Volume 541, June 19 – June 22, 1942

DIARY Book 541 June 19 - 22, 1942 Doaraded i di - A - Book Page Adler, Solomon See China Airplanes Aircraft despatched, week ending June 16, 1942 - British Air Commission report - 6/19/42 541 107 Shipments to British Forces - Kamarck report - 6/22/42 328 Alien Property Custodian Discussion with Cox and Cohen reported to HMJr by Bernstein - 6/19/42 5 a) Placing of power to vest, other than business enterprises, discussed 8 b) HMJr wants Treasury to keep possession of French, Belgian, Dutch gold 9 c) HMJr wants to differentiate between what belongs to the enemy governments and what belongs to the private citizens 11 d) Rosenman wants all vesting in Alien Property Custodian; Acheson would support him 12 e) Cox-HMJr conversation 17 f) Rosenman-HMJr conversation 27 g) "State Department to be consulted" before any steps are taken - Acheson's suggestion to Foley. 35 Automobile Workers, United See Financing, Government: War Savings Bonds - B - "Bastille Day" See Financing, Government: War Savings Bonds Brazil For Rio conference, see Latin America Business Conditions Haas memorandum on situation, week ending June 20, 1942 - 6/22/42 297 Byrnes, James F. (Justice, Supreme Court) See Revenue Revision - C - China Fox dies in Chungking - - 6/21/42 187 a) HMJr's note of condolence - 6/22/42 217 b) Kung-HMJr correspondence - 6/23/42: See Book 542, page 52 c) Chen-HMJr correspondence - Book 542, page 55 d) Further information as received by Lochhead: Book 542, page 252 e) Cable to Adler concerning personal effects - 6/26/42: Book 543, page 92 f) Executor of estate asks help of Treasury and State Departments - 6/25/42: Book 544, page 136; Book 545, page 280 1) Hull letter concerning - 7/3/42: Book 546, page 189 - C - (Continued) Book Page China (Continued) Fox dies in Chungking (Continued) g) Adler (Solomon) recommended as temporary successor - 7/1/42: See Book 545, page 79 h) Kung appoints Adler - 7/6/42: Book 547, page 180 1) Kung's letter to HMJr - 7/12/42: Book 549, page 36 J) Fox's last report transmitted by Adler - 7/15/42: Book 549, page 329 Commodities See Inflation Correspondence Mrs. Forbush's resume' - 6/19/42 541 72 Cuba See Latin America - D - Davis, Elmer HMJr's congratulations on appointment as Director of War Information - - 6/20/42 165 HMJr-Davis conversation - 6/22/42 244 - F - Financing, Government War Savings Bonds: For discussion of proposed speech by Quezon, see Philippine Islands Post Office cooperation discussed by HMJr, Bell, and Gamble - 6/19/42 38 a) Glass bank or inscribed envelope ($5.00 will buy ) discussed by Treasury group - 6/22/42 223 b) Gamble report: Book 543, page 39 United Automobile Workers: Criticism by Thomas (President) outlined in Houghteling memorandum - 6/19/42 43 Progress report - 6/19/42 50 "Bastille Day": Program as suggested by Keith Morgan frowned upon by Gamble - 6/20/42. 152 a) HMJr-Grace Tully conversation - 6/23/42: Book 542, page 39 Sales as of June 20, 1942 155 National Association of Manufacturers reports 90% member participation in purchases - 6/22/42 258 Sales vs. Pledge Campaigns: a) Odegard recommends pledge campaign on an occupational and not on a house-to-house basis 237 b) Pledge campaign - abandonment of, as such: unsigned memorandum 252 c) Sales rather than pledge basis discussed by HMJr, Haas, and Tickton - 6/23/42: Book 542, page 6 d) Conference: present: HMJr, Graves, Kuhn, Odegard, Gambles, Haas, and Tickton - 6/23/42: Book 542, page 20 - 1- (Continued) Book Page Financing, Government (Continued) War Savings Bonds (Continued): Victory Fund Committees: Appointments as recommended by Buffington - 6/22/42. 541 266 a) Salaries discussed by 9:30 group - 6/25/42: See Book 542, page 292 4-H Club report - 6/22/42 267 Navy congratulated on splendid participation in purchases - 6/22/42 286 Food Continental Europe situation reported in White memorandum - 6/19/42 126 Foreign Governments Information desired by Division of Monetary Research reported to State Department - 6/22/42 320 4-H Club See Financing, Government: War Savings Bonds Fox, A. Manuel For death, see China France "Bastille Day": See Financing, Government (War Savings Bonds) De Chambrun, Comte Rene (Laval's son-in-law) reports to American Embassy establishment of Societe de Credit Intercontinentale - 6/22/42 193 - I - Inflation Cost-of-living index as of June 15 248 Wholesale commodity prices - general index, 1942 by weeks - 6/22/42 250 - L - Latin America Brazil: Rio de Janeiro conference: Treasury representation reported to Secretary of State - 6/19/42 100 Cuba: American Technical Mission - third report of - 6/19/42. 128 Decree establishing controls over importation of United States currency signed - 6/20/42 179 Lend-Lease United Kingdom: Federal Reserve Bank of New York statement showing dollar disbursements, week ending June 10, 1942 - 6/19/42 102 Regraded Unclassified - M - Book Page Military Reports British operations - 6/19/42, etc 541 150,178. 190,196 Kamarck summary - 6/22/42 198 Morgan, Keith See Financing, Government: War Savings Bonds - N - National Association of Manufacturers See Financing, Government: War Savings Bonds Navy Department See Financing, Government: War Savings Bonds - O - Office of Facts and Figures Abolished by Executive Order June 16, 1942 311 a) Kuhn praised by MacLeish - 6/22/42 311 - P - Philippine Islands Quezon and Under Secretary of Finance call on HMJr, Bell, and White - 6/19/42 26 a) Radio speech for War Bonds discussed 1) Quezon under doctor's orders for two months - 6/30/42: See Book 544, page 296 Post Office See Financing, Government: War Savings Bonds - R - - Revenue Revision Tax-exempt Securities: Justice Byrnes suggests way of handling argument as to constitutionality of proposal to tax - 6/22/42 313 Rio de Janeiro Conference See Latin America: Brazil - S - Soldiers See Treasury Building Regraded Unclassified - T - Book Page Taxation See Revenue Revision Tax-exempt Securities See Revenue Revision Treasury Building Soldiers: Friends not to loiter at "A" door - 6/20/42.. 541 151 - U - U.S.S.R. "One Year of Soviet Struggle Against German Invasion" June 22, 1941-June 22, 1942. 348 United Automobile Workers See Financing, Government: War Savings Bonds - V - Victory Fund Committees See Financing, Government: War Savings Bonds - W - War Savings Bonds See Financing, Government 1 June 19, 1942 10:08 a.m. HMJr: was at my house last night. Ted 2 Gamble: Yes. HMJr: And he was saying that on this - you know, he brought up the simpler thing - he's still for compulsory savings, you know. He's the one that - one of the chief advocates for it around the President. G: Yes. HMJr: Now, he said that he likes the plan. He likes the plan where - (talks aside) Just a minute. I'll be with you in one second. I want to ask you something. He likes the plan where they can put 80 much money, 8.8 he put it, in an envelope and send it to the Treasury once a month. 8: Yes. HMJr: I mean, evidently the Treasury sends you an envelope, or something. I'm not cuite familiar with it. G: Uh huh. HMJr: He seems to think I thought that was what the bank did. Do you know what it 18? G: Well, we had direct mail for awhile, and, of course, people can HMJr: But isn't there some system, he said, where it comes - there's evidently some system where the Treasury itself - I know one of the President's secretaries had it. Each month they notified her that $18.75 we due. Look into it, Ted. G: All right, eir. HMJr: It's something that comes from the Treasury. 2 - 2 - HMJr: Now, there were two points that he made it. One, where you started with the Treasury. He likes it. It's easy, you see. G: Yes. HMJr: Two, if you want to get that kind of an envelope anywhere locally, you can't get it. G: Yes. HMJr: Inquire where it does. It's something that comes out of the Treasury once a month to you, you see? C: Yes. Well, that was our direct mail, which we've abandoned, but I'll give you a report on 1t. HMJr: No, but I mean, supposing I say to the Treasury, "I'll take $18.75 a month," and the Treasury each month sends me, he said, an envelope, and you stick your money, 8. check in, and you get your bond. G: Yes. HMJr: Now, they were saying - they brought up the point that you just sign & pledge - I was on your side last night. I wasn't giving any- thing away. G: Fine. HMJr: And why couldn't they have something like this envelope which would come to you, you see? G: Yes. HMJr: For the great mass of people that don't have bank accounts. G: Yes. HMJr: And the thing occurred to me, that whatever this system 18, you'll have to pick it up. Regraded Unclassified 3 - 3 - G: Yes. HMJr: And maybe for those that write to the post offices. G: Yes. HMJr: We could use this, whatever system we'd worked out, and I know a lot of people use it G: Yes. HMJr: and take that and install that for the people who designate post offices. G: Yes. HMJr: Will you give it a thought? G: Yes, sir. Of course, that's a very simple thing. We always have known that we could do that, Mr. Secretary. We could handle it as we handled direct mail before. HMJr: Yeah. G: But it's rather complicated procedure, and there's a time lag, and we were trying to avoid both. And we were also trying to provide for the fellow who don't have $18.75, but who only wants to out two dollars a week away. HMJr: Yeah, but to think - look 0: Yeah. HMJr: Now, don't go Treasury on me. G: (Laughs) HMJr: Darn you. G: Okay. HMJr: And - my wife's here. She's laughing. And don't give me the reasons why I can't. 4 - 4 - G: Oh, I'm not HMJr: Just take a look at it as a possible way for this large mass of people in New York, see. G: Right. All right, sir. HMJr: And then talk to me about it during the day. G: All right, sir. HMJr: Thank you. G: Good-bye. 5 June 19, 1942 10:15 a.m. FOREIGN FUNDS Present: Mr. Foley Mr. Bernard Bernstein Mrs. Klotz H.M.JR: Well, last night Judge Rosenman had dinner with us, and I talked with him a little bit. He wanted to talk. I gather he is going to try to clean this thing up today, if it is possible. He got onto this question of income tax, and I told him frankly I didn't know enough about it to argue about it, but I didn't see why these people should be treated any differently than in the Depart- ment of Justice or SEC. So he said, "Well, it is not Americans; it is the foreigners, and you can write the rules and regulations. Y I says, "Can I write the rules and regulations to make it the same as everybody else?" He says, "You have got to be fair about it." I says, "Ain't I always?" He says, "You can say in your rules and regulations that they have got to write you a letter and tell you why", SO forth and so on. I says, "I don't know the fine points, and I don't want to argue about it; better let the boys argue with you. But I am just telling you I don't know, and I don't care particularly to know about it. So he told me that. Now, there is one thing that you fellows may not know, that the reason he had the Budget people there, particularly, was they are to write the rules and regulations about clearance for personnel. Didyou know that? MR. FOLEY: No. Regraded Unclassified 6 - 2 - H.M.JR: So you want to be on guard. I mean, the necessary personnel will be written into the order to go to Chicago to take care of the functions that crowd definitely gets. I didn't think you knew that. MR. FOLEY: No, that hasn't been raised. They didn't say a word. The Budget people just sat there. H.M.JR: I said they just sit there. Dean Acheson - he saw him earlier, and Dean is all right. He is urging Dean to make it an exchange of letters between Mr. Hull and myself as to when we should or shouldn't freeze. He says he is urging them to do that, and Dean said, "Well, I have had no trouble with Henry. Henry always has con- sulted us." He said Dean was fine. And what else did he cover? He is very conscious that Tom Corcoran is in the background of this thing, very conscious. That is about all, other than what he said - he said he only had two worries: One, that the President really might want to understand it and then get ideas of his own, and the other thing, that Crowley might go directly to the President himself. MRS. KLOTZ: Of course he will. H.M.JR: Not necessarily. MRS. KLOTZ: Oh, yes. H.M.JR: No. MR. FOLEY: I think it is going to be difficult for Crowley to do that if both Ben and Oscar say that the order is satisfactory because Crowley apparently is in Chicago and Markham left last night at quarter of six to join him out there. He told Sam that Oscar and Ben would act for them while he was away in the prepara- tion of the order. So Ben said he didn't quite know what they wanted in the order, and Markham indicated that if he said it was all right that was O.K. Regraded Unclassified 7 - 3 - H.M.JR: If who said it was all right? MR. FOLEY: If Ben said it was O.K. MR. BERNSTEIN: That was the impression I got. H.M.JR: You are on a very good footing with Ben right now? MR. FOLEY: You had Sam, I had Ben, and he had Oscar for dinner last night, so we had-- (Laughter) H.M.JR: What were you (Mrs. Klotz) doing for the Treasury? The least you could have had was Biddle. MRS. KLOTZ: I would leave him to you. MR. BERNSTEIN: The dirty job. MRS. KLOTZ: The dirtiest job. H.M.JR: She is good at it. MR. FOLEY: Well, I thought that the one thing you wouldn't want to give him was the income tax returns, and that is why I put up the argument. That is the first time they have pulled that one on us. H.M.JR: Well, he said this, that he thought our fellows were fair, that we were tough, and I don't understand - I didn't give away anything, but if we can write the rules and regulations - I tell you, it is just as good to have something to fight about which isn't important that you know that you can give up, so you might just as well fight for it. MRS. KLOTZ: You don't know what you said. H.M.JR: It is true. You don't want to fight hard for something-- MRS. KLOTZ: that you know you are going to lose. 8 - 4 - H.M.JR: Well, in a pinch, if they let us write the regulations, what the heck. MR. BERNSTEIN: By the time we finished talking about it last night with Cox, he agreed to leave out the busi- ness about the taxes. Now, there again you might do it by exchange-- H.M.JR: Excuse me, may I ask you - Bernie, look, just give me, for a layman, a summary of what happened last night, without getting too technical. I mean, I don't want to get into the technical thing. I mean, I have got an awful lot to do; just give me the drift of the thing. MR. BERNSTEIN: The big point that was considered yesterday was giving somebody the power to vest other than business enterprises. Both Cox and Cohen felt that power ought to be somewhere, and they thought it ought to be in the Treasury but that when it was vested it would be vested in the Alien Property Custodian, on such terms and conditions as the Secretary determined. Now, we played a waiting game on that one and let them develop the whole argument as to why it ought to be in the Secretary of the Treasury, the power to vest. Judge Rosenman was a bit opposed to giving you that power to vest. He thought the President ought to decide such a big problem, but finally everyone else agreed; and in this draft of the order that we are typing up this morning we will have that power to vest in the Secretary, but when he vests he vests it in the Alien Property Custodian on such terms as you fix, after consultation with State and the APC. H.M.JR: Now, let me ask you something because I don't think - if I understand it correctly, it isn't what I want. You were talking about the French thing. Let's say, for argument's sake, that the French have a billion dollars' worth of gold. What have they got? 9 - 5 - MR. BERNSTEIN: They have two billions of gold dollars and securities. H.M.JR: They have got two billion dollars and we declare war on Vichy, France, and we are at war with France. Of course we have the gold now, haven't we? MR. FOLEY: It is here, that is right. H.M.JR: Well, let me tell you the result I want to get at and then you tell me. I want to keep in the Treasury those six billion dollars - we will stick to the French. I want to keep in the Treasury the French gold, the Belgian gold, the Dutch gold, in my possession. MR. BERNSTEIN: When you say "keep in the Treasury", you mean keep in the Treasury under your control, as you have it now. You will have that under that order, and much more. H.M.JR: What did you mean when you said I vest and then give it to them? MR. BERNSTEIN: That is when the Government actually wants to take title to the gold. That isvery unlikely. H.M.JR: Then why should it go to Crowley? MR. BERNSTEIN: There they argue that if the Government is holding title one agency should be doing the holding of the title. MR. FOLEY: As the order was last Saturday-- H.M.JR: I want to understand that because we are talking about six billion dollars. This is important, and I want to understand this, and I don't understand it. MR. FOLEY: Well, as it was last week the order was entirely silent insofar as vesting the enemy-owned Regraded Unclassified 10 - 6 - gold securities and bank accounts, as well as the neutral gold, bank accounts, and securities. The order was entirely silent on that, which meant that if we ever came to the conclusion that it was in our interest to vest the gold and then divest it by transferring it to, say, the DeGaulle government, you would walk across the street with a little memorandum to the President and you would tell him what you wanted to do, and you would ask him to put "O.K., F.D.R." H.M.JR: You mean to give some of this gold to DeGaulle. I see that, but why does Crowley come in the picture? MR. FOLEY: Well, the way they want to do it now is to say that that gold and those securities will be vested on such terms and conditions as you shall pre- scribe, and the actual mechanical taking of title would be in the APC. However, you would have the entire dis- cretion as to how it vested and when it vested and where it goes after you do vest it. H.M.JR: Let me stick to the French thing. The French gold and French securities are in my custody now? MR. FOLEY: Yes. MR. N STEIN: The word "custody" - say under your control. You don't have the physical possession, nor do you have title to it. You have the control, the Government control as to who can use it. H.M.JR: I don't have because we are not at war with Vichy. MR. BERNSTEIN: Simply because we haven't taken title. MR. FOLEY: It is still their property, subject to your license. 11 - 7 - H.M.JR: Now, the point that you are looking forward to is the time we take physical control, actual control? MR. FOLEY: That is right. H.M.JR: If we go to war with them, if we go to war with France, and I say that I should be the depositary - is that a good word - custodian - I should be the custodian for these two billion dollars' worth of enemy France. MR. BERNSTEIN: I think that raises a serious question. I would like to describe what I think will happen. H.M.JR: Is that what you have got or isn't it? MR. FOLEY: Well, I mean, that was the debate all yesterday afternoon, and the thing isn't settled. H.M.JR: well, let me give you my reasons for it. Well now, if that isn't the way it is, I want to get it and I will tell you why. I make the dis- tinction between Government and Central Bank assets and private assets of enemy France. Of the two billion dollars' worth of gold and securities-- MR. FOLEY: I think we can do business on this basis, Bernie. We will give up the other, and we will take this. H.M.JR: I mean, what belongs to the Government I want to keep. MR. FOLEY: And the Central Banks and the banks because there are some big accounts in those banks. H.M.JR: But what belongs to private citizens-- MR. FOLEY: The nationals they can have. Regraded Unclassified 12 - 8 - H.M.JR: The nationals-- MR. FOLEY: they can have. That is the argument that Dean was making coming out to the car, Bernie. H.M. JR: Let me give you my reasons for it. The day may come where I may want to take the French gold and through some transfer or other use it to invest in U. S. Government Bonds, to use it for the war effort. They are securities I may want to use, the enemy assets, and that is something that I have got to do. I am the sole responsible person under the President for the raising of the money. Now, I don't want these things - I don't want to have to call up Leo Crowley and say, "Leo, I want to use this or that or change it from open account to another, to use it to help finance the war." I mean, getting down now to the guts, and the question of Govern- ment - of Central Banks, or, if you want to add banks - I don't know, but those things that belong to the enemies I want in the Treasury. The things that belong to enemy private citizens he can have. I mean, I don't care. The thing is I want-anything that belongs to the enemy Government in the way of gold or assets I want in the Treasury because I deal with governments; he doesn't. That brings in an entirely new person in an entirely new field; but when it comes to running businesses in this country belonging to enemies he can have it. I have said so right along; that is what the President said. Now, am I not consistent? MR. FOLEY: That is consistent. H.M.JR: But that isn't the way, evidently, it went? MR. FOLEY: That isn't the way Ros enman wants. Rosenman wants all vesting in the APC, and these other 13 - 9 - fellows-- H.M.JR: Where is Dean on this? MR. FOLEY: Dean would support that view. H.M.JR: Now, after all, I am accustomed to deal- ing with foreign governments, and all the rest, and I think if you explain to Sam that in connection with my financing I may need this money, may have to hock it, may have to do anything with it to help finance the war - I may want to take the French gold, China, Burma. We may recapture the Dutch East Indies and say, "We will fight for you. They want gold. What are we going to do? Why not use some of the enemy gold? The gold and those securities should be under my control to help me finance the war. That is my position. MR. FOLEY: Well, I think what Bernie-- H.M.JR: You see, it is a clean-cut thing, and it isn't that I want this or that. I have got a definite reason for it. MR. BERNSTEIN: The order gives you all the power, Mr. Secretary, and what it does - it is somewhat face- saving for him. It makes him a bookkeeper. H.M.JR: I don't want him a bookkeeper. MR. BERNSTEIN: Then that is the answer. H.M.JR: I don't want him a bookkeeper. I don't want him in the picture. I don't want his dirty nose around here. MR. FOLEY: All right, and we will give up the property of the enemy nationals in exchange for the right to vest, if it ever becomes necessary, the gold, the securities, andthe bank accounts of the govern- ments and the central banks. 14 - 10 - H.M.JR: And the nationals he can have, and I think I am on perfectly sound ground. MR. FOLEY: That is the suggestion Dean was making. H.M.JR: That is what Dean-- MR. FOLEY: That was the suggestion of Dean. H.M.JR: Then I have got good support. MR. FOLEY: And he said to me going out, "If you split it on that line I think you are on safe ground. H.M.JR: Should I call up Oscar and tell him this is the way I feel myself? Oscar likes it - it is a compliment, you know. MR. FOLEY: That is all right with me. I was just thinking where it would do the most go good. I was think- ing that if you told Sam it might be better. H.M.JR: No, no. It's like going to the judge-- MR. FOLEY: I know, before he has decided the case - while the case is under consideration. H.M.JR: He is seeing you when? MR. FOLEY: Two-thirty. H.M.JR: Let me try it out on Oscar first. Oscar likes me to call him, you know. MR. FOLEY: I know; sure he does. MRS. KLOTZ: Yes, but he is right, wherever it would do the most good. 15 - 11 - H.M.JR: If Oscar agrees with me and Acheson - we all agree, and Oscar Cox is recommending Leo Crowley - I mean, if I go to Sam now-- MRS. KLOTZ: What harm can that do? H.M.JR: Well, has he said no on the thing? MR. FOLEY: He has indicated very strongly that his personal belief is that all the vesting should be in one place, namely, the APC, and he was opposed in the beginning to it, that when the gold and the bank accounts were vested they should not be subject to the rules and regulations that you prescribe, and the others swung him around on that. H.M.JR: Let me just try this thing. If Oscar agrees with me then I don't have to go to Sam, do I? MR. FOLEY: Well, I don't think we will have much trouble getting Oscar to agree on this point. Sam is going to be the one that is going to be hard to convince. I mean, I can convince Dean, and Ben will see the wisdom of this. Ben may hold out a little bit because of face- saving that Ben is trying to retain for Crowley. H.M.JR: Let me just talk with Oscar a minute. MRS. KLOTZ: Nobody can present it to Sam like you can yourself, direct. MR. FOLEY: How have you got it now, Bernie? Does this apply to the enemies as well as the neutrals? MR. BERNSTEIN: Yes. MR. FOLEY: Everything. H.M.JR: This applies to what? 16 - 12 - MR. BERNSTEIN: This applies to all dollars, gold and securities, no mat ter by whom owned, as it is now drafted. H.M.JR: I don't think I know what you are saying. MR. BERNSTEIN: This power in you to vest in the APC. (The Secretary held a telephone conversation with Mr. Cox, as follows:) 17- June 19, 1942 10:35 a.m. HMJr: Hello. Operator: Mr. Cox. HMJr: Hello. Oscar Cox: Yes, Mr. Secretary. 