Volume 475, December 19 – December 21, 1941

DIARY Book 475 December 19 - 21, 1941 Regraded Unclassified - A - Book Page Air Raid Protection of Treasury See Treasury Building Appointments and Resignations Edwards, B. M.: Consulting Expert status from December 20, 1941 475 238 Argentina See Latin America - à - Barth, Alan Editorial Opinion on Foreign Affairs: Meeting the Issue - 12/19/41 114 Budget Message, 1943 Smith and HMJr discuss tax and fiscal policy features - 12/19/41 35 a) Smith's message to FDR 34 b) Smith's message as reviewed by Bell - 12/20/41 202 c) Ezekiel (Mordecai) transmits memorandum on Federal Reserve Board meeting called by Hansen on "tax policy end budget message"; present: economists from Budget, Office of Production Management, and Office of Price Administration - 12/19/41 31 (See also Book 477, page 81) 1) HMJr-Ransom conversation: Book 477, pages 7 and 42 - 12/23/41 2) HMJris letter to Vallace acknowledging Zzekiel outline: Book 478, page 64 - 12/26/41 3) Richard V. Gilbert's notes on discussion of 1942 tax program: Book 479, page 164 Conference of Treasury people: Book 476, page 37 - 12/22/41 a) Goldenweiser and Currie asked to advise Treasury: Book 476, page 83 b) Henderson consulted: Book 476, page 85 (See also Book 477, page 212) Conference: present: HKJr, White, Haae, Viner, and Bell: Book 476, page 88 Conference: present: HMJr, Viner, Paul, Haes, Morris, Hell, and White: Book 477, page 46 - 12/23/41 Conference: present: Treasury group, Ranson, Goldenweiser, Currie, and Gilbert: Book 477, page 213 - 12/24/41 Conference; present: Treasury group: Book 477, nage 266 Recommendations to FDR: Book 477, page 289 "Victory program can not be included in this Budget Message"; discussion at conference of Treasury personnel: Book 480, page 4 - 12/30/41 Actual message: Book 483, page 1 - 1/7/42 Regraded Unclassified - C - Book Page Censorship, Office of Executive Order establishing - 12/19/41 475 82 a) $100,000 made available from "Imergency Fund for President" 81 b) Gaston to represent Treasury: See Book 477, page 103 - 12/23/41 o) Communications to enemy: Memorandum to FDR on administration by Treasury: Book 477, page 346 - 12/24/41 China Stalin's message to Chiang Kai-shek: "Do not ask us to declare war against Japan at this time" - 12/19/41. 131 Stabilization Board: Taylor and Frese - plans to evacuate discussed by Treasury and State - 12/19/41 135 Soong, T. V.: Appointed Foreign Minister - 12/21/41 308 Correspondence Mrs. Forbush's resume' - 12/19/41 99 - D - Defense Savings Bonds See Financing, Government - 3 - Edwards, B. M. See Appointments and Resignations Exchange Market Resume's - 12/19/41, 12/20/41 151,281 Exports Exports to Russia, China, Burma, Hong Kong, Japan, France, and other blocked countries, week ending December 13, 1941 - White memorandum. 124 Esekiel, Mordecai See Budget Message, 1943 - F - Financing, Government Defense Savings Bonds: Tipping by Defense Savings Stamps discussed by Early. Hogate's Restaurant manager, HMJr, and Graves - 12/19/41 22 Progress report - - 12/19/41 24-A Field Organization News Letter, No. 31 - 12/20/41 221 United States Savings Bonds, Series 3, Type A - stock reports of December 20, 1941, and December 21, 1941 222,311 Foley, Edward H., Jr. Sce Press Room Foreign Funds Control Knudsen (William S.) and HMJr discuss problem of Knudsen's sisters in Copenhagen - 12/20/41 192 a) Foley memoranda: Book 476, pages 248 and 251 - 12/22/41 b) HMJr's note to Knudsen: Book 476, page 253 - G - Book Page Gaston, Herbert E. See Press Room Gold See U.S.S.R. Graves, Harold N. See Press Room - H - - Hawaii Destruction by burning there and the re-issuance in United States of checks, currency, and public and private securities - proposed procedure sent to FDR 12/19/41 475 84 Hogate's Restaurant See Financing, Government: Defense Savings Bonds - I - Inflation See Budget Message, 1943 - K - Knudsen, William S. See Foreign Funds Control - L - Latin America Argentina: Finance Minister Irigoyen--White conversation - 12/20/41 263,264 Lend-Lease See also Procurement Division Allocations and obligations - - 12/20/41 254 - M - Manufacturers, Small See Speeches by HMJr Military Reports Reports from London transmitted by Halifax - 12/19-20/41 153,282 Summary by Kamarck - - 12/20/41 286 War Department bulletin: German Armored Car Reconnaissance 12/20/41 290 Regraded Unclassified - o - Book Page Office of Production Management See Procurement Division 011 Latin American operations by Standard 011 Company of New Jersey - 12/20/41 475 261 - P - Philippine Islands Destruction by burning there and the re-issuance in United States of checks, currency, and public and private securities - proposed procedure sent to FDR - 12/19/41 84 Press Room Rumors of plot against Gaston by Foley and Graves discussed by HMJr at group meeting - - 12/20/41 161 Procurement Division For HMJr's radio address to small manufacturers, see Speeches by HMJr Non-military purchasing (machine tools, chemicals, non-military trucks and oil) discussed by Cox and HMJr - 12/19/41 6 a) FDR and HMJr had already discussed situation b) Draft of proposed order signed by HMJr: See Book 480, page 75 - 12/30/41 1) Sent to FDR: Book 480, page 261 - 12/31/41 - Q- Quinine Report on available supplies - - 12/19/41 94 - R - Revenue Revision See also Budget Message, 1943 British joint taxation of husband and wife as a possible deterrent to the employment of married women - White memorandum - 12/19/41 79 Roosevelt, Betsy Cushing Residence in Astor building staffed by Germans reported to HMJr by Gaston - 12/19/41 98 - S - Schwarz, Charles Thompson report on preliminary investigation - 12/20/41. 160 Small Manufacturers See Speeches by HMJr Regraded Unclassified - S - (Continued) Book Page Soong, T. V. See China Speeches by HMJr Small Manufacturers - radio address to: Discussion by HMJr, Foley, and Kuhn - 12/19/41 475 17 a) Draft - speech cancelled - 12/20/41 239 Standard 011 Company of New Jersey See 011 Switzerland Representation of United States interests in Europe and Asia discussed in cables to American Legation, Bern - 12/20/41 276 - T - Treasury Building Air Raid Protection for Treasury Personnel Safety Order No. 1 - - 12/20/41 249 Deasy recommendations: See Book 477, page 336 - 12/24/41 Shatter-proof glass estimates: Book 479, page 143 - 12/29/41 Brigadier-General Ferguson's detail to Treasury asked of War Department: Book 480, page 228 - 12/31/41 Air Raid Wardens Training School: Book 483, page 295 - 1/8/42 Turkey First requisitions reported by Procurement - 12/20/41 259 - U - U.S.S.R. Stalin's message to Chiang Kai-shek: "Do not ask us to declare war against Japan at this time" - 12/19/41 131 Gold: Status of purchases - 12/19/41 140,142 United Kingdom See Revenue Revision - W - War Powers Bill Summers (Hatton W.; Chairmon, House Committee on the Judiciary) thanked by HMJr for assistance - 14 12/19/41 1 TREASURY DEPARTMENT FOR RELEASE, MORNING NEWSPAPERS, Washington Friday, December 19, 1941. The Secretary of the Treasury, by this public notice, in- vitee tenders for $150,000,000, or thereabouts, of 82-day Treasury bills, to be issued on a discount basis under competi- tive bidding. The bills of this series will be dated December 24, 1941, and will mature March 16, 1942, when the face amount will be payable without interest. They will be issued in bearer form only, and in denominations of $1,000, $5,000, $10,000, $100,000, $500,000, and $1,000,000 (maturity value), Tenders will be received at Federal Reserve Banks and Branches up to the closing hour, two c'clock p. m., Eastern Stan- dard time, Monday, December 22, 1941. Tenders will not be received at the Treasury Department, Washington. Each tender must be for an even multiple of $1,000, and the price offered must be expressed on the basis of 100, with not more than three decimals, e. E., 99.925. Fractions may not be used. It is urged that tenders be made on the printed forms and forwarded in the special envelopes which will be supplied by Federal Reserve Banks or Branches on application therefor. Tenders will be received without deposit from incorporated banks and trust companies and from responsible and recognized dealers in investment securities. Tenders from others must be accompanied by payment of 10 percent of the face amount of Treasury bills applied for, unless the tenders are accompanied by an express guaranty of payment by an incorporated bank or trust company. Immediately after the closing hour, tenders will be opened at the Federal Reserve Banks and Branches, following which public announcement will be made by the Secretary of the Treasury of the amount and price range of accepted bids. Those submitting tenders will be advised of the acceptance or rejection thereof. The Secretary of the Treasury expressly reserves the right to accept or reject any or all tenders, in whole or in part, and his action in any such respect shall be final. Payment of accepted tenders at the prices offered must be made or completed at the Federal Reserve Bank in cash or other immediately available funds on December 24, 1941, provided, however, any qualified depositary will be permitted to make payment by credit for Treasury bills allotted to it for itself and its customers up to any amount for which it shall be qualified in excess of existing deposits when 50 notified by the Federal Reserve Bank of its district, The income derived from Treasury bills, whether interest or gain from the sale or other disposition of the bills, shall not have any exemption, as such, and loss from the sale or other disposition of Treasury bills shall not have any special treat- ment, as such, under Federal tax Acte now or hereafter enacted, The bills shall be subject to estate, inheritance, gift, or other 29-17 Regraded Unclassified 2 -2- excise taxes, whether Federal or State, but shall be exempt from all taxation now or hereafter imposed on the principal or interest thereof by any State, or any of the possessions of the United States, or by any local taxing authority. For purposes of taxa- tion the amount of discount at which Treasury bills are originally sold by the United States shall be considered to be interest, Under Sections 42 and 117 (a) (1) of the Internal Revenue Code, as amended by Section 115 of the Revenue Act of 1941, the amount of discount at which bills issued hereunder are sold shall not be considered to accrue until such bills shall be sold, redeemed or otherwise disposed of, and such bills are excluded from considera- tion as capital assets. Accordingly, the owner of Treasury bills (other than life insurance companies) issued hereunder need include in his income tax return only the difference between the price paid for such bills, whether on original issue or on subse- quent purchase, and the amount actually received either upon sale or redemption at maturity during the taxable year for which the return 18 made, as ordinary gain or loss. Treasury Department Circular No. 418, as amended, and this notice, prescribe the terms of the Treasury bills and govern the conditions of their issue. Copies of the circular may be obtained from any Federal Reserve Bank or Branch. -000- Regraded Unclassified 3 December 19, 1941 10:56 RE ALIEN PROPERTY CUSTODIANSHIP Present: Mr. Foley Mrs. Klotz H.M.Jr: Now, the President said did we know how many foreigners own securities and property in this country under dummy names. I said I didn't know, I didn't know whether it was our job or FBI but I would look into it. He said, "Well, now, you take the Queen of the Netherlands." She is no enemy, but he said, "I would like to know does she or doesn't she own property up on the top of the hill, there." He said, "Look into it for me." I said I would. Now, where Jimmie Byrnes is on this, I don't know. Do you? Is he with us or against us? Foley: Well, I haven't talked with him. Oscar indicated he would be with us. H.M.Jr: You had better find out. Hopkins said as soon as he got through he would call me on the phone, but I have got to go on the Mill. That is the way it is done. Foley: All right. There is an Executive Order, you know, to set up this procedure. H.M.Jr: Well, what happened - I am past due on the Hill. Now, what happened last night? Foley: The Justice people came over. Swidler, who is with Townsend, and we had a little talk, and then Regraded Unclassified 4 - 2 - we want back to our respective offices to draft orders and we are going to have a meeting today. H.M.Jr: Well, can't you find out from Oscar where the thing stands? Shall I call him up? Foley: No, I can call him up. I understood from Oscar that he and Harry Hopkins and Jimmie Byrnes thought it ought to be in one place and that it all ought to be in the Treasury; in other words, that the APC should be a part of the Treasury rather than a part of Justice. H.M.Jr: Well, it was a lucky break I got to the President before. I don't think he would do anything after that without first saying something to me, but you never know. O.K., Ed, I have got to move. I thought I would give you that. Regraded 5 December 19, 1941 10:58 a.m. HMJr: Hello. Operator: Mr. Cox. HMJr: Go ahead. Hello. Oscar Cox: Mr. Secretary. HMJr: Go ahead. C: Can I bother you about several things? One, in working on the next war powers bill HMJr: Yes. C: it occurred to me that one of the things that might be done is to cover all the fiscal powers that you might need. HMJr: Yes. C: Marriner Ecoles had one minor one on this authorization of the Federal Reserve Banks to buy outside the open market. HMJr: Yeah. C: Now, I wondered if HMJr: That was my okay. C: Yeah. Now how about having your legislative fellows - 18 it all right if I talk to them in digging up any other fiscal legislation? HMJr: Yes. Of course, the Attorney General, in my presence, agreed to put young Spingarn on that committee. C: Yeah. HMJr: But I don't know why he hasn't done it, and I haven't had time to call him up. C: All right. 6 - 2 - HMJr: He wrote me about it. C: Yeah. HMJr: But you talk with Ed. That'll be all right. C: All right, fine. Now, the other thing is this. The Army is very interested in terms of the future appropriations to have them made to the Army instead of to Lend-Lease. Now, that presents a problem along the lines that you were interested in six months ago on this Department of Supply. HMJr: That's right. C: Now, here's the question I'd like to put up to you. HMJr: Go ahead. C: On stuff like machine tools, chemicals, non- military trucks and oil. HMJr: Yeah. C: Would you see any reason, if it can be worked out, why the Treasury shouldn't handle that? HMJr: Well, the situation 18 this way. Do you know McKeachie? C: Yeah. HMJr: Well, McKeachie came to me last week and said that they'd been studying this at OPM for a long time and they now want us to buy all non- military supplies. C: Yeah. HMJr: That 18, beginning with the departments. They started in by asking us to buy 150,000 desks. C: Yeah. HMJr: And I just talked to the President - just left there - - and said what would he think of my - in the first instance - going on the air and 7 - 3 - explaining to the people that the Treasury's going to do this - no matter how small a manu- facturer he was, we'd want to give him first consideration. C: Yeah. HMJr: And he was crazy about the idea. C: Wonderful. HMJr: And, of course, he gave me some of his own ideas. C: Fine. HMJr: He said, "When you're talking about woodworking", he said, "that's down my alley." C: Yeah. HMJr: Then right away he wanted me to also say on the air that if anybody had any extra lathes, they should turn them in to the Government. Well, I said, "Now wait a minute, Mr. President, I don't know how OPM is going to like that." But he said, "Well, think about 1t." He said, "I wanted some- body to do that for a long time." C: Yeah. There are a lot of them around loose, you know. HMJr: He's right, but I don't want OPM thinking I'm crowding them. My attitude 18, they've got to ask me 'pretty please" to do this. C: Right. I think you're smart. HMJr: And I said we'd do one thing at a time. C: Yeah. HMJr: So C: Well, I have the feeling that if you take on more of these, that you can do more efficiently than the Army can in any event. HMJr: Well, that's no competition. Regraded Unclassified 8 - 4 - C: (Laughs) Well..... HMJr: But the way I feel is this. This would be again something that I'd want the President to feel that he was pushing at me. C: Yeah. HMJr: I didn't seek out McKeachie; he sought me out. C: Right. Well, suppose we get it up until the President asks you to take this on. HMJr: Well, if he does, we'll be glad to do it. C: All right. HMJr: Now, can I ask you one? C: Yes, sir. HMJr: What is this? It's now one minute past eleven, and where do we stand at one minute past eleven on the alien property custodianship? C: Well, your fellows, 8.6 you know, are over talking to HMJr: Yeah, I know about my fellows; but what about you and Jimmie Byrnes and Harry Hopkins? C: Well, can I tell you something completely off the record? HMJr: Absolutely. C: Jimmie feels as I do, that without any suggestion on your part, that it doesn't make any sense to split these functions - that you've got a con- tinuous process there, which in many cases the freezing control 18 more important than the vesting control. HMJr: Yes. C: And that to take the half dollar and try to cut it in half, this 16 crazy HMJr: Yeah. Regraded Unclassified 9 - 5 - HMJr: Yeah. C: particularly where the only rational basis for it 18 that Justice some 20 years ago handled something called alien property. HMJr: That's right. C: The whole world has moved on. HMJr: Yeah. C: And secondly, Jimmie feels the way I do, that Justice 1s not an administrative agency and he thinks it either ought to be in the Treasury or an independent office. HMJr: Why don't you put it under Byron Price, the Censor? C: (Laughs) I'm afraid it would just be beyond his depth, and my own personal thought 18 that it ought definitely to be in the Treasury and HMJr: Well, Oscar, this 18 the way I feel. I can't - the thing that really shocks me - I can talk completely off the record to you. C: Yeah. HMJr: I have a luncheon, at which the Attorney General and Leo Crowley sit down with us. We're in com- plete agreement that we'll try this thing and see how it works, you see? Hello. C: Yes. HMJr: Everybody agrees. C: Right. HMJr: And then somebody gets hold of the Attorney General and he begins to wiggle. C: Yeah. HMJr: Well, in these times, that's no way to do business. C: Well, I think that just proves the point doesn't it? Regraded Unclassified 10 - 6 - HMJr: Well, I mean, if I changedmy mind, I'd call up Francis and say, "Look, Francis, on Saturday I told you 80 and BO but on Monday I feel this way and Tuesday I feel this way." C: Yeah. Well, I think it proves the point for this reason. Francis has got people in that office that are 80 emotional about this business, that if it's going to take you three weeks to work out an order splitting it up, then you've got as good proof as you want that the damn thing won't work on a split basis; because the top fellows can sit there at lunch and agree. HMJr: Yeah. C: but there are & hell of a lot of other people involved in this thing who are like kids playing with a lollypop. HMJr: Well, and then - I agree with you entirely, Oscar. Then there's another thing. There are not many as good organizations B.8 this fund- freezing organization are. They're really a top organization. C: Well, this - there 1sn't any organization administrative-wise that' 8 as good as the Treasury under you. We've seen it in this thing very HMJr: Thank you, sweetheart. C: That's the honest truth. HMJr: Yeah. Well, I got my training under you. C: (Laughs) Ha Ha. HMJr: Ha Ha. C: I learned it the other way around. HMJr: Well, anyway - thanks for the flowers - but the point 1s, here is a good, well-run, highly efficient organization. Now, why destroy it because there are two or three whipper-snappers Regraded Unclassified 11 - 7 - over there in the Department of Justice would like to have it. C: Well, we all agree - I mean, Jimmie Byrnes and I are in a hundred per cent agreement on that. HMJr: Yeah. C: And the only reason that he suggested a possibility of an independent agency was, not knowing what the President had in mind on Crowley; but I think his recommendation will be that even though theoretically it might be better for Crowley to take over the freezing control staff, as a practical administrative matter, he ought to be put in the Treasury. HMJr: Don't have any more independent agencies, Oscar. C: No, sir. It's no good. I mean, even on the sheer problem of space and pencils, for example. HMJr: Well, look at Export Control what happened with that. C: Oh, sure. HMJr: What? C: It's no good. HMJr: Don't have any more independent agencies. C: It means the waste of an organization like the Treasury to do this job. HMJr: I agree with you. I mean, an independent - Crowley will be glad to come over with us. C: I don't think there's any question about it. HMJr: See? C: Yeah. HMJr: Crowley'd be glad to come with us. If it's a matter that centers around Crowley, he'd be Regraded Unclassified 12 - 8 - glad to come with us. C: Well, I would be reasonably sure of that. HMJr: Where does Harry stand? C: We haven't talked to him very much in detail about it. I think Jimmie told him this morning. not to have the President sign any orders on it until we got a chance to talk to him about it. HMJr: Yeah. C: I mean, he didn't want one of these Justice orders sort of elip through under the wire. HMJr: I see. C: And Jimmie feels strongly that certainly in these times you ought to do the Job B.B honestly and as efficiently as you think it ought to be done HMJr: Yes. C: instead of compromising. HMJr: Right. C: There's just no use compromising. HMJr: Right. Well C: I'll let you know what happens on it. HMJr: Will you? Because, Oscar, this is one of the things I'm really interested in. C: Well, I think it's damned important. HMJr: And - well, it's the human relationship. I don't want to see men that have put what they have into this thing just have their - after the months and months of days and nights actually sleeping there with this thing 88 they have - and have these boys just kicked in the gutter. Regraded Unclassified 13 - 9 - C: No, I think you're right; particularly since they've done a wonderful job. HMJr: Yeah. I mean - and - that's not right. C: The only criticism the boys down below in Justice had was that maybe this statute gave the President and the Government a little too much power, which 1s & unique complaint coming from such an agency. HMJr: Yeah. Well, I'm glad you're over there helping him, because God knows he needs some help. C: Well, all right. We'll try, anyway. HMJr: Okay. C: All right, sir. HMJr: All right. C: Good-bye. Regraded Unclassified 14 DEC 19 1941 Dear Judge Summers: Mr. Spingarn has told me how generous you were with your time and energies in connection with the war powers bill. I would be remiss, indeed, if I did not send you, as I do, my warmest thanks and grateful appreciation for the grand work you did in piloting this vital legislation to enactment. Sincerely yours, (Signed) 1. Korgentham, 12, Secretary of the Treasury. Honorable Ratton 1. Summers, Chairman, Committee on the Judiciary, House of Representatives. By Messenger Manur SJS:mfw 12:55 12/19/41 whompson nme Regraded Unclassified 15 [PUBLIC LAW 354-77m CONGRESS) [CHAPTER 593-1er SESSION] (H. R. 6233) AN ACT To espedite the prosecution of the war effort. Be it enneted by the Senate and House of Representatives of the United States of America in Congress assembled, TITLE I-COORDINATION OF EXECUTIVE BUREAUS IN THE INTEREST OF THE MORE EFFICIENT CONCEN- TRATION OF THE GOVERNMENT SECTION 1. That for the national security and defense, for the suc- cessful prosecution of the war, for the support and maintenance of the Army und Navy, for the better utilization of resources and indus- tries, and for the more effective exercise and more efficient adminis- tration by the President of his powers as Commander in Chief of the Army and Navy, the President is hereby authorized to make such redistribution of functions among executive agencies ILS he may deem necessary, including any functions, duties, and powers hitherto by law conferred upon any executive department, commission, bureau, agency, governmental corporation, office, or officer, in such mannet as in his judgment shall seem best litted to carry out the purposes of this title, and to this end is authorized to make such regulations and to issue such orders as he may deem necessary, which regulations and orders shall be in writing and shall be published in accordance with the Federal Register Act of 1935: Provided, That the termina- tion of this title shall not affect any act done or any right or obliga- tion accruing or accrued pursuant to this title and during the time that this title is in force: Provided further, That the authority by this title granted shall be exercised only in matters relating to the conduct of the present war: Provided further, That no redistribution of functions shall provide for the transfer, consolidation, or abolition of the whole or any part of the General Accounting Office or of all or any part of its functions. Sec. 2. That in carrying out the purposes of this title the President is authorized to otilize, coordinate, or consolidate any executive or administrative commissions, bureaus, agencies, governmental corpora- tions, offices, or officers now existing by law, to transfer any duties or powers from one existing department, commission, bureau, agency, governmental corporation, office, or officer to another, to transfer the personnel thereof or any part of it either by detail or assignment, together with the whole or any part of the records and public prop- erty belonging thereto. Sec. 3. That for the purpose of carrying out the provisions of this title, any moneys heretofore and hereafter appropriated for the use Regraded Unclassified 16 2 IPva. LAW 3 (Peo. of any executive department, commission, burean, agency, govern. "(A) investigate, regulate, or prohibit, any transactions in mental corporation, office, or officer shall be expended only for the foreign exchange, transfers of credit or payments between, by, purposes for which it was appropriated under the direction of such through, or to any banking institution, and the importing, export- other agency as may be directed by the President hereunder to per- ing, hoarding, melting, or earmarking of gold or gilver eoin or form and execute said functions, except to the extent hereafter bullion, currency or securities, and authorized by the Congress in appropriation Acts OF otherwise. (B) investigate, regulate, direct and compel, nullify, void, Sec. 4. That should the President, in redistributing the functions prevent or prohibit, any acquisition holding, withholding, use, among the executive agencies ns provided in this title, conclude that transfer, withdrawal, transportation, importation or exportation any bureau should be abolished and it or their duties and functions of, or dealing in, or exercising any right, power, or privilege with conferred upon some other department or bureau or eliminated respect to, or transactions involving, any property in which any entirely, he shall report his conclusions to Congress with such recom- foreign country OF a national thereof has any interest, mendations as he may deem proper. by any person, or with respect to any property, subject to the juris- SEC. 5, That all laws or parts of laws conflicting with the provisions diction of the United States: and any property or interest of any of this title are to the extent of such conflict suspended while this foreign country or national thereof shall vust, when, as, and upon title is in force. the terms, directed by the President, in such agency or person us Upon the termination of this title all exécutivo or administrative may be designated from time to time by the President, and upon such agencies, governmental corporations, departments, commissions, terms and conditions as the President may prescribe such interest burwans, offices, or officers shall exercise the same functions, duties, or property shall be held, used, administered, liquidated, sold, or and powers de heretofore of us herenfter by law may be provided, otherwise dealt with in the interest of and for the benefit of the United any authorization of the President under this title to the contrary States, and such designated agency of person may perform any and notwithstanding. all acts incident to the accomplishment or furtherance of these pur- poses; and the President shall, in the manner hereinabove provided, TITLE II-CONTRACTS require any person to keep a full record of, and to furnish under onth, in the form of reports or otherwise, complete information relative Src. 201, The President may authorize any department or agency to any net or transaction referred to in this subdivision either before, of the Government exercising functions in connection with the prose- during, or after the completion thereof, or relative to any interest ention of the war effort, in accordance with regulations prescribed by in foreign property, or relative to any property in which any foreign the President for the protection of the interests of the Government, to enter into contracts and into amendments or modifications of con- be otherwise necessary to enforce the provisions of this subdivision, country or any national thereof has or has had any interest. or ns may tracts heretofore or hereafter made and to make advance, progress and in any case in which a report could be required, the President may, and other payments thereon, without regard to the provisions of law in the manner hereinabove provided, require the production, or if relating to the making, performance, amendment, or modification of necessary to the national security or defense, the seizure, of any books in contracts whenever he deems such action would facilitate the prosecu- of account, records, contracts, letters, memoranda, or other papers, tion of the war Provided, That nothing herein shall be construed to the custody or control of such person; and the President may, in the authorize the use of the cost-phus-a-percentage-of-cost system of manner hereinabove provided, take other and further measures not contracting: Provided further, That nothing herein shall be construed inconsistent herewith for the enforcement of this subdivision. to authorize any contencts in violation of existing law relating to "(2) Any payment, conveyance, transfer, assignment, or delivery limitation of profits: Provided further, That all acts under the of property or interest therein. made to or for the account of the authority of this section shall be made a matter of public record under United States, of ns otherwise directed, pursuant to this subdivision regulations prescribed by the President and when deemed by him not or any rule, regulation, instruction, or direction issued hereunder to be incompatible with the public interest. shall to the extent thereof be a full acquittance and discharge for all purposes of the obligation of the person making the same; and TITLE III-TRADING WITH THE ENEMY no person shall be held liable in any court for or in respect to anything done or omitted in good faith in connection with the admin- Sw. 301. The first sentence of subdivision (b) of section 5 of the istration of, or in pursuance of and in reliance on, this subdivision. Trading With the Enemy Act of October 6, 1917 (40 Stat. 411), as or any rule, regulation, instruction, or direction issued hereunder. amended, is hereby amended to read A9 follows: the United States and any place subject to the jurisdiction thereof, 4(3) As used in this subdivision the term United States' means "(1) During the time of war or during Any other period of national including the Philippine Islands, and the several courts of have first emergency declared by the President. the President may, through any instance of the Commonwealth of the Philippine Islands shall agency that he may designate, or otherwise, and under such rules jurisdiction in all cases, civil or criminal, arising under this subdivision or otherwise- and regulations as he may prescribe, by means of instructions, licenses, in the Philippine Islands and concurrent jurisdiction with the district courts of the United States of all enses, civil or criminal, arising upon Regraded Unclassified 4 [Pon. the high seax: Provided however, That the foregoing shall not be construed as a limitation upon the power of the President, which is hereby conferred, to prescribe from time to time, definitions, not inconsistent with the purposes of this subdivision, for any or all of the terms used in this subdivision." SEC. 302. All acts, actions, regulations, rules, orders, and proclams. tions heretofore taken, promulgated, made, or issued by, or presuant to the direction of, the President or the Secretary of the Treasury under the Trading With the Enemy Act of October 6, 1917 (40 Stat. 411), as amended. which would have been authorized if the provisions of this Act and the amendments made by it had been in effect, are hereby approved, ratified, and confirmed. SEC, 203. Whenever, during the present war, the President shell deem that the public safety demands it, he may enuse to be censored under such rules and regulations as he may from time to time estab. lish, communications by mail, cable, rudio, OF other means of trans- mission passing between the United States and any foreign country he may from time to time specify, or which may be carried by any vissol or other means of transportation touching at any port, place, or Territory of the United States and bound to or from any foreign country. Any person who willfully evades or attempts to evade the submission of any such communication to such consorship or willfully uses or attempts to tiso any code or other device for the purpose of concealing from such consorship the intended meaning of such com- numication shall, upon conviction, be fined not more than $10,000, or, if a natural person, imprisoned for not more than ten years, or both: and the officer, director, or agent of any corporation who knowingly participates in such violation shall lie punished by a like fine, imprison- ment, OF both, and any proporty, funds, securities, papers, or other articles OF documents, or any vessel, together with her tackle, apparel, furniture. and equipment, concerned in such violation shall be forfeited to the United States. TITLE IV-TIME LIMIT AND SHORT TITLE Ste. 401. Titles I and Il of this Act shall remain in force during the continumente of the present war and for six months after the termina- tion of the war, or until such earlier time ns the Congress by concurrent resolution or the President may designate. 