Volume 529, May 16 – May 19, 1942

DIARY Book 529 May 16 - - 19, 1942 - A - Book Page Agriculture New York State: Mobile farm labor camps - Senator Mead- Agriculture-Treasury correspondence - 5/18/42 529 104 Airplanes Comparison of American and German production - 5/16/42 31 Shipments to British Forces - Kamarck report - 5/18/42.. 131 Argentina See Latin America: Uruguay # Board of Economic Warfare - B - Board of Economic Warfare Exports to Sweden and Argentine Funds to be discussed at meeting of Board in Wallace's office at Capitol - 5/19/42 274 a) Minutes of meeting - 5/21/42: See Book 531, page 161 Bolivia See Latin America Business Conditions Haas memorandum on situation, week ending May 16, 1942 - 5/18/42 91 - C - Canada See Silver Central Banks Conference proposed in accordance with Rio resolution: Collado-Southard conversation - 5/18/42 137 China Central Bank advised Treasury Certificates of Indebtedness or Treasury bills best suited for investment of funds of type now on hand - 5/19/42. 297 Sterling Fund, 1939 - Adler advises Stabilization Board resolved to take over management and control of - 5/19/42 298 Columbia Power Administration See Interior, Department of Communist Party See Federal Government Continental Illinois National Bank and Trust Company Lewis, Frank J. (Chairman, Federal Reserve Bank of Chicago): Arrangement with Bank for purchase of Government securities later sold to Bank at profit reported to Eccles by HMJr - 5/19/42 247 ea) Eccles-HMJr conversation 5/22/42: Book 530, page 290 Council of State Governments See State Governments, Council of Cuba See Latin America - b) Lewis resigns from Federal Reserve Bank of Chicago - 6/24/42: Book 542, page 161 earaded - I - Book Page Federal Government (Communiet Party (German-American Bund Membership as ground for dismissal from Federal employment - report of Interdepartmental Committee - . 5/18/42. 529 113 Financing, Government Refunding: Securities to be refunded in May 1942 - ownership of, as of March 31, 1942 - 5/19/42 243 a) Conference; present: HMJr, Bell, Haas, Buffington, Lindow, and Baker - 5/20/42: See Book 530, page 1 1) Maturities up to December 31, 1942, exclusive of Treasury bills: Book 530, page 9 b) Rouse-HMJr. conversation: Book 530, page 10 c) Conference; present: Treasury group, Eccles, Szymcsak, and Piser - 5/20/42: Book 530, page 21 1) Direct and guaranteed bonds and notes - calendar of - as of April 1, 1942: Book 530, page 38 d) Offerings to be made May 25, 1942 (Home Owners' Loan Corporation and Reconstruction Finance Corporation): Book 530, page 178 e) Public Debt operations estimated for June and July 1942 - 5/22/42: Book 530, page 289 f) Report on refunding - Bell memorandum - 5/29/42: Book 534, page 74 War Savings Bonds: Southern Pacific Railroad bulletin, May 1942; devoted largely to campaign - 5/16/42 8 Sales, May 1-15 - 5/16/42 16 Progress report - 5/18/42 73 Series F and G Bonds down to 83.3% of quota; ways and means of improving situation discussed by HMJr, Graves, Bell, Buffington, Gamble, Haas, and Tickton - 5/19/42 214 a) Lawyers to be contacted with a view to recommending investment of trust funds - 5/19/42.. 233 Victory Fund Committees (See also Book 522): HMJr's letter of appreciation to members - 5/19/42 236 a) To be used for financing other than War Savings issues - 5/29/42: Book 534, page 79 1) Sproul protests: Book 534, page 80 a) Eccles-Treasury conference - 6/2/42: Book 535, page 147 Finland National expenditures and war budget - 5/16/42 39 *Federal Reserve Bank of Chicago See Continental Illinois National Bank and Trust Company - G - Book Page Gasoline Ration books "tie-in" with Internal Revenue use stamps discussed in Office of Price Administration-Treasury correspondence. 5/18/42 529 67 German-American Bund See Federal Government - H - Health Supplies Survey See War Production Board Home Owners' Loan Corporation See Financing, Government: Refunding - I - Illinois National Bank and Trust Company, Continental See Continental Illinois National Bank and Trust Company Interior, Department of Columbia Power Administration: Ickes' letter concerning pending legislation 5/18/42 108 Italy War Financing: Cable from American Legation, Bern, Switzerland - 5/18/42 151 - I- Keppel, Francis (State Department) See Revenue Revision - L - Latin America Argentina: See Latin America: Uruguay - Board of Economic Warfare Bolivia: Agreement discussed by White and Ambassador - 5/18/42.. 138 a) Tin contract discussed by Ambassador and State Department - 5/23/42: See Book 531, page 168 Conference; present: Treasury group and Ambassador - - 5/26/42: Book 532, page 18 a) Draft of agreement: Book 532, page 20 Cuba: Silver certificates - legislation authorizing issuance of additional: Cable from American Embassy, Havana - 5/18/42 144 a) Probable basis of gold purchase contract with Cuban Government Uruguay: Argentina assistance offered Government in meeting increasing deficit in budget - cable from American Embassy, Montevideo - 5/16/42 37 - L - - (Continued) Book Page Lend-Lease Operating report, week ending May 16, 1942 - 5/19/42.. 529 -293 Lewis, Frank J. (Chairman, Federal Reserve Bank of Chicago) See Continental Illinois National Bank and Trust Company - X - Massachusetts Institute of Technology See Secret Service McKeough, Raymond S. (Congressman, Illinois) Paul asks HMJr to urge FDR to back him; valuable on Ways and Means Committee - 5/19/42. 264 a) HMJr's letter to McKeough - - 5/27/42: See Book 532, page 222 Mexico See Silver Military Reports Coordinator of Information reports: British Political Warfare Executive weekly German directive - 5/16/42 40,42 British Political Warfare Executive weekly French directive - 5/16/42 45 British Home Intelligence report, week ending May 11, 1942 - 5/18/42 158 British operations - - 5/16/42, etc. 49,50,157,300 Kamarck summary - 5/19/42 301 - N - New York State See Agriculture - 0 - Office of Scientific Research and Development See Secret Service - P - Plato See Rothschild, Walter N. Procurement Division See War Production Board - R - - Rate Schedules See Revenue Revision Reconstruction Finance Corporation See Financing, Government: Refunding Refugee Governments Financing by United States discussed by Berle and HMJr - 5/19/42 212 - R - (Continued) Book Page Revenue Revision Rate Schedules: Paul (7) memorandum on conference with Joint Committee at request of Doughton: Committee rates too low, Treasury rates too high - 5/16/42.. 529 4 Educational and Charitable Institutions: Taxation of income derived from business and limitation of present exemption from estate taxation of all bequests for a) Discussion at 9:30 meeting - 5/19/42 165 b) Treasury letter (proposed) to Francis Keppel, State Department 161 Withholding Tax: Helvering memorandum concerning - 5/19/42 252 a) Congressmen's impression that Bureau opposes collection at source on administrative grounds reported to HMJr by Paul - 5/19/42 262 b) Paul recommends before House Ways and Means Committee - 5/20/42: See Book 530, page 77 c) Helvering's real attitude Paul memorandum - 5/21/42: Book 530, page 181 Rothschild, Walter N. Plato quoted on income tax - 5/18/42 82 - S - Schenck, Joseph M. See Tax Evasion Scientific Research and Development, Office of See Secret Service Secret Service Personnel desiring to enter armed services - FDR inquires concerning delay - 5/16/42 1 a) HMJr's letter to FDR assuring him "men's personal wishes will control" 2 b) General Watson-HMJr conversation 5/18/42 55 Office of Scientific Research and Development asks for two agents at Massachusetts Institute of Technology - - 5/18/42 90 Silver Canada and Mexico: Purchases by United States under agreement compared with total silver imports from two countries - 5/16/42. 29 Southern Pacific Railroad See Financing, Government: War Savings Bonds State Governments, Council of Committee from war agencies appointed by FDR to meet with; HMJr a member 5/19/42 250 Conference in Jones' office - 5/20/42: Book 530, page 18 Sweden See Board of Economic Warfare - T - Book Page Tax Evasion Schenck, Joseph M.: Progress on case reported by Helvering - 5/18/42 529 86 Taxation See Revenue Revision - U - Uruguay See Latin America - V - Victory Fund Committees See Financing, Government: War Savings Bonds - V - War Production Board Health Supplies Survey: Procurement Division to be represented - 5/16/42 17 War Savings Bonds See Financing, Government 1 May 16, 1942 Chief Wilson Secretary Morgenthau The President of the United States called no at nine-thirty Friday night and said he understood that four members of Secret Service had got commissions and five had arranged to get their commissions with the Army and were about to go in when somebody in the Treasury said that they couldn't go. I told him I knew nothing about it, and I'd look into it at once. I wish you would do 80; and if anybody is holding up their commissions, I'd like to know why and please get word to me wherever I as immediately, as I want to make a report to the President. See letter to Pres. dated 5/16 and lan. with General Watson 5.18 Regraded Unclassified 2 May 16, 1942 My dear Mr. President: I an informed by Chief Wilson that, to date, 9 men from the White House detail have received commissions in the Army or Navy. In regard to the 5 men who wanted to get commissions in the Army, I have issued instructions to Chief Wilson that they should be permitted to earry out their own personal wishes in the matter. Yours sincerely, (Signed) 1. Norgenthaw, IN The President, The White House. n.m.c. S.S. agent 10:25 Regraded Unclassified 3 MEMORANDUM May 16, 1942. I talked with the Secretary this morning at 8:30 en route to the Treasury. I explained to him that the members of the Victory Fund District Committees were volunteers and in no case exercised any authority for the Treasury. It therefore seemed logical to approve their appointment without the complete investigation contemplated in the organization memorandum. The Presidents of the Federal Reserve banks who have submitted District Committee memberships to us will be advised to proceed with appointments after names have been approved by Mr. Bryce and me. The presidents will be asked to confirm acceptance to the Secretary in order that he may send a letter expressing his appreciation. The Secretary stated he would not be willing to sign several hundred letters individually but I suggested some other method might be worked out. He also read and approved the telegram Mr. Eccles proposed sending to all Federal Reserve bank presidents this morning which stated that the names of Executive Managers must be submitted and approved before appointments could be announced. These names should be fully investigated inasmuch as certain managers will be paid repre- sentatives of the Treasury. The Secretary indicated that he might want to use these Committees on F and G Bonds the last week in May and therefore urged completion of the set-up as soon as possible. This procedure was the subject of discussion in Mr. Eccles office, yesterday afternoon at 2:30 at which Mr. Bryce and I were present. Mr. Eccles asked that we discuss with him bank officers appointed to the District committees. G.T. Regraded Unclassified May 16, 1942 MEMORANDUM TO THE FILES polatly Rann On Thursday Mr. Doughton called in the morn- ing and asked me to appear at the Clerk's office for a conference with him and Mr. Stam. I went to this conference, taking with me Mr. Blough and Mr. Tarleau. Mr. Stam appeared later. Mr. Doughton indicated to us that Stam's rate schedules were too low and our rate schedules were too high, and he wanted us to confer privately outside the Committee in order to see whether we couldreconcile our views. He said that if we could not, he would like each of us to statethe furtherest we would be willing to go, Stam in the upper direction and we downward. Thurs- day afternoon, and again on Friday, Stam's staff and our staff conferred on this subject. On Thursday afternoon I, alone, worked out with Mr. Stam and Mr. Price a general tentative agreement along the following lines: A 5 percent normal tax, $1,000 low bracket structure instead of $500. Some relief between $3,000 and $10,000, lower surtaxes reaching an 80 percent top surtax, plus 5 percent normal, or a total of 85 percent hit at $100,000 instead of $200,000, as in Stam's schedules. These lowering of rates would necessitate some increase of lower rates in order to reach the tenta- tively-agreed, halfway-between figure for the entire rate schedule. The next. day, Friday, we met and gave Mr. Stam the result in revenue yields. His schedule of rates applied to the Ways and Means base produces $2,400 millions additional income taxes. Our schedules pro- duce $3.5 billions. The new compromise plan, called the "X" plan, produces about $3 billions. Stam then Regraded Unclassified 5 - 2 - indicated that he was unwilling to accept the "X" plan or any plan substantially higher in yield than $2.4 billions. He expressed the thought that the increased individual income taxes could not exceed the increased corporate tax of $2.5 billions. In the meantime, on Thursday afternoon, Blough and I rode home with the Secretary and indicated to him the general tentative agreement and the revenue results therefrom. The Secretary was unwilling to make any such compromise because it would stultify him in the Senate. Mr. Blough, Mr. Tarleau, and I prepared a memorandum presenting our views on this point, urging upon the Secretary the advisability that he agree if Stam would agree. A copy of this memorandum is attached hereto as Exhibit A. On Saturday morning Mr. Stam and his staff again met with us and we discussed burdens at vari- ous brackets and possible alternatives. Nothing came of this discussion, and at 12:00 o'clock Stam and I went to Mr. Doughton's office at his request for a conference. Mr. Doughton called into his office for a conference, Congressmen Cooper, Disney, Boehne, and Robertson. Mr. Stam and I made a report to this group of our futile efforts to agree, I making it very clear that we had constructed the new "X" schedule in the hope of an agreement with the idea of recommending it to the Secretary and the President only if Stam should agree. Since he did not agree I declined to lower our rates in any way. The group expressed the desire to have presented to it a number of alternate rate schedules running from 2.4 to 3.5 in order that the Committee might study the taxes in various brackets and determine for itself what rate structure it would adopt. I was requested to furnish on Monday, rate schedules bringing $2.7, $3.0, $3.25, and $3.5 bil- lions. Stam was requested to present the burden tables, etc., with respect to his $2.4 billions. To repeat, it was made very clear at this con- ference that none of these schedules (including the 6 - 3 - "X" schedule), except the 3.5 schedule, repre- sented the Treasury's views, and Mr. Disney said that he understood that the Committee was giving us a mandate. I asked Mr. Doughton if he were "ordering" us to produce these schedules and he said that he was "directing" us to do so. At this conference I also mentioned our desire to present to the Committee our recommendations as to the $25,000 limitation and they said that they would be glad to give me the opportunity to do 80. Photoclat to Mr. White 5/18/42 THE WHITE HOUSE WASHINGTON May 16, 1942. MEMORANDUM FOR THE SECRETARY OF THE TREASURY I have your letter in regard to the calling of a conference of Finance Ministers of the United Nations. It is my thought that the studies now in progress should be continued in conjunction with the State Department and the B.E.W. and the Export-Import Bank. You might speak to me about this again after you have done this and after you have got the opinions of the Secretary of State and the Under Secretary of State. F. D. R. 8 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE May 16, 1942 TO The Secretary of the Treasury FROM Mr. Houghteling I feel sure that you will be greatly pleased to see the attached copy of the "Southern Pacific Bulletin" for May, a large part of which is devoted to the War Sav- ings campaign conducted jointly by the railroad and its labor unions. They are driving strong for 100% partici- pation and 10% allotments. 1 PACIFIC LINES das Southern Pacific BUY BONDS VICTORY Bulletin MAY 1942. LOS ANGELES SHOPS THE NO GET BOND WAGON : BAYSHORE 1 PORTLAND THE UNITED WE STAND SACRAMENTO SHOPS MEN WORKING - BUY AMERICA À SHARE IN SAN LUIS OBISPO ..MGS Regraded Unclassified 2 S. P. Bulletin Washington Commends Southern Pacific People To THE MEN AND WOMEN OF THE SOUTHERN PACIFIC: I AM most encouraged to learn of the program being of war bonds during the coming fiscal year. This started April 20 to enlist every one of sixty thou- will require the investment of over 10 per cent of sand Southern Pacific employes in a voluntary pay- the national income. The success of your campaign roll savings plan to buy war bonds. The Treasury for 100 per cent participation among Southern Pacific believes that through voluntary cooperative effort employes will be strong proof that we can do this undertaken jointly by management. labor and gov- job by the democracy method of voluntary action, ernment we can reach our goal. which is the and will show that you are doing your share in a purchase by the American people of $12,000,000,000 big way to assure American victory. (Signed) HENRY MORGENTHAU, JR., Secretary of the Treasury. Payroll Allotment for Bonds-and VICTORY! J. G. Luhrsen. executive secy. of the By. Labor Execu- tives Assn. (in a letter drafted for all chief executives of HORTLY after dispatching the above message to Southern Ry. Brotherhoods): "The need for greater participation and Pacific employes, Secy. of the Treasury Morgenthau increased purchases of bonds is very urgent, and we again announced the beginning of a nation-wide drive to have all appeal for support of every worker. This (Bond Campaign) American workers set aside 10 per cent of their income for must be an all ONI effort; we are at war. Nothing short the purchase of War Savings Bonds through Payroll Savings of full and complete participation will do." Plan. In support of both the SP Drive started April 20 and John Kearney, president of the SP Club of San Francisco the National Drive to start July 1, representatives of SP Man- (speaking for the numerous other clubs on Pacific Lines): agement, Brotherhoods, and Clubs made these pertinent state- "Practically every SP Club has invested a large part of its ments: treasury in Savings Bonds. Through direct solicitation, A. T. Mercier-President. Southern Pacific: "A share of through the stimulation of Victory dances, drawings, and your pay check for a share in your country is today's best in- meetings, we are bending every effort to see that every mem- vestment. War Savings Bonds will help your country today ber of every club signs up for payroll deduction." and take care of you tomorrow. You can buy conveniently and regularly through Southern Pacific's payroll deduction plan." Your government, your management, your organizations, your clubs urge you: SIGN UP NOW! KEEP 'EM ROLLING! HUNDREDS OF GENERAL OFFICE FOLKS PARTICIPATED IN YES SMASH THE ASSIS VOLUNTARY PLAN FOR PAYROLL PURCHASE OF WAR BONDS MEN WORKING Unclassified 3 100% SIGNUP IS THE AIM Railroaders Rally to Systemwide Campaign For Payroll Purchase of War Savings Bonds AMERICA takes the offensive! This is ganizations, SP Clubs, and the manage- news of the hour as bombs rain ment. Working together in committees on Tokio, as plane production is speeded, they are making a systematic solicitation and as Mr. and Mrs. John Q. Public divert on every division, in every department, more and more of the national income to asking every employe to sign a payroll support of the war effort. Railroaders, as allotment form. Simultaneously with this usual, are in the thick of things. There solicitation, an effort is being made to are railroaders at Corregidor; railroaders determine the value of bonds purchased UNCLE SAM'S armed forces, the men who will carry the war direct to the Axis, were typified at are transporting those vital planes, yes by SP'ers aside from payroll allotments. the General Office Bond Rally April 20 by pop- and flying them, too; and railroaders on This figure is desired only that due na- ular Johnny Lake, formerly of the Motive Power and Passenger Traffic Depts. He was interviewed the home front have launched an offen- tional recognition will be given railroad- by Walter C. Fell. Principal speaker at the rally sive to promote the purchase of War Sav- ers as a craft for the patriotic response was A. F. Gaynor, division chairman, BoIRC, Lodge 890, Pres. John Kearney spoke for the SP ings Bonds by payroll deduction. they have already given in bond pur- Club, sponsors of the rally. Others participating On April 20 the Bond Drive opened chases. were: Emmett Fitspatrick, Harold Martin, Enid DeMond, Bernice Maker, Shirley Rogers and sev- with a bang! All over Pacific Lines com- Throughout the magazine you will find eral others from the "Babes in Bediam" cast. mittees swung into action and reverbera- evidence of Bond Campaign activity. The tions came from El Paso, Tucson, Phoenix, pictures speak for themselves in telling Los Angeles, San Francisco, Sacramento, the story of enthusiasm and cooperation north to Klamath Falls and Portland, east that greeted the efforts of committeemen to Sparks and Ogden. Small reverbera- in this Drive. Many individual members tions they were, only scratches of pen on of these hard working committees are stiff white cards, but translated they read seen in the various pictures. We'd need "Death to the Axis Powers". Those cards, another twenty pages to publish pictures requesting payroll allotments, and coming of all the committees, but while we can't in to the Local Treasurer's office by the publish their pictures, we can pass along hundreds, are the railroaders' pledge to a word of praise for the fine work they support the national war effort. are doing without exception. By May 20, when the initial phase of Final and complete results will not be the drive will end, it is believed that known for some time yet but early returns every railroader on Pacific Lines will have are encouraging as railroaders realize the been solicited to buy bonds through pay. definite advantage of systematic saving roll deductions-and to keep on buying through regular and continued purchase them. The drive was organized by rep- of bonds through payroll allotments. EVERYWHERE committee meetings and railies resentatives of railroad brotherhood or- If YOU haven't signed, do it NOW are being held to stimulate Bond sales. Here Supt. J. C. Goodfellow is addressing Tracy group, With him are Trainmaster P. D. Robinson, Jas. E. LLY THAT GOT THE WAR BOND SIGNUP CAMPAIGN OFF TO AN INSPIRING START McCormick, and C. E. Tyner, Local Chm. BofLE. PAYROLL ALLOTMENT PLAN FOR BUYING WAR BONDS NOW REVISED H ERE are the facts about the payroll are allowed because they add up to an allotment method of purchasing even purchase price. War Savings Bonds. The method is sim- What You Get: You get back in bonds ple, and designed to fit railroaders' needs. every cent you pay in. The railroad not Recently, it was revised to improve cer- only does not make a profit of any kind, tain features. But some misunderstand- but assumes the considerable expense in. ings still seem to exist regarding the plan volved in the administration of the plan. 50 we hope you'll help us put things The money accumulated for bond pur- straight by passing along these facts. chases is kept in a special trust fund on Please read them and then talk them over which no interest is given. This money is with other SPers, some of whom may not not withdrawn until your bond is actually know of the revisions made. issued and mailed to you. In addition to In General: A bond purchase is this, the Company advances its own funds started by simply filling out, signing, and to buy bonds from the Government returning the payroll allotment form to in advance of their actual issuance to em- your supervisor or campaign committee- ployes. These are kept on hand 50 that man. This form tells what denomination they can be handed over to you without bonds you want to buy, and how much delay when you complete your purchase. you want taken out of your paychecks to These expenses are assumed by your Com- pay for it. The auditor makes these deduc- pany to afford you a convenient and tions and, when they amount to the price practical method of buying bonds. of your bond, the bond is mailed to you. When Do You Get the Bonds: When That's all there is to it. your deductions amount to enough to pay How & When You Pay: Your deduc- for a bond of the denomination you are tion must be at least $1 a month. You buying, a bond is issued in the name or may have the deduction made from either names you requested and goes forward to the first or second period paycheck. If the you by mail, or as otherwise directed. deduction amounts to $10 or more each Now here's a point to remember: your month, you can split your deduction and bonds will be dated as of the first of the have one made from each paycheck. To month in which you complete payment. simplify the accounting, your deduction must be made in multiples of 50 cents, Changes-Cancellations: You can unless you are signing up for one or more change the amount, you can change the bonds each month, in which case deduc- deduction period, you can change the tions such as $18.75, etc., are permitted, form of registration; you can do any or and may be split between paychecks. Al- all of these things simply by preparing a though they do not come out in even new allotment form and indicating what changes you want to make. You can cancel 50 cents, deductions of $3.75 and $6.25 (Continued on next page) 5 "Bulletin" Swamped with 100% Groups we asked for it, we got estimated the response of our railroaders was too heavy for us to in a matter of this importance. handle. We're talking about the informa- The telegrams, mailgrams and memos ton regarding the departments that were flooded in. They're still coming in, and 100% in payroll allotment during the if the names of 100% departments were first five days of SP's Bond Buying Cam- laid end to end they'd stretch right over paign. When the campaign opened on to Japan and cause the Emperor no end April 20 we thought a good feature for of uneasiness. That's just what they the May Bulletin would be a list of de- caused us, for it soon became evident that partments that had hit the 100% mark a bulky supplement would have to be in the first five days. So out went a tele- provided for the Bulletin just to list de- gram to Department and Division heads. partment, office, gang and station names. So far, so good: but evidently we under- Then, too, there was some misunder- standing in the first reports as to just what the 100% was to cover. Some depart- The Allotment Plan Revised ments considered themselves 100% when everyone in that department had bought (Continued from opposite page) or subscribed for a bond, whereas what the deduction at any time and the full we wanted were names of departments amount accumulated, if not enough to that had reached 100% in PAYROLL purchase a bond, will be returned to you. ALLOTMENT for bond purchases. And if your paycheck is insufficient in any It was all very impressive, these re- period to cover the deduction, that deduc- ports from remote sections of our railroad, tion is simply suspended to avoid a heav- from the varied crafts, from laborers, ier deduction out of A subsequent check. from executives; all singing a song Summary: The entire plan has been of 100% that grew louder in volume as set up with one idea in mind; to make it each hour swelled the total. A loud song, easy for YOU to buy bonds. In one sense, a triumphant song, that song of 100% it is simply a savings plan through payroll from the Southern Pacific railroaders, and deduction. If there are details you don't while its very volume drowned out our understand or if any phase of the present plan for printing names and figures, that plan is still undesirable to you, talk it same volume will make a loud and un- over with your employing officer. He has pleasant noise for the ears of Adolf, the detailed facts and can help you. Benito, and Hirohito. OVER THE TOP in the first days of the campaign went . number of departments, offices and other groups with 100% signup for payroll allotment purchase of War Bonds. It's a pity that space does not make it possible to print pictures of all such groups, for it would make an imposing array. However, here are two of them: (top) Tucson Stores, where W. E. Larson is storekeeper: and (bottom) the 2nd shift at Sacramento Frog Shop, which group gave Foreman G. E. Morris a full signup, back on Mar. 23. NUPS EVERYWHERE typify the response oaders are giving the Payroll Allotment Cam- El for War Bond purchases. (1) H. H. ers, Sacto. Saw Mill, makes out application Committeeman C. G. Murphy and R. R. Deal on approvingly. e (2) Carman Mike Geor- es reports his $6,250 purchase of bonds. With are Sparks carmen A. Hargraves and A. J. son. The trio has $13,350 in bonds. (3) Tuc- drafting room gave the application forms ntion; I-r: Gus Schneider, Bob Porter, "Army" istrong. Paul Bartholomeux, Bob Hall. At El Paso Shops Committeemen F. N. wder and J. G. Black sign up Robt. Putman additional bonds: (5) Asst. Mas. Mech. D. Vance congratulates some of Sparks' com- 100% leemen whose departments have bought or ed up 100% for bonds, I-r: Pete Smith, L. K. (rd, L. Holly, A. W. Rock, W. L. Ford, Brough, L. Zuning. (6) Walter Seal, asst. L supt., explains payroll allotment forms to IP of Taylor yardmen at LA. Seated is Ed. ivan ready to sign. (7) Immediately after (lly at LA Shops, five clerks were kept busy ling up men for payroll allotment or declara- of previous purchases. (8) The same spon- ous response occurred the opening day of the paign at West Oakland Commissary, where G. E. Mackinnon, Genl. Chm. DCC&W Larche and Instr. Waiter Ed. Prohman signup. . (9) Engineer M. W. Nason pplication for payroll allotment at (10) Train Dispatcher B. F. Brum- Bakersfield, joins in the parade with his Istant Division Engineer W. M. Jaekie, com- (11) lature on an allotment application. teeman at Oakland Pier, gets the signa- of Head Draftsman Chas. J. McConaughy. Regraded Unclassified TRACY (1) got its campaign off to good Bin with a raily MC'ed by Trainmaster P. D. Robie. son. wartime movies, Stores Dept. Menican band, Boy Scout exhibition, talks by Supt. I.C Goodfellow and J. E. McCormick, businessmas, GENERAL OFFICE (2) followed up the Coun Yard rally (picture PE. 3) with visits to all pris. cipal offices by members of the SP Speaken Club accompanied by attractive young ladie who distributed the Payroll Allotment Pledge Cards. (3) Committee, 1-r: E. G. Fitspatrick, E. C. Nevin, Albert E. Miller, Phil Young Frank DeAcosta, Ed Gibson, James Joyes Not in the picture: Ed Plate, George Prey. SACRAMENTO (4) Committeemen whose de- partments had subscribed 100% to the Alletment Plan only three days after campaign opened Standing. 1-r: W. P. Hansen, G. A. Ericksen, Varina M. Sawyer. R. H. Hulick, N. A. Simon- sen. Seated: I. 8. Wilson, J. A. Silva, E. Ens- bury and J. A. Collins. Division as a whole will making vigorous drive for a full 100% signs. COLFAX (5) Master Mechanic L. E. Lonergo (right). Sacto. Div. committeeman, with group of 100% bond holders and subscribers. Lonerger also visited Truckee and other stations on the Sierra "hill" in behalf of the bond campaign ROSEVILLE (6) Carmen in the train yard, wig with fellow workers at the Car Shops, 100% bond owners even before the present paign started, through efforts of Genl. Car Forth man A. S. Teal and Clerk Guy S. Steward SAN LUIS OBISPO (7) "rails" H. Blackburt E. Sarmento, W. Turney, R. Duncan, R, Mo Knight made sure their picture with bond poster gave display to department's accomplishment of 1206 days without any reportable accidents COAST DIVISION (8) timekeepers F. J. Ryan, Bob Church, 0. R. Rogers doing a bit of check- ing of rosters as assistance to Committeems Jim Knudsen and Geo. Knudsen in distributing allotment pledge cards at Superintendent's Of. SAN JOAQUIN'S drive was plenty active, W. E Grazier (9), Lo. Chm. MofWE, out among de B&B gangs; Victoriano Ysararoz (10). creasing watchman, setting fine example: and everywher the committeemen are being well received. W. OAK. STORES (11) was typical of almost all other Pacific Lines units of that department in quickly going 100% for Payroll Allotment A full department pledge was in near prospect. 7 Veteran Passenger Officer Is Retired Frank Lathrop's Legion 7 of Friends Include Many of World's "Big Names" RINGING to a close a colorful rail- road career of nearly forty years, Frank C. Lathrop, general passenger agent for the Central Southern Pa- cific with headquarters at San Francisco, retired from active duty on May 1. His successor is to be announced later. Probably no railroad official in the country enjoys a wider acquaintanceship among international celebrities than Mr. Lathrop, who has played "host" to poten- tates and presidents, kings and queens, 8 as well as stars of stage, screen and radio, traveling over his railroad's lines. Mr. Lathrop's personal files would be the envy of any international autograph FRANK C. LATHROP collector. Among these are notes from "big names" throughout the world, in- 1923. He estimates that during his long cluding every United States President period of service he has traveled more since Theodore Roosevelt. He has a wide than 250,000 miles. friendship among high ranking U. S. Widely known in railroad circles, Army officers and numbers among his Lathrop is first vice president of the San close friends Generals George Marshall, Francisco Tourist & Convention Bureau Douglas MacArthur and John J. Pershing. and has been active in promotion of 9 In personal appearance, Mr. Lathrop tourist travel to the Pacific Coast. closely resembles the late President War- ren G. Harding. Once, while accompany- PAYDAY DOLLARS FOR BONDS ing the presidential party from Seattle to San Francisco, many persons mistook him Railroad Book of outstanding nature for the chief executive. is This Fascinating Railroad Business, Starting with the Southern Pacific in published by Bobbs Merrill and written 1903 as a passenger agent at Los Angeles, by Robert S. Henry, asst. to president of after having had traffic experience with the AAR. The book tells what railroad other companies dating from 1896, Mr. service is, how it's produced, what it means to all of us, and tells it not in a Lathrop held various passenger depart- technical treatise, but from the viewpoint ment positions in Los Angeles and Pasa- of the layman who is interested in the fas- dena, coming to San Francisco in 1912 cinating facts behind trains and of the as assistant general passenger agent. He railroad man who is interested not just in had held his present position and that of his own part of the performance but in assistant passenger traffic manager since the business as a whole. TRACY'S NEW TURNTABLE was ready for operation on March 20, the 110-foot table replacing an 80-footer, and equipping this busy division terminal to better handle today's heavy volume of traffic. The installation was carried on by engineering and maintenance crews working under the direct supervision of Division Engineer O. M. Bar- low, B&B Supervisor J. F. Harbor, Roadmaster W. M. Gates, Asst. Engineer K. C. Brun- ner, B&B Foreman Wm. Ferber and Section Foreman Geo. Minotto. This picture was one of a series taken by Locomotive Engineer Dave Welch to record stages in the installation. R. M. Beals R. L. Bouque J. W. Mitchell J. R. Davidson c. H. Grider R. J. Crowe J. 0, Min OFFICERS ALL are the above stalwarts of the armed service, and all former bombing tactics. Beals is a first lieutenant now serving up north at SP'ers too. 1st Lt. Davidson was supervisor of foundry operations at Sacra- Ft. Lewis, Washington. As a railroader the smiling lieutenant signed the mento Shops, is winding up a stay at Engineer Replacement Training payroll at the Eugene yard office. A storesman at West Oakland Center at Ft. Leonard Wood, Missouri, will report to 753rd Railway Shop Genl. Stores was Ensign Bouque before going on active service with the of U. 5. Engineer Battalion. Lt. Grider was a clerk in Lease Agent's navy. He is son of S. L. Bouque, asst. to geni. storekeeper, is a cradus office, was commissioned Feb. 28, is now with the Academic Dept. of the of University of California, has been assigned to Naval Training Station . Infantry School at Fort Benning, Ga. Crowe worked at our Kirkham San Diego since January of last year. Mitchell, now a Heurenant of St. Station in Oakland, is the son of Agent J. Crowe of Alameda, A member an infantry outfit in Tacoma was a yardman at Eugene, is the son of D. H of the Naval Reserve, he completed his training at Corpus Christi, was Mitchell, former car inspector at Eugene, now retired. Ensign Adam commissioned an ensign, specializes in the intriguing business of dive with the Navy Air Corps in the Pacific, was cost analyst at Tucks NEWS FROM THE FRONT-FOR AND ABOUT RAILROADERS IN ARMED SERVICE REETINGS to you, men-all two stands 6 feet 31/2 inches in his stocking thousand of you. That's what we said, feet and he wasn't in his stocking feet TWO THOUSAND, and even that when he talked to us. Our neck's still number is probably outdated by now for stiff from looking up, but we wish all SPers are going into the armed service of you who come to the General Office so rapidly and in such great numbers that would visit us in room 210 and tell us we just can't keep up with them. The what's cookin', variety keeps up, too. As witness Private SLOAN & SLOAN are brothers, railroaders, Shouldn't tell tales on a captain, may- Wm. P. Wheeler, SF district passen- navy men. Peter G., left, worked for Supt. be, but we have it on good authority that of Transportation, James J. was a clerk ger clerk now sliding over the snows Capt. H. H. Wittekind attacked so fero- in Personnel Dept. The young gobs are of the great Northwest with A ski troop sons of P. K. Sloan, secy. to President. ciously during bayonet practice that it outfit, and Sailor E. A. Reupert, Bakers- took three soldiers to get the bayonet out field brakeman, who's fighting his share of the dummy. Wittekind, district ma- in the armed service. Shobert railroaded of this man's war in a submarine. terial supervisor in the Stores Dept., El on the Portland Division. We're feeling a little small as this is Paso, was a member of the Reserve Corps Walter Way, a fireman on the Sacra- being written, and all because of a visit of the Railway Engineers before his in- mento Division, is now with the navy at from A genial soldier named Robt. E. duction March 20. a destroyer base. The navy is old stuff Durham who did his railroading in the There's going to be a surprised private to Walt, for he served his first hitch Stores Dept. down El Paso way. Bob in Uncle Sam's army when Hubert J. from 1930 to 1934. Says "hello" to rail- POLE CLIMBER is Private Kenneth E. Shobert sees his picture in this issue. roaders in and around Roseville. Haines who is skinning up a pole at Camp Shobert's folks sent us his picture Army men Willis Childress and Joseph Roberts during training in Wire Commun- ications. Haines was asst, signalman on might be a hint for you parents whose J. Hopkins, formerly of the SP commis- the Salt Lake Divn. That he can do much sons were former railroaders and are now sary at El Paso, will be interested to know more than climb poles is attested by the medals be has won for rifle marksmanship. INTO A SHELL HOLE drives 1st Sgt. Walter E. Newman to mark the spot where a shell presumably fired from an enemy submarine, landed harmlessly in an oil field north of $150 Barbara some weeks back. Newman (right) was a yard clerk at West Oakland before joining de army, and his railroad friends were quick to tell the Bulletin about this picture, which will widely published in newspapers throughout the country. (Photo from Press Association, Inc) May, 1942 9 that Cmsy. Agt. W. H. "Bill" Barker says he's going to join up himself if he loses any more of his men. By the way, a word to you fellows With the Philippine Forces whose pictures have appeared in the Bulletin: If you want a few extra copies W ITH the Battling to send to Tom, Dick, and Harry (maybe Boys of Bataan, we should say Marian, Edith and Jane), and fighting elsewhere drop us a line and we'll send them to in the Philippines along. you as long as the extra copies last. side the valorous Ameri- Paul w. Fife will soon be wearing can-Filipino troops, are bats on his uniform. He left for Officers' men who but a few Training School in Georgia, April 15. Paul, son of Bayshore Master Mechanic months ago were rail- L. T. Fife, formerly worked in the Motive roading for the Southern Power office, SF. Pacific. Just how many The Chief Engineer's office held its SP'ers there are among own with the army last month. They those immortals with James Rehn Ramon Garela Ray McCarthy gave up Bill Black, Jr., blueprinter, but Wainwright's forces is got back Draftsman W. L. Budde, who not known. Five have been reported J. E. Rehn of Tracy. Ramon Garcia, was recently given an honorable medical thus far. Lieut. Raymond McCarthy, sectionman on Rio Grande Division, discharge. San Joaquin Division brakeman, was once reported killed in action, was There seems to be an awful lot of last heard from just before Christmas with the New Mexico Coast Artillery "best outfits" in this Army, Navy, and with his infantry unit at Fort McKin- units overpowered on Bataan. His Marine Corps of ours. Just about every- ley. He had been called up with re- father is Sectionman Eulalio Garcia one we hear from belongs to the "best." serve officers in February a year ago, of Deming. Also from Rio Grande Private Stan Griffin goes them one better Division, and with Garcia's outfit, in his letter to fellow worker Jim Hig- Corp. James E. Rehn, Western Divi- gins in the Freight Claims, Griffin sion clerk, radio operator with the were George E. Darling, clerk, and says his outfit is "absolutely the best." Signal Corps, was last reported on Warren D. Graves, water service Cebu Island. His father is Yardman We claim a hand in the promotion of helper. Jim Inman, army cook whose picture appeared in the March Bulletin. Just after the magazine came out, Jim was FAMILY TRIO (right) made Mess Sergeant and transferred to consists of Sergt. M. N. El Paso. Nice going, Sarge! Bass, Corporal Norman A. Bass and their father, "The best to the Band" is the word D. L. Bass, Sr., who died from Private H. T. Quaid, former recently. Both boys were checker at 4th and Berry, SF, and leader popularly known yard- men at Roseville, where of the drum section in the SP Band. their father was also a Quaid is right at home in the army- former yardman and Pe- lice Judge of that city. he's with a drum corps outfit. Norman was last re- All of us send regards and good luck ported in Arizona and his brother's army address to all of you. Keep up the good work. was last in Los Angeles. We'll be with you again next month. HORSEMAN is Private J. T. Shepler BUNDLED UP is Private William P. now at a California Camp with a Wheeler-and for good cause. He's cavalry outfit. We're inclined to be- with the ski troops in the Northwest lieve that Shepler is a natural for the Sector where the climate is inclined cavalry because every time we asked to get a little rough in the cold way. him for a picture of himself he sent Bill worked in both Passenger and us a picturé of A horse with him mere- Freight Depts. in SF, did his first ski- ly a part of the background. Shep- ing back east, was prominent in ski- ler railroaded at LA General Shops. ing activity of SP Club at Norden. READY, AIM, FIRE! and judging by the expression on the face of Maride Spencer W. Blackburn he's got a dead bead on the target. Blackburn was an electrician's apprentice at the Sacramento Shops before joining the marines. He's now a private in training at Camp Elliott. Blackburn's father is asst. chief clerk in Motive Power Department, Sacramento, 10 In the Service of Their Country The following names of SP'ers in the U. S. lighting forces sup- plement those published in recent issues of the "Bulletin." There remain mony additional names to be published in later issues. II. J. Shobert David K. Purman Gerald R. Hughes SALT LAKE DIVISION ROHSE, T. J., Navy. Purtiand Divn. 8an Joaquin Divn. Los Angeles Divn. ROSENTHAL, D. E., Navy. ALDOUS, Claire, Marines. SANBERG, Harry E., Army. DALEY, Max