2 HMJr: Are you 80 you can talk a little bit, Oscar? C: Yes. HMJr: Oscar, I've been going over what you and Bernie were doing last night. C: Yeah. HMJr: And I find myself for the first time - how should I say, 8 little bit at difference. I want to explain to you my position. I may not do it very good on legal grounds, but at least tell you how I feel. If we should go at war C: Yesh. HMJr: go to war C: Yeah. HMJr: with Vichy, France C: Yeah. HMJr: the gold and securities belonging to the government of France or the Central Bank of France C: Yeah. HMJr: I'd like to have it in my control. C: Yeah. HMJr: I'll tell you why. Regraded Unclassified - 18 - 2 - C: Oh, I agree. HMJr: Well, just imagine you don't agree to it. (Laughs) I want to try to see to the intelligence, and I'd like to convince you. C: I know you are. HMJr: Well, let me just give you the my reasons, which you most likely have thought of, but let me tell them to you anyway. My responsibility under the President I have the sole responsibility for financing this war. C: Yeah. HMJr: If this war continues over a number of years, I may have to use the securities and the gold of our enemies C: Right. HMJr: And if I do, I don't want to have to go and ask anybody about it except the President. C: Right. HMJr: Does that make sense? C: Sure. HMJr: What? C: That's the way we tried to get the Order drafted. HMJr: But as I understand from Foley and Bernie, that isn't the way it is now. C: oh, no HMJr: What? C: it is, because what it does - I mean, it seems to me the most practical way to carry out that idea, which I agree with a hundred per cent HMJr: Yeah. C: because the APC certainly isn't in inter- national finance or fiscal policy domestically. HMJr: Not yet. 19 - 3 - C: Well, and I hope he never will be. HMJr: Yeah. C: Therefore, he ought not to be given the vesting power as to that kind of property. HMJr: Yeah. C: If you want a practical means of executing that, we drafted the Order so that - in that - with reference to those kind of assets, you're the only fellow who can, on your own steam, decide whether the property ought to be vested, or whether action ought to be taken just short of vesting, with the vesting thing as the ful- crum to get it through. Now that's what the Order does. You would, therefore, be the only fellow who could 80 to the President, after talking to the State Department as an informal matter, and say that I think we ought to do A, 3, C, and D with the French gold and the French Central Bank assets and the French national assets and 90 forth. HMJr: No, I - the French nationals - APC can have those. C: Well, now, you don't know yet. In other words, suppose a new government comes into the picture, which for political and other reasons we think we ought to recognize. You may then come forward and say to the State Department and the President, "The most practical thing to do is to let - un- freeze those assets to the extent that we let the new government draw on them." HMJr: Yeah. C: And if the new government does what the British did, that 1s, to vest the assets of their nationals HMJr: Yeah. C: to eay, "Well, we'll back them up to the extent that we've got the power to do." Regraded Unclassified 20 - 4 - HMJr: Well, I understand that, but I don't think we're together if I understand it. What you're saying is this, that the way the Order is drawn now - the one that you and Bernie worked on lest night - it's up to me to decide when we should vest C : That's right. HMJr: the French gold. All right, let's say I decide I want to vest it tomorrow. C: Yeah. HMJr: Then who has title to the gold? C: Well, that depends upon the conditions on which you vest it. If you just say "vest" period, then the APC gets it. HMJr: Yeah. C: But if you, before vesting, go to the President and say, "I think we ought to vest it on the condition that A, B, C, D" - you may have fifteen different conditions. One of the conditions may be that the Treasury keeps it. HMJr: Well, that C: That condition would apply to the vesting. HMJr: Well, are you sure that C: Oh, sure. I don't have any question about it. And furthermore, if you go to the President and get approved that condition, in addition to the legal problem, I can't imagine the APC saying, "Well, the President didn't know what he was doing." HMJr: But now wait a minute. If - once I vest, who gets the title to the French gold, the way the Order stands? C: Well, that depends on how you vest it. HMJr: But I mean - are you sure that the title doesn't go to the APC? 21 - 5 - C: oh, sure, because you see, under the statute, you can impose any conditions on the vesting that you want to. Now, one of the conditions may be that it be turned over to the DeGaulle government. I mean, I don't know what's going to happen, but HMJr: Yeah, but doesn't - but in between that period, doesn't it - doesn't the title flow to the APC? C: No, not if you say it shall vest in the DeGaulle government. HMJr: Yeah, but can I say it should vest in the - the title should go to the Treasury. C: Oh, sure. HMJr: Are you sure of that? C: Sure. There's no question about that 2.8 a legal proposition; or, if you want to clarify it as an emotional psychological thing, then you can say in the Order that the Treasury has not only got the power to vest under those circumstances after consultation with the Secretary of State, but can impose the conditions of the vesting. HMJr: Well, for emotional, psychological, and practical, I would like to have it so there 1s no doubt. C: Well, I think we can remove the doubt, just putting in those three words. HMJr: Oscar, that once - and I'm only confining myself to Government and Central Banks. C: Well, I wouldn't try to draw that distinction. HMJr: Well, I'm trying to be fair. C: Yeah. But that doesn't top 8 practical distinction. HMJr: Well - I mean, I'm trying to be not only fair, but consistent, you see. C: Yeah. Inclassifiod 22 - 6 - HMJr: But if you fellows - but - to have it 80 that there's no doubt that if we vest that stuff, the title remains with the Treasury on Government and Central Bank stuff. Now, if you want to throw in the other, that's something else. C: Okay. HMJr: Now, do you think that could be done? C: I think 80. HMJr: What? C: I think we could convince them. HMJr: You think you could. Well, to me it's - to me it's the gute of the whole thing C: Yeah. HMJr: now that we've crossed the bridge that there's to be a new Order. That was the first thing. Well, no one's arguing about that any more, are they? C: I don't think SO. HMJr: What? C: I don't think SO. HMJr: You evidently must have done & good job on Biddle. C: All I can say 18 I tried. HMJr: Well, you must have done a good job. C: Well HMJr: And see what you can do on this now. C: Okay. HMJr: Thank you. 23 - 7 - C: Right. HMJr: Thank you. 24 - 13 - H.M.JR: Do you still think I ought to see Sam, because he is a little bit wiggly on that. I am perfectly willing to see Sam. MR. FOLEY: Well, I mean Sam is the one. H.M.JR: He is the one that is fighting this? MR. FOLEY: Yes. H.M.JR: All right. MR. BERNSTEIN: Would this be possible, let us try and draft a provision and see if we can get an agreement, at least with Oscar, before the two-thirty meeting? H.M.JR: I won't have a chance. I expect to leave here at three and won't be back until Monday noon. Sam wants to clean this up this afternoon. (The Secretary put in a call to Judge Rosenman, but he was away.) H.M.JR: He is up with Justice Frankfurter, and he will be in at eleven, so when I go I will take you two boys with me. MRS. KLOTZ: You are going over there? H.M.JR: I will go over. There is no use doing it on the phone. MRS. KLOTZ: Quezon is coming in at eleven. H.M.JR: Well, I can go right after that. MR. BERNSTEIN: I will work on something right now. H.M.JR: Well, you see what I want, and it is very important in connection with financing the war. Regraded Unclassified 25 - 14 - MR. BERNSTEIN: In that area you don't want the APC in any way, shape or form, as I get it. H.M.JR: No. I mean, why should he keep the books for me? Of the Federal Reserve, I mean, yes, but why should he keep the books for me? I mean, why should he be custodian for this large amount of money? In the first place, he isn't on a Government pay roll, and this is something which has to do with the financing of the war and I ne ed it. I want to keep it, and I will tell it to Sam if you fellows feel he is the stumbling block. 26 June 19, 1942. Conference in Secretary Morgenthau's Office June 19, 1942 11:00 A. M. Present: Secretary Morgenthau President Quezon, President of Philippines Under Secretary of Finance, Philippines Mr. D. W. Bell Mr. H. D. White The meeting was called apparently at President Quezon's request. He stated that he had been asked by the Treasury to make a radio speech on the bond-selling program. He said he did not feel he could do so since he did not believe it was appropriate for him to tell the American people what to do with their money. However, he stated his Government had several million dollars which they wouldn't need soon and they would be very happy to invest it in Government bonds if the Secretary thought that would be at all helpful. The Secretary replied he didn't want their money, but he did want the President's cooperation. The Secretary explained to him he did not wish him to tell the people what to do with their money, he merely wanted the President to go on the air and tell the American people what a courageous fight the Philippine people were putting up and what it would mean for them to regain their independence. The Secretary said he was much impressed with the kind of speech President Quezon had made at a recent luncheon which the Secretary had attended and as a. result of that impression, the Secretary had wished him to make a speech to the American people. The Secretary further stated that someone would go on the air before or after President Quezon made his speech and point out that an effective contribution the people could make toward helping the Philippines gain their independence would be to subscribe to war bonds. President Quezon said that was an entirely different matter and he would be only too happy to help and he was at the Secretary's disposal. The Secretary said he would have Mr. Kuhn get in touch with President Quezon and they could arrange the time and other details. H. D. White you Regraded Unclassified 27 June 19, 1942 12:10 pm The Secretary called Judge Rosenman over the White House telephone and the following is the Secretary's end of their conversation: "Where have you been hiding this morning? "Sam, I went over with my boys what they had been doing last night and I found that a certain part of it I was not in agreement with myself. Briefly it is this. Do you want to hear it now? It's this: When, using the French as an example, it is decided, let's say, that we are at war -- the State Department says we are at war with Vichy, we want to take over the French Government gold and assets belonging to the French Government or the French Central Bank. I feel that I want to keep control of it here, for the follow- ing reason: I may need it if this war lasts a long time. I may need that money to help finance the war. "I mean I am talking about the gold and the assets belonging either to the French Government or the French Central Bank. I am not talking about their nationals. "And the way the thing is now, as I under- stand it, if you want to vest it, it would be in Crowley's safe deposit box and the way I feel -- I feel quite strongly about this -- that to carry out this terrific borrowing program, before I get through I may have to scrape the barrel. "That's right, but it will be in the Treas- ury's lock box and not in somebody else's lock box. "Yes, but as I understand the thing, the way the thing is written now when it should be vested 28 -2- it rests with the Secretary of the Treasury "Yes, but when once it's vested I lose control. "But why not settle it now. I understand from my boys that Dean Acheson agrees with my position, with what I am saying. "Well, I called up Oscar to tell him my posi- tion and he said my position is a perfectly reasonable one. The way I look at it, I am making the distinction as between enemy Government assets and private assets. You see? And when this thing is settled I don't want to have to come to you or to the President again and I just -- let's look --what argument is there for putting enemy property in the lock box of another agency? "Well, I am making the distinction of just Government or Central Bank, which is quasi-Government. That's all. I am not talking about private nationals. "Which they don't. It's just gold and money that I am talking about, and I only want it "But they don't. "That's right. "But, I mean, I have no ulterior motive other than the President looks to me to finance the war and I may need to use all of that French gold and I don't want to go to anybody butthe President. "But why not make it easier, drawing the dis- tinction between Government and quasi-Government, and nationals. "You will have no trouble with Oscar on this. "Now, I don't follow you, Sam. Regraded Unclassified 29 -3- "Well, you will have to explain. "Well, you are raising something new. "Well, I thought "Well, I thought the way it is now that I did the vesting. "See if I understand this thing. Using the French, because that's the best example and the most imminent, the question comes up, let's say we declare war on Vichy. Then the question comes, What are we going to do with their $2,000,000,000 assets? And as I understand it, the way the thing is drawn, the taking possession of that, the actual taking possession, would rest with the Treasury, but once we took possession of it we would hand it over to Crowley. "Well, that's the part I object to. "Because he has no use for it. I have. Why should I turn it over to Crowley any more than I should turn it over to Jesse Jones? It's a Government matter and up to now all vis-a-vis Government -- one Government against another -- has always been with the Treasury and I say it should continue because I have use for it and he hasn't. "Then I have got to go all through this fight again of Crowley saying "That's my money" and 80 forth and 80 on, and I don't think that his organization should be trusted with that much money. "Well, I mean, it's -- I thought from what you said that the President -- that you checked and there were three items of $2,000,000,000 and he said those things should stay with the Treasury. "That's right. He had a blank check on it. "You mean he can't get it unless I say 80? Could you detach yourself for & moment and just look Regraded Unclassified 30 -4- "at it from my side. What I am saying, in view of the fact that there is a possibility we will need to use that money in our Treasury financing, don't you think we should be the depository for it? "He might give it to Victor Emanuel. I don't know. "Well, I haven't evidently made much of a dent, but I draw the distinction between the thing that has to do with Governments and private individ- uals, private nationals. "If you could. I mean, this part really means quite a lot to me. It's the only part that has come up all during these discussions that I have not let the thing flow, but when I got this thing ex- plained to me this morning, I was quite upset. "Oh, yes! That's the only point I make. The national stuff can go to him, but Government I think should stay with the Government - the Treasury. "He's not in the room. "They said 2:30. "No. He said he was expected over at 2:30. "Try it, will you? It really means quite a lot to me. ***** Mr. Foley, Mr. Bernstein and Mrs. Klotz came into the Secretary's office following the above conver- sation. HM,Jr: Sam said, "The argument you gave me, Regraded Unclassified 30 -4- "at it from my side. What I am saying, in view of the fact that there is a possibility we will need to use that money in our Treasury financing, don't you think we should be the depository for it? "He might give it to Victor Emanuel. I don't know. "Well, I haven't evidently made much of a dent, but I draw the distinction between the thing that has to do with Governments and private individ- uals, private nationals. "If you could. I mean, this part really means quite a lot to me. It's the only part that has come up all during these discussions that I have not let the thing flow, but when I got this thing ex- plained to me this morning, I was quite upset. "Oh, yes! That's the only point I make. The national stuff can go to him, but Government I think should stay with the Government - the Treasury. "He's not in the room. "They said 2:30. "No. He said he was expected over at 2:30. "Try it, will you? It really means quite a lot to me. Mr. Foley, Mr. Bernstein and Mrs. Klotz came into the Secretary's office following the above conver- sation. HM,Jr: Sam said, "The argument you gave me, Regraded Unclassified 31 -5- Henry, was that you did not want Crowley to have a blank check on you 80 he could draw on you for $6,000,000,000. He says, "Now, he can't do it because you vest. Then he gets it." I said, "That just the thing." He said, "Well, you don't have to vest unless you know what happens to it. I said, "I don't want any more Orders. I want it in the Treasury lock box. I don't want it in Crowley's. For allI know, he might give it to Victor Emanuel." He said, "Would you want to leave it with no Order for vesting? Leave it all up in the air?" I said, "I can't answer that." So I said, "This means a lot to me." He said, "Well, this is hard." The last thing he said was, "All you are asking for is that you just want when you vest the French Government or the quasi-Government, like the Central Bank, that whatever you take stays with you; whatever belongs to a national goes to Crowley. I said, "That's the point." He said, "Well, I will see what I can do about it." I said, "I understand that Oscar Cox is all right on this. I talked to him." "Well, Cox isn't important on this." So I said, "Dean Acheson is all right." He said, "No. Dean wants it some other way. He said, "What you are asking me now is ddificult." So I stressed it. The last he said was, "I will see what I can do." Mr. Foley: Well, the way the order was left last week was not to leave vesting in, but leave it to the President and then you walk across the Regraded Unclassified 32 -6- street to see the President and he puts his 0. K. on your memorandum and you go ahead and take action. That's the way I would have left it. That was satis- factory to me and Sam said that since the Order was silent in that respect both Dean and Vox had picked f' it up and said, "What about vesting alien property?" I said, "We are satisfied to leave it to the President and when the Secretary makes up his mind what he wants to do, he will walk across the street and see the Pres- ident. Mr. Bernstein: Rosenman was certainly orig- inally inclined to go ahead on that. The APC wanted to get some decision on vesting of alien enemy property and he was advised you would get control over vesting but in certain situations he would actually hold the property and it would be an appeasement on that partic- ular point. The language I drafted I cleared over the phone with Oscar and gives you all the power, including power to vest. "provided, however, that any property or interest, not belonging to a foreign govern- ment or central bank which shall be vested by the Secretary of the Treasury pursuant to this Executive Order, shall be vested in the Alien Property Custodian when, as and upon the terms directed by the Secretary of the Treasury. HM,Jr: What did he say? Mr. Bernstein: Cox said it would be all right. HM,Jr: Why don't you try to clear it with Dean? I can see -- I am smart. I can see what Sam is trying to do. He most likely is saying, "What do you care who has the vesting power? Morgenthau says 'Vest it' and you get the $6,000,000,000 and the Presi- dent will tell him 'Morgenthau, you vest it' and he just Regraded Unclassified 33 -7- has the mechanics and you get the property.' In other words, you put it to me this morning: . Why not let Crowley be the bookkeeper?' But he's not the book- keeper. It's his lock box that this stuff goes in. Am I right? Mr. Foley: Well, we are not going to kid you the way Cox did. Sure you are right. I don't think Oscar was frank on the telephone. Of course the title goes to A.P.C. on such terms and conditions as you describe. But it does put him in the picture. HM,Jr: I said, "Why not give it to Jesse Jones? There's just as much reason to give it to Jesse Jones as Crowley." He's trying to make it clean cut. I found out last night -- this is an amazing thing and tell this to Harry White -- when Sam got down to the point of putting everybody who deals with information in one place, Hull and Welles came over and for two hours put up B. fight for Nelson Rockefeller. "He's part of the family and you can't take it away from us." News to me! And Sam said, "There is no rhyme or reason for it except Hull got nasty about it. Up to recently, Nelson has always come around complain- ing about the State Department. Now, what I say is this. I told this to Sam. Government opposite Government, the Treasury; national or private citizens' business, that goes to the A.P.C. He said, "Well, supposing the French Government owns a business. I said, "The answer is they don't. So there is no argument." If you could get Dean to agree - he doesn't want another person to deal with. And the last thing Sam said was, "I will try to do the best thing I can. Mr. Bernstein: By "private citizens" you include 8. French commercial bank that has assets here? HM,Jr: Yes; I would stick to Government and Central Bank. It has always been Treasury-Treasury; Government-Govermment. See if you can't get Dean on our side. Regraded Unclassified 34 -8- Are you fairly well sold on this? Mr. Bernstein: I think if we get this, we are certainly that much ahead of where we were this morning. HM,Jr: What about Ben Cohen on this? Why don't you call Ben and whoever contacts Dean, before 2:30? o0o-o0o Regraded Unclassified checked- 35 June 19, 1942. 2:15 p.m. Edward Foley: I spoke to Dean and he's agreeable to our suggestion if we'll put a consultant's clause in the Executive Order, which would mean that before that kind of property could be vested by you, that you would consult with the Secretary of State. HMJr: That's all right. F: And HMJr: Don't you think 80? F: Yes, I certainly do. And he said if we could get that in there - he said that an air of good feeling would develop, he was sure, between the State Department and the Treasury. HMJr: Yeah that sounds reasonable. F: We - so I thought we'd stick in a general consultant provision to the effect that the 3ecretary of the Treasury and the Alien Property Custodian shall consult with the Secretary of State before vesting any property or interest pursuant to this Executive Order, and the Secretary of the Treasury shall consult with the Secretary of State before issuing any order adding additional countries to Section 3 of Executive Order No. 8389, as amended. HMJr: Consult doesn't mean veto power? F: No, no. It just means that you'll talk it over. HMJr: Fine. On that he's with us? : He's with us. He says that he can't get to the meeting, but I can say that he thinks that this is the way it ought to be done. And the State Department would - would support this language. HMJr: Yeah. Regraded Unclassified 36 - 2 - HMJr: Too bad he can't get there. F: No, he says he can't get there. HMJr: Well sold, American tobacco. What else? F: O.K. Now. that's - that's all. The other - do you want me to read the other language to you? The other language HMJr: What? F: says that - that the authority 18 vested in you, and then it says "provided, however, that any property or interest not belonging to a foreign government or a central bank which shall be vested by the Secretary of the Treasury pursuant to this order shall be vested in the Alien Property Custodian when, as, and upon the terms directed by the Secretary of the Treasury." HMJr: Read it again, please. F: Yeah "provided, however, that any property or interest not belonging to a foreign govern- ment or 8 central bank, which shall be vested by the Secretary of the Treasury oursuant to this Executive Order il In other words HMJr: It sounds all right to me. F: In other words, the property of a foreign government or bank shall be vested by you. HMJr: That's all right. F: But as to the other property, other than that kind, it shall be vested in the Alien Property Custodian when, as, and upon the terms directed by the Secretary of the Treasury. HMJr: It's all right. Now o.k. What else? F: Nothing else. HMJr: Wonderful. Regraded Unclassified 37 - 3 - F: Nothing else. HMJr: Oh, yes. What about Ben? F: I haven't talked with Ben. He was out, and I left word for him to call. He's going to go to the meeting. His girl said that she didn't know whether he'd be back before he went over there or not. HMJr: Didn't know he had a girl. F: His secretary. (Laughs) HMJr: Oh, I see. All right. F: All right, Mr. Secretary. Thanks. 38 June 19, 1942 2:55 p.m. WAR BONDS Present: Mr. Bell Mr. Gamble Mrs. Klotz H.M.JR: I don't know why the post offices shouldn't do exactly for us what the banks are doing, exactly the same thing - act as a bank. Now, sooner or later, you know - this isn't a month's proposition, and sooner or later the banks are going to get tired of this thing. I am just thinking out loud. This thing has got to continue, and I wish you would think about it, a setup in the post offices to render the same service to these people as the banks are doing now. MR. BELL: You know, Frank Walker wants to give us the postal savings system, and then they would run our business for us. I think if we had that we have got to do something like this, or a passbook. H.M.JR: A passbook - who has been talking pass- book? MR. BELL: I have been talking passbook for a long time. H.M.JR: Instead of a bond? MR. BELL: Yes, I would like to work out a scheme where a fellow could walk into a post office and give his money to the post office and he would get credit Regraded Unclassified 39 - 2 - in the passbook. On March 15 if he wanted to pay his taxes he would send in his passbook and the collector would charge his passbook for the amount of taxes. H.M.JR: Where you (Gamble) and I make a mistake, in getting into a thing like this, we forget about the boys who have been here for thirty to fifty years - Bell has only been here half that time - and they have got this wealth of experience, like Eddie Bartelt and the boys. I think if Dan and Eddie Bartelt and some of those fellows down in Public Debt did a little think- ing about this thing - after all, I don't know what plans they had in New York, but whatever they had let them go ahead with them. MR. GAMBLE: Yes, it doesn't interfere. H.M.JR: And give these men a couple of days to think about it. MR. GAMBLE: Of course this is a wonderful op- portunity to experiment with this. We have got the customers; we have got the postal system - everything. If it is successful it would answer a great crying need with people like the farmers, for example; it would be a great thing for them. H.M.JR: Well, Dan-- MR. BELL: I will have a proof on this tonight. MR. GAMBLE: I am crazy about this idea. I told Mr. Bell I thought it was splendid. H.M.JR: Well, the only suggestion I have is about bringing people together, making use of the talents we have here in the Treasury. MR. BELL: This is a tough thing to get it so that it is simple, so the postmasters that are already Regraded Unclassified 40 - 3 - snowed under can do this thing without spending a lot of time on it and making records. What I had in mind was just putting it together, punching a hole, and, "Here is your passbook" - do it like he is handling his mail. MR. GAMBLE: It is in & sense a passbook. MR. BELL: Then the follow-up system worries me a little. Ted says he thinks if we could keep a record, & duplicate card in the postmaster's office, and they would allow his people to go in, they probably could go in and take off the record, for the follow-up. H.M.JR: Your brain is on it now. Is this your own child? MR. GAMBLE: That is his own. He came up with it ten minutes after he left the office. MR. BELL: I don't know as it amounts to much. H.M.JR: I will be back here Monday. Maybe by that time we will have something. Would you want to give it to the chief postal inspector? MR. BELL: I am going to talk to Fred Ironsides. He has more practical experience than anybody else down there. MR. GAMBLE: If he makes a decision it carries a lot of weight. H.M.JR: He is a Frank Walker man. MR. BELL: The trouble with the other people is they seem to try to find reasons why it can't be done because they are already snowed under, whereas Ironsides is the other way. H.M.JR: Before I left I just wanted to check up on this thing. Regraded Unclassified JUN 23 1942 Vineland Times - Journal merican Newspaper Member: 41 sociation Audit Bureau of Circulation Press Association Bureau of Advertising, A.N.P.A. MEMBER: ASSOCIATED PRESS Largest Paid Circulation First in Advertising Volume VINELAND, NEW JERSEY June 19, 1942 My Dear Mr. Secretary: Your letter concerning our efforts in support of Vineland's Victory Day campaign is greatly apprec- iated by all of us here. We did our best to justify Frank Lamb's confidence in his home town, and are happy in the thought that Vineland did not fail in its duty to the country. May I express to you and the Administration my admir- ation for the manner in which the nation is being guided during the greatest of all crises in its history. It does appear that, at long last, Alexander Hamilton may no longer be referred to as "the greatest Secretary of the Treasury". Sincerely yours, man Lenehter Max Leuchter, Publisher Vineland Times Journal Hon. Henry Morgenthau Jr. Secretary of the Treasury Washington, D. C. Regraded Unclassified JUN 23 1942 Vineland Times - Journal merican Newspaper asociation TIMES Member: 41 Audit Bureau of Circulation Press Association Bureau of Advertising, A.N.P.A. MEMBER: ASSOCIATED PRESS Largest Paid Circulation First In Advertising Volume VINELAND, NEW JERSEY June 19, 1942 My Dear Mr. Secretary: Your letter concerning our efforts in support of Vineland's Victory Day campaign is greatly apprec- inted by all of us here. We did our best to justify Frank Lamb's confidence in his home town, and are happy in the thought that Vineland did not fail in its duty to the country. May I express to you and the Administration my admir- ation for the manner in which the nation is being guided during the greatest of all crises in its history. It does appear that, at long last, Alexander Hamilton may no longer be referred to as "the greatest Secretary of the Treasury". Sincerely yours, man Lenelter Max Leuchter, Publisher Vineland Times Journal Hon. Henry Morgenthau Jr. Secretary of the Treasury Washington, D. C. Regraded Unclassified 42 June 19, 1942 Dear Mr. Ambassador: I think the King and Queen will be interested in these newsreel films showing the tremendous enthusiasm created in New York and Boston by the fifteen British and American war heroes who are now touring this country at our invitation. I wonder if you would be good enough to arrange to have these reels flown to England and delivered for me. They show the depth of our admiration for brave men, whether British or American, and they also show how Squadron Leader Nettleton and his group have captured the imagination of the American people. Sincerely, (Signed) H. Morgenthau. 