1941". Sto. 402. This Act may be cited as the "First War Powers Act, Approved, December 18, 1941. Regraded Unclassified 17 December 19, 1941 11:00 a.m. RE RADIO ADDRESS TO SMALL MANUFACTURERS Present: Mr. Kuhn Mrs. Klotz Mr. Foley M.M.Jr: Ferdie, if you don't mind listening, you make notes. I am an hour late on the Hill. I spoke to the President about my going on the air about these desks. The reason I spoke to the President was that I didn't want to have somebody running to the President that I was trying to step out. He said, "Now, when you talk about woodworking, that is right down my alley." He says, "I think it is a swell idea. He is crazy about it. Then he said, "Can't you fix the price in advance and tell these people that the Government is willing to pay such and such 8. price which they have figured out would keep a small woodworking shop going?" (Secretary held a telephone conversation with Oscar Cox.) S.M.Jr: He called me. Foley: Yes, I gathered he did. H.M.Jr: Just stay here a minute and hear the rest of this, Ed. Now, the President on this woodworking thing - it is sort of hard to get back to it. What had I told you? Regraded Unclassified 18 - 2 - Kuhn: You said if anyone had any extra lathes they should turn them over and that the Government should pay such a price 8.8 would keep the small woodworker going. H.M.Jr: Set the price in advance. Now, I don't know whether that is good or not. I don't see how we could fix a price in advance for the desks. You might not get any bids. Kuhn: Then you have to come up to specifications set by the Government. If you go on the air, you have to specify-- H.M.Jr: By sections, and we are doing it by districts, and, for instance, in the Northwest where they are close to the wood, they might be able to bid one price and in another section where they didn't have access to the wood, they couldn't, and the hardwood workers of New Hampshire and Vermont might go way below the fellows who had to work with pine in Georgia. Kuhn: Don't you have to state your specifications on the air when you go on the air? H.M.Jr: You ask them to write me - either ask for a copy of the speech or to go to the nearest Procurement Office. There are only seven of them. I will have to list them on the air. Kuhn: When you have finished, I have got one ques- tion that has been bothering me. That is, the Local Defense Councils in each of the forty-eight states exist for the purpose of putting the Government in touch with the small manufacturers. H.M.Jr: Don't make me laugh. I haven't got time. We will use them as well. Kuhn: That is what I mean. Regraded Unclassified 19 - 3 - H.M.Jr: But I, Henry Morgenthau, Jr., with the Presi- dent's hearty approval, am going to go on the air and say, "Now, we are in this business and we want to reach the small manufacturers." Kuhn: That is right, but I meant use the Defense Councilsand direct some of your-- H.M.Jr: Te will use everybody. They will send them copies of my speech. I have got to go on the Hill. Have you started on this? Kuhn: Yes, I have, and I want to talk to the radio people about it. I have not yet talked to them about it, and I also wasn't clear whether you wanted to do this yourself or-- H.M.Jr: I do. Kuhn: ... have announcers all over the country-- H.M.Jr: No, I want to do it. I want to talk to the small manufacturers of the United States. Kuhn: O.K. H.M.Jr: I want something after Cabinet on this thing. You ought to see Cliff Mack and get the technique. Regraded Unclassified 20 December 19, 1941 11:17 a.m. Senator Byrd: ..explained it to me. HMJr: Well, I just got back this second from the White House. B: Uh huh. HMJr: And I wanted to know whether there's still time to come up. B: No. You see, the House members had a very 1m- portant meeting of all the Appropriations Com- mittee, and they had to leave at eleven o'clock. HMJr: Oh. B: They've adjourned now. HMJr: Well, I'm sorry. B: I told - 80 I told Dan what we were able to do on the farm business - not as much as I would have liked to have seen done. It'll recommend the abolition of the farm tenancy and the farm commodity, together with the loans. HMJr: Oh, yes, B: And then a hundred million dollar reduction in the exportation and domestic consumption of agri- cultural products, and that the overhead expense of the Department of Agri - I mean, the elimination of these Soil Conservation payments - those hundred thousand committeemen he out out at a saving of forty-four million; the elimination of all land purchases during the period of the emergency; that the Federal Crop Insurance be made actuarily sound; and that the Rural Electrification all be deferred. HMJr: I see. B: I did the very best I could with them. That was a ticklish thing, and they had Wickard up here yesterday for two hours. 21 - 2 - HMJr: 8o I heard. B: And he argued and argued and wouldn't agree to make a single dollar reduction. HMJr: I see. B: So I thought - would it be satisfactory to you, Henry, if Dan Bell and I would work over this report and then send it up to you tomorrow? HMJr: Absolutely. B: Fine. Well, he's coming down this evening. HMJr: Thank you. B: You've been a great help." I tell you, if it hadn't been for you, we couldn't have done any- thing. HMJr: Well, that's very nice of you. I'm sorry I - - but I've been in Chicago and I've been - well, I haven't been loafing. B: No. I know what a terrible strain you're under, but you've been invaluable. HMJr: Well, thank you. B: Thank you very much; and I'll get hold of Danny this evening and we'll submit it to you then. HMJr: Thank you, Harry. B: Good-bye. 22 December 19, 1941 11:39 a.m. HMJr: Harold. Harold Graves: Yes, sir. HMJr: Well, how's the great sales manager? G: Oh, I'm fine, thank you, sir. How are you? HMJr: I'm alive. G: (Laughs) HMJr: That was a good meeting. All the after-taste was good. G: Yes, I thought it was good. HMJr: Harold, this is just a little chore which is descriptive of you. G: Yes. HMJr: While waiting to see the President, Steve Early informed me that he'd had lunch down at Hogates Restaurant. G: Yes. HMJr: And that the manager of the restaurant told him that the restaurants in Washington do ten million dollars a month. G: Yes. HMJr: He's a member either of the local or national Restaurant Tariff Association. G: Yes. HMJr: And that they would like to have their patrons do all the tipping with Defense Savings Stamps. G: Fine. HMJr: Now, I didn't let on that I didn't think this was 23 - 2 - an original idea G: Yeah. HMJr: .....but I think it's good business to contact the manager of Hogates G: Yes. HMJr: and tell him you're doing it at Mr. Steve Early's suggestion. G: Yes. HMJr: We'd like his cooperation - if he's a go-getter - he runs a good restaurant - maybe he can get all the restaurant people in the country and handle that for us. G: Yes. HMJr: And then when you get the thing done, fix up a little letter for me to Steve Early, giving him a report what we've done. G: Yes. HMJr: And thanking him for making the suggestion. G: Yes, sir. HMJr: Have you got it? G: I have it. HMJr: Now don't let that slip. G: No, I won't. I'll take care of it right away. HMJr: Then will you organize a meeting to be in my office at four-thirty..... G: Yes, sir. HMJr: between yourself and Bell and Broughton and Hall. G: Yes. - 3 - 24 HMJr: I want a report on what's happened in the last twenty-four hours on manufacturing and what's gone out. G: Fine. We'll be there - four-thirty today. HMJr: And anybody else that has anything to do with it. G: Yes. Very good, sir. HMJr: But at four-thirty I want a report. I'm going to get 8 daily report from now on until that gets on its feet. G: Yes, sir. HMJr: Thank you. G: I'll take care of it. You're welcome. Good-bye. 24.A December 19, 1941 TO: HAROLD N. GRAVES SUBJECT: PROGRESS REPORT FROM DEFENSE SAVINGS STAFF SALE OF BONDS Actual cash receipts from the sale of E, F and G Bonds for the first sixteen working days of December were $223,610,000, an increase of 33.4 per cent over the same period in November. Actual sales for the same period in November were $167,587,000. Actual cash receipts from the sale of Series E Bonds for the first sixteen working days in December were $128,588,000, an increase of 65.8 per cent over the same period in November. SPECIAL REPORTS ON SALE OF BONDS The Federal Home Loan Bank Board reports an increase of 376 per cent in the sale of Bonds for the week, December 8 to 13, as compared with the week, December 1 to 6. of the 120 cities, the highest increase was in the Los Angeles, California area, which was 1400 per cent; the lowest, in the Des Moines, Towa area, showed an increase of 104 per cent. 5/19/41 EWG Regraded Unclassified 24-B -2- SPECIAL REPORTS ON SALE OF BONDS (Continued) Reports from 89 major post offices showed an increase of 95 per cent in the sale of Defense Savings Stamps for the week, December 8 to 13, as compared with the week, December 1 to 6. The actual figures were: December 1 to 6 - $1,145,118.90 December 8 to 13 - $2,236,431.04 This is an increase of $1,091,312.14. Percentages ranged from a loss in some cities to more than a thousand per cent increase at Atlanta, Georgia. CHICAGO MEETING Those who read this report are generally familier with the successful meeting held in Chicago; however, a special detailed report is being prepared and will be ready next week. This report is being made in the form of a four-page news- paper, copies of which will be distributed to all employees of the Defense Savings Staff in Washington and elsewhere, as well as volunteer workers. Regraded Unclassified 24.C -3- COOPERATION Telegrams and letters are pouring into the Defense Savings Staff from movie, radio and stage stars, individual business men, corporations and numerous organizations offer- ing assistance in the Bond and Stamp Campaign. Among the stars are Dorothy Lemour, Ronald Coleman, Jack Benny, Lily Pons, Andre Kostelanetz, and Brian Donlevy. NATION'S ENTERTAINERS PLAN AID Leading representatives of the amusement industry have offered the aid of 165,000 entertainers and have promised that they will launch 8 plan immediately to get Defense Savings speeches, skits, songs and mention into every show, concert and other amusement acts given in the country. This is on 8 continuing basis. Plans were completed at a meeting in New York today, Friday, December 19. These plans are being put into operation by the following: Paul Dulzell, Executive Secretary of Actors' Equity; Leo Cluesmann, essistant to the president of the American Federation of Musicians; Gerald Griffin, Executive Secretary of the American Guild of Veriety Artists; and Blanche Witherspoon, Executive Secretary of the American Guild of Musical Artists. Regraded Unclassified 24-D -4- RADIO The Rudy Vallee show on Christmas night will be dedicated to Defense Bonds and Stamps, with Lionel Barry- more reading Dicken's Christmas Carol. The Columbia Broadcasting System has turned over seven one-half hour late evening dance programs to the promotion of Bonds and Stamps. These will be broadcast on coast-to- coast networks and will include such band leaders as Bennie Goodman, Jinmy Dorsey, Harry James, Cab Calloway, Guy Lombardo, end Glenn Miller. The band leaders will personally read Bond and Stamp announcements, All radio stations have been contacted and asked to sell Bonds and Stamps directly to the public, following up the plan used by Station WFVA in Fredericksburg, Virginia. David Sarnoff, president of the Radio Corporation of America, has been named chairman of E committee to organize MINUTE MEN speakers throughout the United States. These speakers will include nationally known men and women who will speak over the networks, and prominent people in local communities who will speak over local stations. MINUTE MEN speakers will also be furnished over stations broadcasting in foreign languages. 24.E -5- RADIO (Continued) For use ten days before Christmas special ennouncements were prepared urging people to give Bonds and Stamps 8.8 Christmas presents. (Samples of these announcements attached). Special Pay Roll Allotment Programs of approximately three minutes are being used in the next week on fifty-one network programs. RADIO DAILY, trade newspeper of the radio industry, is carrying e two-column box daily, showing what stations are doing individually to promote the sale of Bonds and Stamps. This is in addition to the material furnished by the Treasury Department. (Sample copy attached). Every network children's program is promoting the sele of Defense Bonds and Stamps as follows: American School of the Air - Mondey through Friday, on CBS (Direct to Classrooms) Supermen - Monday through Friday - 500 stations Tom Mix - Monday through Friday - NBC-Blue Walter Damrosch Music Appreciation Hour - every Friday over NBC-Blue Jack Armstrong - every week The Lone Ranger - every week Captain Midnight - three times a week Regraded Unclassified 29.F -6- MAGAZINES The Saturday Evening Post, Newsweek, and the Heart's magazines are using Defense Savings emblems on either the front cover or inside pages. Attached is 8 copy of The Saturday Evening Post issue of December 20, 1941. Pay Roll Allotment advertisements are running in December and January in 575 business and trade publications. The combined circulation is 5,900,000. Attached are sample copies of advertisements appearing in Business Week and Printers' Ink. More than 550 house organs are publishing one column feature entitled "Defense Bonds buy ....". A special Pay Roll Allotment advertisement was mailed to 550 labor papers this week. (Copy attached). PRESS Cooperation from newspapers continues in a most spectacular way. Editorials, cartoons, special boxes, news stories and clippings of cartoons are coming into the Defense Savings Staff by the hundreds. Special cartoons by twenty-five of the country's leading cartoonists have been made for the Defense Savings Staff and these are being matted and sent to daily newspapers. Regraded Unclassified 24-G -7- PRESS (Continued) Attached is a copy of e series of boxes which have been sent out to all newspapers. These boxes will supplant the feature "WAR NEEDS MONEY" sent out & week ago. Attached are a few selected clippings, particularly from Chicago and the Chicago meeting. A full page advertisement of Defense Bonds was carried in the Journal American of Monday, December 15. (Clipping attached). LABOR PRESS Attached are the picture and cartoon sent out to labor newspapers. PLEDGES Plans are being made in connection with the campaign to get 35 million American citizens to subscribe to a pledge to buy Defense Savings Bonds and Stamps on a regular basis. These plans will be given in detail in a later report. -8- RETAILERS FOR DEFENSE The F. W. Woolworth Company announced that on January 2, 1942 they will give to each of eighty thousand employees a twenty-five cent Defense Stamp in an album at a store meeting, at which time all employees will be urged to buy Defense Stamps on a regular basis each pay day from a cashier in the store. In every major store, an employee has been placed in a booth full time to sell stamps during the Christmas period. Sales in New York City in major stores are running more than $600 daily. Sears, Roebuck & Company announced the inauguration of a pay roll allotment plan for all employees in their 900 stores. Starting January 1, 1942 a Defense Window will be established in all stores for the sale of Defense Bonds and Stamps. Retailers for Defense Committees are asking local and national advertisers to use the small Minute Man out in all advertisements in newspapers and magazines. MOTION PICTURES Walt Disney has offered his personal services and the services of his entire organization to make movie shorts. Plans to accomplish this are being worked out. 2A.I -9- SPECIAL ACTIVITIES Joe Williams, noted sports writer, has been named chairman of a committee to promote Bonds and Stamps through sports activities. Mr. Williams is coming to Washington on Monday, December 22, to work out plans. Irving Berlin is writing a new patter for the song ANY BONDS TODAY. The print of Leon Schlesinger's cartoon has been received and will be screened. Defense Houses are being operated in Los Angeles, California and Oklahoma City, Oklahoma. Des Moines, Iowa; Sarasota, Florida; and Hagerstown, Maryland have formed committees patterned after the Buffalo committee and are buying planes and tanks for the Army. MAIL ORDER DIVISIONS The mail order division reports the total sales as of December 18 - $11,053,091. This total has been obtained as follows: First Industrial mailing - $3,191,441 in 86 days Second Industrial Mailing - $1,382,722 in 29 days First Customer Mailing - $3,833,036 in 76 days 24.J -10- MAIL ORDER DIVISIONS (Continued) Regular Purchase Distribution - $304,598 in 34 days Acknowledgement Distribution - $144,337 in 41 days Enclosures to Outside Advertisers - $12,563 Second Customer Mailing - $341,898 - in 9 days with 894,000 new names available First Prospect Mailing - $1,441,532 - in 22 days A large early mailing for 1942, starting December 30, to customers and prospects totalling 12,000,000 is in prospect. 25 December 19, 1941 11:41 a.m. HMJr: Hello. Colonel Smith: Yes. Smith, Mr. Secretary. HMJr: Look, Colonel, I'd like to make a couple little suggestions after my inspection yesterday, see? Hello. S: Yes, Mr. Secretary. HMJr: And I'm making them to you and to nobody else. I didn't say anything to the President, I didn't say anything to General Watson, see? S: All right, sir. Let me get a pencil here & minute. I have one. HMJr: I feel this way, that for the Army's sake first and for the defense of the President - or let's say the defense of the President first and the Army second - if I had that responsibility of that battery, I would send each group S: Yes, HMJr: at once, without fail, to some place where they could fire one of those guns. There 1en't one of those men, including their officers, that's ever fired a 90 millimeter gun. S: That's right, sir. HMJr: And I certainly wouldn't sleep until I had sent each man and the battery, including their officers, to some place - somebody said Indian Head - I don't know if it's Indian Head or where it is S; Yes, sir. HMJr: BO that they had experience and knew how to fire that gun and óidn't wait to experiment on any enemy. B: Yes, sir. Well, that's being taken care of, Mr. Secretary. Regraded Unclassified - 2 - 26 HMJr: Well, I gathered it wasn't going to be done in any great hurry. S: Well, it will be done by instruments 88 rapidly as it can be. HMJr: Yeah. Well S: They go down to Norfolk, to the Coast Artillery School down there where there are those guns, and they go down by detachments and will fire them. HMJr: But I gathered, the way the thing was being handled, that it might be weeks. S: Well, I'll find out. I don't know how long it will take, eir. HMJr: Well, I'm bringing it to your attention and to nobody else's, see? S: Yes, sir. HMJr: And the other thing, I also gathered that with these ears that they have there - these mechanical eare - they don't get - it's "a matter of only a few seconds' notice that they have until they get up this electrical device. S: Yes, sir. HMJr: And I'd also like to suggest that somebody put some heat on them to get up what in the Navy they call a raid-eye - I don't know what you call it in the Army. S: Yes. Those are the ones that they said they hadn't yet received. HMJr: No, pardon me. They said they'd received them S: Oh, they had to fix them up, that was right. HMJr: but they didn't seem to know just how to fix them up. 8: That's right, sir. Regraded Unclassified - 3 - 27 HMJr: And 80 I just want to make those two sug- gestions. S: Yes, indeed, Mr. Secretary. HMJr: Because until the men know how to fire the gun or they know how to detect a plane at least more than a - what is it, four or five seconds, I think, is all the warning they have now - it must be more than that, isn't it? B: Well, they said five miles. I don't know how many seconds that will give them; that won't give them very much. HMJr: Five miles at 300 miles an hour isn't - well, it's only a couple of seconds. S: Yes, I get your point, Mr. Secretary. HMJr: You see? And until they have those electrical raid-eyes up, the batteries are ornamental. S: Yes, sir. Well, General Jarman will be down, I think, tomorrow or next day, and I'll take this up with him then. HMJr: Are you going to wait that long? S: Well, no, I can telephone him, Mr. Secretary. HMJr: That's better. Thank you. S: Yes, sir. You're quite welcome, sir. HMJr: Thank you. 28 December 19, 1941 live P.M.. Memorandum for the Secretary: Colonel Smith telephoned and asked me to give you the following message from him: "I have taken up the points you mentioned in connection with your inspection of anti- aircraft installations yesterday. The Deputy Chief of Staff, General Bryden, and the Chief of Coast Artillery are in conference now making immediate arrangements to put your suggestions into effect." Mrs. McHugh Regraded Unclassified 29 December 19, 1941 1:05 p.m. HWr: This is Secretary Morgenthau. Secy. to Sen. Walsh: Yes, sir. HMJr: Mr. Walsh promised me yesterday when I saw him at four that he would call me before I went to Cabinet. S: Yes, sir. What time do you go to Cabinet, sir? HMJr: Well, I go at two c'clock. S: Two o'clock. Well, he's either on the Floor, eir, or he went to early luncheon. I can reach him before two o'clock, and I'll have him call you. HMJr: Well, he promised me faithfully he'd call me before I went to Cabinet. S: If he promised you that, he will call you, sir. HMJr: I hope 80, S: I know 80, HMJr: All right. S: Okay. 1:48 p.m. HMJr: Hello. Operator: Yes, sir. HMJr: Go ahead. Operator: I have to get him on. He hung up. HMJr: Hello. Regraded Unclassified - 2 - 30 Senator Walsh: Hello, Mr. Secretary. HMJr: Henry speaking. W: Yes, I'm sorry I've had to delay. I've been downtown. Just got back this moment. HMJr: Right. W: I rushed back 80 8.8 to get here before two o'clock. HMJr: Right. W: I am not prepared to give my consent today, and I'll have to ask you to let that go until next week. I'll just say this to you. In the meantime, I talked to Representative Dies and asked him about the conduct of that Bridges case by Mr. Landis. He said he would publicly state that he was most unfair and showed marked prejudice in favor of Bridges during the whole hearing. I want to look into that more. I'm just telling you what he said. HMJr: Yeah. W: I don't know whether Dies - - I don't know him personally at all, or whether his judgment is worth relying upon at all; but it's apparent - it looks to me as if that issue would be raised. I suggest you let the matter go for a few days until I get back from Massachusetts the first of next week. HMJr: Well, it's very disappointing. W: Yes, well I'm sorry too. I appreciate your position. It's very troublesome to me. It's been a source of very great trouble. HMJr: Yes. Well W: I'll take it up with you as soon 8.8 I come back on Tuesday of next week. HMJr: You'll be back Tuesday. W: Yes. HMJr: Thank you. 31 December 19, 1941 To# The Secretary From: Mordecai Seekiel Subject: Tax Policy and the Budget Measage Yesterday Dr. Hansen of the Federal Reserve Board staff called a meeting to consider tax policy and the coming budget message in relation to inflation prospects. Economists from the Budget Bureau, OPM, and OPA were also present, among others. A review of the existing situation led to agreement thate (1) The price increase had slowed down markedly since September, reflecting increased supplies and a cessation of stocking-up. (2) Future increases in defense employment will be partially offset by priority unexployment, leaving only slight net gain in consumer buying power. (3) Quantities of food, clothing, and services available for domestic consumers can continue to expand throughout our war effort. At the same time, defense expenditures themselves will provide food, clothing, and shelter for - rising proportion of the population. (4) Reduction or elimination of consumers' durables will not divert an equal amount of buying power to food and other perishables (a) because these durables are usually bought on installment credit and with the cessation of their sale the credit will contract, and (b) because durables are bought largely by middle- and upper-income groups which already buy about as much food as they need. These facts led to a conclusion that consumer buying power is not likely to rise very much faster than the quantity of commodities and services available for sale to consumers for quite a period ahead. In view of these facts, it was the general consensus of the group that: (1) Inflationary pressures toward a continuing upward price sovement were less marked now than had seened likely several months ago, and the said A of 3x - Regraded Unclassified 32 6 Positives given to Mr. Bell today in accordance with Mrs. Klotz's instructions. THE WHITE HOUSE WASHINGTON December 19, 1941. MEMORANDUM FOR THE SECRETARY OF THE TREASURY I enclose memorandum from Harold Smith and have asked him to cooperate with you in letting me have a general outline of the tax policy or program for in- clusion in my Budget Message. F. D. R. Regraded Unclassified EXECUTIVE OFFICE OF THE PRESIDENT BUREAU OF THE BUDGET WASHINGTON, D.C. ing FICE OF DIRECTOR December 17, 1941 MEMORANDUM TO THE PRESIDENT: RECEIVED The proposed Indget Message for 1943 has gone through several drafts here in the office. It seems quite clear that the Budget Mossage should be used as a vehicle to set forth a more comprehensive statement of the fiscal situation and of fiscal policy than has ever been done before. The Budget picture is affected by price control, priorities and allocations, credit control, ec well as the obvious expenditure and revenue aspects. In view of a possible deficit of 38 billion dollars for 1943, based on present revenue measures, I feel that an in- tegrated financial program should be incorporated in the !ludget Message. I believe that it will give the country a feeling of confidence that - such a program is being formulated for adoption. Tre have already drafted the liessage tentatively to include what ne believe to be the general outline of the Treasury tax program. If you agree that there is advantage in B. rather comprehensive statement of the fiscal situation, I will be glad to try to iron out the text with the Treasury in advance of presenta- tion to you, in order to conserve your time. Regraded Unclas 35 December 19, 1941 4:45 p.m. HMJr: Hello. Operator: Harold Smith. HMJr: Hello, Harold Smith: Hello. HMJr: Henry Morgenthau. :- Yeeh. HVJr: I've juet gotten this note from the President in regard to his message, and he spoke to me about it this morning. 