L., Army Air Corps. LILE, Keith H., Army Air Corps. SANDERSON, Howard W., Army. SANDERSON, W. G., Army. REED, Jack R., Army. SANFORD, Thole L., Army. SCHIVELEY. C. A., Army. STEVENS, Harold B., Navy. SCHOENNOELHL, R. L., Army. SCHRADLE, M. J., Army. SULLIVAN, T. P., Army. SCHRINER, C. 8., Army. SWARTZ, Kyle F., Lt., Army. SHERER, V. J., Army. RIO GRANDE DIVISION SINCLAIR, D. K., Army. SJOSTROM, G. L., Navy. BAROS, Tobias, Army. SKINNER, M. W., Army. BURT. Max, Army, SMITH, C. D., Navy EATON, Jesse Randoll, Army. SMITH, D. C., Navy ERMINE, James J., Army. SMITH, G. A., Navy. GOLDEN, John S., Army. SMITH, W. T., Army. HAAS, Floyd 8., Army. SMITH, W. A., Marines. HELEMAN, Cecil W.. Army. SMYTH, E. F., Navy. 1. Johnson B. R. Blakkolb John P. Courtney HOSKINS, Stanley W., Navy, SPRIGGLE, A. F., Army. hata Divn. Sacto. Shops Los Angeles Shope JAMES, Lealie H. Army. THOMAS. A. R., Navy. JONES, Virgil F., Navy. THORSELL, K. V., Navy. LAMB, J. D., Jr., Navy. TRIPLETT, Jake, Army. LOCKE, Harry R., Army. TUTTLE, R. H., Navy, LOWENSTEIN, Albert G., Army. VANORDEN, Wealey, Army. MIRANDA, Ramon O., Army. WAGNER, C. L., Navy. MONTOYA, Domingo, Army. WAY. Ladrue J. Army. QUINN, Leonard T., Marine Corps. RAMON, Justo, Army. WEAVER, Charles W., Jr., Army. WEIK, J. W., Army. ROBERTS, E. A., Army. WHEALON, 8. T., Army. ROQUEMORE, Prentiss D., Army. SMITH, Eldridge R., Army. WHITAKER, William C., Army. SNYDER, Admiral Dewey, Army. WHITESIDE, L. M., Army. STULL, H. C., Capt., Army. WILLIAMS, D. F., Army. WILSON, L. G., Army. TYRA, Ernest R., Army. WILSON, W. L. Navy. PORTLAND DIVISION WINN, O. M., Navy. T. J. Oaks ALDRICH, Donald R., Army. WIRFS, R. 8., Army Air Corps. Walter Way Edward R. Bush San Joaquin Sacramento Divn. Accounting. SF ALLEY, Charles H., Army. WITHERS, R. 8., Army. WOSTREL, Al. B., Army, BANASKY, Sol A. Navy. YOHN, J. L., Army. COLLINS, Chester A., Army. DOVE, James B., Navy. SACRAMENTO DIVISION DRAKE, Woodrow B., Army. POSBACK, Christian, Army. ALLISON, Geo. W., Army. BAS3, M. N., Army. HENDRICKS, James, Army. KULICK, C. W., Navy, BASS, Norman A., Army. LADEEN, R. H., Army. HENNING, Donald J., Army. HOSKINS, Gilbert J. LAJOIE, E. R., Navy. ISOLA, 1. Army. LASSEGARD, H. H., Army. LEARY, D. J., Army. SCOTT, Walter J., Army. LIDDELL, J. D., Corp., Marines. SHEDD, Gordon J., Army. LISTER. L. B., Navy. SWARTZ, David, Army. LOPUSON, N. R., Army. WALSTROM. E, M., Army. MacGREGOR, D. C., Army. MANN, J. A., Army. SAN JOAQUIN DIVISION MANN, Willis W., Army. POSTER, Harold E. B. M. Bradley Carl H. Heukrodt W.R. Schroeder MASON, J. A., Marines. NARON, Upton W., Army Air Corps. Portland Divn. Los Angeles Shops Sacramento Shops MEISENHEIMER, V. E., Army. TOMMER, Newton W., Army. MELTON, A. B., Navy. TINSLEY, Ferris W., Coast Guard. MERCER, M. E. WALLACE, Vernon D. MEYERS, Frank R., Army. MEYERS, J. D., Army. WESTERN DIVISION MISETICH, R. A-, Army. AINSLEE, John H., Army. MOSHER, M. L. Army. CECIL, Joe, Army. MUSIC, William, Army. CONNERS, 8. W., Army. NADEAU, E. W., Army. DIXON, Joseph, Army. OLSON, Raymond L., Army. GILBERTI, Joseph, Army. PACK, George, Navy. GUTTE, Jack Clark, Navy. PACKARD, D. C., Army. ISAACSON, Allen E., Army. PALADIJCZUK, 8am, Army. JANSEN. Vincent W., Navy. PERRY, L. O., Army. JARNAGIN, Gus L., Army. PETERSON, H. M., Navy. KEEPE, William W., Army. PHILLIPS, Marion R., Army. KEY. George B., Army. PLAISTED, W. K., Army. KLEBAS, Albert, Army. J. Hernander E. It. Reupert Willis Childress REDMAN, D. E., Army. KOENIG. Raymond F., Army. Sacto. Shops Ban Joaquin Divn. Dining Car Dept. REGHITTO, W. J., Army. KOVACICH. Anthony. Army. REID. Maurice, Army. KOWSKE, Edward V., Army Air Corps. HILEY. Curtis B., Navy. KRANTZ George W.. Army. Frederick Selb John Lundeen J.E. Axparren, Jr. ROBERTS, D. J., Army. LACHMAN, Charles A., Army. Equip. Ser. Acts. Pass. Traffic, LA San Joaquin Divn. These Boys Fight With Their Lives- Help em With Your Fighting Dollars Regraded Unclassified 11 LACORTE, Emiliane M., Navy. GREENBERO, M. A., Army. LAFLEUR, Edmond A., Navy. ORIFFITH, P. L., Army. LAGERSON, Victor, Army Air Corps. HAWTHORNE, Robert E., Army. LEAVITT. Relfe W. Marine Corps. HETHCATE, W. E., Army. LENRICH, Frank, Army. HODGE, Irs W., Army. LEWIS, Mike, Army. JONES, B. H., Army. LIPANOVICH, Michael, Havy. KLINE, Wm. H., Army. LOERA, Edmundo, Army. LAMPUM, M. T., Army, MacDONALD, Frank R., Army. LEIKER, V. C., Army. Francis T. Eagen a. H. Billings Cart Pacilini MACKI, Jack L., Army. LEONARDI, A. D., Army. Real Estate-Tax Portland Divn. Bacramento Divn. MANNING, George, Navy. NAPPI, L. J., Army. McARTHUR, R. E., Army Air Corps. NEW, L. R., Army. McCRAY. Orville R., Army. POINTER, R. G., Army. McCUTCHEN, Edward L., Army. QUAID, H. T., Army. McKENNA, Warren, Army. REZENDES, George, Army. McLAUGHLIN, Edward P., Navy. RUTHNICK, H. C., Army. McMILLIN, Ernest J., Army. STANK, James J., Army. MEDINA, Oliver R., Army. TINER, Melvin 8., Navy. METZINER, Harry T., Army. VAUGH, Ward D., Army Air Corps. MITREA, Nicholas J., Navy. VEHMILLION, L. J., Army. MOORE, V. E., Army. WOOD, Ernest, Army. MOORE, William, Army. MULLIGAN, Jack, Army. SHASTA DIVISION NELSON, John, Army. BUTTERS. Norval W., Army. NISICH, Peter. Army. HALL, Barnard, Army. NIX, Harold J., Army. HOLBROOK, Earl L., Army. NIXON. William C., Army. HOPKINS, R. N., Army Air Corps. Harold H. Sharpe N.D. Petrichella W. R. Vextor NOLAN, John M., Army. ROSENDAHL, Harold, Army. El Paso Shope Los Angeles Shops Ban Josquin Divn. OBERO, Rex B., Army. WOLCOTT, D. J., Army. O'LEARY, H., Army. PEER, Kenneth N., Army. LOS ANGELES DIVISION PIVER, Tony N., Navy. BALDWIN, James H., Army. PITTA, Joaquin G., Navy. BLEWITT. Eugene C., Navy. PRITZMICH, Mike, Navy. BLIGHT. James E., State Guard. PROVENCIO, Arturo, Army. BORUFF, William E., Army. QUIRK, Joseph W.. Army. CALLAND, Warren W-, Army. REEVES, Stewart C., Army. DENT. William M., Army. RICHARDSON, John W., Army. RUBALCAVA, J. C., Marine Corps. EGGLESTON, Kenneth W., Navy. RUBALCAVA, Robert E., Navy. ENOUF, Leo J., Navy. SARGENT, Charles R., Navy. FISH, Stephen L., Army. SCHNABEL. Edward J., Navy. POLEY, Archie T., Army. SCHUPP, Harvey R., Army. FRAME, Peter N., Navy. SCHWEITZER, Laurence, Army. GANTUS, John M., Army. SCOTT. Vincent, Army. GRANER, Donald J., Army. J. D. Lamb, Jr. G.L. Miller SCOTT, Walter A., Army. GRAY, Robert A., Army. Ed. L. Lambert SHEARER, Wm. B., Army. GREEN, Edmund L., Army. Purchasing, 8F Rio Grande Divn. PMT Co. SLEIN, John J., Army. SMITH, Kenneth C., Army. GENERAL SHOPS SOLORIO, Jesse, Army. DAVIDSON, J. E., Lt., Army (Sacto) STERLING, Feltus F., Army. DISMONI, Steve J., Army (LA) STEWART. Samuel D., Army. GRIFFITH, E. 8., Army (Sacto) STOKES, Milton L. Army. HARDY. Michael 8., Army (LA) STORCH, George B., Army. HENDERSON, Victor R., Navy (LA) STUART, Victor A., Army. KIDWELL, Thos. L., Navy (LA) TIFFANY, George O. M., Navy. LONGO, Leroy, Army (LA) TILLMAN, Howard R., Army. MARGRAVE, Hugh T., Army (LA) TROAKE, Herman W., Marine Corps. MAXEY, Quinton, Army (LA) VOTAW, Earl A., Army. MILLER, Edward D., Army (LA) WATKINS, William L., Army. McCAULEY, Harry N., Army (Sacto) WEBSTER, Richard J., Army. MONTAGUE, Chas. A., Army (LA) WELCH, Claude E., Army. NASH, Jack, Navy (El Paso) WELSCH, Virgil W., Navy. PIZARRO, Leonzo D., Army (LA) WHITE, Frederick E., Army. W. J. McNell. Jr. Kenneth c. Smith G.A. Nichols SCHIRO, Pete, Army (Bacto) WHITLOCK. Carleton, Navy. Sacramento Divn. Western Divn. Bacramento Stores SMITH, Joe, Army (Bacto) WIGGINS, David P., Army. UMENHOFFER, Lyle E., Army (LA) WILLIAMS, John W. Army. WILLIS, Aubert E. Army. GENERAL OFFICES WILSON, Owen O., Navy. Operating WILBURN, James C., Navy. BLOAN, James J., Navy (Pors.). WOOD, Cyril, Army. SLOAN, Peter G., Navy (Trans.). YATES, John C., Army. Engineering BLACK, Bill, Jr., Army Air Corps. COAST DIVISION FULTZ, Cecil E., Army. BENDOTOFF, Alexander, Army. Real Estate & Tax BRODERICK, A. J., Army. EAGEN, Francis T- Army. CADY, R. L., Army. CALL, L. T., Army. Purchasing CAVALLI, A. M., Army. AKERS, Albert, Jr., Navy (LA) COEN. J. J., Army. Accounting COOK, J. M., Army. ANTHONY, Thomas G. (APA). Army Roy c. Williams Melvin 5. Tiner L. J. Collins COSS, C. K., Army. BAILEY, James A. (APA), Army. Western Divn. Cosst Divn. Los Angeles Shope DAVIS, Robert N., Army. BISHOP, Don (APA), Army. KAMES, J. P., Lt., Army Air Corps. BUSH, E. R. (AD), Army Air Corps. GARCIA, R. 8., Army. (Continued on page 14) M.J. Williams Extel V. Orr W.J. Gautier San Joaquin Divn. Sacramento Stores Sacramento Divn. A Share of Your Check Each Pay Day Is the Easy Way in War Bond Buying LADIES BRIDGE LUNCHEON annual feature of S. F. SP Club's calendar, was held April Palace Hotel. Club members and friends enjoyed lunch and cards, heard some of the song his the forthcoming Club Musical, "Babes in Bedlam." Committee is pictured at far right: Stati Margaret Donahue, Gertrude LaFortune, Ruth McNab. Seated: Chairlady Jean Smogrow, Fae Bei INFORMATION MEN pictured above answer pass- LOS ANGELES folks combined patriotism with safety at the mass meeting of shopmen enger questions in the new Information Bureau at below, held on March 27. Two large United States flags were presented by LeRoy H. Walters. chain Sacramento District Office. The compact unit car- of the safety committee, to Shop Superintendent James Bean. A service Bag was displayed and ries six lines, is manned by Head Information announcement made that over 80 stars would be added to it immediately to represent shopmen Clerk Frank H. Bower (near camera), Clerk J. L. joining the armed forces. F. W. Ferrara entertained with accordion music and Machine Adams (also in picture). Roy Kirschmann, and Oliver made the feature safety talk of meeting urging individual acceptance of responsibility is Robert McGee. "Small but busy" describes office. shops' cooperative effort. Oliver's talk, his first at a safety meeting, compared the job of winning RAMENTO was the scene of the ceremony pictured below showing workers in the Spring Shop cation, March 13, Jefferson's Birthday, was attended by color guard of VFW, American acramento Shops standing at attention just after their new flag was raised for the first time. on members, and other "uests. Master of ceremonies was Legionnaire Walter Hewton, blacksmith. against accidents with the job of winning the war, pointing out that "the outcome of both WELL PROTECTED is Dorothy Kennedy of L. A. ends upon the cooperation of each individual." He used the recent Red Cross and Savings Bond SP Club with escorts from the Navy, Marine Corps opaigns as example of what could be accomplished through the full cooperation of all, concluding and Army. Occasion was party given 60 service the statement, "If our safety movement and war effort are to be successful, every individual men by SP Club members, March 22. Day started learn to think and set teretbes" - At the left standing in front of the U.S. and service with drive through L. A. and suburbs, included merio end radio studios wound 90 S.P 14 In the Armed Forces (Continued from page 11) KELLY. Philip (AGA), Army. McDERMOTT, Waldo D. (AMA). SOUTHERN FACIFIC RIPPON, Paul V. (AMA). SEIB, Frederick (AESA), Army, STUART. R. J. (ACE), Army Air Corp. SWANSON, Paul E. (APA), Navy. STORES DEPARTMENT ANDRADE, Manuel M., Army (W. Oak.) CAMILLO, Joseph D., Army (W. Oak.) CLIPFORD, Patrick J., Army (W. Oak.) COREY, Clarence L., Army (W. Oak.) EMERY, John F., Army (Bayshore) PEIBUSCH, Martin Hans, Army (St'ry) GIANNOTTI, Chas. G., Navy (Bayahore) GILKEY, Norman, Army (Brooklyn) GUGEL, Fred W., Army (Bayshore) JOHNSON, Verne W., Marines (W. Oak.) JOHNSON, Wilton H., Army (Bayahore) KELLEHER, Timothy P., Army (W. Oak.) KOEFFER, J. A., Army (San Luis Oblspo) JUST LIKE NEW is our Geary St. Ticket Office in San Francisco. The exterior, shown LISCOMB, Kenneth A., Army (Bayahore) above, has been refinished and features the brilliant color of our Daylight trains over the entire facade. Simplicity is the keynote of interior fittings, with new fluorescent light- RINALDI, James L., Army (W. Oak.) Ing accentuating the blended color arrangement especially designed for this office. SANTI, Michael, Army (Stationery) THOMPSON, Conrad A., Army (Bklyn.) WITTERIND, H. H., Capt., Army Paso) FREIGHT TRAFFIC ANDERSON, A. C. (DFO-SF), LA, Army. BENEDICT, H. B., Lt. (GFO-SF), Army. BERGSTROM, L. T. (DFO-SF), Army. BOYCE, B. W. (GF-LA). Army. BURDICK, H. M. (GFO-SF), Navy. CAMPBELL, W.B. (GFO-LA), Navy. CARTER, A. W. (S.L.). Army. CHANDLER, A. B. (GFO-SP), Navy. COOK, Geo. W. (GA Pitt.), Navy. EDWARDS, H. Spokane, Army. FLANAGAN, A. P., Lt. (DFO-8F), Army. GREGORY, W. A. (DFO-SF), Navy. HABELT, M. (GFO-SF), Navy. HARRIS, W. R. (Phoenix), Navy. KILLMER, G. F., Jr. (DFO-SF). Army. KOEBER, K. T. (GFO-SF), Army. LINSTAD, 2., Phoenix, Navy. LUCAS, P. G., Lt. (GFO-SF), Army. MARKS, L. H. (SF). Army. MARKWART, J. (GFO-SF), Army. MARSHALL, F. W., Bac'to, Army. MATHER, C. 8., Jr. (GFO-SF), Navy. MATHIAS, W. M. (GFO-LA), Army. McKIM, R. M. (GFO-LA), Coast Guard. FOUR MEN é A CAR: the men are SP carmen, L-R: F. W. Thompson of Dunsmuir, N. McVEIGH, L. T. (GFO-SP). Navy. Reynolds and J. E. Gaunt of Sacramento, and M. A. Mathewson of Los Angeles. The car is an PEEBLES, W. L. (GFO-LA), Army. all steel box, manufactured by Bethlehem Steel Co. at Johnstown, Pa., where the carmen are RIORDAN, J. M. (GFO-SF), Army. checking specifications. 8P's 1942 building program calls for 2100 new cars of this type. RUPPEL, A., Fresno, Army. WEST OAKLAND ROUNDHOUSE group pictured below met on March 30 for discussion of SIMMONS, D., El Centro, Navy. safety methods. The meeting was opened by J. Splendorio, chairman of the Safety Committee, SMITH, R. C. (GPO-LA), Army. to keep in service for defense. Master Mechanic E. R. Auton also stressed the need for fuls who spoke of various accidents at the roundhouse and emphasized the need of avoiding them SWETT. L. M. (GFO-LA), Army. THOMPSON, H. F. (GFO-SF). Army. manpower on the railroads today to move service men and equipment. Announcement was WHEELER, M. P. (K. Falls). Army. the last two months in bond drive conducted by G. Greelman, J. Splendorio and A. Scoggafava. made at meeting that roundhouse forces had purchased $350 worth of War Bonds during WICK, R. z. (GFO-Port.), Army. WIERSEMA, K. C., Capt. (SF). Army. INFORMATION ESTICKETIONS HER SCENES AT SHIPSIDE pictured above were taken at docks in BF men often work from three to fear days to satisfy the train travel following the arrival of transport bringing evacuees from war torn requirements of the overseas voyagers. e (8) Navy personnel at (1) Temporary SP Ticket Office established at docks: L-R: Lt. R. 9. Kimbell, Chaplain H. M. Peterson, Capt. E. Pacific aress. the pier with Passenger Agents Walter H. Anderson, W. E. Godt- U. Reed, Mrs. W. K. Kilpatrick, chairlady Navy Wives Emergency fredson ready to help with the transportation problems of passen- Service, Ensign E. O. Cox, Lt. R. F. McMahon, Yeoman C. gers traveling overland. (2) DPA T. Louis Chess (seated) dis- F. Pullen. (4) Passenger Agents B. C. Harvey, Tom Keedy, cusses plans for handling evacuee's requests with Passenger Agents and Fred Schorcht at second SP Ticket Office. SPers work T. C. Keedy and W. E. Godtfredson. As many as five SP passenger closely with morale officers of the Navy Relief Department. Oakland Engineers will observe Jones to the Rescue: Robert Lillie, en- Susie to Sambo: Manager Bill Hud- route to Los Angeles, got off the train at son of "ND" Telegraph office, Coast the 57th anniversary of Division 283, BofLE, with a dinner at Hotel Oakland Fresno for a stroll. He strolled too far, Div., SF, had to re-name the black kitten May 30. Chairman S. O. Sanden and his returned to find his train gone. Losing recently picked up off the tracks by a mes- active committee are expecting a record your train is awkward under any condi- senger and made the office pet. Originally attendance and promise a program of en- tions but for Mr. Lillie, ninety years old, named "Susie," the kitten now answers to tertainment and speaking that will sur- it was doubly so. To the rescue came "Sambo." This, not because of any protest pass even the best of former years. Mrs. Ticket Agent P. C. Estes, but highest from Surie Johnson in the Division En- Harriet Rodriquez heads the committee honors must go to Walter H. Jones, a re- gineer's office across the hall, but simply of auxiliary ladies who will assist in tired SP engineer, Roseville, who hap- because "Sambo" is more appropriate to staging the event. pened to be in the station. Estes wired the kitty's color and gender. train conductor to assure Lillie's daugh- Capt. Escalle Speaks: To E. E. Es- ter, Mrs. Ada Keel, that her father would A New Bataan: There's a new calle, asst. chief clerk in the Asst. Genl. be well cared for. Jones, on his own initia- Bataan under the American flag Auditor's office, came a letter of thanks tive, bought two bus tickets and accom- these days. It's an army station lo- recently from the Millbrae Parent-Teacher panied the elderly traveler to Los Angeles cated on SP's Fernley-Klamath Falls Association. Escalle, captain of the Aux- via Greyhound. The reunion at Los Ange- line, named Bataan some time ago iliary Police under the Millbrae Civilian les between father and daughter com- by SP officials with a fine flair for Defense organization, spoke before the pleted'a saga of thoughtfulness and kind- timeliness. "Avenge Bataan" is the Parent-Teachers on the defense prepara- liness. Hats off to Pensioner Jones. motto of the men at SP's Bataan. tions being taken. That his listeners Dream Comes True: When Horace found his words highly reassuring was Heidt, playing with his orchestra in Rose- Eggs Wing Back: Speaking of eggs the subject of the letter. ville, asked Oliver Moulton, SP switch- flying back in your face, give a thought to man, to sing two numbers with the band, Alex "Scotty" McAdams, carman at Sac- PMT Enlists: The PMT boys are he made a dream come true. Sonester ramento Shops. "Scotty" has been raising proud of the fact that they are giving Moulton is known as the singing switch- prize homing pigeons for over twenty man around Roseville, and his outspoken years. Recently be shipped twelve pigeon transportation to more and more army aspiration has long been to sing with a eggs to Cardena. On arrival, the shipment encampments each week. The army has consisted of twelve baby pigeons, and been quick to graip the advantage of "name" band. three months later all twelve of them flew this coordinated rail-truck service and the long of the PMT'es is "We're in the Oopal. Slipal A lot of people do a lot over 200 miles right back to McAdams and "home." army now." of checking to see that news appearing in the SP Bulletin is accurate, but in spite of our "check; double-check: triple- Bailroader vs. Gardener: Round- A Wish for Nugent: When Terminal check" policy, we slip occasionally. Phil house Foreman J. McDonald of Santa Supt. M. A. Nugent recently celebrated Kelly's friends called in to tell us that Barbara is torn between two urges. As a his 25th Wedding Anniversary, his yard. we'd called him "Pete" in the April issue, railroader he's enthusiastic about the new men expressed the hope that his golden and Norman Wiley himself corrected the tracks being installed at his roundhouse, jubilee would also be celebrated in Los news of his promotion. Seems he's ASST. but as a gardener he's not so enthusiastic Angeles, proving his popularity at home Personnel clerk in charge of clerical em- about having to take up his beautiful and abroad. ployment. lawn to accommodate them. Regraded Unclassified ating Expenses were $00,432,26), or $17,053,209 more than the expenses for the same period of last year; a 39 per cent increase. Federal retirement and unemployment insurance taxes unted to $2,567,192 and other railway six accruals to $9,061. 915; a total of $11,629,107. After de- ducting these taxes and $4,448,095 of net rentals for use of equipment and joint facilities, there was left Net Railway Operating Income of $16,902,833, or $5,624,112 more than the net railway operating income for the same period of HISTORY MAKING was the above parade as, for the first time a parade crossed Into 1941. Mexico without entrance formalities at the border. Part played by SP is told below. Out of Net Railway Operating In- come, and Other Income consisting of SPERS IN PARADE ACROSS THE BORDER dividends and interest on securities owned, rentals and miscellaneous income, G ALA indeed was this year's Desert international border between the two must be paid the interest on bonds and Cavalcade, annual pageant and pa- friendly republics in this unprecedented equipment trust notes in the hands of rade held in the Imperial Valley, which gesture of good will made possible by the public, and other fixed charges. For this year featured the SP Club band of War Department authorizations from the three months ended March 31, 1942, Los Angeles. On April 11 the parade, both Washington and Mexico City. the final result was a Net Income of culminating three days of festivities, In the evening, the band played a spe- $10,608,767, which compares with a net started in Calexico and crossed the inter- cial concert for several hundred service income of $4,437,629 for the same national boundary into Mexicali, Mexico, men who had taken part in the day's period of 1941. making the first time an SP Club band ceremonies. Soloists and majorettes out- has played in a foreign country. did themselves in presenting 2. fast- WAR BONDS KEEP EM FLYING Supt. H. R. Gernreich, GPA Geo. B. moving program and were generously ap- Hanson and GFA V. F. Frizzell attended plauded at every turn. The entire LA unit the celebration as did many members of was complimented by the Calexico-Mexi- Historians and other "rail fans" will the SP Club of Los Angeles. cali committee for the fine help given in be interested in the "Spike of Gold" ar- Over 25,000 persons viewed the long further strengthening international good ticle that is featured in the current issue parade on its international good will will, and for otherwise assisting in mak- of Trains, which article reviews epic excursion. Armed troops of the United ing the annual Imperial Valley event a events in the building of the first trans- States and Mexico marched across the complete success. continental railroad. TYPICAL SCENES of the big day down Mexico way: (2) Mex- Supt. H. R. Gernreich. Many prominent personages from both ican Drum and Bugle Corps snap to salute as American colors pass Mexico and the Imperial Valley exchanged good will greetings at by. (3) A group pictured at the party for service men sponsored this meeting. (4) Leading the SP Club Band in the night parade: by American Legion officials. Standing, third from left: Ed. Henig, L-R: Vyonne Livingston Bush, V. F. Frizzell, Betty Thorson, commander of Calexico American Legion Post: fourth, GFA, V. F. G. B. Hanson, J. R. McCuiston, SP agent at Calezico. (5) "God Prizzell. Standing at extreme right are GPA Geo. B. Hanson and Bless America" lustily rendered by Americans dawn Mexico way. SPARKS FLAG CEREMONY: pictured above is general scene as flag is raised for the first time. At left: Mrs. Allen Rock, wife of Local Chairman of Carmen, presents flag to Military Guard. Speakers' stand holds company officials, army officers, political leaders. Right: Supt. L. P. Hopkins and Governor E. P. Carville take ride in jeep. OLD GLORY IS GIVEN SALUTE AT SPARKS IN Sparks an impressive ceremony, SP'ers at Morrison, Asst. Master Mech. H. G. dedicated the new flag pur- Vance, County Commissioner C. B. Shel- chased by shopmen and raised over the ley, Secy. of System Federation Earl Ash- roundhouse for the first time on April 23. brook, Oliver Hansen, Dr. H. Earl Bel- Company officials and employes, political nap, Geo. Steiner and Seth Burgess. leaders, officers and men of the armed BUY BONDS THE PAYROLL WAY service joined in an inspiring meeting that was described in the Sparks Tribune as "one large family gathered together to 100%-Two Ways: When Store- dedicate themselves to service under the keeper J. T. McDonald of Tracy sent us the names of storesmen making up his Stars and Stripes." 100 per cent bond buying department, he The program opened with musical se- added the pertinent remark that these lections by Sparks High School Band men are also 100 per cent wearers of after which Sheet Metal Worker G. Nar- safety shoes. Incidentally, the citizens of ramore introduced Supt. L. P. Hopkins Tracy recently elected McDonald to the who acted as master of ceremonies. After City Council. IN OAKLAND the folks of the Kirkham Street brief opening remarks Hopkins intro- Freight Station followed the trend of the day over the railroad and bought their own Bag. Be- duced Major W. A. Gavin of the U. S. BONDS TO BACK OUR BOYS low: Larry Hickerson, Mervyn Baggett raise it. Army who was followed at the micro- phone by Governor E. P. Carville. Mrs. Soldiers' Party: The San Francisco Allen Rock, wife of Local Chairman of Women's Chamber of Commerce served Carmen, then presented the flag to the as hostess to about 2500 service men at Military Guard and it was raised to the the Hospitality House on April 14. top of the 72-foot pole as army bugles Prominent on the committee were SP's played "To the Colors". The Pledge of Barbara A. Pell and Genevieve L. Beane, Allegiance was given, followed by a mo- through whose solicitation 75 cakes, 13 ment of silent prayer. The program closed dozen easter eggs and a cash donation with singing of the National Anthem by were given by SP employes. Also in at- Mrs. August Frohlich, daughter of Engi- tendance were thirty young ladies from neer E. Hecox, accompanied by Mrs. Lula SP Disbursements office, acting as Junior Grimmer. Hostesses at the dance. That the party Others taking part or assisting in the was outstanding is attested by the report program, included: Mayor D. J. Fodrin given by personnel of Hospitaltiy House, of Sparks, Chief of Police A. J. Basse- who stated that this was the first party mier, Brig. Genl. J. H. White, Capt. H. F. where the boys stayed their entire leave. Hayes, Master Mechanic J. E. Stone, To the hard working Barbara Pell and Asst. Supt. A. F. Green, Div. Engr. G. L. Genevieve Beane, congratulations. Regraded Unclassified 18 SOCIALS S P CLUBS ATHLETICS SP CLUBBERS ARE WAR BOND BOOSTERS LOS ANGELES: Featuring a new out- BAKERSFIELD: Big doings al the ing every month, the club recently went Druids Hall on April 16 when the SP down Mexico way in a big way. (See pic- Club held a box social and dance, Music tures, page 16.) Second Victory Dance was furnished by L. S. Benjamin and his on April 18 in the PE Ballroom went SP Club Orchestra. The auctioneering over the top with the usual bang. of Vice-President C. A. Simmons boosted Tommy Brockmiller sent out the call the sales figures to prosperity heights. for softball players. Says he's going to First, the Helpers; second, the Super- field a team that will blast City League visors; third, the Clerks: that's the order opposition in all directions. Over of the teams at the finish of the Bakers- eighty orphans were given a happy outing held Winter Bowling League. The Sum- at the recent Shrine Circus. The day, fea- mer League, consisting of eight mixed turing pink lemonade, elephants and fivesomes, is already under way. clowns, was sponsored by the club. That club members haven't lost sight of PORTLAND: From our "City of Roses" the military in their activities is amply friends comes word that all is in readi- proved by pictures on page 20. The ness for the great swim of May 16 when burnt cork is ready, the interlocutor is club members will take over the North- polishing his speech, the end men are east YMCA pool for an evening of sharpening their wits-another way of splashing and shaking water out of their L. A. GET TOGETHER was is the nature of a saying that the Minstrel Show is all set respective ears. Captains for the Hard Times party attended by employes of SP, PR, LAUPT, Harbor Belt and Carloading Com- for a gala performance sometime in June, seven teams in the newly-organized SP panies, March 28, sponsored by Lodge No. 30 of Softball League: Carl Wood, Fred Kim- BofRC. Purpose: stimulation of savings bond and ball, Clif Evanson, Joe Colatorti, Al stamp sales. Above: Prizewinners Beulah Allen, SP Clerk: Ray Summerfield, Bernardine Conry. SACRAMENTO: Activity of the Capi- Thompson, Paul Streight, Joe Resnick. Bottom (standing): The judges, S. A. Curry, C. H. tal City Club revolves around its recently President of the league is Paul Streight: Thompson, G. B. Hanson: also 3. B. Haines, lodge secretary. (Front): W. J. Roundtree, BofRC Div. organized baseball team. Outstanding secretary-treasurer, Al Thompson. Chairman, and his assistant, R. V. Rachford. members: Tom Glaviano, Jim Herrero, First prize in the defense drawing from Pete Venesin, Henry Nunes, Joe Mungo, club membership cards went to G. A. Allen Zutz, Benny Silver, Harry Pala- Bentley of Stores Dept. Other winners: midi, Primo Dalessando, Steve Zupan, Bill Carse, H. C. Munhollon, R. F. Ab- and Joe Smith. The boys got off to a bott, Agnes Kennedy, G. H. Concon, tragic start, not so much because they F.D. Stady, H. R. Demmon, J. R. Gwynn, lost their opener 10-3, but because of W. W. Kloster, Jennie Klemm, and H.B. the name of the opposition that downed Axtell. And before we forget men- them: The Dreamland Dance Team. tion of that fine club dance, see picture Shame, men, shame! on page 20. TRACY: May 20 is the date for the TUCSON: Wat caused suspension of opening of the Softball season in Tracy. the Arizona-Texas Class C Baseball Manager Clarence H. Davis has organized League so the SP nine that won the City a tram from the store department, shops, and State Championships last year has and clerical employes. In addition a team P LINES entered the local Semi-Pro League. Man- is being formed among the yardmen and ager Carlos Carrillo is confident that his others but is still in the formative stages. boys will repeat their league win without These two SP outfits will battle other much trouble. With the race for the VERSATILE ATHLETES are those pictured above. industrial teams in the City League. They're from the Tucson Shops and at the moment SP Bowling championship entering its they amiling over winning à Southern League final stages, the Motive Power team still LA LEGION: SP Daylight Post 576 of basketball championship just as they were smiling holds a two-game lead but is hotly pur- a few months age over winning State semi-pro base- Los Angeles reports that recent meetings ball championship. The scores of playoff series sued by the News Service, Machinists, have been well attended, with the 40&8 against El Centro were thrillers: 57-51; 48-49; Clerks, and Pipefitters. Still anybody's headed by Comrade Mark Law furnishing 16-36, Seated: L-R: Phillip Grace, Jr., Henry race. The individual big five: Spangler Hanson, Jr., Carlos Carríllo. Standing: Atsulfo entertainment after short business ses- Gardea, Bobby Castillo, Eddie Gallego, Alex. (190), Nelson (188), Magers (180), sions. War activities forced cancellation McMina, capt. Hero was Sharpshooter Carrillo. Hammonds (178), Carlos Carrillo (176), of their plans to send a boy to Boy's State this year, and forced suspension of the HOT AFTER TITLE in the SF Industrial League are these gain of the SP Club basketball school award for the time being. Every- team. Next two games decide the issue. Frant: Julie McKinney, Ruth Morris, Marian Morgan, Betty Seput. Jeanne LeQuatte. Standing: Mary Homesley, Alice Goessel, Mary Nelson, Nell thing is in readiness for the joint meeting Arp. Barbara Hogan, Kathleen Hansell, Pat Anthony, Gertrude Cook. Not present: Alma Plum. of the four L.A. railroad legion posts to be held early in May. SP Daylight Post will act as host at this meeting. SAN FRANCISCO: Swinging into mid-season, the SF Club reports wide spread activity along many fronts. Picture items cover "Babes in Bedlam (next page): Girls' Basketball (this page): and the Ladies Bridge Lund con (center page). Manager Orgin Klamroth and Director Juanita Ellis of the SP Glee Club are still calling for 5P voices to practice Mondays at 5:15 PM IN FINE SHAPE were these chorus cuties of the "Babes in Bediam" sell, Jean Garassino, Marjorie McDonald, Barbara Boles, Jean cast when this picture was taken shortly before the musical comedy Crowe, Isla Lee Smith, Dorothy Roddy, Violet Meseke, Helen of the SP Dramatic Club of SF was to go into production. Left to Hadley. Other chorus members, Betty Sanford and Lillian Hol- right: Patsy Dunn, Rosemary DeClerq, Mary Laveaga, Kay Han- brook, were not present at the time this picture was taken. nament. Cliff Olsen, manager of Men's Softball, says to overlook the loss "BABES IN BEDLAM" PROMISES TO BE A HIT of the opening game, reports his stars will be hard to beat from here in. Repre- RECORD the attendance appeared in store College in "Alto Palto," California. Larry sentatives' Meeting and Dinner on April three-night presentation of Lewis is in charge of stage settings and 7 was the usual combination of business "Babes in Bedlam", original three-act W. K. Smith assists Fell in directing. and fun. Good turnout. May third musical comedy to be staged by the SP Principals include Dorothy Gross, Tom was SP Night at the Shrine Circus. Dramatic Club of SF at the Community Fante, Enid De Mond, Norman Wiley, Ticket Chairman Joe Pine reports a Playhouse, May 6-8-9. The show boasts Joe Pyne, Don Coulter, Beatrice Benja- heavy ticket sale. a cast of 60 employes in songs, dances min, James McCann, Lorraine Kelliher, and other entertainment, written, directed Anatole Bratoff and Jack Crawford. Also SF Speakers: The new plan of meet- and produced by SP employes. Walter C. featured in specialties are Marjorie Mc- ing twice monthly at dinner has met with Fell, SF city passenger agent, wrote the Donald, Jean Garassino, Grant James fine response from members of the Speak- book and Emmett Fitzpatrick, of the Tu- Halsing, Mary Laveaga, Harold Martin, ers' Club in SF. Recent chairmen include reau of News, composed the music and Ray Cone, Bernice Maker, Shirley Rogers. F. G. Clisham, C. G. Barber, Geo. P. lyrics for the play, which centers around The show also will be presented at sev- Smith. Recent guest speakers: Chief Yard some very unusual goings-on at Bedlam eral military encampments. Clerk M. O. Leonhart, Asst. Aud. Freight Accts. H. J. Kihn, DPA T. Louis Chess. nis won the Golden Gloves contest for Those interested in attending future meet- the State of Oregon, will represent the ings, call Clay Cather on Local 2689. state in the National Amateur try-outs at Boston. Stores Baseball: Two giants met when SP tangled with Bens Golden Glow Salute to Sacto. Stores: We give the in the opening baseball game of the nod to Sacramento Stores for (1) the two 1942 season. Sad to relate, Ben's boys fine new Bags, purchased by them, now glowed too brightly for the SP'ers by the flying over Stores building and garage; score of 5-3. The railroaders bounced (2) splendid spirit exhibited by Fire back the following week to score a 2-1 Warden Al Pinney and his bomb-defense win over the Bercovich nine, but again squad; (3) File clerk Mable Lawrence, took it on the chin from Naval Reserve who just returned from a visit with her in an eleven-inning thriller, 7-6. two stalwart sons, both of the U. S. BIRTHDAY GREETINGS from the gala at the Supt's office in 8F were given to Army: (4) Foreman Neal Sullivan, R. E. L. Jones, head steno., in the form of Battling Quinn: A mean man in the president of Hibernians who recently a birthday cake and giant card. Pictured boxing ring is Dennis Quinn, son of handed a check for $375 over to Navy are Betty Moore, Marguerite Engel, Joan Geston, R. E. L. Jones, Lois Manchester, Yardman C. D. Quinn of Eugene. Den- Relief in the name of that organization. Orpha Wachter and Marjorie Loughridge. HARD WORKERS are the SP women employes of Portland and SOME FUN in the LA Medical Department, Apr. 18, when Brooklyn pictured below gathered at the home of Marie Lowes, nurses and secretaries gave a bridal shower for Carla Shoup, clerk in Master Mechanic's Office, to work on quilts, aighans. socy. Gifts were presented by Carol Rosenberger, Lillian Cohn, When completed, these coverings are distributed to the public dressed as bride and groom. L-R: Carol Rosenberger, Lillian schools in Portland that have been designated as air raid shelters. Cohn, Mrs. Shoup, Carla Shoup, Blanche Lineer, Dr. Lineer, Flor- The Indies have received commendations for their workmanship. ence Brown, Helen Twitchell, Marjorie Camphell, and Mary Wood. evening and incidentally gave the CIUD team . good sendoff for proceeds from the dance were used to buy equip. ment for that organization. Hostesses were Mrs. Edith Evans and Mrs. Verna Plotts. In line with the times, door prime awarded were war savings stamps. The winners: A. McNeil D. Tylor, R. C. Knight, J. O'Dare, P. D. Lewis, J. L. Card. A. P. Mishler, Ed Cantoni, J. C. Layton, G. Goenyer, M. P. Hardesty, and C. A. Boles. More Club news on page IL EVERYBODY'S HAPPY in the picture above and with good reason. Girls from the supt's office in Bakersfield are congratulating M. L. Jennings on his promotion to superintendent of Portland Division, and they all con- gratulating Leila Pyle (at Jennings' right) on her coming marriage. (See page 23.) "GOOD LUCK, BERT" was keynote of the sur- prise party given B. W. Mitchell (right) when he returned to Los Angeles for a day follow- ing his promotion from asst. supt. there to supt. of San Joaquin Division. Supt. H. R. Gernreich presented him with a fine radio on behalf of his former office workers. Repre- sentatives of other departments spoke briefly, congratulating Mitchell on his appointment and extending every wish for continued success. SOLDIERS & SAILORS are receiving attention from the SP Club of Los Angeles as the pictures at the left and below will testify. Picture at left shows the culmination of the party given for 60 service men recently. Through ar- rangements made by club members, these men were taken for an extended drive through Los Angeles, Hollywood and Beverly Hills, visiting radio and moving picture studios. In the evening the club sponsored a dance, with girls from the club acting as hostesses to the service men. Many of the soldiers had never before been in Los Angeles, said outing was the best given them since entering the ser- vice, Below: Officiating at the drawing for the lucky bond winner at the Victory Dance of April 18, LA club officers are pictured with service men guests. L-R: K. P. Ginn, pub- licity; B. L. "Doc" Cook, president; Sailor Frank Harrison: Martin Carr, VP; Marine Joe Ingle: E. M. Griffin, VP; and Charlie Lewis, treasurer. Prizes were $70 in bonds, stamps. GET ACQUAINTED NIGHT or the air rais waruens at es Market Street brought out the 117 wardens pictured below. They had previously met in four business sessions under the direction of Chief Air Raid Warden V. P. Dailey. but the meeting on April 21 at the new Tivoli was for sociability. Several short talks were made by various wardens and a motion picture showing the bombing of Pearl Harbor exhibited. Duty of these wardens is to supervise evacuation of the General Offices in case of blackouts and air raids. Trial evacuation of the tenth floor personnel was recently completed in three minutes. 21 AMONG THE VETERANS WHO RETIRE Coast: J. F. Cullinane, car inspector LA Divn. in 1915, was promoted to ma- at Watsonville Jet., retired March 1 after chinist in 1023 and retired in that a. continuous service at that location since pacity April 30. All service on LA Divn. J. M. Stanich. car inspector in Annuity applications approved: Foun- SP. 1925. April 1. Stanich jotned SP in 1022 tain A. Brown, janitor: Michael O'Den- and served all his railroad career on the nell, yardman: 1. T. Painter, yardman. Coast Divn. John Musacchia Joined Shops: Los Angeles: Charles D. Moul- SP in 1918 as A track laborer on the Coast tgn, bollermaker helper, retired Peb. 12. Divn. and retired in this capacity, effec- All service was in this capacity in the tive April 1. Patrick King, clerk LA Shops. e Thos. E. Royse started with checker at Drumm Street Station, who SP an car builder, 1913, promoted to has been in the Genl. Hospital for some freight carman in 1932. retired in that months, took his retirement last Feb- capacity March 28. All service in LA ruary He has had continuous service THROTTLE TO FARM is the transition Annuity WILL approved for Annuity applications have been ap- made by Engineer 5. H. Rogers, shown here since 1906. proved for Ed. Fergus, freight carman: as he prepared to leave El Paso April 4 on Michael Sugrue, trucker. Frank P. Knowles, bollermaker. Sac- last run to complete 44 years with SP and Sacramento: Edward T. Williams be- ramento: Annuity applications have then retire to his Upper Valley cotton farm. gan service with SP in 1919, retired last been approved for John W. Armstrong, (Picture from El Paso "Herald-Post.") April 9. All service was as switch-tender coremaker: Narciso Gorl. blacksmith on Sacramento Division. Annuity ap- helper: Wm. M. Raugh, bollermazer: and Bob Kelly. 