12. His Excellency, The Right Honorable the Viscount Halifax, British Ambassador, Washington, D. C. FK/egk n. m.c. Capies to Thompam (d that original letter # mr. Kashira office Regraded Unclassified 43 TREASURY DEPARTMENT M INTER OFFICE COMMUNICATION DATE June 19, 1942 TO The Secretary of the Treasury FROM Mr. Houghteling You have asked me to report on the attached letter from R. J. Thomas, President of the United Automobile, Aircraft, Agricultural Implement Workers Union of America, C. I. 0., with regard to the activities of State Chairman Isbey of Michigan. On this subject I have interviewed: Mr. Isbey Other members of the Michigan State War Savings Staff Mr. Thomas Walter Reuther Richard Deverall, Director of Education, U. A. W. John Fitzpatrick, his assistant Paul Ste. Marie, President of the Ford Local No. 600, U. A. W. Byron Taylor, Chairman of the War Savings Committee, U. A. W., Local No. 600 and others, and checked with Leo Goodman and Miss Mary McCarthy of my staff. I. Mr. Thomas' first complaint has to do with the award of a flag at the Chrysler Tank Arsenal last January. You were in Detroit at that time and so was Ferdinand Kuhn and you have more first-hand information about this incident than I have. Mr. Isbey tells me that on the day prior to this event he was informed by Mr. Thomas' secretary that Mr. Thomas was out of town and could not possibly take part in the ceremonies. He says that he invited George F. Addes, Interna- tional Secretary and Treasurer of the U. A. W., to represent the International Union, but Mr. Addes reported that he had to leave town and could not attend. At the last moment Mr. Thomas returned to Detroit for the ceremonies and was finally included in the program, although after a certain amount of unfortunate confusion and misunderstanding. II. Mr. Thomas criticizes Mr. Isbey for having helped the General Motors Corporation outline its War Bond campaign, without giving due credit to the par- ticipation of Organized Labor in its Pay Roll Savings Program. On the basis of information which I believe Mr. Thomas received from Mr. Ermet McCormack, a member of the U. A. N. who is temporarily serving as a deputy for Mr. Isbey, Mr. Thomas Regraded Unclassified 44 - 2 - informs us that Mr. Isbey had a number of meetings with officers of the General Motors Corporation before the General Motors Publicity Drive for Pay Roll Savings was formulated. He feels that Mr. Isbey should have insisted that the cooperative efforts of the United Automobile Workers be recognized in the publicity. Mr. Isbey tells me that the first time he saw this publicity was on the day after Walter Reuther saw it. He says that he commented on the unfortunate omission of all reference to the splendid cooperation of Organized Labor; and was told by General Motors officials that Mr. Reuther of the U. A. W. had approved the copy as it stood. We know from your own interview with Mr. Reuther that he reluctantly accepted the General Motors publicity because it appeared at that time to be too late to have it changed in a way which would give better recognition to Organized Labor. Mr. Thomas criticizes Mr. Isbey for having personally conducted Messrs. Armstrong and Jerpe of General Motors to Washington to present their plan to you. It is my under- standing that Mr. Isbey brought these men to present their plan to you at your in- vitation. III. Mr. Thomas' third criticism of Mr. Isbey is that he interfered with a joint War Bond plan being negotiated with the Ford Motor Company by responsible officers of the U. A. W. -- Richard T. Leonard, Director of the Ford Section of U. A. W.; Paul Ste. Marie, President of Ford Local 600, U. A. W.; and Byron Taylor, Chairman of the Ford Division, U. A. W., War Bond Committee - who were being helped and advised by Leo Goodman of my office. Mr. Goodman went to Detroit under my in- structions and at the invitation of the United Automobile Morkers, and Mr. Isbey's office was duly notified in advance by the Field Division of the War Savings Staff. 0. A. F. representatives had negotiated a very desirable agreement with Messrs. Rauch and Besardi of the Ford Motor Company. Mr. Isbey's office had been notified of these negotiations, but had appeared willing to leave them in Mr. Goodman's hands as representing the Treasury. It was important that the Ford War Savings .rogram be adopted immediately, prior to the negotiation of a new contract between the Ford Motor Company and the U. A. W, On the day that it was hoped to conclude an agreement for this joint War Bond Drive of the Ford Motor Company and the U. A. W., Mr. Mills of Under Secretary Bell's office, and Mr. Siler of the Chicago Federal Reserve Bank arrived in Detroit to negotiate with the Ford Motor Company and other large corporations about becom- ing issuing agents for Series E War Bonds. Through a series of misunderstandings -- for which I am not prepared to blame either the intelligence or good intentions of any of the parties - these two separate negotiations between Treasury repre- sentatives and the Ford Motor Company became confused, to the extent that the Ford officials decided to postpone further negotiations of the War Bond Drive until after the conclusion of their labor negotiations with the U. A. W. When I was in Detroit on Tuesday and Wednesday of this week I made efforts through Mr. Isbey Regraded Unclassified 45 - 3 - to revive these negotiations. Messrs. Ste. Marie and Taylor of the U. A. W. are very anxious to see these negotiations brought to a successful conclusion. I think that this can be accomplished in the near future. Ford officials, however, seem to be somewhat temperamental and the matter will have to be handled with con- siderable diplomacy. IV. The U. A. W. is full of factional difficulties and I understand that some of Mr. Isbey's closest contacts among U. A. W. officials are affiliated with a faction hostile to Mr. Thomas. I do not believe, however, that Mr. Isbey is con- scious of this fact. I talked to Mr. Thomas in Washington a few days after you had received his letter. Unfortunately, on that day Mr. Thomas had given to a representative of the Detroit News in Washington a statement regarding his differences with Mr. Isbey; and the Detroit News, an anti-administration newspaper, had published a front-page story that the U. A. W. was demanding the ouster of Isbey. Since then Mr. Thomas has attacked Mr. Isbey in speeches and in his union's weekly publication. I was sorry to find in Detroit that other elements of the C. I. 0, tend to back Mr. Thomas up in this matter. On the other hand, Mr. Martel, President of the Michigan Federation of Labor, and other A. F. of L. leaders, are backing Mr. Isbey, as are many other elements in the population. I find that Walter Reuther, Richard Frankensteen, Paul Ste. Marie, and Byron Taylor, all of the U. A. W., are much more cordially disposed toward Mr. Isbey, although Mr. Reuther and Mr. Ste. Marie will stand with Mr. Thomas as the president of their organization. I have not seen Mr. Frankensteen, who is chairman of the Aircraft Division of the U. A. W. and spends most of his time on the Pacific Coast. The above situation represents the possibility of very bad relations between the C. I. O. in Michigan and the War Savings Staff. In view of the fact that the U. A. W., at its convention last August, was the first national union to endorse the Pay Roll Savings Plan, and that it was the first national union to adopt a goal of $50,000,000 for its Pay Roll Savings effort, I think it is of utmost importance that Mr. Isbey and Mr. Thomas be brought together and a reasonable degree of co- operation established between them. Mr. Isbey agrees with me on this point. I am working to establish these better relations. James L. L. Augtlet Regraded Unclassified 46 June 11, 1942 R. J. Thomas, Esq. President International Union United Automobile, Aircraft, Agricultural Implement Workers of America, C. I. 0. 281 West Grand Boulevard Detroit, Michigan My dear Mr. Thomas: The Secretary of the Treasury has asked ne to thank you for your letter of June 1 in which you report to him a mumber of cases in which it has been difficult for the United Automobile, Aircraft, Agricultural Implement Workers of America, C. I. 0., to secure adequate cooperation from Frank N. Isbey, the State Chairman of the War Savings Committee for Michigan. Secretary Morgenthau has asked me to go into this matter thoroughly, and I accordingly had a preliminary talk with yourself, Mr. Reuther and Mr. Levinson in my office last week. I an planning to come to Detroit next Monday to discuss this matter more fully with yourself and Mr. Isbey. With many thanks for your fine cooperation in the War Savings Program of the Treasury, I am Yours sincerely, James L. Houghteling Director National Organizations Division JLHifl Regraded Unclassified AUTOMOBILE AIRCRAFT . AGRICULTURAL IMPLEMENT WORKERS 47 UNITED of AMERICA (UAW-CIO) INTERNATIONAL HEADQUARTERS ⑉ WIST GRAND BOULEVARD DETROIT, MICHIGAN R. - THOMAS INTERNATIONAL PRESIDENT GEO. F. ADDES INTERNATIONAL SEC - TREAS SECURITY AMERICA INTERNATIONAL NOIND June 1, 1942 PHONE LAFAVETTE 7900 Honorable Henry Morgenthau Jr. Secretary of the Treasury Washington, D. C. Dear Sir: It is a difficult task for me to be forced to write to you regarding the failure of your representatives in the State of Michigan to cooperate with the United Automobile Workers in making your war bond drive reach the highest possible results. Since your visit here last January 25, I have been made acutely conscious again and again of the antipathy with which your State Director, Frank N. Isby, views the desires of our organization to throw its full forces behind the war bond pro- gram. You will recall his failure to include any representative of the union among the speakers at the Chrysler Tank Arsenal when its flag for high participation was awarded. Fortunately for the full success of the program, that error was corrected by the prompt action at the last moment of one of your labor advisers. Repeatedly since then, my attention has been called to specific actions of that State Administrator, attempting again and again to prevent the UAW war bond program from receiving the public attention which it merits. I have also noted specific failures on his part to cooperate with those of our officials who are desirious of making our campaign an outstanding success. You are aware of his role in the development of the Gen- eral Motors war bond campaign, many features of which were pilfered from the activities of this organization without credit and with- out even private request or acknowledgment. Mr. Walter Reuther, Director of the General Motors Div- ision, has apprized me of the conversations which took place in your office during the morning of April 16 in regard to the public Regraded Unclassified -2- 48 endorsement of that plan in the face of its failure to acknow- ledge the existence or to secure the cooperation of the UAW. Mr. Reuther tells me that Mr. Isby is the man on your staff who led the delegation of General Motors officials to your office early in April and failed to secure the fair recognition for the UAW's activities in making that program possible by laying the background and providing many of the mechanism for increas- ing sales and participation which General Motors Corporation took as its own. Now I am advised that Mr. Isby has again interposed him- self in a developing situation under which the activities of the UAW bond committee were going to set the pace for the kind of program which I understand it is your desire should be used to achieve the maximum possible results. For several months the UAW has been increasing the participa- tion and purchase level among the employees of Ford Motor Company. Out of our experiences we have evolved the establishment of the Ford Division UAW war bond committee, chairmanned by Mr. Byron Taylor, B member of Ford Local 600. This committee has had in- creasing success in stimulating further participation and in- creased allotments. In line with our program, following the meet- ing of the General Executive Board of the UAW in Chicago at the end of March, we instructed our Locals to "exert all possible ef- fort to promote the sale of defense bonds". Following this and contacts from your Labor Section of the War Savings Staff, our Ford Division initiated activities looking toward the establish- ment of a general goal in line with the Executive Board's policy. Extensive meetings were held by the members of the com- mittee and a program evolved. We requested the services of a mem- ber of your Labor Section, Mr. Leo Goodman, to give us the benefit of his broad knowledge of the program. He met with the committee several times and finally sat in on a joint conference of Ford Company officials and the union war bond committee. During this conference, someone speaking for Mr. Isby telephoned the company and attempted to arrange a conference regarding the war bond cam- paign. This person alleged that a representative of the Labor Sec- tion of the War Savings Staff of the U. S. Treasury would accompany Mr. Isby and a Mr. Mills to the proposed conference the follow- ing day. The practical effect of this call was virtually to bring to an end the discussions tnen going on, as the Company desired to determine the purpose of the meeting with the new representative. I am advised by the Ford Motor Company men that they did meet with the additional Treasury agents the next day. Something strange must have happened at that meeting, be- cause the Company has since failed to keep the arrangements which had been agreed upon at the joint session. The union was prepared to proceed with an all-out effort to make the war bond campaign a success. We cannot help but feel that your State Administrator in Regraded Unclassified -2- 48 endorsement of that plan in the face of its failure to acknow- ledge the existence or to secure the cooperation of the UAW. Mr. Reuther tells me that Mr. Isby is the man on your staff who led the delegation of General Motors officials to your office early in April and failed to secure the fair recognition for the UAW's activities in making that program possible by laying the background and providing many of the mechanism for increas- ing sales and participation which General Motors Corporation took as its own. Now I am advised that Mr. Isby has again interposed him- self in a developing situation under which the activities of the UAW bond committee were going to set the pace for the kind of program which I understand it is your desire should be used to achieve the maximum possible results. For several months the UAW has been increasing the participa- tion and purchase level among the employees of Ford Motor Company. Out of our experiences we have evolved the establishment of the Ford Division UAW war bond committee, chairmanned by Mr. Byron Taylor, a member of Ford Local 600, This committee has had in- creasing success in stimulating further participation and in- creased allotments. In line with our program, following the meet- ing of the General Executive Board of the UAW in Chicago at the end of March, we instructed our Locals to "exert all possible ef- fort to promote the sale of defense bonds". Following this and contacts from your Labor Section of the War Savings Staff, our Ford Division initiated activities looking toward the establish- ment of a general goal in line with the Executive Board's policy. Extensive meetings were held by the members of the com- mittee and a program evolved. We requested the services of a mem- ber of your Labor Section, Mr. Leo Goodman, to give us the benefit of his broad knowledge of the program. He met with the committee several times and finally sat in on a joint conference of Ford Company officials and the union war bond committee. During this conference, someone speaking for Mr. Isby telephoned the company and attempted to arrange a conference regarding the war bond cam- paign. This person alleged that a representative of the Labor Sec- tion of the War Savings Staff of the U. S. Treasury would accompany Mr. Isby and a Mr. Mills to the proposed conference the follow- ing day. The practical effect of this call was virtually to bring to an end the discussions then going on, as the Company desired to determine the purpose of the meeting with the new representative. I am advised by the Ford Motor Company men that they did meet with the additional Treasury agents the next day. Something strange must have happened at that meeting, be- cause the Company has since failed to keep the arrangements which had been agreed upon at the joint session. The union was prepared to proceed with an all-out effort to make the war bond campaign a success. We cannot help but feel that your State Administrator in Regraded Unclassified -3- 49 Michigan, Mr. Isby, is doing everything he can to hamper our activ- ities in this program. We want this program to succeed. We do not want to be ac- cused later of having failed to take adequate steps to make this program succeed when our members are threatened with the alternative of a compulsory deduction or a sales tax. Surely, Mr. Secretary, our efforts should not be hampered by a political self-seeker, even though he claims to be friendly to organized labor. The present war effort in our opinion requires full joint cooperative action of all elements in our community. Labor's efforts to make the war bond campaign a success cannot be hamstrung, least of all by a United States Treasury official. Respectfully yours, Photha International Union R. Thomas, President UAW-CIO RJT:AMD Regraded Unclassified Analysis of Exposure to Payroll Savings Plans June 13, 1942 Number exposed Total number in the Percent to payroll savings plans country of total (estimated) exposed Part A - Summary by Number of Organizations Exposed I. Business organizations (1) Firms with 5,000 employees or more 476 480 99 (2) Firms with 500 to 4,999 employees 4,876 6,174 Bo (3) Firms with 100 to 499 employees 18,917 27,041 70 (4) Subtotal - large firms 24,269 33,695 72 (5) Firms with less than 100 employees 74,035 * * (6) Total business organizations 98,304 + II. Governmental organizations # * III. Grand total 98,304 Part B - Summary by Number of Employees Exposed I. Business organizations (1) Firms with 5,000 employees or more 7,779,558 # (2) Firms with 500 to 4,999 employees 6,603,450 # # (3) Firms with 100 to 499 employees 4,482,326 + (4) Subtotal - large firms 18,865,334 * (5) Firms with less than 100 employees 2,001,511 * # (6) Total business organizations 20,866,845 30,000,000 70 II. Governmental organizations (1) Federal Government 397,981 2,100,000 19 (2) State and local governments 1,126,681 2,700,000 42 (3) Total governmental organizations 1,524,662 4,800,000 32 III. Grand total 22,391,507 34,800,000 64 June 19, 1942. Office of the Secretary of the Treasury, Division of Research and Statistics. Excludes agricultural employees, military personnel, employees on WPA or NYA or CCC projects, proprietors, firm members, self-employed, casual workers and persons in domestic service. + Data not available. Regraded Unclassified 50 June 19, 1942 TO: HAROLD N. GRAVES SUBJECT: PROGRESS REPORT FROM WAR SAVINGS STAFF RADIO 1. "THE TREASURY STAR PARADE", "VOICES OF THE PEOPLE", "ROLL CALL OF THE NATION". A. 795 radio stations (out of the nation's 868) are now broadcasting the "Treasury Star Parade" series of programs three times weekly. B. More than sixty per cent of the radio stations now have installed Payroll Savings Plans. Almost fifty per cent of the nation's radio stations have installed Payroll Savings one hundred per cent. C. "Roll Call of the Nation" announcements are now being used by approximately sixty per cent of the nation's radio stations. D. 417 radio stations have used 25,033 "Voices of the People" announcements. 2. "SAVE THE AMERICAN WAY" A. Rudy Vallee and orchestra making special recording. B. Also will be used as part of "Treasury Star Parade" program early in July. Regraded Unclassified 51 -2- RADIO (continued) c. Horace Heidt orchestra will use on "Treasury Chest" program, Tuesday, June 30, over NBC - 8:30 to 9:00 PM. "Wheeling Steelmakers" program, Sunday, June 21, over the Blue Network from 5:30 to 6:00 PM, will feature a special arrangement of this song. 3. SPECIAL BROADCASTS A. Treasury Department goes over the top on Ten Per Cent Drive; Monday, June 15, Station WWDC, "Your Government and Mine" program. This information also broadcast during news programs on Sunday, June 14. (Attachment #1). B. New "10% War Bond Club" song was heard on Bing Crosby's Kraft Music Hall program, June 18 - 9:00 to 10:00 PM over NBC (WRC local outlet). (Attachment #2). C. "The Aldrich Family" on War Bonds and Stamps, June 18, NBC, 8:30 PM. D. CBS program on War Effort and War Savings (series) typical script attached. (Attachment #3). 4. "VICTORY PARADE", SESAC, INC., AND PEPSI-COLA A. Beginning July 5 and through August 23 special Treasury Department Summer series of network shows, "Victory Parade", will be heard over NBC from 6:30 to 7:00 PM, on Sundays. "Victory Theater" (CBS version of "Viotory Parade") will be heard on Mondays over CBS beginning July 20. 52 -3- RADIO (continued) B. SESAC cooperates with War Savings Staff as liaison to radio industry. (Attachment #4). C. Pepsi-Cola -- now adding promotion of 10% Club to jingle contest. Total entries in jingle contest (being heard over radio stations in 48 states, D. C., Panama, Alaska, Canada and Mexico) 45,576. 5. NEW COPY A. New Sponsors' Kit sent out to all radio stations on 10% Club. (Attachment #5). 6. FOREIGN LANGUAGE A. M. S. Szymczak, Member of the Board of the Federal Reserve System, delivered excellent War Bond speech in Polish at patriotic Flag Day Rally of Polish-American organizations of Pittsburgh, on June 14. Now arranging to have Mr. Szymozak make transcription of speech for distribution to all Polish language stations. (Attachment #6). FIELD DIVISION Agriculture Cooperatives The nation's agricultural cooperatives have now pledged themselves to wholehearted support of the U. S. Treasury's farmer- producer plan for the purchase of War Bonds. Through their 53 -4- FIELD DIVISION (continued) national organization, The Council, 4,500 farmer-owned and con- trolled marketing and purchasing associations, representing over two million farmers, have endorsed the Treasury plan. Two distinot systems of saving for the purchase of War Bonds are available as a result of trial of several plans in different parts of the country. Farmers with regular monthly incomes, such as dairymen and poultry raisers, may have their cooperatives deduct stated sums monthly. Farmers who deliver crops to their cooperatives only once a year may have a per cent of each sale or a stated amount per bushel or other unit deducted. Cost-Plus-a-Fixed-Fee Contracts Contractors engaged on cost-plus-a-fired-fee contract with the Government are now permitted by the War Department to qualify as issuing agents for War Savings Bonds in order to accom- plish the delivery of Bonds to employees, when such contractors are administering Payroll Savings Plans. Field Promotion The allotment to State Offices of two handbooks, "Handbook for Speakers" and "Handbook for Banking Committees", which have been printed in limited edition, was announced through Field Memorandum #321, (copy attached). 54 -5- FIELD DIVISION (continued) Display cases to facilitate the distribution of infor- mational folders and order forms for War Savings Bonds will shortly be sent to all moving picture theaters in the country. Field Memorandum #327 (copy attached) announced this promotion, making the additional suggestion that State Administrators use these display cases for the distribution of any suitable infor- mational material on hand in their offices. June County Quotas Reached Telegrams from the Secretary will be sent during June to the Chairmen of Counties that report the advance achievement of June goals. The first 16 counties to report, with the dates of completion of quotas were: Hayes County, Nebraska -June 10 Pooahontas County, W. Va.-June 15 Lincoln County, Colorado -June 8 Calhoun County, Illinois -June 14 Essex County, Vermont -June 6 Crook County, Oregon -June 16 Island County, Washington -June 6 Hernando County, Florida -June 1 Petroleum County, Montana -June 13 Indian River, Florida -June 2 Bristol City, Virginia -June 13 Lawrence County, Indiana -June 13 Tripp County, South Dakota-June 7 Orange County, Indiana -June 13 Starke County, Indiana -June 13 Warren County, Indiana -June 13 Announcement of the above plan was made to State Admin- istrators in Field Memorandum #323 (copy attached). The Adminis- trators were urged to add their own congratulations to those of Secretary Morgenthau. 