8: Yeah. 9MJr: Also, he enclosed your note to him. :: I Just BAW it right this minute, myself. 4MJr: Pardon? 01 This ie the first time - I see I have a copy of it here. I hadn't seen it until this minute. HMJr: Yes. Well, any time that you want to sit down with our people, they're available. St. Yeah. HMJr: I'm available. St. well, I think that we'll have to make some - we've got a tentative draft of a Budget message HMJr: Yes. 9; and my general feeling 18 that the Budget message ought to be more comprehensive then it's been in the past because of this particular situation. You remember what I said in the memorandum to him- HMJr: Yes. Regraded Unclassified - 2 - 36 S: And that was the point I had in mind, and we're running against time on it; and let me see where the draft stands and then I'll get in touch with you or shall I get in touch with Bell HMJr: Either one of us. S: and see what the next move - I think possibly you and I ought to sit down and talk about it a little. HMJr: I think you and I should. S: Yeah. HMJr: But if there's going to be anything in there about taxes, why I want to be sure it' S: Yeah. HMJr: in agreement with what we here in the Treasury feel. S: Yes. Yes. HMJr: And 80 any time you're ready, if you'll just give me a little notice I'd like to sit down S: Yeah, I'll do that. HMJr: I'd like to sit down with you myself. S: Yeah. Well, I'd like to talk to you about it. Now, let me remind you - maybe you don't need to be reminded - about that speech in New York. Have you got it all written? HMJr: No. Now, let's see, what night 18 that? S: That's Sunday night, as I recall; I think that's about the twenty-eighth of December. HMJr: Yes. No, but we've made a start on it. S: Good. Good. The radio time, I understand, is fixed up. - 3 - 37 HMJr: That's right. S: Yeah. HMJr: Now, there'll be some people from the Treasury that would like to go. 9: Yeah. HMJr: Do you suppose there could be 8 Treasury table? S: Why, I would think 80, yes. HMJr: What? S: Well, I would think so. Now, I don't know the arrangement of the hall. HMJr: Well, who takes care of S: It's not a dinner meeting, you know. HMJr: Oh, I thought it was a dinner meeting. 8: No, no. HMJr: Oh. S: It's a big assembly of the two organizations. HMJr: Oh. S: Yeah. HMJr: Well S: Do you recall the radio time, whether it's HMJr: I think it's eight-thirty. S: Yeah. Well, that's what I was thinking. HMJr: Well, if anybody at the Treasury wants to go, how will they get in? S: Oh, easy enough. There are no limitations. HMJr: Well, I mean, how - do they have to have tickets or what? Regraded Unclassified 38 - 4 - S: I don't think so. HMJr: I see. 8: One of the groups, I don't think, 1s even registering people. HMJr: I see. S: No, this is pretty much of an open meeting. HMJr: Oh. S: But I'll check into that and get the arrange- ments to somebody over - over to your secretary 80 they can take care of it. HMJr: Right. And if you - now, on this thing, I'm ready any time if you'll just give me a little notice. S: Yeah. Well, what I was thinking of, of course, we're running into the Christmas and these other responsibilities. HMJr: Well, if your draft 18 ready on the fiscal part and the tax part, why we're ready to dis- cuss it. 8: Yeah. Fine. All right, I'll get in touch with you. HMJr: Thank you. S: Good-bye. 39 December 19, 1941 4:55 p.m. RE DEFENSE SAVINGS BONDS Present: Mrs. Klotz Mr. Bell Mr. Graves Mr. Broughton Mr. Haas Mr. Kilby Mr. Hall H.M.Jr: Well, I see we are still selling them. This last day's is the biggest, isn't it? Graves: The best day was really Monday, looking at the E Bond column. Eighteen million E Bonds Monday, as I recall it, and thirteen million yesterday. H.M.Jr: But the total is -- Haas: The total is the biggest yesterday. H.M.Jr: It doesn't give the total. Yes, it is all right. Now, how many did you produce? Hall: We turned out one hundred twenty thousand already and they were delivered today. H.M.Jr: Now, have you got`a sheet for me like you gave me yesterday? Hall: Mr. Broughton submitted that this morning. Broughton: You have got that report, haven't you? That is it. Here is what the Bureau plans for the next three days. 40 - 2 - H.M.Jr: Well, what did they do? Ilall: We did that today. H.M.Jr: Well, how many have you sent out? Broughton: I haven't got the figures, but it is about two hundred and fifty thousand in round numbers, two hundred fifty thousand pieces in round numbers. H.W.Jr: How can you do that? Broughton: Well, we shift in our stock, you see. H.M.Jr: Well, you have only got nine thousand -- Broughton: That is the -- H.M.Jr: But how many of the one hundred twenty thousand is twenty-five dollars? Hall: All twenty-five's. H.M.Jr: A hundred and twenty thousand? Broughton: Yes, sir. H.M.Jr: Then you shifted. Hall: No, that figure shows all twenty-fives. It comes under that column, you see. H.M.Jr: Oh, I thought you said you didn't have the plates. Hall: No, I didn't say that. H.M.Jr: I understood you didn't have the plates. Hall: No, I never said anything about not having plates. We have got plenty of plates. Regraded Unclassified 41 - 3 - Bell: Mr. Secretary, he is on a production basis today of how many? Hall: Five hundred fifty thousand bonds are being plate burned by the day. H.ll.Jr: What does that mean? Hall: That means they are being actually printed. The finishing operations is where we will be having the bottlenecks. S.M.Jr: I understood you said you had only so many master plates. Now, you used that twenty-five dollar plates - I mean, you couldn't increase them because you were limited in the number of plates that you had. We were talking about going up to four hundred thousand, Hell: No, I don't recall saying -- H.M.Jr: I wouldn't know what a master plate was. Hall: Well, we don't print with a master plate. I don't know how that came into the conversation. H.M.Jr: You said you made twenty-five dollar plates. Hall: I think I know what you are referring to now. We have master plates in the bath, depositing plates, and we are taking them out in one day rather than allowing them to deposit for two days, cutting down the time. H.M.Jr: Well, I won't argue with you. I got the impression you were limited -- Hall: Our plates are in excellent shape, Mr. Secretary. We are in excellent shape on plates. H.M.Jr: But these you are going to concentrate on that? Regraded Unclassified 42 - 4 - Hall: There are hundreds now being called for, so we will have to get twenty-five, fifty and one hundreds. H.M.Jr: Let me ask you, George, if-they - just take your pencil. How much is a hundred and fifty times twenty-five dollars. Bell: A hundred and fifty what, thousand? H.M.Jr: A hundred and fifty thousand times twenty-five dollars. You have got to take off a quarter. Then you have got to deduct a quarter. Haas: Thirty-seven fifty. H.M.Jr: Thirty-seven fifty what? Haas: Well, you have got thousands up here, have you? H.M.Jr: A hundred and fifty thousand at eighteen-seventy- five. Bell: Three million seven hundred fifty thousand dollars. Graves: Now take a quarter off, George. Haas: One quarter of that amount? Graves: Yes, because that is face value. Bell: You want the cash value? H.M.Jr: And then if you do fifty thousand -- Haas: It is about two, six. H.M.Jr: Then fifty thousand, fifty dollars. That is two and a half million, isn't it? And you take a quarter off that and it makes it two million, roughly. So how much is that - I am getting at it -- - 5 - 43 Haas: About five, now. H.M.Jr: You are producing about five million dollars worth of bonds a day and you are selling twenty-five million. Graves: No - well, that is correct, but the point is that the production in the high denominations isn't in that calculation. Bell: That is all bonds, you are selling twenty- five million. H.M.Jr: But Harold, he has got down here on Friday he produced a hundred and twenty thousand twenty-five dollar bonds. Saturday he is going to produce a hundred and fifty and fifty. The next time a hundred and seventy-five and seventy-five. I was trying to get the monetary value of that. Graves: And relate it to this actual da ily receipt. Hall: There are two other denominations, Mr. Secretary, of which they have stock in the banks. Graves: Sixty percent of our dollar volume, Mr. Morgenthau, comes or has been coming in thousand and five hundred dollar bonds. Here is 8. table showing the percentage of dollar volume by denominations in twenty-five and fifty in relation to the total sales of the E Bond. You see, the twenty-five dollar bond is only ten percent. H.M.Jr: Well, Harold, how many complaints are you getting from people that haven't been getting them? Graves: Well, we get our complaints pretty well channelized through the Post Office Department Regraded Unclassified 44 - 6 - here and through the Federal Reserve Banks, and I guess all of them are complaining. Dan will know that better than I because he contacted them, the twelve banks, the other day. Bell: No, Kilby did, but he said that they all thought that the situation was pretty well in hand, and they were satisfied, as I understand it, when he talked to all of them. Kilby: That is right. Broughton: Two days ago the Post Office called up and their urgent requirements were three hundred thousand twenty-fives and sixty thousand twenty-fives. A lot of the requisitions are in hand and the Federal gets us on the wire, on the telephone, when they are out, and it is all twenty-fives and fifty's at the moment. H.M.Jr: Who gave the order to Hall to stop printing? Did you? Bell: There was no order given. Hall: Mr. Secretary, let me explain. Broughton: Never heard of it. Hall: There must have been a misinterpretation of what I said. H.M.Jr: There is no misinterpretation. If you want some witnesses I can bring in Kuhn and Buffington. Hall: Well, I wish they would come in because -- H.M.Jr: No, my word -- Hall: I would like to relate what I said. This is the point I was making. I made the point that Regraded Unclassified - 7 . 45 we were misled on the production program. We hadn't any idea of what was ahead of us. We had an order for five million bonds to be delivered before Christmas, for the Christmas rush. That order was well in hand in the early part of December. As a matter of fact, I related the same thing in these talks that I made before the four groups. The first part of September we completed that order on the first operation, wound it up. There were five or six operations that followed. Before we took the plates off the press, we called up either Spencer Thompson or Mr. Broughton - someone in his office, Spencer Thompson, I guess, who is handling the matter for you (Broughton) and asked him whether another order was coming through to keep the presses going, so we wouldn't have to take the plates off. He said, "No, there is nothing in the making." So we took the plates off and put other work - presses on the first operation. Bell: Up to that time the requisitions hadn't begun to flow in. Hall: No, there was no sign of any -- H.M.Jr: But you stopped printing them. Hall: On the first operation. It didn't hurt our program. I am explaining how it misled us. H.M.Jr: But if you stopped on the first operation you stopped printing bonds. Hall: No, the first operation runs about four or five times as fast as the other operation, so it is a matter of catching up. H.M.Jr: You didn't say anything about the first 46 - B - operation. You said you had stopped printing. You simply said that you had been told to complete five million bonds and you told me sometime after the first of December you did it. You filled the orders you got and you were told to get that many and so you stopped. Hall: I am sorry that you misunderstood me, Mr. Secretary. I meant the first operation -- H.M.Jr: Well, you never mentioned the word "first operation." I never heard it before. Hall: ...because following the first operation is the most important printing operation. H.M.Jr: Well, you didn't - you most likely thought I knew what the first operation was, but you left the impression with me that the orders were to get out five million b onds and you got those out and then you stopped. Hall: Well, I couldn't make that - if I made that statement I didn't know what I was talking about, because there are so many operations - printing operations that follow that operation. The plate printing operation was next. Bell: Then there was a requisition put in on the third. It went astray, however, in the Printing Division. H.M.Jr: That is the impression I had and that is 47 - 9 - why I told you to go to four hundred thousand & day and buy enough machinery 80 you could go to eight hundred thousand. I told you to send a telegram out. Hall: I did send a telegram out. Bell: But he is on a production basis today of five hundred fifty thousand in bonds 8 day. H.M.Jr: I can't help it. I got the impression from him that he stopped. He didn't say anything more about first operations - I said, "Can you go up to eight hundred thousand now?" He said, "I can't make any more twenty-five dollar plates because I haven't got enough master plates. Bell: Mr. Secretary, all these orders in here, these requisitions, don't mean that they are out of bonds. It means that they are sending them in ahead of time. Now, some of them are out of bonds. Regraded Unclassified 48 - 10 - H.M.Jr: Now, Dan, this is a meeting for what? So that we don't get caught in this same posi- tion again, see. Bell: That is right, I agree with that. H.M.Jr: That is the whole purpose. I am not trying to - I am not creating an alibi for myself because if Hall is criticized, who comes to his defense? I do, publicly, but I don't want - I don't care whether you have got ten operations or five operations. We ought to have enough stuff on hand and that is where somebody, I think, fell down, and I don't care what anybody says. In this room, somebody fell down. We should have had enough stock on hand for three months. Hall: We have. We have three months' stock in the banks. H.M.Jr: Now, Hall, I am going to begin to get irri- tated, because you told me you only were told to have enough for two months. Now, you are telling me an entirely different story here than you told me in my room on the train. Don't drive me, because I have got-- Hall: Mr. Secretary-- H.M.Jr: Look, these men who work for me every day never try to trip me up on my memory. They know my memory. Now, there is something wrong here and this comes under Bell, and I want - I mean, don't - on these things, the men that work with me every day, they know my memory. I have got & lot of weak points, but one of the things isn't B. conversation that I had two nights ago. Now, Bell, please build this thing up, will you, so that each denomination - in the first Regraded Unclassified - 11 - 49 place, the stuff so it can cure. Bell: Now let me explain to you & little what position we are in. H.M.Jr: There should be three months' stock in. Bell: We get the best estimates we can on the re- quirements, and we get that from Mr. Graves' section, Gene Sloan, who gives the best esti- mate he can on what we need for a year. Now, that has been changed two or three times since we put in our estimate last spring. At the present time we are on an eighteen million dollar bond program for the year. H.M.Jr: Eighteen-- Bell: Eighteen million pieces. Sixteen million of those are twenty-five dollar pieces - Series E, I should say, Series E Bonds. Now, Harold tellsus-- H.V.Jr: You see, I don't know pieces. If you talk to me in terms of billions of dollars-- Bell: Well, you can't because they are different denominations. H.M.Jr: Well, give me B. percentage of the thing. I mean, talk to me - if you are going to sell five billion or ten billion - I mean, trans- late it. Here are your percentages. Bell: Well, it is et little difficult to translate it as I go along. Graves: I think the fact is that what I told Dan is not to be found there because we are expecting a complete shift. Regraded Unclassified 50 - 12 - H.M.Jr: Let's put it this way, Dan. What is the best guess for the first six months? How many billions of dollars of bonds are we going to sell from January to July l? Bell: Harold says that we are going to sell - the goal is now to sell four hundred million dollars a month. Graves: At least, E Bonds. Bell: Now, Mr. Secretary, on the average that is fifty million pieces a year. H.M.Jr: Now, may I make it - instead of four, will you make it five hundred million? I am raising it. Broughton: Five hundred million? Graves: Yes. Bell: We have got to have some more money, immediately. H.M.Jr: All right, then, something will come out of me. Let's make it five hundred million. Now, how many-- Graves: We will give the distribution by denominations in pieces. Bell: That is right, yes, that is what we have got here. H.M.Jr: But I would say the way the thing is going now that is low. Bell: Well, I am sure in & week - in five days we will have the full situation clear. H.M.Jr: That is low. 51 - 13 - Broughton: Well, do you think it would be safe to assume dollars. an average denomination of & hundred H.M.Jr: Now, I am no good at that. Broughton: You are not? H.M.Jr: I am no good at that. Graves: We can give that distribution. H.M.Jr: But I certainly would do this. I am going to put down, until they tell me I am crazy, and then if we get too many, that is all right, see. I am going to give you a figure of seven hundred fifty million dollars. Bell: On E Bonds alone? Graves: E Bonds? H.M.Jr: Yes, sir. Bell: We can build up the stock. Graves: On that basis? Bell: Yes. H.M.Jr: Now, I want seven hundred fifty million. Broughton: A month? H.M.Jr: A month, and when you have enough on hand for three months' supply, then, Hall, come around and see Papa, and in writing I will tell you to slow down. Hall: It will be in writing, you can make up your mind to that. H.M.Jr: In writing, see, in writing. Then you and I Regraded Unclassified 52 - 14 - won't have any misunderstandings. Hall: I am sorry about it. H.M.Jr: That is all right. You go on another trip with me anyway. Hall: I enjoyed that. H.M.Jr: You are talking technical printing language and I am talking dollars, but I would aim for seven hundred fifty million dollar E Bonds and cut your cloth to suit that, and then after you have got three months' supply on hand, then you can begin to slow down. Will you do that, Dan? Broughton: Yes, sir. Bell: It is done. We will get the money later. Graves: Don't you think we had better talk & little to the Secretary about money or do you want to do that later? Klotz: They are talking together about it. I love that. You are not supposed to be listening to that Mr. Secretary. H.M.Jr: I know. Bell: We have got to go get money, and we might as well make up our minds to get it now. I think that is right. Graves: Get it quick. H.M.Jr: That is what I - I don't know now many pieces that is. Hall: I just made an inquiry. How many pieces? Yes, sir. 53 - 15 - H.M.Jr: I may be crazy but-- Broughton: No. H.M.Jr: Old Lloyd George, he asked his whole general staff to give him estimates. The story is an old one. And then he said, "The amount of ammunition they need," he said, "I multiply it by four," and he gave it to them during the World War and then they were short. He just multiplied it by four and then they were short. I am saying seven hundred fifty until we get three months supply. Broughton: Right. H.M.Jr: And the stuff ought to cure anyway. Gosh, when I came in here they told me a dollar bill had to cure six months before you could use it. Broughton: That is our old bond. Bell: That is a little different. Graves: You can do that. Haas: What? Bell: You see, this is & new process we have got out here. We are really in a better position because of this new program than we otherwise would be. Kilby: We have got three million more bonds than we otherwise would have had. Hall: You have got to match the numbers up with the bond. That is what slows us up. Bell: And it has to be checked in Loans and Currency 54 - 16 - before it is shipped out. H.M.Jr: All right, it was a good meeting. Good night. Hall: Good night. Kilby: Good night, sir. (Mr. Broughton, Mr. Kilby, and Mr. Hall left the conference.) Haas: We have had several different plans, and I think the most satisfactory procedure is to get it direct from the corporations, the statistics you want. Here would be the information you get from each corporation which is using the plan. H.M.Jr: Total number of employees, amount of payroll, number of employees pledged, amount of aggre- gate, amount of bonds purchased by employees on the payroll. Have any of you gentlemen seen this? Graves: Yes, I have seen it. H.M.Jr: Do you approve of it? Graves: Yes. H.M.Jr: Do you approve of it? Bell: George just told me about it, and I have the general idea. It sounded all right. I don't think you could put that on the agency system. Haas: The agency does not have-- Graves: This is a short cut. Regraded Unclassified 55 - 17 - Bell: That is right. Graves: This is more direct to the employers. Haas: And then, Mr. Secretary, the question of - I don't think we could get this unless we use your signature addressing the corporations. If that is agreeable to you, I could - I would go over the draft of a letter with Kuhn and with Harold Graves and so on. H.M.Jr: Well, look, one, two, three, anything the three of you agree to suits me, as long as I get it. Haas: The other thing was your particular thing. You wanted weekly - I am inclinded to think it is impractical except monthly. H.M.Jr: O.K. Haas: O.K., all right, fine. Thank you very much. Regraded Unclassified 56 TO: Secretary Morgenthau DATE December 19, 1941. FROM: George Buffington Walt Disney agrees to produce and deliver on or before February 15, 1942, 700 to 800 feet of film in technicolor with 8. tentative title "The New Spirit" at a cost not to exceed $40,000. The Walt Disney production will consist of one negative and one print. The production cost will include only out of pocket expense and does not include anything for Mr. Disney's personal services. Mr. Disney 1e particularly anxious to produce a picture that will be a credit to his name and will make every effort to keep the cost below $40,000. In order to cover the key motion picture theatres as promptly 8.8 possible, Mr. Disney suggests that we will need 1,000 extra printe. The regular cost of producing this number would be $40,000 in addition to Mr. Disney's charges, making 8. total cost of $80,000. Mr. Dieney believes he can reduce the cost of prints somewhat. He pointe out also that with very little added expense he believes this picture can later be adapted for Defense Savinge Bond purposes. Regraded Unclassified 57 LIITED STATES SAVINGS BONDS Commarative Statement of Sales During First Sixteen Business Days of December, November and October, 1941 (October 1-18, November 1-21, December 1-18) On Basis of Issue Price (Amounts in thousands of dollars) : : Amount of Increase : Percentage of Increase Sales : : or Decrease (-) : or Decrease (-) Item : : : : December : November : December : November : December : November : October : over : over : over : over : : : : November : October : November : October Series E - Post Offices $ 44,197 $ 27,551 $ 25,006 $16,646 $ 2,545 60.4% 10.2% Series E - Banks 84,391 50,003 48,107 34,388 1,896 68.8 3.9 Series 3 - Total 128,588 77.555 73,113 51,033 4,442 65.8 6.1 Series Fn - Banks 13,856 13,007 13,804 849 - 797 6.5 - 5.8 Series G - Banks 81,166 77.025 75,024 4,141 2,001 5.4 2.7 Total $223,610 $167,587 $161,942 $56,023 $ 5.645 33.4% 3.5% Office of the Secretary of the Treasury, Division of Research and Statistics. December 19, 1941. Source: All figures are deposite with the Treasurer of the United States on account of proceeds of sales of United States savings bonds. Note: Figures have been rounded to nearest thousand and will not necessarily add to totals. Regraded Unclassified 58 UNITED STATES SAVINGS BONDS CONFIL Daily Sales - December 1941 On Basis of Issue Price (In thousands of dollars) Post Office Bond Sales Bank Bond Sales All Bond Sales Date Series E Series E Series F Series G Total Series E Series F Series G Total December 1941 1 $ 2,976 $ 3,904 $ 1,333 $ 7,220 $ 12,458 $ 6,880 $ 1,333 s 7,220 $ 15,434 2 1,229 2,592 623 5.750 8,964 3,821 623 5.750 10,193 3 1,510 2,734 870 5,289 8,893 4,244 870 5,289 10,403 4 2,411 4,036 726 7,530 12,292 6,447 726 7.530 14,703 5 2,015 4,805 1,152 12,357 18,314 6,820 1,152 12,357 20,329 6 1,001 2,293 656 2,776 5.725 3,294 656 2.776 6,726 8 3,282 4,764 1,011 3,810 9.585 8,046 1,011 3,810 12,866 9 1,828 3,877 601 4,996 9.475 5,706 601 4,996 11,304 10 1,651 3.566 491 2,612 6,668 5,217 491 2,612 8,320 11 1,909 4.763 719 3.423 8,905 6,672 719 3,423 10,814 12 2,773 5,012 658 3.768 9.437 7.785 658 3.768 12,211 13 2,767 5,030 584 2,120 7.734 7.798 584 2,120 10,501 15 7,185 11,679 1,022 4,462 17,162 15,864 1,022 4,462 24,347 16 2,113 3,956 893 1,901 6,750 6,069 693 1,901 8,863 17 4,164 9.750 1,180 6,327 17,257 13,914 1,180 6,327 21,421 18 5,382 11,630 1,337 6,826 19,793 17,012 1,337 6,826 25,175 Total $ 44,197 $ 84,391 $ 13,856 $ 81,166 $179,413 $128,588 $ 13,856 $ 81,166 $223,610 Office of the Secretary of the Treasury, Division of Research and Statistics. December 19, 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 Unclassified 59 25, U. S.SAVINGS BONDS, SERIES E, TYPE A STOCK ACCOUNT OF LOANS AND CURRENCY VAULT Report for December 19, 1941 Total $25 $50 $100 $500 $1,000 Pieces On hand c.o.b. Dec. 18 9,653 9,722 102,126 45,149 128,181 294,831 Received from Bureau Dec. 19 120,000 120,000 ..... Total 129,653 9,722 102,126 45,149 128,181 414,831 Shipments 123,640 1,460 59.955 22,167 23,211 230.433 On hand c.o.b. Dec. 19 6,013 8,262 42,171 22,982 104,970 184,398 Estimated deliveries to be received from Bureau of Engraving and Printing: Saturday, Dec. 20 150,000 50,000 200,000 Sunday, Dec. 21 .... 175,000 75.000 250,000 Monday, Dec. 22 .... 150,000 75,000 25,000 250,000 Regraded Unclassified U. S. SAVINGS BONDS, SERIES 1, TYPE & 60 REQUISITION ACCOUNT OF ISSUING AGENTS Report of December 19, 1941 $25 $50 $100 $500 $1,000 Total Pisces Due on requisitions c.o.b. Dec. 18 Federal Reserve Banks 324,040 254,060 204,655 45,037 45,061 872.853 P. 0. Department 706,000 305,000 275,000 30,000 30,000 1,346,000 Others Total 1,030,040 559,060 479,655 75,037 75,061 2,218,853 Requisitions received Dec. 19 Federal Reserve Banks 110,600 68,400 66,300 31,130 35,150 311,580 P. 0. Department Others 800 200 100 8 1,120 Total 111,400 68,600 66,400 31,150 35,150 312,700 Totals - Federal Reserve Banks 434,640 322,460 270,955 76,167 80,211 1,184,433 P. o. Department 706,000 305,000 275,000 30,000 30,000 1,346,000 Others 800 200 100 20 1,120 Total 1,141,440 627,660 546,055 106,187 110,211 2,531,553 Shipments Dec. 19 Federal Reserve Banks. 63,640 1,460 39.955 17,167 18,211 140,433 P. O. Department 60,000 20,000 5,000 5,000 90,000 Others Total 123,640 1,460 59,955 22,167 23,211 230,433 Due on requisitions c.o.b. Dec. 19 Federal Reserve Banks 371,000 321,000 231,000 59,000 62,000 1,044,000 P. 0. Department 646,000 305,000 255,000 25,000 25,000 1,256,000 Others 800 200 100 20 1,120 Total 1,017,500 626,200 486,100 84,020 87,000 2,301,120 Regraded Unclas 61 U. S. SAVINGS BONDS, SERIES E, TYPE A REQUISITION ACCOUNT OF THE FEDERAL RESERVE BANK OF BOSTON Report of December 19, 1941 $25 $100 $1,000 Total $50 $500 Pieces Due on requisitions c.o.b. Dec. 18 22,000 .... 10,000 .... .... 32,000 Requisitions received Dec. 19 .... .... .... .... .... Total 22,000 .... 10,000 .... 32,000 Shipments Dec. 19 5,000 .... 5,000 .... 10,000 Due on requisitions c.o.b. Dec. 19 17,000 .... 5,000 .... .... 22,000 Regraded Uncla 62 U. S. SAVINGS BONDS, SERIES E, TYPE A REQUISITION ACCOUNT OF THE FEDERAL RESERVE BANK OF NEW YORK Report of December 19, 1941 $25 $50 $100 $500 $1,000 Total Pieces Due on requisitions c.o.b. Dec. 18 110,000 72,000 115,000 35,000 40,000 372,000 Requisitions received Dec. 19 .... .... .... .... .... Total 110,000 72,000 115,000 35,000 40,000 372,000 Shipments Dec. 19 15,000 .... 10,000 5,000 10,000 40,000 due on requisitions c.o.b. Dec. 19 95,000 72,000 105,000 30,000 30,000 332,000 Regraded Unclass 63 U. S. SAVINGS BONDS, SERIES E, TYPE A REQUISITION ACCOUNT OF THE FEDERAL RESERVE BANK OF PHILADELPHIA Report of December 19, 1941 $25 $50 $100 $500 $1,000 Total Pieces Due on requisitions c.o.b. Dec. 18 3,000 10,000 .... .... .... 13,000 Requisitions received Dec. 19 25,000 25,000 25,000 15,000 25,000 115,000 Total 28,000 35,000 25,000 15,000 25,000 128,000 Shipments Dec. 19 .... .... .... .... Due on requisitions c.o.b. Dec. 19..... 28,000 35,000 25,000 15,000 25,000 128,000 Regraded Unclassi 64 U. S. SAVINGS BONDS, SERIES E, TYPE A REQUISITION ACCOUNT OF THE FEDERAL RESERVE BANK OF Cleveland Report of December 19, 1941 $25 $50 $100 $500 $1,000 Total Pieces Due on requisitions c.o.b. Dec. 18 35,000 20,000 .... .... 55,000 Requisitions received Dec. 19 50,000 25,000 25,000 10,000 5,000 115,000 Total 85,000 45,000 25,000 10,000 5,000 170,000 Shipments Dec. 19 5,000 .... 5,000 ae on requisitions c.o.b. Dec. 19 50,000 45,000 25,000 10,000 5,000 165,000 Regraded Unclassifie 65 U. 8, SAVINGS BONDS, SHRIES 1, TIPS A REQUISITION ACCOUNT OF THE , TV BANK OF RICHMOND Report of December 19. 1941 Total $25 $50 $100 $500 $1,000 Pieces he ⑉ requisitions c.o.b. Bee. 18 23,040 9,060 655 37 61 32,853 Requisitions received Des. 19 600 400 300 130 150 1,900 Total 23,640 9,460 955 167 all 34,433 Shipped Doe. 19 7,640 1,460 955 167 211 10,433 es requisitions c.o.b. Dec. 19 16,000 5,000 ... ... ... 24,000 66 U. 8. SAVINGS BONDS, SERIES 3, TIPE A REQUISITION ACCOUNT OF THE FEDERAL RESERVE BANK OF ATLANTA Report of December 19, 1941 Total $25 $50 $100 $500 $1,000 Pisces Due on requisitions c.o.b. Dec. 18..... 8,000 10,000 5,000 ... ... 23,000 Requisitions received Dec. 19 Total 8,000 10,000 5,000 ... ... 23,000 Shipped Dec. 19 2.000 2,000 on requisitions c.o.b. Dec. 19..... 6,000 10,000 5,000 ... ... 21,000 Regraded Uncla 67 U. 8. SAVINGS BONDS, SERIES B. TYPE A REQUISITION ACCOUNT OF THE FEDERAL RESERVE BANK OF ATTANTA, NEW ORLEANS BRANCH Report of December 19. 1941 $25 $50 $100 $500 $1,000 Total Pieces Due on requisitions c.o.b. Dec. 18 13,000 5,000 ... ... ... 