6 As the Bulletin neared plications have been approved for Kd. Frederick G. Toomey, sheet metal worker. press time these appointments were Apostolos, section foreman: A. R. Merri- General Office: Annuity application announced on Western Division: L. a. them, pumper: C. T. Newton, conductor. has been approved for Mins Aurie J. An- Smith to Stockton as unst. supt.: E. D. Portland: Henry D. Ryan retired as derson, clerk, Equip. Service Accounts. Moody to ast. supt., Oakland Pier; be la Incomotive fireman, March 30. He began succeeded by A. 8. McCann se terminal SP service In 1900, but continuous ser- supt., Went Oakland. MAKE PAYDAY A BOND DAY vice dates from 1917. All his service was Accounting: Following the death of on the Portland Divn. Annuity appli- A. W. Lawrence, W. W. Willson became cations have been approved for Wayne Arnold, B&B carpenter; Luke H. Bo- Promoted & New Jobs: auditor of passenger accounts. Willson started with BP in this same office in lander, telegrapher-clerk; Thomas E. Operating: Following the promotion 1909 working up through positions of E. Woods, brakeman. of operating officers announced In last head government clerk, asst. chief clerk, Bio Grande: Stephen H. Rogers, 1000- month's Bulletin, R. E. Hallawell, asst. and special accountant until his ap- motive engineer, retired April 4 after supt. of Sacramento Div. since 1940. pointment M asst. auditor in November forty-four years' service, dating back to of 1941. He is succeeded as asst. auditor transferred to Los Angeles in the same his start as a fireman in 1898. He was capacity. He was succedeed by V. M. of passenger accounts by former special made switch engineer in 1904, road engi- accountant L. E. Colligan. Culligan Petterson. former asst. manager of per- neer in 1905. His entire railroad career sonnel. Petterson started as a clerk in joined BP In 1906 and has served his was spent on the Rio Grande and Tucson Portland: was in the Army for a time entire career thus far to passenger ac- divisions. (Picture, this page.) An- and rejoined SP in 1919; was amt. train- counta with the exception of a short nuity applications have been approved master and trainmaster on Portland period in General Auditor's office. Culli- for John T. Hamel, clerk; Francis A. Div., went to Western Div. as train- gan is succeeded by former special ac- Rehrig, brakeman. countant Tom Cunningham, who in master in 1939; and became asst. man- turn is succeeded by Herman Nelson, Shasta: John H. Wagner, locomotive ager of personnel in 1940. . Effective former asst. special accountant. engineer, retired March 31. He started April 10, Geo. DeYoung WM appointed service as fireman in 1901 on Sharta asst. manager of personnel with head- Freight Traffic: Promotions are an- Divn., transferred to Sacramento Divn. quarters in 8F. DeYoung joined BP in nounced for the following in Geni. in 1904, was promoted to switch engineer 1914 as station clerk on San Joaquin Div. Freight Office, SF. R. J. Harries, Wm. T. in 1900, made road engineer in 1907. All Following short time as brakeman. he Altken, E. c. Doyle, E. c. Conroy, G. G. service was on the Sacramento and transferred to Coast Div. station service Hughes, M. J. Gagnon, R. G. Glbbs, Wm. Shasta Divisions. Annuity approved In 1916. In 1919 he became local chair- Hazeirigg, F. W. Loucks, D. E. Lee, W. D. for Antonio Rossetto, track laborer. man for Brotherhood of Railway Clerks, Frey, B. T. Warner. F. T. Doyle, E. E. Los Angeles: Preston H. Wofford be- rising to general chairman of that or- Greenwood, and F. M. Calder. gan SP service as engine watchman on ganization. from which position his sp- Passenger Traffic: With the an- pointment was made. As reported last nouncement that G. W. Hudkins for- month. J. F. Koenig WM called into mill- merly agent at Huntington Park, had tary service before he could get his feet joined the navy. Southern Passenger squarely under bis desk as asst. train- marter at Portland, He to succeeded by "MIKE" KROMBECK, agent-telegrapher H. J. Davis, former brakeman. Promo- at Bakersfield has retired after 32 years tions in the supt's office, Coset Div., in- with the SP. Wire Chief N. P. Gidley was volve Norman A. Sorenson. former trans- one among the large group of (ciende who portation clerk, now division station su- gathered around Krombeck on the last day oervisor: Morris H. McCurdy from asst. at his key to present him with a gift, eat of his remembrance cabe, and wish him well. head timekeeper to general transporta- tion clerk. Warren A. (Jack) Welch takes over as asst. head timekeeper. . c. H. Nell and T. S. Boyer were appointed to nonitions of aret. trainmaster at Imlay. Neil joined BP as student brakeman in 1925. Boyer was brakeman In 1930. trans- ferred to yardman in 1939. The transfer of 5. J. Bullough to Tracy resulted in promotion of Machinist L. L. Huston to night roundhouse foreman at Montallo. Huston has served 8P since 1917 in roundhouse capacities on Balt Lake Divi- sion. Promotions to the Genl. Man- ager's office Involve H. E. Eyler to gen- eral clerk, E. A. McDowell to secy. to "BILL" PIERCE, Bashing the personality genl. manager, W. T. Tose to secy. to that was him such popularity as telegraph asst. gent. mgr., W. Kingston to appro- lineman on Los Angeles Division, exhibits priations clerk. R. P. Waldmann to file the Bas watch from Telegraph Dept. friends clerk, W. C. Lundin to Jr. appr. clerk. and handy traveling bag from Santa Bar- New faces in that office Include: Chris- bara "rails" presented him when he retired tine Jensen, Kathryn Pierce, Betty Gin- recently after service with SP since '05. ley, Lorene Smallfield, H. G. Hanthorn Regraded Unclassified OUTCOINE HARRY STROHLEIN (inset), popular chief clerk of the Corporate the 33th anniversary of his starting work with SP as a stenographer Accounts Bureau, Ant. General Auditor's Office, was tendered a back in 1907. Asst. General Auditor P. J. Kendall (far left) - pleasant surprise April 15 when . small group of his many General tended the official greetings. Stroblein was a secretary, head clerk, Office friends joined with his Acct. Dept. associates to observe and special acct. before advancing to his present position in 1929. District reports that R. J. Mahan be- brakeman, Ogden, April 9. Pension- comes TF&PA at Riverside, W. A. Frost ers: Chas. McBride, sec. foreman, Feb. 23. becomes agent at Huntington Park, G. A. Baldwin was named relief agent, San Joaquin: Arthur R. Dugan, ma- chinist, March 30. Pensioner: Fred M. H. c. Hall was made station passenger agent at LA. B. R. Haley appointed to Wasgatt, agent-telegrapher, March 30, night military train service head clerk, Los Angeles: Erra B. Thayer. team and H. L. Woodward made night chief track foreman, LA, March 25. Harold clerk Pullman reservation agency, LA. J. Lange, yardman, March 28. Henry B. Cade, conductor, April 2. Horace PMT: Wyatt H. Smott, formerly at A. Humelsine, yardman, April 9. Al- PMT Garage, Los Angeles. has been bert E. Hillier, boilermaker, April 17. transferred to the PMT Sacramento- Pensioner: Wm. J. C. McClurkin, con- Williams run. PTE Driver Gordon R. ductor, March 19. Bradford has moved from Marahfield to Corvaills, Ore. Rio Grande: Pensioner: Wm. J. Per- PROMOTED are G. Nelson (left) to Audi- tiller, section foreman, April 8. Engineering: The Chief Engineer's tor of Miscel. Accts., and V. M. Petterson office says "bello" to Arthur W. Jenkins, to asst. superintendent, Sacramento Div. Tucson: Robert M. Jarratt, district blueprinter, Marcella Young and Frances painter. March 21: Orlando N. Smyth, Miller, stenographers: says farewell to brakeman, March 31. Whiteford, trucker, SP, April 3. Harry Steno John E. Pedersen, who recently J. Erne, machinist, April 7. Pension- Shasta: our D. Ward, B&B carpenter. joined the Berkeley Police Force. ers: Joseph Brown, conductor, April 11; April 10, in Genl. Hospital. Howell A. McNair, agent, March 24; BONDS SPEED VICTORY Frank Rellly, section foreman, April 11; Shops: Bacramento: George Brown, drill operator, in Genl. Hospital, March John A. Sully, yardman, March 25: 29. G. H. Laufer, airman, March 20. Died: Oliver M. Wells, brakeman, March 20. Tom B. Calhoun, carman, March 2. Western: Frank D. Smith, boller- Dominic Catalano, bollermaker Accounting: A. W. Lawrence, auditor maker, March 22. Harry Brannan, helper, April 3, in Genl. Hospital. Pen- passenger accts., April 20 in Genl. Hospi- yardman, March 27. Patrick Dolan, sioners: H. B. Holmdrup, shopman. tal after a short illness, Lawrence had section foreman, April 5. Pensioners: April D, at Butter Hospital; Sterling continuous service from 1894, all of It. John P. Lombard, clerk, April 17: Peter Cook, blacksmith, April 5, in Los An- with the exception of the first six A. Johnson, cabin watchman, April 12: geles: Charles R. P. Redman, upbol- months as ticket clerk, spent in Aud. Edward Stad, conductor. April 1; Elliott sterer, April 7; Napoleon Starnes, shop- Pass. Accts. office, He became head clerk T. Wright, conductor, April 12. man, April 13; Fred G. Alcott, April 14. in 1906, special accountant in 1918, asst. in Red Bluff; Wm. D. Shonefelt, dept. aud. pass, accounts in 1931, and auditor Portland: Warren Abercromble, foreman. March 30: John Thomas Spang- passenger accounts in 1041. switchman, April 12, in Genl. Hospital. ler, car Inspector, March 19. El Paso: Coast: W. H. Fine, master car repairer, Ed. J. Johnson, machinist at Brook- Francisco J. Nava, upholaterer. April 19. lyn Shops, April 11. Wm. 5 Bayahore Shops, died April 19 after an DeWitt, Illness of & few weeks, His funeral, in 63, engineer, March 29. after forty years' MAKE YOUR DOLLARS FIGHT service with SP. Los Angeles, was attended by many offi- Pensioners: R. C. cera and long time associates. Fine "Dad" Harden, well loved veteran. and started with 8P in 1922 as passenger car for many years chief dispatcher at Married: builder in LAGS after previous railroad Marshfield. Harden retired in 1932, died experience. In 1933 be was made depart- March 17; M. H. Crandall, conductor, Draftsman Joe Smith, of the Chief En- ment foreman of passenger repairs, and Mar. 19; E. W. Barker, carpenter, April 7. gineer's office, journeyed to Reno April 16, where Charlotte Gwin became Mrs. in 1935 general foreman of the car dept. Sacramento: William Schnoor, freight handler, April 15. Smith. Absence of Johnny Couden He came to Bayshore in 1938. W. G. Dominic P. Cata- Colthurst, clerk SP Freight Station, lano, bollermaker at Roseville Round- from Bay region golf courses started March 4. Henry Mann, yardman, SF. house, in Genl. Hospital, April 3. March 24, beginning of bis married life. March 17. Patrick Byrne, machinist James Wm. Godding. yardman, after Bride: Mary Drake. John's a clerk in allo the helper. Bayshore, March 31. Francisco being struck by auto, March 31. Genl. Passenger Office, SF. An Pen- Zonchetta, steel carman, Bayshore. ratiroad romance culminated in the ITUMPS eloners: Wm. C. Flook, clerk, April 16: March 18. Manuel Lopez, track In- riage of Walter Olsen and Peggy O'Net Wm. J. McEnerney, car foreman, April borer. Ban Jose, as result of auto acel- April 16. Both work in Aud. Miscl. Ad- 10; John M. Wright, conductor. March 9. dent, March 12. Martin L. Haworth, counts, John P. Dodds of the name Salt Lake: E. c. Ingram, fireman, conductor, SP. March 37. Hugh office married Alva Starnes April 25 Sparks, March 31. Herbert King, Leita M. Pyle joined the army by mary Regraded Unclassified May, 1942 rison, une of SP's popular telephone op- erators in Portland, to E. K. Strandhoim, also of Portland, at Pinole on April 12. The beneymoon was in Ban Francisco. BUY BONDS THE PAYROLL WAY Born: To Mr. and Mrs. Fred II. Stelers, & daughter, March 10. Siefere la a cabouse supply man at Brooklyn Stores, e Bon number two arrived at the home of Mr. and Mrs. W. R. Greene, April 2. Greene is clerk in superintendent's office, Port- land, Mr. and Mrs. James Toney TO- cently announced the arrival of Mervic ARMY COUPLE Mr. and Mrs. Edward B. Ziegier pictured on their wedding day, C. Toney. Papa la OS&D clerk at Oak- April 12. The charming bride is the for- land Freight Terminal. From down mer Leila M. Pyle, ant. personal record south on the Rio Grande comes word clerk and Bulletin Correspondent In Bakers- that Mr. and Mrs. H. R. Mulchahoy are field. Ziegler is an air corps staff sergeant. celebrating the arrival of a boy, Ray, ALL RAILBOAD was the marriage of June born April 9. Mulchahey La asst. engineer Tregaskie to Frank Hunter in Oakland, riage when ahe exchanged "I do'n" with at El Paso, T. S. Boyer, recently pro- March 15. June is the daughter of Mr. and Staff Sgt. Ed. B. Ziegler, April 12. Leila moted to nast, trainmaster at Imlay had Mrs. L. H. Tregaskis, train baggageman at Oakland. Hunter works in the Information is asst. personal record clerk and Bul- another reason for celebrating: & new Bureau of SP's Ticket Office, Oakland. letin correspondent in the superinten- son on March 20. From Sparks comes dent's office at Bakersfield. e June Tre- word of new arrivals at the homes of pounds, March 28. Sacramento Shops gaskis, daughter of Mr. and Mrs. L. H. Mr. and Mrs. Nello Glannotti (daughter, reports birth of sons for: Mr. and Mrs. Tregaskis (train baggageman, Ogden- March 18), and Mr. and Mrs. Manuel David Lang (burner in Welding Shop), Oakland), became the bride of Frank Garcia (son, March B). Gianotti la as ma- March 18; Mr. and Mrs. Roy Robison Hunter, Pass. Dept., Oakland, March 15. chinist, Garcia a bollermaker helper, (machinist), March 20; Mr. and Mrs. Los Angeles reports the marriage of It's a baby daughter for Mr. and Mrs. Louis Colombani (shopman), March 26; Yardman Carl K. Olson, Yard Clerk Gene Mark Salel, April 11. Salel la electrician Mr. and Mrs. Clyde M. Hanger (Sacto. H. Lorona, Brakeman R. M. Bopp, March at West Oakland, To Mr. and Mrs. Stores), April 8. Daughters for: Mr. and 10; Porter Nathan E. Wills, Stevedore Wm. L. George, a daughter, Margaret LA Mrs. Wm. Davis, April 10; Mr. and Mrs. Thos. N. Walton, March 5; Stevedore Verne, March 28. Father Bill works in Alvin Clark (machinist), April 12; Mr. Wm. A. Hinson, March 22; Clerk John E. the Auditor Passenger Accts, . J. B. and Mrs. Robert E. Tremaine (machin- Moss, March 29; Electrician Robt. B. Hardman, Genl. Freight Traffic, SP, Ist), April 19; Mr. and Mrs. Henry Ven- Thielen, April 12. From Sacramento crashes this column with the birth of a and (Erecting Shops), March 16. Shope we hear of the marriage of Ma- grandson, Kenneth Howell, weight eight Greta Ivene is the new baby girl in the chinist Anthony Gomes to Kay Super- home of Mr. and Mrs. Richard L. Ricken- lane, April 19; Machinist Helper Joseph bacher since March 26. Dick works for Bruno Costello to Josephine Peters, Southern Pacific PMT in supt's office, Preano. PMT April 12; Clerk John Thomas to Grace Driver Raymond Luke of Bacramento re- Cassinelli; Brass Moulder Miche Orbe, porta that he and Mrs. Luke are celebrat- April 12; Machinist Helper Ralph All- log the arrival of Roberts, 7 pounds good, April 9; Geo. D. Fisher to Myrtle Bulletin strong. March 20. Clyde Hanger and Clough, March 29; Switchman Phillip wife Jean are mighty, mighty proud of Yoder of Salem to Miss Edith Mohr, Volume 26, Number $-Published monthly that 7-pound bundle named Les Martin, March 15. Telegrapher W. Denham by Southern Pacific Bureau of News. residing at the Hanger home since April of Salem to Mary Woodworth, March 29. 65 Market Street, San Francisco a. Clyde is head tracer clerk at Bacra- - Section Poreman Willis F. McGee of ERLE HEATH, Editor mento Gen'l Stores. Another proud pape Mohawk, Tucson Div., to Leavaine Old- among storesmen Le Barney Wright cele- ham in El Centro, March 3. Sheet GBO. P. SMITH, Asst. to Editor brating arrival of Michael Lee. At the Metal Worker Helper Wm. Boss Gunther In the interest of and distributed free to moment Barney la on leave of absence to Ruth Meaders, in Yuma, April 10. active and retired employes. Signed contri- while serving with the U. 8. Army. Section Stockman J. A. Monahan of butions of news items and pictures regard- Stores Dept. at Dunsmuir, to Audrey ing employes or activities of the railroad To Mr. and Mrs. LeRoy M. Leale, a son, Savage, April 30. are invited, and should reach the aditor by James Michael, Feb 15. Leale is a brake- Miss Maxine Mor- the 15th of the month. man on the Const Divn. e "Bulletin" Correspondents-They'd like to Have You BUY BONDS! TERN DIVISION: Walter E. Lake, lease agent, Oakland Pier. Assis- SHASTA DIVISION: W. L. Minor, Dunamuir. Assistant: Frank Peyton, state Henry Loretz, Oakland Pier; E. O. Ornelles, West Oakland Klamath Falls. rd; R. Rooney, Water Service Dept.: J. P. Francis and T. Vander- art, West Oakland; R. J. LeClert and E. R. Stevenson, Tracy: STORES DEPT.: Jack Griffle, Gen'l Storekeeper's Office, 8. P. Assta- jekton. Illip P. Healy, Gen'l Freight Terminal, Oakland; A. B. Caughey, tants: c. Pine, Bacramento; F. M. Connett, West Oskland; F. J. O'Donnell, Los Angeles; E. g. Cummings, EL Paso; c. S. Boroughs, Portland; W. P. Beall, West Oakland. AMENTO DIVISION: J. A. Collins, nas chief clerk, Sacramento. SACRAMENTO GEN'L SHOPS: Fred Moseley, W. J. Lambert, R. R. Johnson. distant: W. c. "Sparky" Hellbron, Roseville. Los ANGELES GEN'L Snore: Carl G. Randall. LAKE DIVISION: George Greenwood, sup't sec'ty, Ogden. Assia- NEW: Bruno Tassone, Sparks: D. DeGroot, Montello: Burton Howard, EL PASO GEN'L SHOPS: Ellis Crysler, general clerk. titn: G. A. Gillett and D. Buswell, Imlay. TELEGRAPH DEPT.: Miss "Pat" Dowd, general clerk, San Francisco. Assistants: Evelyn Cutter, "BD", Ban Prancisco; c. E. Weish, "UN", LAND DIVISION: Howard E. Balley, secty to ass't superintendent, Tucson: Fern Liston, "HU", Los Angeles; J. K. Brent, "H", Baora- Hand. Assistants: All agents and roadmasters' clerka. mento; J. W. Clark, "SW", XI Paso; L. V. Hawkins, "DW", Portland. DIVISION: J. A. Knudsen and Marty Boland, 3rd St., San Fran- TRAFFIC DEPT: Durothy Ferie Johnson, Gen'l Freight, B.P.: 1. R. bo, Assistants: T. J. O'Conner, Ban Luis Obispo: F. J. McCabe, Jarman, Gen'l Pass., 8.F.; Paul Streight, Gen'l Freight, Portland, tsonville Junction: R. McClintock and 5. W. McCarley, Ban Jose. Chas. Mulks, Gen't Freight, L.A.; Chas. G. Shea, Oen'l Pass., L.A.: JOAQUIN DIVISION: Tom Billingsley and Lella Ziegler, Bakersfield. L. & Helmer, Dis. Pass., B. P.: Al Walling, Dia. Pass., Oakland: Frank detants: AL Anderson, Presno; E. W. Smith, Bakersfield round- Wisdom, Dia, Pass, L A; E. D. Culp, Seattle, Geo, Bennett, Mojave, GENERAL OFFICES: Norman Wiley, Ass't Gen'l Auditor; 0. W. Hellwig, as DIVISION: Walter 8. Olson, sup't secity, Los Angeles. Auditor Misc. Acounts: Russcit Knox, Auditor Cap. Expenditures: Sants: Jas. B. Steele, Taylor Roundhouse: Max M. Damon, L. A. G. D. Frey, Aud. Disbursements; H. F. Woods, Aud. Freight Accts.: light Station: K. P. Ginn, SP Club. Herman Nelson, Aud. Pass. Accts.: Everett Dial, Central Timekeeping: ON DIVISION: Leroy Magers, ass't chief clerk, Tucson. Assistants: August Cheyrias, Equipment Service; Beth G. Parliman, Law: W. C. ke Quibais, Tucson: Eddle Anaya, Yuma; D. B. Darsey, Phoenix: Allen, Dining Car: R. 2. Detting, Chief Engineer; W. J. Hayes, Pur- C. Collier, Gila; Max Richards, Globe. chasing: A. L. Frits, Freight Claim; Bert Ream, Operating. sistents: R. U. McLean, El Paso: L. B. Armstrung, Tucumeari; DEANGE DIVISION: Bobt. B. Hall, head clerk. Div. Egr., 22 Paso. PACIFIC MOTOR TRUCKING: V. L. Richeda, Ban Francisco, Assistants: E. R. Smith, Portland; O. M. Melsheimer, Los Angeles: Allen Hansen, D. Robin, Deming: Geo. Pergusua, Douglas; J.B. Stearn, Carrianto. Tumon. Regraded Unclass 10 May 16, 1942 Letters to the following, attaching 8. photostat of letter from Mr. H. W. Anderson, Vice President of the General Motors Cor- poration, giving results of the payroll allotment plan for sale of War Savings Bonds, described to Ways and Means Committee on April 16, 1942. Signed HMJr. Copies to Thompson. (HNG) Hon. Robert L. Doughton, Hon. Peter G. Gerry, Hon. Raymond S. McKeough, Hon. Joseph F. Guffey, Hon. Knute Hill, Hon. Prentiss M. Brown, Hon. Arthur D. Healey, Hon. Clyde L. Herring, Hon. Aaron Lane Ford, Hon. Robert A. Taft, Hon. Allen T. Treadway, Hon. Robert M. LeFollette, Jr., Hon. Frank Crowther, Hon. William H. Smathers, Hon. Harold Knutson, Hon. George L. Radcliffe, Hon. Daniel A. Reed, Hon. Edwin C. Johnson, Hon. Roy 0. Woodruff, Hon. James J. Davis, Hon. Thomas A. Jenkins, Hon. Arthur H. Vandenberg, Hon. Donald H. McLean, Hon. Arthur Capper, Hon. Bertrand W. Gearhart, Hon. Henry Cabot Lodge, Jr., Hon. Frank Carlson, Hon. John A. Danaher, Hon. Benjamin Jarrett, Hon. Walter F. George, Hon. Richard M. Duncan, Hon. David I. Walsh, Hon. A. Willis Robertson, Hon. Alben W. Barkley, Hon. Patrick J. Boland, Hon. Tom Connally, Hon. Milton H. West, Hon. Josiah W. Bailey, Hon. Thomas H. Cullen, Hon. Bennett Champ Clark, Hon. John W. Boehme, Jr. Hon. Harry Flood Byrd Hon. Jere Cooper, Hon. Wesley E. Disney, Hon. Frank H. Buck, Hon. John D. Dingell, Hon. The above list of letters were all mailed from Mr. Graves' office. 11 My 15, 1942. MAY 16 1942 Hg dear Mr. Dingell: You will recall that on April 16 officials of the General Motors Corporation, with repre- sentatives of the workers, described to the Mays and Heans Committee a ompaign about to be insuranted for the purpose of increasing the participation of the Company's employees in the payroll allotment plan for the sale of War Sevings Bonds. I - - that you will be interested in reading a letter which I have received this morning from Mr. E. N. Anderson, Vice President of the Corporation, describing the results of the campaign, and I take pleasure in enclosing a copy for that purpose. Sincerely, (Signed) 1. Mergenthau, 19. Hu. John D. Dingell, House of Representatives, Weshington, D. c. HNG:ew Regraded Unclassified 12 GENERAL MOTORS CORPORATION BROADWAY AT 57 TH STREET NEW YORK, N.Y. Washington Office - 17TH AND EYE ers. as. W, May 15, 1942 Honorable Henry Morgenthau, Jr. Secretary of the Treasury Washington, D. 0. My dear Mr. Secretary: Mr. Gamble, of your office, inquired as to the result achieved from the campaign starting on April 16 to increase participation in the purchase of War Bonds. This campaign was known as the "GENERAL MOTORS EMPLOYES BOND DRIVE FOR VICTORY." We are pleased to inform you that from an employe participation of 314 percent as of April 1, the participation of all General Motors employes now stands at 99.2 percent as a result of this drive. As a percent of the payroll, the participation of employes increased from 1.9 percent for March to 6.9 percent for April. General Motors has ninety seven plants and units within the United States. Employes of each of these unit- have subscribed for and purchased War Bonds far in excess of our expectations. In eighty four of these units, 100 percent of the employes are purchasing War Bonds. In the remaining thirteen units, between 95 percent and 99.9 percent of employes are perticipating. There is attached a list of General Motors plants and units and the percent of participation of each of them. The following is & summary of the results of the drive: BEFORE CAMPAIGN AFTER CAMPAIGN MARCH 1942 APRIL 1942 . Number of Employes Working (U.S.) 222,819 235,090 Total Payroll $51,224,330 $54,457,053 Number of Employes Purchasing Bonds 70,295 233,197 Amount Subscribed for Purchase of Bonds $965,529.50 $3,756,173 Subscription Per Employe Per Month $13.73 $16.10 Bond Purchases as a Percent of Total Payroll 1.9% 6.9% Percent of Employe Participation 31.55 99.2% *These are prelimary figures based upon individual employe pledges and projected on , monthly basis. Regraded Unclassified 13 - 2 - The bond drive was developed and directed by experienced executives of the Corporation with splendid cooperation from all employes. In the mass meetings, various representatives of employes played an active part in building up patriotic interest and enthusiasm for the entire program. In reviewing the foregoing, consideration should be given to the short period of time since the drive started. Among the points stressed in the promotion of bond sales were the following: 1. Furnishing necessary funds for the war effort. 2. Establishing reserves to help carry employes through any post-war readjustments. 3. Constructively decreasing available purchasing power in line with diminishing supplies of consumer goods. The employes in the plants are currently averaging 46 hours of work per week and earnings have been stabilized at high levels. Barnings were low during December, January and February as a result of the curtailment" of non- defense production. While the results are gratifying to date, the next phase of the progra will be directed toward encouraging employes to increase their weekly 07 monthly subscriptions. The slogan will be: "NOT LESS THAN ONE BOND PER EMPLOYE PER MONTH." We anticipate an increase in weekly and monthly subscriptions as the war program develops and hours of work and overtime pay are increased. I wish to take this opportunity to express our appreciation for the help and cooperation we have received from the Treasury Department in preparing this campaign and which we feel contributed materially to its success. HW.Cinderson: Very tmly yours, H. W. Anderson Vice President hwa-em encl. NERAL MOTORS EMPLOYES BOND DRIVE FOR VICTORY SALES STANDINGS * * 14 CONGRATULARTORY FINAL STANDINGS X PARTICIPATION RANK Aeroproducts 100% 1 Allison 100% 1 Argonaut 100% 1 Brown-Lipe-Chapin 100% 1 Buick Lotor 100% 1 Cadillac 100% 1 Chevrolet - Atlanta 100% 1 Chevrolet - Aviation Engino # 2 100% 1 Chevrolot - Baltimoro 100% 1 Chevrolet - Bay City 100% 1 Chevrolet - Bloomfield 100% 1 Chevrolet - Exporimental 100% 1 Chevrolet - Flint 100% 1 Chevrolet - Grey Iron Foundry 100% 1 Chevrolet - Indianapolis 100% 1 Chevrolet - Janosvillo 100% 1 Chovrolet - Kansas City 100% 1 Chevrolet - Motor & Axle 100% 1 Chevrolot - Muncie 100% 1 Chovrolot - Norwood 100% 1 Chovrolot - Oakland 100% 1 Chovrolot - Spring & Bumpor 100,1 1 Chovrolet - St. Louis 100% 1 Chovrolot - Tarrytown 100% 1 Chevrolot - Tolodo 100% 1 Chevrolet - Transmission 100% 1 Doloo Appliance 100% 1 Doloo Brako 100% 1 Dolco Rudio 100/- 1 Dolco Romy - andorson 100% 1 Doloo Romy - Antioch Foundry 100," 1 Delco Romy - Muncio 100% 1 Dotroit Diesol 100% 1 Dotroit Transmission 100,1 1 Eastorn ..ircruft - Baltimore 100% 1 Eastorn ..ircruft - Lindon 100,: 1 Eastorn Mircraft - Tarrytown 100,1 1 Eastorn ..ircraft - Trenton 100% 1 Eloctro-Notive 100% 1 Fishor - Contral Development 100, 1 Fisher - Contral Enginooring 100, 1 Fisher - Contral Plants 100,3 1 Fisher - Cloveland 100% 1 Fisher - Dotroit ..ircraft 100,1 1 Fisher - Detroit Stamping 100, 1 Fisher - Dic & Machino 100, 1 Fisher - Export 100) 1 Fisher - Flootwood 100;' 1 **PULASE TO YOUR EMPLOYES PLEASE GIVE YOUR STORY TO YOUR NEWSPAPERS Regraded Unclassified -2- 15- Fisher - Garage 100% 1 Fishor - Grand Rapids Stamping 100% 1 Fisher - Lensing 100% 1 Fisher - Momphis miroraft 100% 1 Fishor - Pontino 100% 1 Fishor - Service 100;: 1 Fishor - Tank 100,7 1 Floot Salos 100,1 1 Foroign Distributors 100% 1 Frigidaire 100,3 1 G. E. I. C. 100% 1 G. M. A. C. 100% 1 G. If. Building 100,3 1 G. M. Instituto 100% 1 G. 14. Oversoas 100% 1 G. 14. Proving Ground 100% 1 G. X. Rescarch 100% 1 Guide Lamp 100% 1 Harrison Radiator 100,1 1 Hyntt Boarings 100,3 1 Inland "fg. 100% 1 Modern Housing 100, 1 Mornino Products 100,3 1 Motors Holding 100, 1 Motors Insurance 100,3 1 Now Doparture - Loridon 100,5 1 Packard Eloctric 100,1 1 Rochostor Products 100,: 1 Saginaw !'c.lloable Iron 100, 1 Saginaw S. G. # 1 100% 1 Saginaw S. G. Machino Gun 100,5 1 Southorn California 100, 1 Sunlight Elcotric 100,0 1 United Motors 100,3 1 ..C Spark Plug 99.99 2 New Doparture - Bristol 99.97 3 Fisher - Entire 99.96 4 Fisher Tornstodt 99.9 5 Oldsmobile 99.9 5 Chovrolet - Entire 99.89 6 Chovrolot Goor & axlo 99.84 7 Chovrolot Contral Office 99.79 8 Now York Contral Office 99.73 9 Fishor - Flint # 1 99.7 10 AVERAGE ALL GENERAL HOTORS 99.3 Dotroit Contral Office 99.46 11 Doloo Products 99.2 12 Eastorn Mircraft - Bloomfield 98.8 13 Cloveland Diesol 98.43 14 Pontiac 98.0 15 Chevrolet - Forgo 97.8 16 Buick Aviation 95.0 17 -2- 15- Fisher - Garage 100% 1 Fisher - Grand Rapids Stamping 100% 1 Fishur - Lensing 100% 1 Fishor - Momphis miroraft 100,1 1 Fisher - Pontine 100% 1 Fisher - Service 100; 1 Fishor - Tank 100,7 1 Floot Salos 100,: 1 Foreign Distributors 100% 1 Frigidairo 100% 1 G. E. I. C. 100% 1 G. R. A. C. 100% 1 G. Id. Building 100,3 1 G. M. Instituto 100% 1 G. 14. Oversoas 100% 1 G. % Proving Ground 100% 1 G. If Resoarch 100% 1 Guide Lamp 100% 1 Harrison Radiator 100,1 1 Hyntt Boarings 100,3 1 Inland Yfg. 100% 1 Modern Housing 100, 1 Mornino Products 100% 1 Motors Holding 100, 1 Motors Insurance 100,: 1 Now Doparture - Loridon 100, 1 Packard Eloctric 100,! 1 Rochostor Products 100,: 1 Saginaw "c.lloable Iron 100% 1 Saginaw S. G. # 1 100% 1 Saginaw S. G. Machino Gun 100,: 1 Southorn California 100,2 1 Sunlight Elcotric 100,: 1 United Motors 100,3 1 ..C Spark Plug 99.99 2 New Doparturo - Bristol 99.97 3 Fisher - Entire 99.96 4 Fisher Tornstodt 99.9 5 Oldsmobile 99.9 5 Chovrolet - Entire 99.89 6 Chovrolot Goar & xlo 99.84 7 Chovrolet Contral Office 99.79 8 New York Contral Office 99.73 9 Fishor - Flint # 1 99.7 10 AVERAGE ALL GENERAL HOTORS 99.2 Dotroit Contral Office 99.46 11 Doloo Products 99.2 12 Eastorn Mircraft - Bloomfield 98.8 13 Clovoland Diosol 98.43 14 Pontiac 98.0 15 Chovrolet - Forge 97.8 16 Buick Aviation 95.0 17 Sales of United States Savings Bonds From May 1 through May 15, 1942 Compared with sales quota for same period (At issue price in millions of dollars) # Series I : Series y and G : Total 2 Actual Sales : Quota, : Sales : Actual Sales : Quota, : Sales : Actual Sales : Quota, : Sales Date : : May 1 : May 1 : to Date : : May 1 : May 1 : to Date # : May 1 : May 1 : to date : Daily : to : to : as x of 2 Daily : to : to : as $ of : Daily : to : to : as $ of : : Date : Date : Quota : : Date : Date : Quota : : Date : Date : Quota 1 $ 12.7 $ 12.7 $ 14.0 90.7% $ 7.3 $ 7-3 $ 9.0 81.1$ $ 20.0 $ 20.0 $ 23.0 87.0% 2 11.6 24.3 25.7 94.6 7.9 15.2 16.0 95.0 19.4 39.4 41.7 94.5 4 22.3 46.5 47.8 97.3 10.3 25.5 29.5 86.4 32.6 72.0 77.3 93.1 5 8.9 55.5 57.8 96.0 7.6 33.1 37.1 89.2 16.6 88.6 94.9 93.4 6 18.4 73.8 70.5 104.7 15.6 48.8 49.8 98.0 34.0 122.6 120.3 101.9 7 23.2 97.0 84.0 115.5 12.1 60.8 60.3 100.8 35.3 157.9 144.3 109.4 8 17.2 114.2 98.0 116.5 6.4 67.2 69.3 97.0 23.6 181.4 167.3 105.4 9 14.5 128.7 109.7 117.3 5.6 72.8 76.3 95.4 20.0 201.5 186.0 108.3 11 23.3 152.0 131.8 115.3 8.1 50.8 89.8 90.0 31.3 232.8 221.6 105.1 12 9.4 161.3 141.8 113.8 4.6 85.4 97.4 87.7 14.0 246.8 239.2 103.2 13 15.8 177.1 154.5 114.6 9.0 94.4 110.1 85.7 24.8 271.5 264.6 102.6 14 16.9 194.0 168.0 115.5 7.7 102.1 120.6 84.7 24.6 296.2 288.6 102.6 15 14.9 205.9 182.0 114.8 6.8 108.9 129.6 84.0 21.7 317.9 311.6 102.0 16 193.7 136.6 330.3 15 215.8 150.1 365.9 9 225.8 157.7 383.5 20 238.5 170.3 405.8 21 252.0 180.8 432.8 22 266.0 189.8 455.8 23 277.7 196.8 474.5 25 299.8 210.3 510.1 26 309.8 217.9 527.7 Regraded Unclassified 27 322.5 230.5 553.0 28 336.0 241.0 577.0 29 350.0 250.0 600.0 Office of the Secretary of the Treasury, Division of Research and Statistics. May 16, 1942. Source: Actual sales figures are deposits with the Treasurer of the United States on account of proceeds of sales of United States savings bonds. Figures have been rounded and will not necessarily add to totals. 18, 16 tite JOB says that Kr. termarly 27 with Mr. served with that he is very this project is lise. Ao has comparable assign- 10. TOM: MB. GASTON TO:L2 May 19 0 Mack states that he have rly with Mr. served with that he is very this project is lyin his line. Be has had comparable assign- FROM: MR. GASTON 17 1 MAY 16 1942 Dear Mr. May: I have received your letter of May 13, with regard to a survey of health supplies in the United Nations. I wish to designate Mr. John c. Driver, statistician, Procurement Division, as the representative of the Treasury Department. Very truly yours, (Signed) 1. Morgenthau. Jr. Secretary of the Treasury. Mr. Stacy May, Director, Statistics Division, War Production Board, Washington, D. c. FCR:ds Photo file n.m.c. By Messenger Veach 10:00 Orig File next to Cliften mack 10. mn. Maston's office WAR PRODUCTION BOARD WASHINGTON, D.C. IN REPLY REFER TOI May 13, 1942 The Non. Henry Morgenthau The Secretary of the Treasury Washington, D. C. Subject: Health Supplies Surveyl/ Dear Mr. Secretary: The policy of the United States and of all other governments has been to accord to health supplies a posi- tion of importance in wartime programs equal to that of armament and of basic economic activities. A Survey of Health Supplies in the United Nations has been insugurated in accordance with the directive by Mr. Lauchlin Currie, Administrative Assistant to the Presi- dent, transmitted to Mr. Donald M. Nelson, Chairman, War Production Board, and to no. Directive: The directive specifically states the following points for development in the Health Supplies Survey: Phase "1. To reconcile available data of United States Army and British War Office experience with medical supplies and adapt existing supply tables to the major theatres of present and anticipated oper- ations;" Ref.: Memoranda of March 31, 1942, April 7, 1942, April 11, 1942, and May 2, 1942, to Dr. Stacy May, Dr. Vergil Reed, Mr. N. L. McKlroy, War Production Board Ref.: Directive of March 17, 1942, The White House ICTORY BUY Regraded Unclassified The Hon. Henry Morgenthau May 13, 1942 - 2 Phase "2. To estimate military requirements of the United Nations on the basis of men under arns in each theatre;" Phase "3. To determine world sources of supply, production and the possibilities of expansion, with due re- gard to essential needs of civilian population; and Phase ⑉4. To develop immediate and long range plans for the supply of all military areas with minimum shipping." To comply with the provisions of the directive, a general Survey of the entire supply and requirements situation is necessary. The preliminary outline for this Survey has been organized and submitted to Mr. Currie and has been ap- proved by him. Identity: Health Supplies are considered to include botanical and animal drugs, medicinal chemicals, biological products, surgical dressings, surgical instruments and equipment, and other related products. The Survey will include strategic and critical raw materials necessary for the extraction, manufacture, processing or fabrication of such health supplies. Responsibilities: Responsibility for the assembly of data has been assigned to Dr. John N. McDonnell, Research Adviser to the Health Supplies Branch.2/ His staff already has accumulated background information for this Survey and is prepared to serve as the focal point for assembly of the remainder, with the cooperation of the other agencies concerned, With the object of minimizing duplication of effort and expediting the work, the over-all task has been sub-divided tentatively into portions which it is believed can be handled advantageously by the respective war agencies. Cooperation will, of course, be mutual. The activities of each agency may be expected to gain in effectiveness through the existence of this clearing house for health supplies information. Ref.: Memorandum of April 2, 1942 Regraded Unclassified The Hon, Henry Morgenthau May 13, 1942 - 3 Organization: With your cooperation, it is our belief that the project can be handled most expeditiously without meetings of representatives of the agencies involved. It is our in- tention to make such time-consusing conferences unnecessary by periodic reports on the status of the project, and by free current inter-change of views among the respective agencies. In order that all agencies may be acquainted with the organization of the Survey, a full schedule of the sug- gested responsibilities of each agency is attached. This division of the work has been arrived at after considerable study, and the individual responsibilities are believed to correspond closely with the data and channels available in each agency. Comments are welcome, nevertheless, if it appears to any of the agencies that there are discrepancies in the schedule, In order to assure proper responsibility and proper channels in both directions, it seems essential that a single representative for the purpose of the Survey be designated by each agency. This representative will be responsible for seeing that his agency's portion of the work is carried out and transmitted to the clearing house, and will serve at the same time as a medium for keeping his agency informed of the status of the project. Will you please designate such a representative in writing this week? Data covering the factors shown in the accompanying outline are requested by Monday, May 25, on the following highly critical items. Agar Digitalis Arsphenamine Emetine Acid ascorbic Ergot Acid nicotinic (and amide) Ipecac Acid tannic and nutgalls Morphine Atabrine Necarsphenamine Atropine Opium Belladonna Procaine Caffeine Quinine Cinchona bark Riboflavin Codeine Sulfanilamide Regraded Unclassified The Hon. Henry Morgenthan May 13, 1942 - 4 Sulfadiazine Sulfaraphenamine Sulfapyridine Theobromine Sulfaguanidine Thiamine hydrochloride Sulfathiazole Requests for comparable statistics on other critical items will be made from time to time as the Survey progresses. Very truly yours, Stacy May Director Statistics Division Regraded Unclassified Health Supplies Section Statistics Division WAR PRODUCTION BOARD May 12, 1942 HEALTH SUPPLIES SURVEY DIVISION OF RESPONSIBILITY AMONG DEPARTMENTS AND AGENCIES War Department Office of the Surgeon General, Medical Department Requisitions, orders and deliveries of health supplies for (a) United States Army; (b) United States Navy; (c) Lend-Lease Nations, by military and by civilian destination; (d) American and other Red Cross; (e) the several foreign war relief groups. Headquarters Services of Supply, Commodities Division 1. Requirements information covering the following units in the Army: (a) Office of the Surgeon-General, for the ground force; (b) Air Corps; (c) Quartermaster Corps. 2. Bills of materials for each commodity covered. This information will provide the basis for calculating raw material requirements and for assistance in determining scarce and critical materials. Navy Department Bureau of Medicine and Surgery, Office of the Surgeon-General Commodity requirements for (a) Navy on direct purchase (itoms not obtained by the Surgeon-General's Office of the Army); (b) Marine Corps, if separate from the Navy supplies; and (c) Coast Guard. Federal Security Agency Public Health Service, Office of the Surgeon-General Requirements for (a) Marine hospitals; and (b) Public Health Service. Technical assistance of the Public Health Service. Regraded Unclassified Technical assistance of the Public Health Service will provide data on regional health problems, on epidemiology in domestic and foreign areas, and on replacement items for scarce commodities. Office of Civilian Defense Office of the Director Estimates of the commodities required for civilian defense in first aid posts, emergency posts, casualty stations, and for use in base and civilian hospitals. Treasury Department Procurement Division (Representative from this Division) Requirements for those agencies for which the Procurement Division purchases health supply commodities. Narcotic Tax Unit Supply and consumption data for narcotic items. Alcohol Tax Unit Supply and consumption data for alcohols. Tariff Commission Chemical Section Production and consumption data of certain important commodities obtained on regular monthly schedules. Department of Commerce Census Bureau Production and consumption data of certain important commodities obtained on regular monthly schedules. Foreign Trade Statistics Division Monthly reports of imports and exports. Regraded Unclassified - 3 - Bureau of Foreign and Domestic Commerce, Drug and Chemical Division Past consumption, and source data, both foreign and domestic, for important commodities and raw materials. War Production Board Health Supplies Branch "All available data contained within its files concerning production and stocks of commodities in the field. Division of Civilian Supply The Health and Medical Supplies Branch will determine civilian requirements upon the basis of available supplies of raw materials and finished commodities. Puch of the data necessary will be available from the files of the Health Supplies Section, Statistics Division. Where domentic allocations are necessary, this group will evolve and recommend such programs. Other Branches The various commodity Branches of the "ar Production Board will provide production and other essential data concern- ing the materials for health supplies. These include branches handling chemicals, aluminus, copper, stool, nickel, rubber, and textiles. Department of Agriculture Burcau of Plant Industry Date on cultivation and supply of botanical drugs from domestic sources. Office of Lond-Lease Administration The Office of the Administrator Requirements for health supplies by lintions receiving Lend-Lease assistance, ecific as to items and quantities. Board of Economic Marfare Office of the Director Specific requirements for health supplies for the Central American and South American countries and the Dominion of Canada and other friendly Nations, with the exception of Regraded Unclassified of those receiving Lend-Lease aid. Determination of production, stocks and requirements data on health supplies in accordance with the "Commodity Basic Data Report" for all Nations other than those receiving Lend-Lease Aid. Cooperating Agencies Considerable general cooperation and technical assistance will be requested from the following agencies and organizations in the course of the survey: National Research Council, Committee on Medical and Health Problems. Office of Defense Health and Welfare Services, Health and Medical Committee Office of Scientific Research and Development, Committee on Medical Research Office of the Coordinator of Inter-American Affairs, Economic Warfare Division Office of Price Administration, Price Division, Chemical Soction, Drug Unit The State Department The Maritime Commission Formulation of the program of development for Phases 1, 2 and 4 of the Health Supplies Survey will take place in the immediate future and a succeeding memorandum will outline the respective functions and method of cooperation. Copy of the proposed "Commodity Basic Data Report" for the Allied Nations, together with detailed operating instructions, will be attached to communications to interested agencies. Regraded Unclassified THE BRITISH SUPPLY COUNCIL IN NORTH AMERICA 28 BOX 680 TELEPHONE: REPUBLIC 7860 BENJAMIN FRANKLIN STATION WASHINGTON, D. c. May 16, 1942. My dear White, I gave you a-memorandum about a fortnight ago containing figures of our estimated future financial position, and asking that in view of our probable deficit the air contracts as well as the ordnance contracts should now be taken over. You asked me on that occasion what delay there normally was between payment on the contracts and the actual export of the planes. I have consulted Air Marshal Hill on this and,he now tells me that it has always been our policy to ship the goods intended for export as quickly as possible. The actual delay depends largely on the availability of shipping, but the over-all average is somewhat on the order of twenty-one days. Thus, there would be likely to be in the U.S.A. at any time dur- ing the coming months, some three weeks stock of delivered material. As the delay in shipping is evidently, for the most part, quite short, it does not seem to me that, if later on our financial position is seriously deterior- ated, it is likely that any satisfactory remedy could then be found by purchase by your Government of material coming off our contracts but not yet shipped. I feel sure that the cleanest and easiest method must be by the take-over, in some form, of our outstanding contracts, and I very much hope that you will once more review this possibility. Yours sincerely, Hhillips Dr. H. D. Director of Monetary Research, United States Treasury, Washington, TAM 1. C. notatvity deserved Regraded Unclassified TREASURY DEPARTMENT 29 INTER-OFFICE COMMUNICATION DATE May 16, 1942 TO Secretary Morgenthau FROM Mr. White SUBJECT: Silver Purchase Agreements The table below compares our silver purchases from Canada and Mexico under agreement with total silver imports from these two countries. We have bought no silver under the new Mexican agreement, and purchases under the Canadian agree- ment declined to zero by the end of last year. Total silver imports from Mexico have been well maintained in recent months, while imports from Canada are running somewhat lower than last year. FROM CANADA FROM MEXICO Imports Treas. Purchases Imports Treas.Purchase under Agreement under Agreement (In thousands of ounces) 1936 16,692 7,497 64,925 55,464 1937 18,642 9,759 68,179 52,545 1938 29,496 14,439 96,454 15,001 1939 24,018 12,136 79,947 1940 20,550 11,672 73,536 1941 18,844 7,131 73,749 0 1941 Jan.-Mar. 4,501 1,427 18,581 Apr.-June 4,789 1,952 17,524 July-Sept. 5,499 2,852 19,749 Oct.-Dec. 4,055 900 17,895 O 1942 Jan.-Mar. 3,512 0 19,201 o April 1,384 O 6,304 0 Includes import of 6,687,000 OZS., special Treas. purchases of March, April, May 1938. Includes import of 35,000,000 OZS., a special Treas. purchase of December 1937. Regraded Unclassified 30 -2- The Canadian agreement, under which we undertake to buy up to 1,200,000 ounces a month, has been in operation since March 1936. The first Mexican agreement, with a monthly limit of 5,000,000 ounces, was in operation between January 1936 and March 1938. The second Mexican agreement, with a monthly limit of 6,000,000 ounces, has been in operation since December 1941. 31 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION MI DATE May 16, 1942 TO Secretary Morgenthau FROM Mr. Kamarck Subject: Of Possible Interest: Comparison of American and German Airplane Production German and American Airplane Production German U. S. Production Production December, 1941 # March, 1942 ## Type Pursuit 950 776 Light and medium bombers (including 2-engine naval patrol) 1040 624 Heavy bombers 60 156 Total-basic combat 2,050 1,556 Trainers 300 1,369 Other military types (transports, observa- tion, etc.) 250 537 GRAND TOTAL 2,600 3,462 * Source: U.S. War Department, TM 30-450, "Handbook on German Military Forces." ** Source: War Production Board, compiled by U.S. Treasury, Division of Research and Statistics. Regraded Unclassified 32 - 2 - Comments In spite of all the publicity about our airplane production achievements, we have no reason for complacency. 1. The Germans still produce 500 more basic combat planes a month than we do, or 2,050, compared to 1,556. 2. According to C.O.I., the British reported some time ago that the Germans had increased their plane produc- tion in the winter of 1942 by 15 percent. The comparison between German December figures and our March figures, therefore, may actually understate our lag behind the Germans. C 33 0 P Y DEPARTMENT OF STATE WASHINGTON May 16, 1942 In reply refer to FD The Secretary of State presents his compliments to the Honorable the Secretary of the Treasury and encloses copies of telegram no. 260, dated May 15, 1942, from the American Consulate General, Sydney, Australia, reporting receipt from the Commonwealth Bank on May 13 of Havy bill no. 3861 of May 5, 1942, drawn by Lieutenant Patroney in the amount of $322,800. The Treasury may disregard the last paragraph of the telegram which concerns administration of State Department telegraphic codes. Enclosure: From Consulate, Sydney, no. 260, May 15, 1942. Copy:bj:5-16-42 C 0 34 P Y ALH Sydney This telegram must be paraphrased before being Dated May 15, 1942 communicated to anyone other than a Governmental Rec'd 7:22 a.m. agency. (BR) Secretary of State, Washington. 260, May 15, 5 p.m. "Reference is made to the Department's telegram no. 173, May 1, 11 p.m. Received from Commonwealth Bank today". Navy bill no. 3861 May 5. 