55 -6- VICTORY PIG SALE A Victory Pig Sale was held at Jonesboro, Arkansas and every dime of the proceeds of the sale was to go into the purchase of War Savings Bonds and Stamps. Every entrant was given a chance to win an extra $5.00 War Savings Stamp as a prize for suggesting the best slogan for the Club. Feeders and Breeders of other kinds of live-stock have adopted the principles of the plan. FARM SECTION Is the Farmer Buying His Share of War Bonds? --- In order to evaluate the effectiveness of our promotion in the rural areas, it is necessary to know whether the farmer is putting as great a proportion of his income into War Bonds as is the city dweller. The following table throws light on this question: Sales of War Bonds as a Percentage of Income Average Monthly Sales of E, F and G Bonds Counties Ranked According (July 1941-January 1942) to % Farm Families are of As a Percentage of Total Number of Families Estimated Annual Effective Buying Income Illinois New York Most Rural .25% .28% Less Rural .28% .27% Less Urban .31% .38% Most Urban 59% .79% 56 -7- FARM SECTION (continued) This table shows that from July 1941 through January 1942 the farmer was putting considerably less than half as much of his income into War Bonds as was the city dweller. When a county breakdown of May sales is available, it should be helpful to see whether our increased promotion among farmers has changed this relationship. PRESS RESULTS Releases showing July State Quotas are scheduled to go out to all newspapers in plate and mat form for release June 29. July County Quotas will be released July 1, also in plate and mats in the form of State maps with the county quotas lettered in. The State quota release also gives a comparative table of May sales and May quotas with a column indicating the per cent over and below the quota. Cooperating with the War Savings Organization Unit, stories were sent to every Czech and Slovak newspaper, urging them to conduct War Bond rallies as their answer to the Nazi massacre of the Czechoslovak town of Lidice. 57 -8- PRESS RESULTS (continued) Dr. Leo Stein's editorial on War Bonds and the Herblock cartoon were sent to 1,000 foreign language newspapers in 22 different languages. Dr. Stein is author of the best seller "I Was In Hell With Niemoeller". A July 4th article by M. S. Szymozak, member of the Board of Governors of the Federal Reserve Board, explaining the aims of the War Bond Campaign, has been prepared. Four cartoonists, at our request, have drawn special War Bond Editorial Cartoons with a Fourth of July background which we are sending out in photoprint form to the leading dailies of the country next week. The cartoon donors are Willard Combes of the Cleveland Press, Arthur Poinier of the Detroit Free Press, C. D. Bachelor of the New York Daily News, and Coakley of the Washington Post. A cartoon featuring the British and American War Heroes has also been sent to all papers in cities where the Heroes are appearing. Our Sunday Visitor, largest Roman Catholic publication in the United States (482,000), is now using our promotional material every week. A special feature story on the activities of Indians in selling War securities has been accepted by the Associated Press. 58 -9- PRESS RESULTS (continued) A feature article on "Woman's Part in the Quota Campaign", written by Priscilla Wayne of the Des Moines Register and Tribune Syndicate, has been reproduced and is being mailed to all Women's Page editors. Attached is a picture of a Powers model wearing a War Stamp corsage. This photograph appeared in the New York Herald Tribune and later will be used by King Features. Photographs of Warner Brothers motion picture stars wearing the Stamp corsages will be released next week. Attached are copies of several dozen new songs, all carrying the War Bond emblem on the covers. These were sent to us by Walter G. Douglas, President of the Music Publishers Protective Association, as evidence of the fact that all sheet music published in the United States will carry War Bond seals throughout the Duration. Attached are two Press activities released by our Press men in New York -- a complete Press Book for the Greater New York Pledge Campaign and a new page of one-column cartoons. Also attached is an article on July Fourth War Bond newspaper promotion which appeared in The Publishers' Auxiliary and has been sent to all weekly editors. 59 -10- MAGAZINES Attached 18 the War Stamp corsage cover taken from the current issue of LIFE. Fawcett Publications have agreed to use three of the new War Bond posters as inside covers on all issues. Attached is a two-page fashion layout from Fawoett's MOTION PICTURE magazine for this month. The Fawcett magazines have a circulation in excess of three million. These publications also will use eight of the cartoons secured for us by Crockett Johnson. SCREEN GUIDE and STARDOM have agreed to use the Crockett Johnson cartoon. "Liberty Limericks" and the "Penny Wise" features have likewise been placed with these magazines. SCREENLAND plans immediate use of cover photograph with War Bond posters as background. They will also use our Liberty Limericks and Dr. Seuss cartoons. SILVER SCREEN has sent us advanced proofs of the August issue containing numerous War Bond mentions. A War Bond cover has been arranged for this magazine. PHOTOPLAY - Attached is a three-page short story with a by-line by Bette Davis, the screen star, whose story inaugurates a contest in which prizes in War Bonds will be paid to readers sub- mitting a printable story about people who buy War Bonds and Stamps. 60 -11- MAGAZINES (continued) Ideal Publications, publishers of MOVIES, MOVIE STAR PARADE and MOVIE LIFE, promise to develop pictures showing what the movie fan clubs should do to promote the War Savings Campaign. Two of the three above-named magazines are planning to use covers. Attached are two sheets of the latest copy sent from the Press Section to all newspapers. These include new cartoons, Liberty Limericks, slogans and Minute Man insignia. NAVY BOND PURCHASES A report from the Office of the Secretary of the Navy informs us that purchases of War Savings Bonds by the personnel of Naval Shore Establishments hit a new high record in May, with total sales reaching $6,472,257. The May total was $1,705,650.75 above the April figure, an increase of 35.77 per cent. The total of War Savings Bonds purchased by Navy Shore personnel since the inception of the Bond Campaign late last year is now $22,971,317.10. BUSINESS PUBLICATIONS On June 18th the Business Publications Section met with Mr. Schuyler Hopper of the Associated Business Papers to plan business papers releases for the next several mailings. Mr. Hopper is establishing a procedure to keep the Business Publications Section informed of ourrent problems and information desired in various industries so that advertising releases may be closely attuned to conditions. Regraded Unclassified 61 -12- COMPANY PUBLICATIONS In response to numerous requests from editors, a complete transcript of the Business Publications Section's pre- sentation to the National Council of Industrial Editors Associations in Chicago was mailed this week to company publications. LABOR PUBLICATIONS 122 labor union publications are publishing the attached advertising release according to returns to date. RETAIL STORES DIVISION Attached is the latest issue of "Retailers For Victory" published for the Retail Stores Division of the War Savings Staff through the courtesy of the National Cash Register Company. The distribution of this bi-monthly publication is now up to 14,000 copies. The second attachment is a seventeen-page mimeographed leaflet containing specific suggestions that form a blueprint for the "Retailers For Victory" July drive. The third attachment is a plan for promoting the sale of War Stamp corsages. They are to be made, sold to retailers, and resold to customers - all at cost. 62 -13- CITATIONS A total of 18,341 organizations have now received the Certificate of Award, as reported by 34 State Administrators. States which have not yet submitted lists have been asked to do 80. WAR DEPARTMENT PAYROLL SAVINGS The War Department reports that the average monthly deduction for various groups of personnel under its jurisdiction are as follows: Commissioned personnel - $20.95; enlisted personnel - $5.00; civilian personnel - $8.95. STATE TOURS Jane Withers, now on vaudeville tour in the East, is doing Bond-and-Stamp appearances between shows in Pittsburgh, Philadelphia, New York, Louisville and Chicago. Lana Turner, glamorous film actress, is on an intensive bond-selling tour. She appears first in Portland, Oregon at the Rose Festival, where she will reign as queen; then she goes to Centralia, Olympia, Tacoma, Seattle, Yakima, Spokane and Walla Walla, Washington; and Kellogg and Burke, Idaho. COWBOYS Roy Rogers, Republic Pictures cowboy star, and his horse "Trigger", are on auto and trailer tour, making radio appearances in behalf of War Savings. 63 -14- BONDWAGONS Horace Heidt and His Musical Knights Orchestra reports the following Stamp sales record for a six-day playing stay in Minneapolis: Cash received $883.70 10-cent books started 1,575 25-cent books started 1,880 50-cent books started 98 $1.00 books started 27 $5.00 books started 32 Potential sales $97,175 (These were theater appearances). AIR CAVALCADE The 8-plane "Air Cavalcade", joint project of the Treasury and the Army Air Forces to promote War Savings and Aviation Cadet Enlisted Reserve, got away to a "flying" start in New York City at LaGuardia Field on June 16, 17 and 18. The itinerary is attached hereto. RALLIES Waterville, Maine - AFL meeting June 10th, Nancy Carroll; Camden, New Jersey - RCA plant, June 12th, Allan Jones and Nancy Carroll; Harrison, New Jersey - RCA plant, June 12th, Lily Damita; Allentown, Pennsylvania - June 12th, Barry Wood and Gloria Stuart; Passaic, New Jersey - June 14th, Alexander Kirkland and "Ship Ahoy" Girls; Buffalo, New York - June 14th, Fay Wray; Rochester, New York - June 15th, Fay Wray. 64 -15- WAR WEEK Rochester, New York "War Week" Committee held a large parade of 50,000 marchers, 150 floats. Major Ben I. Funk, holder of DSC, who flew Ambassador Bullitt to Egypt from the United States, led the parade in a car with two enlisted men from the ill-fated Lexington. NEWSPAPER CARRIER SALES Latest report on total sales of stamps by newspaper carrier boys to date is attached. Also attached is special report showing the sales by newspaper carrier boys for six weeks, May 2 through June 6. This shows that newspaper carrier sales reached a peak in the May 9th week, held steady the two following weeks, and declined during the May 30th and June 6th weeks. SPECIAL Report on replies to the Secretary's letter of April 25 and subsequent wires. (Report #9 attached). Firms Employing 100 to 499 Persons Participating in Payroll Savings Plans (As reported by the Defense Savings Staff's State Administrators) : Number of firms with payroll : Total : savings plans Percent of total having payroll : : number : State savings plans : : : : of firms : : Apr. 18 : June 6 June 13 : : : (estimated) : Apr. 18 : June 6 June 13 Alabama 149 213 219 285 52 75 Arizona 43 55 56 64 67 77 86 48 88 Arkansas 44 48⑉ 142 31 34 Northern California 512 596 616 616 34 83 97 100 Southern California 756 B40 855 1,171 65 72 73 Colorado 113 120 121 124 91 97 98 Connecticut 277 302 304 622 45 49 49 Delaware 21 49 49 85 25 58 58 District of Columbia 52 76 78 152 34 50 51 Florida 147 175 177 177 B3 99 100 Georgia 133 259 272 590 23 44 46 Idaho 31 31 31 39 79 79 79 Illinois 1,300 1,515 1,564 2,252 58 67 69 Indiana 415 553 559 587 71 94 95 Iowa 165 201 201+ 272 61 74 74 Kansas 276 278 278 278 99 100 100 Kentucky 136 180 180 312 44 58 58 Louisiana 179 245 251 384 47 64 65 Maine 60 93 99 198 30 47 50 Maryland 177 221 225 405 44 55 56 Massachusetts 639 728 746 1,523 42 48 49 Michigan 689 816 831 1,022 67 8o 81 Minnesota 376 413 416 416 90 99 100 Mississippi 59 62 62 143 E 43 43 Missouri 472 569 572 664 71 86 86 Montana 40 44 44 44 91 100 100 Nebraska 103 111 111 123 B4 90 90 Nevada 14 16 16 21 67 76 76 New Hampshire 89 100 102 145 61 69 70 New Jersey 463 671 685 867 53 77 79 New Mexico 33 33 33+ 42 79 79 79 New York 2,060 2,694 2,774 4,240 49 64 65 North Carolina 282 372 382 499 57 75 33 North Dakota 14 19 19 29 48 66 66 Ohio 1,126 1,224 1,233 1,739 65 70 71 Oklahoma 166 202 206 345 48 59 60 Oregon 211 264 266 271 78 97 98 Pennsylvania 1,682 1,894 1,914 2,032 83 93 94 Rhode Island 154 180 184 224 69 80 82 South Carolina 71 116 125 174 41 67 72 South Dakota 21 23 23 23 91 100 100 Tennessee 199 199 199* 449 44 44 44 Texas 326 423 437 1,376 24 31 32 Utah 36 44 We 111 32 40 40 Vermont 59 60 60 63 94 95 95 Virginia 281 351 354 354 79 99 100 Washington 234 293 304 323 72 91 94 West Virginia 134 142 143 272 49 52 53 Wisconsin 278 377 380 680 61 55 56 Wyoming 17 18 18# 18 94 100 100 Alaska 2 2 2» 2 100 100 100 Hailroads 49 49 49 52 94 94 94 Total 15,365 18,559 18,917 27,041 57 69 70 Office of the Secretary of the Treasury, Division of Research and Statistics. June 19, 1942. Data are for June 6, inasmuch as no June 13 report was received. Regraded Unclassified Firms Employing 500 Persons or More Participating in Payroll Savings Plans (As reported by the Defense Savings Staff's State Administrators) : Number of firms with payroll : Total : Percent of total having payroll : savings plans : number : savings plans State = : June 6 : : of firms : : Apr. 18 : June 13 : (estimated) Apr. 18 : : : : I June 6 June 13 Alabama 41 55 60 82 50 67 73 Arizona 9 10 13 69 69 77 Arkansas 16 16 16* 22 73 73 73 Northern California 122 124 125 175 70 71 71 Southern California 121 127 130 165 73 77 79 Colorado 25 28 28 29 86 97 97 Connectiout 114 117 117 152 75 77 77 Delaware 15 18 18 24 63 75 75 District of Columbia 32 33 33 53 60 62 62 Florida 28 30 31 63 44 48 49 Georgia 86 106 106 111 77 95 95 Idaho 11 11 11 11 100 100 100 Illinois 391 417 421 549 71 76 77 Indiana 88 124 125 170 52 73 74 Iowa 22 29 29* 41 54 71 71 Kansas 23 24 24 24 96 100 100 Kentucky 38 45 45 73 52 62 62 Louisiana 29 39 40 77 38 51 52 Maine 48 54 55 59 B1 92 93 Maryland 84 91 91 108 78 84 84 Massachusetts 237 269 272 355 67 76 77 Michigan 265 273 277 309 86 88 90 Minnesota 79 80 80 84 94 95 95 Mississippi 26 30 30 38 68 79 79 Missouri 103 114 115 135 76 84 85 Montana 3 3 3 3 100 100 100 Nebraska 23 24 24 31 74 77 77 Nevada 4 4 4 5 Bo 80 80 New Hampshire 29 31 32 32 91 97 100 New Jersey 142 162 167 204 70 79 82 New Mexico 5 5 5* 5 100 100 100 New York 759 804 816 1,096 69 73 74 North Carolina 103 128 128 160 64 80 Bo North Dakota o o o o o o o Ohio 412 426 426 496 83 86 86 Oklahoma 31 39 39 51 61 76 76 Oregon 48 54 54 54 89 100 100 Pennsylvania 551 574 576 624 88 92 92 Rhode Island 61 69 69 81 75 85 85 South Carolina 84 94 94 103 82 91 91 South Dakota 5 5 5* 5 100 100 100 Tennessee 50 50 50* 102 49 49 49 Texas 63 77 78 142 44 54 55 Utah 8 10 10» 16 50 63 63 Vermont 12 12 12 12 100 100 100 Virginia 93 98 98 100 93 98 98 Washington 49 59 64 73 49 B1 88 West Virginia 36 55 58 64 56 86 91 Wisconsin 127 137 138 154 82 89 90 Wyoming 1 1 1* 1 100 100 100 Alaska 3 3 30 3 100 100 100 Railroads 109 109 109 115 95 95 95 Total 864 5,296 5,352 6,654 73 80 80 Office of the Secretary of the Treasury, Division of Research and Statistics. June 19, 1942. * Data are for June 6, inasmuch as no June 13 report was received. Regraded Unclassified CONFIDENTIAL 68 UNITED STATES SAVINGS BONDS - TOTAL Comparison of June sales to date with sales during the same number of business days in April and May 1942 (At issue price in thousands of dollars) : June : Cumulative sales by business days Date : daily : : June : May : June as sales April : : : : :percent of May June 1942 1 $ 29,539 $ 29,539 $ 19,981 $ 24,980 147.8% 2 15,903 45,442 39,430 45,933 115.2 3 21,604 67,046 72,048 64,147 93.1 4 31,162 98,208 88,605 82,937 110.8 5 34,132 132,341 122,575 111,289 108.0 6 21,744 154,085 157,866 129,786 97.6 8 38,574 192,659 181,431 149,409 106.2 9 13,863 206,523 201,464 168,289 102.5 10 30,029 236,552 232,801 185,904 101.6 11 23,220 259,772 246,756 196,667 105.3 12 21,952 281,724 271,525 229,895 103.8 13 21,439 303,163 296,152 242,969 102.4 15 31,235 334,398 317,861 257,280 105.2 16 11,099 345,497 337,371 279,933 102.4 17 23,285 368,782 371,066 295,244 99.4 18 18,587 387,369 385,098 309,780 Office of the Secretary of the Treasury, June 19, 1942. Division of Research and Statistics. Source: All figures are deposits with the Treasurer of the United States on account of proceeds of sales of United States savings bonds. Note: Figures have been rounded to nearest thousand and will not necessarily add to totals. 69 CONFIDENTIAL Sales of United States Savings Bonds From June 1 through June 18, 1942 Compared with Sales Quota for Same Period (At issue price in millions of dollars) : Series E : : Series F and G : Total : Actual Sales : Quota, : Sales : Actual Sales : Quota, : Sales : Actual Sales : Quota, : Sales Date : : June 1 : June 1 : to Date : : June 1 : June 1 :to Date : : June 1 : June 1 : to Date : Daily : to : to : as % of : Daily : to : to :as % of : : to : to Date : Date : Quota : : : Quota Daily : as % of : : Date : Date' = : Date : Date : Quota 1 $ 19.8 $ 19.8 $ 21.7 91.2% $ 9.7 $ 9.7 $ 14.0 69.3% $ 29.5 $ 29.5 $ 35.7 82.6% 2 8.0 27.8 32.0 86.9 7.9 17.6 23.0 76.5 15.9 45.4 55.0 82.5 3 13.0 40.8 46.4 87.9 8.6 26.2 37.9 69.1 21.6 67.0 84.3 79.5 4 17.4 58.2 63.6 91.5 13.8 40.0 51.0 78.4 31.2 98.2 114.6 85.7 5 24.8 83.0 79.6 104.3 9.3 49.4 61.7 80.1 34.1 132.3 141.3 93.6 6 15.2 98.2 93.7 104.8 6.5 55.9 69.4 80.5 21.7 154.1 163.1 94.5 8 27.0 125.2 120.0 104.3 11.5 67.4 82.2 82.0 38.6 192.7 202.2 95.3 9 8.9 134.2 132.4 101.4 5.0 72.4 89.2 81.2 13.9 206.5 221.6 93.2 10 20.1 154.2 149.6 103.1 9.9 82.3 99.6 82.6 30.0 236.6 249.2 94.9 11 15.7 169.9 170.0 99.9 7.5 89.9 108.4 82.9 23.2 259.8 278.4 93.3 12 16.5 186.5 189.0 98.7 5.4 95.3 115.4 82.6 22.0 281.7 304.4 92.5 13 15.2 201.7 205.6 98.1 6.2 101.5 120.8 84.0 21.4 303.2 326.4 92.9 15 24.0 225.7 236.5 95.4 7.3 108.7 130.9 83.0 31.2 334.4 367.4 91.0 16 7.5 233.2 251.1 92.9 3.6 112.3 137.3 81.8 11.1 345.5 388.4 89.0 17 15.8 249.0 271.3 91.8 7.5 119.7 147.8 81.0 23.3 368.8 419.1 88.0 18 12.3 261.3 295.2 88.5 6.3 126.0 157.0 80.3 18.6 387.4 452.2 85.7 19 317.4 164.6 482.0 20 336.9 170.6 507.5 22 373.0 181.9 554.9 23 390.0 189.2 579.2 24 413.5 201.3 614.8 25 441.1 212.0 653.1 26 466.8 221.0 687.8 27 489.2 228.0 717.2 29 530.6 241.4 772.0 30 550.0 250.0 800.0 Office of the Secretary of the Treasury, Division of Research and Statistics. June 19, 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. * Takes into account both the daily trend during the week and the monthly trend during the month. CONFIDENTIANO UNITED STATES SAVINGS BONDS - SERIES F AND G COMBINED Comparison of June sales to date with sales during the same number of business days in April and May 1942 (At issue price in thousands of dollars) : June : Cumulative sales by business days Date : daily : : : : June as June : : : May sales : April :percent of May June 1942 1 $ 9,705 $ 9,705 $ 7,302 $ 11,987 132.9% 2 7,895 17,601 15,168 21,677 116.0 3 8,634 26,235 25,516 29,097 102.8 4 13,774 40,009 33,145 35,818 120.7 no 9,344 49,353 48,751 46,174 101.2 6,535 55,888 60,817 55,991 91.9 8 11,526 67,414 67,213 63,695 100.3 9 4,952 72,366 72,794 70,364 99.4 10 9,945 82,310 80,845 77,197 101.8 11 7,542 89,852 85,410 80,586 105.2 12 5,402 95,254 94,391 91,623 100.9 13 6,210 101,464 102,106 96,031 99.4 15 7,251 108,715 108,923 102,657 99.8 16 3,564 112,279 114,129 111,829 98.4 17 7,470 119,749 123,534 116,374 96.9 18 6,299 126,048 127,724 120,625 98.7 Office of the Secretary of the Treasury, June 19, 1942. Division of Research and Statistics. Source: All figures are deposits with the Treasurer of the United States on account of proceeds of sales of United States savings bonds. Note: Figures have been rounded to nearest thousand and will not necessarily add to totals. Regraded Unclassified CONFIDENTIAL 71 UNITED STATES SAVINGS BONDS - SERIES E Comparison of June sales to date with sales during the same number of business days in April and May 1942 (At issue price in thousands of dollars) : June : Cumulative sales by business days Date : daily : : : June : June as : sales May : : April : :percent of May June 1942 1 $ 19,834 $ 19,834 $ 12,679 $ 12,993 156.4% 2 8,008 27,841 24,263 24,256 114.7 3 12,970 40,811 46,532 35,050 87.7 4 17,388 58,199 55,460 47,119 104.9 5 24,789 82,988 73,824 65,115 112.4 6 15,209 98,197 97,049 73,795 101.2 8 27,048 125,245 114,218 85,714 109.7 9 8,912 134,157 128,670 97,925 104.3 10 20,085 154,242 151,956 108,707 101.5 11 15,678 169,920 161,346 116,081 105.3 12 16,550 186,470 177,133 138,272 105.3 13 15,230 201,700 194,047 146,937 103.9 15 23,984 225,684 208,939 154,623 108,0 16 7,535 233,218 223,242 168,103 104.5 17 15,815 249,033 247,532 178,870 100.6 18 12,288 261,321 257,374 189,156 101.5 Office of the Secretary of the Treasury, June 19, 1942 Division of Research and Statistics. Source: All figures are deposits with the Treasurer of the United States on account of proceeds of sales of United states savings bonds. Note: Figures have been rounded to nearest thousand and will not necessarily add to totals. Regraded Unclassified 72 MEMORANDUM FOR THE SECRETARY. June 19, 1942. Mail Report Mail for this week has contained letters full of suggestions, chiefly for increasing or improving the sales of Bonds and Stamps, and for securing additional revenue through taxes. No new suggestions and no new angle on old suggestions have appeared. Although practically every letter that mentions pay- roll deductions for the purchase of Bonds is in favor of the 10% plan, source deductions for income tax do not meet such favorable reaction. In general, the tax program of the Treasury is approved, and there continue to be a number of copies of letters sent to the members of the Ways and Means Committee, calling upon that group to abide by the suggestions of the Treasury in raising new taxes. Letters in favor of the Sales Tax outnumber unfavorable ones by 15-11. There are, however, 8. number of organizations, usually Labor Unions, which submit formal resolutions of opposition to this form of taxation. Lowered personal exemption is exceedingly unpopular, as is the suggestion of an increased corporation tax. In each case, the unfavorable letters outnumber the favorable by 6-1. The suggested ceiling of $25,000 for annual income elicited 3 favorable to 2 unfavorable returns. There is scattered opposition to joint income tax re- turns, taxes on charitable institutions, etc., a stamp tax for cars, and the flat levy on income tax returns. Among the possible sources of additional revenue, the following have been suggested -- radios, bill-boards, dogs, slot machines, bets, soft drinks, tourist camps, bank checks, Labor Unions, railroad fare, cosmetics, etc. A number of writers have urged a higher tax on gasoline as a fairer means on restricting its use than the present rationing plan. Regraded Unclassified 73 - 1 - General Comments George Koch, N.Y.C. As it is impossible for me to buy Stamps or Bonds, I wish you kindly would accept the enclosed transfer of deeds to 11 lots located close to the new Florida Canal, which may come handy as part of the new air field or warehouse. I am 66 years of age, not too good in health, receiving old-age pension of $24.30 monthly, so you can see for yourself. Other in- come is $15 8. month for my wife's services as janitress. G. C. Hart, Baltimore, Md. I know that the Federal Govern- ment has done everything outside of using force to en- courage manufacturing plants to hire people with a bit of age on them. But it appears that force only will do the trick. I know. Since I have been working up near Phila- delphia, during recent years, I have tried at least a hundred times to get a job in Baltimore again. *** The impression is quite widespread that all people profit during boom periods. This just isn't so. Every time I get my head above water, something happens beyond my control, and down I go again. This happens during booms as well as depressions. In fact, I feel sure that nobody has tried harder to accumulate a few dollars for old-age than I have. *** I think that I should be granted exemption on all my railroad fare, plus the room and meals near Philadelphia. Why? It's all just & duplication of what I have here in Baltimore. And it's a duplication that I don't want. One of the income tax men here had the colossal gall, or ignorance, to tell my wife that I preferred to live as I do, and that no exemption could be allowed. My, how I envy people who can have the kind of job they want, and where they want it. These people evidently think that others can, because they can. Little does this income tax man know how I despise Philadelphia, and nearly everything about it. Yet I must get on a train and go to the cursed place this afternoon. 74 - 2 - Nancy Ill, The Woodland Ensemble, Glen Ridge, N.J. This fall, my brother, sister, and I decided to form an orchestra. Martin plays the trombone, Susan the trumpet, and I the French Horn. # # # There are 18 children in our orchestra, ranging from 10 to 16 years old. Our father, who is a doctor, and never had any experience, conducted us. By popular demand, we voted to give 8. concert this spring, and to donate the money to the Treasury of the U. S. for the war effort. Because it was our first concert, and we didn't feel at all pro- fessional, we only charged 25¢ apiece for them, but we sold 8. good number of tickets, and the concert was quite a success. We made $37.75 which I, as secretary, am for- warding to you. S. Messina, N.Y.C. It is a fact that a citizen of the U. S., unemployed at the age of 60, is bound to remain thus. In civil life, nobody hires him for keeping the Group Insurance Rate down. He is too old for any civil service examination; and to get a position in war indus- tries he has to go through a lot of red tape. Recently, mature men up to 65 were registered; perhaps for work, perhaps to shed our blood in one of the slaughter-fields. If 8. 