18,000 Requisitions received Dec. 19 ... ... ... ... ... Total 13,000 5,000 ... ... ... 18,000 Shipped Dec. 19 2,000 ... ... 2,000 las on requisitions c.o.b. Dec. 19 11,000 5,000 ... ... 16,000 Regraded Unclass 68 U. S. SAVINGS BONDS, SERIES 3, TYPE A REQUISITION ACCOUNT OF THE FEDERAL RESERVE BANK OF CHICAGO Report of Becember 19, 1941 #25 $50 $100 $500 $1,000 Total Pieces Due 62 requisitions c.o.b. Dec. 18..... 10,000 15,000 ... 5,000 ... 30,000 Requisitions received Dec. 19 ... ... ... ... Total 10,000 15,000 ... 5,000 ... 30,000 Shipped Dec. 19 5,000 ... ... 5,000 ... 10,000 02 requisitions c.o.b. Dec. 19 5,000 15,000 ... ... ... 20,000 Regraded Unclassi 69 U.S. SAVINGS BONDS, SERIES 3. TIPE & ENQUISITION ACCOUNT OF THER your beloing DATE OF ST. LOUIS Report of December 19, 1941 $25 $50 $100 $500 $1,000 Total Pieces Due as requisitions c.a.b. Dec. 18..... 9,000 13,000 4,000 ... ... 26,000 Requisitions reseived Dec. 19 15,000 8,000 8,000 4,000 3,000 38,000 Total 24,000 21,000 12,000 4,000 3,000 64,000 Shipments Dec. 19 2,000 ... 4,000 2,000 3,000 11,000 on requisitions c.o.b. Des. 19..... 22,000 21,000 8,000 2,000 ... 53,000 Regraded Unclass 70 U. 8. SAVINGS BONDS, SERIES 1. TIPE A REQUISITION ACCOUNT OF THE Federal RESERVE RAME OF MEMITAPOLIS Report of December 19, 1941 $25 $50 $100 $500 $1,000 Total Pieces Due OR requisitions c.o.b. Dec. 18..... 15,000 15,000 10,000 ... ... 40,000 Requisitions received Dec. 19 ... ... ... ... ... ... Total 25,000 15,000 10,000 ... ... 40,000 Shipments Dec. 19 5,000 ... 5,000 ... ... 10,000 as on requisitions c.o.b. Dec. 19 10,000 15,000 5,000 ... ... 30,000 Regraded Uncla 71 U.S. SAVINGS BONDS, SERIES 1. TIPS A ERQUISITION ACCOUNT OF M RAWK OF KANSAS CITY Report of December 19. 1941 $25 $50 $1.00 $500 $1,000 Total Pieces Due on requisitions c.o.b. Des. 18..... 7,000 10,000 5,000 ... ... Requisitions received Des. 19 20,000 10,000 8,000 2,000 2,000 42,000 Total. 27,000 20,000 13,000 2,000 2,000 Ch,coo Shipments Des, 19 2,000 ... you ... ... 2,000 a requisitions c.o.b. Des. 19.... 25,000 20,000 13,000 2,000 2,000 62,000 72 U. 8. SAVINGS BONDS, SERIES 1, TIPS A REQUISITION ACCOUNT OF TXA maing BANK OF DALLAS Report of December 19, 1941 $25 $50 $100 $500 $1,000 Total Pieces Due on requisitions c.o.b. Dec. 18..... 29,000 25,000 15,000 ... ... 69,000 Requisitions received Dec. 19 ... ... ... ... ... ... Total 29,000 25,000 15,000 ... ... 69,000 Shipments Dec. 19 5,000 ... 5,000 ... ... 10,000 20 on requisitions c.o.b. Dec. 19 24,000 25,000 10,000 ... ... 59,000 Regraded Unclassit 73 U. S. SAVINGS BONDS, SERIES 1, TYPE A REQUISITION ACCOUNT OF FEDERAL RESERVE BANK OF SAN FRANCISCO Report of December 19, 1941 Total $25 $50 $100 $500 $1,000 Pieces Due on requisitions e.e.b. Dec. 18 40,000 50,000 40,000 5,000 5,000 140,000 Requisitiens received Dec. 19 Total 40,000 50,000 40,000 5,000 5,000 140,000 Shipped December 19 8,000 10,000 5,000 5,000 28,000 Due on requisitions c.o.b. Dec. 19 ...... 32,000 50,000 30,000 ..... 112,000 Regraded Uncl 74 Henry m. Cabinet Loc 19th 1941 74 12/19/41 Given to HM, Jr at Cabinet today by Secretary Wickard. THE WHITE HOUSE WASHINGTON Henry you weren't here just now when I announeed that we are selling government wheat since last Monday, Futures only Hucluate a fraction of ant a day now. Claude W. Regraded Unclassified 75 December 19, 1941 Dear Claude: Dan Bell has told me of the stato- ment made by Sen. Nye at yesterday's hear- ing before Sen. Byrd. I understand that Sen. Nye indicated I had made the state- ment that larger savings could be made in the Department of Agriculture. In order to keep the record straight, I would like you to know it was my sugges- tion that you be invited to appear before the Committee before any action was taken on your appropriations, and that you be asked to show where specific cuts could be made on a basis of saving $500,000,000 or more. Yours sincerely, Henry. Honorable Claude R. Wickard, The Secretary of Agriculture, Washington, D.C. By messinger 11:40A.M.M.- Regraded Unclassified 76 THE SECRETARY OF THE TREASURY WASHINGTON December 19, 1941 Dan Bell has trea me indicated of the statement at made by Sen Trye That I the had statement Dear Claude: made that largr coungs could be I have just read the minutes of made - yesterday's hearing before Sen. Byrd. I notice that Sen. Nye tried to give The Dept you the impression that it was his 44 Ford suggestion that you appear before the 2 agre. Committee and explain how much money you could save. In order to keep the record straight, I would like you to know it was my suggestion that you be invited to appear before the Committee and not Sen. Nye's. Yours sincerely, A of W / & before say a action was Taken on your Honorable Claude R. Wickard, Secretary of Agriculture, affrabriations Washington, D.C. and that your he assed To show Could he made on * have whome cuts) Regraded 77 MEMORANDUM 20: Secretary Morgenthau December 19, 1941. FROM: Mr. Sullivan TLS For your Information re State Taxation of Defense Activities. The War and Navy Departments are proposing that legislation be enacted relieving defense activities from State sales taxation. This would in effect reverse the result of the Supreme Court's decision in the King & Boozer et al. case, which subjected such defense activities to State sales taxation (with the exception of the situation in which the State sales tax was on the purchaser and the United States was the purchaser). The Treasury Department has reported to the Bureau of the Budget that it 18 opposed to such legislation on the ground that it would deprive the States of needed revenues and interfere with our position respecting tax exempt State securities. In order to eliminate administrative problems that may arise in this field, because of the difficulty of ascertaining whether or not a State sales tax is applicable, some legislation may be necessary to clarify the situation. You will recall that after the above decision was rendered the President asked you to study the type of legislation which would be desirable, It is my suggestion that this could be done by having the Federal Government consent to State sales taxation in all cases, regardless of the legal incidence of the tax and regard- less of whether the United States or the defense contractor is the Regraded Unclassified 78 - 2 - purchaser of the commodities in question. Since at present defense activities are subject to State sales taxation in all cases except where the tax 1s on the purchaser and the United States is the pur- chaser, the additional burden would not be significant. By thus making all transactions taxable, the legal questions that now arise as to the scope of State sales taxes would be eliminated. The policy question, therefore, is whether to clarify the situation by subjecting defense activities to State sales taxation as is suggested above or by withdrawing such activities from State taxation as the War and Navy Departments recommend. After a conference in the Burean of the Budget yesterday, it was decided that the Bureau Director would submit the above question of policy to the President. Regraded Unclassified Treasury Department 79 Division of Monetary Research Date December 20, 19 41 To: Secretary Morgenthau H. D. White From: British joint taxation of husband and wife as possible deterrent to employment of married women. Reports from Mr. Casaday reveal Parliamentary and press criticism that joint taxation deters married women from working outside the home, alleging that the additional tax plus extra expenses (due to the wife's absence from home) may exceed the wife's contribution to the family income. In reply to this criticism, the Chan- cellor of the Exchequer says the tax paid by 8 married couple is often less under joint taxation than it would be under sparate assessment, due to the exemption NI nine-tenths of the wife's earned income up to stipulated limits. Some sections at least of the finan- cial press are not satisfied with the Chancellor's reply, and urge him to "take fresh advice on this really urgent question". Copies to: Mr. Bell Mr. Foley Mr. Sullivan Mr. Paul Regraded Unclassified TREASURY DEPARTMENT 80 INTER OFFICE COMMUNICATION DATE December 19,1941 TO Secretary Morgenthau H. D. White PROM subject: British Joint taxation of husband and wife 28 a possible deterrent to the employment of married women. Information received from Mr. Casaday reveals that allegations have been made in Parliament and the press, and by Inland Revenue experts, that joint taxation 1s a merious obstacle to the Government's plan to attract women into industry. These critics hold that in many cases the present tax penalizes married women who work outside the home, alleging that the additional income tax olus extra expenses (due to the wife's absence from home) may exceed the wife's contribution to the family income. In reply to this criticism, the Chancellor of the Ex- chequer states that, in many cases, the tax burden ie less under joint taxation than it would be under separate 888898- ment, In support of this statement, he points out that, under the present law, a married couple 1s allowed an exemp- tion of $560, if the husband alone receives an income. But if the wife 18 working this exemption may be increased to a taximum of 8740 (by nine-tenths of the wife's earned income, but not more than $180. $560 4 $150 - $740). On the other hand, if each were assessed 8.6 a single person with 8320 exemption, their combined exemption would amount to only $640. Some sections at least of the financial press are not satisfied with the Chancellor's reply. An editorial in the Financial News states that the Tressury has always refused to treat married women's incomes separately on the grounde that the Exchequer cannot afford the financial sacrifice, rejects the Chancellor's statement that joint assessment is not a deterrent to production, and urges the Chancellor to *take fresh advice on this really urgent question". Regraded Unclassified 81 THE WHITE HOUSE WASHINGTON December 19, 1941 My dear Mr. Secretary: By virtue of the authority vested in - by the pro- visions of the appropriation entitled "Emergency Fund for the President" contained in the Independent Offices Appropriation Act, 1942, approved April 5, 1941, I hereby allocate from the fund of $100,000,000 provided by the said appropriation as follows: To Amount The Director of Censorship $100,000 to be expended by the Director of Censorship, or such officer or employee as he may designate for the purpose, for carrying out the functions and duties prescribed in the Executive order establishing the Office of Censorship and prescribing its functions and duties, issued by the President December 19, 1941. The funds hereby allocated shall be available for all necessary expenses of the Director of Censorship in carrying out the above-described activities, including not to exceed $20,000 for the temporary employment of persons or organizations by contract or otherwise without regard to section 3709 of the Revised Statues, or the classification laws; travel expenses, including actual transportation expenses, and not to exceed $10 per diem in lieu of subsistence and other expenses of persons serving as advisers while away from their homes without other compensation from the United States; printing and binding; the purchase of one automobile, law books, books of reference, and newspapers and periodicals. Very sincerely yours, The Honorable, The Secretary of the Treasury. Regraded Unclassified 82 THE ATTORNEY GENERAL WASHINGTON December 19, 1941 diary My dear Mr. Secretary: I an inclosing you herewith a copy of an Executive order signed today by the President, with reference to the Office of Censorship. I am also sending a copy to the other members of the Censorship Policy Board. Sincerely trincisional yours, The Honorable, The Secretary of the Treasury, Washington, D. C. 83 EXECUTIVE ORDER ESTABLISHING THE OFFICE OF CENSORSHIP AND PRESCRIB- ING ITS FUNCTIONS AND DUTIES By virtue of the authority vested in ne by the Constitution and the statutes of the United States, and particularly by section 303, Title III of the act of December 18, 1941, Public Law 354, 77th Congress, 1st Session, and deeming that the public safety demands it, I hereby order as follows: 1, There 18 hereby established the Office of Censorship, at the head of which shall be a Director of Censorship. The Director of Censorship shall cause to be censored, in his absolute discretion, communications by mail, cable, radio, or other means of trans. atssion passing between the United States and any foreign country or which may be carried by any vessel or other means of transportation touching at any port, place, or Territory of the United States and bound to or from any foreign country, in accordance with such rules me regulations as the Fresident shall from time to time prescribe. The establishment of rules and regulations in addition to the provisions of this order shall not be a condition to the exercise of the powers herein granted or the censorship by this order directed. The scope of this order shall include all foreign countries except such as may hereafter be ex- pressly excluded by regulation. 2, There is hereby created a Censorship Polloy Bourd, which shall consist of the Vice-President of the United States, the Secretary of the Treasury, the Secretary of War, the Attorney General, the Postmaster General, the Secretary of the Navy, the Director of the Office of Government Reports, and the Director of the Office of Pacts and Figures. The Postmaster General shall act as Chairman of the Board. The Censcrship Policy Board shall advise the Director of Censorship with respect to policy and the coordination and integra- tion of the consorship herein directed. 3. The Director of Censorship shall establish a Censorship Operating Board, which unall consist of representatives of such departments and agencies of the Government as the Director shall specify. Each representative shall be designated by the head of the depart- bent or agency which he represents, The Censorship Operating Board shall, under the super- vision of the Director, perform such duties with respect to operations as the Director shall determine. 4. The Director of Censorship is authorized to take all such measures as may be necessary or expedient to administer the powers hereby conferred, and, in addition to the utilization of existing personnel of any department or agency available therefor, to employ, or authorize the employment of. such additional personnel as he may deem requisite. 5, As used in this order the term "United States" shall be construed to include the Territories and possessions of the United States, including the Philippine Islands. The WHITE HOUSE, December 19, 1942 Regraded Unclassified 84 DEC 19 1941 emorandum for the President Attached are draft cables to the High Commissioner of the Philippines and the Covernor of Hawaii providing A. procedure for the destruction by burning there, and the reissuence hers, of checks, currency and public and private securities. The destruction would take place in the presence of a Destruction Committee of United States Government officials In the event the military situation makes such action necessary. The procedure has been worked out jointly by the Jureau of Insular Affairs, the Department of the Interior, and the Treasury Department, and has the approval of Secretary Ickes and myself. If you approve, the necessary instructions to set up the procedure will be sent to the respective High Commissioner and the Governor today. (Signed) 8. Corgenthau, so. Approved Delivered by Secret Jemes 2:45 Attachments. EHF:mp 12/19/41 Regraded Unclassified 85 DRAFT OF CABLE TO BE TRANSMITTED TO THE GOVERNOR OF HAWAII Re my radio of December 19 . President directs that you make adequate arrangements in cooporation with the military authorities, if necessary, for complete destruction by burning of all securities, cheeks and surrency deposited if, in your judgment, the military situation 00 requires and that you or your designated agent immediately thereupon certify to the Treasury Department all securities, checks and currency which are listed on affidavite previously filed with the Treasury Department that have been ⑉ destroyed. For this purpose you should designate a group of United States Government officials to act as a special destruction committee and such committee, if pessible, should also certify to the destruction. FEmrd - 12/18/41. Regraded Unclassified 86 DRAFT or CABLE TO ME TRANSMITTED to THE GOVERNOR OF MAWALI In order to proteet the interests of owners or holders of United States Government securities, checks and currency in Hawaii the Treasury Department has approved the following procedure for deposit and safekeeping of such securities, checks and currendy during the national energency declared by the President on May 27, 1941. This procedure applies to al. United States Government securities, cheeks and currency, even though blocked countries of nationale thereof have an interest therein or such securities have stamped thereon or otherwise attached ther to any tax or other stamp or notarial or similar seal of any blooked country. This procedure is to be administered by you and such members of your staff or agents :- you may designate. A. The owner or holder of United States Government securities, sheeks or currency to be deposited should prepare an effidavit in six counterparts setting forths de Name, address and citizenship of affient and of all persons having any interest in securities, checks or currency listed and nature of such interests. 2. List of securities by title, loan, interest rate, denomination, serial number, form of registration if registered, number and dates of coupons of coupon securities, and a description of any tax or other stamp or noturial or similar real of a blocked country which may appear on such securities. 3. Date and source of acquisition of coupon securities by present owner or holder. 4. In the case of currency, - 11st of such currancy by kinds and Regraded Unclassified 87 demominations, and, in the care of Federal Become motoo, the name Regraded Unclassified of the bank of issue. 5. In the case of Government cheeks, that is Government checks drawn on the Treasurer of the United States or other authorised depositery, a list of such checks by dates, amounts, name of payee, name of drawer, symbol number (If any), and names of indorsers (if any). 6. À request that the securition, checks or currency be accepted for safekeep- ing during the national emergency dellared by the President on Day 27, 1941. 7. A request that, in the event of destruction of such securities, ebeeks or curreney, substitute securities, checks or currency or check in payment be issued by the Treasury Department and be held for the account of the depositer or delivered to a designated bank, corporation or individual in the continental United States. All of the foregoing ifformation 1a susential. B. The affient should execute sach counterpart of the affidavit, which shall be numbered 1 to 6, under eath in the presence of # designated officer or agent. The list of securities, checks and currency shall be checked against the Items deposited and the designated officer or agent shall certify under official seal on each counterpart na to the deposit and verification. Counterparts numbered 1 through 3 shall be forwarded by separate mouns to "Treasury Do- partment, Rashington, D.C."; counterpart numbered 4 shall be retained by the designated officer of agents counterpart numbered 5 shall be delivered to the depositor; counterpart numbered 6 shall be placed with the securities, checks and currency in a sealed envelope which shall be properly identified. C. In the event of destruction of securities, cheeks or currency so deposited, If the ovidence is satisfactory and acceptable to the secretary of the Treasury, and subject to all applicable law, substitute securities, checks or surrency or 88 -3- check in payment will be issued by the Treasury Department and be held for the account of the depositor of delivered to the designated bank, corporation or individual in the continental United States. You my also accept for safekesping, under a procedure similar to that outlined above, securities other than those of the United States Government, provided it is understood by the depositor that neither you nor the United States.Covernment assume any responsibility. The President approves this procedure and, unless there are strong reasons which in your spendon could make this action inadvisable, desires that you put it into effect immediately and that you make arrangements, with the silitary authorities, if necessary, for the safekeeping of such securities and currency at such place as you may dees advisable. Regraded Unclassified 89 The Secretary of the Interior Seal) Washington December 18, 1941. Dear llenry: The proposed cablegram to the High Commissioner of the Philippine Islands and the Governor of Hawaii regarding the safekeeping of securities and currency during the national emergency, which has been drafted jointly by members of your staff and mine, meets with my approval. If you also approve the draft, I will appreciate it if you will discuss it with the President when you see him tomorrow morning, as I do not expect to have an early appointment with him. Sincerely yours, /s/ HAROLD L. ICKES Secretary of the Interior Hon. Henry Morgenthau, Jr., Secretary of the Treasury. Regraded Unclassified 90 THE SECRETARY OF THE TREASURY WASHINGTON DEC 19 NM Memorandum for the President Attached are draft cables to the High Commissioner of the Philippines and the Governor of Hawaii providing a procedure for the destruction by burning there, and the reissuance here, of checks, currency and public and private securities. The destruction would take place in the presence of a Destruction Committee of United States Government officials in the event the military situation makes such action necessary. The procedure has been worked out jointly by the Bureau of Insular Affairs, the Department of the Interior, and the Treasury Department, and has the approval of Secretary Ickes and myself. If you approve, the necessary instructions to set up the procedure will be sent to the respective High Commissioner and the Governor today. Approved Firshten Massiveh Attachments. Regraded Unclassified 31 TransIation of Radiogram in Code Sent December 19, 1941. deb ALTERY NITA. Secember 19 - So. 719. In order to protect the interests of owners or holders of United States Avvernment securities, checks end currency in Philippines the Treasury De- pertnedt he e negroved the following procedure for deposit and mafekeeping such securities. checks and currency during the national emergency de- plared by the President on May 27, 1941. This procedure annlies to all lited States Government securities, checks and currency, even though blocked countries or nationals thereof have an interest therein or such securities LIFE stemped thereon or otherwise attached thereto any tax or other stamp or anterial or similar seal of any blocked country. This procedure is to be administered by you end such members of your staff or agents as you may declarate. he The owner or holder of United States Government securities, checks or currency to be deposited should prepare an affidavit in six counterparts setting forth: 1. Name, address and citizenship of affient and of all persons having any interest in securities, checke or currency listed end nature of such interests. 3. List of securities by title, loan, interest rate, denomination, serial number, form of registration if registered, number end dates of coupons of coupon securities, end , description of any tex or other stemp or notarial or similar seal of a blocked country which may avyeer on such securities. 3. Date and source of acquisition of coupon securities by present owner or holder. it. In the case of currency, B list of such currency by kinds and denominations, end, in the case of Federal Reserve notes, the name of the bank of issue. 5- In the case of Government checks, that is, Government checks drewn on the Treasurer of the United States or other authorized decositary. a list of such checks by dates, emounts, name of payee, name of drawer, symbol number (If any), and names of indorsers (if eny). E. A request that the securities, checks or currency be accepted for safekeeping during the national emergency declared by the President on May 27. 1941. 7. A request that, in the event of destruction of such securities, checks or currency, substitute securities. checks, or DIFFERENCY or check in payment be issued by the Treasury Department and be held for the account of the depositor or delivered to n. designated bank, corporation or individual in the continental United States. Regraded Unclassified 92 - 2 - All of the foregoing information 1s mosential. B. The affiant should execute each counterpart of the affidavit, which shall be numbered 1 to 6, under oath in the presence of a designated officer or agent. The liet of securities, checks and currency shall be checked against the items deposited and the designated officer or agent shall certify under official seal on each counterpart as to the deposit and verification. Counter- parts numbered 1 through 3 shall be forwarded by separate means to "Treasury Department, Weshington, D. C."; counterpart numbered 4 shall be retained by the designated officer or agent; counter- part numbered 5 shall be delivered to the depositor: counterpart numbered 6 shell be placed with the securities, checke and cur- rency in el sealed envelope which shell be properly identified. C. In the event of destruction of securities, checks or currency so deposited, if the evidence is setisfactory and acceptable to the Secretary of the Treasury, and subject to all applicable law, substitute securities, checke or currency or check in payment will be issued by the Treasury Department and be held for the account of the depositor or delivered to the designated bank, corporation or individual in the continental United States. You may also accept for safekeeping, under a procedure similar to that outlined above, securities other then those of the United States Government, provided it ie understood by the depositor that neither you nor the United States Government assume any responsibility. The President approves this procedure and, unless there are strong reasons which in your opinion would make this action in- advisable, desires that you put it into effect immediately and that you meice arrangements with the militery authorities for the sufekeeping of such securities and currency at Corregidor. Harold L. Ickes. SWOPE. the copy 1-3-43 Regraded Unclassified 0 93 P I Translation of Radiogram in Code Sent December 19, 1941. deb. SATRE, MANILA. December 19 - No. 720. 