1942, drawn by Patroney Lieutenant J. G. Scuerr for $322,800. Referring to the Department's telegram no. 174, May 2, 3 p.m. will Department designate code group for above quotation. PAIMER. RR eh:copy 5-15-42 Regraded Unclassified 35 TELEGRAM SENT HRL Chungking This telegram must bE paraphrased before being Dated May 16, 1942 communicated to anyone other than a Governmental Rec'd 11:01 a.m. agency. (BR) Secretary of State, Washington. 562, May y 16, 9 a.m. FROM ..DLER FOR SECRETARY OF THE TREASURY "TF 37 OnE. Miss Chumley of board secretariat Escaped from Hong Kong at the End of March writes from Kweilin Taylor secretary of American Community working closely with Chairman Hunt and Frese active in com- munity affairs and in good health. Two. Federal RESERVE Bank of NEW York's statements of account to February 28 and SET of credit and debit advices posted March 26 received May 12." GAUSS WSB 36 INCOMING CABLEGRAM Date: May 16, 1942 From: Chungking. Federal Reserve Bank of New York #12 With regard to the two new accounts in the names of Allied Victory U. S. dollar bonds and the U. S. dollar savings certificates, we are instructed by the Ministry of Finance to ascertain your views and advice as to the possibility of investing portion or whole of these de- posits in gilt edged securities such as Government bonds or Treasury bills to earn some interest. Please cable. (signed) Central Bank of China. (Received by telephone from Federal Reserve Bank of New York, N. I. May 18, 1942) TV Regraded Unclassified 37 PARAPHRASE OF TELEGRAM RECEIVED FROM: AMERICAN EMBASSY, Montevideo, Uruguay. DATED: May 16, 1942, 2 p.m. NUMBER: 390. Reference 18-made to Department's telegram no. 220, April 16. An important official of the Bank of the Republic has now made available to us the information given below, which 1s strictly confidential. Approximately a month ago, a Buenos Aires banking group, realizing that the Government of Uruguay badly needed funds to meet the increasing deficit in the budget, offered the Government a five year ten million peso loan, the terms of which would be: With the group's funds, the Bank of the Republic to purchase and bring to Uruguay in gold bars five million dollars, the Bank on the security of the gold to lend to the group ten million pesos to be loaned to the Government, and on maturity of the loan to deliver the gold to the group. The Bank of the Republic consulted the Central Hanover Trust Company with regard to the regulations governing the exportation of gold before completing the transaction, and refused to conclude the bargain upon being told that export licenses were not granted for gold intended for private parties. It 1s Regraded Unclassified 38 -2- #390, May 16, 2 p.m., from Montevideo. It is the understanding of the Embassy that an export license to cover the shipment was granted. The Department may desire to take steps discreetly to ensure that the shipment is not made, even though it 1s in- formed that the Bank of the Republic does not plan to carry out the deal. DAWSON 39 Reclosures COPY No." (Classification) (For Record Bestion only) MILITARY INTELLIGENCE DIVISION W. D. G. S. MILITARY ATTACHÉ REPORT FINLAND, (Country reported on) Subject WAR DEPARTMENT BUDGET POR 1942, 1. G. No. 6420 (Driet descriptive title) From M. A.Helsinki,FinlandReport No. 523 Date May 16. 1942, Source and degree of reliability: Statute Book of Finland, January 9, 1942. SUMMARY.-Here enter careful summary of report, containing substance succinetly etated; include important facts, names, places, dates, etc. Total National Expenditures 11,069,735,000 War Department budget: 22.04% of total expenditures 2,439,787,400 Distribution by originator Routing space below for use in M. I. D. The section indicating the distribution will place a check mark in the lower part of the recipients' box in case one copy only is to go to him, or will Indicate the number of copies in case more than one should be sent. The message center of the Intelligence Branch will draw & circle around the box of the recipient to which the particular copy is to go. OHQ 0-1 G-8 0-4 WPD ONI State Comm. Miss. F.B.L A.W.C. C.&G. Ind. Coll. Export 8.8. Control X I A. o, of 8. Chist in MA Bec. FL Bec. Bee. Bee. Trans. CIB 880 P.sofT. Inf. Coord. Coord. G-1 Bec. Boc. OLLA Tank Cont. of Int. Center 2 Air BE CE BE EX WE FR LA Bit. Cost. Dism. Field ASW USW ASWA Pers. 2 4 CHIEFS OF ARMS AND SERVICES Inf. Car. FA CAO ДО AAT it Armd. Ord. QM CWS Med. Engr. Fin. Attaché at OG Phil, OG Pa. OG Haw. Enclosures: VAR DEPARTMENT O. C. B. IT (Rev.) a. & PRINTING INFICE Regraded (Clastification) Unclassified Wer Department Budget for 1942, The following is the War Department Budget for the fiscal year 1942 which coindides with the calender year: Finnmarks: Pay of the Army 640,345,200 Rations 340,000,000 Uniforms and equipment 115,800,000 Barrucks and quarters 36,500,000 Purchase and maintenance of horses 52,700,000 Purchase and mointenance of wer material and vehicles 288,000,000 Fuel and lubricants 100,000,000 Portifications 1,800,000 Other real estete 107,400,000 Transportation, travel end per diem 60,000,000 Miscellaneous expenditures 40,050,000 Civic Cuards, excepting pay end travel 50,000,000 Coast Guards (budget of the Ministry of the Interior) 27,379,900 " R " or " " # Border Guards 81,143,100 Powder Factory 31,157,300 Cartridge " 68,732,300 Rifle " 29,787,500 Gun if 85,¥7,500 Shell Loading Factory 7,456,800 Airplane Fectory 111,71,000 Shipbuilding Yard 16,924,200 Clothing Factory 4,563,90 Fuze Factory 31,88',500 Army and Air Force repair shops 18,162,600 Allowances to families of men on active service and pensions to war veterans and invalide (budget of the Ministry of Social welfore) 81,871,000 TOTAL 2,439,787,400 Total National Expenditure 11,069,735,000 war Department budget - 22.04 % of total expenditures. Rate of exchange: $1.00 to 48.85 Finnmarks. Notes by the 11/4. 10 in previous budgets, the revenues of the Government factories are shown to be equal to the expenditures but from the examination of the whole budget it appears that these items should be regarded as military expenditures. The ordinary military expenditures are not perceptibly larger than in the 1941 budget (see Report 271-6420), with the exception of pensions. It is evident that the enornous wer expenditures (according to Swedish newspepers at least 2 billion Finnmarks monthly) are prin- cipally covered by means of Government loans. It 18 also evident that there will be supplementary budgets. Details regarding the expenditures for the Army Navy and Air Force are not available. * G. S. huthsteiner, Colonel, G.S., Militery Attache. From:M/A. Helsinki, Finland. Report No. 523. Date: May 16, 1942. 2 - Regraded Unclassifie Date May 16, 194219 To: Secretary Morgenthau From: Mr. Kamarck The attached directive of the British Political Warfare Executive outlines the British Government's policy towards the German people. You might find it of interest. 41 PWE war aims, for Germany only, are to be given by means of two or three definitive talks explaining speeches of Churchill, Cripps and Eden. These talks are not to be an appeal to the German people but rather by way of state- ment of fact. The German people will be told what to ex- pect and left to make their own choice. Using Churchill, Cripps, and Eden as text, the Direc- tive calls for the following line: (a) The certain knowledge that Germany can't win is being concealed from the German masses by the Nazis. (b) The Germans' choice is between a protracted war followed by anarchy and chaos and an action inside Germany to shorten the war and save her from anarchy. (c) By citing relevant quotes from speeches by Churchill Cripps and Eden, PWE lans to show the German people what their action must be, namely to destroy Hitler and his gang and to reestablish respect for internal and external law. (d) This action must take place before, not after, the United Nations are victorious. (e) Example of Norway or Holland is cited to those in Germany who say they can do nothing. These examples prove that civil courage without weapons can avail against the Gestapo. (f) The United Nations are ready to welcome as Allies anyone, whatever his creed or race, who risks his life in war against Facism and National Socialism. Anyone who re- mains neutral we will treat as an enemy. (g) Thus Germany can be saved from protracted war and anarchy only by Germans. The United Nations can and shall defend their liberties during and after the war; they cannot redeem Germany. Only the Germans can do that. Regraded Unclassified 42 UNITED STATES GOVERNMENT COORDINATOR OF INFORMATION WASHINGTON, D.C. May 16, 1942 The Honorable The Secretary of the Treasury Washington, D. C. Dear Henry: The attached is from the British Political Warfare Executive German Directive for the week end- ing May 22. Sincerely, Biu William J. Donovan 43 PWE war aims, for Germany only, are to be given by means of two or three definitive talks explaining speeches of Churchill, Cripps and Eden. These talks are not to be an appeal to the German people but rather by way of state- ment of fact. The German people will be told what to ex- pect and left to make their own choice. Using Churchill, Cripps, and Eden as text, the Direc- tive calls for the following line: (a) The certain knowledge that Germany can't win is being concealed from the German masses by the Nazis. (b) The Germans' choice is between a protracted war followed by anarchy and chaos and an action inside Germany to shorten the war and save her from anarchy. (c) By citing relevant quotes from speeches by Churchill, Cripps and Eden, PWE plans to show the German people what their action must be, namely to destroy Hitler and his gang and to reestablish respect for internal and external law. (a) This action must take place before, not after, the United Nations are victorious. (e) Example of Norway or Holland is cited to those in Germany who say they can do nothing. These examples prove that civil courage without weapons can avail against the Gestapo. (f) The United Nations are ready to welcome as Allies anyone, whatever his creed or race, who risks his life in war against Fascism and National Socialism. Anyone who re- mains neutral we will treat as an enemy. (g) Thus Germany can be saved from protracted war and anarchy only by Germans. The United Nations can and shall defend their liberties during and after the war; they cannot redeem Germany. Only the Germans can do that. Regraded Unclassified 44 -2- PWE German, Italian and French Directives all call fα the utmost caution in handling news of the Eastern front. PWE asks for Germany that the vital passages from Russian and German communiques be given together with a cautious interpretation based on daily advice from the War Office. 45 DIRECT at UNITED STATES GOVERNMENT COORDINATOR OF INFORMATION WASHINGTON, D.C. May 16, 1942 The Honorable The Secretary of the Treasury Washington, D. C. Dear Henry: Attached is the British Political Warfare Executive French Directive for the period ending May 31. Sincerely, Bu William J. Donovan Attachment 46 Following is the Political Warfare SECRET French Directive for the period ending May 3300RDIKATOR OF INFORMATION 1. A unique attempt is made in this directive to cover fundamental objectives which are as follows: a. To demoralize the German military and civil forces of occupation. b. To hinder use by the enemy of French Economic resources. C. To convince the French people, and particularly those in the unoccupied zone that the government of Laval cannot be an independent power representing France itself, and that, because the Germans know they can make it do what they want, it is fostered by them. d. Restoration of French confidence in Britain and British policy particularly as regards post war policy. e. To convince the French that no terri- torial designs on the French Empire are held by the British. f. To maintain the morale of the French people and to prepare them for active cooperation with the allied forces of liberation. 2. Long-term tasks included in directive in order of priority as follows: a. To treat air raid precaution measures at least twice a week for the purpose of diverting Nazi controlled anti-aircraft weapons from the Eastern Front and Germany to France. Material prepared by Regraded Unclassified 47 -2- Political Warfare Executive will be forwarded SECRET this campaign will be explained in full short OF INFORMATION the main, it is meant to create a demand for mone protection against RAF raids in France. b. At least once weekly, advice for Commando raids to be given. c. To expose the real Nazi schemes and plans to Balkanize France. d. Hints on scientific listening. e. Admiralty themes for French mer- cantile fleet and French navy. f. Economic exploitation of occupied countries and France by Germans. g. Allied resources and war production, especially the United States. h. Appeals to peasants which are intended to limit the movement of food from farms to cities. i. Appeals to French youth. 3. The above long-term tasks were listed for the first time and, in subsequent discussions, are subject to revision. If our French section and planning board would send their views and list of long-term tasks and fundamental objectives for discussion and comparison here it would be useful. 4. In order of importance, PWE lists the following tasks for the coming fortnight: a. By linking the following points, to convince the French people that all is not well in Germany. 1. German internal troubles, especially manpower problem. Regraded Unclassified 48 -3- 2. Fear of RAF offensive SECRE 3. Inability of Germans or INFORMATION air warfare on all fronts. 4- German terrorism and oppression in France and all occupied countries. 5. Radio and press censorship in Europe to hide truth from France. 6. Comparison of German position in 1942 with that in 1940 (caution is given to prevent impression that an immediate crack-up in home front is at hand. This task is connected with the funda- mental objective a.) b. The myth of Laval's cleverness should be broken. c. The socialist new order of Europe which Germans and Laval are trying to sell to French workers should be debunked. This can be done by showing the new slave labor of conquered Europe and also the German methods of treating their own working classes and by stressing Laval's personal wealth and past life. Emphasis can also be placed on the pro- gressively better position of British and American workers. d. French should be convinced that no designs on French Colonial possessions are held by United Nations. This is linked with the fundamental objectives d and e, which must, during the present fortnight, become tasks. Also called for is constant repetition of American and British statements on Martinique and Madagascar. Regraded Unclassified 49 13 U.S. SECRET BRITISH LOST SECRET OPTEL No. 161. Information received up to 0700/16. 1. NAVAL One of H.M. Destroyers engaged two armed enemy trawlers off the Channel Islands on 14th/15th and left them sinking. She had no damage or casualties, A destroyer depot ship and a transport in convoy to Middle East, struck mines off Cape Agulhas on the afternoon 15th. The former was in no immediate danger of sinking. A 7,000 ton British ship was attacked by raider on 10th and abandoned a thousand miles South West of Cocos Islands. An attack by human torpedoes was attempted at Alexandria on the 14th/15th. The enemy failed to penetrate the defences and four prisoners were taken. 2. MILITARY BURMA: Western Front: There was no contact with the enemy in (?the Kalowa) Area up to the 12th. Our withdrawal in this area is continuing. Eastern Front: Chungking Comminiques of the 15th reported that Japanese had captured Tingyueh 50 miles West of Yungchang and were striking Westwards across the Irrawaddy from Bhamo. 3. AIR OPERATIONS WESTERN FRONT: 15th. 8 Hurricane bombers with fighter escort attacked enemy minesweepers off the Aherbourg Peninsula. They sank one, probably sank another and damaged a third. Our fighters destroyed a German bomber and damaged two other aircrai off the East Coast, 15th/16th. Fifty bombers were sent sea mining off the East Coast of Denmark and Heligoland in good weather. Four of them are missing. Seventeen Hudsons were sent to attack two convoys totalling twenty ships off the Dutch Coast. Both located and preliminary reports indicate that were three and possibly four ships were left burning and three more were damaged. Six Hudsons are missing and three others crashed on return. MALTA: Between 1515/14th and 1100/15th about eleven bombers and 120 fighters attacked or destroyed five enemy aircraft, probably destroyed patrolled the Island. Our Fighters and anti-aircraft one and damaged eight. We lost one Spitfire. BURMA: 13th. Our aircraft attacked river craft near Schwegyin and the Aerodrome at Akyab. 14th. River craft on the Chinawin River were again attacked and other aircraft bombed Magwe and Myitkyina Aerodrome. Regraded Unclassified 13 COPY NO. BRITISH MOST SECRET Regraded Unclassifi (U.S. SECRET) OPTEL No. 162 Information received up to 7 A.M., 17th May, 1942, 1. NAVAL Reconnnissance aircraft yesterday sighted the pocket battloship LUTZON with five destroyers steering south off the Skaw. Reference OPTEL No. 161, the destroyer depot ship has arrived at SIMONSTOWN. It is reported that there are 385 survivors from seven shipe sunk in the outward HALIFAX convoy last week. R. MILITARY BURMA. KALEWA was occupied by the Japanese on the 14th. The withdrawal of our forces northwards continues. LIBYA. There is increased onemy activity behind their forward positi in the area twenty to forty miles south-west of GAZALA. RUSSIA. In the KHARKOV area, the Russian attacks are continuing against stubborn German resistance. In the CRIMEA, the Germans have made further progress. The German Air Force has maintained an intonse air effort against the Russian offen- sive in the KHARKOV sector during the past few days, this has resulted in a decided slackening of their attacks against the BLACK SEA ports and the CRIMEA. 3. AIR OPERATIONS WESTERN FRONT. 15th/16th. 86 mines wore laid successfully. The attack by 17 Hudsons, 11 of which were R.C.A.F., on convoys off the Dutch coast was very successful, 2 ships of 2500 tons and 1 of 4,500 tons were left burning, 7 others between 2,000 and 6,000 tons are claimed as hit and a near miss WILD made on a 5,000 ton ship. 16th. Our fighters carried out seven small offensive operations against inor objectives in occupied territory without making contact with enemy aircraft. hey also shot down one German bomber off East Anglia and damaged dnother. Six Mo 09 attacked shipping in PLYMOUTH SOUND; anti-aircraft fire from destroyers shot own one and damaged another. 16th/17th. Fourtoun aircraft were sent sea-mining If HELIGOLAND and the east coast of DESMARK. Fourteon Boauforts with torpodoes are sent to attack the PRINZ EIGEN which WILD reported steaming south at high spoed rom TRONDHJEM, but failed to locate her. Six Hampdene laid mines in conjunction 1th this operation. 51 - 2 - MALTA. Between eleven A.M. 15th and twelve thirty P.M. 16th fifteen bombers, escorted by over 100 fighters, attacked or reconnoitred the Island without causing serious damage. Fighters destroyed five enemy aircraft, probably destroyed three and damaged five. One Spitfire crashed on landing (pilot safe) and another was destroyed on the ground. 4. NORWAY On the fourteenth May, the German Air Force oporated ten Focke Wulfs 200 (four-engined, long range bomber) from NORWAY against the United States shipping North-East of ICELAND. There are now believed to be between forty and fifty Focke Wulfs 200 in the German Air Force. 5. GERMANY Confirmation of the serious locomotive situation referred to in Hitler's latest speech is provided by a report that the construction and repair of loco- motives and wagons in GERMANY are to be given & priority equal to those of air- craft, tanks and submarines. 52 AMHERST COLLEGE PROGRAM OF THE CXXI COMMENCEMENT ed ALUMNI GYMNASIUM QUADRANGLE SUNDAY XVII MAY MDCCCCXXXXII ORDER OF EXERCISES I Prayer Commencement Chaplain EDWIN HILL VAN ETTEN, 1905 II Music The Spacious Firmament Joseph Haydn AMHERST COLLEGE CHOIR III Address LAURENCE BRADFORD PACKARD Anson D. Morse Professor of History IV Music Periti autem fulgebunt ut fulgor aetherus Felix Mendelssohn AMHERST COLLEGE CHOIR V ЯЗСЯО John Dennett Fernald West Newton, Massachusetts Everett Gladding Fuller Woodbury, New Jersey Conferring of the Degree Bachelor of Arts Robert John Gilfert Teaneck, New Jersey Randolph Gilman Bryn Mawr, Pennsylvania Edwin Howard Gilson Wellesley Hills, Massachusetts RITE William Henry Goelitz, Jr. Oak Park, Illinois Dandridge Murdaugh Gray Bronxville, New York Alexander Alexander, Jr. Garden City, New York Robert Kidder Green Crestwood, New York Pawling, New York Craig Gordon Allen William Henry Greene Rochester, New York Syracuse, New York Mark Banfield Baker Edward Emery Gregg John Mason Betts Evansion, Illinois Pelham, New York Charles Michel Griffith Robert Caldwell Black New York, New York Pittsburgh, Pennsylvania George Gregory Grim, Jr. Clinton Hamlin Blake, Jr. Great Barrington, Massachusetts Hillside, New Jersey Howard Jolivette Gross Robert Eldredge Blood, Jr. New Hampton, New Hampshire Newton Highlands, Massachusetts William Edward Harper, Jr. John Jacob Blumberg Elizabeth, New Jersey Manhasset, New York Thomas Southworth Harrison William Leland Bonnett Brooklyn, New York Indianapolis, Indiana Burton Henry Harwood, Jr. John Oscar Bower, Jr. yncote, Pennsylvania South Glastonbury, Connecticut Albert Herman Hastorf, III Robert Barrett Bravo asbington, D. C. Vestfield, New Jersey John Tower Heald David Broadbent Providence, Rhode Island South Weymouth, Massachusetts Edmond Hardesty Heisler Edmund Alden Brown Plainfield, New Jersey ynnewood, Pennsylvania Robert Lincoln Hicks William Cooper Browning Philadelphia, Pennsylvania Swampscott, Massachusetts William Curtis Holdsworth Clarence Jay Buckman, Jr. Langhorne, Pennsylvania Amberst, Massachusetts James Braddock Hurd Douglas Parker Butler Worcester, Massachusetts Barrington, Illinois Robert Edmund Johnson Henry Louis Butterworth, Jt. Worcester, Massachusetts Oak Park, Illinois Porter Keach Johnston Richard Wadsworth Case Longmeadow, Massachusetts Dallas, Texas Eric Arthur Jones James George Chapman Seneca Falls, New York Greenwich, Connecticut William Nicholas Jones Robert Gooddell Church, Jr. Teaneck, New Jersey Meriden, Connecticut Wilmer Deaver Kehne Alden Gould Clayton Frederick, Maryland Providence, Rhode Island Willard Kitts Eric Marbe Cohn Honolulu, T. H. New York, New York Edward Joseph Kneeland Jay Binswanger Cohn New York, New York Holyoke, Massachusetts James Lay Knight Thomas Richeson Collins, Jr. Warsaw, Missouri Clayton, Missouri Theodore Woods Lacey George Lloyd Cowan, III Arlington, Massachusetts Edgewater Park, New Jersey Robert Shields Law Kenneth Raymond Crittenden Brooklyn, New York Glen Ridge, New Jersey Frank John Leahy Pelham, New York Merriam Davis Windsor, Connecticut Alexander Cooper Leonard Thomas Robert Davis Bennington, Vermont Bronxville, New York Harry Alexander McDonald, Jt. Detroit, Michigan Allen John deCastro, Jr. South Norwalk, Connecticut Robert Knox McKechnie Wayne Elliot Dorman Cleveland Heights, Obio Washington, D. C. Mano McLaughlin Milwaukee, Wisconsin Jurgen Henry Doscher, Jt. Sweetwater, Texas Robert Drummond McMullin Waban, Massachusetts Frederic Curtiss Eastman Framingham Centre, Massachusetts Willard Charles McNitt, Jr. Winnetka, Illinois James Fairclough bite Plains, New York Bradford Talmadge Main New Haven, Connecticut Richard Everett Fallow Vest Hartford, Connecticut Richard Robinson Major Bronxville, New York the common enemy is received with special grati Regraded Unclassified Herbert Putnam Mason, Jt. Plattsburg, New York Homer Frank Trautmann Manhasset, New York Gordon Campbell Menzies Syracuse, New York William Evert Traver, II Wellesley Hills, Massachusetts Edward Grosvenor Merrill Warwich, New York William Sutton Webber, 3rd Gloucester, Massachusetts Alan David Miller New Rochelle, New York James Hervey Wells Batavia, New York George Henry Millington Philadelphia, Pennsylvania Homer Orson White, Jr. Glenolden, Pennsylvania Thomas Edward Mulroy Marblehead, Massachusetts James Platt White, Jr. Winchester, Massachusetts Charles Babcock Nevins Winnetka, Illinois William Homer Whorf Winchester, Massachusetts Yonkers, New York Thomas Clinton Wickenden Richard Joseph Newman Short Hills, New Jersey Richard Boynton Page Weston, Massachusetts Richard Purdy Wilbur North Caldwell, New Jersey Arthur Walden Palmer, Jr. Haverford, Pennsylvania Lawrence Edward Willard, Jt. Saco, Maine William Henry Patch Jenkintown, Pennsylvania William Powell Williams Saint Louis, Missouri Ward Harris Patton, Jr. Minneapolis, Minnesota CUM LAUDE Theodore Tuttle Peck Shaker Heights, Obio James Kermott Alexander Robert Thomas Pfeifer Philadelphia, Pennsylvania Englewood, New Jersey French Harlan Buddington Phillips Mount Vernon, New York Binghamton, New York John Townsend Burgess Franklin Hopton Preston Belleville, New Jersey Economics Charles Vincent Ramsey Glen Rock, New Jersey John Carson Rather Brooklyn, New York John Jonas Chester, III Columbus, Ohio Arthur Marshall Raymond Hingham, Massachusetts American Studies William Ely Ripley Shaker Heights, Obio Miner Dunham Crary, Jr. Northport, New York William Hexamer Rodgers Merion Station, Pennsylvania Philosophy Ralph Eugene Rollins, Jr. La Jolla, California Perry Woodruff Davison Texas City, Texas John Robert Rowley Narberth, Pennsylvania Physics Harold James Savage Westfield, New Jersey Bruce Charlesworth Dein Honesdale, Pennsylvania Perry Alden Sawyer Hackensack, New Jersey Political Science Clinton Robert Scharff, Jr. Detroit, Michigan David Plumb Eastburn Irving Lawrence Segal Doylestown, Pennsylvania Worcester, Massachusetts Music William Robert Shera Scarsdale, New York Henry Harlow Skinner, Jr. Yakima, Washington Richard Woodbury Farwell Winnetka, Illinois Economics Trygve Bjorn Sletteland Madison, Wisconsin Obed Finch Slingerland Albany, New York Raymond Dante Gozzi Mount Vernon, New York Howard Persifor Smith, IV Lancaster, Pennsylvania English William Johnston Smythe Amberst, Massachusetts Albert Fox Houghton Milwaukee, Wisconsin Alan Wilson Steadman Greenfield, Massachusetts History Thomas Ashley Stebbins Deerfield, Massachusetts Allen Hathaway Howland Walpole, Massachusetts Franklin Stockbridge Baltimore, Maryland Economics George Arthur Stuart Baldwinville, Massachusetts Grosvenor Pierce Taylor Donald William Kittelberger Queens Village, New York Greenfield, Massachusetts Economics Franklin Charles Thomas, Jr. Martinsburg, West Virginia Paul Farr Thomas John Hugh Liedtke, II Tulsa, Oklahoma El Paso, Texas Mark Lawrence Thomsen Philosophy Cleveland, Obio the common enemy is received with special grati Regraded Unclassified Mitchell Stanley Matuszko Hadley, Massachusetts Irvin Chaffee Plough Amberst, Massachusetts Chemistry Biology John Hollister Risley Waterville, Maine John Hutchins Reber Sinking Spring, Pennsylvania Fine Arts Philosophy Gerrit Hubbard Roelofs East Aurora, New York Sherborne Baston Simonds Worcester, Massachusetts English Biology Albin Joseph Sigda Holyoke, Massachusetts Donald Laurence Thomsen, Jr. Brookfield Center, Connecticut French Mathematics Henry Goodwin Storrs West Chester, Pennsylvania Richard Storer Ward Templeton, Massachusetts Biology Chemistry Harrison Greenwood Taylor, Jr. Worcester, Massachusetts Thomas William Wilcox Evanston, Illinois Economics English Rufus Johnston Wysor, Jr. Shaker Heights, Ohio History SUMMA CUM LAUDE MAGNA CUM LAUDE Elbert Bartlett Harvey Chestnut Hill, Massachusetts Theodore Spaulding Bacon, Jr. Springfield, Massachusetts History History Thomas Lynn Johnson Chatham, New Jersey Robert French Belding Northampton, Massachusetts Chemistry Mathematics James Turner Kaull, Jr. Newport, Rhode Island William Hugo Bergstrom Bingbamton, New York English Biology George Crawford Buck Meriden, Connecticut VI German Robert James Good Lincoln, Nebraska Conferring of the Degree Bachelor of Arts Chemistry John Leslie Green HONORIS CAUSA Clayton, Missouri History Eric Pratt Hamp Frank Lusk Babbott, Jr. East Orange, New Jersey Bernardsville, New Jersey Latin Austin Dudley Barrett Kew Gardens, New York Ralph Lyman Harding, Jr. Eric Kenneth Marks New York, New York Shaker Heights, Obio History Samuel Reid Russell, Jr. Wilmington, Delaware Carl Frederick Johnson William Peabody Simons Longmeadow, Massachusetts Springfield, Massachusetts History Mitchell A. Kohn, Jr. Biology Schenectady, New York John Abbott Lindsay Andover, Massachusetts Fine Arts the common enemy is received with special grati Regraded Unclassified VII IX Conferring of the Degree Master of Arts Conferring of Honorary Degrees ROBERT THURLOW Hood B.A., Amherst, 1940 Master of Arts WILLIAM TECUMSEH SHERMAN JACKSON, 1892 WILLIAM GERRISH METCALF B.A., Oberlin, 1940 Doctor of Humane Letters GERALD MILLER CHARLES WOOLSEY COLE, 1927 B.A., Oberlin, 1940 ORDWAY TEAD, 1912 ROBERT WASHBURN MAYNARD, 1902 JOHN VINCENT OSMUN B.S., Massachusetts State College, 1940 Doctor of Divinity THEODORE MEYER GREENE, 1918 VIII Doctor of Laws Awarding of Medals for Eminent Service JOHN JAY McCLOY, 1916 GEORGE WALTER WITNEY, ex-1912 LUTHER ELY SMITH, 1894 SAMUEL BOWLES KING, 1902 HENRY MORGENTHAU, JR. Secretary of the Treasury the common enemy is received with special grati Regraded Unclassified X Music The Star Spangled Banner Francis Scott Key AMHERST COLLEGE CHOIR AND AUDIENCE XI Benediction Commencement Chaplain EDWIN HILL VAN ETTEN, 1905 ed The audience is requested to remain standing while the Trustees, Faculty, Invited Guests, and Graduating Class leave the quadrangle. the common enemy is received with special grati 53 MINISTRY OF FINANCE Chungking, May 17, 1942. Mr. Henry Morgenthau Jr., Secretary of the Treasury, Washington, D.C., U. S. A. Dear Mr. Morgenthau, I acknowledge with pleasure and thanks the receipt of your letter of March 21, a copy of which, received by telegraph, was forwarded to me through the courtesy of Ambassador Gauss on March 25. Before your kind message came, I had sent you, through the American Embassy, an appre- ciative telegram upon the conclusion of our negotia- tions on financial aid to China. It would therefore appear that our messages came across each other on the ethereal highway. I would like to take this occasion to express to you once more my deep appreciation of your friendship for and faith in our people and Govern- ment, because without your foresight and cooperation during the discussions the Loan would not have been consummated so expeditiously. Your confirmation that the finan- cial assistance given by the United States to China is one example of the United Nations' good faith in ful- filling their pledge to pool their resources to defeat the common enemy is received with special gratification. 54 MINISTRY OF FINANCE - 2 - Perhaps it would be superfluous for me to assure you and through you the American Govern- ment that the past record of our Government in adher- ing to the aims and intent of Agreements entered into with the U.S. Treasury, to which you have so kindly referred, will be fully maintained with respect to this new Loan Agreement. America has proved herself China's friend in need and I have every reason to be- lieve that America's confidence in China will be vin- dicated. INO Yours sincerely, NNW H.H.Kung of They adv я ThesenT SAIT AS DUA so solatviCI vistegoM 55 May 18, 1942 4:55 p.m. HMJr: Hello. Are you feeling better? General Watson: Hello there. E.M.W. speaking. HMJr: Yes, are you feeling better? W: Is this H.M., Jr.? Yes, I am, really. HMJr: Did the doctor find you all right? W: The doctor said I was okay. HMJr: Good. V: outside of my general debility. HMJr: Yes. W: Now, look here, I just wanted to check. I'm telling the Army any time one of these Secret Service men applies, that the Army should consider it on its merit and take him in if they wanted to. Is that right? HMJr: That's right. W: Good. HMJr: Did you see the letter I wrote to the President? W: No, but I haven't seen that - it's what I was trying to get - but I heard the Chief here of our section told me, and I just wanted to verify it. HMJr: Well, I didn't - what evidently happened was that there were four or five men W: Yes, I know. HMJr: that wanted to go in, and the Chief talked to some Captain in the Army - I don't know who looks after you now that - Walter Smith isn't there any more, you know. 56 - 2 - W: Yes. HMJr: And evidently - I don't know whether they wanted desk jobs or not, but I got this 1m- pression, which may not be correct, that what Wilson says, if they want to fight, all right; but if they just want to get desk jobs, why he thinks they ought to stay in the - to look after the President. %: Yeah. HMJr: But the President called me himself, and I told Wilson that if anybody wants to go into the Army, let them go. W: Regardless of whether it was deek or field. HMJr: Yes, inasmuch as that's the way the President evidently feels. W: Good. That's all right. HMJr: What? W: That's all right. HMJr: Because the President said to let these five go. W: Good. I knew about that. HMJr: That makes fourteen now. W: Yes. HMJr: But I just feel that if the President. feels that way and that each - it's up to the Army to decide whether they want it or not. W: Surely. HMJr: Okay? W: Fine. HMJr: Thank you. W: Good-bye. Thank you. 57 May 18, 1942 5:25 p.m. Mrs. Dorothy Roosevelt: Hello, Mr. Secretary. HMJr: How do you do. R: How are you? HMJr: I'm all right, thank you. R: I expect to be in Washington Thursday. I wondered if there was a chance of seeing you. HMJr: Surely. R: What would be a convenient time? HMJr: Now, let me just see. Thursday, Mrs. Roosevelt? Thursday - what - let me just - no, I - in the afternoon? R: Yeah, any time. HMJr: Three o'clock? R: Fine. HMJr: Three o'clock Thursday. R: In your office. HMJr: In my office. R: That's fine. Thank you 80 much. HMJr: Thank you. R: All right. co - Mr. Foley 58 May 18, 1942 5:58 p.m. John Pehle: Yes, sir. HMJr: I was - good evening. I wanted to get Ed, but he's left. I was curious to know what progress you were making with the APC. P: Well, we haven't made any progress. HMJr: Really? P: Homer Jones, who was supposed to get in touch with me, didn't do it..... HMJr: Yeah. P: and I asked Ed today whether I ought to get in touch with him, and he thought not. I understand Markham called last week..... HMJr: Yeah. P: and said something about the APC still wasn't clear as to why it couldn't - the Executive Order couldn't divide up the functions. Now we've discussed that with them several times, and I think they ought to know by now why it's impossible to do that. HMJr: Ed thought that you shouldn't? P: What? HMJr: Shouldn't get in touch with Jones. P: Well, Jones 18 supposed to get in touch with me, and I'm sure he knew that. HMJr: Well, should I call Crowley and tell him? P: Well, I assume that he's up to date, Mr. Secretary. HMJr: Well, I don't - I don't think that that should - I'd Just as lief call up Crowley and tell him 59 - 2 - that you're waiting there. P: Well, you don't need to do that. I'll be glad to call Jones myself and say, "I understood we were to get together and I haven't heard from you, and how about it." HMJr: Well - and tell him that Mr. Crowley and I are meeting P: All right. HMJr: tomorrow at three-thirty. e, I'll do that right away. HMJr: We're meeting tomorrow at three-thirty. P: Now I'll remind him of that. HMJr: See? And the thing was to have been settled. P: That's right. HMJr: Oh, I think that Ed advised badly. I think that not having heard from him - who said that he would get in touch with you? P: I suppose Leo did. HMJr: Well, anyway P: The message that I got from Ed was that Homer Jones was to get in touch with me. HMJr: Well, I don't know - all this finagling P: (Laughs) But I'll be glad to call him right away. HMJr: If I hadn't heard from the man, I'd have called him up right away. You call him up, will you? P: Certainly. HMJr: And if he's gone, call him up the first thing in the morning, and say that Mr. Crowley and I 60 - 3 - are getting together tomorrow at three-thirty, what about it. P: All right, I'll do that. HMJr: See? P: Yes, sir. HMJr: Please. P: Right. may 18, 1942 Supreme Court of the United States Mashington,D.C. Dran Wortor Henry: to anold professor law Entitled to academic prejudicer- at least ? have dues ! bued the deepect, is a biar against the a du tera fion of Love or ary degreer feed to I freatly rejoice Had in conferring a doe for ate ourson Am here my own Eskeared 19 luca health, war true to He beah standard in acdar duig her Louses - in are king public a Uertadion of pride and fra titude for and Ligh - public teroices. Enderg usered 62 OFFICE OF PRICE ADMINISTRATION WASHINGTON, D.C. LEON HENDERSON ADMINISTRATOR May 18, 1942 Hon. Henry Morgenthau, Jr. Secretary of the Treasury Washington, D, c, Dear Henry: Dave Ginsburg told me of his conversation with you regarding the reporting of my Ways and Means testimony. I enclose the comparison of newspaper reports which you requested. However, I raise the question most in- tensely as to whether any resurrection of this matter would be of help. I believe most strongly that it would not and I trust you will tell the President of my opinion. For my part it would certainly suit our purposes if the whole matter were allowed to drop. Very sincerely, Lean Administrator FORDEFENSE BUY UNITED STATES EAVINGS BONDS - Regraded Unclassified 63 MEMORAN DUM ON PRESS TREATMENT OF LEON HENDERSON'S TESTIMONY BEFORE THE HOUSE WAYS AND MEANS COMMITTEE ON MAY 11, 1942, AND TREATMENT OF CORRECTIVE STATEMENT ISSUED THE FOLLOWING DAY: Representative Papers Examined - May 12 and May 13: A New York Times New York Herald Tribune Chicago Sun Philadelphia Record Baltimore Sun Washington Times-Herald New York Journal of Commerce Wall Street Journal - O - o - o - o - 0-0- - - Summary - Only one newspaper of those examined - the Wall Street Journal - had a completely accurate account of Mr. Henderson's May 11 testimony, accurately headlined. One other - the Baltimore Sun - did not touch upon the subject of wages. The two major press associations, the Associated Press and the United Press, had well-balanced stories, accurately qualifying the reports (via committee members) of what Mr. Henderson 8 aid. Headlines, however, gave emphasis to the wage freeze". All but one of the seven other papers examined, carried pro- minently head-lined accounts on the first page (Philadelphia Record gave it page 9) playing up the "Wage Freezing" angle. could not be located Mr. Henderson's statement of the following day, giving an in accurate presentation of his position, at all four of the nine papers. In two others it was buried under a small heading in the inside pages with a minimum of space - about 2 inches. Only two papers - the New York Journal of Commerce and the Baltimore Sun (which was accurate on the first day) - gave any substantial treatment of the second-day stay. Paper by Paper, the treatment on each day was as follows: NEW YORK TIMES - May 12 Page One, Column Three - Four-Bank head: Henderson Urges Wages Be Frozen To Avoid Inflation - - House Committee Members Say He Advocated Step, Warning Situation Is Dangerous Also Asks Forced Savings, etc. - 2 - 64 Story - by Henry N. Dorris - fairly well qualified, but went beyond other papers in intimating, according to committee members, that he would "go to President Roosevelt to insist that wage controls be added to his present powers to fix commodity prices." Account of Mr. Henderson's testimony and press conference accurate in RP account carried on P. 12 without headline. NEW YORK TIMES . May 13 Arthur Krock on Page 12 under 2-col. head "Henderson and Wages" refers in passing to Mr. Henderson's statement, but confines story chiefly to editorializing on President Roosevelt and Bernard Baruch's formula, etc. - o - 0 - 0 - 0 - NEW YORK HERALD TRIBUNE - May 12 Prominent Headline, Page 1, Col. 1, says: . Wage Ceiling Is Advocated by Henderson He Also Calls for Forced Savings***etc. - 0-0-0-0- Story makes flat statement bearing out headline without qualification until third parragraph. Story runs full column and run-over. NEW YORK HERALD TRIBUNE - May 13 No news story could be found on Mr. Nenderson's statement. Leading editorial entitled "Leon the Leaper" congratulates Mr. Henderson on belated di scovery of the need for wage freezing. - 0 - o - o - 0 - CHICAGO DAILY TRIBUNE - May 12 Eight-Column Page One Streamer head in Boldface Type- FREEZE PAY, HENDERSON ASKS Story by Willard Evans qualified so as to freeze all wages that are not sub-standard. -0-0-0-0-0-0-0- CHICAGO DAILY TRIBUNE May 13 Mr. Henderson's corrective statement not located. - 0 - o - o - o - - 3 - 65 CHICAGO SUN - May 12 Page One, Column One - Large Black Head: Henderson Proposes Drastic Levy; Freezing of All Wages and Salaries Advisable, House Told Story by Cecil Dickson not qualified as to source until third paragraph CHICAGO SUN - May 13 Two-ince United Press summary of Mr. Henderson's statement carried near bottom of Page Four with small headline. - 0 - O - 0 - o - PHILADELPHIA RECORD - May 12 (The only standard newspaper examined without a Page One Story) On Page 9 under a Black Head at top of the column: Salary Freezing; Stiff Tax Urged by Henderson Used story of United Press, which was well qualified as to source, i.e., "according to committee members PHILADELPHIA RECORD - May 13 on page 6 Buried under a small head, is a 2-inch piece referring to Mr. Henderson's correcting statement. - 0 - 0 - o - 0 - BALTIMORE SUN - May 12 Page One, Column Three - Cites Danger of Inflation; Asks Tax Hike. Story, by Frank Kent Jr., is accurate and wages are not mentioned at all. BALTIMORE SUN - May 13 Gives prominent play to Mr. Henderson's corrective statement using virtually the full substance. - 4 - 66 WASHINGTON TIMES-HERALD - May 12 Page One, Column Three - Black Headline: Henderson for Forced Saving Phan OPA Also Favors Wage Freezing Story, by Virginia Paisley, poorly qualified as to source until third paragraph. (This same story under three@column black head on "Pay Freezing and Compulsory Saving" appeared in New York Daily News) WASHINGTON TIMES-HERALD - May 13 No story on Mr. Henderson's corrective statement could be located. -* 6 - o - 0 - 0 - 0 - JOURNAL OF COMMERCE & COMMERCIAL (New York) - May 12 Two-Column Large Head on Page One OPA Head Asks Wage Freezing; Wider Tax Base Story unqualified as to source. JOURNAL OF COMMERCE & COMMERCIAL (New York) - May 13 Prominent Head at top of Page 6 Henderson for Rise in Sub-Standard Pay AP story carried in full - 0 - 0 - 0 - o - 0 - WALL STREET JOURNAL May 12 Three-column headline on Page 2 Henderson Asks Stabilization of Wages; Farm Prices; Backs Cut in Personal Tax Exemptions OPA Head Opposes Sales Levy As Adding to Difficulties Of Rationing Story the most accurate of any examined; well qualified where the single reference is made to wage freezing. WALL STREET JOURNAL - May 13 No news story on Mr. Henderson's corrective statement, but leading editorial comments caustically on "Not Grapping the Nettle". 