65-year old man is good to fight, he also ought to be good at work. And I am just three scores of years. Exactly two months older than our President, who at my age is doing an incredible amount of work with his mar- velous brains. Why then, a man of 60 is not wanted in the office or in the factory? I simply ask you. Edwin C. Wilson, Embassy of the U.S.A., Panama. I have the honor to transmit herewith a copy of a letter from Mr. Adalbert Fastlich, dated April 12, 1942, together with a check for $1,000, drawn in favor of the U. S. Treasury, which he encloses "for the purchase of a large air bomb to blast as many Nazis as possible to hell". Mr. Fastlich explains in his letter that he makes this donation in the hope of retaliating for the killing of his brother by a Nazi bomb in London in November, 1940. When Mr. Fastlich called on me this morning to present the check, he remarked that he had long been wishing to make some sort of 8. contribution to the struggle against the Nazis, and that when he read yesterday that U. S. Regraded Unclassified 75 - 3 - aviators may soon cooperate with the R.A.F. in bomb- ings over Germany, the idea of purchasing a bomb suddenly occurred to him. He went on to say that not being an American citizen, he is unable to buy U. S. Defense Bonds, and that he regrets this inasmuch as he has at present about $50,000 which he is not using, and which he would be delighted to put into Defense Bonds, if it were pos- sible for him to do so. Quon Ming Him, Endicott, N.Y. Please except this one hundred dollar Money Order Check for buying just a little more amunition to kill the Japs. This check is enclosed in this letter. Victory is always ours. Nevill Joyner, Blair, Nebraska.* # # At Wahoo, Nebraska, an ordinary unskilled laborer, with ability to use hammer and saw (not a finished carpenter, not a cabinet maker), gets $1.25 an hour for 8 hours a day for 5 days a week, and then time and 8. half for the 2 extra hours on any day, and for all the hours on Saturday. # # # The farmer is considered very dumb, and he is, but he is not "so damn dumb" as not to see the yawning gulf between the inexperi- enced carpenter lad's weekly wage and his own. And the farmer works before sun-up and after sun-down. A farmer works 8 hours a day? Could he do so, he would consider himself a gentleman of leisure. # # # All of the labor and expense of price-fixing is absolutely of no avail without 8. ceiling on wages. The untrained, unskilled laborer who passes his weekly wage across the merchant's counter is 8. large contributor to inflation. And he is the gentleman, who having saved nothing of his exorbitant wage, will be on relief when the war is over, and thereby, as after the last war, 8. burden to the taxpayer, THE FARMER INCLUDED. Maybe, Mr. Morgenthau, you agree with Mr. Sloan in his attack on the Federal Government for its "shameful spectacle in the failure to place a ceiling on wages". ### With very high personal regards, and certainly with-every best wish in your arduous task. 76 - 4 - Max P. Haas, European Picture Service, N.Y.C. Following Mr. Conger's prolonged stay in our office, I have gathered a few thoughts which I would like to send on to you. United States picture agencies are well organ- ized, yet highly competitive. They have never asked for any praise, but they have done a grand job of cover- ing the war, and of cooperating with the Government. # The European war posed 8. very difficult problem for everybody. # Nobody in my organization likes Hitler, and yet it has always been my opinion that in order to show off the criminal of the worst sort, you have to show him off publicly, either by news, radio or pictures. So everybody in this business made contact for German pictures. Most of these pictures are a. spectacular indictment of Hitler, his methods, and of fascism. I don't see why so much should be made over the fact that we too handled German pictures. These pictures have at no time been used for propaganda purposes. As a matter of fact, the newspaper P. M. used many of them to waken up the American public to the dangers of Hitler and fascism, both of which I despise desperately. And why should not I? Having had 8. frozen bank account in Germany for many years, with an amount of 50,000 Marks, with many relatives exiled, some of them killed, what would I have to gain helping him? * # In looking back, I find that U. S. Government agencies have found our pictures most helpful in determining the strength of the German army, its equipment and its tactics. We have been highly complimented many times for making these pictures avail- able, either as a loan or for sale. As a citizen in good standing, with a brother in the U. S. armed forces for over 8. year, with all the responsibilities of war time weighing down on me, I feel that I have done more than my share for the war effort. # # Now I come to the prize story of them all, namely, that the A. P. in Germany, in the summer of 1941, started negotiations with Orbis in Berlin, and made a deal to get their pictures for them- selves and Wide World, as of October 1, 1941. So if there is anything wrong, why not tackle them? They must have thought pretty highly of Orbis to want their pictures that badly. And guess who was head of the A. P. at that par- ticular time? No other than Byron Price, Head of the Office of Censorship of the U. S. - 5 - 77 E. J. Hathaway, Rossville, Ill. Today I went to the bank to pay on and renew my note, and find that under present regulations, same must be paid without fail in 12 months. Like many others through encouragement of the Administration, I contracted past debts in payment form and was carrying about the limit, but was outting all down monthly. Now with this new setup, find it will possibly be too much of a load. All out of clear sky! *** I agree with you that 12 months is the correct limit for small financing such as autos, refrigerators, sweepers, heaters, and all other small luxuries. # # # The only logical long-time financing for any average citizen is that of financing a home. In my own partic- ular case, as conditions are at present, if I cannot refinance my home to obtain enough to pay off these other payments, under present limitations, it will be a case of allowing foreclosure on home or "sticking" the man on my note, and I am sure it will not be the latter. I under- stand the war conditions and seriousness of same, and I am sorry to say that the Middle West has been slow to awaken to same -- probably can condemn the Tribune for majority of laxity, until actual attack showed how wrong they were. * # I can see one little ray of hope for the small bank through the present setup under $1,500, and that is that it is going to give the small bank the advantage of competing with the small loan racket which should never have been permitted in any state. This thing of P ermitting 21 or 3% a month interest, whether it is carried on by Household Finance or any other similar set- up is a disgrace to capital. I believe the Treasury Dept. can begin to see the light in the same way. # # # 78 - 6 - Favorable Comments on Bonds C. W. Muehleck, Oradell, New Jersey. I had a recent experience that I would like to bring to your attention, as it seems utterly ridiculous to me at a time when our country is at war. We are having a celebration in our little community on July 4th, and I am in charge of the athletic events for our children. We are in 8. position to spend about $75 for prizes and I suggested giving Defense Stamps instead of the customary medals. The Amateur Athletic Union has informed me that such 8. pro- cedure would be the same as giving money as prizes, and would affect the amateur standing of our children in the future. It would seem to me that this organization should be forced to make some temporary ruling permitting the granting of Defense or War Stamps, and even Bonds as prizes at such affairs. *** Axel A. Olson, Secretary, St. Paul Federal Savings & Loan Association, St. Paul, Minn. As a Savings and Loan executive, together with our crew of workers, we have tried in every possible way, through newspaper advertising and special booklets, to do our share toward selling as many Bonds and Stamps as we can to help our country along in the war effort. This is evidenced by the fact that we were placed on the honor roll in this eighth Home Loan Bank district, as the only Association in the five states having sold over 5%. Yesterday we were visited by one of the Victory Aides who wanted us to sign 8. pledge signifying that we buy "Defense Savings Bonds by one of the methods listed below". Then you go on naming, "post office, banks, or other sales agency". What's the matter with Savings and Loan Associations? We are spending good money advertising the Bonds, and then you ignore us altogether. This letter is sent with a keen desire to help in this war, but it seems that the powers that be either don't want us to do so, or they wish to make the job as hard as possible. Please give us a chance. *** 79 - 7 - Unfavorable Comments on Bonds Charles H. Hill, Jr., Gloucester, Mass. The following is a short account of my first experience in this city when trying to purchase some War Stamps. Made a small purchase in the first store and then asked for two 25¢ Stamps, was referred to another counter, although there was 8. cash register at the counter where I had purchased an article. Upon making my request there, was told that they were all out of the 25¢ Stamps. Then I entered a store across the street, went to the cash register nearest main door and asked for War Stamps; was referred to another part of the store in extreme rear, and was there told that a sale would be made me when the manager returned from lunch. The third store entered did not and never had had any, and there was told to try a bank or the Post Office. Just then my bus came. # # # I alight- ed at 8. stop where there is 8. small group of stores, barbershop, etc. I entered the principal store and tried to buy some War Stamps there; was told that they had never had any; that none had ever been sent them; and that they could not get any. From what has been published and given out over the radio, it would seem that your intention is to have these Stamps as available to the public as pos- sible, and this is more or less evident from my experience in Florida this past winter, where honest effort was being made to further their sale. * # # People who are used to buying securities will go out of their way considerably to make a purchase of 8. War Bond, and for them, the bank or Post Office is good enough. But little people, those whose dimes and quarters must buy your Stamps, if such are to be sold, must have them constantly in reach, and be endlessly reminded that it is by their buying and sacri- fice of some longed-for luxury that the money will be found for our war effort and ultimate victory. And that's not the way it is being done in this, the city of Gloucester, Massachusetts. George B. Wood, Treasurer, Goodall Rubber Co., Philadelphia, Pa. It might be of interest, and possibly be easy on Stamps through our own various agencies, to report what appears Regraded 80 - 8 - to the writer 8. definite piece of Axis propaganda in connection with the sale of War Stamps and War Bonds. Within the last week I have heard 8. number of people, including employees of our company, say that they think that they have bought enough War Bonds, because at the end of this emergency, when the War is over, War Bonds will not be worth anything scarcely, because they can't be redeemed by the Government at the same time. W. T. Clark, Los Angeles, Calif. This Administration, through F.H.A. and bank loans, encouraged thousands upon thousands of small wage earners to own their own homes -- influenced two of my friends to each buy a home upon payments. Now then, the press and radio announce that Congress plans & law requiring all employers to withhold 10% of salaries for Defense Bonds. # # I have had several tell me they will lose their homes sure if 10% be taken from their small salary. Now Mr. Morgenthau, why not a law compelling F.H.A. and banks to reduce pay- ments 1/3 to 1/2 for the duration, to offset your pro- posed 10% deduction from salary? If something is not done, it will be a case of foreclosures like we had during 1932, 1933 and 1934. President, Jahn & Olliver Engraving Co., Chicago, Ill. This will acknowledge receipt of your form letter and the Certificate of Award showing that in our firm over 90% of our employees are participating in continuous payroll War Bond contributions. In connection with this, I am forced to inform you that the contributions of our employees would be far greater than they are were it not for the real fact that Secretary Morgenthau and Price Fixer Henderson are apparently conducting 8. perfectly conceived plan to murder the advertising industry, from which our employees and our firm derive their livelihood. In our firm we have never considered this very highly technical, artistic and skillful industry in 8. class with houses of ill repute, etc., which should be thrown out of existence. # # # Advertising - beyond anything else - built the great firms of this country, and where would the nation be today without the great firms like General Motors, Chrysler, General Electric, Westinghouse, etc.? Regraded Unclassified 81 - 9 - Advertising built every one of those firms to their present greatness, from which size and skill they have been able to do the impossible in providing munitions to help win this war. In spite of that, Morgenthau, Henderson, and some others, are on record as proposing curtailment of goodwill advertising 80 that these firms can continue to exist after the war is over, and are quite apparently bent on taxing advertising as one added means of curtailing it or ruining it entirely. # # # So I write this letter with regret, to say that our men are already on short hours because of the tremendous reduction in the available volume of photo engraving, and while they would willingly increase their contributions to War Bonds under ordinary circumstances, they very probably will be compelled, in the near future, to re- duce the percentage they are now contributing because of lack of money to take care of personal expenses. "A Loyal American", Brooklyn, N.Y. I read in yesterday's newspapers that Mayor La Guardia of New York was the first New Yorker to sign & pledge in the Minute Men's campaign now starting. He earns $25,000 a year as Mayor. 10% of this would be $2,500 8. year. Yet our Mayor signed 8. pledge to buy one $100 Bond each month; which is 12 times $75 or a yearly total of $900, which is only 3.6% of his salary. I am a worker in the electrical supply industry in New York. My weekly earnings amount to $24 a week. I belong to the A.F. of L. Union in this industry. This Union has taken upon itself to pledge that every member will sub- scribe 10% of his salary towards the purchase of War Bonds. No matter if a member makes $10 8. week or $150 8. week, the same 10% is deducted from each member's salary. I cer- tainly cannot afford to contribute $2.40 weekly toward the purchase of War Bonds. I also have deducted from my salary $0.24 for old-age benefits, and $0.50 weekly for Union dues. Every once in 8. while there is an additional tax placed on me by the Union. The Union also from time to time pledges part of my salary for Red Cross, Army Relief, Navy Relief, and other worthy organizations. I therefore do not average $20 weekly. I feel very bitter on this subject, but the Union says either I agree to the 10% deduction or I will Regraded Unclassified 82 - 10 - be fired, the Union membership must support the Union's pledge 100%. I therefore must either give my wife and two children less for food and other expenses weekly, or I must loan each week, and when I get the $18.75 Bond, I must turn it in for cash to repay these loans. I do not think that the Administration in Washington wants to impose such hardships on the workers. George W. Hickman, N.Y.C. You possibly attended the Army & Navy Parade up Fifth Avenue, or if not, you will see it by newsreel, and I understand that such parades are to be held throughout the entire country, but what I want to say is, that Mayor La Guardia and his Police Commissioner Valentine did a 100% job in keeping the millions who turned out, from getting within one block of the parade at every street crossing throughout the entire line of march. Just who did you want to see this parade? Wasn't this parade to show off our armed might to the working people who have the liquid cash to buy Bonds and Stamps? If it was, then somebody had bet- ter do some apologizing for such stupidity that was shown by the New York City police. Every one I talked with was fighting mad about it. # # # So it is my impression that the police attitude has done more to harm the sale of Bonds, and has stirred up more hatred among our people than Hitler could have done in Germany with his secret police. # The sale of Bonds and Stamps will fall off if something isn't done to explain today's action by local police toward their harsh treatment of the families who brought their children long distances to see what their Stamp and Bond money was paying for, only to be manhandled and told to get back and stay back. I would appreciate an explanation, and I think the Treasury Department would find it a sound investment to run an apology in the New York Times. 83 - 11 - There have been 8. number of letters from individuals whose income is affected by lowered dividends from public utilities, The following is a characteristic comment: "As an American citizen, I am most desirous of contri- buting my financial support to the conduct of the war savings bonds. If I am to continue to lend my support through purchases of these securities, it must be through the cooperation of the present Administration. This can be accomplished by permitting the public utility companies to operate as privately owned concerns, without inter- ference by political bodies. The continuance of Govern- mental agitation against these utility corporations will eventually result in bankruptcy for most of them, with consequentialloss of capital and income by their security holders. This should in no manner prove beneficial to the United States Government. In presenting this problem to you, I am thinking not only of myself as an individual, but of all the security owners, employees and officers of those corporations. Arnold M. Cowan, Queens Village, Long Island, N. Y. As 8. Minute Man in my neighborhood, it has been my experience that, almost without exception, my neighbors are fully in agreement with the main purpose of the drive to encourage savings (and lending to the Government) out of current in- come on the part of all the people, and I am happy to re- port that in many cases, the pledge is merely a promise to continue 8. program already in operation. However, there is one major objection to the pledge. Many have voiced their disapproval of the delay on the part of the author- ities in setting the new tax rates, and it is feared that under the spur of the present drive, many will pledge amounts in excess of any possible margin for savings after taxes, and will be compelled to redeem the Bonds next year to meet their tax bills, involving additional expense and work for the Government. ### May I observe, also, that the selection of New York City for a test was not a partic- ularly happy one. It must be apparent that New York City, as a whole, has not received its proportionate share of the increase in the national income due to the war effort, and in terms of "real" income, might possibly show a loss. 84 - 12 - Favorable Comments on Taxation R. W. Glasner, Chicago, Ill. While I am not in the habit of writing letters to officials in Washington, in these strenuous days an occasional expression of sympathy may not be out of order. Much emphasis, and rightly so, is being put upon the production of war material for winning the war, but equally important is the economic welfare of the country. It is gratify- ing to know that our Treasury is not only fully aware of all the issues, but is courageously urging sound principles of taxation upon a reluctant Congress. You, no doubt, know of the sharp criticism prevalent, partic- ularly among those who could best afford to pay taxes, and who unfortunately are the same people apparently with the most influence among our legislators. Incidentally, I - both personally and as the president of two corpora- tions "troubled" by excess profits from accelerated business out of our war activities - perhaps could be classified among those who, shortsightedly, would deem it to their best interests to have legislated low taxes for those in the higher income brackets. I am enclosing a copy of a letter which I am writing today to The Honorable Robert L. Doughton. (Strongly urges support of Treasury recommendations.) I am aware that my letter to you in itself will have no important effect, but I do think that people should express themselves in praise as readily as in criticism. Allow me to express my sincerest wishes that you may be successful in carrying out your intelligent tax program. 85 - 13 - Unfavorable Comments on Taxation R. D. Longyear, Minneapolis, Minn. I would like to urge that something be done to assist corporations and individuals to pay off indebtedness incurred prior to the present defense effort. A credit should be allowed before calculating both income and excess profits taxes in all cases where principal payments are made on ac- count of such indebtedness. Otherwise, corporations similar to the Longyear Company, who have incurred in- debtedness prior to 1940, on which substantial annual payments on the principal must be met, will be unfairly burdened. In our own case, it will be difficult, if not impossible, to set aside sufficient funds to meet normal and excess profits taxes, and also to take care of the expansion demanded of us to carry on our share of the increased demand for mineral resources. Jay Taylor, Federal Reserve Bank, Dallas, Texas. During the last few weeks I have had many conversations with business men and bankers of Texas about the proposed tax program, and without exception, all of them mentioned the necessity for some consideration being given to business institutions to allow them to make more payments on their debts. # # % With income tax payments increasing, and profits on most businesses not engaged in war work de- creasing, we in Texas are faced with the possibility of many of our oil companies, ranchers, and other business men getting into dire financial circumstances. Won't you please lend your efforts to helping out on this problem? Merle E. Robertson, Liberty National Bank & Trust Company, Louisville, Ky. The cost of the war is daily accumulating, and it is, of course, important that we pay as much of it as possible by taxation. # # * The fact is that the tax burden, even after reducing living expenses, is coming dangerously close to the point of forcing the discontinuance of life insurance. # # I happen to be one of those people who have not had an opportunity to accumulate any particular amount of material things with which to provide for my wife, 86 - 14 - and three children, all under five years of age, in the event of my death, and under the present tax program will not have an opportunity to do so. Like many others, I have no desire to leave them 8. heritage of riches, but I do have the desire that in the event of my death, they should have something which might be sufficient to rear them until they are at least eighteen years of age, and that they might not be a burden on charity, private or public. # # Inasmuch as men willingly pay out a sub- stantial part of their income in taxes, with the inability, as stated, to make any financial accumulations, it seems to me only the part of wisdom in the preservation of our way of life that some reasonable percentage of income should be allowed to be deducted for tax purposes for the carrying of life insurance which is for the benefit of dependents, and particularly minors. 