3e my radio of December 19, President directs that you make adequate arrangements in cooperation with military authorities for complete destruction by burning of all securities, checks and currency deposited if, in your judgment. the military situation so requires and that you or your designated agent 1m- mediately thereupon certify to the Treasury Department all securities, checks and currency which are listed on affidavits previously filed with the Treasury Department that have been so destroyed. For this purpose you should designate a group of United States Government officials to act as a special destruction committee and such committee, if possible. should also certify to the destruction. Harold L. Ickes. SWOPE. Copy:1c:1/5/42 Regraded Unclassified 94 OFFICE OF PRODUCTION MANAGEMENT SOCIAL SECURITY BUILDING WASHINGTON, D.C. OFFICE OF DOUGLAS C, MACKEACHIE DIRECTOR - PURCHASES December 19, 1941 Monorable Henry Morgenthau Secretary of the Treasury weahington, D. C. Desr b. Lorgenthau: You mentioned quinine the other night and I am happy to call to your attention the attached report which I believe indicates that we are reasonably well supplied with this important product. Very truly yours, Douglas C. MacKeachie attachment Regraded Unclassified 95 C 0 F Y Room 2615, Social Security Bldg. December 16, 1941 EMPRAYDUM TO: Mr. Douglas C. mackeachie Director of Purchases Room 5027, Social Security Bldg. Birth William M. Bristol, Jr. SUBJECT: Quinine in response to your telephone call of today, i am pleased to give you the following information: By Executive Order, the Treasury Department established a stockpile of 7,200,000 ounces of quine. This is frozen and cannot be removed except by Government order. Collaborating with the Defense Supplies Corporation, there has been authorized an additional stockpile of 2 million ounces, of which 500,000 ounces are afloat. In the meantime, there have been additional quantities coming in regularly, which have been permitted to flow through the usual trade channels. The estimated annual consumption amounts to from 3 to 32 million ounces. Therefore, we believe we have more than three years' available supply in the country or afloat at the present time. It is my intention to bring this matter up before the Technical Council at its next meeting, to determine whether restrictive orders should to issuei. /s/ WILLIA L. BRISTOL, Jr. Assistant Director of Purchases In charge of Health Supplies Branch Regraded Unclassified 96 December 19, 1941. The Honorable, The Secretary of War. Dear Mr. Secretary: I have your letter of December 17, 1941, relating to the requested closing agreement covering the Pan- American Airways matter. I have asked Mr. John L. Sullivan, Assistant Secretary of the Treasury, to represent me in resolving this problem. Mr. Sullivan will telephone Mr. Amberg and arrange for a conference at which I hope this matter can be settled. Sincerely yours, (Signed) n. Mergenthan, in Secretary of the Treasury. CLK:gmb 12/18/41 By Messanger Sturges pm 6:40 Regraded Unclassified 76. war DEPARTMENT WASHINGTON CONFIDENTIAL 10 580,82 (11-25-41)MC-D DEC 17 1941 the Honorable, The Secretary of the Treasury. Dear lbr. Secretary: As a result of the outbreak of hostilities in- welving the United States, the necessity for expediting the development of air fields in the Caribbean and South American areas as mentioned in your letter of November 25, 1941 has as- sumed new importance. The interests of National Defense de- mand the earliest possible execution of the proposed supplement to the War Department - Pan American Airports Corporation con- tract of November 2, 1940. I regret that the existing state of War places such demands upon us both as to preclude the possibility of our conferring together with respect to the extension to the modi- fied contract of the tax indemnification features of the original contract. As an alternative method of responding to the request in the closing paragraph of your letter of November 25, 1941, I - designating Mr. Julius H. Amberg, Special Assistant to the Secretary of War, as my authorised representative to present to your authorized representative my views on this subject. If this arrangement meets with your approval, I would suggest that your representative communicate with Mr. Amberg and arrange a meeting at the earliest possible date. Sincerely yours, Henry < Shinson Secretary of War. CONFIDENTIAL Regraded Unclassified 98 December 19, 1941. MEMORANDUM TO: Secretary Morgenthau FROM: Mr. Gaston Mrs. Betsy Cushing Roosevelt and her two children live at 520 East 86th Street, New York, in Yorkville. This building and two connecting buildings, operated as a unit by the Astor estate, are staffed largely by men of German origin. Some are sus- pected Nazis. Secret Service has re- ported observations about them to F.B.I. and Chief Wilson has suggested to Captain James Roosevelt that it would be better if the family moved to another locality. I have the re- port of the agents if you would care to see it. Regraded Unclassified 99 MEMORANDUM FOR THE SECRETARY. December 19, 1941. Mail Report Reading the mail as it has come in this week, it has proved difficult not to put aside most of it for quotations on the abstract. The whole tenor has changed from that of sharp criticism to the heartiest support. The great majority of the letters speak of Defense sonds and Stamps. Report after report tells of increased sales, and the only complaints are those of the mechanics of handling the bonds; insufficient force at Post Office windows: insufficient supply of bonds on hand at banks, etc. The suggestion which appears most often is that the name be changed from Defense Bonds to Victory Bonds. The next most frequent term is, "Remember Pearl Harbor". There are all sorts of suggestions for stamps, buttons, windshield stickers, with the "Remember Pearl Harbor" alogan, to be sold at anywhere from 8. cent to fifty-cents a piece. A number of firms and individuals have asked for permission to issue such souvenirs, the proceeds to De turned over to the Government. Cash contributions have been coming in every mail. Some "sample" letters transmitting money are included, but here again, it is hard to pick and choose. Amounts vary from 10d to $1,000. There are a great many Bonds and Defense Stamps sent in to be cancelled. A tabulation of gifts received the first four days of this week will be found at the end of the report. Abusive mail has practically ceased, although there have been one or two nasty anonymous letters. Tax mail has also practically ceased to exist, al- Inough the few letters that do come in, contain pledges Regraded Unclassified 100 - 2 - Memorandum for the Secretary. December 19, 1941. of willingness to pay or suggestions as to raising money. The economy note continues to run through these letters, even though it is mentioned less often and less urgently. get orbush Holiday Note: The soldiers quartered on the fourth floor have hopefully hung B. large spray of mistletoe over the door entering their quarters. Come up and see them sometime! Regraded Unclassified 101 1 Comments from Letters OFFERING SUPPORT in Present Emergency David Higuers, Barre, Vermont. In the heart of this city there is 8. Spanish Club. The members of this Club for the Dast five years have been active against our enemy, Hitler. We have been giving money to different organizations. Now more than ever we want to destroy Hitler and his servants by giving direct aid to our Government. I would like to know if the Treasury Department would accept money as & gift. If not, which national organization will accept money. Virgil H. Frazier, President, Aga Aviation Corp., Willow Grove, Pa. In line with the timely and worthy sug- gestion of Drew and Allen we discussed that proposal in our fifteen minute meeting of the entire personnel. Each and every person agreed to give New Year's Day to the Government. We will all work that day, and the checks for that day's wages will be endorsed by the workers and sent to the Treasury of the United States. The Company will donete its profit for that day and send this to the Treasury. Every person here wants to help. We are making er- rangements to purchase Defense Bonds and Stamps. The workers themselves are arranging to put aside 8 certain amount of their overtime to purchase Bonds and Stemps. 0. A. Crain, Fort Worth, Texas. I was retired from actual duty 8.5 a railroad fireman on account of having lost my eyesight and hearing: have since (by an operation) ne- gained my sight, but not my hearing. I was placed on the Railroad Pension Rolls for the amount of $25 per month, to receive that amount for life. This, and $2 per month that I receive from my Masonic Lodge is my entire income. collar per month from my pension check, and this letter will Like the widow who gave her mite, I went you to deduct one be authority for the Railroad Retirement Board to deduct, and pay over to you, one dollar per month from my pension check, for the entire duration; and please understand that I want to ive this amount to my Country - don't want any stamps or nything. Regraded Unclassified 102 2 Offers of Support Accompanied by ACTUAL CONTRIBUTIONS Felix Brunner, N.Y.C. As 6. Czechoslovak and as an immigrant who is happy to have found shelter in this country for his family, and for himself, I was deeply impressed by Hitler's declaration of war against the United States. Feeling that en all out effort is necessary to crush Hitlerism, I beg to accept my enclosed check per $100 as a modest and whole- hearted contribution to America's great task of arming against all her enemies. Aline Rather, Principal, San Antonio Independent School District, San Antonio, Texas. I am enclosing 8. check in the amount of $50 which is B. contribution from the children and the P.T.A. of the John J. Pershing Elementary School to our Government to aid the National Defense Fund. We are sending this with great pleasure, and in honor of General John J. Pershing, for whom our school was named. Dr. Anson Hoyt, Pasadena, Calif., sends his check for $125, the difference between the issue price and the maturity value of 8. $500 Defense Bond, which he has just purchased, and surgests that individuals be urged to buy such bonds at the Issue price, and in addition, donate to the U. S. Government the difference between the purchase price and the maturity value. This would amount to a ten-year loan to the Govern- ment, without interest, which would help in the present crisis, es well as reduce future interest payments. :rank L. Frazin, Chicago, Ill. # + In memory of my dad, who immigrated from Russia some 60 years ago, I Am enclosing n. cashier's check in the amount of $250, payable to "WINGS FOR AMERICA - U. S. Treasury Department". * * * Good luck pass on this great and noble heritage to our children and to you, Mr. Secretary. "LET'S KEEP 'EM FLYING", so we may their children's children. John K. Collings, President, The Turbine Engineering Corp., Hoboken, N. J. Please accept this check in the amount of be $2,000, It made occurred which sometime to is the made in writer, the in future the that national to in the addition, wer many interest of an us appeal the who and emergency, may might effort. be 50 to refund to the Government, during "Series interest disposed checks which accrue to the holders from the G" bonds which they may hold. Regraded Unclassified 103 - 8 - Hon. John H. Folger, House of Representatives, Washington, D. C. I have just finished my day's work. I calculate my day's pay is $33.34 and herewith enclose check for that amount - for defense - B. voluntary contribution. I do remember this injunction: "Do noble things; not dream them all day long; and thus make life and that grand forever one sweet song. With great respect - John H. Folger. Anton J. Klemm, Camden, N. J. I have just made the final payment on a $25 Defense Savings Bond at the RCA Victor plant in Camden, where I work as a tool maker on radio equipment for the National Defense. Last Monday all of the workers at RCA Victor assembled in Johnson Park, op- posite the plant, and there they stood with their hats off and their hands raised and pledged allegiance to the Flag. It was B. wonderful meeting. There were more than 12, 000 of us. # # * Mr. Morgenthau, I am & naturalized citizen of our great country. I came here after I was old enough to understand the freedoms and liberties we enjoy in America that people in many foreign countries do not have. I want you to accept the return of my Defense Bond 50 that it can be sold again and the money used for our national defense. Paul Sounnaire, Pittsburgh, Pa. (Letter addressed to the President) Enclose check for $1,000 for Secretary's entire disposition to the benefit of the nation. French American have been waiting to do such gift - since gangster Hitler and his companions have invaded his mother country. Please accept sincere consideration and full esteem to U. S. May the French Ambassador (Gaston Henri Haye) at Washington will take notice. Elizabeth Archer, Norristown, Pa. You have protected me for seventy years. At long last I em glad to contribute for defense. Enclosed herewith is a check for $10.00. Brice Bowie, Clerk of the Circuit Court of Prince George's Co., Md. Enclosed find check for $50 toward the purchase of a bomber to help to set the "Rising Sun". # 5 * The Clerk and the clerks in the office, following an old custom, usually exchange the gifts decided that WG would derive much national more pleasure small at Christmas time, and after hearing out broadcast, this small contribution to the cause-of defense. of We wish no publicity 8.8 a result of this action, to our but idea of making this small donation follow. Government do think would the be an excellent plan for others to Regraded Unclassified 104 4 G. B. Williams, Geneva Daily Times, Geneva, N.Y. A couple of nights ago we were discussing Defense Savings Stamps and I asked our young son, aged 5, if he wanted to invest in some. He did not, but wanted to give some money to the Government "for keeps". (The printed letter from Master Samuel Williams, accompanied by 15¢, was evidently 8. real one, and not a fake as some of the letters, supposedly written by children, are.) Mr. and Mrs. F. D. Snell, Lansdowne, Pa. Instead of our usual $2 Christmas tree, we offer these Defense Stamps for cancellation. We hope this small donation will help "Beat those Japs". Henry J. Abrahams, Omaha, Neb. Enclosed to you please find Treasury Check #42047 for $50 recently received from you in payment of interest on U. S. Savings Bonds. In view of the extraordinary emergency now existing and in the realization that the best efforts and unified action by each one of us is of vital necessity in prosecuting this war to complete victory, I wish to return this check to you. I ask only that its proceeds be used for our defense, and am pleased to make this contribution. God Bless America. Regraded Unclassified 105 - 5 - DISAGREEABLE Comments on the Present Emergency Philip E. Hamilton, Attorney at Law, Beaver Falls, Pa. (Sends copy of letter addressed to Senator Barkley.) This day I took the money saved for my daughter's education in college and placed it in the hands of the U. S. Treasury, and I stand ready to make any sacrifice necessary, but, for God's sake, out out the damnable politics of this Administration and its infernal logrolling. We are sick and tired of a Perkins, a Hillman, a Lewis, a Phillips, & Murray and the contemptible pack of radicals who have been converting this Government in- to a hopeless mess. If we had 8. man in the President's chair who had the guts to be an American to the bone, we would not tolerate these conditions for a minute. Procrastination, evasion and politics are taking a terrible toll. Think not that you and other Administration officials will escape the final accounting if we go down to defeat, due to incompetence or negligence. This is an all out war and it will take an all out effort to win, whether or not you men in Washington believe it. A Government which hesitates to control in such B. grave crisis is already well on the way to its downfall, and I never believed that I would live to see the day when such things could be. Take those appropriation bills and out out the useless and wasteful appropriations for non-defense essentials. Etc., etc. Louis H. Kohn, Chicago, Ill. You are on the right track when you suggested that the Government reduce its expense, not to pay out any money unless necessary. *** I can do no better than enclose an extract from the Chicago Sun written by Phil S. Hanna, and unless the Government will follow business prin- ciples, I believe you will be inclined to resign, and I think you should, because the responsibility is placed on you. If our President attempts to do everything himself, our War policy will not be a success. # No man can play politics in every one of his actions and forget, if he wants to be suo- cessful, that he must be an executive and not keep his nose 80 close to the grindstone that he overlooks 80 much that he must be responsible for. The impression is that no one has before action is taken. That resulted in disaster to our fleet any authority, and that everything must be referred to him in Hawaii, and will result in disaster to union labor as he is handling it. 106 - 5 - FAVORABLE Comments on Bonds Hugo H. Doyen (Formerly Hugo Tomenotti), West Los Angeles, Calif. I can assure you that every penny that I can spare will go in Defense Bonds. # # The enclosed in- significant cheque for the sum of $100 brings my best wishes for the future of the Country. # # " Once in Europe, I was an Attorney at Law. To keep up with my social life I was forced to spend B. great deal of money. Now here, I am just 8. humble servant in & private femily. I do not need to spend money. I have made an investigation of my own among the servant class. I can say that every servant in this Country should be satisfied if the taxation on the income would start for them at $500 for single persons and at $1,000 for married couples, instead of at $800 and $1,500 as it is now. A. S. Amerman, The Dime Savings Institution, Newark, N.J. As President of the New Jersey Savings Banks Association, I am pleased to advise you that the mutual savings banks of this State, representing over six hundred thousand depositors with deposits of over Three Hundred Million Dollars, pledge their full support and cooperation in our war effort. It is my information that the sale of Defense Bonds and Stemps by our member banks during the last four days has been three times over that of any previous like period. This is at some sacrifice on the part of the banks, 8.3 the labor involved is tremendous and about forty per cent of the sales represent withdrawals from deposits. However, we will "keep them flying" and are determined to 368 this thing through. Sam Ongar, Marietta, Ohio. I am in receipt of your letter of the 19th instant for which I wish to thank you. After receipt of your letter I purchased this morning two hundred dollars more in U. S. Defense Bonds, which I hope will help win the war against Adolph Hitler. At the same time, with this letter, I apply for & position with the Government as a tailor to be sent any place that I may be of help to win this war - without pay. I am 8. reputable tailor all through. Regraded Unclassified 107 7 - C. N. Waldron, Secretary, Graduate Council, Union College, Schenectady, N. Y. I have just read your splendid cir- cular letter to the purchasers of war saving bonds. My whole family will buy what they can of these securities. As soon as I know what my taxes will be, I shall put the balance, if there is any, into these same bonds. It is 8 satisfaction to do this, particularly for older people like myself, whose personal services in the behalf of the country are limited. Donald Setele, Cleveland, Ohio. Mother is writing this letter to you from me. I was 3 years old November 20th, and did I enjoy that letter you had written to me personally about buying United States Savings Bonds. John Hoven, Mayor of Three Oaks, Mich. This town beat the United States in the Dewey Cannon contest in 1898. We now challenge the cities and towns of the United States in the per capita sale of Defense Bonds and Stamps. Regraded Unclassified 108 - 8 - UNFAVORABLE Comments on Bonds Alexander Henry Carver, Philadelphia, Pa. (Lawyer). Thank you for your very politic letter courteously acknowledging my purchase of United States Savings Bonds. You urge me to continue buying them periodically. *** I would gladly do so, and 80 would practically all of my friends to whom I have spoken, were we not deterred by the fact that we cannot borrow on the bonds nor can we transfer them by sale, and this makes abso- lutely frozen assets that may well be needed to keep in liquid form. Den V. Richmond, Ewing, Va. I have been Postmaster of Ewing, Va., for more than 27 years. NEVER have I seen B. certain class of people treat the matter of U. S. Bonds SO lightly. 42 * Something should be done about this matter, and immediately. I am in a position to know that those who are able to purchase bonds are not the least bit interested. Harold J. Bowen, Lieut. Comdr., USNR, Charleston, S. C. For the past three years I have been systematically in- vesting in U. S. Defense Bonds. On Oct. 23, 1941, I spplied to the Post Office, Charleston, S.C., for 3-$100 end 1-$50 Defense Bonds. The Postal clerk serving me BC- cepted $262.50 in cash and then told me that she could not then give me the Bonds as they were locked in a safe to which she did not have access, but would mail the Bonds in question to me that same afternoon. To date, I have received no satisfaction from the Postal authorities or from the Treasury Department, to whom this matter was re- ferred. I have 8. cash receipt from the Charleston Post Office to the amount of $262.50. Since I have never had the Bonds in my possession, I feel that it is up to the Postal Department to either return my money, as they refuse to do, or to have the Treasury Dept. cancel the lost Bonds and issue new ones. Being on active duty with the Navy at the present moment, I do not have the time to spend in fruitless appeal to the two Departments involved. I would be very obliged to you if you could attend to this matter for me. onr The delay of two months certainly discourages one in the matter of purchasing Defense Bonds. Regraded Unclassified 9 109 John Doe, N.Y.C. I would like to call your attention to a practice of New York and New Jersey banks which I believe, from discussion with others, is preventing the purchase of Defense Bonds to the fullest extent. I refer to the various charges on checking accounts introduced during 1932 and 1933 to sustain bank divi- dends when loan revenue was low, and continued ever since. * If I draw out $500 to buy B. Defense Bond, the charges for handling my reduced balance will be considerably increased beyond the revenue obtained from the Bond. In other words, I am actually paying to the bank, not only the Bond interest, but more for the privilege of buying 8. Defense Bond. I am perfectly will- ing to go without Bond interest in the interest of general welfare of the country, but I am decidedly not willing to sustain bank dividends in this manner. Dr. Thomas H. Bowne, Jr., Chester, Pa. Please In- vestigate your mailing department. I keep getting three letters or ads every time they are sent out. This is 8. needless cost in time and paper and at 8. time like this, when every penny counts, I feel that "Wilful waste makes woeful want". Harold W. Gould, N.Y.C. May I call to your attention the first paragraph in the enclosed letter bearing your signa- ture, which I and several of my friends criticize on the grounds of poor taste. No one wants to be thanked for doing his duty, particularly when combined with a re- quest for a further demonstration of loyalty. Nor may a mimeographed letter be classified as "personal". Wm. H. Taylor, Yonkers, N. Y. Like thousands of others, I went to my bank Monday morning and arranged 8. purchase of Defense Bonds. We don't propose to let you down. But we have our moments, if not our hours, of dis- couragement. Why should we save, scrimp and sacrifice to buy Bonds if the funds so supplied are often spent with reckless abandon and in some cases, even squandered? Should frugality be reserved exclusively for the private individual? Consider the spectacle of a nation seeking the dimes from little children for Defense Stamps, and at who, to satisfy his whims, is reputed to have flung a cold that very moment tolerating on its payroll 8. labor boss helf million dollars to the winds by ordering rejection of the Currier Company low bid. Regraded Unclassified 110 - 10 - Howard K. Woolverton, Philadelphia, Pa. On Friday evening, December 12th, I tried to purchase 15 Fifty Dollar Defense Bonds. I was told by the Teller of the Philadelphia Saving Fund, 11th and Lehigh Ave. Branch, that they could not give me 15 Fifty Dollar Defense Bonds because it would take an hour or more to write them up. I then suggested that I could come around sometime during the day when they were not so busy, but he still said that I would have to take Bonds of the largest denomination in relation to the amount of money I wished to invest. Charles T. Hathaway, Rocky River, Ohio. I am a boy of 13. I would like to know why the United States does not issue small denomination Defense Savings Bonds, such as $5 or $10 Bonds. These would more easily fit the pocket of boys and girls like me and adults who can't afford the higher denomination Bonds. I know from experience that it is very discouraging to try to save the $18.75 for even 8. $25 Bond and not feel that you must spend it on something else, usually something very trivial, but seemingly important at the time. James W. Batchelor, Durant, Okla. Relief clients and old age pensioners desire to purchase Defense Stamps with savings from relief funds. They fear regulations will force their removal from rolls if they save anything. Sug- gest promulgation of regulations that any Defense Stamps or Bonds purchased with funds saved from relief payments will be disregarded in determining clients' participation in relief funds. Regraded Unclassified 111 - 11 - GENERAL COMMENTS Kingsley K. Lyu, Duke University, Divinity School, Durhem, N. C. I W8.5 informed by the Citizens National Bank, in Durham, N.C., 8. few days ago that my bank account had been blocked under the regulation issued by the Treasury Department on the 8th of this month. # I am neither 8. Japanese national, or a Japanese business man, but 8. Chinese-Korean student now studying here at the Duke University Divinity School where I am 8 senior. I do not think it is the intention of the United States Government to freeze the schooling expenses of the Korean students who are in exile here in this country. No Korean student has ever liked or cooperated with the Japanese imperialistic aggression, Koreans have always been eager to seize even 8. small chance to break the bondage of the Japanese imperialism. *** I wish you would be kind and thoughtful enough to save the Korean students from starvation here in this country by not freezing their schooling funds and expenses. Your kind instruction to the bank in Durham would be greatly ap- preciated. My bank account is not much, but you will thereby save my life and give me 8. chance to finish my study here. At this time, I am re-assuring you of my loyalty to this country. W. W. Housewright, Vice President, The San Benito Bank & Trust Co., San Benito, Texas. One of our customers today withdrew her entire balance of $11,000.00. So far as we can learn, the funds were not needed, and apparently were withdrawn for the purpose of hoarding. In order to try and curtail such withdrawals where we believe the money will be hoarded, we are wondering if you have any sugges- tions to make that would be of benefit to us in refusing to cash such checks. If 80, please write us fully. If there is no way to stop such withdrawals, then maybe you would be interested in this bank furnishing you with the names and amounts of such withdrawals. Regraded Unclassified 12 - 112 J. J. Williams, Pasadena, Calif. I am wondering if the manufacturers of phonograph records could be asked to make, free of charge, thousands of transcriptions of the memorable "War Declaration Message to Congress" delivered by our President. If this could be done, of course with the approval of the President, the records could be sold through the Post Offices of the country. They would be eagerly sought -- one should be in every home, school and college in the entire country, making 8. prize souvenir of the voice of the most popular and grandest man who was ever in the Presidency. There have been several letters from bank officials and banking associations speaking of the newspaper clipping which indicated that the Treasury would "tap the nation's current savings", and thus gave depositors the impression that the Government might impound their savings, either with or without some form of security in exchange. Most of these letters ask for B statement through the press or in the form of 8. letter which may be used to counteract this impression. Among those who reported anxiety on the part of their depositors are members of the American In- dustrial Bankers Association, whose Executive Secretary urged that the matter be clarified. J. F. Connelly, Cashier, The Thurmont Bank, Thurmont, Md. *** There is being circulated B. rumor that the Government will "freeze" bank deposits - or require each depositor to take a percentage of his deposit in Government Bonds. *** Money is beginning to go into hiding. If something is not done to check the rumor, it could easily reach alarming pro- portions and result in increased difficulties for the Govern- ment. 4b # We are inclined to believe recent ill-advised radio and newspaper comments have contributed to the existing fear. C. H. Crandon, Chairman, Finance & Budget Division, Defense Council of Dade County, Fla. Did you know that millions of dollars are now being withdrawn from the banks, and hidden away in secret places, or in safety deposit vaults? Most certainly this has been reported to you. Unless some curb is put on this withdrawal of funds, as above outlined, billions of dollars will find their way into hidden places. Regraded Unclassified 113 SUMMARY OF GIFTS RECEIVED MONDAY, DECEMBER 15TH THROUGH THURSDAY, DECEMBER 18TH In checks $6,393.29 In cash $ 141.25 Bonds to be cancelled $ 850.00 Also 400 shares in the Lincoln Building and Loan, made over to the Secretary. Please note that this includes only mail addressed to the Secretary. It does not include that addressed to the Treasury Department, or to other officials, nor does it include mail sent to the White House. In one envelope from the White House, received this week, there wes a gold wedding ring, and other remittances have been in cash, checks, money orders, etc. Regraded Unclassified TREASURY DEPARTMENT 114 INTER OFFICE COMMUNICATION DATE December 19, 1941 Ferdinand Kuhn, Jr. TO FROM Alan Barth EDITORIAL OPINION ON FOREIGN AFFAIRS: MEETING THE ISSUE Confidence The first feeling of shock and fright engendered by the Japanese attack has disappeared. The press now reflects an attitude of reassurance and determination. Newspaper headlines during the past week have been markedly encouraging in tone. Their tendency has been to underscore minor American triumphs. They have proclaimed that the Japanese navy fled from 8 test of strength against the American Pacific fleet, that the bend of marines on Wake Island is resolutely maintaining its position, that landing attempts have been severely repulsed in the Philippines. Air raid threats to the American continent have not materialized and are no longer so prominently 8 subject of newspaper speculation. The most effective restorant to confidence was the report made by Secretary Knox upon his return from Hawaii. Editorial commentators found in it 8 full and frank account of the war's first blow. They liked the candor of his confession that the Navy was not on the alert. The losses which he detailed were less than had been feared. And, Regraded Unclassified - 2 - 115 while there was some tendency to wonder about the damage undis- closed by the Knox catalogue, the emphasis in news stories and in editorial comment was placed mainly on the heroism of American sailors and officers. The Secretary seems to have succeeded to a very high degree in restoring the confidence of the American public in its first line of defense. Secretary Knox's report succeeded also in abating criticism of the Government's policy on the release of war information. There is still, of course, a good deal of impatience for news on the part of editors. But there now seems to be 8. higher degree of reliance on official releases than existed in the first days of fighting, although foreign sources are still quoted extensively. The appoint- ment of Byron Price to the role of censor was received, in the main, with tentative approval, based on respect for his standing as a newspaperman. It is possible that the current confidence promoted by the press will degenerate into 8. fresh complacency. Despite numerous editorial warnings that the war in the Pacific may be a long and difficult one, there is an undercurrent of anticipation that Japan, having failed in its initial coup, can be quickly broken by blockade and bombing attack. The traditional American contempt for the Japanese is not easily overcome. - 3 - 116 Strategy with attention focussed on the Pacific, the magnitude of the Nazi setback in Russia has been partially eclipsed from the American point of view. Repulse of the invaders at Luzon has taken precedence over the steady German retreat on the long Russian front. The American press is, nevertheless, acutely aware of the import- ance of Russia to the interests of the United States. The pledge of Ambassador Litvinoff that the Soviet Union would negotiate no separate peace with Germany was greeted here with considerable relief. Although 8. number of newspapers feel aggrieved that the Russians have not declared war upon Japan and made Siberian bases available to American air forces, the bulk of the press takes a remarkably tolerant view of the Soviet position. The prevailing attitude is expressed by The New York Herald-Tribune, not usually an apologist for Communism. The pressure exerted by the Red Army on German land and air forces, it points out, "is a mighty service to the common cause. If it demands so much of an already strained Russian economy that the Siberian troops can only stand on the defensive, it may be B. cause for regret, but it is not one for recrimination." Among the more influential newspapers, there is almost unanimous insistence that Lend-Lease aid to Russia, as well as to Britain, be accelerated and increased. The President's latest report on shipments Regraded Unclassified 4 117 of war materiel was received with some disappointment, but without serious criticism. The theme of almost all comment is that our performance as the arsenal of democracy has been woefully inadequate to date and must be greatly improved. There seems to be a wide- spread recognition that American equipment can most usefully be employed at the fighting fronts. A good deal of disagreement prevails 8.8 to the particular fighting front at which American strength can now best be concen- trated. Some journalistic strategists urge that everything we can spare be rushed to the defense of Singapore; others see North Africa or Russia as the essential points to be bolstered. Few editorial voices have been raised, however, to suggest that our armaments should be hoarded for purely defensive purposes at home. Awakening The Bill of Rights celebration on December 15 seems to have fostered, at least in editorial minds, 8. heightened awareness of the genuine issues over which the war is being waged. In a great many editorial comments on this occasion, and particularly in ref- erence to the President's speech, the press gave signs of 8. maturing recognition of the global character of the conflict. The narrow sense of outrage against the Japanese onslaught has given way, in Regraded Unclassified - 5 - 118 part, to 8 broader understanding that it is totalitarianism as 8. whole which must be relentlessly destroyed. But this enlarged grasp of the war's meaning does not conceal certain developing fissures in the domestic scene. Enthusiasm for protecting the Bill of Rights has not prevented sporadic violations of its spirit, sometimes reported in the press, sometimes reflected in the temper of editorials. However closely they may be bound by 8 common desire for victory, management and labor still have 8. dangerous gap between them; the press, representing the viewpoint of the former, demands an ironbound no-strike agreement out of the current conferences, with no apparent recognition that employers, AS well as employes, may be responsible for strikes. Finally, there is an undertone of fear and suspicion in the press -- suspicion that the war may be used to mask 8. continued social revolution under the New Deal, fear that the costs of war may undermine the existing social structure. These divergent interests were temporarily joined by 8. sense of common danger. They seem likely to be welded "for the duration" only by continuing joint participation in directed action under firm leadership. TREASURY DEPARTMENT 119 INTER OFFICE COMMUNICATION DATE December 19, 1941 Ferdinand Kuhn, Jr. TO FROM Joseph Melia EDITORIAL OPINION ON DOMESTIC AFFAIRS: VICTORY IS PARAMOUNT Domestic issues are subordinated by the press to the war. Editorial writers point out that this is total war, 8 battle of production, and victory is jeopardized by anything that hinders the mobilization of our productive facilities at maximum effi- ciency. They call for an end of "pushing as usual" for group interests. And they insist that now it is more than ever essen- tial to solve the "labor problem," either by legislation or by & voluntary agreement between labor and management. Announcement of the estimated cost of the Victory Program was a signal for newspapers to hammer home the need in wartime for effective price controls and plead for non-defense economies. But the press is resigned to an "inevitable" increase in taxes and the national debt. Newspapers throughout the country are wholeheartedly behind the Defense Bond campaign and are actively pushing sales, both as an anti-inflation and an income-raising measure. 