67 MAY 18 1942 Honorable Leon Henderson, Administrator, Office of Price Administration, Washington, D. C. My dear Kr. Henderson: I have your letter of May 14, 1942, carrying the symbols R2:2:WSS, together with copy of a communication addressed by your office to the Postmaster General, both regarding the desirability of issuing gasoline ration coupon books as an adjunct to the sale of the internal revenue stamps for evidencing payment of the Federal tax on the use of motor vehicles which becomes due July 1, 1942. As the result of discussions by representatives of the Bureau of Internal Revenue with representatives of your office during the past several weeks, steps have been taken whereby the use tax stamps will be serially numbered. June 10 has been tentatively set as the date on which the use tax stamps for the fiscal year 1943 will go on sale in the post offices and in the offices of the Collectors of Internal Revenue. I an not officially informed of the results of your endeavors to secure the aid of the Post Office Department in issuing the gasoline coupon books incident to the sale of the use tax stamps. In any event, there seems to be no obstacle in the way of tying in the serial number of the stamp with the gasoline coupon book issued to a motor vehicle owner and the Bureau of Internal Revenue is pre- pared to cooperate with you in every reasonable way toward & successful solution of your problem. Very truly yours, (Signed) 1. Morgenthau, and Secretary of the Treasury Phato file n.m.c. File Regraded Unclassified OFFICE OF PRICE ADMINISTRATION COMMISSIONER WASHINGTON, D.C. TC LEON HENDERSON Temporary Building "S" OFFERSAL NEVENUN MAY Refer to R2:2:WSS The Honorable Henry Morgenthau, Jr. Secretary of the Treasury Washington, D. C. My dear Mr. Morgenthau: During the last several weeks representatives of the Fuel Rationing Branch of this office have had a series of discussions with representatives of the Bureau of Internal Revenue concerning the joint issuence, through the post offices, of the motor vehicle use tax stamps and the basic gasoline rationing coupon books which are to 60 into effect July 1, 1942. It is my understanding that P.O. e result of these discussions representatives of the Bureau of Internal Revenue are of the opinion that such a joint issuance would have material advantages for the enforcement of the use tax stamp collection. since no motor vehicle owner could obtain a gasoline ration coupon book without first purchasing a use tax stamp. The serial number of the use tax stamp would be placed on the gasoline ration coupon book as A means of identification. The proposal for joint issuance during en initial registration period in June has -1so been presented to the Post Office Department, and there is enclosed nerewith a copy of the formal request which has been mede to the Post- master General. Frenk C. Walker. This letter is to request your approval of the proposed joint issuence of the use tax stemp with the basic gasoline rationing coupons. Very truly yours, Leon Henderson FORDEFENSE Leon Eenderson BUY Administrator UNITED STATES SAVINGS BONDS - Regraded Unclassified Temporary Building "S" Refer to: R2:2:WMS The Honorable Frank C. Walker Postmaster General Post Office Department Washington, D. C. Dear Mr. Walker: The permanent plan for gasoline rationing 1s scheduled to go into effect on July 1, 1942. No have con- sidered several methods for the distribution of the basic gasoline ration coupon book. We have found that the school system is not available for use as a distribution system, and wo have discovered that other alternatives, such as distribution through state motor vehicle offices, are in- practical. After a series of conferences between represent- atives of your office, the Bureau of Internal Revenue and the Fuel Rationing Branch of this office, we are convinced that the most satisfactory method for the distribution of the basic gasoline ration coupon books is through the post offices at the time the motor vehicle use tax stamp is sold to the owner during an initial gasoline rationing registra- tion period from June 10 to July 1. This method provides a sufficient number of local distribution points in each county throughout the rationed area; it permits the gasoline consumer to acquire his coupon book and his use tax stamp in one visit; and it aids in the collection of the revenues from the sale of the use tax stamp. This letter is to request the Post Office Depart- ment to assist us in this important part of the war program. For your information, the procedure required for this method of distribution would include the following steps: Regraded Unclassified The Konnrable From: niver 1. -10 files of rice 101-17 :: form "no 0.17 occupting out flow 3016 oft f:ice sen: 2. ... net ffien - Plant - recintribute forms -6--- Has :- att officer. Wallents :- - ti - wretten PRODUCT -- at = - lication core (+2) of Id. lie pt asser 14 and address the 10-1.00 vr the motor vehicle - : : of 1100 of % Trivia are . . --t Visit (104) ini -N:-- lication c-m. number of :- use 1., -I-n works - ...... if 16000 mg) :- one 1:10 inc y - at by ilems revented :, it - 4. cat of .00 clare - re - Informati A 10 L 1- card vit t - -1 :- 7.51.0 Y - 1010 registration certificate or :- lie nt. 5 - . . . ant of:ice clere could write OR the from of bille coulon book 4.0 requested Concriptive in 110ml'- r. -, :ve of --- ! care number -At -or:-1 number of : e - --- 11.- : . J. -- get office clare would 11% 1-0 revorse 0100 of L.e 11:1- st parjett 1104 -- at. - are office date -trom return :- e :10.00 L st 01- state registration card visi the cou où book -nd 110 use tox - 110-11 Card* will 10 cost 15 unserembled : receiving pointe of the ffice of rice aministration. Ithough I re-lien that : 1- :.com *D ditional t.ax OR Line 0-1 flice evertment. which 1- strendy corrying 11. full of the --- burden. : believe list your organisation CAR provide in most effective 'no efficient 50-20 of n-klar 11. distribution. Very truly yours. Leon wanderson deinistrator Regraded Unclassified 71 THE Regraded Unclassified 71 TREASURY BILLS May 20 May 13 May 6 April 29 Amount offered $250 M $250 и $150 M $150 M Bids tendered 567 546 355 375 Low rate 0 3/ 0 2/ .245% 0 1/ High rate .372% *376% .372 .356% Average rate #365, .368 .358 .335 Amount in New York $101 H $ 92 M $ 63 M $ 90 M Amount in Chicago 71 101 58 29 Amount in San Francisco .... 15 6 2 4 Amount in balance of country 63 51 27 27 1/ $50,000 bid at 100.000; $5,000 bid at 99.980 , next low rate 0.198% 2/, $5,000 bid at 100.000; $10,000 at 99.985, next low rate 0.245% Il $98,000 bid at 100.000 and lower; next low rate 0.237% May 18, 1942 72 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE TO Secretary Morgenthau May 18, 1942 FROM Mr. Vincent F. Callahan Recently you indicated a desire to see the newspaper results which occurred over the country in connection with the launching of the Quota drive the first of this month. Mr. Kuhn suggested that we get together the clippings carrying this material which have already come in and send them to your house so that, when you had 8. few moments, you would have the opportunity to look through some of them. The bundle of clippings we are sending to you represent those that have already been sent in from eight points over the country. Similar clippings are being collected for us at thirty-four points in all, so this collection represents only a partial showing. It will, however, give you an indication of the way newspapers through- out' the United States used our initial material on the Quota drive. 73 May 18, 1942 TO: HAROLD N. GRAVES SUBJECT: PROGRESS REPORT FROM WAR SAVINGS STAFF QUOTA CAMPAIGN War Bond quotas for the month of June have already been sent to the field and will be given to the newspapers on May 25 for release in morning papers June 1. State quota figures for June will be released in the after- noon papers on May 25. PAYROLL SAVINGS The Payroll War Savings Plan has now been adopted by 76,330 firms throughout the country. Of the 30,400,000 employees of private concerns, 19,986,685 now have the plan available to them. In addition, a total of 1,471,862 or 33 per cent of the 4,400,000 employees of Federal, State and Local Governments may now purchase Bonds through the Payroll Savings Plan. - 2 - 74 PAYROLL SAVINGS (Continued) General Motors Corporation reported that as of May 15 more than 99 per cent of its 236,000 employees were invest- ing almost 7 per cent of their wages in War Bonds through the company's Payroll Plan. PLEDGE CAMPAIGN News and radio bureaus for the Greater New York Pledge Campaign have been set up and arrangements have been made with the W.P.A. Writers Project, the New York Chapter of the American Newspaper Guild, and with the Press Photographers Association to furnish volunteer professional personnel in promoting the Campaign. A group of reporters and photographers will cover every one of the 109 districts in the five boroughs on a volunteer basis. To aid the Campaign photo coverage, the Press Photographers Association of New York, and photographers of New York newspapers and News Photo services will donate their time. In addition, the Photographers Association has volunteered to arrange for the use of newspaper and news photo services' facilities for processing negatives and prints on 8. gratis basis. - 3 - 75 PLEDGE CAMPAIGN (Continued) Radio promotion of the Greater New York Campaign will start with an All Star Show featuring famous personalities of stage and screen, probably on a statewide hook-up with all 14 New York City radio stations participating. Numerous appearances by Minute Men are being scheduled on all stations. Special interviews, religious programs, dramatic sketches and spot announcements are being prepared. Each station in the Greater New York area is assigning a member of its staff to serve as liaison officer between the station and the War Savings Pledge Committee. NEWSPAPER CARRIER SALES With sales of 3,678,002 ten-cent Stamps reported since May 7 by the newspaper carrier agents of 880 newspapers, sales by the carriers to date total 279,786,878, in ten-cent stamps, or their equivalent in Bonds or Stamps of larger denominations. VICTORY HOUSE With daily feature purchases by famous actresses and actors attracting large crowds, the Victory House in Los Angeles, California, continues to average War Stamp sales of $ 3,000 daily, and to date has generated the sale of more than $ 4,000,000 in War Bonds. Victory House in Allentown, Pennsylvania, reports sales of War Bonds and Stamps of $114,000 since its inauguration six weeks ago. - 4 - 76 RALLIES Kate Smith sold $78,000 worth of War Bonds in one hour at a special booth set up in Rockefeller Center in New York City. In addition she purchased $50,000 herself. CHICAGO "CHEZ PAREE" Management of the "Chez Paree" Night Club in Chicago reported $1,252,300 in actual cash through the sale of at least $1000 bonds to each person attending a special party on Sunday, May 17. The management invited personal friends and provided dinner and entertainment featuring Danny Kay's orchestra. A miniature United States Treasury Department was set up on the floor, cash accepted and Bonds issued. SPECIAL An interesting example of the way in which War Savings Stamps may be used as tips for waiters, porters, taxi cab drivers, etc., was reported this week by C. P. MacGregor, a New York radio executive. His "Tips for Victory" cards carry Stamps of various denominations. PRESS A series of seven self-explanatory attachments shows typical results made in publicizing special articles by "name" writers in newspapers; the use of Quota slogans, War Bond - 5 - 77 PRESS (Continued) copy and special covers in various types of magazines; use of Minute Man insignia on all major race track programs; and typical use of the feature "What You Buy with War Bonds" in more than 2500 newspapers. Also attached is a booklet showing samples of editorial cartoons on the Quota Campaign. A scrapbook on the use of War Savings material by movie and radio fan magazines with a combined circulation of 8,000,000 readers is also attached. RELIGIOUS PRESS Reprints of War Bond editorials appearing in the GRACE EVANGELIST OF ST. LOUIS, CATHOLIC STANDARD and TIMES of PHILADELPHIA, THE ALBANY LOCAL EVANGELIST, and THE NEW YORK TEMPLE EMANUEL MESSENGER were sent out this week to 750 religious publications. FOREIGN LANGUAGE PRESS Special War Bond material in mat form was sent to 1,000 foreign language publications in connection with "I Am An American Day". Typical example of use of the Secretary's letter on the Quota Campaign by foreign language papers is attached. - 6 - 78 LABOR PRESS Fifty-four chapters of the American Newspaper Guild are now cooperating with the War Savings Program and have appointed members to serve on a volunteer basis as local press representatives. Copies of current issues of the GUILD REPORTER and EDITOR AND PUBLISHER, newspaper trade magazines, with articles outlining these activities, are attached. RADIO Mrs. Morgenthau was scheduled as a guest speaker on the Fred Allen broadcast over the nationwide CBS Network on Sunday, May 17, from 9 to 10 P.M., EWT, in connection with "I Am An American Day". The program also featured Paul Robeson in "The Battle Hymn". Special Bond and Stamp announcements featuring "I Am An American Day" copy were sent to all radio stations. The "Roll Call of the Nation" program was broadcast 407 times by 455 of the nation's stations. "Voices of the People", featuring Bonds and Stamps and quota copy, was broadcast 23,346 times by 392 radio stations. "Women's Part in the War Bond Quota", a round-table discussion, will be conducted by Mrs. Henry Morgenthau, Jr. on Thursday, May 21, from 10:30 to 11:00 P.M., EWT, over the coast-to-coast NBC Network. Those who will take part in the - 7 - 79 RADIO (Continued) program discussion are: Jan Struther, author; Edna Woolman Chase, Editor, Vogue Magazine; Luise Rainer, actress; Mrs. Jeanett Simpson, factory war worker; Mrs. Clarence Hewitt, war worker's wife; Mrs. Philip Jones, farm wife and member of a typical American family. One of the programs in the Treasury Star Parade Series entitled, "Education For Death", has been voted a certificate of merit by the Women's Press Club of New York. The Payroll Savings Plan has now been installed by 478 radio stations, of which 380 report one-hundred per cent employee participation. BUSINESS PUBLICATIONS A total of 362 business publications, with a combined circulation of 3,405,719, advised they are using our latest advertising release. FARM PUBLICATIONS The second in a series of public advertising releases for farm publication copy, "Winning the War Begins on the Farm", (proof attached) also went to 47 audited farm publications with an approximate aggregate circulation of 18,000,000 farm readers. - 8 - 80 LABOR PUBLICATIONS The fourth advertising release for labor publications entitled "A Call to Action!" went to a list of 460 labor publications. Proof is attached. Sales of United States Savings Bonds CONFIDENTIAL From May 1 through May 16, 1942 Compared with Sales Quota for Same Period (At issue Price in millions of dollars) 1 Series I : Series 7 and G : Total I Actual Sales # Quota, : Sales : Actual Sales : Quota, : Sales : Actual Sales : Quota, : Sales Date : 1 May 1 : May 1 : to Date # : May 1 : May 1 : to Date : : May 1 : May 1 : to Date # Daily : to : to : as $ of : Daily : to : to # as x of : Daily : to : to I as $ of : : Date : Date : Quota : : Date : Date I Quota : : Date : Date : Quota 1 $ 12.7 $ 12.7 $ 14.0 90.7% $ 7.3 $ 7.3 $ 9.0 81.1% $ 20.0 $ 20.0 $ 23.0 87.0% 2 11.6 24.3 25.7 94.6 7.9 15.2 16.0 95.0 19.4 39.4 41.7 94.5 " 22.3 46.5 47.8 97.3 10.3 25.5 29.5 86.4 32.6 72.0 77-3 93.1 5 8.9 55.5 57.8 96.0 7.6 33.1 37.1 89.2 16,6 88.6 94.9 93.4 6 18.4 73.8 70.5 104.7 15.6 48.8 49.8 98.0 34.0 122.6 120.3 101.9 7 23.2 97.0 84.0 115.5 12.1 60.8 60.3 100.8 35.3 157.9 144.3 109.4 8 17.2 114.2 98.0 116.5 6.4 67.2 69.3 97.0 23.6 181.4 167.3 108.4 9 14.5 128.7 109.7 117.3 5.6 72.8 76.3 95.4 20.0 201.5 186.0 108.3 11 23.3 152.0 131.8 115.3 8.1 80.8 89.8 90.0 31.3 232.8 221.6 105.1 12 9.4 161.3 141.8 113.8 4.6 85.4 97.4 87.7 14.0 246.8 239.2 103.2 13 15.8 177.1 154.5 114.6 9.0 94.4 110.1 85.7 24.8 271.5 264.6 102.6 14 16.9 194.0 168.0 115.5 7.7 102.1 120.6 84.7 24.6 296.2 258.6 102.6 15 14.9 208.9 182.0 114.8 6.8 108.9 129.6 84.0 21.7 317.9 311.6 102.0 16 14.3 223.2 193.7 115.2 5.2 114.1 136.6 83.5 19.5 337.4 330.3 102.1 8 215.8 150.1 365.9 19 225.8 157.7 383.5 20 238.5 170.3 408.5 21 252.0 180.8 432.8 22 266.0 189.8 455.8 23 277.7 196.8 474.5 25 299.8 210.3 510.1 26 309.8 217.9 527.7 27 322.5 230.5 553.0 28 336.0 241.0 577.0 29 350.0 250.0 600.0 Office of the Secretary of the Treasury, Division of Research and Statistics. May 18, 1942. Source: Actual sales figures are deposits with the Treasurer of the United Sti 00 on account of proceeds of sales of United States savings bands. Figures have been rounded to nearest hun cod thous ad and will not necessarily add to totals, 82 AY 18 1942 Dear Valter: Thank you for sending se the quotation from Plate, contained is your letter of May 13, 1943. Apparently sany things have changed in the last 2800 years, including our ideas about the income tax. Plate some to have considered an income tax wajnet to the just and more than just to the unjust. I don't know what con- trast he had in mind--pessibly scale ansester of the sales tax. In any event, the income tax seems today to be the best available tax from the combined standpoint of revenue and equity and we are recommending that 11 be substantially increased. I hope Plate vas wrong! One quotation for another--you say be interested in reading Anatele France on the cales tax. Inclosed 10 a quotation from Penguin Island, page 49. Beek II, Chapter IV, of the Modern Library edition. Cerdially yours, (Signea) Henry Mr. Walter N. Rethschild, 432 Fultom Street, Breeklyn, New York. Enclosure File n.m.c. Capies to Thompson REPIRTS 5/18/42 Regraded Unclassified 83 WALTER N. ROTHSCHILD 422 FULTON STREET BROOKLYN, N.Y. May 13, 1942 The Hon. Henry Morgenthau, Jr., Secretary of the Treasury, Washington, D. C. Dear Henry, I thought you would be interested, in case you have never run across it, in a quotation from Plato, in the period 427-347 B.C., which reads: "When there is an income tax, the just man will pay more, and the unjust less, on the same amount of income". With kind regards, Cordially yours, beto WNR:LT Regraded Unclass 84 Regraded Unclassified THE FIRST ASSEMBLY OF THE ESTATES OF PENGUINIA "Bulloch, my son," said old Mael, "wo ought to make & census of the Penguins and inscribe each of their names in a book." "It is a most urgent matter," answered Bulloch, "there can be no good government without it." Forthwith, the apostle, :1th the help of twelve monks, pro- coeded to make a census of the people. And old Mael them saids "Now that we keep a register of all the inhabitants, we ought, Bulloch, my son, to levy a just tax so as to provide for public expenses and the maintemance of the Abboy. Each ought to contribute according to his means. For this reason, By son, call together the Elders of Alea, and in agreement with them we shall establish the tax." The Elders, being called together, assembled to the number of thirty under the great sycamore in the courtyard of the wooden monastery. They were the first Estates of Penguinia. Three-fourths of them were substantial peasants of Surelle and Clange. Greatauk, as the noblest of the Penguins, sat upon the highest stone. The venerable Mael took his place in the midst of his monks and uttered these words: "Children, the Lord when he pleases grants riches to men and he takes them away from them. Now I have called you together to levy contributions from the people se as to provide for public ex- penses and the maintenance of the monks. I consider that these contributions ought to be in proportion to the wealth of each. Therefore he who has a hundred exen will give ten; he who has ten will give one." When the holy 5021 had spoken, Morio, a labourer at Anis-on- the-Clange, one of the richest of the Penguins, rose up and said: "0 Father Mael, I think it right that each should contribute to the public expenses and to the support of the Church. For my part I an ready to give up all that I possess in the interest of my brother Penguins, and if it were necessary I would even cheer- fully part with my shirt. All the elders of the people are ready, like no, to sacrifice their goods, and no one can doubt their abso- lute devotion to their country and their creed. "No have, then, only to consider the public interest and to do what it requires. Now, father, what it requires, what it demands, is not to ask much from those who possess much, for then the rich would be less rich and the poor still poorer. The poor live on the wealth of the rich and that is the reason why that wealth is sacred. Do not touch it, 85 - 2 - to do so would be an uncalled for evil. You will get no great profit by taking from the rich, for they are very few is number; on the con- trary you will strip yourself of all your resources and plunge the country into misery. Whereas if you ask a little from each inhabitant without regard to his wealth, you will collect enough for the public necessities and you will have no need to enquire into each citizen's resources, a thing that would be regarded by all as a most vexatious neasure. By taxing all equally and easily you will spare the poor, for you will leave them the wealth of the rich. And how could you possibly proportion taxes to wealth? Yesterday I had two hundred exem, to-day I have sixty, tomorrow I shall have a hundred. Clunic has three cows, but they are thin; Nicclu has only two, but they are fat. Which is the richer, Clunie or Nicelu? The signs of opulence are deceitful. What is certain is that everyone eate and drinks. Tax people according to what they consumo, That would be visdom and it would be justice." Thus spoke Morio amid the applause of the Elders. "I ask that this speech be graven on brense," cried the monk, Bulloch. "It is spoken for the future; in fifteen hundred years the best of the Penguine will not speak otherwise." The Elders were still applauding when Greatauk, his hand on the pommel of his sword, made this brief doclarations "Being noble, I shall not contribute; for to contribute is ignoble. It is for the rabble to pay." After this warning the Elders separated in silence. As in Rome, a new census was taken every five years; and by this means it was observed that the population increased rapidly. Although children died in marvellous abundance and plagues and famines came with perfect regularity to devastate entire villages, new Penguins, in continually greater numbers, contributed by their private misery to the public prosperity. (From Penguin Island. by Anatole France, Book II, Chapter IV, Page 47) Regraded Unclassified 85 - 2 - to do 80 would be an uncalled for evil. You will get no great profit by taking from the rich, for they are very few in number; on the con- trary you will strip yourself of all your resources and pluage the country into misery. Whereas if you ask a little from each inhabitant without regard to his wealth, you will collect enough for the public necessities and you will have no need to enquire into each citizen's resources, a thing that would be regarded by all as a nost veratious neasure. By taxing all equally and easily you will spare the ppor, for you will leave them the wealth of the rich. And how could you possibly proportion taxes to wealth? Yesterday I had two hundred oxem, to-day I have sixty, tomorrow I shall have a hundred. Clunic has three cows, but they are thin; Nicelu has only two, but they are fat. Which is the richer, Clunie or Nicelu? The signs of opulence are deceitful. What is certain is that everyone eats and drinks. Tax people according to what they consume. That would be wisdom and it would be justice." Thus spoke Morio amid the applause of the Elders. "I ask that this speech be graven on bronse," cried the monk, Bulloch. "It is spoken for the future; in fifteen hundred years the best of the Penguins will not speak otherwise." The Elders were still applauding when Greatauk, his hand on the pommel of his sword, made this brief declarations "Being noble, I shall not contribute; for to contribute is ignoble. It is for the rabble to pay." After this warning the Elders separated in silence. As in Rome, a new census was taken every five years; and by this means it was observed that the population increased rapidly. Although children died in marvellous abundance and plagues and famines came with perfect regularity to devastate entire villages, new Penguins, in continually greater numbers, contributed by their private misery to the public prosperity. (From Penguin Island, by Anatole France, Book II, Chapter IV, Page 47) Regraded Unclassified 86 Commissioner Helvering says nothing in +7 S requires the Secretary's approval. wire memo was sent to the Secretary as a matter of information only. Shows 6-182 eb CALL 87 TREASURY DEPARTMENT WASHINGTON OFFICE OF COMMISSIONER OF INTERNAL REVENUE May 18, 1942 ADDRESS REPLY TO COMMISSIONER OF INTERNAL REVENUE AND REFER TO this matter Memorandum for the Secretary: In accordance with the provisions of R. A. No. 1014, dated September 14, 1939, paragraph 12, the case of today heing Joseph M. Schenck for the years 1937 to 1941 has been ex- cepted from the decentralization procedure for the rea- sons stated in an order to Deputy Commissioner Mooney, a in onnection with copy of which is attached hereto. Mr. Schenck's income tax casesfor the years 1935 and 1936, as well as a gift tax case, which cases are pending before the United States Board of Tax Appeals, Dockets #103213 and #89242, have previously been excepted from the decentralization procedure with your approval. The tax- payer, through his duly authorized representatives, has requested that prempt field investigations be made of his anything 1938, 1939, 1940 and 1941 returns in order that his Federal tax liability for 1935 to 1941, inclusive, may be deter- mined at an early date. Regraded Unclassified 88 - 2 - Memorandum for the Secretary. Mr. Schenck's 1937 return was examined in connection with the field investigation made for the years 1935 and 1936 and this year is receiving consideration at the present time in the Income Tax Unit in Washington. Field investigations will be ordered promptly for the years 1938 to 1941, inclusive, in the offices of the Internal Revenue Agents in Charge of the Los Angeles Division and the Upper New York Division, some of the returns for these years having been filed in Los Angeles and others in New York. Considering all the circumstances surrounding the case of Mr. Schenck, it is believed that the Government's interests will be best served by having his case for the years 1935 to 1941, inclusive, managed under one super- vision. Commissioner. Attached: Copy of order to Deputy Commissioner Mooney. as 89 IT:R15:AJ JJL-11846 MAY 18 1942 Memorandum for Deputy Commissioner Mooneyn In accordance with the provisions of R. A. No. 1014, dated 14, 1939, you are advised that the case of Joseph M. Schenek for the years 1937 to 1941, inclusive, has been excepted from the decentralisation procedure. The texpayer's representative in a recent letter has stated that Mr. Schenek desires to effect an early settlement with the Bureau of his liability for Federal taxes for all years 1955 to 1941, inclusive. Mr. Schenck's income tax case for the years 1956 and 1986, as well as a gift tax case, have previously been excepted from the decentralisation procedure. These cases are pending before the United States Board of Tax Appeals, Docketa #103213 and #89242. À field investigation for the year 1957 was completed consurrently with the years 1956 and 1936 and the case for this year is now under consideration in the Income Tax Unit in Washington. Field investi- gations by the Los Angeles end Upper New York Divisions for the years 1988 to 1941, includive, will be ordered promptly. Some of the returns for these years were filed in Los Angales and others in New York. The issues occurring in the years 1955 and 1936 and the action taken by the Governamt as to such years affect 1937 and subsequent years also. Since this case for 1985 and 1956 is pending on appeal before the Board of Tax Appeals, the year 1937 10 receiving consideration in Washington in connection with the field investigation already made, the years 1958, 1939, 1940 and 1941 are to be made the subject of field investigations in two widely separated field divisions, and as the action already taken for 1955 and 1936 will have its effect on subsequent years, it is concluded that the Government's interests will be best served by having Mr. Schenck's case for 1955 to 1941, inclusive, managed under one supervision. (Signed) Guy T. Heivering Commissioner. Regraded Unclassified 90 May 18, 1942. MEMORANDUM TO: Secretary Morgenthau FROM: Mr. Gaston The Office of Scientific Research and Development asks for the continuous services of two Secret Service agents to safeguard personnel and protective devices at the Radiation Laboratory at the Massachusetts Institute of Technology at Boston where some extremely secret research is under way. They will reim- burse us. The men can be provided from the Boston office. I recommend that the request be approved. O.K. HM Jr HEG:pm Daston Regraded Unclassified 91 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION CONFIDENTIAL DATE May 18, 1942 TO Secretary Morgenthau FROM Mr. Hass Subject: The Business Situation, Week ending May 16, 1942. Summary (1) Retail trade continues at a somewhat slower pace, which has probably been due in part to the imminence of retail price ceilings, effective today. The actual volume of depart- ment store sales in the early part of May fell below year- earlier levels. Dollar sales ran only 6 to OR percent above year-earlier levels, while prices were up about 19 percent. (2) The general price level has shown the first recession since early in February. The BLS all-commodity index in the week ended May 9 declined 0.1 percent to 98.6 -- a figure 31.5 percent above the pre-war level of August 1939. Basic commodity prices on the whole have shown little change recently. (3) The cost of living continued upward in April, prior to the influence of the price ceiling order. The BLS cost-of- living index in that month rose 0.7 percent over the previous month, and stood 16.7 percent above the pre-war level of June 1939. Clothing costs led the rise, showing a gain of 2.7 percent. (4) The output of steel ingots last week rose to the highest level on record as a result of a 1-point rise in the operating rate to 99.6 percent of capacity. However, demand for steel continues to run ahead of production, with orders carrying ratings of A-10 or higher amounting to 117 percent of capacity. Direct and vital indirect war requirements are aggregating nearly 99 percent of the industry's maximum out- put. (5) Due to heavy military requirements, particularly for cantonment and warehouse construction, the delivery of soft- wood construction lumber to civilian users, by nearly all mills, has been banned for 60 days. The lumber will go to the Army, Navy and Maritime Commission. Larger supplies of raw materials for current war needs should become available as & result of last week's reported major policy decision to virtu- ally eliminate longer range expansion of war plant capacity. Regraded Unclassified 92 - 2 - General price control developments The first week of wholesale trade under the general wholesale price ceiling was marked by a series of OPA rul- ings which have partially allayed the confusion in the trade over administration of the ceiling order. As the regulation for retail prices becomes effective today, announcement of additional orders and adjustment procedures are expected. In some lines, noticeably in woolen goods, retail sales are re- ported to have dwindled considerably, and wholesale sales to have halted, pending further instructions concerning the prio- ing of seasonal textiles and goods sold under Government con- tracts. OPA rulings issued last week included the following: (1) Retail ceilings on specified seasonal goods shall be determined by applying last season's percentage mark-up to a cost figure which cannot exceed the highest manufacturer's price in March. (2) Retailers whose margins are lowered, or even eliminated, on articles not making up a sub- stantial portion of their total volume, must absorb the difference or seek relief from their suppliers. (3) Retail prices established under fair trade contracts, where there is any conflict be- tween existing State fair trade laws and the general price order, are to be subject to the order. Cost of living rises in April Although living costs as of April 15 (prior to the ceiling order) rose to a new war-time high, the advance may not have carried average retail prices above the high point of March, on which the price ceiling 1s based. (See Chart 1.) In such case, living costs may show relatively little decline from the April level after the ceiling becomes effective. Nevertheless, costs of certain items will be lowered, and chief among these will be many food and clothing items. The BLS cost-of-living index for mid-April rose 0.7 per- cent above that of March, and was 16.7 percent higher than the pre-war level of June 1939. Clothing prices advanced 93 - 3 - sharply for the third successive month, and their nearly vertical rise has practically caught up with the advance in food costs. Clothing costs increased 2.7 percent during the month, and food costs 0.8 percent. Rent, fuel, and light costs were unchanged, but other costs increased to some extent. Some retail food prices due for reduction Retail prices for selected foods in 51 cities monthly in 1940, 1941, and through mid-April 1942, are shown in Chart 2. The chart has been brought more nearly up to date with estimates of prices as of April 28, made on the basis of confidential information supplied by the Bureau of Labor Statistics for 19 cities. These indicate a marked general rise during the latter part of April. of the selected foods shown separately, prices for pork chops, round steak, and bread are subject to the general ceiling order. Butter and egg prices -- not under ceilings -- are likely to rise, since the Department of Agriculture is supporting wholesale prices of butter at a minimum of 36 cents a pound for the rest of the year, and had earlier announced a rising scale of fixed buying prices for dried eggs. Wholesale commodity prices hesitate The BLS all-commodity index receded very slightly to 98.6 in the week ended May 9, immediately before the general price regulation became effective in wholesale commodity markets. This was 31.5 percent above the level of the pre-war month of August 1939. Basic commodity prices last week continued to follow an irregular course, with little net change. (See Chart 3.) The BLS price index of foodstuffs advanced to a new high, but the index of industrial raw materials declined somewhat. The rise in foodstuffs prices was featured by advances in prices for hogs and steers, which were buoyed by Government purchases of pork and by livestock producers' withholding of offerings. Cottonseed oil prices advanced as a result of an adjust- ment of the OPA ceiling. Wheat and corn prices were somewhat lower, but barley advanced to a new war-time high. Butter prices declined as Government buyers stayed out of the market. Price ceilings and futures trading The effect of price control on futures trading was demon- strated again last week with the announcement of the closing of the New York Cocoa Exchange, following liquidation of existing Regraded Unclassified 94 4 contracts. Since the ceiling was placed on cocoa prices, trading on the Exchange has consisted chiefly of exchange of futures for actuals, gradually eliminating most of the open contracts. The Cocoa Exchange was the tenth commodity ex- change to close as a result of the war. The others were those dealing in silk, rubber, copper, tin, lead, zinc, hides, sugar, and coffee. Pressure on sugar supplies lightened in East A sharp decline in demand for refined sugar has occurred recently, as sugar hoarded by householders and industries 1s coming into use under rationing. As a result, refined sugar is being moved by rail from the South into warehouses in the deficit area in the North, and the OPA has ordered beet sugar offerings restricted to its normal western territory. Cuban planters, as well as planters in this country, are reported hesitant about planting for a large 1943 crop because of uncertainty as to United States requirements, which appear to have been lowered by rationing and by curtailment of the alcohol program from high-test molasses. Lag in retail trade continues Department store sales have continued to lag recently, probably due in part to the effects of the maximum price regulations which go into effect on retail prices today. Thus in the week ended May 9 the gain over year-earlier levels narrowed to 6 percent from 8 percent in the previous week. (See Chart 4.) Furthermore, the figures mentioned contrast markedly with the cumulative sales gain of 20 percent shown thus far in 1942. The unit volume of department store sales in recent weeks has actually fallen noticeably below year-earlier levels, since retail prices of typical department store items on May 1 were 18.7 percent above those of a year-earlier, thus much more than accounting for the recent moderate gains in dollar sales. Retail prices on May 1, as measured by the Fairchild index, were 0.8 percent higher than a month earlier. All of the major groups comprising the index showed gains during the month, with an advance of 1.3 percent in men's wear leading the rise. Preliminary reports from the New York area indicate that department store sales improved slightly last week, with more favorable weather conditions tending to offset the restrain- ing influences of gasoline rationing and the imminence of Regraded Unclassified 95 - 5 - retail price ceilings. Dun and Bradstreet's nation-wide week- ly survey of retail trade showed that average dollar sales last week were approximately equal to year-earlier levels, thus indicating a rather noticeable decline in actual volume. Steel output at new high As a result of & 1 point rise in operations to 99.6 per- cent of capacity, the tonnage of steel ingots scheduled for production last week was the highest on record. (See Chart 5.) Although an operating rate of 99.9 percent was reached in the weeks ended May 19 and June 23, 1941, the in- dustry's capacity at that time was lower. Steel operations during the current week are scheduled at 99.2 percent of capacity. Steel ingot production in April fell moderately below the previous month's record output, but it was more than 5 percent greater than in April 1941. In the face of some earlier predictions of an actual decline in this year's steel output, aggregate production in the first 4 months of 1942 exceeded year-earlier levels by more than 4 percent. Ship- ments of steel plates in April rose about 2 percent to a new high, and Maritime Commission requirements are reported to have been met for the second consecutive month. Neverthe- less, it was indicated that a permanent solution to the troublesome steel plate problem would not be had until addi- tional plate mill capacity was in production. War needs absorb nearly all steel output Despite the attainment of virtual capacity production by the steel industry, demand for steel is still well above production, and WPB officials indicated last week that fur- ther restrictions will be imposed on consumption. Thus it was stated that demand during the current quarter carrying ratings of A-10 or higher amounts to 117 percent of the industry's capacity. Direct war requirements of the Army, Navy, Maritime Commission and Lend-lease amount to nearly 67 percent of total capacity. In addition, allocation pro- grams for mines, railroads, exports, etc., account for another 14 percent, while new construction vitally essential to the war effort, such as for rubber, steel and aluminum plants, 1s taking 18 percent of capacity. Thus direct and vital indirect war requirements alone are currently aggre- gating nearly 99 percent of the steel industry's total capacity. Regraded Unclassified - 6 - 96 Plant expansion program to be out The shortage of raw materials, the dire need for more ships, and the belief that war developments may reach, a climax in the near future, have apparently resulted in a major shift in emphasis in the conduct of the war production pro- gram. A spokesman for the WPB at the end of last week is reported to have stated that virtually all contracts for war plants which cannot be completed and in production by mid-1943 would be canceled. This move would tie in with the reported desire of the WPB to concentrate available supplies on the production of arms and munitions rather than on the plants in which they would be made in the more distant future. It was further indicated that, while construction will be pushed on projects like synthetic rubber and aviation gasoline plants, the scope of steel plant expansion, for example, would be cut down considerably. Scrap dealers licensed An improvement in the flow of steel scrap to mills has contributed to the recent rise in steel output. Nevertheless, in order to secure greater control over the scrap industry, the OPA recently ordered the licensing of all dealers in scrap, waste and salvage materials, effective May 20. The licensing will apply not only to dealers in iron and steel scrap but also to those handling other scrap materials for which maximum prices have been established, such as aluminum and zino scrap, waste paper, scrap rubber, etc. In issuing the order, Price Administrator Henderson indicated that evasions of price schedules have presented difficult problems and that a more comprehensive enforcement technique was deemed necessary. Considerable significance would appear to attach to this move, since OPA will thus be able to force the hand of violators of price regulations by revoking their licenses. Construction lumber deliveries restricted Due to heavy military construction requirements, the WPB last week banned for 60 days the sale and delivery of softwood construction lumber for civilian uses by all but the smallest mills. Delivery from mills will be made during this period only to the Army, Navy and Maritime Commission. The apparent purpose of the move 1s to enable the Army to obtain urgently needed lumber for the erection of canton- ments and warehouses. Regraded Unclassified Chart 1 COST OF LIVING AND SELECTED ITEMS 97 JUNE 1939 = 100 1939 1940 1941 1942 PER PER CENT CENT 112 112 108 108 COST or LIVING 104 104 100 100 124 124 120 120 FOOD 116 116 112 112 108 108 CLOTHING 104 104 100 100 RENT, LIGHT, HOUSEHOLD FURNISHINGS AND HEAT AND MISCELLÁNEOUS 96 96 J $ D M J 5 o N D J F M A M J J A $ o N D J F M A - J 1940 1941 1942 1939 SOURCE: B.L.S. Office of the Secretary of the Treasury C - 413 I = j I 1 Regraded UInclassified FOOD PRICES. RETAIL JAN. MAR. MAY JULY SEPT. NOV. PERCENT PERCENT RETAIL FOODS" (1940-100) 130 130 125 125 1942 120 120 115 115 110 110 1941 105 105 100 100 1940 95 95 90 90 JAML MAR. MAY JULY SEPT. NOV. Selected Basic Foods MAR. MAY ALT SEPT NOV. JAM MAR. MAY AAY SEPT. NOVE JAM. CENTS CENTS PER CENTS CENTS PER PER DGZ. 10 La. SAB PER DOZ. 10 LB. BAG WHEAT FLOUR" EGGS* 52 52 54 54 1942 48 48 50 50 J941 44 44 1942 46 46 1940 40 40 JAM. MAR. MAY au SEPT NOV. 42 42 CENTS CENTS PER LE BREAD . PER LA 1941 9.0 9.0 38 30 8.5 1942 8.5 1940 1940 8.0 8.0 34 34 1941 7.5 7.5 JAM. MAR. MAY JULY SEPT. BOX 30 30 CENTS CENTS PER us PER LB. BUTTER* 48 26 26 48 JAIL MAR MY ALT SEPT. BOX CENTS CENTS PER LA PER LR. PORK CHOPS* 44 44 46 46 1942 40 40 1941 42 42 36 36 1940 38 38 32 32 JAN. BAR. MAY MY SEPT NOV. CENTS CENTS 1941 PER LB. PER LS. 1942 ROUND STEAK", 34 34 44 : 1942 30 30 40 40 1940 1941 1940 26 20 36 36 $2 32 == = - MAR. MAY au 5 - JAR. - - any SEPE NOT - Let figures are for April 26. detimated - - 51 Cillies, als 6 Chart - of - - di - - I 1 1 I Regraded Unclassitled MOVEMENT OF BASIC COMMODITY PRICES AUGUST 1939-100 PERCENT PERCENT PERCENT PERCENT Weekly Average Daily 220 220 200 200 200 200 190 12 Feedstuffe 190 12 Foodstuffs 180 180 180 180 160 170 170 160 140 140 160 16 Row Industrial 160 Materials AS Row Industrial Materials 120 120 150 150 100 140 140 100 as 28 7 M a a 4 " at # . . # 29 . 6 a JUNE AUG. OCT. DEC. FEB. APR. JUNE AUG. OCT. DEC. FEB. MAR. APR MAY JUNE 1941 1942 1942 PERCENTAGE CHANGE FOR INDIVIDUAL COMMODITIES Aug. 1939 to May 15. 1942 Dec. 6. 1941 to May 8,and May 15. 