87 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE June 19, 1942 TO Secretary Morgenthau FROM Mr. Haas DA Subject: Recent Changes in Prices and Yields of Government Securities The offering yesterday of $1.5 billions of 5/8 percent certificates of indebtedness due February 1, 1943, had no appreciable effect on the market for outstanding Government securities. At the end of the first day of the offering, prices of all short-term issues were either unchanged or up 1/32 from their closing prices of the previous day. During the week ended last night, the market for tax- able notes and bonds improved slightly. The premium on the new 1-1/2 percent notes showed no change, remaining at 13/32. The new taxable 2's of 1949-51 rose 3/32 during the week, reaching a new high of 100-24/32. The taxable 2-1/2's of 1967-72 closed last night at 101-10/32, up 1/32 from 8. week ago. In general, prices of tax-exempt notes and the shorter-term partially tax-exempt bonds declined slightly, while some improvement occurred in the longer maturities. A comparison with prices on March 19, shows the same basic situation that has existed for a number of weeks. Prices of long-term securities are above their levels of that date, while prices of medium- and short-term securities are below. (See attached chart and tables.) The average rate on the weekly offering of bills was 0.365 percent, down fractionally from the previous week. The 1/2 percent certificates of indebtedness remained stable during the week at 0.46 percent. aggregated $19.8 millions, consisting of $11.5 millions of Federal Open Market Account purchases during the week bills, $5.8 millions of the taxable 2's of 1948-50 and $2.5 millions of the 1-1/2 percent taxable notes. Sales totaled $10.8 millions, including $7.6 millions of bills, $1.2 millions of the taxable 2-1/2's of 1967-72 and $2.0 millions of the 3-1/8's of 1946-49. Bill redemptions totaled $7.2 millions, 80 that the net increase in the portfolio was only $1.8 millions. Attachments Regraded Unclassified 88 Table I Price and Yield Changes of United States Securities June 11, 1942 to June 18, 1942 (Based on mean of closing bid and asked quotations) : : Prices Yields Security June 11, : : June 18, : 1942 June 11, : 1942 Change : June 18, : : 1942 1942 : Change (Decimals are thirty-seconds) (Percent) Bills - Average rate last issue - - - .37 .36 -.01 Certificates 1/2% 11/1/42 - - - .46 .46 .00 Taxable Notes 3/4% 3/15/43 100.06 100.06 .00 -50 .50 .00 3/4 9/15/44 99.21 99.22 +.01 .90 .89 -.01 3/4 12/15/45 99.10 99.11 +.01 .95 .94 -.01 1 3/15/46 99.15 99.15 .00 1.15 1.15 .00 1-1/2 12/15/46 100.13 100.13 .00 1.41 1.41 .00 Taxable Bonds 2% 3/15/48-50 101.15 101.16 +.01 1.73 1.72 -,01 2 6/15/49-51 100.23 100.26 +.03 1.89 1.88 -.01 2 9/15/49-51 100.21 100.24 +.03 1.90 1.89 -.01 2 12/15/51-55 100.12 100.16 +.04 1.96 1.94 -.02 2-1/2 3/15/52-54 104.05 104.07 +.02 2.03 2.02 -,01 2-1/4 6/15/52-55 101.11 101.13 4.02 2.10 2.09 -.01 2-1/2 3/15/56-58 103.09 103.11 +.02 2.22 2.22 .00 2-1/2 6/15/62-67 - - - 2-1/2 9/15/67-72 101.09 101.10 +.01 2.43 2.43 .00 Wholly Tax-exempt Notes 2% 9/15/42 100.18 100.17 -.01 1/32* 2/32* +1/32* 1-3/4 12/15/42 100.26 100.26 .00 .15 .09 -.06 1-1/8 6/15/43 100.26 100.25 -,01 .32 .33 +.01 1 9/15/43 100.25 100.25 .00 .38 .37 -.01 1-1/8 12/15/43 101.04 101.04 .00 .38 .37 -.01 1 3/15/44 100.30 100.29 -.01 .46 .48 +.02 3/4 6/15/44 100.15 100.14 -.01 .52 .53 +.01 1 9/15/44 101.01 101.02 +.01 .54 .52 -.02 3/4 3/15/45 100.16 100.14 -.02 -57 .59 +,02 Partially Tax-exempt Bonds 3-3/8% 6/15/43-47 102.25 102.24 -.01 .60 .58 -.02 3-1/4 10/15/43-45 103.12 103.10 -.02 .72 .73 +.01 3-1/4 4/15/44-46 4 104.11 104.09 -,02 .87 .88 +.01 12/15/44-54 107.19 107.17 -.02 .93 .93 .00 2-3/4 9/15/45-47 105.14 105.15 +.01 1.05 1.03 -.02 2-1/2 12/15/45 105.04 105.04 .00 1.01 1.00 -.01 3-3/4 3/15/46-56 109.16 109.14 -.02 1.16 1.16 .00 3 6/15/46-48 107.05 107.04 -.01 1.17 1.17 .00 3-1/8 6/15/46-49 107.19 107.18 -.01 1,18 1.18 .00 4-1/4 10/15/47-52 115.07 115.07 .00 1.29 1.28 -.01 2 12/15/47 104.20 104.19 -.01 1.13 1,13 .00 2-3/4 3/15/48-51 107.22 107.24 +.02 1.36 1.34 -.02 2-1/2 9/15/48 106.31 107.01 +.02 1.34 1,32 -.02 2 12/15/48-50 104.21 104.20 -.01 1.25 1.26 4.01 3-1/8 12/15/49-52 110.27 110.27 .00 1.59 1.58 -.01 2-1/2 12/15/49-53 106.22 106.22 .00 1.55 1.55 .00 2-1/2 9/15/50-52 107.00 107.02 +.02 1.59 1.58 -,01 2-3/4 6/15/51-54 108.26 105.27 +.01 1.69 1.69 .00 3 9/15/51-55 110.26 110.28 +.02 1.73 1.72 -,01 2-1/4 12/15/51-53 105.12 105.13 +.01 1.64 1.63 -.01 2 6/15/53-55 103.26 103.28 4.02 1.62 1.61 -.01 2-1/4 6/15/54-56 105.17 105.18 +.01 1.74 1.73 -.01 2-7/8 3/15/55-60 110.16 110.18 +.02 1.94 1.94 .00 2-3/4 9/15/56-59 109.28 109.27 -.01 1.95 1.96 2-3/4 +,01 6/15/58-63 110.00 110.01 +.01 2.02 2.01 -.01 2-3/4 12/15/60-65 110,16 110.18 +.02 2.06 2.06 .00 Treasury Department, Division of Research and Statistics. June 18, 1942. Excess of price over zero yield. Regraded Unclassified 89 Table II Price and Yield Changes of United States Securities March 19, 1942 to June 18, 1942 (Based on mean of closing bid and asked quotations) : : Prices : : Yields Security : : : June 18, : March 19, March 19, : : : 1942 Change : June 18, 1942 : : : : 1942 1942 : Change : : (Decimals are thirty-seconds) (Percent) Bills Average rate last issue - - - .20 .36 +.16 Certificates 1/2% 11/1/42 - - - - .46 - Taxable Notes 3/4% 3/15/43 100.12 100.06 -.06 .37 .50 +.13 3/4 9/15/44 99.31 99.22 -.09 .76 .89 +.13 3/4 12/15/45 99.21 99.11 -,10 .84 .94 +.10 1 3/15/46 99.29 99.15 -,14 1,02 1.15 +.13 1-1/2 12/15/46 - 100.13 - - 1,41 - Taxable Bonds 2% 3/15/48-50 101,28 101,16 -,12 1,67 1.72 +.05 2 6/15/49-51 101.04 100.26 -,10 1.83 1,88 +.05 2 9/15/49-51 - 100.24 - - 1,89 I 2 12/15/51-55 100.12 100.16 +.04 1,96 1.94 -.02 2-1/2 3/15/52-54 103.23 104.07 +,16 2.09 2.02 -.07 2-1/4 6/15/52-55 101.06 101.13 +.07 2.12 2.09 -.03 2-1/2 3/15/56-58 103.05 103.11 +.06 2.24 2.22 -,02 2-1/2 6/15/62-67 - - - - - 2-1/2 9/15/67-72 100.27 101.10 +.15 2.46 2.43 -.03 Wholly Tax-exempt Notes 2% 9/15/42 101.04 100.17 -.19 5/32* 2/32* -3/32* 1-3/4 12/15/42 101.11 100.26 -,17 2/32* .09 -3/32* 1-1/8 6/15/43 101.04 100.25 -,11 .22 .33 +.11 1 9/15/43 101.03 100.25 -,10 .26 .37 +,11 1-1/8 12/15/43 101.16 101.04 -,12 .26 .37 +,11 1 3/15/44 101.10 100.29 -.13 .34 .48 +.14 3/4 6/15/44 100.27 100.14 -.13 .37 .53 +.16 1 9/15/44 101.16 101.02 -,14 .39 .52 +.13 3/4 3/15/45 101.00 100.14 -.18 .41 .59 +.18 Partially Tax-exempt Bonds 3-3/8% 6/15/43-47 103.21 102.24 -.29 .41 .58 +.17 3-1/4 10/15/43-45 104.06 103.10 -.28 .57 .73 +,16 3-1/4 4/15/44-46 105.06 104.09 -.29 .72 ,88 +.16 E 12/15/44-54 108.11 107.17 -.26 .91 .93 +,02 2-3/4 9/15/45-47 106.06 105.15 -,23 .94 1,03 +.09 2-1/2 12/15/45 105.28 105.04 -.24 .90 1,00 +.10 3-3/4 3/15/46-56 110.08 109.14 -.26 1.11 1,16 +.05 3 6/15/46-48 107.28 107.04 -,24 1,09 1,17 +,08 3-1/8 6/15/46-49 108.08 107.18 -.22 1.13 1,18 +,05 4-1/4 10/15/47-52 115.20 115.07 -,13 1.33 1,28 -.05 2 12/15/47 104.23 104.19 -.04 1,15 1,13 -.02 2-3/4 3/15/48-51 107.28 107.24 -.04 1.38 1.34 -.04 2-1/2 9/15/48 107.07 107.01 -,06 1.33 1.32 -.01 2 12/15/48-50 104.21 104.20 -,01 1,28 1,26 -.02 3-1/8 12/15/49-52 110.22 110.27 +.05 1.65 1.58 -.07 2-1/2 12/15/49-53 106.16 106.22 +.06 1,60 1.55 -.05 2-1/2 9/15/50-52 106.20 107.02 +.14 1,66 1,58 -.08 2-3/4 6/15/51-54 108.18 108.27 +.09 1.74 1.69 -.05 3 9/15/51-55 110,20 110.28 +.08 1.78 1,72 -.06 2-1/4 12/15/51-53 104.29 105.13 +.16 1.70 1.63 -.07 2 6/15/53-55 103.10 103.28 +.18 1,68 1,61 -.07 2-1/4 6/15/54-56 104.28 105.18 +,22 1,80 1.73 -.07 2-7/8 3/15/55-60 110,00 110.18 +.18 2,00 1,94 -.06 2-3/4 9/15/56-59 109.10 109.27 +.17 2.01 1,96 -.05 2-3/4 6/15/58-63 109,12 110.01 +.21 2,07 2,01 -.06 2-3/4 12/15/60-65 110.00 110.18 +.18 2,10 2,06 -,04 Treasury Department, Division of Research and Statistics. June 18, 1942. Excess of price over zero yield, Regraded Unclassified 9 THE WHITE HOUSE WASHINGTON June 19, 1942. MEMORANDUM FOR THE SECRETARY OF THE TREASURY The discovery of over ten million dollars belonging to Henry M. Blackmer of the Teapot Dome Oil scandal is so amazing that I think you should give publicity to it. Also, in view of the fact that he is a fugitive from justice over a long period of years, the Government should take steps to sequestrate the whole amount permanently. F. D. R. TREASURY DEPARTMENT 91 INTER OFFICE COMMUNICATION DATE JUN 1942 TO Secretary Morgenthau FROM Messrs. Foley and Pehle In our memorandum to you of June 2, 1942, in regard to Jean Monnet and George Murnane, we pointed out that we were continuing this investigation. Since then, Treasury representatives have talked to George Murnane, members of the Petschek family, and to Gert Weismann, who was formerly assistant to Hjalmar Schacht and who assisted Murnane in the sale of the Petschek coal properties in Germany. In the discussion with George Murnane we learned little that we had not already known. As can be expected, Murnane pictured himself as strongly opposed to Axis interests. To support his contention, Murnane stated that in 1930 he, then a partner of Lee Higginson, had arranged the extension to the Bruening government of a $125,000,000 credit by an international syndicate, and that this loan had delayed Hitler's rise to power in Germany. We are studying this transaction further. Murnane also characterized his activity during the last decade as that of helping to protect the assets of victims of Nazi aggression. From what we know about his activities in the American Bosch case, it is evident that this statement does not represent the complete picture. While we are still pursuing our broad study of the interesti and activities of Monnet and Murnane, we did want to bring to your attention at this time a more detailed description of the manner in which the sale of the Petschek coal properties, which was described in our previous memorandum on Monnet and Murnane, was handled by Murnane. The significant facts can be briefly summarized as follows: The Petschek family began to make investments in the United States after the first World War. In 1929 they organized the United Continental Corporation, a family holding company. The legal details relating to the organization of this company were handled by John Foster Dulles of Sullivan and Cromwell, who became the chairman of the board of the United Continental Corporation and for several years held one-half of the company's outstanding shares for the benefit of the Petschek family. It was this company Regraded Unclassified 92 - 2 - that was later used by the Petscheks in order to facilitate the successful sale of their coal holdings in Germany for $6,250,000. In 1936, when the Petscheks were attempting to protect their property in Germany against seizure, they turned to John Foster Dulles for assistance. He introduced them to George Murnane. As part of the process of "aryanizing" the German coal properties George Murnane became chairman of the board of United Continental Corporation. In 1937 the shares in the German coal properties were transferred to a voting trust of which Murnane was sole trustee. However, Murnane claims that he did not consider that the voting trust sufficiently concealed the Petschek interests. Accordingly, the German coal properties were sold to United Continental Corporation and Murnane arranged to have two-thirds of the stock of United Continental Corporation sold to Monnet, Murnane and Company for $100,000 with "no strings attached." The $100,000 used to purchase these shares was advanced to Monnet, Murnane and Company by Mrs. John Foster Dulles. (This loan was subsequently repaid to Mrs Dulles with a bonus of $25,000.) Murnane then proceeded to negotiate with the Germans with respect to the sale of the Petschek coal properties in Germany. In 1938 the Petscheks learned that & German named Flick, head of the Mitteldeutsche Steel Works, was the only person in Germany authorized by Goering to purchase these coal properties. Flick represented a syndicate of buyers which included I. G. Farben. Murnane himself made the first contact with Flick concerning the sale of these properties, but the detailed negotiations with Flick were handled by Viscount Strathallan, the London representative of Monnet and Murnane, Ltd., Hongkong and Gert Weismann, former assistant to Hjalmar Schacht. It is interesting to note that the sale of the properties was consummated and the final papers signed in May 1938, when the German armies were poised at the Czechoslovakian border, and that the payment of $6,250,000 was made while the Czech crisis was at its peak. Murnane, Weismann, and the members of the Petschek family, all conceded that the Germans knew at all times that the Petscheks were the real owners of the coal properties in question and were to be the recipients of the proceeds of the sale. When questioned as to why the Germans would be willing under these circumstances to pay out this large amount in dollars to a Czech-Jewish group for coal properties located in Germany, both the Petscheks and Murnane pointed out that this was one of the ways in which Goering and Regraded Unclassified 93 - 3 - some of the German industrialists could make substantial profits, in as much as these properties were worth far in excess of the price at which they were sold. Murnane stated that the properties actually worth 60 to 70 million reichsmarks were sold for the equivalent of 15 million reichsmarks. When Weismann was questioned about this matter, he stated that he had never spoken to Schacht concerning this deal. Weismann indicated that no one in the Reichsbank knew anything about the matter until a last-minute order came, presumably from Goering, to transfer the dollar exchange. Weismann indicated that if the Reichsbank officials had known about the transaction they would have objected strenuously to the use of foreign exchange for this purpose. {.1.7h 7h Int Regraded Unclassified 94 Re: Jean Monnet and George Murnane In response to your recent request, the following is a summary of the more significant facts now available to us concerning Jean Monnet and George Murnane. JEAN MONNET Jean Monnet was born in France and came to the United States in 1931. Prior to that time he had been deputy head of the League of Nations where he was in close association with the Earl of Perth, who for many years was head of the League of Nations and more recently British Ambassador to Italy. Viscount Strathallan, son of the Earl of Perth, later became affiliated with the London office of Monnet, Murnane & Co. and played 8. significant role in obtaining payment in dollars for certain properties held in Germany. In 1935 Monnet became associated with Murnane in the partnership of Monnet and Murnane, and, from November 1939 to the time of the French armistice in June 1940, he acted as chairman of the coordinating committee of the British and French governments. Since August 1940 he has been in the service of the British Government here in Washington as 8. member of the British Supply Council in North America. Monnet may be connected by marriage with one of the Gianninis in view of the fact that he has A step-daughter, Anna Boucline Giannini and that in 1929 he was the Paris representative of the Bancamerica Blair Corporation. Jean Monnet's principal source of income seems to be derived from the New York partnership and the Hongkong corporation in the name of Monnet and Murnane, although he appears to have been inactive in the New York partnership since early in 1940. In 1937 he borrowed $37,500 from John Foster Dulles, senior partner of Sullivan & Cromwell. This loan was repaid in 1940. Regraded Unclassified 95 -2- During the decade 1930-1940, Monnet spent a substantial portion of his time in Europe and some time in the Far East. In fact, his income tax return for the year 1939 discloses that he filed as 8. non-resident alien although he had previously filed as B. resident alien for some years. Monnet has had accounts in Paris with Worms et Cie., and accounts in London with Lloyds and Lazard Freres and Company, Ltd. He is a director of Kreutoll Realization Co., Wilmington, Delaware; J. G. Monnet & Co., Wilmington, Delaware; and Societe des Proprietaires Vincote de Cognac, France. Monnet's TFR-300 report on himself shows assets in the United States in 1941 of $109,000, of which $99,000 is represented by his interest in the Monnet-Murnane partnership. We have no information as to his assets abroad. His gross income for 1940 was $54,000. GEORGE MURNANE Murnane was born in Brooklyn, New York, in 1887. From 1919 to 1928 he was deputy commissioner for the French-American Red Cross, and, during the same period, vice president of the New York Trust Company. From 1928 to 1935 he was a partner in Lee Higginson Company. Since that date he has served principally as 8. member of the partnership of Monnet, Murnane & Co. and the Hongkong corporation of the same name. Since the outbreak of the war in 1939, Murnane seems to have been the active member of the partnership. His important contacts in Europe have included Ivar Krueger, Dr. Mannheimer (Mendelssohn & Co.), the Wallenberg family of Sweden, Ernest Frohnknecht (former president of Continentale Handelsbank), and the Petscheks of Czechoslovakia. An example of Murnane's close relationship with some of these persons is the fact that in 1938 Mannheimer carried a securities account for Murnane in excess of $185,000 under an arrangement whereby Murnane received the profits and Mannheimer bore the losses. This account was closed out in 1939 when Mendelssohn failed. The international flavor of Murnane's personal contacts is reflected in his business connections. For instance, he is the voting trustee for the foreign-owned shares of the American Bosch Corporation. Together with Eli Whitney Debevoise, a New York lawyer, and John C. Traphagen, a New York banker, he acts as voting trustee for 300,000 shares of common stock of the Solvay-American Corporation (all of the common stock outstanding), Regraded Unclassified 96 -3- which is held for the benefit of Solvay et Cie. of Brussels. Solvay-American Corporation is an investment trust with 8. portfolio aggregating over $90,000,000. The principal asset of this portfolio consists of 500,000 shares of Allied Chemical and Dye stock having a value of over $76,000,000. Murnane is also one of the voting trustees holding all of the stock of the York Commercial Corporation, which has assets of about $2,000,000 in the United States. The York Commercial Corporation is associated with the Continentale Handelsbank, which is allied with the German Potash Syndicate. This stock is apparently held for the benefit of Ernest Frohnknecht, previously referred to above, a Dutch Jewish refugee banker, who states in a TFR-300 report that he is holding funds in the United States which he believes to be beneficially owned by Germans. As also indicated in A previous memorandum, Murnane claims to have recommended to the Wallenbergs that Batt be made the president of S.K.F. and also recommended Batt as 8. director of American Bosch. These "voting trusts" are devices adopted by prominent financial interests in Europe in order to insulate their business operations against the effects of war. By transferring the "legal" control of their enterprises into American names, they have hoped to avoid being designated as "enemy" or "enemy controlled," thus escaping the restrictions against trading with the enemy and the possible seizure of their property. It is significant that Murnane has been very active in these operations. A recent application filed with the Foreign Funds Control by the Finnish-American Trading Corporation, which is a Finnish Government organization, indicates that George Murnane is the president and director of the corporation and that he is con- tinuing as president and as director "at the request of the Export-Import Bank of Washington, in view of the large interest of the United States Government as a creditor of Finnish-American Trading Corporation." In this connection, it is reported that Mr. Murnane is a friend of Jesse Jones. MONNET, MURNANE AND COMPANY, NEW YORK This partnership was formed in 1935 under an agreement which, up to December 31, 1940, provided that Monnet and Murnane divide the income equally between them. The partnership agreement was drawn up by Sullivan & Cromwell. The activities of the firm appear to consist primarily of giving financial and business Regraded Unclassified 97 -4- advice to various clients, particularly with respect to relation- ships of their clients to the United States and foreign govern- ments. During 1940 the partnership's net income was $78,000, which was derived from 17 clients. Included in this income was $15,000 from the American Bosch Corporation. The rest of the income represented directors' fees paid to Murnane and income from service contracts with the partnership. The partnership's net income in 1941 was $110,000 derived from 22 clients. Participa- tion in the partnership profits was changed SO that beginning in 1941 Murnane received 75 percent and Monnet 25 percent. When Mendelssohn failed in the summer of 1939, German Bosch was fearful lest the stock of American Bosch be sold by the New York Trust Company to competing interests. George Murnane and his partner, Jean Monnet, participated in negotiations to prevent the sale of the American Bosch stock to interests who would not be friendly to German Bosch. MONNET AND MURNANE, LTD., HONGKONG At the same time that the New York partnership was set up, Monnet and Murnane organized 8. Canadian company by the same name. Actually the capital in such Canadian firm was furnished by John Foster Dulles and W. N. Cromwell of the firm of Sullivan & Cromwell, who acquired the 1,000 shares of preferred stock for $100,000 against the 2,000 common shares owned by Monnet, Murnane with a value of $10,000. In August 1937, this company was liquidated and the interest of Dulles and Cromwell was extinguished. At the same time 8. new company, Monnet and Murnane, Ltd., Hongkong, was organized, all of the stock of which is divided equally between Monnet and Murnane. This corporation was apparently set up to receive the fees paid in connection with transactions effected outside of the United States. For example, the $200,000 fee received by Monnet and Murnane in connection with the Petschek coal sale described below was paid to the Hongkong corporation. Viscount Strathallen, previously referred to in connection with Monnet, although working out of London, was on the payroll of Monnet and Murnane, Ltd., Hongkong. Regraded Unclassified 98 -5- It is interesting to note that while Monnet actually with- draws very little money from New York, he has "borrowed" sub- stantial sums from the Hongkong company. In fact, the Hongkong corporation seems at present to be the real source of his funds. The Hongkong corporation has assets in the United States totaling about $70,000. We have no information concerning other assets of the corporation. OPERATIONS OF MONNET AND MURNANE. A previous memorandum has discussed the operations of Monnet and Murnane in connection with the American Bosch deal. Another interesting transaction engineered by Monnet and Murnane was the liquidation of the Petschek coal holdings in Germany. The Petschek family (Jewish) was one of the leading industrial families of Czechoslovakia, holding important coal, chemical, paper, and textile properties throughout central Europe. In 1937 the Petscheks became convinced of the necessity of liquidating certain valuable coal properties held by them in Germany. Viscount Strathallan, who was on the payroll of Monnet and Murnane, Ltd. of Hongkong, negotiated with important political and industrial interests in Germany. Strathallan, with the consent of Petschek, retained a Mr. Weisman who was a former assistant to Hjalmer Schacht, president of the Reichsbank, and the son of a former Prussian secretary of state. Through Weisman contact was made with a Mr. Flick, head of the Mittel Deutsche Steel Works. (A recent British intercept indicates that there is now 8. Weisman connected with Monnet, Murnane and Company who, in the autumn of 1940, was apparently interested in certain similar transactions. As a result of these negotiations, the Petschek family received a purchase price of six and a quarter million dollars paid to them in the United States in 1938, despite the drastic regulations then in effect in Germany. For these services, Monnet and Murnane, Ltd., Hongkong, received a fee of $200,000. It will be recalled that Viscount Strathallan, who par- ticipated actively in these negotiations, is the son of the Earl of Perth, who was head of the League of Nations at the time that Regraded Unclassified 99 -6- Monnet was deputy head. The Earl of Perth was subsequently British Ambassador to Italy. Certain phases of this investigation are still under way. Two leading members of the Petschek family are scheduled to appear at the Treasury Department on Wednesday, June 3, accompanied by counsel (Sullivan and Cromwell) to discuss pending applications. At such time we intend to inquire into their activities, particularly into the sale of the coal properties in Germany. We are also going to question Murnane in detail about his activities and the services he renders to the various clients from whom the partnership derives substantial fees. Regraded Unclassified 100 JUN 19 1942 My dear Mr. Secretary: Reference is made to the conversations be- tween representatives of the Department of State and of this Department with reference to the selection of the delegate and advisers to represent this Govern- ment at the forthcoming Inter-American Conference to be held pursuant to Resolution 6 of the Third Meeting of the Ministers of Foreign Affairs of American Republics at Rio de Janeiro. The Treasury Department proposes that the delegate of the United States to such conference be E. H. Foley, Jr., General Counsel of the Treasury, who acts for me on foreign funds matters, and the following advisers be designated: Harry D. White, Assistant to the Secretary, John W. Pehle, Assistant to the Secretary, end Bernard Bernstein, Assistant General Counsel of the Treasury. Regraded Unclassified 101 - 2 - It is our understanding that the Depart- ment of State will nominate three advisers from the State Department staff. Very truly yours, (Signed) 1. Morgenthau. Jr. Secretary of the Treasury. The Honorable, The Secretary of State. n.m.c. By Messenger Dison 3:45 Capies to Thompson JWP:EHF:vls - 6/19/42 Regraded Unclassified 102 TREASURY DEPARTMENT OFFICE OP THE SECRETARY June 19. 1942 CONFIDENTIAL Received this date from the Federal Recerve Bank of New York, for the confidential information of the Secretary of the Treasury, com- pilation for the week ended June 10, 1942, showing dollar disbursements out of the British Empire and French accounts at the Federal Reserve Bank of New York, and the means by which these expenditures vore financed. A enk-6.19.42 Regraded Unclassified C 0 103 P I FEDERAL RESERVE BANK OF NEW YORK June 18, 1942 CONFIDENTIAL Dear Mr. Secretary: Attention: Mr. H. D. White I am enclosing our compilation for the week ended June 10, 1942, showing dollar disbursements out of the British Empire and French accounts at this bank and the means by which these expenditures were financed. Faithfully yours, /s/ L. W. Knoke L. W. Knoke, Vice President. The Honorable Henry Morgenthau, Jr., Secretary of the Treasury, Washington, D. C. Enclosure Copy:vw:b-19-42 Regraded Unclassified AMALYSIS OF BRITISH AND FRENCH ACCOUNTS (In Millions of Dollars) Took Ended June 10, 19/2 BANK OF ENGLAND (BRITISH GOVERNMENT) BANK OF FRINCE DEBITS CREDITS DEBITS CREDITS Proceeda of Gov't Net Incr. Sales of (+) or Gov't Proceeds Net Incr. Total Expendi- Other Total Securities Other Decr. (-) Total Expendi- Other (+) or Total of Gold Other PERIOD Debits tures(a) Debits Credits Decr. (-) Gold (amdai) (b) Credita(c): in Balance Debits tures (d) Debits Credits Sales Credite in Balance First year of war (8/29/39-8/28/40)* 1,7932 605.6 1,187.6 1,828.2 1,356.1 52.0 420.1 + 35.0 866.3(e) 416.6(e) 449.7 1,095.3(a) 900.2 195.1(e) +229.0 War period through December, 1940 2,792.3 1,425.6 1,356.7 2,793.1 2,109.5 108.0 575.6 + 10,8 878.3 421.4 456.9 1,098.4 900.2 198.2 =220.1 Second year of war (6/24/40-8/27/43)** 2,203.0 1,792.2 410.8 2,189.8 1,193.7 274,0 722.1 - 13.2 38.9 4.8 34.1 8.8 - 8.8 - -30,1 1941 Aug. 28- Oct. 1 140.9 105.9 35.0 176.2 20.1 2.0 154.1 + 35.3 0.3 - 0.3 0.5 - 0.5 + 0.2 Oct. 2- Oct. 29 109.0 77.3 31.7 150.9 0.8 - 150.1 + 41.9 0.3 - 0,3 0.3 - 0,3 - Oct. 30 - Dec. 3 156,1 111,6 44.5 134,6 - 1,0 133,6 - 21,5 16.1 - 16,1 0.4 - 0.6 - 15.7 Dec. 4- Dec. 31 88.4 69.6 18.8 2.5 - - 51,5 - 36,9 0,8 - 0,8 0.4 - 0.4 - 0.4 1942 Jan. 1- - Jan, 28 102,3 73,2 29.1 69.3 - 0.5 68,8 - 33.0 0.2 - 0,2 0.4 - 0.4 + 0.2 Jane 29 Feb. 25 87.2 63.8 23.4 57.2 - 1,0 56.2 - 30.0 - - - 0.3 - 0.3 - 0,3 Feb. 26 - Apr. 1 121.4 86.4 35.0 171.4 - - 171.4 + 50.0 6 - 0,1 0,4 - 0.4 + 0.3 Apr. 2- Apr. 29 93.1 64.2 33.9 70.6 - 0.5 70.1 - 27.5 0,2 - 0.2 0.6 - 0.4 + 0.2 Apr. 30 June 3 104.0 11.4 22.6 165.2 - I 165.7 + 01.7 - - - 0.3 I 0.3 + 0.3 WEEK ENDED: May 20 16.4 13.0 3.4 26.1 - , 26.1 + 9.2 - - - 0.1 - 0.1 + 0.1 27 20.5 15.8 427 28.5 - - 28.5 + 8.1 - - - - I - - June 3 16.3 12.8 3.5 18.2 - I 18.2 + 1.9 - - - 0.1 - 0.1 10 32.0 28.5 3.5 62.3(f) + 0.1 62.3 - - + 30.3 - - - 0.1 - 0.1 + 0.1 Average Weekly Expenditures Since Outbreak of War Transfers from British Purchasing Commission to France (through June 19, 1940) $19.6 million Bank of Canada for French Account England (through June 19, 1940) 27.6 million Week ended June 10, 1942 - million England (since June 19, 1940) 37.6 million Cumulation from July 6, 1940 162.7 million *For monthly breakdown see tabulations prior to April 23, 1941. **For monthly breakdown see tabulations prior to October 8, 1941. (See attached sheet for other footnotes) Regraded Unclassified (a) Includee payments for account of British Purchasing Condezion, Dritten Air Ministry, trittal heply lant, Mataley Supply Timber Control, and Ministry of Shipping. (b) Estimated figures based on transfers from the New York Agency of the Bank of Montreal, which appareatly represent the proceeds of official British sales of American securities, including those effected through direct mgetiation. In addition to the official selling, substantial liquidation of securities for private British account occurred, particularly during the early months of the war, although the receipt of the proceeds at this Bank cannot be identified with any accuracy. According to data supplied by the British Treasury and released by Secretary Morgenthau, total official and private British liquidation of our securities through December, 1940 amounted to $334 million, (c) Includes about $85 million received during October, 1939 from the accounts of British authorised banks with New York banks, presumably reflecting the requisitioning of private dollar balances. Other large transfers from such accounts since October, 1939 apparently represent the acquisition of proceeds of exports from the sterling area and other currently accruing dollar receipts. (d) Includes payments for account of French Air Commission and French Purchasing Commission, (e) Adjusted to eliminate the effect of $20 million paid out on June 26, 1940 and returned the following day. (f) Includes: 442 million presemable representing refunds on advances made by the British Purchasing Commission to American concerns under contracts subsequently taken over by U. S. Government. 