120 - 2 - Victory Program Maintaining that the war effort may seriously and perhaps permanently affect our economy, editorial writers throughout the country now assert, almost without any qualification, that victory is worth whatever it may cost. In the words of the Cincinnati Enquirer: "No tax will be too heavy, no control too drastic, if the end is ultimate victory." The press hopes that additional taxes and non-defense economies will defray 8. large part of the war's expense. But it also expects an increase in government borrowing. And many newspapers commit what previously would have been considered editorial heresy in reminding their readers that there is, in the words of the New Yorker, a fate worse than debt. Commenting on the Victory Program, editorial writers were quick to point out that the mere appropriation of money can not bring victory, that dollars are not a. criteria of production. They warned against smugly accepting the quick passage of the Third Supplemental Appropriation Bill as evidence that our war effort is complete. Many newspapers are again marshalling the arguments for having an over-all defense head to cut red tape, wipe out waste, and dovetail civilian and military needs for efficient production. Regraded Unclassified 121 - 3 - Inflation High prices help Hitler and Hirohito, the press points out. It fears that the dangers of inflation are heightened by our entrance into the war. Newspapers throughout the country maintain that effective anti-inflationary measures are now imperative to keep the expense of the war at a minimm and the cost of living from skyrocketing as a consequence of increased government spend- ing and further curtailment in the production of consumer goods. Unless anti-inflationary measures are promptly put into effect, many editorial writers fearfully forecast a rapid decline in national morale. First, the press wants Congress to take immediate action to pass 8. strong price control bill. It hopefully hails the statement by Leon Henderson that the agricultural ceiling should be lowered from 110 to 100 per cent of parity as an indication that perhaps the Senate will also take advantage of the war situa- tion to resist pressure from the farm bloc. But Mr. Henderson is criticized for not going "far enough." The majority of the nation's newspapers still want a provision controlling wages. According to most editorial writers, the next step -- after price legislation -- is to increase taxes as a means of adding to the Government's income and at the same time draining Regraded Unclassified - 4 - 122 off some of the consumer's "surplus" cash. They expect addi- tional taxes, but they want the new tax schedule announced as early as possible 80 that people will be able to budget their expenses. Some newspapers also mention enforced savings and & sales tax as possibilities. The idea of increasing the excess- profits tax is conspicuous only by the way it is comparatively ignored. Along with an increase in taxes, the press calls incessantly for 8. cut in non-defense expenditures. Labor The nation's newspapers seem to be pretty evenly divided over the present need of legislation restricting organized labor. The split is not along liberal and conservative lines. The Chicago Tribune, one of the paperspreviously most critical of labor, for instance, holds no legislation is now necessary and says 8 voluntary agreement between labor and management would be better for national morale and all concerned. No matter what their stand on immediate anti-strike legisla- tion, however, editorial writers almost unanimously agree that strikes for any reason can no longer be "tolerated." Any large- scale strike will be the signal for a demand that legislation be promptly enacted -- in spite of any statements made by labor leaders that organized labor is wholeheartedly behind the war effort and against work stoppages. Regraded Unclassified 123 - 5 - Whether we have anti-strike legislation or not, the press wants the "labor problem settled for the duration" by the establishment of a National War Labor Board along the lines set in World War I. It hopes that the President's conference between labor and management will agree on 8. program to freeze the status quo in organization, adjust wage scales to the seven- day week, and provide for B. rapprochement between the CIO and AFL. Regraded Unclassified TREASURY DEPARTMENT 124 INTER OFFICE COMMUNICATION DATE Secretary Morgenthau TO Mr. White FROM Subject: Exports to Russia, China, Burma, Hong Kong, Japan, France and other blocked countries, 88 reported to the Treasury Department during the week ending December 13, 1941. 1. Exports to Russia Exports to Russia as reported to the Treasury during the week ending December 13, 1941 amounted to more than $12,000,000, the largest total for any single week since July 28. The principal items were landplanes, military tanks and motor trucks. (See Appendix C.) 2. Exports to China, Burma and Hong Kong Exports to Free China were valued at approximately $2,340,000 as compared with $791,000 during the previous week. Cartridges, passenger care, scout cars and automobile parts for replacement were the main items. (See Appendix D.) Exports to Occupied China amounted to nearly $700,000, the largest figure for any single week during the last 3 months. (see Appendix E.) Exports to Burma totalled only $18,000. (See Appendix F.) No exports to Hong Kong were reported during the week under review. 3. Exports to Japan No exports to Japan were reported during the week under review. 4. Exports to France No excorts to France were reported during the week ending December 13, 1941. 5. Exports to other blocked countries Exports to other blocked countries are given in Appendix A. Regraded Unclassified 125 SUMMARY OF UNITED STATES DOMESTIC EXPORTS TO SELECTED COUNTRIES AS REPORTED TO THE TREASURY DEPARTMENT FROM EXPORT DECLARATIONS RECEIVED DURING THE PERIOD INDICATED 1/ July 28 to December 13, 1941 (In thousands of dollars) July 28 to Week ended Week ended Total Nov. 29 December 6 December 13 Domestic Exports $54,497 $ 3,609 $12,040 $70,146 1. S. S. R. 10,523 61 678 11,262 Occupied China Free China 25,201 791 2,337 28,329 1,870 2/ 5/ - 1,870 Japan 6,716 64 18 6,798 Burna 3/ - - 6 France w 6 2 - 2 1 cupied France 1 oh 04 - Free France 1 2,217 Spain 2,216 - 4,619 237 161 5,017 Switzerland Sweden 10,192 188 17 10,397 17 394 French Indochina 353 24 December 17, 1941 Treasury Department, Division of Monetary Research Many of the declarations are received with & lag of several days or more. of Therefore this export compilation does not accurately represent the actual shipment a partibular week. The longer the period covered, the closer will these figures come to Department of Commerce revised figures. 3/ Of this total $1,864 thousand was reported from July 28 to August 23, inclusive, Domestic and shipped exports prior from to freezing August 23 orders. through week ending November 29, amounted to $6,053. 3/ From September 11, 1941 to date - It is presumed that a large percentage of mate- rial listed here, consigned to Burma, is destined for Free China. 1/ Includes both occupied and Free France through week ending October 4, 1941. Occu- pied and Free France separated thereafter. Less than $500. Regraded Unclassified APPENDIX B Exports from the U.S. to China, Burma, Hong Kong, Japan and U.S.S.R. as reported to the Treasury Department, July 28, 1941 - December 13, 1941 (Thousands of Dollare) 1/ Exports to China Total To Japanese To Chinese Exports Exports Exports Exports controlled controlled to to to to ports ports Burma Hong Kong Japan U.S.S.R. July 28 - Aug. 2 937 542 395 654 1,657 4,523 Aug. 4 - Aug. 9 2,794 2,794 - 983 159 551 Aug. 11 - Aug. 16 1,278 969 309 235 42 986 Aug. 18 - Aug. 23 1,352 1,350 2 234 6 2,735 Aug. 25 - Aug. 30 736 735 1 742 - 1,023 Sept. 2 - Sept. 6 897 693 204 634 - 4,280 Sept. OF - Sept.13 3,038 757 2,281 456 - 5,217 Sept.15 - Sept.20 3,978 156 3,822 2/ 389 - 752 Sept.22 - Sept.27 462 352 110 449 810 - 2,333 Sept.29 - Oct. 4 1,305 80 1,225 684 297 - 323 Oct. 6 - Oct. 11 5,864 552 5,312 1,157 1,233 - 6,845 Oct. 13 - Oct. 18 272 267 5 35 584 - 1,924 Oct. 20 - Oct. 25 668 399 269 403 1,243 - 5,623 Oct. 27 - Nov. 1 5,210 438 4,772 58 624 - 4,484 Nov. 3 - Nov. 8 1,836 164 1,672 342 283 5 4,552 Nov. 10 - Nov. 15 3,009 158 2,851 88 303 - 2,677 Nov. 17 - Nov. 22 1,701 473 1,228 1,021 600 - 3,581 Nov. 24 - Nov. 29 3,359 120 3,239 1,364 1,325 - 2,436 Dec. 1 - Dec. 6 852 61 791 64 - - 3,609 Dec. 8 - Dec. 13 3,025 688 2,337 18 - - 12,040 Total 42,573 11,748 30,825 5,683 11,629 1,869 70,494 1/ These figures are in part taken from copies of shipping manifests. 2/ Figures for exports to Free China during these weeks include exports to Rangoon which are presumed to be destined for Free Ohina. 126 3/ It is presumed that a large percentage of exports to Burma are destined for Free China. Treasury Department, Division of Monetary Research December 1 Regraded Unclas 127 APPENDIX e Principal Exports from U.S. to U.S.S.R. as reported to the Treasury Department during the week ending December 13, 1941. (Thousands of Dollars) TOTAL EXPORTS $ 12,040 Principal Items: Landplanes, powered 4,829 Military tanks and parts 1,843 Motor trucks (1 to 11 tons) 1,122 Motor trucks (1) to 21 tons) 790 Aviation gasoline 621 Boots and shoes 268 Explosive shells and projectiles 250 Sole leather 243 Other aircraft engine parts and accessories 232 Hard winter wheat 192 Coated wire of iron or steel 156 Aluminum plates, sheets, bars, strips and rods 143 Barbed wire 136 Motor trucks (under 1 ton) 134 Metallic cartridges 132 Anti-knock compounds 104 Engine lathes 95 Treasury Department, Division of Monetary Research December 18,1941 128 APPENDIX D Principal Exports from U.S. to Free China, as reported to the Treasury Department during the week ending December 13, 1941 (Thousands of Dollars) TOTAL EXPORTS TO FREE CHINA $ 2,337 Principal Items: 606 Cartridges 278 Passenger cars 254 Scout cars Automobile parts for replacement 211 152 Cotton sheeting 139 Cotton blankets 136 Motorcycles Steel bullet jacket cups 92 Treasury Department, Division of Monetary Research December 18,1941 Regraded Unclassified 129 APPENDIX E Principal Exports from U.S. to Occupied China as reported to the Treasury Department during the week ending December 13, 1941 (Thousands of Dollars) TOTAL EXPORTS TO OCCUPIED CHINA $ 688 Principal Items: Vitamines and vitasterols, n.e.s. 123 Leather and tanned skins 66 45 Barbitual Other medicinal and pharmaceutical preparations 33 Fruits and preparations 23 22 Wheat flour Other industrial chemicals 20 Dried whole and skimmed milk 20 Bicarbonate of soda 17 17 Toilet preparations 16 Bottle and container closures Other coal-tar products 15 Treasury Department, Division of Monetary Research December 18,1941 Regraded Unclassified 130 APPENDIX , Principal Exports from U.S. to Burma as reported to the Treasury Department during the week ending December 13, 1941 (Thousands of Dollars) $ 18 TOTAL EXPORTS Principal Items: 7 Wire nails 2 Galvanized wire Household and personal effects 2 2 Auto replacement parts 1 Pharmaceutical preparations 1 Tires and tubes Treasury Department, Division of Monetary Research December 18,1941 Regraded Unclassified 131 12/19/41- Dear Dr. Soong: Thank you very much for your letter of December 16, 1941, enclosing a copy of the telegram of December 12th. I appreciate your keeping no informed on matters of such importance and insediate interest. Sincerely yours, /s/ 21. Morgethur, In Secretary of the Treasury. Dr. T. V. Soong, China Defense Supplies, Inc., 1601 V Street, N. K., Washington, D. C. 10/10 Return to Ren. 2143 12/19/41 Regraded Unclassified It white CHINA DEFENSE SUPPLIES, INC. 132 1601 V STREET N. W. WASHINGTON, D.C. December 16, 1941 SECRET Dear Mr. Morgenthau, For your information I enclose copy of a telegram Stalin sent to Chiang Kai-shek, dated Moscow, the 12th of December. A copy of the same has been given to the State Department. Yours sincerely, When T. V. Soong Enclosure The Secretary of the Treasury Washington, D. C. Regraded Unclassified 133 C o SECRET R Y TELEGRAM TO GENERAL CHIANG KAI-SHEK FROM STALIN (Translation from Chinese) "Your telegram only reached me yesterday. I am deeply appreciative of your kind consideration. I am in perfect agreement with you that the long heroic struggle China has put up against Japen, and the present anti-Japanese front in the Pacific are part and parcel of the general anti-Axis front. At the same time the anti-German front assumes special significance in the anti-Axis front, because Germany is the strongest partner of the Axis. "Soviet Russia today has the principal burden of the NOT against Germany. And Soviet Russian victory over Germany constitutes a great hope of the other members of the anti-Axis front, Great Britain, the United States and China. It is my opinion that under the circumstances the Soviet today ought not to divert its strength to the Far East, when it is beginning to attack the German armies, for by dispersing our strength the difficulties of the German armies will be lessened. I beg you therefore not to insist that Soviet Russia at once declare war against Japan. "Soviet Russia must fight Japan, for Japan will surely unconditionally break the Neutrality Pact. We are preparing to meet that situation, but it takes time to prepare. Therefore I again implore you not to take the lead in demanding that Soviet Russia at once declare war against Japan. Stalin" Moecow, December 12, 1941. Regraded Unclassified 134 TELEGRAM SHT WIA PLAIN December 19, 1941. HERICAN CONSUL, HONG KONG, (CHINA). 477, nineteenth. TO TAYLOR AND FRESE FROM Secretary morgenthau. QUOTE If any opportunities occur to leave Hong Kong safely, you are instructed to do so without delay. END QUOTE HULL (FL) FD:FL:ME FE Regraded Unclassified 135 DEC 19 1941 My dear Mr. Secretary: This is to ask whether you nan give any help to two of our Treasury nen who are stranded in Hong Kong. These man, Messrs. W. y. Fress and W. H. Taylor, were there working with the Chinese Stabilisation Board, and for some reason, which NO do not yet understand, they were not evacuated when the Board and some of its staff were hurriedly flown to Chungiding. E. Prese is a Treasury employee on temporary duty in the Far East. Mr. Taylor of our staff is the alternate to Mr. A. II. Fox on the Chinese Stabilisation Board. In that capacity be is an employee of the Chinese dovernment, but since we recomeended him from our staff, W regard his as our responsibility. It was our thought that perhape the Consul in Shanghei could add Frese and Taylor to his staff, so that in the event that Hong Xong was taken by the ensuy these two men would be able to return to the United States more quickly than would otherwise be possible. This procedure may be imprecticable. However, any help which your Department can give Measrs. frese and Taylor will be greatly appreciated. Sincerely yours, (Signed) a. in Secretary of the Treasury The Monorable, by The Secretary of State. VPUmsh 12/19/41 HOW VFC COPY Regraded Unclassified TREASURY DEPARTMENT 136 INTER OFFICE COMMUNICATION DATE December 19,1941 Secretary Morgenthau TO Vr. White FROM Subject: British Press Summaries. Press summaries received from Casaday covering October 19 to November 9 reveal the following items of perticular interest: 1. Expressions of dissetisfaction with the War Cabinet on the grounds that (a) it is too large and un- wieldy, (b) it contains numerous incompetent members, and (o) there are many men in high office with an un- desirable and unpopuler political outlook. The criticism extended to Lord Halifax, based on the charge that he lacks "the common touch" and that, for other reasons, he is not suitable for the post he holds. There was almost no adverse criticism of Prime Minister Churchill. 2. Announcement by the Ministry of Labor further regulating the occupations of women in the 20 to 30 age group, and indicating that B. much firmer policy would be followed in assigning women to war industries. 3. Serious criticism of the alleged failure of the British Government to give all possible aid to Russin, especially the failure to create B. diversion for the Nazis by B. British invasion of the continent. There was, however, a perceptible diminution of such criticism during the last two weeks, some papers celling on their readers to cease *111-informed clamour" and trust Churchill. Regraded Unclassified 137 Treasury Department Division of Monetary Research 0 Date Dec. 19, 194119 To: Mrs. Klotz I am in doubt whether to bother the Secretary about this matter, yet I hesitate to make a decision since the Secretary may be particularly interested. If you think the Secretary would prefer not to see this, I'll send the appended letter. H.D.W. ok MR. WHITE Branch 2058 - Room 2141 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION Y 138 DATE December 19,1941 Secretary Morgenthau TO H. D. White FROM Casaday wrote on December 1 saying that shortage of help was preventing him from keeping up with all his assignments. He mentioned that he had been doing con- siderable special work for the Ambassador. He asked that the Treasury say which of the various lines of work he was doing were the most useful. Casaday's activities are roughly 8.8 follows: 1. Gathering data and preparing reports on queries from Washington. 2. Transmitting messages between the two Treasuries. 3. A weekly financial report. 4. Dealing with problems of Americans involved in British exchange control. 5. Clipping press items. 6. Weekly press summary. 7- Preparing reports on subjects Casaday believes of interest. 8. Work for the Ambassador. This is likely to be on financial matters raised by other departments, British financial questions, internal economic issues between the two Governments, and perhaps other economic work. Do you still feel that you want items 5 and 6 continued? Mr. Coe feels that if funds were available Casaday could probably hire someone in England to help him on such work. I have appended a letter which I think might go. Regraded Unclassified 139 Dear Mr. Ganaday: In your letter of December 1, 1941, you sentioned that shortage of half was preventing you from keeping up with all your assignments. I an indeed glad that the Ambassador has been able to make good use of your services. If you could let us know about hav such time you are spending on special work for him, it would help us to decide whether VS ought to try to arrange for an assistant to you. Please let us know, by cable, if it is possible for you to employ help in England for the elipping of press items and preparation of press summaries. Sincerely yours, B. D. Unite, Assistant to the Secretary. Mr. L. 1. Casaday, Attache for the treasury, The Americen London, Ingland. HHabwl 12-19-41 Regraded Unclassified Treasury Department Division of Monetary Research 140 Date December 19, 1941 19 To: Secretary Morgenthau H. D. White From: Subject: Status of Gold Purchases from Russia 1. The Agreement of August 16 provided for advance of $10 million against the delivery of gold within 90 days. 2. The current Agreement of November 10 pro- vided for the advance of $30 million against the delivery of gold within 180 days. 39 days have elapsed and about $21 million of the $30 million has been repaid. (Schedule of Repayments attached) 141 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE December 18, 1941 TO Mr. White FROM Mr. Southard Status of Gold Purchases from Russia : Date Dunces Amount : Date of Ounces Amount Applied rurchased (000) Value Advanced : Payment (000) Against Advance : 2/16/41 2/ 301 $10,535,000 $10,000,000 : 9/26/41 161 $ 5,636,423 : 10/25/41 140 4,871,938 : : 301 $10,508,361 : : : 10/10/41 3/ 903 $31,605,000 $30,000,000 : (Excess delivered under above agreement) $ 508,361 : 10/25/41 19 8 662,908 : 11/18/41 160 5,599,791 : 12/13/41 190 6,629,109 : 12/18/41 195 6,796,408 = : : 564 $20,196,577 Advance still outstanding B 9,803,423 Full value of gold less 1/4 of 1% and less lint charges. D if This purchase agreement provided for delivery within 90 days. This purchase agreement provides for delivery within 180 days. Regraded Unclassified > 142 DEC 1 9 1941 W dest B. 1 vish to refer to the agreement dated October 10, 1941, relative to the purchase of 903,000 fine toog - of gold W the Secretary of the treasury from the Government of the Union of seriet secialist Reyablics, against which m advance of $30,000,000 voi más a October 11, 1941. I take pleasure is enclosing for your information too espice d the - report of the United States Rist at in Prencisco giving n analysis of the gold which arrived en the # DONDASS at deposited w your - a December 5. 1941. for the assount of the secretary of the treasury. Tou will cheerve from the enclosed report that the z I I 1 I 1 and 1 tota 109,683.349 fine toop - of onld and to have a value of 06,045,323.40. After the deluction of the mount of $16,804.78 representing the Rind charge of $190.00 plus the 2/4% headling change of $16,624.78, the net value of the gold use $6,689,100.62. this sensi of gaid has been applied w the treasury against the - of gold agreed be be purchased w the secretary of the Treasury under the agreement of October 10, 1941. sincerely yours, (Signed) 1. Mergenthan, and secretary of the treasury. Nie Incollency Maria Litvissif, % will a I r Socialist Depublics. By Measenger Steen 6:05 I Regraded Unclassified BULLION DEPOSIT . MEMO REPORT 143 Min: Form 42R and (For BANK OF SAN Loo 5, 1941 Memos Required Silver Price SOURCE DATA Other Data (2 sheets) or Class FL. QUEST JF FEDERAL accessive BANK OF NEW YORK State MUSSIA 7. Y SECRETARY OF THE TREASURY, SPACIAL ACCOUNT. County Mine Deveription Assay WEIGHTS ASSAY CERTIFICATE Before Malt Refining Number After Melt - Deposit FINENESS PINE o UNCES chg-cts. GOLD Ounces Dac Ounces Dec Gold Silver SILVER Base per oz. Ounces Dec 1+2 20 8951 Ounces 7852.47 7454.82 999.9 (000 1) Dec 7454.074 il 20 52 7057.42 8033.18 999.9 (000 1) 8032.376 -12 20 53 7863.21 7709.56 999.9 (000 1) 7708.789 13-15 20 54 7974.75 7664.38 999.8 (000 2) 7662.847 17.21 2 55 7899.54 7747.15 999.8 (000 2) 7745.600 del 20 56 7309.85 7900.37 999.9 (000 1) 7899.579 V-23 26 57 7929.26 8235-49 999.9 (000 1) 6234.666 - 20 58 7863.47 7627.84 999.9 (000 1) 7627.077 05-30 2U 59 7777.59 7848.82 999.9 (000 1) 7848.035 20 60 7804.07 8025.05 999.8 (000 2) 8024,044 20 02 7886.80 7746.29 999.5 (000 1) 7745.515 G-all 20 62 7799.96 7700.11 999.9 (000 1) 7699.339 MI BY CHECK NOTE:- THIS REPORT IS FOR THE INFORMATION Total Total FL AS NOTED OF THE DEPOSITOR AND IS OF NO OTHER VALUE. VALUES CHARGES GOLD SILVER Melting Refining Handling Total $ $ $ $ $ $ $ Bars $ Cash Check NET VALUE Regraded Unclassified STATE MINT BULLION DEPOSIT - MEMO REPORT SAN FRANCISCO. CAL Mint Form 42R Dec 2, 1941 7806 Memos Required 6 Silver Price SOURCE DATA ber FEDERAL RESERVE Data BANK OF SAN FRANCISCO Other Data by Depositor or Class ( 2 sheets) State dussia asibor For account, FEDERAL RESERVE BANK OF NEW YORK FOR CREDIT N THE SECRETARY OF THE TREASURY, SPECIAL ACCOUNT County Mine net #2 Assay WEIGHTS Description ASSAY CERTIFICATE Before Melt Refining Number After Melt FINE OUNCES Boxes of DOFBARS FINENESS chg.-cts. GOLD Ounces Dec Ounces Dec Gold SILVER Silver Base per 02. Ounces Dec Ounces Dec 49-52 20 8963 7929.99 7835.68 999.8 (000.2) 7834.112 53-56 20 64 8003.92 8049.61 999.8 (000.2) 8048.000 57-60 20 65 7964.12 8422.82 999.9 (000.1) 8421.977 61-64 20 66 7943.78 7584.50 999.9 (000.1) 7583.741 bt 13 10-13 20 67 7447.50 7576.71 999.9 (000.1) 7575.952 14-17 20 68 7403.81 7183.65 999.9 (000.1) 7182.931 18-21 20 69 7345.80 7217.92 999,8 (000.2) 7216.476 22-25 20 70 7437.08 7189.83 999.9 (000.1) 7189.111 26-29 20 71 7507.63 7604.30 999.9 (000.) 7603.539 30-33 20 72 7534.21 7622.94 999.8 (000.2) 7621.415 34-37 20 73 7581.65 7517.76 999.9 (000.1) 7517.008 38-41 20 74 7603.75 7948.97 999.8 (000.2) 7947.380 -2-43 10 8975 3888.64 4460.55 999.8 (000.2) 4459.657 189,910.27 189,908.90 BLE BY CHECK NOTE:- THIS REPORT IS FOR THE INFORMATION Total Total PT AS NOTED OF THE DEPOSITOR AND IS OF NO OTHER VALUE 189,883.240 VALUES CHARGES GOLD SILVER Melting Refining Handling Total $ 6,645,913.40 $ $ 190.00 $ $ $ XXX 16,614 78 16,804.78 Bars $ 6,629,108.62 Cash Check NET VALUE C o 144 P DEPARTMENT OF STATE WASHINGTON December 19. 