1942 PERCENT Cottonsed Oil IS&AX PERCENT 12 Foodstuffs 12 Foodstuffs Noge ansx +40 Hoge ITESX 120 Tollow INL7X Lard INJX +30 Coooo MM.7X Marley PL/X Lord 17.7% Com sasx Corn ALIX Coffee 772% +20 80 Barky M.BX Whent 684X Steers M3X Steere 65.0% Cottormed Oil est Butter 884X +10 Butter 40% Tollow 7.92 40 Sugar 6.9X Sugar 30.8% Wheat 1.1% o Coffee ex Coose A 0 -10 Aug May 15 Dec.6. May8 May IS 1939 1942 1941 1942 1942 PERCENT PERCENT 16 Raw Industrial 16 Raw Industrial Materials Materials Flowed 44.6% & Cotton IMM 120 / Buriqo AMAX +30 Print Cloth past Flanned 71.5% Cotton N.SX Zino sex +20 Load IIIX 80 Who/ 42/2 Print Cloth 78% Mideo M.72 Zine # 4a. Screp.dem JE.PX Rubber MAX +10 0% Change Shellec. Tin. Load FROM Copper 40 Albain 8272 Mides. Silk, 17.1% 0 St. Scrept don. Rubber. Copper N.OX St. Scrap. asp. am - Who -1.00 Tin 4.6% -10 0 May IS Dec.6. May 4 May IS Assin -MI Aug 1939 1942 1941 1942 1942 Bundep -4R "Black lines indicate commedities under price callings 99 - é - - of - - P-84-0 Chart 3 Regraded Unclassified Chart 4 100 DEPARTMENT STORE SALES 1935 . '39 - 100, UNADJUSTED JAN. MAR. MAY JULY SEPT. NOV. PER PER CENT CENT Weekly 260 260 240 240 220 220 200 200 180 180 160 160 140 140 120 120 '41 '42 100 100 80 80 '40 60 60 JAN. MAR. MAY JULY SEPT. NOV. Office of the Secretary of be Trumy - of - and Male c - 390 Chart 5 101 STEEL INGOT PRODUCTION PER CENT Per Cent of Capacity 100 '41 42 80 :40 60 40 Amer. / and 8. Inst. 20 JAN. MAR. MAY JULY SEPT. NOV. Office of the Secretary of the Treasury Division of Research and Statistics c- 419 102 May 18, 1942 For the Secretary Attached is 8 copy of a letter just received from our District Chief Examiner in Dallas. mhr Upm ó 103 TREASURY DEPARTMENT o P Y Office of venth Federal Reserve District Comptroller of the Currency May 15, 1942 Comptroller of the Currency Washington, D. C. Attention: Mr. C. B. Upham Sir: This has further reference to our telephone conversation of May 13, relative to oil production loans carried by national banks in this district. My information is that the Railroad Commission of Texas has authorized six days' production for the first half of the current month, and while no order has been announced by the commission, it is believed that another six days of production will be authorized for the last half of the month, making a total of twelve days' pro- duction for the entire month. My information also is that storage facilities are running about to capacity in some localities and pipe lines have materially reduced the amount of oil that they will receive. In some cases the pipe lines are now taking only about forty per cent of that normally permitted to run. Under these conditions, it is evident that oil production loans now carried cannot be paid out at the rate anticipated when the loans were made, and in many cases, will have to be rewritten on different payment terms. Banks in Dallas, Fort Worth, Houston, and San Antonio, where the principal portion of the oil production loans in this state are carried, have been contacted, and without exception, they fully realize existing conditions and are going along willingly and without complaint with the loans they now have, but are making no new loans of this character of any consequence. Information along this line is that no borrower is to be pressed on account of restric- tions in production and use, when otherwise the loans are c onsidered good. You may feel fully assured that the national bank examiners in this district are not taking any unreasonable position relative to oil production loans on account of present restrictions. The banks and the bank examiners have 8 full understanding of the situstion and I am thoroughly convinced there is no cause for any criticism of either. Very truly yours, (Signed) W. A. Sandlin W. A. Sandlin Chief National Bank Examiner. WAS:b 104 DEPARTMENT OF AGRICULTURE 1 WASHINGTON STATE the May 18, 1942 The Honorable The Secretary of the Treasury Dear Mr. Secretary: There is attached a copy of a letter which I have just sent Senator James E. Mead relative to the establish- ment of mobile labor camps. This letter was sent in reply to two requests received by Senator Mead indi- cating the great need for these camps in New York State in 1942. After our discussion yesterday I thought you would be interested in this letter. Sincerely yours, Claude Secretary Enclosure COPY 105 Honorable James M. Mead United States Senate Dear Senator Mead: Thank you for sending us the letters you received from Mr. John E. Johnson, Chairman of the Genesee County Agricultural Defense Com- mittee, LeRoy, New York, and Mr. Charles Parker, Chairman of the County War Board of Niagara County, Lockport, New York, about the need for facilities to house migrant farm laborers in these sections of New York State. A serious farm labor shortage is expected in many parts of New York during the coming crop season, due both to industries in nearby communities absorbing much of the labor usually available for this purpose and to the increase in farm production called for under the Food for Victory Campaign which is now being stressed throughout the Country. The Farm Security Administration, in cooperation with other agencies and groups, made a study of this situation, and as a result that Administration expects to be able to provide five Mobile Migratory Labor Camps to operate in the State of New York during the coming crop season where the need appears greatest. It is expected that Niagara and Genesee Counties will each be served by a camp. As you know, provision for construction and operation of Migratory Labor Camps was stricken from the Agricultural Bill in the House of Representatives contrary to the recommendation of the President. It is hoped that before final passage of the Agricultural Appropria- tions Bill this situation will be remedied. Sincerely yours, Secretary Enclosures MA e) YAM SACI Am allent06 C 1 This meeting THE SECRETARY OF COMMERCE with m UNITED of WASHINGTON sullware May 18, 1942 Dear Henry: In accordance with the President's suggestion made in his letter of May 16th, copy of which is enclosed, I an calling a. meeting of this committee and the Executive Committee of the Governors' Conference in my office at the Department of Commerce, Wednes- day, May 20th, at 10 A. M. Your presence will be greatly appreciated. Sincerely yours, Honorable Henry Morgenthau, Jr. Secretary of the Treasury Washington, D. c. 107 COPY THE WHITE HOUSE Washington May 16, 1942 My dear Mr. Secretary: As you know, divergent State laws and regulations are impeding many phases of the war effort. These impediments to full production were discussed at your comference last week between representatives of the State governments and Federal war agencies. Specific solutions must be developed. The Council of State Governments has suggested that I appoint a committee from the war agencies to meet with the Executive Committee of the Governor's Conference and formu- late these solutions. I an appointing you chairman of the committee from the Federal Government. Other members are the Secretary of the Treasury, the Attorney General, the Under Secretary of War, the Assistant Secretary of the Navy, the Chairman of the War Production Board, the Director of the Office of Price Administration, the Director of the Office of Defense Trans- portation, and the Chairman of the War Manpower Commission. I suggest that you communicate at once with Mr. Frank Bane, Executive Director of the Council of State Governments, and arrange a meeting of your committee with the Executive Committee of the Governors' Conference early next week. Sincerely yours, /a/ Franklin D. Roosevelt The Honorable HTRATHY Y) The Secretary of Commerce laws la VW NO BACK a 30,770 OLL Regraded Unclassified 108 MAY 18 1942 Dear Harolds I have your letter of May 15. 1942, calling attention to pending legislation providing for the establishment of a Columbia Power Administration. I an glad to have your full explanation of this matter and I am having the will studied w representatives of this Department and hope to give you a report on the proposed legislation within the course of the next few days. Sincerely yours, (Signed) H. Morgenthau, Jc. Secretary of the Treasury The Henorable, The Secretary of the Interior. DWB:ce 5-18-42 Regraded Unclassified 109 Regraded Unclassified THE SECRETARY OF THE INTERIOR WASHINGTON MAY 1 5 1942 Dear Henry. a For almost two years I have sought to secure legislation that would enable the Bonneville Power Administration to provide the necessary leader- ship in the program for acquiring utility properties in the Northwest and setting up a coordinated public development. The culmination of this effort has been the recent introduction in the two houses of Congress of exendments to the Bonneville Act, R. R. 6889, H. R. 6890, and 8. 2430, all of which are identionl bills providing for the establishment of a Columbia Power Adminis- tration. They are largely the work of Senator Bone of Washington. I believe that it is of great importance that this legislation become law during this session of the Congress. For many years a vigerous popular movement in that region has been attempting to effect these acquisitions. The huge Federal investment in the Columbia River dams, together with the expressions of Congress in the Bonne- ville Act respecting the disposition of the power from that project, has given that movement new impetus. The Northwest is a public power area and the continued existence of private utilities in the region is an unpopular and uneconomical anachronism. The smooth transition from private to public ownership of utility properties is a vital concern to the owners of those properties, to the public agencies that seek to distribute electricity, to the consumers, and to the Government. Even if the welfare of all of the groups involved were not a matter of concern to the Federal Government, its heavy investment in power in the region and its role of principal producer and wholesaler of energy would make the Government necessarily a party at interest in the matter of these acquisitions. The war has magnified the importance of the acquisitions. No soheme of operation under diversified ownership will effect the degree of coordination of the electrical facilities of this heavily electrified region necessary to achieve the greatest output of power and energy with the least expenditure of oritical materials. Every kilowatt of power in this country is important to the war, but in the Northwest every kilowatt is crucial. The region is a storehouse of critical war materials that can only be unlooked through the availability of large quantities of electric energy. About 95% of the eleo- tricity being generated at the Federal facilities in the region is being put directly into industries essential to the war. The only alternative to legis- lation permitting Bonneville to effect immediately an acquisition program that is inevitable in this area would be to resort to emergency expedients 110 that would either be ineffective or would be many times more expensive to the Goverment than the orderly acquisition procedure provided in the pro- posed legislation. That is the reason, I an sure, that the President, who has kept closely in touch with this matter for a number of years, wrote to Senator Bone with respect to his bill as follows: "I an glad to ⑉ that you have introduced a bill in the Senate which will authorise the acquisition by public bodies of the utility properties in the Northwest without increasing the indebtedness of the Federal Treasury, and provide an orderly means for returning to the Federal Government its investment in the power facilities at Bermeville and Grand Coulee. Both aspects of your bill are important in connection with the prosecution of the war. It will be helpful to the Federal Treasury to have the finances of Bonneville and Grand Coulee placed on a self-sustaining basis, and it is of great importance to our production program that the Bonneville-Grand Coulse power system, which is now almost entirely devoted to the manufacture of materials of mr, should be auguented by the acquisition of other utility properties in the Northwest, Your bill will mean more airplanes, more ships and more rew materials and implements of war." The prospects for securing this legislation are exceedingly favorable, particularly since the President has indicated that it will have the support of the Administration. of course there will be the inevitable opposition and it can be counted upon to seise every opportunity to divide those who favor the measure. For that reason I hope that it will be possible for all the agencies of the Federal Government that report on the bill to favor its enactment and to suggest as few modifications in language as my be consistent with securing workable provisions. The bill does not embody all of the features that I would like to have had included. It is in a very real sense a compromise. But because the and sought is of such great importance and I an convinced that the provisions as they now stand have a real chance for enactment, I as willing to forego any betterments upon which I might otherwise have insisted. The fiscal provisions som particularly advantageous at this time because they set up the Government's Northwest power program on a business-like, pay=as=you-go basis. These features of the bill are substantially those worked out by conferences with representatives of various agencies of the Government and embodied in the draft of legislation prepared by the Bureau of the Budget and introduced last November by Congressman mill as H. R. 6076. Officials of your Department were particularly helpful in working on this matter. The provision for the issuance of revenue bonds rather than obli- gations fully guaranteed by the Treasury is a new one in this bill. This Regraded Unclassified 111 exception to the procedure contained in earlier drafts resulted from ⑉ ferences that Senator Bone had with colleagues in the Senate and with members of the House. It was generally felt that the Congress would be unwilling to pass the bill unless provision were made to finance the acqui- sitions without increasing the indebtedness of the Treasury. The revenue bond provisions of the bill accomplish this end. I an certain that the bill can not pass unless this feature is retained, I em aware that the Federal Government has not heretofore resorted to revenue bond financing in circumstances such as these, and I understand that there may be considerations against the widespread use of this method. How- ever, none of these considerations obtains with respect to the issuance of revenue bonds for financing the acquisitions contemplated in the current legislation. The use of revenue bond financing, especially in connection with public power programs, has a. great deal of precedent in state and municipal practice. The record of revenue bonds issued for this type of enterprise 18, I believe, unblemished by default. Interest rates on such bonds have been low, indeed, in many instances, lower than rates paid by the same governmental bodies on their general obligation bonds. Revenue bonds have maintained relatively stable values when other mmicipal securities have fluctuated. In the North- west, particularly, the history of this type of financing is a. long and honorable one. Mr. Foley, your general counsel, wrote some axcellent articles on the subject of revenue bond financing as a result of his experience with these securities in the Public Works program. The revenue bonds contemplated by the proposed legislation would be issued against acquired facilities that would enhance the value of the Government's power properties. They would be supported by earnings many times in excess of their debt charges. of course, each of the acquisitions, under the terms of the bills as well as under prudent administrative practice, must stand on its own feet. However, the bonds that would be issued to acquire electrical facilities in the Northwest would be amply secured not only by the income derived from the use of the properties that they would represent but also by the tremendous income producing value of the Federal facilities in the area. Any discussion of the possibility of a default would be purely theoretical. The Bonnoville Power Administration is now deriving about $500,000 per month from its sales of power. Before the end of this year its income from power sales will be on the basis of $1,000,000 per month. Its operation and main- tenance costa will be in the neighborhood of $2,000,000 per year. This heavy oushion makes the security of the proposed bonds already a case of super- erogation without the imposition of further guarantees by the Treasury. Regraded Unclassified 112 It is contemplated in the bills that the system-wide acquisitions of utility properties would be accompanied by the resale of the distribution properties to local bodies and occperatives. Incidentally, these local agencies would issue revenue bonds against the properties that they acquired. Only the major generating stations and transmission facilities would be retained by the Columbia Power Administration and integrated with its con- structed system. The Administration as well as the local public agencies would thereby secure necessary properties without having to pay heavy severance damages that would be imposed by piecemsal acquisitions. The bonds to be issued against the facilities retained by the Administration would represent only a fraction of the price of the purchased properties. The distribution facilities that would be sold to local groups would provide customers and increased revenues for the Federal system, Subsequent to the introduction of the Columbia Power bills we have had direct evidence of the soundness of the revenue bond proposal. A number of representatives of recognised banking groups, including The First Boston Corporation, Lehman Bros., Blyth & Co., Inc., and Halsey, Stuart & Co., Inc., have sought out Senator Bone and members of my staff to discuss the marketing of these bonds. Moreover, eminent bond counsel have been consulted in this matter and have indicated that the bill would provide an appropriate basis for the issuance and sale of revenue bonds. It is generally believed that they could be sold to bear interest rates commensurate with those paid by the United States on its general obligations. In the circumstaness, I hope that the practical considerations that I have outlined may prevail and that your Department will be able to render a favorable report on the Columbia Power bills now before the Senate Commerce Committee and the Rivers and Harbors Committee of the House, Joint hearings on the bills may be expected in the next few weeks. If I or members of my staff can be helpful to you in going into this matter more fully, please do not hesitate to call upon me. Sincerely yours, (Sgd.) HAROLD L. ICKES Secretary of the Interior. lays WA le 38 IVERINGA OKL CE Hon. Henry Morgenthau, Jr., Secretary of the Treasury. Regraded Unclassified m 113 STRICTLY CONFIDENTIAL May 18, 1942. MEMORANDUM FROM: Interdepartmental Committee on Investigations Pursuant to Public No. 135. TO: Executive heads of departments, agencies, and independent estab- lishments. SUBJECT: Membership in the Communist Party or German-American Bund as ground for dismissal from Federal employment. NOTE: The following memorandum prepared for the Interdepartmental Committee is being made available to executive heads for use in administration under Public No. 135. 1. The question has been raised whether the membership of a Federal employee in the Communist Party or the German-American Bund is ground for his dismissal. If the Party and the Bund advocate "the overthrow of the Government of the United States by force or violence," or advocate the "overthrow of our constitutional form of government in the United States," the answer must be in the affirmative. The first test appears in the recent appropriation acts (see paragraph 4, below); the second appears in the Hatch Act (see paragraph 5, below). Whether or not a showing is made as to the advocacy of force or violence, it would seem that a member of the Party or the Bund is by reason of that fact alone subject to removal from Federal employment under section 652 of title 5 of the United States Code, which provides for removal "for such cause as will promote the efficiency of said service." (OVER) Regraded Unclassified - 2 - 2. The Intention of Congress. It has long been the clear inten- tion of Congress to outlaw and condemn subversive elements -- which Congress regards as being most plainly exemplified by Communists and Bundists. This intention is reflected in the Federal employment statutes, and definitely expressed in certain other legislation. Two statutes make specific mention of the Communist Party and the German-American Bund. The first is the Selective Service Act of September 16, 1940, 50 U.S.C.A. App. sec. 308 (1). Congress there inserted an express statement of its policy that whenever there is a vacancy in any employment because of the induction into the armed services of an employee, "such vacancy shall not be filled by any person who is a member of the Communist Party or the German- American Bund." The second statute is the Emergency Relief Appropriation Act, June 16, 1940, 54 Stat. 611, 620. It is there provided that no person belonging to the Communist Party or the Nazi Bund Organization "shall be given employment.or continued in employment on any work project prosecuted under the appropriations contained in this joint resolution." The same act calls for an affidavit from certain individuals that the affiant is not a Communist and not a member of any Nazi Bund Organization. Mention may be made also of the recent amendment to the Foreign Agents Registration Act (Public Law 532, April 29, 1942). That act con- tains general language concerning membership in an organization which advocates the overthrow of our form of Government by force or violence. In the debate in Congress, it was urged that express mention be made of the Communist Party and the German-American Bund. Because of the inter- national political situation, such language was omitted. Yet most speakers emphasized that the act, as passed, was intended to cover and does cover Regraded Unclassified 114 - 3 - membership in the organizations just named. It was simply deemed politic to avoid any specific labels. See Cong. Rec. V. 88, P. 827. There can be no doubt that Congress regards the dismissal of Commu- nists and Bundists from the Federal service as not only desirable but mandatory. 3. Removal under section 652. The Civil Service Act provides that civil service employees may be removed only "for such cause as will pro- mote the efficiency of said service," Act of August 24, 1912, 37 Stat. 555, 5 U. S. C., sec, 652. This section has recently been invoked by the Secretary of Labor in removing an employee who was affiliated with the Communist Party and whose employment was therefore felt to be inimical to the efficient operation of her Department. See Matter of Miller (opinion of August 1, 1941). The Secretary of Labor, after reviewing the evidence, relied solely on section 652. She found that the employee was a leader in organizations dominated by Communists; that the employee had solicited another person to join the Party; that the employee, if not a Party member, at least accepted the Party's discipline; that the employee's usefulness as a government worker had been impaired; and that the employee's retention would undermine the confidence of the public in the employing Bureau, The Miller case is clear precedent for the dismissal of Communists and Bundists from the Federal service. Even stricter controls apply to employees of the War and Navy Depart- ments, of the Coast Guard, and of their field services. Section 652 ex- tends no protection to such employees, and they can be dismissed whenever their immediate removal is "in the opinion of the Secretary concerned, (OVER) Regraded Unclassified - 4 - warranted by the demands of national security." Act of June 28, 1940, 54 Stat. 676, sec, 6. The same result is achieved with regard to em- ployees of the Military Establishment by the act of July 2, 1940, 54 Stat. 713, 5 U. S. C. 653. All this seems to do is spell out in broad terms still greater discretionary power in limited instances without detracting from the broad interpretation of section 652 employed by the Secretary of Labor. 4. The Appropriation Acts. Another approach to the problem appears in the recent appropriation acts. Those acts provide that no funds are to be allocated to pay any salary or other expense otherwise authorized "to any person who advocates, or who is a member of an organization that advocates, the overthrow of the government of the United States by force or violence." A partial list of acts using substantially the quoted 2) language is as follows: Public Law 13, March 17, 1941, Sec. 3, Title 3; If 23, March 27, 1941, Sec. 4; If 28, April 5, 1941; If 29, April 5, 1941, Sec. 3, Title 3; If 71, May 23, 1941, Sec. 4; If 88, May 31, 1941, Sec. 305; " 135, June 28, 1941, Sec. 504, Title 5; 11 136, June 28, 1941, Sec. 7; If 139, June 30, 1941, Sec. 10; If 143, July 1, 1941, Sec. 12 (b); II 144, July 1, 1941, Sec. 3; II 145, July 1, 1941, Sec. 5; II 146, July 1, 1941, Sec. 704; # 148, July 1, 1941, Sec. 10; If 150, July 3, 1941, Sec. 303; If 282, October 28, 1941, Sec. 301; If 353, December 17, 1941, Sec. 502; 11 422, January 30, 1942, Sec. 301; 19 441, February 7, 1942, Sec. 112; II 463, February 21, 1942, Sec. 301; " 474, March 5, 1942, Sec. 401; 11 495, March 10, 1942, Sec. 305. 3 Regraded Unclassified 115 - 5 - All of these acts impose criminal penalties on persons of the pro- scribed class who accept Federal employment and derive wages therefrom. The subversive employee must also restore to the United States the wages he has wrongfully obtained. See 18 U. S, C. secs, 80, 81, 83; 28 U. S. C. secs. 279, 280; 31 U. S. C. sec. 231. Whether the Communist Party advocates the overthrow of the Government by force or violence is a point which has been much mooted. At one time the Party almost certainly did 80. In 1938, or perhaps earlier, the Party line is said to have changed and violence is said to have been repudiated. The Bridges case is relevant. An effort was made to deport Bridges because of his connection with the Communist Party. In December 1939, Dean Landis ruled that Bridges on the evidence was not then a member of the Communist Party and accordingly recommended against deportation. On September 29, 1941, Judge Sears found that Bridges had been a member of the Communist Party and held that sufficient ground existed for his deportation, the statute having been amended to make past membership in subversive organizations a basis of deportation. Judge Sears held that the Communist Party was still advocating overthrow of our Government by force and violence. On January 6, 1942, the Board of Immigration Appeals overruled Judge Sears as to Bridges' connection with the Communist Party, but said nothing as to the Party or its aims. The case law on the subject relates chiefly to the period prior to 1938, and hence is not decisive if in fact the aims of the Party have changed. Dean Landis points this out in his Bridges opinion and adds, at page 7: If * * * Not only is there the possibility that the characteristics and objectives of the Communist Party of (OVER) Regraded Unclassified - 6 - the United States of America have changed, but it is possible, in the light of changing economic and political conditions, to view the type of radical advocacy indulged in by that party as now 80 indefinitely related to force or violence as to cast doubt upon its appropriate inclusion within the ban of the statute. See Antolish V. Paul, 283 Fed. 957, 959." In the deportation cases, the courts have found almost uniformly that the Party has advocated the use of force and violence and have held in consequence that membership in the Party was in itself grounds for de- portation. These cases arose under the deportation statutes now contained in the act of October 14, 1940, 54 Stat. 1141, 8 U. S. C. sec. 705, et seq., and the act of June 28, 1940, 54 Stat, 673, 8 U. S. C. sec. 137. The chief difference of opinion in the decisions relates to questions which are not relevant to our inquiry, i.e., whether or not an individual member has in fact subscribed to the aims of the Party, and as to the time of 2) his membership. The latter point is the only one on which the Supreme Court has ruled in this field. See Kessler V. Strecker, 307 U. S. 22 (1939), where the Court avoided our problem by refusing to pass upon the adequacy of the evidence concerning the purposes and aims of the Communist Party. The Circuit Courts in the past have generally agreed that the Communists urge the use of force and violence. In some cases, the in- dividual under scrutiny conceded that the Communist Party did advocate force and violence, but his contention was that the evidence did not establish him as a member. There follows a selected list of cases in which it was held, or stated in dictum, or tacitly assumed, that the Communist Party did advocate force and violence: United States ex rel, Kettunen V. Reimer, 79 F. (2) 31,5 (C.C.A. 2, 1935) United States ex rel. Ohm V. Perkins, 79 F. (2) 533 (C.C.A. 2, 1935); United States ex rel. Yokinen V. Commissioner, 57 F. (2) 707 (C.C.A. 3 1932); Berkman V. Tillinghast, 58 F. (2) 621 (C.C.A. 1, 1932); Regraded Unclassified 116 - 7 - Wolck V. Weidin, 58 F. (2) 928 (C.C.A. 9, 1932); Jurgans v, Seaman, 25 F. (2) 35 (C.C.A. 8, 1928); Kenmotsu V. Nagle, 44 F. (2) 953; United States v. Tapolcsanyi, 40 F. (2) 255 (C.C.A. 3, 1930); United States ex rel. Vojewvic v, Curran, 11 F. (2) 683 (C.C.A. 2, 1926): Kjar V. Doak, 61 F. (2) 566 (C.C.A. 7, 1932); Vilarino V. Garrity, 50 F. (2) 582 (C.C.A. 9, 1931); Murdoch V. Clark, 53 F. (2) 155 (C.C.A. 1, 1931); Branch V. Cahill, 88 F. (2) 545 (C.C.A. 9, 1937); United States ex rel. Fernandas V. Commissioner, 65 F. (2) 593 (C.C.A. 2, 1933). Compare: United States ex rel. Vajtauer V. Commissioner, 273 U. S. 103 (1927) (discussion of evidence); Strecker V. Kessler, 95 F. (2) 976 (C.C.A. 1, 1938), (membership in Party not per se cause for deportation), affirmed on other grounds, 307 U. S. 22 (1939). 5. The Hatch Act; "Overthrow." The Hatch Political Activity Act of August 2, 1939, makes it unlawful for any Federal employee "to have membership in any political party or organization which advocates the overthrow of our constitutional form of government in the United States." 53 Stat. 1147, as amended July 19, 1940, 54 Stat. 767 (18 U.S.C.A. sec. 61 (i)). It provides further that any person violating this prohibition is to be immediately removed from the employment rolls. There is no men- tion of "force and violence." The Hatch Act thus differs from the various appropriation acts just discussed- a difference which may simplify our problem. Some contend that the Communists do not now advocate the use of force or violence; yet few would deny that the Party is striving to replace "our constitutional form of government" with something entirely different. Compare Chafee, Free Speech in the United States (1941) P. 222, Yet the Hatch Act does present certain difficulties of interpretation. What, exactly, is meant by the words "overthrow of our constitutional form of government"? Many political parties advocate peaceable changes. (OVER) Regraded Unclassified - g - Numerous constitutional amendments have been effected in the last few years. If "overthrow" means more than change, it may return us to the old test of force and violence. Similar remarks may be made concerning the application of the Hatch Act to the German-American Bund, though here we have the additional fact that the Bund can probably be regarded as essentially an enemy group. 6. Summary. There appear to be three bases for removing from Federal employment rolls all members of the Communist Party and German- American Bund: First, under the broad powers contained in section 652 of the Civil Service Act; second, under the Hatch Act, without need of establishing the advocacy of force; third, by virtue of the various appropriation acts, though here the advocacy of the use of force and violence must be shown. If an administrator decides to take action in a particular case, the use of section 652 would seem to involve fewer difficulties of fact and law than the second and third alternatives mentioned above. 117 MAY 18 1942 My dear Mr. President: I an enclosing report on our exports to some selected countries for the period ending April 30, 1942. Faithfully, (Signed) 1. Morgenthan, and Secretary of the Treasury The President, The White House. Enclosure. By Measenger reach 9:45 5/19/42 HDWsmoh 5/14/42 Ref. to Secips office Regraded Unclassified SECRET 118 May 14, 1942 Exports to Russia, Free China, Burna and other blocked countries, as reported to the Treasury Department during the tom-day period ending April 30, 1942 1. Exports to Russia Exports to Russia as reported during the ten-day period ending April 30, 1942 amounted to nearly $51,000,000 as compared with approximately $67,000,000 during the previous ten-day period. Motor trucks and land planes were the two principal items. (See Appendix C.) 2. Exports to Free China and Burna Exports to Free China during the period under review amounted to about $2,827,000, of which military equipment accounted for more than ninety percent. (See Appendix D.) No exports to Burna were reported. 3. Exports to France No exports to France were reported during the period under review. 4. Exports to other blocked countries Exports to other blooked countries are given in Appendix A. Most important were exports to Switzerland and Sweden amounting to $223,000 and $155,000, respectively. ISF/efs 5/16/42 STRICTLY CONFIDENTIAL SUNMARY OF UNITED STATES DOMESTIC REPORTS 90 SILECTED COUNTRIES AS REPORTED 90 THE TREASURY IMPARTMENT FROM EXPORT INCLARATIONS RESERVED DURING THE PERIOD INDICATED V July 28, 1941 to April so, 1942. (In thousands of dellars) July 28 to Period ender Period online Total Hear, April 20 April D Demestic Emerts U. S. S. R. $230,881 $66,850 $80,958 $448,689 we China 65,531 5,335 2,827 73,003 Durna al 11,557 639 - 12,196 France 3/ 6 - - 6 Occupied France 2 - - 2 occupied France 28 - - 28 Spain 2,845 4 w 2,30 Svitserland 7,690 2,093 223 10,006 Sveden 17,472 19 155 17,646 Portugal 8,488 256 a 8,795 French North Africa y 6,283 IV - 6,383 Treasury Department, Division of Monetary Research May 12, 1942. w Hany of the export declarations are received with a lag of several days or more, Therefore this compilation does not accurately represent the actual shipment of a particular period. The longer the period covered, the cleser will these figures come to Department of Commisse revised figures. al From September 11, 1941 to date - 10 is presumed that a large percentage of material listed here, consigned to Darm, is destined for Tree Orina. 3/ Includes both Occupied and Uncompled France through week ending October 4, 1941. Occupied and Unocoupied France separated thereafter. 4 Includes Merocco, Algeria, and Tumisia. of Loss them $800. 5/12/42 Regraded Unclassified APPENDIX B SECRET Exports from the U. s. to Free Gaine, Burna and 120 U.S.S.R. as reported to the Treasury Department July 28, 1941 - April 30, 1942 (Thousands of Dellars) Experts to Exports to Free China Exports to Burna 3/ U.S.S.R. July 28 - Aug. 2 393 Aug. 4 - Aug. 2 4,523 Aug. 11 - Aug. 16 309 Aug. 18 - Aug. 23 N Aug. 25 - Aug. 30 1 2, Sept. 2 - Sept. 6 204 Sept. 8 - Sept.13 2,281 Sept.15 - Sept.20 3,822 5,217 Sept.22 - Sept.27 110 Sept.29 - Oet. 4 1,225 2,333 Ost. 6 - Oct. 11 5,312 1,157 Det. 13 - Oct. 18 6, 5 Oct. 20 - Oet. 25 1, Oct. 27 - Nov. 1 4,772 Nov. 3 - Nov. 8 1,672 342 Nov. 10 - Nov. 15 4, 2,851 Nov. 17 - Nov. 22 w 1,228 1,021 Nov. 24 - Nov. 29 3.5 3,239 1,364 Dee. 1 - Dec. 6 3,6 00. 8 - Dee. 13 2,337 18 12,040 NO. 15 - Dee. 20 iii 4,5 Dee. 22 - Dec. 27 1 196 1,4 Dec. 29 - Jam. 3 35 2 Jan. 5 - Jam. 10 91 3.99 1,073 Jan. 12 - Jan. 17 1,695 Jam. 19 - Jan. 24 Jan. 26 - Jam. 31 6,938 Feb. 1 - Feb. 10 1,054 13,315 Pob. 20 - Feb. 20 4,853 583 Feb. 20 - Feb. 26 5/ Mar. 1 - Mar. 10 23 Mar. 10 - Mar. 20 8,058 Mar. 20 - Mar. 31 y Apr. 1 - Apr. 10 4,836 447 Apr. 11 - Apr. 20 5.355 639 Apr. 21 - Apr. 30 - Total 876,296 $11,063 0449,180 These figures are in part taken from copies of shipping manifosts. Figures for exports to Free China during these weeks include exports to Rangoom which are presumed to be destined for Free thina. It 10 presened that a large percentage of exports to Durse are destined for Free China. Beginning with February 1 figures will be given for 10-day period instead of week except where otherwise indicated. -day period. -1-day period. recoury Department, Division of Monetary Research May 14, 1942 ISF/efs 5/14/42 SECRET 121 APPENDIX e Principal Exports from U. s. to U. 5.5. a. as reported to the Treasury Department during the ten-day period ending April 30, 1942 (Thousands of Dellars) TOTAL EXPORTS $ 50,958 Principal Items: Motor trucks 6,424 Landplanes - benbardment 4,800 Dried 088 products 3,037 Lard 2,275 Landplanes - pursuit, interceptor and fighter 1,930 Sausage, canned 1,841 Other aircraft parts and accessories 1,792 Military tanks - medium 1,761 Irea and steel sheets and strips 1,757 Pork, canned 1,633 Explosive shells and projectiles 1,231 Military tanks - light 1,223 Copper wire, insulated Aireraft engines Arsor plate Tires and inner tubes Steel bare 721 Aireraft engine parts and assossories Diesel marine engines Relief supplies - clothing Pork, pickled or salted 626 Metallie eartridges 592 Treasury Department, Division of Mometary Research May 14,1942 ISF/efs 5/14/42 Regraded Unclassified SECRET APPENDIX D Principal Exports from U. 8. to Free Ohina as reported to the Treasury Department during the ton-day period ending. April 30, 1942 (Thousands of Dollars) TOTAL EXPORTS $ 2,827 Principal Items: Military equipment 2,653 Road rollers 84 Auto replacement parte n4 Medicinal chemicals 16 Vitamines and vitasterels, n.e.s. 10 Photographie apparatus and supplies 10 Treasury Department, Division of Monetary Research May 14, 1942 ISF/efs 5/14/42 123 MAY 18 1942 My dear Mr. Secretary: I an enclosing copy of report on our exports to some selected countries for the period ending April 30, 1942. Sincerely yours, (Signed) 1. Morgenthaw, Jr. Secretary of the Treasury The Honorable, The Secretary of State, Washington, D.C. Inclosure. n.m.c. By Messenger reach 9:45 5/19/12 5/15/42 HDW:meh Res. to Secip office 124 MAY 18 1942 My dear Colonel Denovan: I an enclosing copy of report on our exports to some selected countries for the period ending April 30, 1942. Sincerely yours, (Signed) H. Morgenthau, in Secretary of the Treasury Colonel William J. Donovan, Coordinator of Information, Old National Institute of Health Building, 25th and E Streets, N. W., Washington, D. C. Enclosure. By Messenger Yearh 9:45 NDW:mob 5/19/42 5/15/42 Ref to Secy's office 125 MAY 18 1942 My dear Mr. Perkins: I an enelosing five copies of the report on our exports to some selected countries for the period ending April 30, 1942. Sincerely yours, (Signed) 1. Morgenthau. Jr. Secretary of the Treasury Mr. Mile Perkins, Executive Director, Board of Economic Warfare, Room 3710, Department of Commerce Building, Washington, D. C. Enclesures. By Messenger . 9:45 5/19/42 HW:meh 5/15/42 Return to Secip office Regraded Unclassified 126 MAY 18 1942 Dear Mr. Chen: I wish to congratulate you OR the excellent address which you made to the United States on May 6th under the auspiess of the Chinese-Anerican Institute of Cultural Relations. The confidence which you expressed in the American people is, I an sure, not misplaced, and day I say that we, on our part, have the utmost faith that the Chinese people and their Government, as in the past, will do their utsost to help defeat the COMBOR foe. Sincerely yours, (Signed) 1. Morgenthan, 19. Secretary of the Treasury. Mr. X. P. Chen, Chairman, Stabilization Board of China, Chungking, China. n.m.c. ISF/efe Copin WDrW hire. 5/15/48 Return to Secy's office. 127 OFFICIAL LISTENING POST of BOARD OF INFORMATION REPUBLIC OF CHINA The following was transmitted by the Chinese International Broadcasting Station IGOY, Chungking, China. Recorded and transcribed by Dr. Charles E. Stuart, 461 East Main Street, Venture, California. May 6, 1942 - 1430 G.M.T. - 9635 K.C. Note: The following is a transcript of the speech given by Mr. K. P. Chen, a prominent alumus of the University of Pennsylvania. He is well known in Washington Government circles. Mr. Chen is now Chairman of the Chinese Currency Stabilization Board and was former head of the Chinese Foreign Trade Commission. While in Washington he negotiated the first American Loan to China at war. Mr. Chen speaks under the auspices of the Chinese-American Institute of Cultural Relations. My American friends: I an glad of this opportunity which the Sino- American Cultural Association has given me to speak to my friends in America. First of all as an alymus of the University of Pennsylvania I wish to bring greetings to By Alsa Mater from all graduates of the University now in this country. I also wish to take advantage of this opportunity to say "helle" to all the friends which I have made during By many visits to America. Ever since my student days over thirty years ago I have enjoyed the most satisfactory personal as well as business relations with By many friends in America first in my school days at the Wharton School of the University of Pennsylvania and subsequently through long experience in bank ing and business. I have learned to admire American business efficiency and ways of life and often dreamed of the immense possibilities of Sine-American cooperation in the advancement of common ideals. In recent years my experience gained through the two financial missions which I took to the United States on behalf of my government and work of the currency Stabilisation Board convinced no of the existance of a. long standing common interest which underlies the traditional friendship Regraded Unclassified 128 -2- between the two countries. Now,since the eventful day on December 7th our traditional friendship has ripened into an alliance. Not only & common interest but a common destimy now binds us together, a common ideal inspires us and all our common actions lead to the attainment of the common objective of defeating the Axis. As I stand here speaking to you, my friends, I can vividly visualise to myself the millions and millions of sen and women in the United States mobilised for war production. I can see them busily working day and night in factories, in shipyards and in the numberless offices that have lately sprung up in response to war needs and requirements. I can see how millions of the flowering manhood of America are pouring into training camps to emerge again as fliers and expeditionary forces destined sooner or later for some distant parts of the world to fight the cause of liberty. I can see your determined looks and your burning zeal. I want to salute you all. Friends, I want you to realise, as no doubt you do, that free peoples of the entire world are looking up to you, to every one of you, for the great part you are playing and are bound to play in delivering the crushing blow to the aggressors and for even the greater task of remaking this world to our liking. I am speaking to you from Chungking, the spot from which the Chinese people have for nearly five years directed their struggle against the Japanese aggressor. I need not tell you the devastations we have borne, the sacrifices we have made in defense of our freedom. Right at this moment fiercest battles are being waged in Burma where our main link with the outside world and chief route of communications with America and other democracies is at stake. I know you understand fully the gravity of the situation and there is no need for me to remind you of it. If I take this opportunity to Regraded Unclassified 129 mention it, it is because I want you to know that however overwhelming are the odds we are determined to fight on until TO win. I wish to give special emphasis to the fact and to assure you that though temporarily out numbered and short of equipment we are determined to match our flesh and blood against the bombs and shells of the ensury so that every minute we thus help to gain may be used by you in the manufacturing of aras, of tanks, of bombers and of battleships. It is truly heartening to read reports from the United States that you are making satisfactory progress in your war production. We people here have an implicit faith in American efficiency. To thoroughly realise that the reason you have not been able to produce more than you do now is because the energy had the clear advantage of a head start and the fact that they had this head start is because aggressors are always better prepared than their peaceful neighbors, just as bandits are sure to be armed while the houses which they go to rob are usually unarmed. We know that although you are not well prepared, because you never aim to attack others, once you are attacked, once the bandit is in your yard and once your mind is made up to beat back the attack and capture the bandit we know that you mean business. We know that once your mind is made up you mean business. Without fear of exaggeration we can say this war is the biggest business that human beings have ever engaged in. I think that we all share the feeling that unless we make this business a success we will not be able to pursue any other business in peace and happiness. This war 1s a war of life and death, a was the which all that makes life decent and worthwhile living 10 at stake. The rest of free mankind and contingents of your om soldiers are fighting tenaciously on all fronts, are all confident that you will soon bring forth the production which will turn the tide of this titanic struggle. Regraded Unclassified 130 No have faith in America's mastery of war economy and technique. The challenge to turn out as many goods as fast as possible was answered by the American industrial machine with its customary energy, initiative and ingenuity. The prerequisite of victory is getting the right goods to right places. The triumph of American war production 1s already assured. Fe in China no less confidently await the triumph of American war distri- bution. Regraded Unclassified 131 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE May 18, 1942 TO Secretary Morgenthau Mr. Kamarck FROM Subject: Shipment of Planes to British Forces ny 1. In the week ending May 12, 1942, a total of 118 planes of all types (112 combat planes) were shipped to British forces. 