4 million to be held at disposal of U. S. Army in England and Egypt. 4 million presumably representing proceeds of wool shipments to U. S. Regraded Unclassified DEBITS Transfers Transfers from Official I to Proceeds British A/C fies Inst, 3 Official of (+) or Official Total British Other Total Gold For Own For French Other Deer, (-) Total British Other Total Cold Other H PERIOD Debite A/C Debite Credite Sales A/C A/C Credits in Mance Debite 4/C Debite Credite Sales Creditalia him First year of was (8/29/39-8/28/40)* 323.0 16,6 306.4 504.7 412.7 20.9 38.7 32.4 +181.7 31.2 3.9 27.3 36.1 30.0 6.1 + 4.9 War period through Desember, 1960 477-2 16.6 460.6 707.4 534.8 20.9 110.7 41.0 4230.2 57.9 14.5 63.4 62.4 50.1 12.3 * 4.5 Second year of Mar (8/29/40-8/27/41)** 460.6 - 460.4 462.0 246.2 3.6 123.9 88.5 + 1.6 72.2 16.7 55.5 0.2 62.9 18.3 . 9.0 due. 26 - Oct. 1 23.1 - 23.1 52.2 21.2 - - 31.0 + 29.1 10.7 0.5 10.2 2.8 2.1 0.2 - 7.9 19/1 Oct. 2 - Oct, 29 37.4 - 37.4 19.7 11,9 - - 7,8 -17.7 8.2 5.5 2.7 8.0 5.9 2.1 + 0,2 Oct, 30 - Dec, 3 52.8 0.1 52.7 32.5 19,3 - - 13.2 - 20.3 10.3 6.9 3.6 11,6 900 2.6 + 1,3 47.7 47.7 22.2 17.3 - - 4.9 - 25.5 3.9 1.8 2,1 2.8 0.2 2.6 - 1.1 Dec. 6- Dec. 31 - 1942 Jan, 1 - Jan. 28 39.5 - 39.5 33.0 27.0 - - 6,0 - 6.5 4.5 - 4.5 10,8 - 10.8 + 6.3 34.1 - 34,1 35.7 12.4 - - 23.3 + 1.6 8.4 5.3 11 1,6 - 1.6 - 6.8 Jan. 29. Feb. 25 7.8 1.3 6.5 3.6 3.6 - 6.2 Feb. 26 Apr. 1 46.5 - 46.5 99.3 20.5 7.7 - 71.1 + 52.6 - Apr. 2- Apr. 20 37.4 - 37.4 35.9 14.2 - - 21.7 - 1.5 10.9 8.0 2.9 16.8 - 16.8 + 5.9 54.2 54.2 47.9 15.7 - 32.2 - 6.3 13.2 9.5 3.7 14.6 If 14.6 + 1.4 Apr. 30 - June 3 - - NEXX ENDED: 10.6 10.5 6.6 0.1 - - 6.5 - 4.0 0.5 - 0.5 10.4 - 10.4 + 9.8 May 20 - 13.8 13.1 6.5 - 6.6 - 0,7 - 8.3 8.0 0.3 0.9 - 0.9 - 7.4 27 13.8 - 11.5 5.3 0,2 - 6.2 - 1 5.1 2.4 1.0 11.5 1.4 0.9 . 0.9 - 1.5 June 3 - 10 8,2 8.2 33.0 3.4 - - 29.6(a) + 24.8(b) 0.1 - 0.1 0.6 - 0.6 + 0.5 - Weekly Average of Total Debite Since Outbreak of Mar Through June 10, 1942 $ 8.0 million + For monthly breakdown see tabulationsprior to April 23, 1941. (a) Includes: $18.0 million from proceeds of payment to Aluminum Co. of Canada by R. F, C. - For monthly breakdown see tabulations prior to October 8, 1941. 7.6 million representing proceeds of U. S. Government checks deposited by War Supplies, Ltd. (v) nonversion of cash derosits into 225 mill' Treasury bils. Regraded Unclassified 107 BRITISH AIR COMMISSION 1785 MASSACHUSETTS AVENUE WASHINGTON, D.C. TELEPHONE HOBART 9000 PLEASE QUOTE REFERENCE NO. With the compliments of British Air Commission who enclose Statement No. 38 - Aircraft Despatched - for week ended June 16, 1942. The Honourable Henry Morgenthau, Jr. Secretary of the Treasury Washington, D. C. June 19, 1942. Regraded Unclassified MOST SECRET 108 STATEMENT NO. 38 AIRCRAFT DESPATCHED FROM THE UNITED STATES DURING WEEK ENDED JUNE 16th, 1942 FLIGHT DEL'D DESTINATION ASSEMBLY POINT BY SEA BY AIR FOR USE IN CAN TYPE BOEING U.K. Canada en route 1 B 17E FortressII CONSOLIDATED UK Canada en rdute 5 B 24 D CURTISS Kittyhawk IA Middle East Port Sudan 31 " South Africa Port Elizabeth 6 a LOCKHEED A 29 A AC 151 U.K. Canada en route 1 U.K. . # 11 A 28 Hudson VIA Middle East 1 C 60 Lodestar IIA Middle East Venture U.K. Cariada en"route 5 GLENN MARTIN B 26A Marauder U.K. Canada en route 1 NORTH AMERICAN Canada en route 5 B 25 B U.K. If . 2 B 25 C U.K. Mustang U.K. U.K. 16 STEARMAN 4 PT 27 Canada Canada VULTEE Vengeance India Bombay 5 TOTALS 58 32 4 BRITISH AIR COMMISSION June 19/42 Regraded Unclassified 109 JUN 19 1942 My dear Mr. President: I - melosing report on our exports to some selected countries ⑉ for the period ending May 31, 1942. Faithfully, (Signed) a. Morgenthau. Jr. Secretary of the Treasury The President, The White House. Enclesure. n.m.c By Messenger Harmond :15 atum to Decretarip office HDW:rl 6/13/42 Regraded Unclassified SECRET 110 June 15, 1942 Exports to Russia, Free China, Burma and other blocked countries, as reported to the Treasury Department during the eleven-day period ending May 31, 1942 1. Exports to Russia Exports to Russia as reported during the eleven-day period ending May 31, 1942 amounted to about $26,180,000 for & total of $72,832,000 during May as compared with $169,562,000 during April. Military equipment exported during the period under review included twenty-eight light bombers, fifty-neven light tanks and seven medium tanks. ( Bee Appendix C.) 2. Exports to Free China and Burna Exports to Free China during the eleven-day period ending May 31, 1942 amounted to about $2,533,000, of which military equipment accounted for more than 90 persent. (See Appendix D.) Exports to Burma amounted to less than $500. 3. Exports to France No exports to France were reported during the period under review. 4. Exports to other blocked countries Exports to other blocked countries are given in Appendix A. Most important were exports to Switzerland and Portugal amount- ing to $249,000 and $93,000, respectively. INF/efe 6/15/42 Regraded Unclassified 111 STRICTLY CONFIDENTIAL SUMMARY (IF UNITED STATES DOMESTIC EXPORTS TO SELECTED COUNTRIES AS REPORTED TO THE TREASURY DEPARTMENT FROM EXPORT DECLARATIONS RECEIVED DURING THE PERIOD INDICATED July 28, 1941 to May 1, 1942. (In thousands of dollars) July 28 to Period ended Period ended Total April 30 Very 20 May 31 Domestic Exports S. S. R. $477,341 $17,977 $26,180 $521,498 Free China 73,989 1,872 2,533 78,394 Purma 3/ 12,196 5 5/ 12,201 France 3/ 36 20 - 56 Prain 2,849 5/ 5/ 2,849 3wl tserland 10,006 112 249 10,367 streden 17,731 5/ 47 17,778 Portugal 8,795 124 93 9,012 French North Africa w 6,283 - - 6,283 Treasury Department, Division of Monetary Research June 11, 1942 Many 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 closer will these figures come to Department of Comerce revised figures. From September 11, 1941 to date - it is presumed that a large percentage of material listed here, consigned to Burma, is destined for Free China. Includes both Occupied and Unocoupied France - no breakdown is obtainable from Department of Commerce. Includes Norocco, Algeria, and Tunisis. Less than $500. Illirl 6/11/42 Regraded Unclassified 112 SECRET APPENDIX B Exports from the U. 3. to Free Chima, Burne and U.S.S.R. as reported to the Treasury Department July 28, 1942 - May 31, 1942 (Thousends of Dollars) 1/ Exports to Exports to Exports to Free China Burea V U.S.S.R. July 28 - Aug. 2 395 4,523 - 551 Aug. 4 - Aug. 9 Aug. 11 - Aug. 16 309 986 Aug. 18 - Aug. 23 2 2,735 Aug. 25 - Aug. 30 1 1,023 Sept. 2 - Sept. 6 204 4,280 Sept. 8 - Sept.13 2,281 5,217 Sept.15 - Sept.20 3,822 758 110 449 Sept.22 - Sept.27 2,333 Sept.29 - Oct. 4 1,225 684 323 Oct. 6 - Oct. 11 5,312 1,157 6,845 Oct. 13 - Oct. 18 5 35 1,924 Oct. 20 - Oct. 25 269 403 5,623 Oct. 27 - Nov. 1 4,772 58 4,454 Nov. 3 - Nov. 8 1,672 342 4,552 Nov. 10 - Nov. 15 2,851 88 2,677 Nov. 17 - Nov. 22 1,228 1,021 3,581 Nov. 24 - Nov. 29 3,239 1,364 2,436 Dec. 1 - Dee. 6 791 64 3,609 Dec. 8 - Dec. 13 2,337 18 12,040 Dec. 15 - Dec. 20 111 8 4,550 Dec. 22 - Dec. 27 1 196 1,829 Dec. 29 - Jan. 3 35 2 3,993 Jan. 5 - Jan. 10 91 1,073 8,247 Jan. 12 - Jan. 17 1,695 447 5,874 - 3,885 Jan. 19 - Jan. 24 - Jan. 26 - Jan. 31 6,938 923 9,608 Feb. 1 - Feb. 10 4,889 1,054 13,315 Feb. 10 - Feb. 20 4,853 583 26,174 Feb. 20 - Feb. 28 5/ 2,921 - 28,119 Mar. 1 - Mar. 10 2,879 23 32,502 Mar. 10 - Mar. 20 8,058 3 28,556 Mar. 20 - Mar. 31 6/ 2 2 42,435 Apr. 1 - Apr. 10 4,836 447 51,698 Apr. 11 - Apr. 20 5,335 639 66,906 Apr. 21 - Apr. 30 - 50,958 2,827 May 1 - May 10 V 296 - 28,652 May 11 - May 20 1,872 5 18,000 26,150 May 21 - May 31 6/ 2,533 - Total $80,997 $11,008 $522,012 1. These figures are in part taken from copies of shipping manifests. Regraded Unclassified 113 APPENDIX B Page 2 2. Figures for exports to Free China during these weeks include exports to Rangoon which are presumed to be destined for Free China. 3. It is presumed that a large percentage of exports to Burma are destined for Free China. 4. Beginning with February 1 figures will be given for 10-day period instead of week except where otherwise indicated. 5. S-day period. 6. 11-day period. 7. Due to changes in reporting procedure by the Department of Commerce this report is incomplete for the period indicated. Treasury Department, Division of Monetary Research June 12, 1942 ISF/efe 6/12/42 Regraded Unclassified SECRET APPENDIX o 114 Principal Exports from U. s. to U. S. S. R. as reported to the Treasury Department during the eleven-day period ending May 31, 1942 Unit of Value Quantity Quantity (Thousands of dollars) TOTAL EXPORTS $ 26,180 Principal Items: Landplanes - light bombers (2 engine) No. 28 4,200 Sausage, canned Lb. 9,526,385 3,060 Metor trucks No. 1,323 2,626 Military tanks 2,111 Light tanks No. 55 Medium tanks No. 7 Linseed oil Lb. 15,160,320 1,819 Sugar, refined Lb. 26,439,108 1,332 Iron and steel sheets Lb. 22,752,924 784 Dried egg products Lb. 687,681 688 Ammunition 657 30 caliber balls No. 4,264,500 30 caliber tracers No. 1,819,500 30 caliber armor piercing No. 582,000 30 caliber incendiary No. 250,000 32, 38, and 45 saliber balls No. 1,065,000 Small ares components - - 37 mm. tank and anti-tank armor pieroing No. 49,000 602 Aircraft engine parts and accessories - - Iron and steel strip Lb. 8,202,455 592 Iron and steel pipe and pipe fittings Lb. 11,314,019 484 Sole leather Lb. 1,065,208 475 Copper wire, insulated Lb. 1,282,955 458 Lathes No. 77 417 Steel bars Lb. 5,258,274 412 Treasury Department, Division of Monetary Research June 13, 1942 ISF/efe 6/12/42 Regraded Unclassified SECRET 115 APPENDIX D Principal Exports from U. S. to Free China as reported to the Treasury Department during the eleven-day period ending May 31, 1942 (Thousands of Dollars) TOTAL EXPORTS $ 2,533 Principal Items: Military equipment 2,363 Relief supplies - drugs and biologies 6 Relief supplies - surgical and hospital 76 Relief supplies - other 11 Treasury Department, Division of Monetary Research June 15, 1942 Isf/efe 6/15/42 Regraded Unclassified 116 JUN 19 1942 My dear Mr. Perkins: I am enclosing five copies of the report on our exports to some selected countries for the period ending May 31, 1942. Sincerely yours, (Signed) 1. Horgenthas. Jr. Secretary of the Treasury Nr. Milo Perkins, Executive Director, Board of Economic Warfare, Room 3710, Department of Commerce Building, Washington, D. C. Enclosures. n.m.c. By Messenger Harmer 3:20 Return to HDW:rl 6/13/42 Regraded Unclassified 117 JUN 19 1942 My dear Colonel Donovans I an enclosing copy of report on our exports to some selected countries for the period ending May 31, 1942. Sincerely yours, (Signed) H. Morganthau, Jr. Secretary of the Treasury Colonel william J. Denovan, Coordinator of Information, old National Institute of Health Building, 25th and E Streets, N. We, Washington, D. C. Enclosure. P.S. Place let me know n.m.c. By Messenger Harmon 3:20 if receive you these still wish figures." to HDW:rl 6/13/42 To frien Regraded Unclassified 118 Treasury Department Division of Monetary Research Date June 15, 19 42 To: Miss Chauncey From: Mr. White The tables for transmittal to the Secretary of State, the Coordinator of Information and Mr. Perkins differ from those being sent to the President in that certain military figures are not broken down. 119 TUN 19 1942 My dear Mr. Sedretary: I am enclosing copy of report on our exports to some selected countries for the period ending May 31, 1942 Sincerely yours, (Signed) 1. Morgenthas, Jr. Secretary of the Treasury The Honorable, The Secretary of State, Washington, D. C. Enclosure. n. n.m C. By Messenger Harmon 3:20 HDWsrl 6/13/42 actuan to Decartary's office Regraded Unclassified SECRET 120 June 15, 1942 Exports to Ruesia, Free China, Burna and other blocked countries, as reported to the Treasury Department during the oleven-day period ending May 31, 1942 1. Exports to Russia Exports to Russia as reported during the eleven-day period ending May 31, 1942 amounted to about $26,180,000 for a total of $72,832,000 during May as compared with $169,562,000 during April. Military equipment accounted for less than one-third of the total. (see Appendix C.) 2. Exports to Free China and Burna Exports to Free China during the eleven-day period ending May 31, 1942 amounted to about $2,533,000, of which military equipment accounted for more then 90 persent. (See Appendix D.) Exports to Burza amounted to less than $500. 3. Exports to France No exports to France were reported during the period under review. 4. Exports to other blooked countries Exports to other blocked countries are given in Appendix A. Most importent were exports to Switzerland and Portugal Amount- ing to $249,000 and $93,000, respectively. ISF/efe 6/15/42 Regraded Unclassified STRICTLY CONFIDENTIAL 121 SUBMARY OF UNITED STATE DONESTIC REPORTS TO SELECTED COUNTRIES AS REPORTED TO THE TREASURY DEPARTMENT PHON EXPORT DECLARATIONS RECEIVED LURING THE PERIOD INDICATED w July 28, 2942 to May 31, 1942. (In thousands of dollars) July 26 to Period ended Period ended Total April 30 May 20 May n Donentic Sports 8477,341 $17,977 $26,190 $521,498 Valie S. R. pree China 73,989 1,872 2,533 78,394 Durna 2/ 12,196 5 5/ 12,201 France 3/ 36 20 - 56 st Spain 2,849 2/ 2,849 itserland 10,006 112 249 10,367 threden 17,731 5/ 47 17,778 Portngal 8,795 124 03 9,m2 Prench North Africa w 6,283 - 6,213 I Treasury Department, Division of Ventary Research June 11, 1942. y Vary 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 closer will these figures come to Department of Comerce revised figures. 3/ 7yon September n, 1941 to date - 18 is presumed that a large persontage of material listed here, oursigned to Dama, is destined for Free China. 3/ Includes both Occupied and !moosupied France - no trankdown is obtainable from Department of Comeros. y Includes Noroeco, Algeria, and Tunisia. 5/ Less than $500. JMarl 6/12/42 Regraded Unclassified SECRET 122 APPENDIX B Exports from the U. 5. to Free China, Burne and U.S.S.R. AS reported to the Treasury Department July 28, 1942 - May 31, 1942 (Thousands of Dollars) w Exports to Exports to Experts to Free Ohina Purne V U.S.S.R. July 28 - Aug. 2 395 4,523 Aug. 4 - Aug. 9 - 851 Aug. 11 - Aug. 16 309 986 Aug. 18 - Aug. 23 2 2,735 Aug. 25 - Aug. 30 1 1,023 Sept. 2 - Sept. 6 204 4,260 Sept. 8 - Sept.13 Sept.15 - Sept.20 2,281 & 5,217 3,822 752 Sept.22 - Sept.27 110 449 2,333 Sept.29 . cot. 4 1,225 684 323 Oct. 6 - Oct. 11 5,312 1,157 6,845 Cet. 13 - Det. 18 5 35 1,924 Oct. 20 - Dat. 25 269 403 5,623 Oct. 27 - Nov. 1 4,772 58 4,484 Nov. 3 - Nov. 8 1,672 342 4,552 Nov. 10 - Nov. 15 2,851 88 2,677 Nov. 17 - Nov. 22 1,228 1,021 3,581 Nov. 24 - Nov. 29 3,239 1,364 2,436 Dec. 1 - Dec. 6 791 64 3,609 Dec. 8 - Des. 13 2,337 18 12,040 Dec. 15 - Dec. 20 111 a 4,580 Dec. 22 - Dec. 27 1 196 1,829 Dec. 29 - Jan. 3 35 2 3,993 Jan. 5 - Jan. 10 91 1,073 8,247 Jan. 12 - Jan. 17 1,695 447 5,874 Jan. 19 - Jam. 24 - - 3,855 Jan. 26 - Jam. n 6,938 923 9,608 Feb. 1 - Feb. 10 4,589 1,054 13,315 Feb. 10 - Feb. 20 4,853 583 26,174 Feb. 20 - Feb. 28 5/ 2,921 - 28,119 Mar. 1 - Mar. 10 2,879 23 32,309 Mar. 10 - Mar. 20 8,058 3 28,5% Mar. 20 - Mar. 31 y $ 2 42,435 Apr. 1 - ApP. 10 4,836 447 Apr. 11 - Apr. 20 5,335 639 66,906 Apr. 21 - Apr. 30 2,887 - 50,958 May 1 - May 10 V 296 - 18,652 May 11 - May 20 1,572 5 18,000 May 21 - May 31 2.31 - 26.180 s/ Total $60,997 $11,088 $522,012 1. These figures are in part taken from sopies of shipping manifests. Regraded Unclassified SECRET 123 APPENDIX B Page 2 2. Figures for exports to Free China during these weeks include exports to Rangoon which are presumed to be destined for Free China. 3. It is presumed that a large persentage of exports to Burne are destined for Free China. 4. Beginning with February 1 figures will be given for 10-day period instead of week except where otherwise indicated. 5. 8-day period. 6. 11-day period. 7. Due to changes in reporting procedure by the Department of Commerce this report is incomplete for the period indicated. Treasury Department, Division of Monetary Research June 12, 1942 ISF/efe 6/12/48 Regraded Unclassified SECRET 124 APPENDIX C Principal Exports from U. s. to U. S. S. R. as reported to the Treasury Department during the eleven-day period ending May 31, 1942 (Thousands of Dollars) TOTAL EXPORTS $ 26,150 Principal Items: Hilitary equipment 7,699 Sausage, canned 3,060 Motor trucks 2,626 Linseed oil 1,819 Sugar, refined 1,332 784 Iron and steel sheets 688 Dried 988 products Iron and steel strip 592 Iron and steel pipe and pipe fittings 484 Sole leather 475 458 Copper wire, insulated 417 Lathes 412 Steel bare Treasury Department, Division of Nonetary Research June 15, 1942 ISF/efs 6/15/42 Regraded Unclassified SECRET 125 APPENDIX D Principal Exports from V. S. to Free China as reported to the Treasury Department during the eleven-day period ending May 31, 1942 (Thousends of Dollars) TOTAL EXPORTS $ 2,533 Principal Items: Militery equipment 2,363 Relief supplies - drugs and biologies 83 - 4 - surgieal and hospital 76 . . - other 11 Treasury Department, Division of Monetary Research June 13, 1942 Isr/efe 6/13/42 Regraded Unclassified 126 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE June 19, 1942 TO Mr. White FROM Mr. Gass Subject: The Food Situation in Continental Europe 1. As the end of the third year of war approaches, the food situation in continental Europe is serious everywhere and catastrophic in some countries. Yet all available evidence suggests that food consumption today is, on the average, substantially higher than in 1917 or 1918. 2. In Germany, stocks have been greatly depleted. The outlook for this year's crop is unfavorable. A summer of bad weather followed by another ex- ceptionally harsh and prolonged winter would push supplies below the level needed to maintain efficiency. Still today in Germany industrial workers have rations providing roughly nine-tenths as many calories as they consumed before the war. It is the opinion of informed students that the German ration system provides a diet adequate to maintain her population "without any marked loss of efficiency or serious effects on morale". 3. Even if Germany were in a worse absolute position than she is today, her relative strength could not be assessed properly without taking into account the fact that the domestic food supply of Germany's major military opponent, the U.S.S.R, is substantially less adequate than that of Germany. In the occupied area, the Soviet Union lost -- though Germany did not gain -- an annual production of about 17 million metric tons of bread grains, 28 million metric tons of potatoes and 15 million metric tons of sugar beets. These losses amount to about one quarter of former Soviet production of bread grains, two-fifths of her production of potatoes and two-thirds of her production of sugar beets. Among rationed commodities, the Soviet civilian consumer fares better than the German only in bread. By comparison with the German, the Soviet ration provides the civilian consumer with very roughly 30 percent as much potatoes, 30 percent as much sugar, 50 percent as much meat and 60 percent as much fats. 4. If we arrange some of the principal European countries from top to bottom in the order of the adequacy of their food supply, the following might be included in the first sub-group, whose food supplies are "adequate": Switzerland, Portugal, Sweden, Denmark, Germany, U.S.S.R. The following countries' supplies are clearly "inadequate": Netherlands, France, Italy. In the last group of countries the supply situation is very bad: Norway, Belgium, Spain, Poland, Greece. British Ministry of Economic Warfare, April 20, 1942, and U.S. Department of Agriculture, June 1, 1942 Regraded Unclassified 127 Division of Monetary - 2 - Research 5. In spite of the idleness or underemployment of large masses of people on the European continent, the most constricting shortage in German agriculture -- as in German industry and the German military forces -- is manpower. If the Germans had manpower, they would have agricultural machinery, they would have fertilizers, they would have motor fuels -- they would have plenty of food. The Reich military authorities, the food authorities and the industrial authorities are in a continuous conflict over the dwindling supply of manpower. This is Germany's absolute poverty. If she had years to perfect the organiza- tion of the European economy, she might learn to put her subject peoples into industry and agriculture while her own men fought in the armies. But Germany has not yet been able to do this. Her supplies from the occupied territories are clearly dwindling rather than increasing. It must be emphasized that, in spite of the much vaunted German efficiency, under the stress of war Germany has not been able to create a functioning European economy - in food supply or in any other branch of her economy. The essential basis of the Reich's power is still in Germany, and that basis is weakening as the manpower problem becomes steadily more acute. 6. In evaluating the long-term food outlook of the Soviet Union in comparison with that of Germany, regard must be had to three sets of facts: (a) The Soviet food rationing system is not as comprehensive as that of Germany. Russia has a greater percentage of rural self-suppliers and more unrationed foods. Therefore the degree by which German rations exceed Russian ones overstates the superiority of the German diet over the Russian. (b) Russia has always had a greatly lower standard of living than Germany. The Russian population is accustomed to a much more meager diet than the German. The percentage cut from peace to war is possibly not greatly higher for the masses in Russia than in Germany, and it is possibly not felt more. (c) Soviet supplies can be supplemented from outside Europe to a greater extent than those of Germany. It is true that in the 10 months from July 28, 1941 to May 20, 1942 the United States sent Russia only $61 million of food, but this amount can be greatly increased if the shipping situation develops favorably. Regraded Unclassified 128 June 19, 1942. Dear Mr. Secretary: I as sending to you herewith for trans- mission to the Cuban Government the Third Report of the American Technical Mission to Cuba contain- ing comments on the draft Monetary Law which was handed to the Mission by the Cuban Finance Minister on the occasion of his recent visit to Washington. Sincerely yours, (Signed) H. D. White H. D. White, Chief, American Technical Mission to Cuba. The Honorable, The Secretary of State, Washington, D. C. HRS sugb 6/19/42 Regraded Unclassified 129 American Technical Mission to Cuba COMMENTS ON THE DRAFT MONETARY LAW Third Report to the Cuban Government June 18, 1942 Personnel of Mission G. A. Eddy, Treasury Department A. T. Esgate, Farm Credit Administration W. R. Gardner, Board of Governors of the Federal Reserve System F. A. Southard, Jr., Treasury Department H. R. Spiegel, Treasury Department G. B. Vest, Board of Governors of the Federal Reserve System H. D. White, Chief of Mission, Treasury Department Regraded Unclassified 130 AMERICAN TECHNICAL MISSION TO CUBA June 18, 1942 Dear Mr. Minister: You will recall that on the occasion of your recent visit to Washington you handed to the Mission copies of three draft laws, one of which was a Monetary Law. Members of the Mission have given careful consideration to the draft Monetary Law from two points of view: 1. In the light of the Mission's recent Second Report to the Cuban Government, dealing with the Central Bank and the Exchange Stabilization Fund, are there any changes which should be made in this draft law? 2. What additional suggestions or comments might the Mission appropriately make on the provisions in the draft law? I herewith submit to you a Memorandum containing the com- ments of the Mission on the draft Monetary Law. The Mission's views on the other two draft laws were expressed in its Second Report. Sincerely yours, HDWhite H. D. White, Chief of Mission. Honorable Oscar Garcia Montes, Minister of Finance, Habana, Cuba. Regraded Unclassified 131 AMERICAN TECHNICAL MISSION TO CUBA Comments on the Draft Monetary Law The following comments pertain to the draft Monetary Law submitted by Minister Garcia Montes to the Mission on the occasion of his visit to Washington in March 1942. The Mission has examined the draft Monetary Law from the point of view of its compatibility with the Mission's recommenda- tions as presented in its Second Report to the Cuban Govern- ment and also from the point of view of the principles which the Mission feels should be embodied in the Monetary Law. GOLD CONTENT The llission agrees that it is desirable to define the OF THE PESO peso in terms of gold and that a gold content equal to that of the United States dollar is appropriate for the Cuban peso. The weight of the United States gold dollar was fixed at 15-5/21 grains of gold 9/10 fine by Presidential Procla- mation of January 31, 1934. This is equivalent to 0.987412+ grams of gold 9/10 fine or 0.388671- grams of fine gold. Article 1 of the draft Monetary Law specifies that the Cuban gold peso shall have a weight of 0.9873 grams and Article 5 that gold coins shall have a fineness of 9/10, which makes the gold content of the Cuban peso slightly less than that of the United States dollar. It might be more convenient if the two gold contents were exactly equal. Regraded Unclassified 132 - 2 - COINAGE OF The Mission agrees that a prohibition against coinage GOLD of gold such as is contained in Article 8 is desirable, At present gold is used primarily for settling international balances and for monetary reserves. The use of gold as a medium of hand-to-hand circulation has almost completely disappeared. ISSUE OF GOLD Article 8 also provides that the President of the CERTIFICATES Republic shall be empowered to issue gold certificates and that such gold certificates shall be used only for exchange at the Central Bank for currency having legal circulation privileges. In its Second Report the Mission made recom- mendations giving the Bank sole power to issue currency and outlining means available to the Stabilization Fund for financing acquisitions of gold. The !lission believes that provisions pertaining to the issue of obligations secured by gold and foreign exchange can more appropriately be in- cluded in those portions of the Central Bank Law which are concerned with the Stabilization Fund, PRIVATE Paragraph 1 of Article 15 in effect prohibits the OWNERSHIP OF GOLD private ownership and holding of gold in Cuba. A number of other countries have adopted similar measures designed to provent the hoarding of gold. It may be observed, how- over, that a