1941 In reply refer to 17 F40 51 Frozen Credits/46R6A The Secretary of State prevente his compliments to the Monorable the Secretary of the Treasury and encloses herewith a paraphrase of a circular telegram to all diplomatic offices in the American republics concerning nessures taken by the United States to control transactions in financial, trade and business matters in which Italy or Jerseny or blocked nationals thereof have any interest, and for similer treatment of Japanese nationals in continental United States, and with a view to the aioption of P program for similar control in the Western Femisphere. Soclceure: Paraphrase of circular telegram December 15, 1941. Copy:1c:12/22/41 Regraded Unclassified C 0 145 P Y PARAPHRASE OF TELEGRAM SENT PROM: Secretary of State, Washington TO: All Diplomatic Officer in the American Republics DATED: December 15, 1941, 10 p.m. NUMBER: Circular It is requested that you contact the officials of the Government to which you are accredited and call their at- tention to the administration under the present conditions of war of blocking control measures placed in effect with the United States in June 1941 affecting Italian and German activities in this country. Under this freezing order this Government exercises control of all trans- actions in financial, trade and business in which Italy or Germany or blocked nationals thereof have any interest by prohibition of such transactions except by special licenses. No payments, withdrawals or transfers are per- mitted from any accounts in banks if Italy or Germany or blocked nationals thereof have any interest in said accounts except by specific authorization. There is, of course, prohibited between this country and Italy and Germany all financial, business or trade transactions. These controls which are applied to the individual acti- vities of Italian or German nationals resident in this country and to business conducted locally by such nationals in which neither Italy nor Germany nor any national thereof 146 -2- residing in Italy or Germany has any interest, are based on the extent to which said nationals are suspected of engaging in activities detrimental to United States defense. This selective method is possible because this Govern- ment possesses current information obtained by various methods, including available information under the Alien Registration Act which provides separation of those aliens suspected of such activities from those under or above such suspicion and to interne those Italian, German and Japanese nationals whose activities seem to be detrimental to the United States. The treatment of Japanese nationals has been some- what modified. Upon the outbreak of war with Japan, as you were previously advised, all financial, trade and commercial transactions of Japan or her nationals were stopped subject to the granting of appropriate future licenses. Subsequently an arrangement has been made by which any Japanese nationals in the continental United States not now in custody are permitted minimum living expenses from bank accounts or salaries, and nationals of Japan participating in agricultural pursuits considered essential to the local economy where they operate, may with certain minor exceptions engage in any transactions relative to normal conduct of said business. Regraded Unclassified 147 -3- Italian and German banks as well as Italian and German business enterprises owned or controlled by Italians or Germans not residing within the Western Hamisphere have been placed under a stringent control. Government representatives since the outbreak of the war have taken custody of financial and banking institutions of Germany and Italy throughout the United States with instructions when necessary to prevent the entrance to such premises and to avoid the removal or destruction of their records, books or other property. Business enterprises controlled or owned by Italians and Germans not resident within the Western Hemisphere have been placed under similar custody. Of these concerns many have been denied the privilege to engage in any business trans- action and liquidation will be necessary. In instances where certain businesses are important to domestic economy, permission has been given for them to engage in strictly domestic business subject to detailed Government supervision. No transactions, of course, are permitted which are of interest to Italy or Germany or any national thereof residing outside of the Western Hemisphere. Measures have been taken in such cases to prevent Italy or Germany or nationals thereof outside the Western Memisphere from engaging in any control whatsoever in the affairs of such concerns and the Government in many cases may take over the interests in the concerns of such persons. Regraded Unclassified 148 These controls which interne Italian or German nationals resident in this country whose activities are considered detrimental to the United States interests, deprive them of the right to any business activities whatsoever, are in addition to the controls outlined earlier in this cable. Conforming with the declarations of inter-American solidarity in the event that the security, peace or ter- ritorial integrity of any American republic is endangered, particularly Recolution IV which was adopted by the second meeting of the American Republice Ministers of Foreign Affairs, who are requested to state to the Government to which you are accredited, that it 1s presumed that said Government will agree to adopt appropriate steps to pre- vent Italian, German and Japanese activities in the Western Hemisphere. You should be guided by your knowledge of present conditions in the country to which you are accredited, including whether or not it has declared war against Italy, Janan or Germany when Bug esting steps for adoption by that Government which would control the financial and economic activities of Germany, Japan and Italy and nationals thereof. The measures which this Government would vish adopted are considered to be measures facilitating Regraded Unclassified 149 -5- the accomplishment of the following results: 1. All financial, trade or business transactions between Italy, Japan or Germany ená the country to which you are accredited will be prevented. 2. All financial, trade or business transactions in such country which are participated in for the benefit of or by persons controlled by Italy, Japan or Germany or nationals thereof not resident within the Western hemisphere will be prevented. 3. All financial, trade or business transactions in such country by Italian, Japanese or Germen nationals or their agents detrimental to the Western Hemisphere defense will be prevented. 4. All financial, trade and business trans- actions in such country participated in by Italian, Japanese or Germen nationals will be subjected to supervision. 5. Such nationals of Italy, Japan or Germany engaged in activities dangerous to the Western Hemisphere defense will be taken into custody. The presentation of the Department's views must be left to the discretion of the Chief of each mission, but it is hoped that appropriate controls will be adopted readily by all the Governments. It is felt that the defense of the United States and of each of the other American republics will be endangered if the adoption of such measures fails or is delayed. Regraded Unclassified 150 -6- Continuous study of our present procedures in policies is being made and will be modified according to the trend of events and experience. You are instructed to advise all consular officers subject to your jurisdiction. Copy: 1c: 12/22/41 151 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE December 19, 1941 TO Secretary Morgenthau FROM A Districh CONFIDENTIAL Registered sterling transactions of the reporting benks were as follows: Sold to commercial concerns £63,000 Purchased from commercial concerns 246,000 you market sterling remained at 4.03-3/4. end there were no reported inasactions. The Canadian dollar closed at a discount of 13-1/6%. The present level compares with B. low for the year of 17-1/26 discount, reached last January, and A 4164 DI 10-1/4%. reached early in September. The Argentine free peso declined 25 points to close at .2365. It was re- orted that this movement mainly reflected воше strengthening in the dollar cuotation in Buenos Aires. The Cuban peso, which has been offered at a premium of 1/4% during the Inst two days, moved off to close at par today. In Sey York, closing quotations for the foreign currencies listed below NETO Ba follows: Brazilian milreis (free) .0516 Colombian peso -5775 Mexican peso .2065 Uruguayan peso (free) .5310 Venezuelan bolivar .2700 were no purchases or sales of gold effected by uo with foreign countries 16807. Vo new gold engagements were reported. In London. spot and forward silver were unchanged at 23-1/2d and 23-9/16d, investivaly. The U. S. equivalents were 42.67$ and 42.764- 248 Treasury's purchase price for foreign silver wes unchanged at 354. Handy erian's settlement price for foreign silver was also unchanged at 35-1/84. : e cade no purchases of silver today. Regraded Unclassified 152 - 2 - The report of December 10 received from the Federal Reserve Bank of New York, giving foreign exchange positions of banks and bankers in its district, re- vealed that the total position of all countries was short the equivalent of $4,377,000. an increase of $252,000 in the short position since December 3. Net changes were as follows: Short Position Short Position Change in Country December 3 December 10 Short Position* England** $ 393,000 (Long) $ 212,000 (Long) + $181,000 Europe 2,552,000 2,588,000 + 36,000 Canada 460,000 (Long) 543,000 (Long) - 83,000 Latin America 98,000 47,000 (Long) - 145,000 Japan 160,000 160,000 --- Other Asia 2,246,000 2,401,000 + 155,000 All others 78,000 (Long) 30,000 + 108,000 Total $4,125,000 $4,377,000 + $252,000 *Plus sign (+) indicates increase in short position, or decrease in long position. Minus sign(-) indicates decrease in short position, or increase in long position. **Combined position in registered and open market sterling. X CONFIDENTIAL Regraded Unclassified 153 BRITISH EMBASSY WASHINGTON, D.C. December 19th, 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. Regraded Unclassified 154 Copy No. BRITISH MOST SECRET (U.S. SECRET) and No. 40 Information received up to 7 4, 18th December, 1941. (t) TAVAL Northern Datora. 26th November, A Russian submarine sank an 800 ton merchant ship in FUGLO SOUND (s.w. of North Cape). Between 28th November tal 6th December another Russian mitmorine senk one 10,000 and the 6,000 ton emorted merchant ships in the visinity of North Cope, 17th P.m. Two of H.M. minemeepers were in action with two enetty destroyers off GORCDETSKY (entrance to UHITE SEA). One was alightly lamged and the other has so far been unlocated, MEDITERRANEAN. 17th, Early in the morning our aircraft 10- cated n force of energy battleships, cruisers and destroyers Southbound escorting 4 merchant ships, to the Westward of MAVARINO. At 5.55 P.m. our light forces were in action with the enemy 165 miles to the Southmard but lost touch at 6.47 P.S. since when no further reports have been received. Attacks on chinning. 13th, A Spanish tanker of medium tonnage wes runk by A G-boat off the Spanish coast to the Zest of GIBRALTAR, 15th. À Portuguese ship of medium tennage was torpedood in the visinity of CAPE ST. VINCENT. 16th, & Dutch coastal vessel was damaged in the BRISTOL CHANNEL by an enemy aircraft which WILD probably shot down by a Corvette. (II) EILITARY LIBYA. 16th. We continued to press the enemy along the whole Tront taking about 1,000 Italians prisoner. Strong resistance une encountered sime 12 miles South-West of GAZAIA. Neanuhile a mobile detachment had reached DUMI astride the GAZALA-DERNA road where como enemy H.T. was destroyed. In the afternoon our armoured forces moving from BIR HALEOH EL ALEBA (See OPTEL No. 39) engaged the energy in the roar of his right flank North of the TRICH EL ABD, 17th. 10 the the 22 German tanks (probably remants of 15th and 21st German armoured divisions) escarting o large column were discovered with- drawing in the direction of TUDII. Later enemy began to retreat all along the line. Our forces followed up and by noon, Not Zealand troops had reached a point 10 miles North West of GAZALA. The nain partion of our artoured forces The moving from the BIR HALEGH EL AIRBA area on TUDEI, Prontier Area. South African troops captured en enemy post forming part of the defences of BARDIA, Following prisoners of was have reached Regraded Unclassified 155 ALEXANDRIA up to 15th December: German - 72 officers, 2,926 other ranks Italian - 237 officers, 4,869 other ranks. FDIG KONG. Enemy shelling and nortar fire have caused some damage to our beach defence pill boxes on North shore of the Island and to one coast defence battery. Bombing has caused BODO damage to food stores and water mains. Our artillery fire has dispersed anemy troop concentrations and transport on the mainland and silenoed four enemy guns, 8 17th, a further summone to aur- render as received, The Governor replied that be was not prepared to receive any further communication on the subject. MALAYA. 17th, REDAH, On right enetty attacked our detachments in GRIK area (25 miles S.S.E. of KROH) in some strongth, On left, withdrewal from River MUDA is continuing. Our reserve formations now on line of River KRIAN (20 niles to South). PRIMAND. Withdrawal prosseding, KALANTAN- We now hold position on River MAL (25 miles South of KOTA BRARU). Enemy broke off engagement after suffering casualties, Elsewhere nothing to report, Enemy air activity negligible. Anti-aircraft defences have shot down 13 enemy aircraft to date, plus 5 probable. PORTUGUESE TIMER. The Netherlands East Indies Government an- nounce that on the morning of 17th December Portuguese Timor was occupied by Dutch and Australian forces. RUSSIA. Nothing additional to official communiques. (III) AIR OPERATIONS 16th/17th. WILHELLSHAVEN (71 tons), OSTEND (35 tone), BREST (31 tons), and DUNKIRK were attacked in fair visibility. 13 aircraft from R.C.A.V. aquadrons took part in these reide. 17th, Our fighters destroyed a Junker 88 off KENT. 17th/18th. 137 aircraft despstabed to BREST (121) HAVRE (14) loaflets PARIS - CRIZANS (2). At BREST, attacked by 99 aircraft a large explosion and fires were seen, though & smoke screen hindered observation. One bember missing. Another come down in the sea but the crew is safe. LIBYA. 16th. Our light bombers started a large fire in dumps near BARDTA and attacked BENINA asrodrome. In the course of contimuous fighter patrols to the Southwest of GAZATA and frequent sweeps between GAZALA and TMBI only two ensuy aircraft were sighted, one of which was destroyed. Regraded Unclassified 156 - 3 - FAR EAST 17th. Six light bombers escarted by 5 fighters ? operating from SINKAWANG (North=Nest BORNEO) unsuccessfully attacked Japanese warships off MIRI. (IV) ENEMY ACTIVITY 17th/18th. About 40 enemy aircraft operated against the United Kingdom, of which 18 crossed the coast for short periods. 157 RESTRICTED 6-2/2657-220: No. 574 M.I.D., W.D. 11:00 December 19, 1941. SITUATION REPORT I. Pacific Theater. Philippines: Ground patrol activity is increasing. Heavy enemy air raids yesterday over Iloilo (on the south coast of Panay Island) and over the Manila area. No results reported. Hawaii: No further reports of hostile activity have been received. Wake: The Navy reports a Japanese bombing attack on Wake in the late morning of the 18th. No results were given., Hong Kong: Air attacks continued en the 17th. The press states today that the British were fighting against Japanese troops who are attempting landings on Hong Kong Island. Malaya: Heavy fighting continues in the north. On the west coast the British are evacuating Penang; in the east they are holding successfully. West Coast: There have been no further reports of enemy activity. II. Eastern Theater. Ground: There is no reported change in the situation along the entire front. The Russians claim continued success. (No rituation map will be issued today.) III, Western Theater. Air: According to the British Air Ministry, the SCHARNHCRET and GNEISENAU were again attacked yesterday at Brest by a large force of R.A.F. bombers. The British admit losing six planes and claim that they shot down eight German planes. Raids on these battleships were renewed last night. A single German aircraft dropped bombs on the coast of East Anglia, causing some damage and a number of casualties. IV. Middle Eastern Theater. Ground: Axis troops are withdrawing westward with great rapidity in two bodies. One body north of the Jebel Achdar by way of Derna has set up a rear guard southeast of Derna proper. Body with- drawing south of the mountains has set up a rear guard at Mechili. British are pursuing both bodies vigorously. Air: The press reports that yesterday's bombing attacks try the R.A.F. were the heaviest of the present campaign in Libya. Axis aircraft, according to the press, made torpedo at- tacks on units of the British Lediterranean fleet yesterday off eastern Libya. RESTRICTED Regraded Unclassified RESTRICTED 158 G-2/2657-220; No. 575 L.I.D., W.D. 11:00 A-ll-, December 19, 1941 SITUATION REPORT I. Pacific Theater. Hawaii: No further reports have been received. Philippines: Press reports that Japanese troops landed yesterday morning at Davao in southeast Lindanao. The general situation remains the same. Borneo: According to the press, N.E.I. planes made bombing attacks over the Hri area yesterday, and Japanese planes made an air raid on Pontianak (southwest coast of Borneo). Malaya: No change reported south of Kota Bharu, In the west, the British are withdrawing to a new de- fensive position. Hong Kong: The situation at Hong Kong seems serious. The press reports this morning that the British garrison there is still holding against Japanese forees which have landed on the island. West Coast: No further reports of enemy activity have been received. II. Eastern Theater. Ground: The German High Command reports no change on the Eastern Front and claims the repulse of the Russians. The Russians claim the capture of Ruza (north of Mozhaisk), Tarussa (southwest of Serpukhov), and Khanino (15 milos west of Dubna). III. Western Theater. No further reports have been received. IV. Middle Eastern Theater. Ground: Axis retreating westward. Germans generally north of Jebel Achdar (Lountains), Italians south. Axis losses severe. British advance elements have reached vicinity Cirene and passed Mechill. Air: According to the German High Command, German bombers successfully raided military installations in Tobruk harbor. The that Italian High Command admitted that Derne airport is in British hands and the British had bombed Tripoli and Benghazi. Dalta, clain the Italians, received a series of bombing attacks by formations of the German Air Force. RESTRICTED Regraded Unclassified 159 December 20, 1941 Norman Thompson Mr. Morgenthau By eleven o'clook, if possible, I would like a one-page memo from you, tolling me when I originally asked you to make an investigation of Chick Schwarz's office. I mean what date I asked you to do this. Who made the investigation for you? I want the men's names. I also want to know how long it took, when the investi- gation was finished, and a very brief summary of what the recommendations were. Please try to get this into Mrs. Klotz's hands by eleven this morning so that she can give it to me. lubmitted 17/20/11-10:50- Regraded Unclassified 160 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE December 20, 1941 TO Secretary Morgenthau FROM Mr. Thompson In reply to your memorandum of today with respect to Chick Schwarz' office, I submit the following report: on October ó, 1941, you directed me by memorandum to be responsible for the efficiency of Chick Schware' office. On October 23, 1941, I sent you a memorandum in which I advised that a study was made of the operations of Chick's office and the efficiency of his personnel. Mr. John D. Larson of my staff made the detailed investigation, with the assistance of Mr. William Lynch of the Procurement Division. On November 10, 1941, Mr. Larson submitted a preliminary report dealing with the administrative phases of the office. This report con- templated (1) correcting immediately existing inefficiencies occurring in disseminating the Secretary's speeches, and (2) to better organize the clipping work where considerable duplication WEB found. This report received the approval of Messrs. Schwarz, Kuhn, Schoeneman, Bell and myself, and the recommendations were put into effect at once. These functions now are being carried on efficiently. Subsequently, I advised you that Mr. Larson was working on the second section of his report which would cover the matter of the per- sonnel engaged in public relations work. This report was in process inefficient men in Chick's office. This was accomplished on December 16th, of preparation when you gave me your instructions to get, rid of the DE were proceeding cautiously with these more important personnel changes inasmuch as Messrs. Kuhn, Gaston and Chick were not in agreement, whereas I felt and the investigators under me felt that notwithstanding the support these men were receiving, they should be displaced. In the course of this investigation, Chick agreed in the presence of Larson, Schoeneman and Bell that Mayl, Lampman and Barbee were not capable - ployees. As for Mr. Stone, the fourth to be transferred, this was done largely on the strength of your impression of Mr. Stone coupled with the fact that Mr. Graves had earlier indicated the unsatisfactory performance ty Dr. 3tone and had separated him from the Savings Bonds Staff. disfied with Mr. Schwarz 25 head of this important field of work. The remaining question in my opinion is whether or not you are I attach the original of Mr. Larson's preliminary report to which I referred in case you may wish to look it over. of Regraded Unclassified 160 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE December 20, 1941 TO Secretary Morgenthau FROM Mr. Thompson In reply to your memorandum of today with respect to Chick Schwarz! office, 1 submit the following report: On October 6, 1941, you directed me by memorandum to be responsible for the efficiency of Chick Schwarz' office. On October 23, 1941, I sent you 4 memorandum in which I advised that a study was made of the operations of Chick's office and the efficiency of his personnel. Mr. John D. Larson of my staff made the detailed investigation, with the assistance of Mr. William Lynch of the Procurement Division. On November 10, 1941, Mr. Larson submitted a preliminary report dealing with the administrative phases of the office. This report con- templeted (1) correcting immediately existing inefficiencies occurring in disseminating the Secretary's speeches, and (2) to better organize the clipping work where considerable duplication was found. This report received the approval of Messrs. Schwerz, Kuhn, Schoeneman, Bell and myself, and the recommendations were put into effect at once. These functions now are being carried on efficiently. Subsequently, I advised you that Mr. Larson was working on the second section of his report which would cover the matter of the per- sonnel engaged in public relations work. This report was in process of preparation when you gave me your instructions to get rid of the inefficient men in Chick's office. This WE.S accomplished on December 16th. AG were proceeding cautiously with these more important personnel changes inssmuch as Messrs. Kuhn, Gaston and Chick were not in agreement, whereas I felt and the investigators under me felt that notwithstanding the support these men were receiving, they should be displaced. In the course of this investigation, Chick agreed in the presence of Larson, Schoeneman and Bell that Mayl, Lampman and Barbee were not capable am- ployees. As for Mr. Stone, the fourth to be transferred, this was done largely on the strength of your impression of Mr. Stone coupled with the fact that Mr. Graves had earlier indicated the unsatisfactory performance by 15. Stone and had separated him from the Savings Benda Staff. Attefied with Mr. Schwarz as head of this important field of work. The remaining question in my opinion is whether or not you are 1 attach the original of Mr. Larson's preliminary report to which I have referred in case you may wish to look it over. often Regraded Unclassified 161 December 20, 1941 11 a.m. GROUP MEETING Present: Mr. Gaston Mr. Graves Mr. Buffington Mr. Kuhn Mr. Schwarz Mr. Paul Mr. Sullivan Mr. Thompson Mr. Haas Mr. Foley Mr. Viner Mr. Morris Mr. White Mrs. Klotz Mr. Bell H.M.Jr: So many people have wanted to see me that I couldn't do it individually -- Viner: What are you hiding for? Paul: I am not hiding. I couldn't hide very much behind you anyway. (Laughter) H.M.Jr: One of the things - I have got a lot of odds and ends - there is supposed to be a story written for Time. Would you mind my telling it? Gaston: I don't mind at all. It was perfectly ridiculous. H.M.Jr: Gaston called me up - well, you might 8.5 well have it, as long as all the newsmen know it. It was supposedly that the reason that these men were eliminated from the news room, there was 162 - 2- a plot on the part of Foley and Graves against Gaston. Well, I asked Schwarz to handle it and he didn't handle it through Felix Belair but he got a very unsatisfactory answer and it occurred to me that the man to talk to was the man that covers the Treasury. [thwarat Crider will be here at 11:45 and he would like to see you alone rather than with the other boys. B.W.Je: Well, the thing that you could have done, Chick, for me, you could have thought of seeing Crider. Schwarz: I did. I have talked with him. H.H.JrT Well, anyway, I am doing everything that I can personally to get to the bottom of it and kill it, because we don't have that kind of thing. It doesn't exist in the Treasury. It is the kind of thing that I like to do if somebody else is under fire, just the way when I am under fire my people try to protect me; but I just thought I would tell it to you. I don't know what it is all about. Perlmeter wrote me a letter of ugly rumors around the Treasury and could he see me and some of the boys, SO I thought I could do it better today than Monday . I don't like those kind of things hanging over my head, 50 he is coming in when? Schwarz: At noon. H.M.Jr: But I am seeing these men alone. But Crider wants to come in at -- Schwars: I have talked with him thoroughly and he said simply that he had to send B. memorandum on what he was told up to New York. lle doesn't think they are going to print anything. What did he tell you about it, so that I know. Regraded Unclassified 163 - 3 - (Mr. Bell entered the conference.) H.M.Jr: There is a chair over here, Dan. Schwarz: He didn't have anything about a plot. I think that was News Week's story. Gaston: Walter Fitzmaurice called me up, of News Week, to tell me and he said Time had that story. Schwarz: Crider denies there was any plot but said there were rumors of jealousies and feelings. H.M.Jr: Well, anyway, it is the kind of thing that I- it doesn't exist in the Treasury because I won't let it exist and when somebody - I will do the best I can anyway for everybody involved by seeing the men myself alone and collectively. I know how unpleasant those kind of stories are. I thought I would do it today 80 I would have it off my mind and it won't worry me. Gaston: I certainly appreciate it. H.M.Jr: Well, you have done it often enough for me, Herbert. If there is anything that any of you men involved should know before I go home, I will let you know. In fact, I will let you know anyway, the result. I have got a couple of things. I don't expect 8. lot of stuff. I will talk as long as I can. There are two memoranda. Bell, have you got that first one -- I mean White? I gave it to you. It is a month old, Harry. White: I have them right here. H.M.Jr: No, I mean the one from the Director of the Budget. White: Yes. 164 4 H.M.Jr: Could I have that one? White: Yes. Here is & draft of our reply. H.M.Jr: Where is the President's? Where is the actual memo? White: I have some thoughts on it if you want to discuss it. H.M.Jr: Well, something has happened since then. This affects everybody. This affects the speech in New York. It cuts across so many people. I can't see each person. Bell, read the President's memo to me and then what is attached, you see. Bell: Read Smith's memorandum too? H.M.Jr: Yes. Bell: "Memorandum for the Secretary of the Treasury from the President: I enclose memorandum from Harold Smith and have asked him to cooperate with you in letting me have a general outline of the tax policy or program for inclusion in my budget message." Harold Smith's memorandum to the President is dated December 17th. "The proposed budget message for 1943 has gone through several drafts here in the office. It seems quite clear that the budget message should be used as a vehicle to set forth a more comprehensive statement of the fiscal situation and the fiscal policy than has ever been done before. The budget picture is affected by price control, priorities and allocations, credit control, as well as the obvious expenditure and revenue aspects. In view of the possible deficit of thirty-eight 165 - 5 - billion dollars for 1943, based on present revenue measures, I feel that an integrated financial program should be incorporated in the budget message. I believe that it will give the country B. feeling of confidence that such a program is being formulated for adoption. "We have already drafted the message tentatively to include what we believe to be the general outline of the Treasury tax program. If you agree that there is advantage in 8. rather comprehensive statement of the fiscal situation, I will be glad to try to iron out the text with the Treasury in advance of presentation to you in order to conserve your time." R.W.Jr: Well, I called up Harold Smith yesterday and told him that the President sent this to me and that I would be glad to see him, so he said should he work it out with Bell and I said no, that I wanted him to see me, myself, and that we would be very glad if he gave us time enough to go over anything that the President wanted to say a bout taxes, or fiscal policy. Well, he said he was very busy and I said, "Well, just give ne time enough and I will be glad to sit down. If Now it seemed to me that Sullivan and Paul - that we shouldn't wait until Harold Smith comes over with a draft as to what he thinks the President should say about taxes, but you fellows had better get busy, see, and have some thing for me as soon as possible. What we would like the President to say, if we are going to carry the ball, you see, which I think we should, and which is the President's attitude in his memorandum to me. In other words, that is 8. very cleverly worded memorandum of Smith's but the President doesn't simply Regraded Unclassified 166 - 6 - say that. He sends it to me. He is looking to me. Well, I want to respond and I want to have something 80 that when Harold Smith comes over, the President - "if you want to say something on taxes, Mr. President, or if you want to say something"- he spoke about the difference in the gap, what I call the Shoup plan or theory - lets us say something. He wrote the President on this on October 29th, Smith did, on this thing, and the people who have read it say it isn't very good. Isn't that what you said, Harry? Somebody told me that. White: I didn't say that. H.M.Jr: Well, somebody read it anyway. Bell: I haven't seen it. H.M.Jr: Yes you have, excuse me. Bell: Harold Smith's memorandum? H.M.Jr: Yes, look; I think you saw it. It is old, Didn't you see that? Bell: No. H.M.Jr: You haven't seen it? Bell: No, sir, I haven't. H.M.Jr: Well, that is my error. Bell: The only one I have seen from him is that statement. H.M.Jr: Well, now, Dan, we can't write anything. We can write something - here is the thing: We can say something to the President on the gap as between civilian goods and production and 167 - 7 - purchasing power, can't we? Paul: We have got plenty of material on that. H.M.Jr: We can say something on how much - how that should be mopped up, that popular word. Bell: Don't use that word. H.M.Jr: I know. Now, that is why I called the group in. I don't know how many people are affected. If we are to say something or put something in the President's mouth, do I want to say it on Sunday, the 28th? You see? Now, do you see, Ferdie, why I asked you to wait? I had to