2. The Royal Air Force squadrons in the United Kingdom have now received over 1,000 combat planes in 1942 from the United States. 3. The proportion of American plane production going to the British forces might be of interest. In the first three months of 1942, the British received one-quarter of our total combat plane production. They took a greater proportion of our pursuit planes (31 per- cent of total production) than of any other type. Heavy bombers were least favored; only four percent of our heavy bombers went to the British. The detailed table follows: Percent of total American production Jan. 1, 1942- March 31, 1942, shipped to Type British forces Pursuit 31 percent Light and medium bombers 23 If Naval patrol bombers 19 " Trainers 6 If Heavy bombers 4 " Total combat types 25 " (excluding trainers) Regraded Unclassified - 2 - 132 Table A - Shipments by Area Week Total Shipped Total Shipped Ending in 1942 since May 12,1942 to date Jan. 1, 1941 To the United Kingdom Light and medium bombers 22 248 1,419 Heavy bombers 3 50 154 Naval patrol bombers 0 8 110 Pursuit 44 686 997 Army Cooperation 12 71 102 0 Trainers 0 24 Total to the United Kingdom 81 1,073 2,806 To the Middle East Light and medium bombers 0 192 522 Heavy bombers 0 0 5 Pursuit 11 205 1,053 Army Cooperation 0 12 12 Trainers 0 8 150 Total to the Middle East 11 417 1,742 To the Canadian Forces Light and medium bombers 0 35 203 Heavy bombers 0 1 1 Naval patrol bombers 0 23 31 Pursuit 0 30 72 Trainers 6 323 1,564 Total to the Canadian Forces 6 412 1,871 To the British Pacific Forces Light and medium bombers 0 121 216 Naval patrol bombers 0 0 27 Pursuit 20 175 343 Trainers 0 0 105 Total to Pacific Forces 20 296 691 To the British Indian Forces Pursuit 0 40 40 Total to Indian Forces 0 40 40 Totals Light and medium bombers 22 606 2,360 Heavy bombers 3 51 160 Naval patrol bombers o 31 168 Pursuit 75 1,136 2,505 Army Cooperation 12 83 114 Trainers 6 331 1,843 Grand Total 118 2,238 7,150 Regraded Unclassified - 3 - 133 Table B - Shipments by Types Week Total shipped Total shipped Ending in 1942 since May 12, 1942 to date Jan. 1, 1941 Bell Airacobra 0 314 468 Boeing B-17 1 12 32 Boston III 0 10 34 Brewster Buffalo 0 o 168 Cessna Crane I-A (AT-17) 5 45 45 T-50 0 86 700 Consolidated Catalina 0 31 168 Liberator 2 39 128 Curtiss Kittyhawk 31 414 796 Tomahawk 0 0 544 Douglas Boston I,II, and III 0 o 492 Fairchild 24 R-9 12 73 95 Glenn Martin Baltimore 0 195 263 Maryland 0 o 150 Grumman Martlet II 0 46 87 Lockheed Hudson 8 277 1,247 Lightning 0 3 3 Ventura I 0 12 12 Ventura Bomber 14 106 106 North American B-25B 0 6 6 Harvard II 1 52 949 Mustang 44 359 439 Pitcairn Autogiro 0 0 5 Stearman PT-27 0 148 149 Vought-Sikorsky Chesapeake o 0 50 Vultee Stinson 0-49 o 10 14 Grand Total - All Types 118 2,238 7,150 Regraded Unclassified 134 Table C - Plane Shipments to the British by Weeks Week Light and Heavy Naval Army Ended medium bombers patrol Pursuit Coopera- Trainers Totals bombers bombers tion Weekly aver- age of ship- ments in 1941 36 2 3 28 1 30 100 January 6,1942 24 0 5 30 4 9 72 January 13,1942 3 0 2 58 o 42 105 January 20,1942 8 0 o 14 o 60 82 January 27,1942 24 0 1 100 5 13 143 February 3,1942 9 0 3 10 4 4 30 February 10,1942 33 0 3 59 0 4 99 February 17,1942 12 0 2 41 7 0 62 February 24,1942 33 0 2 86 7 1 129 March 3,1942 26 0 1 80 6 0 113 March 10,1942 29 2 0 78 1 0 110 March 17,1942 34 1 0 94 8 0 137 March 24,1942 94 9 12 79 o 84 278 March 31,1942 49 1 0 58 4 10 122 April 7,1942 69 2 0 8 4 5 88 April 14,1942 55 7 0 86 6 29 183 April 21,1942 55 11 0 43 15 34 158 April 28,1942 35 10 0 39 o 26 110 May 5,1942 14 2 0 98 0 4 118 5" May 12,1942 22 3 o 75 12 6 118 Total shipments since Jan.1,1941 to date # 2,360 160 168 2,505 114 1,843 7,150 These totals include shipments of planes made in 1942 prior to March 17, which are not in the weekly totals. Regraded Und assified 135 May 18, 1942 Memorandum on the Telephone Conversation between Mr. White and Mr. Acheson Mr. White called Mr. Acheson and stated that the rate on Swiss francs for non-commercial purposes has been rising; that the Swiss are determined to prevent the Swiss banks from providing francs for non-commercial purposes at the official rate; and that we are now unable to secure a supply of Swiss francs from the Bank of Portugal. Under the circumstances, Mr. White felt that there were only two ways of securing the Swiss francs we need and of keeping the Swiss franc rate from rising: 1. By special bargaining arrangements along the line of the recent license for the transfer of $3.2 million from Switzerland to Spain. 2. An agreement with the Swiss to provide Swiss francs for non-commercial purposes on the same terms as for commercial purposes. Mr. White indicated that an agreement would be superior for our purposes and that to secure such an agreement we must be ready to substitute special license requirements for the present general license requirements in connection with Switzerland. Mr. Acheson replied that on Friday Mr. Noel Hall, the British Minister, had spoken to him on the same subject and that he had suggested that we work out a complete agreement with the Swiss on financial and commercial matters. Mr. Acheson asked Mr. White to join him in a discussion of this question with Mr. Hall and Mr. Stopford. Mr. White stated that the problem was not an urgent one in the sense of requiring a decision within a few days. However, our policy on the question should be considered broadly. He added that it would be highly desirable to have our policy and the British policy on such financial arrangements in harmony. In that way we can present a. common front. Regraded Unclassified 136 - 2 - Division of Monetary Research Mr. Acheson suggested that the meeting be held at 4:00 o'clock Wednesday, May 20th, in his office. It was tentatively agreed that the time would be held open for this meeting unless Mr. Acheson's office notified Mr. White to the contrary. Mr. Acheson then entered into a discussion of the problem of lend-lease in reverse. He will send to Mr. White a memorandum of the meetings at the Treasury which Mr. White will examine. The Secretary can then call the group together and, after agreement, put the question up to the President. One point that must be considered is whether remaining payments falling due after June lst on contracts entered into by the British before lend-lease can be taken over. There is no question of reim- bursing the British for past payments. Presumably, the goods covered by the payments falling due after June 1st will be made available to the Joint Munitions Board. On lend-lease in reverse, it has been agreed that these arrange- ments should cover all supplies originating locally or employed locally. Separate agreements on the question can be entered into with the United Kingdom and the Crown colonies, and with Australia. New Zealand has indicated that it wishes the same sort of agreement. India will present a special problem. For the time being, South Africa is out of the picture. Regraded Unclassified 137 MEMORANDUM TO THE FILES May 18, 1942. Subject: Central Bank Conference in accordance with Rio Resolution VI. In accordance with Mr. White's instructions, Mr. Southard phoned Mr. Collado on May 16 to ask him for further information concerning the Central Bank Conference proposed under Resolution VI at the Rio Conference. Mr. Southard said it was our understanding (a) that the conference relates entirely to freezing control problems and (b) the Treasury Department will be the responsible agency in United States. Mr. Collado assured Mr. Southard that the Treasury Department's understanding is correct with reference to both points. He said Mr. White would recall that considerable work had been put on Resolution V - the freezing control resolution - at Rio, but that Resolution VI got less attention. In Mr. Collado's opinion the substance of Reso- lution VI should have been included in an extra article in Resolution V. Collado said that he had not wanted a conference called on the subject but that the Peruvian who was head of the committee had insisted on a separate resolution and wanted it primarily a Central Bank reso- lution because he himself was a Central Bank official and because in Peru the Central Bank administers freezing control. Mr. Collado com- plained that this was another one of the resolutions muffed by Wayne Taylor. Mr. Collado assured Mr. Southard that the State Department has not written the Federal Reserve Board in connection with Resolution VI and that it concerns the Federal Reserve people only insofar as the Treas- ury Department wants it to. Requests have been sent by the Economic and Financial Advisory Committee to the other countries for their suggestions as to the agenda of the conference. Replies are coming in and will be circulated in mimeographed form shortly. Mr. Collado thinks that the conference will probably follow the pattern of the Maritime conference called under the auspices of the Advisory Committee last year. At that conference Summer Welles, as Chairman of the Committee, was temporary chairman of the conference but a maritime man was named permanent chairman. There were two United States members who equally shared United States responsibility. In the case of the proposed conference on Resolution VI, Mr. Collado suggests that possibly a State and a Treasury representative would be selected. Speaking only for himself, he would think that they would either share responsibility or that the Treasury man might be named the senior, but he made it clear that he had not heard either Mr. Welles or Mr. Berle express an opinion on this matter. ras Regraded Unclassified 138 MEMORANDUM TO THE FILES May 18, 1942. Subject: Bolivian Stabilization Agreement. Having received a satisfactory reply from the Banco Central of Bolivia to our questionnaire, Mr. White arranged a meeting with the Bolivian Ambassador on May 14. Prior to this meeting Mr. Southard telephoned Mr. Livesey to notify him of it and to find out whether the State Department had any new views on the matter of the proposed stabilization agreement. Mr. Livesey said that the Standard Oil pay- ment of $1.7 million was made to Bolivia on April 26 and that there was, therefore, less pressure on us to complete the negotiations for the agreement. The current problem in the State Department with reference to Bolivia relates to the tin contract negotiated by Defense Materials. The higher price for tin was granted to Bolivia by United States in order to encourage production of additional tin. The State Department is currently engaged in trying to get some sort of statement from the Bolivian Government that it will take no step through taxes or other- wise which would take away from the tin producers the price increase and consequently nullify its effect. The present proposal, Mr. Livesey explained, is to get the Bolivian Ambassador to write a letter along those lines. It is hoped by the State Department that the consultation provision in the stabilization agreement will provide added protection against any appreciation of the boliviano or any other change in the Bolivian foreign exchange policy which would have the effect of reducing the boliviano income of tin producers. Mr. Southard assured Mr. Livesey that there would be ample opportunity at the meeting for this State Department problem to be presented. At the meeting on May 14 (covered in 8 memorandum from Mr. deBeers to Mr. White) the Bolivian Ambassador was told that a draft agreement would be handed to him sometime during the following week. After the Bolivian Ambassador left the meeting, the above problem was discussed (see Mr. deBeers' memorandum) with the result that Mr. Livesey agreed to see what could be done to add to the note being drafted for the Bolivian Ambassador's signature some reference to modifications in exchange control in addition to the present reference to taxes. On May 16, Mr. Livesey informed Mr. Southard by telephone that Defense Materials would insert a reference to exchange control in the note which it is hoped the Bolivian Ambassador will agree to sign. He suggested that the Treasury wait until State gets a reaction from Bolivian Ambassador to this draft note before we hand our draft stabilization agreement to the Ambassador. Mr. Southard assured Mr. Livesey that we would wait on this matter until we heard from the State Department. Mr. Southard then informed Mr. Bernard Bernstein that there was less need for haste in the Bolivian matter. Jus Regraded Unclassified Treasury Department 139 Division of Monetary Research Date May 18 19 42 To: Miss Chauncey From: Mr. White Please call to the attention of the Secretary. 140 - OFFICIAL COMMUNICATIONS TO THE SECRETARY OF STATE WASHINGTON, a c. DEPARTMENT OF STATE WASHINGTON May 18, 1942 In reply refer to FD The Secretary of State presents his compliments to the Honorable the Secretary of the Treasury and encloses copies of telegram 2710, dated May 16, 1942, from the American Embassy, London, England, transmitting a message for the Secretary of the Treasury from Mr. Harriman. Enclosure: From Embassy, London, no. 2710, May 16, 1942. BEEHAN FORDEFENSE BUY UNITED WEBEYBCH STATES MAVINGS DE BONDS 141 LSH PLAIN London Dated May 16, 1942 Rec'd 3:25 p.m. Secretary of State, Washington, 2710 sixteenth. PERSONAL FOR SECRETARY MORGENTHAU FROM HARRIMAN William H. Schubart raturning efter six WEEKS assisting Appleby on agriculture end food studies. HE has had also opportunity to talk to many people and believe you will find his observetions on c. number of other matters of interest to you. HE is planning to call on you on his return. WINANT DD Regraded Unclassified COPY 142 TRIPLICATE Rio de Janeiro, Brazil, May 18, 1942 No. 7344 Subject: Telegram Received by the Financial Attache of the French Embassy of Rio de Janeiro from the Finance Minister of the Vichy Government STRICTLY CONFIDENTIAL The Honorable The Secretary of State, Washington, D. C. Sir: I have the honor to report that the Financial Attache of the French Embassy has received the following telegram from the Finance Minister of the Vichy Government: "With regard to the sum of approximately four million france and 6,000 Pounds Sterling which Brazilian Government has deposited with the Bank of Brasil (instead of French banks as agreed) in respect of interest on Federal loans, please do the following: a) ask what is the milreis value of these deposits; b) ask that interest due on August 1940 be also paid; c) ask that transfer of these sums be assured by Brazilian Government (as per decree of March 8, 1940) eventually through free currencies (escudos or Swiss francs): a) ask that these sums may be ascribed to EBA, in case transfer is refused. "With regard to Bahia Docks & Port Bonds, 5.1/2%, President of Bond- holders Society wishes to know milreis value of half-year payments not yet transferred. Please obtain this information from Mr. Pilon, 15 Rua Senador Paulo Egydio, Sao Paulo (Bondholders' agent). Furthermore, please request permission of Brazilian authorities to apply these milreis to the benefit of EBA. "Dourado Railway Bonds: Liquidator has no information as to milreis value of payments due after last payment. Kindly ask the company itself, 3 Rua Boa Vista, Sao Paulo." EBA is the Empreza Brasileira de Aguas (see my Despatch No. 7286 of May 11, 1942). The Financial Attache of the French Embassy has replied as follows: "Contemplated conversion of French loans with guaranteed exchange (4% - 1925 and 4.1/2%-1937) will affect some Brasilian holders. One of them, with Regraded Unclassified 143 - 2 - 2-1/2 million francs worth of 1937, suggests bonds be handed in to French Embassy here for annulation, since it is impossible to send safely to France. Value in francs of fresh bonds would be credited him in France. Please instruct what answer I am to give." Respectfully yours, For the Ambassador; John F. Simmons, Counselor of Embassy. File No. 7344 WEF:ms A true copy of the signed orig- inal. (1) ms Copy:bj:6-12-42 Treasury Department 144 Division of Monetary Research Date May. 20, 19 42 To: Miss Chauncey From: Mr. Southard This is a copy of the new Cuban Law on the basis of which the Secretary will probably sign a gold purchase contract with the Cuban Government. I do not believe it need be brought especially to his attention but I think it should go in his files. C o 145 P Y DEPARTMENT OF STATE WASHINGTON May 18, 1942 In reply refer to FD 837.5151/145 The Secretary of State presents his compliments to the Honorable the Secretary of the Treasury and encloses a copy of despatch no. 3954, dated May 5, 1942, from the American Embassy, Habana, Cuba, concerning the enactment of legislation authorizing the Cuban Government to issue additional silver certificates and to adopt other fiscal measures. Enclosure: From Embassy, Habana, no. 3954, May 5, 1942. Copy:bj:5-19-42 Regraded Unclassified 146 No. 3954 Habana, May 5, 1942 AIR MAIL (Enactment of legislation authorizing Subject: (the Cuban Government to issue addi- (tional silver certificates and to (adopt other fiscal measures The Honorable The Secretary of State, Washington, D. C. Sir: Supplementing the Embassy's air mail despatch No. 3439 of February 10, 1942, file No. 851.5, enclosing a copy and translation of a Presidential message to Congress recommending the enactment of legislation which would authorise the Government to issue additional amounts of silver certificates to be backed by gold bullion, dollars or dollar exchange, and to adopt other fiscal measures, I have the honor to report that the legislative measure recommended by the President, which had been approved by the Senate on February 28, was passed by the House on April 30 and signed by the President on May 2, 1942. There is enclosed a copy and translation of this law (No. 5) as promulgated in OFFICIAL GAZETTE No. 266 of May 4, 1942, the text of which does not substantially differ from that proposed by President Batista in his aforementioned message. According to the Embassy's information, arrangements have already been made with the Bureau of Printing and Engraving for the printing of silver certificates of various denominations in two lots of 25,000,000 and 23,000,000 pesos (face value), respectively, which the Cuban Government proposes to issue under the authority granted it by the present law. An additional 58,000,000 pesos in silver certificates are to be printed later to be used mainly for the purpose of replacing mutilated and worn-out certificates already in circulation. Negotiations between the Cuban Government for the purchase of the gold coverage for the new silver certificate issues have, it is understood, already been initiated. It might be added that the above law was opposed in the House by the Autentico and ABC members of the Opposition who allege that the bill had been reported out of the Finance and Appropriations Committee without due regard to prescribed congressional procedure and who reportedly pro- pose to institute unconstitutionality proceedings against the law on the ground that it was not approved by two-thirds of the members of Congress. They apparently have in mind Article 253 of the Cuban Constitution under which the Government may not negotiate loans unless approved by two- thirds each of the members of the Cuban Senate and the House. There 147 -2- appears to be some doubt, however, that the foregoing provision of the Cuban Constitution applies in this particular instance. At any rate, usually well-informed Treasury sources do not believe that such an appeal, if actually filed, would be upheld by the Supreme Court. Respectfully yours, Ellis 0. Briggs Charge d'Affaires ad interim Enclosures: 1. Clipping from the OFFICIAL GAZETTE No. 266, May 4, 1942 2. Translation thereof File No. 581.5 AFN/hmc Copy:bj:5-19-42 Enclosure No. 2 to despatch No. 3954 148 of May 5, 1942, from the Embassy at Habana Translation (From OFFICIAL GAZETTE OF the Republic of Cuba, No. 266, May 4, 1942) LAW NO. 5 Article I. Article 180 of the Code of Commerce will be amended to read as follows: "Banks will maintain in their vaults in legal tender currency, as reserves, at least one-fourth of the amount of the deposits of all kinds which they hold. "The Executive at any moment may reduce the amount of the reserves in national currency set forth in the preceding paragraph but it in no case may be less than 12-1/2 per cent of the amount of the deposits. The President of the Republic will also periodically and in accordance with the market re- quirements, fix the proportion of the several kinds of legal tender currencies which must compose that reserve." Article II. The Executive is authorized to issue silver certifi- cates to be guaranteed by the gold, dollars or dollar exchange in the possession of or purchased by the Treasury General of the Republic. The guarantee in dollars or in dollar exchange shall include the obligation of the Government of substituting the guarantee as soon as possible, in order that it may be definitely established in the manner set forth in the following article. Article III. The guarantee of the certificates issued in accordance with this law is fixed as follows: For each silver peso placed in cir- culation in the form of a certificate there will be deposited in the Treasury General of the Republic in accordance with the formalities established in Presidential Decree No. 161 of January 26, 1935, an amount of gold equivalent to at least 98/100 of the gold content of the peso, of the weight and fineness established by Article I of Decree-Law No. 410 of August 10, 1934, $0.98 in United States currency or in dollar exchange. The gold guarantee of this issue may also, as long as the circumstances warrant, be partially or wholly deposited with the Treasury of the United States or with a Federal Reserve Bank of said Republic and in that event, there will be delivered to the commission established by the above mentioned Decree No. 161 of January 26, 1935, a certificate issued by the afore- mentioned entities certifying to the existence of the deposit and that the same may not be withdrawn without the presentation of that certificate. Regraded Unclassified 149 -2- Article IV. Upon presentation and delivery of any certificate to be issued under this law, the Treasury General of the Republic will deliver to the bearer in Cuban metal money an amount equal to the nominal value of the certificate presented for conversion. Article v. The President of the Republic is authorized to negotiate with the appropriate entity for the engraving and printing of the new silver certificates of the same denominations and designs previously authorized in the amount which is believed necessary for the strictest compliance with the present law. He may also negotiate for the printing of silver certificates in 500 peso and 1,000 peso denominations with such designs as he believes appropriate. Article VI. The Executive is also authorized to purchase at the rate of 35 pesos /dollars? per troy ounce, hold [conservar] or sell gold, as well as dollars or dollar exchange, and to negotiate loans with national or foreign banking entities for the purpose of implementing such operations, and may give in guarantee for such loans the gold or dollars held by the Republic. The proceeds from the loans authorized by this law will be destined exclusively to the purchase of gold, dollars or dollar exchange and said loans must be paid within & period not exceeding 120 days. The Executive is also authorized to pay for the gold purchases a commission not exceeding 1/2 of 1 per cent. Article VII. While the engraving and printing of the certificates referred to in Article II of this law is taking place, the Executive is authorised to place in circulation the engraved and printed but únissued silver certificates which may be in the Treasury General of the Republic under the custody of the commission created by Decree-Law No. 406 of August 10, 1934. As soon as the certificates referred to in Article II of this law have been engraved and printed, they will be substituted, in custody for those which may have been put in circulation, with all the formalities prescribed by Decree-Law No. 406 of August 10, 1934. Article VIII. The profits which might be derived from the issue authorized by the present law will be applied first to defraying the ex- penses incurred by the operations authorized by Article VI thereof and any remaining balance to meeting the cost of the silver certificates to be printed in accordance with the authorization granted by this law and the Law of June 23, 1938. Article IN. The President is authorized to issue Treasury certifi- cates or Treasury notes, the amount in circulation of which may not ex- ceed 6,000,000 pesos, for the purpose of borrowing from any banking insti- tutions or entities or by subscription the amounts which are considered necessary to meet obligations of the current budget, or to substitute revenues to be received later and which are indispensable to meet obligations of the regular or extraordinary budget, the interest charges and expenses on which [notes] say not exceed 4-1/4 per cent per annum. The notes referred to in the foregoing paragraph may also be dis- counted by the Treasurer against any account, loan, liquidation or fund which is not needed at the moment, excluding such as are destined for payment of the Foreign Debt. Regraded Unclassified 150 -3- The maturity date of these notes may not exceed one year, and for thear payment pertinent receipts will be pledged as the Executive may decide. Article X. There is established a surcharge of 25 per cent on the port improvements and tonnage taxes referred to in Articles 175 and 176 of the Customs Ordinances as regulated by the Law of February 9, 1938, and Decree-Law No. 491 of January 7, 1936. The proceeds from the surcharges mentioned above will be devoted to the defense and protection of the navigation, the coasts, bays, keys and ports, and the President is authorized to pledge the receipts ob- tained from the surcharges in contracting the projects or in issuing notes or negotiating loans destined to the purposes mentioned above. Revenues collected thus obtained shall be part of public (budgetary) revenues. Article XI. All laws, decree-laws, orders, decrees and other legislative dispositions opposed wholly or in part to the fulfillment of this law are derogated, and the law will become effective upon its promulgation in the OFFICIAL GAZETTE of the Republic. I therefore order that the present law by fully complied with. Signed at the Presidential Palace in Habana, on May 2, 1942. F. RATISTA President Carlos Saladrigas Prime Minister Oscar Garcia Montes Minister of the Treasury Translated AFN:ed Copy/hmc Copy:bj:5-19-42 C 0 151 P Y DEPARTMENT OF STATE Washington In reply refer to FD 865.51/1116 May 18, 1942 fl The Secretary of State presents his compliments to the Honorable the Secretary of the Treasury and encloses a copy of despatch no. 2249, dated March 20, 1942, from the American Legation, Bern, Switzerland, concerning Italian war financing. Enclosure: From Legation, Bern, no. 2249, March 20, 1942. eh:copy 5-19-42 Regraded Unclassified COPY Bern, March 20, 1942 152 No. 2249 Subject: Italian war financing. Via air mail pouch The Honorable The Secretary of State, Washington. Sir: I have the honor to provide the following summary of a comprehensive report from Milan on Italian var financing, published in a recent issue of the German newspaper Die Deutsche Volkswirtschaft: It is recalled that during the six year period preceding Italy's entry into the var the country had spent for extraordinary purposes a total amount of Lire 82 billion. Extraordinary expenditure for the period let July 1940 to 8th October 1941 amounted to Lire 76 billion, corresponding to an average monthly war cost of about Lire 5 billion. According to official statements made last year, war costs correspond to about 77 percent of national income and, according to the budget estimates for 1941/42, about 69 percent of expenditure must be covered by extraordinary means, a larger proportion than in other belligerent countries. The outbreak of war found Italy's financial system not unprepared, BO that the transition to a war footing took place without friction. Extraordinary expenditure of Lire 82.435 million in the six years 1935/40 plus Lire 45 billion extraordinary expenditure for the first eight months of the financial year 1940/41, was covered from the following sources: Lire 2 billion 9-year Treasury bonds 1943, 6.836 million 5 percent rentes, 6,405 million 5 percent redeemable loan, 21,990 million 5 percent Treasury bonds 1949, 11,657 million partial proceeds up to February 1941 of the 5 percent Treasury bonds 1950, 2,787 million proceeds of the special issue of Treasury certificates 1944, 3,007 million issue of bank-notes, 1,376 million growth in value of the reserves of the Bank of Italy, 27,735 million ordinary 1-year Treasury bills and 12.333 million current account credits from various institutions and banks. The remainder of about 30 billion required to make up the above total vas raised partly by means of advances from the Bank of Italy. In November 1941 the Minister of Finance stated that accrued war expenditure for the period July 1940 to October 1941 had been covered chiefly by extra- ordinary means, namely the net proceeds of two issues of 9-year Treasury bonds 1950 (more than Lire 34 billion), ordinary 1 to 12-month Treasury bills (about 21 billion), additional proceeds from the 5 percent real estate loan (more than 200 million), liquid funds deposited with the Treasury by various corporations, insurance companies etc. (more than 10.3 billion) and special Treasury certificates against advances from the Bank of Italy (7.4 billion). This means that more than five-sixths of the total outlay was met out of saving funds. Taxation does not play the same part in var financing in Italy as in other countries; for in Italy the tax burden at the outbreak of var had reached a level which did not allow an appreciable rise. Though the tax charge in Italy represents only about 24.8 percent of the national income, it must be borne in mind that the bulk of tax revenue is raised by medium and small income. Taxation in Italy vas intensified as far back as 1934/35, BO that at the outbreak of the war the Regraded Unclassified 153 -2- margin left for heavier taxation was smaller than in other countries. This is why revenue from taxation increased by only 7 percent in the first year of war Regraded Uncl financing, though, partly as a result of the lira devaluation, the present tax yield is 65,5 percent above that for 1934/35. These figures explain the moderation shown by the Government with regard to the introduction of new additional charges on the community. A completely different attitude is noticeable with regard to extraordinary taxes, vis. excess profits tax, dividend tax etc. A preponderant role in Italian war financing is played by loans. Between June 1930 and June 1935 the Italian State debt rose from Lire 90,4 billion to Lire 107,4 billion, and after the period of sanctions, autarkic tendencies and military enterprises, the debt must have risen to an appreciably higher amount. No official figures are available, but the extent of the increase can be gauged from the following data: total liabilities (consolidated, permanent and redeemable, etc.) of the State accounts rose from about 126 billion in 1934/35 to about 210.5 billion in 1939/40. Nevertheless, Italy's public debt may still be assumed to have kept within the limits corresponding to the production potential of the nation. Italy's national income is steadily growing and the public debt burden need not necessarily weigh more heavily as it rises; nor need it lead to an increase in the tax burden, as is shown by the relation which expenditure for the interest service on the State debt bears to revenue: though interest on the public debt rose from 4,653 million in 1927 to 6,876 million in 1939 and 8,033 million in 1940, in percentage rate of total revenue the change was only from 24 to 23 and 25-26 percont. The do- clining share of the interest service in total expenditure is more clearly re- flected in the following table: Interest in $ of Interest Total expenditure total expenditure (In million Lire) 1934/35 4,469 20,850 21,43 1937/38 6,190 38,640 16,02 1939/40 6,876 56,140 12,24 Since the outbreak of war three Government loans have been issued: in February 1940 Lire 16 billion of Treasury bonds were taken up (10.6 billion in cash and about 5,4 billion by conversion); the loan of February 1941 brought in Lire 18,6 billion (about 15,3 billion in cash and over 3 billion by conversion), while the third loan, issued in September 1941, brought in, in cash alone, about Lire 20,2 billion. The three loans were all of the same type: 9-year premium Treasury bonds at 5 percent, exempt from taxation. The two 1940 loans were issued at 97,50 and thus have a yield of 5.35 percent. From & level of Lire 67,3 billion in 1935, the total of savings capital at post offices, banks etc. rose to 93,3 billion in 1939 and to 115 billion in June 1941. Deposits at savings banks totalled Lire 19,45 billion at the end of 1940 against 17,5 billion at the end of 1939. This latter rise is the more remarkable since extensive subscriptions to war loans were being made during the same period. As shareholder in the big banks and admi- nistrator of the Cassa Depositi e Prestiti, the State has control over savings capital to the extent of nearly Lire 100 billion out of 116 billion - namely, 40 billion at post offices, 26 billion in savings deposits at banks (21 billion being held at big banks of national interest), 11,5 billion at public credit institutions and about 20 billion at savings banks and institutions granting loans against -3- 154 personal chattels. The Cassa Depositi e Prestiti, whose chief function is to centralize post office savings, plays a leading part in war financing: during the period from the middle of 1934 to the middle of 1941 it financed extra- ordinary expenditure to an amount of more than Lire 26 billion. Since savings represented by the resources of insurance companies, in so far as they are liquid, are of importance for war financing, the report mentions the upward trend in the receipts of such companies: life assurance premiums totalled Lire 679 million in 1936 and 1.372 million in 1939; social insurance contributions amounted to 992 million in 1938 and 2.675 million in 1940, while accident in- surance contributions rose from 350 million in 1935 to 574 million in 1939. In spite of its recent expansion, savings capital formed in the normal way does not suffice to cover the cost of the war. Up to the present, however, the Government has not resorted to forced saving. Instead it has sought to encourage saving by directing and restricting consumption and a marked increase in savings has been noticeable since the introduction of these measures. At the same time the exhaustion of stocks, the decreased scope of business in many lines with a corresponding decrease in capital requirements and the postponement of renewals of plant have released substantial resources in industry which have sought invest- ment to & large extent in Government securities. To ensure that increased savings are directed into the necessary channels is the purpose of the measures taken in regard to share-holdings, real estate transactions and the restrictions of bank credits. Respectfully yours, Daniel J. Reagan, Commercial Attache Original and seven copies to the Department. DJR/AG/bdb A true copy of the signed original. (1) BDB Copy:eh:bj:5-19-42 Regraded Unclassified 155 My 18, 1942 E. waste 22. Districh I s I 1 2 and 1 I % 1 I 1 a I s that # had anthorized á I Financial so by w s $25,000,000 is purpose Subtes's gold heldings estimate use the $33,000,000 to bills totaling and 6 LAMO, r the I I $ r for É his the I additional is gold for the Dectrom a - to the the Risk of in order to increase the busine mid boketings in this eventry. this 8024 will to parchased with the proceeds of United States Treasury bills w follows: . Reg I that No. MAY that the 7ml would - svailable to nates $6,000,000 in gold a the 20. EDITIONS (2) 5/18/42 Regraded Unclassified C 11480 0 156 P Y SS PLAIN Ankara Dated May 18, 1942 Rec'd 8:43 p.m. Secretary of State, Washington. 441, eighteenth. The Turkish Government has enacted a decree which went into effect on May sixteenth establishing a license system for all exports from Turkey. According to this decree all Turkish products and manufactured articles and all articles of foreign origin which have been in- ported into Turkey whether with or without payment of duty as well as merchandise in customs warehouses may be exported from Trukey only after the issuance of an export permit by the Ministry of Commerce. STEINHARDT. CSB Copy:bj:5-25-42 157 COPY NO. 13 BRITISH MOST SECRET (U.S. SECRET) OPTED No. 163 Information received up to 7 A.M., 18th May, 1942. 1. NAVAL Two of H.M. trawlers, which were attacked by aircraft without damage off the Portuguese Coast, shot down one of the attacking aircraft. The transport ship which struck a mine off CAPE AGULHAS has sunk. 2. MILITARY BURMA. Our withdrawnl continues without contact with the enemy, the main body of the Burma Army is now in the TAMU area. RUSSIA. Large numbers of motor boats and small craft have been concentrated in ports on Northern Coast of the SEA OF AZOV, probably with the in- tention of following up across the KERCH STRAIT if the Russians are forced to evacuate the Peninsula. 3. AIR OPERATIONS WESTERN FRONT. 17th. 12 Bostons with 16 Squadrons of Spitfires no escort, were sont to attack shipping at BOULOGNE, bursts were soon in the docks and on the Gare Maritime. À total of 12 Squadrons of Spitfires carried out 3 sweep over Northern France and 13 Spitfires patrolled over sen rescue Inunches. In all those operations, 9 enemy fightors were destroyed, 7 probably destroyed and 13 damaged. Nine Spitfires are missing, one pilot safe. In the ovening 52 Constal Command Aircraft, including 27 Torpedo-Carrying Beauforts, were sent to attack and shudow the PRINZ EUGEN off the Southern point of NORWAY. Proliminary reports indicate two hits with torpodoes, five onemy fighters were destroyed. Seven Benu forts, one Hudson and one Benufighter are missing. 17th/18th. 88 aircraft wore sent out, including 18 R.C.A.F. and one New Zoaland - sea mining sixty, BOULOGNE 27. Eight are missing, including one R.C.A.F. About 140 mines wero laid successfully. MALTA. Between three P.M. 16th and one P.M. 17th, a total of nbove thirteen bombors and eighty fighture made sporadic attacks on the Island, causing only slight damage. Our fighters destroyed eight enemy aircraft, probably dostroyo two and damaged seven. One Spitfire was lost. Regraded Unclassified 158 GOOD ORGANING UNITED STATES GOVERNMENT COORDINATOR OF INFORMATION WASHINGTON, D.C. May 18, 1942 The Honorable The Secretary of the Treasury Washington, D. C. Dear Henry: The attached is the British Home Intel- ligence report for the week ending May 11. Sincerely, Bill William J. Donovan 159 In eleven regions a definite rise in public spirits is noted. The remaining two are described as "steadily confident". The reasons are: Madagascar, Coral Sea, con- tinued RAF offensive and-- Churchill's speech which had a tonic effect. It met with general enthusiastic approval. Its effects: stimulated militancy, increased confidence, silenced fretting over inaction and reestablished Churchill as the natural leader of people at this time. The main discussion con- cerned the gas warning but there is little discernible nervousness concerning its possible use by the enemy againt Britain. Concerning Madagascar, many are puzzled by the American attitude and by the United States continued "willingness to negotiate with Vichy about Martinique". Some would have preferred outright material support by the United States, but there is also satisfaction that "we did it on our own," because of British prestige. Confidence was inspired by Coral Sea that the U.S. Navy is now "well in at last in full cooperation" whatever the proportion of losses may be. The fall of Corregidor was considered inevitable. There is praise and admiration for the heroic stand of the U.S. forces. Belief is growing in an early victory, even this year. An important hardening of the British attitude is revealed by the special report of the public reaction to the German proposals for a bombing truce. "General tone suggests public feeling of ruthlessness toward the German people is increasing." Regraded Unclassified 160 -2- Although only a few people appear to have heard of the proposals, among those in all classes who have heard of them, there is very strong sentiment against it. This applies equally in raided and non-raided areas. Comment: The British in accepting the truce would be throwing away a supreme advantage. Distrust of German promises. Despite possibility of reprisals, the public is strongly in favor of increased bombing of Germany. RAF destruction of workers' houses and "non-military targets whether by accident or by design" is regarded with indifference, resignation, not regret. Northeastern Region reports "Any weakness of the Air Ministry towards Germany might result in the Government's being turned out of office." 162 Dear Mr. Keppel: In the light of our discussion of the other day, I think it may be helpful if I restate the Treasury's two tax proposale affect- ing educational and charitable institutions. These proposals seek to accemplish tve things: The first, to tax certain income which some educational and charitable institutions my derive from bust- sess, and the second, to limit in a moderate var the present exemp- tion free estate taxation of all bequests for educational and charitable purposes. is you know, charitable sad educational corporations are not subject to the corporate income tax. Some of these institutions, however, have so far departed from the purpose of the statutery exemp- tion as to engage in trades and businesses completely unrelated to their charitable or educational functions. A college my operate a hotel, yet the hotel's earnings are exempt from tax: as erphans' have may operate a water works, a electric pover and gas company, and oil and pl wells, yet the earnings of these businesses are exempt; 6 sharitable organization my operate a bathing beach, yet the earnings of the beach are not subject to tax. This invelves a serious less of revenue to the Government, and is obviously unfair to privately evact business of the same cert. We feel that the time has case to provent this Less and this unfoirmes. We have suggested. therefore, that educational or charitable serporations should be taxed on the income from a trade or business which is not necessarily incidental to their exempt activities. Thus, there is no thought of taxing as institute for the welfare of the blind II the proceeds from the sale of articles unde w its OVR blind patients. There is ao thought of taxing the income from college is- firmaries, dermiteries, and cafeterias, which furnish an excellent example of the type of activity the Treasury has no decire to reach. Ve have also suggested that it night be desirable so allow a not exemption of $5,000 regardless of the nature of the business activity in question. Regraded Unclassified 163 - 2 - Our second proposal valid outlined in w/ statement of March 3rd, to the Ways and Hease Committee, in which I suggested that the estate tax deduction allowed on account of bequests to efusational and charitable institutions be limited to a persentage of the estate from which the bequest is made. My statement 414 not specify any exact percentage, but the Treasury has is sind a limitation of 60 persent of the entire not estate, including both life and remainder interests. Such a limitation has proved fair and reasonable in New York and in manywather States; moreever, 11 is consistent in principle with the 15 percent limitation on deductions applicable for income tax purposes. We also contemplate that this 50 percent limitation should not apply to relatively small estates. Ye do not believe that such & limitation will interfere with the flow of property to educational institutions except in extraordinary cases. After all, the present high rates of tax on estates have tended to stimulate educational and charitable bequests which otherwise night not have been nade. Such a limitation as the Treasury has proposed on the present 100 percent exemption would help to prevent the tax free transfer of large cetates to foundations operated by the surviving relatives, or foundations which for other reasons should not be en- titled to full exemption. It would, therefore, help to eliminate one form of tax avoidance which is particularly out of keeping with the unprecedented needs of the Government for revenue at this time. Furthermore, it 10 surely not unreasonable that the Government under whose protective laws the estates were accumulated, and whose primary obligation 10 to care for its citizens, should receive a pertion of estates along with private educational and charitable institutions. The suggested limitation would help to distribute the estates of our nest fortunate citizens zere fairly - the various agencies, pub- lie and private, which must help the least fortunate. ve have studied this problem long and carefully is order to be sure that our proposale would not endanger the welfare of the integ- rity of privately endoved schools or charities. Ve age convinced that the proposals are an insurance against abuses rather than a threat of any conseivable kisd. Ve certainly would be apposed to any such threat, since one of the purposes for which we are fighting this Regraded Unclassified 164 - $ - var 10 to prevent that State centrol of - educational and religious life which has already been applied is every Azie-deminated country, and which would eurely be applied here if our enemies should via. Sincerely yours, Randelph B. Paul Assistant to the Secretary Francis Keppel, Esq., State Department, Washington, D. C. REP:BTE 5/19/42 Regraded Unclassified 165 May 19, 1942 9:30 a.m. GROUP Present: Mr. Gaston Mr. Sullivan Mr. Bell Mr. Graves Mr. White Mr. Foley Mr. Paul Mr. Blough Mr. Thompson Mr. Haas Mr. Buffington Mr. Kuhn Mr. Schwarz Mr. Odegard Mrs. Klotz H.M.JR: Randolph Paul says he wants to get away. For the first time last night I read this letter of Paul's to Dr. Keppel, in which he suggested two things, and inasmuch as I don't happen to agree with him, I will give the other people a chance. One is, let's say that a church or institution owns a plant, is left a plant, a factory, and that income from that factory should be taxed, even though it might be owned by Vassar College or by the Cathedral. MR. GASTON: Corporate taxes? H.M.JR: Yes. On the second proposal, not more than half of anybody's fortune should be left to charity. I go along with him on that, provided - I think that you should exempt anywhere from the first twenty-five-- MR. PAUL: We haven't quite made up our mind, but we mentioned in there the exemptions of the lower estates. 166 - 2 - H.M.JR: Anyway up to the first fifty thousand, or something like that, up to a hundred, could be exempted, but anything over that I don't have any disagreement. But, after all, a person may leave to a church or to a college or any form of charity, cash, or is more apt to leave a business, and I don't see why that institution shouldn't - if the principle is right that a charitable institution or a church is to be tax-free, then I don't see what difference it makes whether it gets cash or whether it has an interest in the business. But I think in these times, where their sources of income, new sources, are going to be so very limited - I don't want to prejudice this audience, but you can take your own - I just think it is bearing down unnecessarily hard on a group that is going to feel it the worst of all anyway. But you can state your case. I mean, I want the benefit of somebody else's advice. MR. PAUL: Of course we are only proposing that the business income of these institutions and not their ordinary investment income be taxed, and we are trying to get at what I regard as pretty flagrant abuses of the exemptions. For instance, one orphan's home had a utility, water works, oil wells and so on, five or six different types of business. Now, if the business is separately taxed, that is, if the institution has the stock of, say, General Motors, the Government is getting a tax on that business and only the investment income is coming out of the company to the institution. We are not after that type of thing, nor are we after things that are perfectly incidental and connected with the business of the institution. For instance, we wouldn't want to tax a dormitory run by a college, or that sort of thing, or the proceeds of the sale of articles made by an institution for the blind. Where an institution goes out- right into the market and runs a business and there is no tax on the business, as there is on General Motors, before its income comes to the institution, we think there ought to be a tax. 167 - 3 - MR. WHITE: There might be one economic argument to support that. I don't know how much it is worth. If institutions or operating businesses are not taxed they can operate them much more inefficiently and still main- tain them, because they have a considerable advantage over their competitors. It also means, therefore, that you introduce an unfair element in competition. The chief social disadvantage would be the fact they could continue to operate inefficiently, which would be a social loss. MR. PAUL: It is an unfair competition because they have paid no taxes, and that unfairness of that competition is accentuated at the time when the rates of tax are very high. H.M.JR: Has anybody complained on that angle? I have had no complaints. MR. KUHN: The complaint in the papers was chiefly on the second point, limiting the tax-free estates that are left to charity, and I think they have all exaggerated the thing and distorted it, made it seem that the Treasury was taking control of the charities and the schools in question. MR. SULLIVAN: I don't agree with you. I an heartily in accord with the first point, Mr. Secretary, I think Randolph is entirely right in proposing that business income of charitable institutions should be subject to tax for the very reason that Harry stated, that they may be in competition with other like ventures that are subject to tax;and I think that is wrong. A college isn't set up to do anything except teach and to supply its students with the necessary service. If they go outside that field, run a dance, or bowling alleys, open to the public, they should pay a tax on what they earn on that part of their plan. The thing that is going to hurt the charitable in- stitutions is the second point, because I think you can take almost any college and you will find that the con- tributions from living benefactors is 8. very small pro- portion of the total contributions that come to it. They are largely supported by endowments that are left by will. 168 - 4 - I think there have been abuses of it, and I think it can be corrected without going all the way. But I think that point two will do a great deal more to hamstring charitable efforts by exempt institutions than point one. H.M.JR: What do - when you talk about point two, you mean the inheritance? You are not in favor that they should limit, that not more than half of a big estate should go to charity? MR. SULLIVAN: I think there is some point somewhere along the line, but I don't know and I don't think it has been determined where this point is to be. MR. PAUL: We have determined in our own minds-- MR. SULLIVAN: I think that may be one reason for the uneasiness of the charitable institutions. H.M.JR: I can defend that, say a million-dollar estate, not over half of it should go to charity. I can defend that because I believe in that. MR. BLOUGH: Tax-free to charity; they can give it all to charity, but only half of it is tax-free to charity. H.M.JR: Yes. MR. PAUL: We have in mind a half, and that is a limitation which has been sanctioned by many State statutes. We have in the statute now a very much more stringent limitation with respect to the income tax. H.M.JR: It is half tax-free. MR. BLOUGH: Half is tax-free, but they can give it all, if they want, to charity. H.M.JR: That's all right, but I think at this time, where certainly - certainly this year people are not going to be able to give to private charities the way they did last year, or anything like it, and a lot of people Regraded Unclassified 169 - 5 - are going to have to cut it out and then suddenly - I never heard of the thing until I read this last night. MR. PAUL: There are a lot of cases on it, Mr. Secre- tary, on the first point, of people running bathing beaches, utilities, oil wells, all kinds of businesses. H.M.JR: But look, why crack down on a charitable institution? Let's say two-thirds of them are being run well - when Congress won't do this much on tax exempts, future or past, or on oil-well depletion - I mean, it just doesn't seem necessary. I mean, these people are going to be up against a wall. A lot of them are going to go under the end of this year or next, going to. be wiped out. Why should we be the hand to hang the hat? MR. SULLIVAN: That is the very point I make on the second one. They have two sources of income; one is contributions from living benefactors, and I agree with you that they are going to be practically nil from now on. The other source of income, support from them, comes from bequests. MR. PAUL: There are very few of those bequests that are more than fifty percent of the estate. H.M.JR: John, on the one thing - as far as I am concerned, I am not debating. MR. SULLIVAN: That is all right then. H.M.JR: It is debatable, but in my mind I can defend my own position. I say "mine"; in the final analysis I have got to defend it when I am pressed on it. You can see the building-up in the hands of one or two groups tremendous properties, on the one hand, and on the other hand, the Federal Government getting absolutely no benefit from an estate which was built up under Federal protection. MR. SULLIVAN: I agree with you that this is wrong. 170 - 6 - H.M.JR: I mean, here a man is permitted to do business and protected and made - possibly he earns a million dollars, he dies, and the Federal Government gets no benefit. MR. WHITE: He isn't giving away his money. He is giving away the Government's money, anyway. MR. GASTON: I think that is true of the first point. Take 8 case like the Garfinckel store where he gave the residue of his estate to the YWCA; that business has a certain value as a going business. Assume that during his lifetime the man was giving the whole income of the business to the YWCA. He was giving it subject to taxation on the business profits, and he dies and he leaves this to the YWCA, the whole business. Then, if you free that from taxation from business profits, he is not giving what he possessed as an individual; he is giving something with perhaps double value. Where does it come from? it isn't his. It comes out of the Government. It comes out of the tax rolls, what he is giving. You have greatly increased the value of that business when you give it free from taxation. MR. WHITE: That isn't the decisive consideration. MR. GASTON: That is one consideration. H.M.JR: Herbert, you are right, but here I sat in this chair for eight years, and I never worried about it. Nobody has ever written to me about it. I haven't had a single complaint, and in a year in which charities are going to get the worst blow that they have ever had, I, as Secretary of the Treasury, should say - let's say that Garfinckel's - I don't know, the business was left to support the YWCA-- MR. GASTON: As a matter of fact, I think that was left in 8. will which is still subject to taxation. H.M.JR: Let's say it wasn't, and let's say that the 171 - 7 - income from that is a hundred thousand dollars a year. Then I come along this year, and let's say I am success- ful and Garfinckel has to pay a tax, as a result of which this private institution may get twenty-five thousand dollars. MR. GASTON: Well, if he were making a hundred thousand dollars and giving that to the YWCA before death and left the business to the YWCA, he would still be giving the hundred thousand dollars a year to the YWCA. If he is giving it tax free, he might be giving it two or three or four hundred thousand dollars a year. H.M.JR: I am the executive manager of the YWCA here in Washington, and I have had a budget of a hundred thousand dollars, which comes out of profits of Garfinckel's; never mind what happened before or what it is worth. I have been doing this now for the last ten years, and then along comes the Treasury all of a sudden and says, "That is wrong. Garfinckel's has to pay a tax," and I am cut down to twenty-five thousand dollars. That is what is going to happen. MR. WHITE: I think the Secretary is right, that it is not a question of the merits of the case. The Secretary's position is that it can't be an extremely important thing; it never came up before. Quantitatively, it can't be an important thing; why pick this particular moment to do it, if it isn't acute? I should imagine that the totals involved would be very small. Am I wrong? MR. PAUL: There are a lot of recent cases showing that it is being done on quite a wide range. H.M.JR: Randolph, I went out on the end of a limb on municipal State tax exempts outside of the Treasury. I haven't been able to get a single person to make a public speech to support me. That may be one percent exaggeration. I will do the thing on oil wells; I will do the thing on joint returns; I will go the limit on every form of taxation which involves several Regraded Unclassified 172 - 8 - hundred million dollars, and I will do it year after year. I will go back up in the Senate, and I am going to ask again for the oil wells and I will repeat my whole self over again; all right, but then why make myself vulnerable on an unimportant front on this thing? MR. PAUL: It seems to me you are more vulnerable on the other point. H.M.JR: Which one? MR. PAUL: On the limitation. H.M.JR: I believe that these big estates should be broken up. MR. WHITE: Isn't there a compromise possible? Why don't you put this thing in effect five years or three years or four years from today so they will continue to get whatever income they have been getting, in this difficult period. You have established your principle. Give them an opportunity to establish their business during that period; if they don't want to operate it as they should, then you won't be cracking down during a period, say-- MR. PAUL: We must keep in mind we are not trying to tax this investment income of this. There we collect the taxes in corporate form. H.M.JR: But my case is correct, isn't it, that if Garfinckel's has been producing a hundred thousand dollars a year, and that income has been going to charity, and now we have put on a corporate tax, the chances are they won't receive more than twenty-five thousand. MR. PAUL: If Garfinckel's is owned individually, and that is passed to the YWCA, we would be trying to get a tax, that is correct; the YWCA is running Garfinckel's. On the other hand, if the YWCA just gets the stock of Garfinckel's, Garfinckel's is taxed as 8 corporation and all that comes to the YWCA is dividends. 173 - 9 - H.M.JR: Yes, but that isn't the case, they own it individually. MR. PAUL: If you are thinking of individual owner- ship it is true there may be a reduction in what the YWCA gets. H.M.JR: That is what your suggestion applies to. MR. BLOUGH: Is your point, Mr. Secretary, suppose they have had Gerfinckel's for ten years and they have been getting a hundred thousand a year, and now we put the corporate tax of forty percent on, or whatever it is, they get sixty thousand instead of the hundred thousand? H.M.JR: It would be more than that, wouldn't it? MR. BLOUGH: Not unless they H.M.JR: How much would they get? MR. BLOUGH: They would get what was left after the corporate tax. H.M.JR: Well, with the excess profits and everything-- MR. BLOUGH: If they have excess profits, the profits are probably going up; they won t get any less. H.M.JR: Certainly the tax will average fifty percent. MR. BLOUGH: It depends on what is happening to their profits. H.M.JR: Whatever it is-- MR. BLOUGH: It will be reduced, of course. H.M.JR: It is safe to say it will be out in half. MR. PAUL: It would be seriously cut, probably nearly in half. 174 - 10 - H.M.JR: In this year, I don't think it is important enough. MR. GASTON: Mr. Paul's proposition certainly is an equitable one. Whether it is wise in this particular situation, of course, is another matter, but it is certain- ly an equitable proposition. H.M.JR: I am not arguing on the equitable side. I haven't said that. Is it smart to do it in this year, that is all. MR. PAUL: If you are not talking about the merits, I have got a definite policy question there. H.M.JR: That is why I am bringing it up now. On the merits I am with you. As to the timing, I think it is bad. MR. GASTON: There is another feature, where a man gives only a portion; he may give his stock, maybe ten percent, twenty-five percent, or a partnership, or maybe seventy-five percent, and in all those cases they get it subject to taxation. It is only when he gives the entire complete business for their ownership in fee that they can possibly escape taxation. H.M.JR: But take, for instance, I have seen it - I don't know what it is, I mean, what the setup is, but there is the Christian Brothers' Monastary in California that make a lot of wine and if they own that, which I take it that they do, I suppose they pay no tax on it, is that right? MR. PAUL: That is right. H.M.JR: And if this thing went through on this wine business they would pay a tax like anybody else? MR. PAUL: That is right. MR. SULLIVAN: They should. 175 - 11 - MR. GASTON: And there is still another consider- ation. H.M.JR: I would like to see you two boys go out and make a speech on it. MR. SULLIVAN: Any time. H.M.JR: All right, I will put you on the air tomorrow. (Laughter) MR. FOLEY: They will admit it. MR. SULLIVAN: Sure. MR. FOLEY: The last time I was up there they talked about that very case, Monsignor Ready said they ought to pay a tax. They are in competition with business. They are selling a wine. H.M.JR: Try it out at noon today. MR. FOLEY: They will admit it. MR. GASTON: This can be a very big avenue of tax evasion. MR. SULLIVAN: Don't try point two. 176 - 12 - MR. GASTON: In 8. period of increasing taxation you increase the incentive to evasion by this method by fake charitable organizations, and so on, organizations formed to hold businesses under the guise of charity; and the very fact that our taxes are going up very steeply adds to that incentive. H.M.JR: Well, Herbert Gaston, I agree with all of you on the theoretics, and so forth and so on, but I have said again and again I don't want to take this fight at this time. I have got enough fights. MR. SULLIVAN: You are picking a difficult half of the fight here, sir. H.M.JR: Well, I have got plenty of fights. I don't want to fight the Community Chests of America on this whole thing. MR. SULLIVAN: That is what you are doing on point two. The first one isn't one percent of the fight you have on point two. H.M.JR: Point two I would enjoy fighting. MR. PAUL: Would you accept the idea, Mr. Secretary, that White suggested of establishing a principle now to be put into effect as of, say, three years from now? H.M.JR: Oh, I would drop it. I would drop it. MR. BELL: Why don't you compel them to dispose of the property within a period, or thereafter be taxed? MR. PAUL: That is what we mean. That is what Harry had in mind. H.M.JR: When will this come up? MR. PAUL: It probably won't come up for a couple of weeks. 177 - 13 - H.M.JR: All right, let's have another fight. I will think about it. There is one other thing, oh, yes, the New York times today, and this is the second or third time - if you want to walk out on me, it is all right. MR. PAUL: I just want to ask one more thing before I go. Do you think that anybody from the Treasury should go to Pat Boland's funeral Thursday? H.M.JR: Is it tax-exempt? MR. PAUL: Use a lot of gasoline. MR. WHITE: Ferdie Kuhn, publicity man? H.M.JR: Don't you, when a man gets up and says, "Mr. Chairman, I suggest a committee, make that fellow chair- man? You (Paul) suggested it. I think you should go. MR. SULLIVAN: I think Treasury certainly should be represented. He is as good a friend as we have ever had on that committee. H.M.JR: Norman, who should go, outside of me? MR. THOMPSON: I think perhap S Mr. Sullivan should go. MR. PAUL: I haven't got any clothes to go. H.M.JR: Want to go? MR. SULLIVAN: No, I don't want to go, but I think somebody should go. H.M.JR: Are you willing to go? MR. SULLIVAN: Of course, I would be willing to go. H.M.JR: I would like you to go. MR. SULLIVAN: All right, I will. H.M.JR: What else? As i say, in the papers this morning on the front page, it is the second or third time it 178 - 14 - has appeared that the Treasury is studying and has a plan for rationing money. Of course, we don't know whether we are going to recommend it or not. My memory is hazy on it. As I remember it, there was a study - Harry grabbed it and said, "I haven't finished the study on it. As I remember, the thing was dropped, and I think you, narry, recommended it be dropped. Is that right? MR. WHITE: I don't know whether I recommended it be dropped; I think I recommended not to be pushed. John McCormack came in to see me. Chick Schwarz called me up. He said that he had the idea that Treasury had 8. fight on, Treasury was pushing this particular program, and he doesn't know much about it, that he woul like to see more of it. We agreed he had better see me, because I wanted to disillusion him that the Treasury was pushing it and that there was a fight on. He came to see me yesterday. I explained 8. little bit about it, and he pressed on the point whether it was a Treasury program. I said, "It is not." I said, "Everybody in town is studying it, and the study is only in a prelimin- ary stage; there are all kinds of difficulties, and so on. I didn't read the story, but that is the background of it. H.M.JR: Well, is there any reason why we shouldn't tell the rest of the press that we have dropped the study? Is anybody studying it? MR. WHITE: We haven't dropped it, really, it is going on. I don't think'we should be ashamed to say that we have dropped it. I do think we should avoid as much as possible any notion we are fighting other agencies on it. Is there any of that in it? H.M.JR: Let me explain the background on this thing. Carey, the Secretary of the CIO, tells me that there is a difference of opinion between he and Phil Murray, on the one hand, being a hundred percent for volunteer savings, and Hetzel and - who was the attorney - Lee Pressman, having doubts about it, so forth and so on, and it is they who are feeding this thing to - this is all very much in the room - Leon menderson's crowd, 80 much so that Gilbert told Paul Regraded Unclassified 179 - 15 - that at a meeting with labor representatives, labor said they were going to dump us overboard. It turned out it was the Pressman-Hetzel crowd. Carey said that they do not talk for Murray and the CIO, and that was borne out in another case about this man Hinckley when they demanded that I see him. I told Carey I would see them - it was Hetzel who asked to bring in the man, the head of the Government employees union, and I said to Mr. Carey, "Please get word to Phillip Murray; if he wants me to see him, all right, but I have gone over the whole thing, and I am satisfied he should not be reinstated." Carey said - this is not for quotation - "I don't see why he ever hired the man in the first place, I never would hire him." And the word came back from Mr. Murray that he was entirely satisfied. (Mr. Blough and Mr. Paul left the conference.) H.M.JR: I wouldn't see Hetzel on that. Now, Carey furthermore tells me that among the Henderson crowd they are scared of rationing, they can't do it, they don't want to do it. And, therefore, what they are trying to do is to shove the Treasury into the position of rationing of money, see? So, I sort of put two and two together and think that this is 8. sort of - the thing is we are being needled by the Henderson crowd to try to put us in the position as though we were in favor of rationing money; and it is a con- tinual drive on Harold Graves and me, an attack on our volunteer plan. Therefore, unless the thing is under serious study, I would like to tell Schwarz to tell the people that We are not studying, I mean, that the matter-- MR. WHITE: is held in abeyance. H.M.JR: I would like to kill it, see? I would like to kill it. I can change my mind. MR. WHITE: I don't know all the reasons. I don't think it is that important. Anyway, the fact that you say you killed it won t make it impossible for you to change your mind later if you want to resuscitate it. H.M.JR: If somebody can convince me the way I con- vinced myself on lowered exemptions - three months ago I 180 - 16 - said I wouldn't - I can always change my position, but I would like to kill it because I need - the men in the field are doing a volunteer job and can't have all these termites working on them all the time if the volunteer plan is going to succeed. This is just another termite; maybe the Treasury wants to ration money - naturally, if you are going to ration money, people aren't going to buy volunteer bonds. MR. WHITE: I don't understand that deduction or con- clusion. MR. HAAS: That would help. H.M.JR: Well, it is just another plan, George. MR. HAAS: I mean, if it was effectively done. I think the problem is doing it effectively. If it was effectively done, you set aside in a category money that has no place except to buy bonds or to hoard it. MR. WHITE: There might be the charge that in order to aid your program of volunteer saving you are going to come out with this. That might make some logical sense. I don't know how effective it would be, but I think the whole thing is not important whether we say the Treasury is studying it or not, because no one is seriously contem- plating at this moment drafting a bill or presenting a plan. There is a lot of discussion. Other agencies and other men are picking the thing up and talking about it, and there is a growing interest. As this reporter says, "I never heard about this thing, sounds like a good thing to me." But there is more talk going on. If you have the least qualms about it, say the Treasury is no longer studying it. MR. KUHN: The Wall Street Journal started it on Friday. They were the people that got McCormack excited. The effect in the field is very bad. We got & report just yesterday saying that one of the reasons it is operating against the bond purchase, the continuous stories-- MR. WHITE: We ought to remove every possible reason or obstacle for the lack of success; if that in any way Regraded Unclassified 181 - 17 - is intimated as something which is standing in your way, there is certainly nothing lost by saying we are not studying it. H.M.JR: This is what the heading says, "Rationing of Spending by Public Urged to Bar Inflationary Buying. That is the heading. "The rationing of the proportion of income that could be spent for consumer goods or travel has been proposed by Treasury economists as an alternative to the over-all rationing of consumer goods. This proposal has not been officially sponsored by the Treasury Depart- ment and whether it will be submitted to Congress depends in large extent on the chances for a favorable popular response. MR. WHITE: He didn't get that from the Treasury. He got our view, and then went over to the other agencies, probably the OPA, and they gave him that angle. As I say, I don't think there is that much at stake. I think you can very easily say you have killed it or we have dropped it. H.M.JR: Harold Graves, what would you like me to do on this? MR. GRAVES: As I recall that story, it says specific- ly that amounts to be invested in bonds would not be rationed, that is, they would be exempt from the rationing. Isn't that said in the text of the story? H.M.JR: It says, "Under the Treasury plan for ration- ing of expenditures there would be no restriction on expen- ditures for the payment of taxes, the purchase of war bonds or other investment". MR. BELL: That would be the purpose of it. MR. GRAVES: I didn't get any impression as I read that, that that would be apt to hurt our bond program, as is true of compulsory savings. MR. HAAS: This is a type of compulsory saving which would aid the voluntary, an indirect compulsion. Regraded Unclassified 182 - 18 - H.M.JR: What would you say, Harold? MR. GRAVES: Well, I think that it would be well to say what Harry said a while ago, that this is something that everybody in Washington is studying, that it is not 8. Treasury-sponsored-- H.M.JR: No, it is a question of my saying to Schwarz to tell them I am not studying it, we have dropped it, and kill it, or say nothing. MR. SCHWARZ: It is a question of whether any harm is done. There doesn't seem to be any conflict between the two programs. MR. ODEGARD: As Harry explained the system of ration- ing money a moment ago, it would seem to me it would leave a margin of money that had no place to go except War Bonds. That would not hurt the voluntary savings plan. The public in its general reaction to this whole thing confuses ration- ing of money with the compulsory savings. MR. WHITE: I am sure the public doesn't understand it. He doesn't understand it, and he said the others didn't understand it; and if Ferdie Kuhn is getting reports back from the field that people are troubled about it, I don t see anything much lost to say that it is killed, because you don't affect its chances. If you want to resuscitate it, you can always have another inter-departmental meeting and get started again. MR. KUHN: Harry, my point was that the public wasn't troubled by the rationing of money story, but by all the talk of compulsory savings; but if the story persists and creates public debate, the columnists will be after it and will again be urging compulsory savings, and the whole debate which we are trying to choke off will be revived. MR. WHITE: I think your information from the field should be decisive. Regraded Unclassified 183 - 19 - H.M.JR: What do you want to do, boys? MR. GRAVES: Let's kill it. H.M.JR: Let's kill it? MR. WHITE: Say it is killed. MR. GRAVES: That is what I mean, let's say it is killed. MR. WHITE: That is, that the Treasury is not study- ing it any more, we are through. H.M.JR: If you want to be very accurate, you can say it has been shelved. MR. WHITE: Yes, and that is true. That would be definitely true. (Laughter) H.M.JR: That gives it & certain amount of merit. MR. FOLEY: A little, not much. (Laughter) MR. GASTON: There is another possible device you haven't considered, and that was to tell them the truth, but you are getting pretty close to it. MR. WHITE: The shelf is pretty high. H.M.JR: The shelf hangs high all right; it has been shelved. MR. SCHWARZ: I will pass it on? H.M.JR: Yes. All right, they are two fairly impor- tant subjects. 184 - 20 - H.M.JR: Herbert? MR. GASTON: I haven't anything, just this matter you wanted to speak to me about. MR. FOLEY: Harry and I are going to see Secretary Jones about the silver order this afternoon. We want to sell it to him and have him take the loss, and have his strategic metals corporation sell it to people that need it. H.M.JR: Well, you can tell him this story. I have got a new suggestion for silver. When Wickard was here for lunch the other day - he had been home over the week end - he said, "What do you suppose happened to me when driving up to my farm?" I said, "I don't know." He said, "There I drive by my beautiful new alfalfa pasture, and there are my hogs rooting up this alfalfa pasture. I said, "What was the matter?" He said, "I found my hired man and said, 'Why didn't you ring those hogs? You ought to know better than that.' 'Well', he said, 'Mr. Wickard, you tell me where I am to get the copper. I can't get any copper nose rings.' I said, 'That is simple, make them out of silver.' MR. WHITE: I have heard of silver going to the dogs but never to the hogs. (Laughter) MR. GASTON: I forgot something. The Defense Plant Corporation people have been over to see the Secret Service. They wanted them to furnish guards for transporting the silver and probably for guarding the silver in the plants. I told the chief - we got hold of this contract and found that the Defense Plant Corporation is wholly responsible for the silver from the time it is delivered from storage, and I told him that we could give them advice and perhaps help them to recruit forces of guards if we wanted to, but we should not take the responsibility for guarding it. H.M.JR: I am sure there are plenty of injured Texas Democrats who would be very glad to. Regraded Unclassified 185 - 21 - MR. GASTON: We have a list of people from whom they could employ guards, if they wish to. H.M.JR: If not, New Hampshire could help out. I hope you (Foley) didn't disagree with me too much on what I did last night, telling him (Pehle) to call up that fellow. MR. FOLEY: That is all right. I noticed in your telephone conversation you told him you thought I was using bad judgment; but I didn't think so. I don't think you will, either, when you know the whole story. Markham called me, and he said that he understood that we weren't far apart and could I have somebody draft another way to do it. I said, "You mean to try to carve out 5b in an executive order?" He said, "Yes. I said, "Well, we have given a great deal of study to it, and we think the only way to be sure on the legal side is for the President to give both agencies the complete power. I understood they all agreed to that. That is the best way we know how to do it after studying it for months; and if you have got a better way why don't you draft it." H.M.JR: This is since Leo-- MR. FOLEY: That was Friday. He said, "All right, I will try my hand at it." I said, "You let me see it and let me criticize it." He was trying to get us to do something more. H.M.JR: But if you read it - I got the distinct impression from what he said that from the day Leo went nobody had heard from Leo's office. MR. FOLEY: He told you in that conversation that Markham had talked with me, but he didn't give you the whole conversation, and I hadn't had a chance to tell you. Regraded Unclassified 186 - 22 - H.M.JR: I didn't want Leo to walk in here-- MR. FOLEY: Leo sent for John, and John is there this morning. H.M.JR: I didn't want him to say, "I am here, but I can't do anything because the Treasury didn't make the first move." Inasmuch as you had been criticized, that is why I sent you the transcript. If it was unfair, I am sorry. MR. FOLEY: No. I think you didn't know the whole story, but the time schedule was running against him and I wasn't going to be put in the position of having to produce something that was better than I had already pro- duced when I couldn't do it. H.M.JR: If I had known Markham had called you - our office had not heard from Crowley, and I thought it was childish to sit here for one week-- MR. FOLEY: That wasn't the situation, and Crowley himself called John. John told me this morning, and John was going over there at half past nine. H.M.JR: Crowley himself? MR. FOLEY: Yes. H.M.JR: Wonderful. John is coming up in the world. If he thinks John is soft, he will find out. MR. FOLEY: John is the toughest one. John didn't want to go as far as I was willing to go. H.M.JR: Sullivan? MR. SULLIVAN: Do you recall the telephone conversa- tion you had with Budge about & tax moratorium on Hawaii? Here is a transcript of a radio telephone conversation he had with somebody else on the same thing. That Regraded Unclassified 187 - 23 - might be interesting. That should go back to Mr. Gaston. H.M.JR: Just the first page? MR. SULLIVAN: Yes. (Paper read by the Secretary.) H.M.JR: I don't get the significance of that. MR. SULLIVAN: The implication is very clear, that the Treasury was trying to do everything but the facts prevented us from doing it. H.M.JR: I see. MR. SULLIVAN: Somebody has been sold a bill of goods there. H.M.JR: I see. MR. SULLIVAN: The rest of it I don't think is particularly important. H.M.JR: Do they send this to you? Do you get all of these? MR. GASTON: We get all of them. H.M.JR: When I talk to Bob in Puerto Rico, do you get that? MR. GASTON: No, I don't hink we get that. We get everything that might affect the Treasury. This was a special from Captain Fenn because he thought it did affect the Treasury. MR. SULLIVAN: We have been having a very difficult time checking Social Security taxes from laundries, and we finally cracked down and sent one fellow to the penitentiary. We want to sell the machinery, and we Regraded Unclassified 188 - 24 - run into a priority, of course, can't auction off machinery. The Commission is very much interested in this particular case. They got in touch with me and wanted to know if I could talk to Donald Nelson about it. I wanted to clear it with you. H.M.JR: Sure. Buffington? MR. BUFFINGTON: Six of the twelve Federal Reserve Banks have their committees organized. I would like to send this letter out to the regions to thank them and get these regional committees set up. (Paper handed to Secretary.) H.M.JR: Who is this going to? MR. BUFFINGTON: Members of the committee. H.M.JR: It goes to the individual members? MR. BUFFINGTON: Yes. H.M.JR: Copy to Mrs. Klotz, please. MR. BUFFINGTON: That is all. H.M.JR: Harold, I am going to have to stop at ten-thirty. If I don't get to you, some time during the morning or this afternoon I want to see you and Bell and your partners and Buffington, and Gamble, because Gamble told me yesterday up there that he has made some arrangements with some banks to go out and sell twenty-five million, or something, of F's and G's, just to be safe. I want to be sure what it is and be sure that everything is coordinated. MR. GRAVES: Gamble isn't here. MR. ODEGARD: Yes, he is here. 189 - 25 - H.M.JR: What I was going to suggest is that Bell and you and Buffington, whoever else is interested, get together before you see me. See? I am tickled to death at what he is doing. He said he wants to be sure and have a safety margin of twenty-five million dollars of F's and G's over our quota. He says he has done something with the banks in New York and Chicago to assure himself of that. I think if you fellows got together and just checked what he has done, and then later on during the day I would like to see you myself to be sure, because I am worried about the F's and G's and I want to be sure. Gamble seemed very confident it was in the bag, but - so some time this afternoon I would like to see you. So will you get together? MR. GRAVES: Of course the point there is that we are skating on very thin ice with respect to this May quota due to the low volume of F and G Bonds, and he is trying to give us enough increased volume in the F and G Bonds to see us through on this six hundred million May quota. H.M.JR: He says it is in the bag, but I would like to have other people who are in contact with other banks or sales organizations go over it. We will get together this afternoon. MR. GRAVES: May I speak of another matter? Mr. McPherrin, who is the editor of the druggists' trade corporation and the chairman of the committee promoting this drive, is in town. H.M.JR: I have asked him (Lt. Stephens) to make an appointment. MR. GRAVES: He wondered if you would agree to having his picture taken with you for use in their-- H.M.JR: I don't mind because they never publish them. I mean, I have my picture taken all the time. Regraded Unclassified 190 - 26 - MR. SULLIVAN: They will publish this one. MR. SCHWARZ: They use them in the trade press, Mr. Secretary. MR. GRAVES: It is very important to them to have that. If you like, I will arrange that with Chick when I know the time. H.M.JR: I wish you would also make an arrangement that I get all my drugs from now on wholesale. That would be very nice. My bills are something. I will share with all of you. What else? MR. GASTON: That is, an X card on drugs? (Laughter) MRS. KLOTZ: I like that. H.M.JR: I'd let sleeping dogs lie. MR. GASTON: They do. MRS. KLOTZ: Not this one. (Laughter) H.M.JR: Mr. - who is the fellow, the columnist in the Post? MR. BELL: Jerry Kluttz. H.M.JR: Jerry Kluttz, this morning he has got that in the headline. MR. ODEGARD: I would like you to see this in the Seattle papers on the bond drive. (Papers handed to the Secretary.) MR. KUHN: Mr. Secretary, Callahan has got together a large volume of newspaper pages. H.M.JR: Which is the better? 191 - 27 - MR. GRAVES: They are just alike. They each contain about the same play. MR. BELL: The back page is a good one. MRS. KLOTZ: That is lovely. MR. ODEGARD: You asked for evidence of increased activity. H.M.JR: Yes, sir. (Laughter) Yes, sir, Harry White and I. MR. KUHN: I would like to give you a postscript on that. Callahan has hundreds of newspaper pages resembling those from all parts of the country. He has put them together in & volume. That volume is a first of several. I suggested that he send that volume out to your house, and when you have a few minutes thumb through it and see. H.M.JR: Callahan is of a trusting nature. He wrote me a personal letter and said it was on the way over. MR. KUHN: I thought he was sending it to your house. H.M.JR: I got the letter but I haven't got the volume. MR. GRAVES: I think I told him yesterday to put it in the room across the hall here. H.M.JR: In the "gold" room? MR. KUHN: Anyway, he says that the publicity is really astonishing in volume in all parts of the country. H.M.JR: Haas? Unclassified 192 - 28 = MR. HAAS: I have nothing. MR. SCHWARZ: Nothing. MR. WHITE: Phillips was in yesterday and wants to put a question to you about their Chinese loan. It would take me just a minute to explain it. H.M.JR: I had better handle it some other time. MR. WHITE: He also raised another question, and Acheson, I think, is ready to consider the British Lend- Lease in Reverse, the work of the program. So some time this week you will want to call a meeting to continue the earlier discussions on it. We got a telegram from Handy and Harman, a long telegram, very urgent in tone, to see what the Treasury can do about putting more silver on the market; the silver situation is becoming very acute. I merely in- form you about that. The Bolivian negotiations have been resumed by the Stabilization Fund and are proceeding very rapidly. H.M.JR: I will talk to you during the day. You have so much stuff I can't get it. Harold, how about the American Bar Association? MR. GRAVES: I haven't had a report on that. I gave it to Mr. Houghteling. H.M.JR: Will you get the report? MR. GRAVES: Yes. H.M.JR: What else? MR. GRAVES: Nothing. 193 - 29 - H.M.JR: Bell? MR. BELL: About some refunding operations next week. H.M.JR: Well, put yourself down for an appointment. MR. BELL: We ought to do it the first of the week, I should think; getting some cash again in June, and have to date these bonds not earlier than the fifth of June, possibly seventh or eighth. H.M.JR: You don't give me any rest. MR. BELL: Today you want to discuss it? H.M.JR: Yes. MR. BELL: That is all I have. MR. THOMPSON: The President has indicated that where the war effort can be furthered we should stay open on Memorial Day. We did that on prior holidays. H.M.JR: All right. MR. THOMPSON: I have in mind getting out an order restricting annual leave to two weeks this year. The Personnel Council had it up, and it seems to be the general feeling that it is a desirable thing to do. H.M.JR: I would like to think about that. MR. BELL: That is a lot. MR. THOMPSON: Yes, some are getting less than that. (Paper handed to the Secretary) That formalizes Mr. Irey's duties in keeping tab on important cases and in checking over important personnel changes on the investigating forces. 194 - 30 - H.M.JR: Who would this hit? MR. THOMPSON: Stewart Berkshire. I think he has a little more difficulty dealing with him than anybody else. MR. SULLIVAN: I haven't heard about this. H.M.JR: Where will Irey be sticking his nose where he hasn't before? MR. GASTON: In all of the agencies. H.M.JR: I mean, should Sullivan see it before-- MR. GASTON: I should think so, be a good idea. H.M.JR: Anybody else? MR. THOMPSON: I don't think anyone else should see it. H.M.JR: I had better O.K. it subject to Sullivan's approval. Is that fair? MR. SULLIVAN: Yes, sir.