catch my breath, I mean this morning. Kuhn: We had talked about the 28th and I wanted to report to you on what John and Randolph and Tommy Tarleau thought. H.M.Jr: We will go ahead. Kuhn: We all agreed that you should not talk about taxes in any way at that particular party up in New York because that would be made up of sharpshooters who would be only too glad to get some advance indication of what you were wanting to do and they would start to work and criticize it. H.M.Jr: Well, that is one reason. Now, if you want to put it into the mouth of the President to say it on January 5th, that is & much better reason why I shouldn't say it. what? White: Has it been customary for the Treasury in the past budget messages to write the portions dealing with taxes? H.M.Jr: Bell can answer that better. Bell: Up to 1939. (Laughter) As long as I was on Regraded Unclassified -8 - 168 the Treasury payroll and acting Director of the Budget, yes. White: I personally think it is inexcusable for the Treasury not to do it as B. routine thing each time. Every time there is a budget message going up and you know about it ahead of time, there ought to be a memorandum suggesting the inclusion of something. H.M.Jr: Well, Paul - where is Paul? I am going to pin this on you, see. This is the part that would come under you, see. Paul: All right. H.M.Jr: And ask everybody in this room who has anything on it please to cooperate with you. Bell: I should think it would have to be rather general, Mr. Secretary. You can say here is the gap and it must be taken up through additional taxation. You can't go into 8. program because the program isn't ready. I don't believe Smith meant that, as to the program the Treasury has in mind. I don't believe that he could have written anything, as he has indicated here, as to the Treasury program, because he has only sat in one conference and that was up at John's house that night. Do you agree with that, John? He couldn't have written the Treasury program, because it wasn't available. Paul: But he might have written his own program. Bell: No, he says, "I have written what I understand to be the Treasury program. We include what we believe to be the general outline of the Treasury tax program. White: what is the date of that, Dan? Regraded Unclassified 169 - 9 - Bell: The 17th. So it would have to be quite general for him to have written it. Paul: Isn't it possible to get his draft? I would like to see what he did say. White: I am inclined to think the Secretary is right in saying that without seeing his draft, a draft ought to be prepared here. It ought to be a Treasury draft and then let him go over that or combine it. Bell: It seems to me you would have to, some place along the line, see the budget draft in order to fit what you are going to say on taxes into that whole message, because he is going to say something on prices and priorities and everything else. Paul: The most important question is to know whether it is to be very extremely general or to go into detail and details are indicated from what you read. White: I think, Randolph, that is & decision that in the first instance should be made by you and your group, that the President will accept anything that is good, and if you think that you can phrase something which has sufficient detail and follows the kind of principles which apparently Smith has suggested as being novel, then the President will accept it, so that I don't think you need more instructions than those that are already before you to draft something for the budget speech. It may not be what finally emerges, but certainly you ought to get the best kind of statement you think the President ought to make. H.M.Jr: Let me help guide you, and Bell can check me Regraded Unclassified - 10 - 170 on this, and Sullivan. We have never been able to get the President to get into details. He won't talk about depletion of community property, you see, or inheritance taxes. He won't say it. So you have got to talk about principle. We have never been able to get him to say that, John. Sullivan: This is one time I hope we will. Paul: I agree with that. H.M.Jr: No, but he wouldn't say it anyway. It is B. question of principles and you have got to just crystallize your own thinking, plus - Blough isn't here, is he? Sullivan: No. H.M.Jr: Well, everybody else that has anything, and then get it to me just as fast as you can. This is just forcing our hand. I would much rather say to the President - write the President a letter, "My dear Mr. President, I have received your note from Harold Smith and I am delighted to have the opportunity to give you the Treasury's ideas, and I am sending this to you and B. copy to Harold Smith; and Harold Smith and I have arranged to sit down and go over it together." White: That is right. That is the way it should be. H.M.Jr: To take the initiative, because Harold Smith has every reason to say, "Well, Mr. President, I had to do something, because the Treasury didn't give me anything. Every other department has. Every other department has given me something. White: I think it ought to be done over the weekend. It ought to be done fast. Paul: Obviously. Regraded Unclassified 171 - 11 - H.M.Jr: Now Randolph, will you take that? Paul: Yes, sure. H.M.Jr: There is no use - and then as I say, I have got to pin it on somebody. I am available any time Monday. Sullivan: I think we ought to have that Monday morning for you. H.M.Jr: I am ready. I will tell you now, ten o'clock Monday morning. Bell: Do you want any attempt made to get 8. copy of the present draft of the budget message from Smith? H.M.Jr: If you would ask him that, tell him that we are working over the weekend. Bell: I think the savings bonds ought to fit in to this too. Obviously he is going to say quite a lot about inflation. He is going to speak about deficit and then talk about inflation and prices. We ought to show from the fiscal angle what we can do to stave off inflation. Most important is taxes and next comes savings bonds. H.M.Jr: I don't blame Harold Smith for pushing because we haven't - we have just been doing nothing in trying to get the stuff to the President and to him to include it. Bell: Of course, he has never included anything in his message on taxes heretofore. H.M.Jr: Well, anyway, here it is. The President writes me & very nice memorandum and is very courteous -- Bell: I think it is a good thing to have a. general thing about taxes, the fiscal program in the budget. Regraded Unclassified 172 - 12 - Morris: Is the fiscal program for this purpose going to include some general principles of borrowing? That is what I have been trying to figure out. You wanted us to try something on not only the savings bonds but your general financing program. I don't want to do it if we can avoid it, but do you think we are forced into doing it? Bell: No, I don't think 80. The only thing you might want to consider is as to whether or not the President might want to say something about interest rates. Viner: That is right. Bell: This might be a good place to say something, that our average interest rate is 80 much and that we do not expect to finance this war above that level. H.M.Jr: No, I am sorry. Bell: That is important. H.M.Jr: Well, I would much rather have what Dave Morris said, something on the borrowing. The borrowing - I mean, Dan, let's put - this is what I am asking this group, and each person that - let's say that - I am saying here now, let this group produce something that covers the whole fiscal and tax program and how we in the Treasury feel we would like to see the thing handled. Now, I am not interested in interest rates except as a very incidental thing, but the whole thing, Mr. President - we can use the things here. Let's go on the basis that you are going to spend - you (Haas) got those figures from OPM. We are going to - we will go in jumps of five billion, that we are going to spend thirty billion, thirty-five, forty, forty-five, fifty billion, whatever it is. Depending upon that program the Treasury 173 - 13 - feels we are going to have to borrow 80 much. We can do so much with Defense Savings Bonds and we can do 80 much in taxes. And here is the thing, Mr. President. Ball: I agree with you. H.M.Jr: See? Bell: Yes. To that extent I agree with you, that the borrowing program ought to be in, but not too much detail on borrowing. H.M.Jr: No, no, that is why I don't want to say anything about interest rates. Bell: Well, we may come to that. We ought to talk about that because that is very important. Morris: That is the heart of the matter. Bell: Yes, it is very important. H.M.Jr: Excuse me one minute. Let me just run through this thing once more. Here comes this thing in. I have always prided myself, I like to be a little bit ahead of the parade. All right. We do this thing - 8. fiscal program for the next fiscal year, the Treasury's program, and we give it to them. Then we sit down. Harold Graves says this is fine, and we argue it out. But if we don't, Smith has every reason to believe that he can lay down the fiscal program. Now, Dan, are you in disagreement? Bell: Not as & general matter, but laying down & fiscal program, 8. borrowing program for the fiscal year which is six months off - the beginning of it is six months off - I don't think it can be done for the budget message. Viner: I think the program is the wrong word. The Treasury ought to state its philosophy here. Regraded Unclassified 174 - 14 - H.M.Jr: Thank you, Jake. Viner: The program has to be worked out as to techniques and detail, but the general drift as to its attitude and approach ought to be stated in that message. H.M.Jr: Are you here over the weekend? Viner: Yes. H.M.Jr: Wonderful. Herbert, where do you agree or disagree? Gaston: I think this, that the budget program of necessity must contain some statement of general fiscal policy, not only taxation, but the general fiscal policy of the Government. That is mainly the business of the Treasury Department. I think it would be perfectly ridiculous for the Director of the Budget to prepare B. budget message without submitting the whole budget message to the Treasury, particularly for discussion as to what should be said on fiscal policy, and I don't agree that we ought to submit stuff to Harold Smith for inclusion in the message. I think Smith should, on his part, consult with the Treasury before he drafts the fiscal policy portion of his message. Regraded Unclassified 175 - 15 - H.M.Jr: Granted, but we have no excuse to ask him - if he comes back and says, "Well, Mr. Morgen- thau, what is your attitude on this thing? "Well, we are thinking about, but here Mr. Smith, here is our plan." "Well, here, Mr. Roosevelt, is our plan." Then the President says, "Harold, go over and see Henry and get that stuff. He has some good stuff. Some of it I like and some of it I don't like." Gaston: I think he certainly should do that in an early stage of drafting the message. H.M.Jr: Let's see how we are going to divide this thing up, Dan. Certainly you are going to try and get a draft, aren't you? Bell: Yes, I will try to right away. H.M.Jr: On the borrowing stuff, and you have got your people to help. What's-his-name is sitting there. Bell: Morris and George. H.M.Jr: What you need from Harold Graves in the way of what he thinks he can do through Defense Savings Bonds and whatever he tells you, up it a little bit, just the way you know, the President always upped our revenue and downed our spending. We will do that after we get the figures from Harold. Then Paul and Sul- livan and Blough will get busy on the other thing, and then we will hit it Monday morning; and Jake, you be there to tell everybody when they are good and bad and put your own oar in. Viner: I will be at anybody's service. H.M.Jr: And Harry, a general contribution from your section would be welcome. Regraded Unclassified 176 - 16 - White: O.K. H.M.Jr: General contributions, anything that you have got, will be welcome. Foley, what can you contribute on this thing? Foley: Nothing. H.M.Jr: That leaves you and Herbert and I and Kuhn and Mrs. Klots, we sit back here and we will be the critics. Gaston: Lovely. H.M.Jr: If any of your boys, Foley, have got any ideas. I will not contribute anything over the weekend. I won't phone anybody after midnight. Let's take anybody that has got any ideas so we have - Paul is going to carry the tax ball, Bell will carry the fiscal end, and everybody is welcome with suggestions until we get something and do the hair pulling before ten o'clock. White: Doesn't it all have to be woven into one, and doesn't somebody have to have the responsi- bility for that? I think that will be the most difficult part. H.M.Jr: No, I don't-- Bell: I think it all has to be gotten together and where it fits into the message, if we can get & copy-- Paul: But I think we ought to have a clearing house. Everybody ought to give me his ideas, and I have to weave something together then and submit it to the crowd. Regraded Unclassified 177 - 17 - H.M.Jr: You mean, including the borrowing? White: Everything. Paul: No, I mean just the tax. I suppose the same technique would apply to Mr. Bell. White: That still doesn't fit what I thought - it has to be woven into one picture, doesn't it? Bell: Then the two groups ought to get together and see how one fits with the other. I think Harry is right. Paul: Oh, I beg your pardon. I agree with you. Sullivan: He means the two different sections together. Paul: Oh, I agree with that. H.M.Jr: Well, everybody is going to have a wonder- ful weekend, but we have never had a good week- end from Christmas until New Years. I think that is enough. That. is about all. Bell: Want me to give copies of that-- H.M.Jr: Yes. Anybody got anything minute, funny? Gaston: I have a letter from the Secretary of War, but I think I will go into it Monday with you. H.M.Jr: Have you got something you want me to sign? Are you through, Herbert? Gaston: Yes. H.M.Jr: Nothing too important. Foley: We want to restore some of these general Regraded Unclassified - 18 - 178 licenses, reinstating the Japanese program. The only reason I bring it up is because you said on license number one which permits them to make deposits in the blocked accounts, you would like to have the thing brought back to you. All right? H.V.Jr: Do I have to sign anything? Foley: No, I will do it. H.M.Jr: Use the old bean. Foley: O.K. H.M.Jr: All right? Sullivan: I have several matters, but they don't qualify under your instructions. H.M.Jr: Well, could they cook? Would the pot boil over? Sullivan: They can cook until Monday all right. H.M.Jr: The pot won't boil over? Sullivan: No. The Commissioner wants to leave this evening to go to Kansas. H.M.Jr: For how many weeks? Sullivan: He will be back here the third. H.M.Jr: The third? Klotz: He is tired. Sullivan: So am I. Bell: We all are. Klotz: He has really been sick. Regraded Unclassified 179 - 19 - Sullivan: We ought to let those that feel all right have some fun. H.M.Jr: It is all right with me. Is it all right with you? Sullivan: Yes, sir. H.M.Jr: Anything else? Sullivan: No. I have 8. personal question I want to ask you later on if I have & chance. H.M.Jr: Want to stay afterward? Sullivan: Yes, just a minute, H.M.Jr: All right, Randolph? Paul: You have given me enough to do. H.M.Jr: Dr. Viner? George? I hear you are going to charge up on the Hill with Walt Disney in your pocket. Buffington: What is that? H.M.Jr: Are you going up on the Hill Monday to get Mickey Mouse? Buffington: Going to try to. Thompson: It is before the Bureau of the Budget. H.M.Jr: I see. Wonderful. Have you got anything, Dave. Morris: I am not sure, but I would like to mention it. You can shut me off if you want it to wait. On those loans to small industry which are Regraded Unclassified 180 - 20 - very important in this defense proposition, in effect I think Eccles wants the Treasury to carry the ball on that to prove that something ought to be done, and he ought to do it rather than Jesse Jones who has the power but nobody has ever induced him to do it, and I don't know if you want me to start digging into that too hard. H.M.Jr: No, that is a fight I don't want to - I pick my fights and that is one fight I don't want to pick. Eccles - when Ecoles wants to fight he can fight, and I don't want to take on his fight. Morris: And we give him our blessing? H.M.Jr: That is right. Morris: You are willing to do that? H.M.Jr: Oh, yes. Bell: A little more, I think, than that. It is a question of whether we expand or whether we repeal 13b, in which we are very much intorested in. We are using our money. In a conference yesterday the question came up as to whether we should try to find out just what the problem is by asking one or two officers of the War Department as to what they would run up against. Now, have they run up against this problem, and, if they have, then we have got to say who is going to do it. Morris: Dan, can I say one thing? OPM came over to see me this morning because they are very upset about it. Bell: Upset about what, Eccles? Regraded Unclassified 181 - 21 - Morris: No, about the sub-contractors getting no- where, and while they say they don't care who does it, they indicated off the record that they would rather have Eccles do it than the RFC because they have had such bad luck with the RFC, but they are very upset about getting nowhere. Bell: I think if we are satisfied that there is a problem and the War Department and Navy or OPM wants something done, I think we can say to Ecoles that we don't care. If he wants to expand 13b, it is his problem and if Jesse Jones wants to do it, which he will get through committee action after it goes up, probably, it is all right too. If Jesse Jones does it, then I think 13b ought to be repealed and the money ought to come back to the Treasury. H.M.Jr: Dan, I can't absorb it this morning. All I can tell you, Dave, if it is a fight between Jones and Eccles, you know the story about the man that tries to separate husband and wife fighting on the streets. I always get licked by those two birds. (Laughter) They always get together. They always have. The whole fight with Giannini, Eccles, and - I never knew whether it was Eccles or Jones, but they always were on Giannini's side, always. Bell: I don't think we got licked. H.M.Jr: Well, I was fighting both of them and the rest of the world, but look what it took out of me. Look at the time. It took five years. Viner: I think you can support the idea without entering into the question as to who ought to execute it. The fight would all be on the execution. 182 - 22 - H.M.Jr: O.K., Ambassador, take your cue from Dr. Viner. We missed you at our luncheon the other day in Chicago. Viner: Well, I had to catch a train. H.M.Jr: You needn't get sore about it. (Laughter) Viner: I am apologizing. Klotz: That is an apologetic voice. H.M.Jr: All the other important bankers in Chicago where there. Bell: Any professors? Viner: Is that B. compliment. (Laughter) Morris: I don't know. White: Mr. Secretary, I think this is a little bit more important, and there are a few more angles to this than appears right now, and I am wondering whether you would reconsider the thing Monday morning. I think your course is right, but I don't think Dave Morris has quite got what you want him to do, and I think there is danger there because to fol- low Jack's procedure means that Jesse Jones isn't doing his job. Now, that may very well be, but I don't know why - there is another angle from which this thing can be approached and in which you can keep out of it entirely. H.M.Jr: Well, Harry, until we do this fiscal and monetary and borrowing thing for the Presi- dent, and B. speech for 8. week from Sunday, I an not going to take on anything else. Viner: That is urgent. Regraded Unclassified 183 - 23 - H.M.Jr: Which? Viner: This other. I wouldn't hold it up anyway. I wouldn't let Treasury be a barrier. Bell: I don't think we should take it on yet. The only question here is whether we shall go and find out what the facts are. H.M.Jr: No, I don't want to do that. Bell: Up to that point, and then let somebody else have it. H.W.Jr: Not today, anyway. Anybody that has got any information, I would like-- Morris: OPM is sending me some information. H.M.Jr: All right. We will hear what Harry has to say, too. Bell: Do you care if we contact the Army to see what information they have got? H.M.Jr: No, that is all right. Bell: That is about as far as we want to go. H.M.Jr: That is all right. Well, George is running a chart right on the facilities that Federal Finance is doing. You have got a chart for them? hass: Yes, sir, I carry it with me every day. It is right here. H.M.Jr: Well, unburden it now. I have had George studying how far and how fast Jones has been financing facilities. lie has been at it for about 8. month. Regraded Unclassified 184 - 24 - Morris: Well, just one sample, OPM told me in the last two weeks they presented twenty situa- tions to him, and he had only helped them in four. H.M.Jr: Go to it. I like your courage. Morris: Well, I will just get - can I talk to the Army and Navy informally? H.M.Jr: Yes. Bell: That is all we wanted to know. H.M.Jr: I have waited a long time for somebody to find out what Jesse Jones hasn't been doing on this. O.K., Dave? Morris: Thank you. H.M.Jr: Ferdinand? Kuhn: I would like to mention again that speech Sunday night because in view of the fact that you can't talk about taxes at all or a fiscal policy, I think it would be wiser to cancel the whole engagement. I don't see what you can talk about appropriately to that group. It is not just a group of - it is not a Boston Advertising Club or women's club. They are-- White: What is it? Kuhn: It is the Institute of Public Administration and the Association of Political Science up in New York on Sunday night. White: Public Administration? Kuhn: Yes. White: Why can't that be his speech, "Administration"? Regraded Unclassified 185 - 25 - Kuhn: Well, the Secretary can talk about the administering of Government in wartime. White: It is B. very good topic. Kuhn: It is a good subject, but I wonder whether he wants to talk on it. H.M.Jr: Look, I haven't had time. I am just pacing the floor. I have been trying to get to- gether with Harold Smith in some way that he doesn't feel that we are his enemy number one. Now, he is president of this organiza- tion, and, if I cancel the speech, nothing is going to irritate him more. Isn't he presi- dent of it? Bell: Yes, sir, and Luther Gulick is vice presi- dent. H.M.Jr: Now, if I cancelled that - this is the apple of his eye. Ask Viner. He will write a speech in four or five minutes on it. Viner: I would get Luther Gulick on it. He is an expert on the stuff those people expect. I would like to talk to you. There are things you can do on that. This is a timely thing, the whole question of wartime Government administration. White: It is one of the roundtables on that very topic. H.M.Jr: I wouldn't give up so easily because Harold Smith and Gulick-- Viner: They wouldn't want 8. talk on taxation as such. That isn't their role. Their role is on the question of operating the Government. H.M.Jr: Dan, don't you think it would be 8 mistake Regraded Unclassified - 26 - 186 to cancel it? Bell: I wouldn't turn it down. H.M.Jr: Look, let me catch my breath. Talk with Viner. Viner: Where is Gulick? Is he around? Is Gulick around? White: Yes, he is. H.M.Jr: Could you maybe, and then get some ideas? Viner: Yes. Kuhn: Yes. H.M.Jr: All right. How far did I get? Did I get beyond Harold? Graves: You sent me a letter this morning from Congressman Cannon of Florida -- H.M.Jr: Yes. Graves: ....in which he suggested that we ought to have bonds and stamps in the post office at the Capitol. H.M.Jr: We had that once before. Graves: We will reopen that, but I would like to refresh your recollection about what happened before. H.M.Jr: Is that Cannon of -- Graves: Of Florida. It is not Cannon of Missouri. H.M.Jr: Don't worry. I thought it was Cannon of Missouri. Graves: You see, those post offices are under the 187 - 27 - Capitol, not under the Post Office Department. H.M.Jr: Write him a letter for my signature. I thought it was Cannon of Missouri. Graves: I thought you might have thought SO, It was Cannon of Florida. H.M.Jr: Thank you. George? Haas: These figures on Savings Bonds just came in, and I did not have time to complete the table, but I have them here on this sheet. H.M.Jr: This week we have done twenty-four million, eight million eight, twenty-one million four, twenty-five million, twenty-two and a half million. Very nice. Chick? Schwarz: I have an important speech invitation which I will bring up on Monday. H.M.Jr: Harry? White: Mr. Clark of Canada telephoned that it is inconvenient for him to come next week. He would like to come the week following provided you are going to be here Monday, Tuesday, or Wednesday. Do you have any-- H.M.Jr: Ask me Friday, next Friday. I can't tell, Harry. I don't know. White: As far as you know you are, because if you are not, he wants to come this week and it is inconvenient for him. H.M.Jr: No, New Year's Day I hope to spend on the farm. Regraded Unclassified 188 - 28 - White: New Year's Day is on Thursday. H.M.Jr: I hope to be on the farm. I can't tell, Harry. White: It is on a Thursday. H.M.Jr: I can't tell. Ask me the day after Christmas. White: But you definitely don't know that you are not going to be here? H.M.Jr: No, I won't say that. (Laughter) White: All right. H.M.Jr: I don't know, Harry. White: All right. Mr. Irigoyen called me yesterday at the request of the State Department. He pre- sented certain matters. I am writing it up. We will have a little meeting here and then we will have something to present to you. What he has asked for, I don't think is within our province, but I will present it to you. H.M.Jr: Any Argentinian champagne? White: It is a little early for that. I didn't think the first meeting was appropriate as & time to ask for it. H.M.Jr: Remember, fifty-fifty. White: Mine is all gone. I will remember. (Laughter) H.M.Jr: As a matter of fact, I don't like Argentinian - I will take the red wine in place of the champagne. Regraded Unclassified 189 - 29 - White: We got it for nothing, you realize. They never did-- H.M.Jr: Same basis. Bell? Bell: Do you want the draft of the report of the Byrd Committee to come up to the house. H.M.Jr: Yes. Bell: I will have it sometime today. H.M.Jr: Right. Thank you. Bell: That is all. Thompson: To ease the space situation in the Treasury building, I am planning to move Mrs. Ross of the Mint Bureau out if that is O.K. with you. H.M.Jr: It is wonderful, but I just want to know who is going to issue the order. Thompson: I will issue it. Bell: Harold Graves. Klotz: Yes, Harold Graves. H.M.Jr: Harold can't take it. Thompson: I will take care of it. H.M.Jr: Where are you moving her? Thompson: Over to the Washington Building. H.M.Jr: What are you telling her? Thompson: Cy Upham has arranged to move his Insolvent Regraded Unclassified 190 - 30 - Bank Division. H.M.Jr: When are you moving Nellie? Thompson: Next week. H.M.Jr: Couldn't you see Nellie home on B. day I am out of town or something? Thompson: Yes, I can hold it up. It isn't so urgent. Klotz: She won't come up. H.M.Jr: You know the McReynolds story. All right. Wonderful. (The Secretary held 8. telephone conversa- tion with Mr. Knudsen.) Klotz: If you start it with him, you are going to have a time. Foley: Jenkins, the president of the General Motors Export Company, is waiting for me in my office now. H.M.Jr: What is the thing? You give how much to a person and how much for each child? Foley: He is entitled to a hundred dollars a month and twenty-five dollars in addition for each dependent. That is the general rule. Now, what he wants to do is to give the family ten thousand dollars for Christmas, and you can't do it. H.M.Jr: Oh, no. Foley: And he just happens - you tell him you can't do it, you tell him what the regulations are, and then he gets his export man to come in with this idea of crediting the account of General Motors Export here with ten thousand Regraded Unclassified 191 - 31 - dollars and having the money paid out in Denmark to the sisters. Now, you can't do for him what you can't do for everybody else, and everybody else-- H.M.Jr: Ed, you are telling me that? (Laughter) Foley: Well, you know, for Christmas. Regraded Unclassified 191 - 31 - dollars and having the money paid out in Denmark to the sisters. Now, you can't do for him what you can't do for everybody else, and everybody else-- H.M.Jr: Ed, you are telling me that? (Laughter) Foley: Well, you know, for Christmas. 192 December 20, 1941 11:45 a.m. HMJr: Hello. Wm. S. Knudsen: This 1s Knudsen. HMJr: Well, for gosh sake. It's like a voice from the dead..... K: (Laughs) HMJr: .....as far as I'm concerned. K: Well, I never like to bother people unless I've got something concrete to bother them about. HMJr: Well, I like to see you when you've got nothing but just a nice "how-do-you-do". K: (Laughs) I got four sisters. HMJr: Four sisters. K: /eah. They live in Copenhagen. HMJr: Yes. K: They've got children and grandchildren. HMJr: Yes. K: Since 1928 I have sent them $200 each every month. HMJr: Yeah. K: The funds that I have over there run out January the first. HMJr: Yeah. K: I have asked General Motors to give them krones out of the plant over there, and I will refund it in dollars here. HMJr: Yes. K: In cash. I'm told that there's a regulation - 2 - 193 which forbids a transaction of this kind. HMJr: I see. K: And Mr. Pehle HMJr: Yes. X: in your Department HMJr: Yes. K: knows the negotiations with G.M. in that respect. HMJr: Right. K: I want to ask you, as a friendly favor to a man that wante to help his sisters HMJr: Yes. K: whether there's any way I could continue this money beyond January first. HMJr: Well, Bill, I'll look into it personally; and if there's any possible way of doing it, we'll certainly do it for you. K: I've done it since 1928. HMJr: Well, we'll look into it. It's difficult. X: Yeah. HMJr: Very difficult. K: Yeah. HMJr: But K: Well, I understand furthermore, that there's some possibility of giving a hundred dollars HMJr: Yes. K: and twenty-five dollars for each dependent. 194 - 3 - HMJr: That's right. K: But there are plenty of dependents. HMJr: There are? K: In other words, the Knudsen family is quite prolific. HMJr: Well, that would help. K: All right. HMJr: I'll have an answer - I'll tell you what we can or cannot do by Monday. K: Thank you very much. HMJr: Thank you. K: Thank you, sir. Regraded Unclassified