prohibition against privato gold holding would not prevent Cubans from hoarding dollars either in Cuba or Regraded Unclassified 133 - 3 - in the United States and that measures designed to do so would be incompatible with a free exchange market. GOLD PURCHASES Paragraph 1 of Article 15 also requires redemption of BY THE GOVERN- :ENT gold in "coins of legal circuiation." This appears to be an unnecessarily inconvenient method of payment. It would probably be better to eliminate any reference to the form in which payment should be made, thus permitting payment in legal tender currency as well as in coins, or payment by check if that is agreeable to the person whose gold is being redeemed. Paragraph 2 of irticle 15 requires that the Cuban Govern- ment purchase all gold which is offered to it and specifies the price at which gold shall be acquired. The Mission agrees that if private holding of gold is to be forbidden, the Cuban Government should stand ready to purchase all gold surrendered by residents of Cuba, The Mission does not believe, however, that the Cuban Government should be required to purchase all gold offered to it, at home or abroad, without regard to the amount or to conditions which might from time to time develop. It may be noted that the United States Treasury and Stabili- zation Fund are not so obligated. CHANGES IN THE Paragraph 3 of Article 15 provides that the President PRICE OF GOLD of the Republic shall have power to modify the price of gold and the gold content of the peso but not below 0.8359 grams (prosumably of gold 9/10 fine). This gives the President Regraded Unclassified 134 - 4 - power to devalue the pcso by as much as 15 percent or to approciato it without limit. The Mission has recommended in its Second Report that the Stabilization Fund be required to maintain the peso at parity permitting only minor technical fluctuations within a range of not more than 2 percent in either direction. The Mission, however, has also stated its belief that the Stabilization Fund Committee should be empowered to recom- mend to the President of the Republic the adoption of a now parity lovel with a corresponding change in the gold content of the peso if circumstances appear to require a basic adjustment of Cuba's exchange rate. If he agrees the Prosident should then ask the Cuban Congress for the necessary logislation to change the gold content of the pcso. To prevent flight of capital in a period during which devaluation of the peso was being considered, it might be necessary temporarily to subject foreign exchange transactions to control by license. À recommendation pro- viding for just such a step in this contingency was in- cluded by the Ifission in its Socond Report. There is ono circumstance in which prompt executive action may be dosirable. By powers conferred in the Act of May 12, 1933, as anonded by the Gold Roserve Act of 1934 and by subsequent extensions of these powers, the President of the United States is authorized to fix the Regraded Unclassified 135 - 5 - weight of the gold dollar between 50 and 60 percent of its former gold contont. By proclamation of January 31, 1934, the President fixed the weight of the gold dollar at 59.06 percent of its former content. However unlikely the con- tingency that these powers to altor the gold content of the dollar will again be excrcised, so long as they renain in effect the President of Cuba should probably be authorized to rovise the gold content of the peso and the poso price of gold in the event of sinilar action by the United States and to an equivalent extent. Since quick action may be re- quired, oxercise of this authority should probably not be subject to the necessarily slower process of Congrossional approval. REGULATION The Mission agrees that provisions similar to those OF GOLD TRANS CTIONS contained in Articles 16, 17, 18, 19, 20, 22 and 23 rogu- lating transactions in gold are necessary if private holding of gold is to be forbidden. It suggests, however, that this entire group of provisions be reviewed in the light of the role contemplated for the Stabilization Fund in the Mission's Second Report. Article 22 contains a reference to Article 16 which presumably should be a refer- once to Article 15. Under the Mission's rocommendations in its Second Report, powers similar to those in Article 21 (authorizing the Central Bank to recoive and hold gold) and Article 24 Regraded Unclassified 136 - 6 - (authorizing the Finance Ministor to deal in gold, foreign exchange, or other credit instruments for the purpose of stabilizing the exchange rate) arc provided in the Contral Bank Law and do not noed to be repeated in the Monetary Law, In several respects these Articles differ from the recon- mendations nade in the Second Report. PROPORTION OF The Mission believes it is unnecessary in the Monetary SILVER TO GOLD IN THE 10NE- Law to raise the problem of the relative size of the gold T.RY STOCKS and silver stocks as is done in Article 3 or to provide means for withdrawing silver from the monetary stocks as is done in Article 14. The lission has included recommenda- tions on these matters in its Second Report. In the opinion of the lission, this entire problem can best be handled in the Central Bank Law. decordingly, the Mission suggests the deletion of Articles 3 and 14 from the Monetary Law. While the !lission favors the acquisition by Cuba of ade- quate reserves of gold or foreign exchange, it considers that operations for this purpose should be carried out by the Stabilization Fund and that no legal declaration on the proportion of gold and silver (such as that made in Article 3) is required. ISSUE OF SILVER CERTIFICATES In view of the fact that the /fission contemplates the ultimate replacement of all silver certificates by Central Bank notes, the Mission reconnends the omission from the Monetary Law of Article 12 which provides for further issues of silver cortificates. de 137 -7- - - FRACTIONAL The Mission approves the proviso in Article 9 that COINS silver needed for coinage of fractional silver coins shall be obtained, unless circunstances indicate otherwise, from the stock of one-peso silver coins. Under the !fission's reconnendations in its Second Report the silver coins will be in the possession of the Central Bank, unless the silver has been sold through the mechanism suggested in that Report, and will be available to the extent to which silver certi- ficates have been retired. In the event that the Govern- nent obtains the silver needed for fractional coinage from the one-peso coins held by the Central Bank, the Mission presuries that the Government will reinburse the Bank by naking payment in cash for the bullion value of the silver at the current market price and in non-interest-bearing and non-maturing Government securities for the difference between the bullion and the nonetary value, For reasons of flexibility and when circumstances warrant, it nay be desirable to authorize the Finance l'inister also to buy silver for coinage purposes in the open market. The Mission believes that the power to order the nint- ing of fractional coins should be vested in the Finance !!inister but that he should be authorized to exercise this power only to replace worn-out coins or to neet the noods of circulation, including the accumulation of a reasonable Regraded Unclassified 138 - 8 - reserve stock of coins, after consultation with the Central Bank, This reconnendation necessitates appropriate changos in Articles 9 and 10. SUBSTITUTION In view of the current shortage of nickel, which pre- FOR NICKEL IN 00 INS sunably will continue until the end of the war, the Ilission bulieves it may be desirable to include in the Monetary Law authorization for the coinage of snall fractional coins con- taining no nickol, Just what matorials will be available during the war cannot now be specified. Therefore, a flexi- ble authorization to uso any appropriate naterials would avoid the need for later, special authorization, This recom- mendation will necessitate appropriate changes in Articles 2, 5, 6, 10 and 11. EXCHANGE Article 25 of the proposed Monotary Law provides that CONTROL whenever the Central Bank reserves fall below 40 percent and neasures to restore the reserves to the legal minimum prove ineffective, the President may forbid foreign exchange transactions, provided an energency exists. In its Second Report the lission recomended that in an energency and upon the recommendation of the Stabilization Fund Committee, the President of the Republic be empowered to subject foreign exchange transactions to license by the Finance !finister. In addition, the Mission has recommended that whenever Central Bank reserves fall below the legal minimum the Cen- tral Bank must pursue a corrective policy sutisfactory to Regraded Unclassified 139 - 9 - the Advisory Council. In view of these recommendations, the Mission believes that Article 25 and Article 26, which are related, should be omitted from the Monetary Law. .TED Article 13 outlines rules for redemption of mutilated CURRENCY silver cortificates. Since no mention of Central Bank notes is made in Article 13, the Mission prosumes it is the inten- tion of the Cuban Government that the Central Bank shall frame its own rules for redomption of its own nutilated notes. However, since the Bank's notes are being made legal tender, it secms desirable to have the Government lay down rules for the redemption of mutilated notes. This can be done by applying to Contral Bank notes the rules on muti- lated silver cortificates. DOLLAR The last paragraph of Article 27 forbids the collection EXCHANGE RATE of any amount, premium or compensation in excess of the ex- change rate quoted by the Central Bank at the time of the transaction, in converting into Cuban pesos the dollar deposits or accounts existing at the time the proposed Mone- tary Law comes into force. In the opinion of the Mission the last paragraph of Article 27 should be omitted. There does not appear to the Mission to be any good reason for writing into the law rigid restrictions on the exchange rate at which dollar deposits or accounts may be converted into pesos. The Mission has proposed that the Exchange Stabili- zation Fund rather than the Central Bank shall assume Regraded Unclassified 140 - 10 - responsibility for the exchange operations essential to the stabilization of the peso. There will, therefore, be no occasion for the Central Bank to quote a current ex- change rate for the poso. Horeover, having in mind the secrecy with which the Exchange Stabilization Fund must carry on its operations in the exchange market, the Fund will ordinarily not publicly quote an exchange rate. Unless it becomes necessary to adopt exchange licensing, holders of dollar deposits or other foreign-currency deposits should be permitted to convert them into pesos at the rate of CX- change provailing in the foreign exchange market at the time the conversion is made. DELETION OF The draft Monetary Law refers to the Superior Banking SUPERIOR BINKING COUNCIL Council in many places and gives several important powers to this body, The Mission's Second Report contemplates the establishment of an Advisory Council with restricted functions and powers in lieu of a Superior Banking Council. This nocessitates review of a number of paragraphs of the draft Monetary Law from this point of view. In most cases, however, the nature of the necessary revision has already been indicated in preceding paragraphs. The Superior Banking Council is referred to in Arti- clos 3, 9, 10, 12, 15, 17, 24, 25, 26 and 28. In this nonorandum the Mission has suggested the delction of Arti- cles 3, 12 and 24 (among others) thus eliminating the Regraded Unclassified 141 - 11 - necessity for considering changes in these Articles. Arti- clos 9 and 10 require advice of the Superior Banking Council in connection with coinage of fractional coins by the President of the Republic. The Mission his recommended that this power be vested in the Finance Minister without refer- once to the Advisory Council. Article 15 makes the Presi- dont's authority to change the price of gold subject to a recommendation by the Superior Banking Council. The Mission has recommended that in the ovent of a change in the gold content of the United Statos dollar, the President be author- ized to make a similar change in the gold content of the Cuban peso. For changes under all other conditions legisla- tivo action should be required to alter the gold content of the Cuban peso. Article 17 subjects the Finance Minister's authority to prescribe rules respecting transactions in gold to action by the Superior Banking Council. The Mission does not believe that the consent and advice of the Advisory Council is necessary in this connection. Article 25 requires action by the Superior Banking Council in connection with the imposition of exchange control by the President. The Mission recommended in its Second Report that the Presi- dent be authorized to subject foreign exchange transactions to license by the Finance Minister upon the advice of the Stabilization Fund Committec. Article 26 gives the Regraded Unclassified 142 - 12 - Superior Banking Council as well as the Finance Minister the right to require testimony under oath in connection with the establishmont of exchange control. The Mission has not recommended that the Advisory Council be given similar authority but agrees that the Finance Minister should have such authority. Article 28 specifics that the Superior Banking Council may determine the date when the legal tender power of United States currency shall coase. The Mission has not given the Advisory Council this authority and instead has suggested that the legal tondor power of United States currency cease immodiately (pre- sumbly upon the entry into force of the legislation in- corporating the recommendations of the Second Report). Regraded Unclassified 143 Treasury Department Division of Monetary Research Date July 11, 19 42 To: Miss Chauncey From: Mr. Southard Need not be brought to the Secretary's attention. C 144 0 P Y DEPARTMENT OF STATE WASHINGTON In reply refer to FD 832.51/2026 June 19, 1942 The Secretary of State presents his compliments to the Honorable the Secretary of the Treasury and encloses copies of telegram no. 2109, dated June 18, 1942, from the American Embassy, Rio de Janeiro, Brazil, indicating the appreciation of the Finance Minister for the message received in the Department's 1508 of June 12, and with the suggestion that the Stabilization Agreement be extended for five years. Telegraphic confirmation was requested. The Department's 1508 was transmitted to the Treasury on June 16; 1942. Enclosure: From Embassy, Rio de Janeiro, no. 2109, June 18, 1942. Copy:bj:6-19-42 Regraded Unclassified C 145 0 P Y BR Rio de Janeiro This telogram must be paraphrased before being Dated June 18, 1942 communicated to anyone other than a Governmental Rec'd 5:48 p.m. agency. (BR) Secretary of State, Washington. 2109, June 18, 5 p.m. Department's 1508, June 12, 2 p.m. The Finance Minister appreciates message and suggests that the stabilization agreement be extended for 5 years. Please telegraph confirmation. CAFFERY RR Copy:bj:6-19-42 Regraded Unclassified 146 June 19, 1942 To: Mr. Livesey From: Mr. White Please transmit the proposed cable to London for Casaday from the Treasury: FOR CASADAY FROM TREASURY: AMERICAN PRESS SAYS THAT A GERMAN ORDINANCE OF JUNE 15 REQUIRED THAT ALL STOCKS AND BUNDS LISTED OK THE BERLIN EXCHANGE BE TRANSFERRED TO THE REICHSBANK IN EXCHANGE FOR REICH TREASURY BONDS. THE TREASURY WOULD LIKE TO KNOW WHETHER THIS IS TRUE, AND IF LONDON HAS ANY ADDITIONAL INFORMATION BEARING ON THIS ORDINANCE. THE TREASURY WOULD ALSO LIKE TO KNOW WHETHER THIS ORDINANCE IN- VOLVES A CHANGE IN THE CONTROL OF GERMAN INDUSTRY, h PERMENENT CHANGE IN THE OWNERSHIP OF THE UNDERLYING SECURITIES, OR ANY TRANSFORMATION IN THE RELATIONSHIPS BETWEEN THE GERMAN GOVERNMENT AND SECURITY OWNERS IN GERMANY. HG:00:mw 6/19/42 Regraded Unclassified 147 PARAPHRASE OF TELEGRAM SENT TO: American Embassy, London, England DATE: June 19, 1942, 11 p.m. NO. : 2831 This telegram transmits the following message from the Treasury Department for Mr. Lauren Casaday. According to American press reports, on June 15 an ordinance was issued in Germany requiring transfer to the Reichsbank of all bonds and stocks listed on the exchange in Berlin, the holders to receive Reich Treasury Bonds in exchange therefor. Is this report true? Has London any additional information bearing thereon? Among the questions which the ordinance suggests to the Treasury are whether it involves permanent change in the ownership of the underlying securities, a change in the control of German industry or any transformation in the relationships between German security owners and the Government of Germany. HULL (FL) Copy:bj:6-20-42 Regraded Unclassified 148 June 19, 1942 Mr. Livesey Mr. D. W. Bell Will you please send the following cable to the American Legation, Teheran, Iran. "From Treasury. Please inform Imperial Bank of Iran, Teheran, that its branch at Ahwaz, Iran, is hereby designated a depositary of public moneys of the United States. Under this designation the Imperial Bank of Iran, Ahwaz, is authorized to accept and maintain on its books an account to the official credit of Captain M. G. Call, Finance Depart- ment, United States Army, in such amounts as may be deposited from time to time. Advise Imperial Bank of Iran, Teheran, that copy of letter to its London office follows." FD:EDB:ew Regraded Unclassified 149 TELEGRAM SENT JG June 19, 1942 This telegram must bE paraphrased before being 6 p.m. communicated to anyone other than c. Governmental agency. (BR) /MIEGATION, TEHR/N (IRAN) 160 From Transury. Please inform Imperial Bank of Iran, Tehran, that its branch at Ahwaz, Iran, is hereby designated n depositary of public moneys of the United States, Under this designation the Imperial Bank of Iran, Ahway, is authorized to accept and maintain on its books an account to the official credit of Captain M. G. Call, Finance Department, United States Army, in such amounts as may be deposited from time to time. Advise Imperial Bank of Iran, Tehran, that copy of letter to its London office follows. HULL (FL) FD:FL:BM Regraded Unclassified 150 13 COPY NO. BRITISH MOST SICRET U.S. SECRET OPTIL No. 207 Information received up to 7 A.M., 19th Juno, 1942. L. N.,VAL HOME WATERS. The attack on the Destroyer escorting a homeward bound convoy reported in OPTEL No. 206 was carried out by 12 JU 88's while passing through B. Spanish trawler fleet. Four enemy aircraft were shot down and two crashed after collision. 10 Officers and 123 ratings were rescued. 2. MILITARY LIBYA. In evening of 17th, enemy force estimated tanks attacked zen Amount Brigade South of SIDI REZEGH and 4th Armoured Brigade was withdrawn about 15 miles. At the same time, two minor attacks on ACROMA wore repulsed but further attacks expected. During 18th, enomy continued his advance apparently in two main thrusts with about 50 tanks each. One column moving along TRIGH CAPUZZO cod the other along the track & ADEM - SHEFERZEM. During the morning, the Northern column was halted at a point 12 miles south of GAMBUT. Our mobile columns were still operating to the south of EL ADEM. The regrouping of our forces is proceeding. Demolitions have been ordered at BARDIA. RUSSIA. In their KHARKOV operations the Germans have widened the bridgehoad cast of Rivor DONETS. They have resumed operations against SEVASTOPOL, but BQ far appear to have made little progress. 3. AIR OPERATIONS WESTERN FRONT. 18th. Spitfires probably sank five small boats off DIEPPE. Two Mosquitos bombed LANGEOOG and WILHELMSHAVEN. 18th/19th. Aircraft despatched - Sen mining, 55 off FRISLAN ISLANDI and LO off LORIENT. One Hampden crashed. LIBYA. 17th. Maximum fighter and bomber effort was concentrated on the defence of EL ADEM and in attacks on enemy columns advancing on BIR 1. HAMED and SIDI REZEGH. Our fighter bombors made a successful surprise attrick on meny's forward landing ground at a GAZALA and this was again attacked on 18th. light 17th/18th. Our aircraft bombed TMIMI landing ground. MALTA. Between 1.08 p,m. 17th and 7.50 a.n. 18th enemy activity was on a very small scale. Our fighters destroyed a JU 88 and damaged another. 4. LABOUR MOBILISATION Mobilisation of labour in Axis controlled countries in increasing. In Norway large scale conscription for work on defences in announced and activity in all industries other than those ongaged on armaments and production of food and other absolute necessities is to be drastically curtailed. In Finland, where labour situation is particularly acute, a thorough round up of all available labour is to be carried out. In Hungary, a special labour corps for women between 16 and 50 is being formed. In Croatia, a general mensure of labour conscription for all mr.los between 18 and 60 is to be brought into force. Regraded Unclassified 151 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE June 20, 1942 TO Secretary Morgenthau FROM Mr. Charles S. Bell must With reference to loitering at the Treasury ramp and at the barricade, as a precantionary measure Chief Wilson has had this up with Colonel Fennel and they both agree that the soldiers should not enter- tain visitors in the immediate vicinity of these gates. Instructions to this effect are being issued and the soldiers are being given to understand that they can meet their friends at the corner of Fifteenth Street and Treasury Place. Respecting the particular person seen at the barricade in the early morning and again in the afternoon, a discreet inquiry discloses her identity to the Secret Service as only a friend of the soldiers. Regraded Unclassified TREASURY DEPARTMENT 152 INTER OFFICE COMMUNICATION DATE June 20, 1942 TO Secretary Morgenthau FROM Mr. Gamble In answer to your request, I have been in touch with Keith Morgan regarding his suggestion for "Bastille Day." After explaining to him that we had a very heavy schedule in July and also pointing out to him that the reaction to the French problem is not uniformly good enough to put over such a suggestion, he agreed that we should abandon the idea. For your information, on July 1 our state organizations in conjunction with the retailers have arranged for governors and municipal officers to take part in state and city-wide radio programs. On July 4 we have numerous state tie-ups with Independence Day celebrations. On July 17 virtually every section of the country will have a number of its communities taking part in "American Heroes Day.' If This is the outgrowth of the Vineland, New Jersey, celebration. The above activities are in addition to the Air Caval- cade, the War Heroes Tour, the Miners meetings, the Management Labor meetings, and numerous other local affairs taking place during this month. Even though the idea were a "top" one, we could not intelligently handle it. 153 THE WHITE HOUSE WASHINGTON June 17, 1942. MEMORANDUM FOR THE SECRETARY OF THE TREASURY Will you write Keith Morgan and tell him what you think about his suggestion? F.D.R. THE WHITE HOUSE WASHINGTON June 15, 1942. MEMORANDUM FOR THE PRESIDENT: Keith Morgan telephoned to say that he had this idea and wondered what you think about it. July 14th is Bastille Day and he thinks it would be a grand idea to put on a radio program -- calling it "Liberation Day" -- ging everybody in the country to buy war stamps and war bonds for the liberation of the French people from the Axis. He says he would be glad to head it up as Chairman and get all the Governors, Mayors, Senators, etc. to act as a Committee. He says it can be done practically over night and would be better this way than to have a long drawn it preparation for it. G. 155 Sales of United States Savings Bonds From June 1 through June 19, 1942 CONFIDENTIAL Compared with Sales Quota for Same Period (At issue price in millions of dollars) : Series È : Series F and G : Total : Actual Sales : Quote, : Sales : Actual Sales : Quota, : Sales : Actual Sales : : : to Date Quota, : Sales Date : June 1 : June 1 : : June 1 : June 1 :to Date : : June 1 : June 1 : to Date : Daily : to : to : as % of : Daily : to : to :as % of : Daily : to : to : as x of : : Date : Date : Quota : : Date : Date* : Quota : : Date : Date : Quota 1 $ 19.8 $ 19.8 $ 21.7 91.2% $ 9.7 $ 9.7 $ 14.0 69.3% $ 29.5 $ 29.5 $ 35.7 82.6% 2 8.0 27.8 32.0 86.9 7.9 17.6 23.0 76.5 15.9 45.4 55.0 82.5 3 13.0 40.8 46.4 87.9 8.6 26.2 37.9 69.1 21.6 67.0 84.3 79.5 4 17.4 58.2 63.6 91.5 13.8 40.0 51.0 78.4 31.2 98.2 114.6 85.7 5 24.8 83.0 79.6 104.3 S.S 49.4 61.7 80.1 34.1 132.3 141.3 93.6 6 15.2 98.2 93.7 104.8 6.5 55.9 69.4 80.5 21.7 154.1 163.1 94.5 8 27.0 125.2 120.0 104.3 11.5 67.4 82.2 82.0 38.6 192.7 202.2 95.3 9 8.9 134.2 132.4 101.4 5.0 72.4 89.2 81.2 13.9 206.5 221.6 93.2 10 20.1 154.2 149.6 103.1 9.9 82.3 99.6 82.6 30.0 236.6 249.2 94.9 11 15.7 169.9 170.0 99.9 7.5 89.9 108.4 82.9 23.2 259.8 278.4 93.3 12 16.5 186.5 189.0 98.7 5.4 95.3 115.4 82.6 22.0 281.7 304.4 92.5 13 15.2 201.7 205.6 98.1 6.2 101.5 120.8 84.0 21.4 303.2 326.4 92.9 15 24.0 225.7 236.5 95.4 7.3 108.7 130.9 83.0 31.2 334.4 367.4 91.0 16 7.5 233.2 251.1 92.9 3.6 112.3 137.3 81.8 11.1 345.5 388.4 89.0 17 15.8 249.0 271.3 91.8 7.5 119.7 147.8 81.0 23.3 368.8 419.1 88.0 18 12.3 261.3 295.2 88.5 6.3 126.0 157.0 80.3 18.6 387.4 452.2 85.7 19 19.4 280.7 317.4 88.4 8.0 134.1 164.6 81.5 27.4 414.8 482.0 86.1 20 336.9 170.6 507.5 22 373.0 181.9 554.9 23 390.0 189.2 579.2 24 413.5 201.3 614.8 25 441.1 212.0 653.1 26 466.8 221.0 687.8 27 489.2 228.0 717.2 29 530.6 241.4 772.0 30 550.0 250.0 800.0 Office of the Secretary of the Treasury, Division of Research end Statistics. June 20, 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. * Takes into account both the deily trend during the week and the monthly trend during the month. CONFIDENTIAL 156 UNITED STATES SAVINGS BONDS - SERIES 7 AND G COMBINED Comparison of June sales to date with sales during the same number of business days in April and May 1942 (At issue price in thousands of dollars) : June : Cumulative sales by business days Date : daily : June : : May : June as : sales April : : : percent of May June 1942 1 $ 9,705 $ 9.705 $ 7.302 $ 11,987 132.9% 2 7,895 17,601 15,168 21,677 116.0 3 8,634 26,235 25,516 29,097 102,8 4 13,774 40,009 33,145 35,818 120.7 5 9,344 49,353 48,751 46,174 101.2 6 6,535 55,888 60,817 55,991 91.9 8 11,526 67,414 67,213 63,695 100.3 9 4,952 72,366 72.794 70.364 99.4 10 9,945 82,310 80,845 77,197 101.8 11 7,542 89,652 85,410 80,586 105.2 12 5.402 95,254 94,391 91,623 100.9 13 6,210 101,464 102,106 96,031 99.4 15 7.251 108,715 108,923 102,657 99.8 16 3,564 112,279 114,129 111,829 98.4 17 7,470 119,749 123,534 116,374 96.9 18 6,299 126,048 127.724 120,625 98.7 19 8,014 134,062 138,908 131,852 96.5 Office of the Secretary of the Treasury, June 20, 1942. Division of Research and Statistics. Source: All figures are deposits with the Treasurer of the United States on account of proceeds of sales of United States savings bonds. Note: Figures have been rounded to nearest thousand and will not necessarily add to totals. Regraded Unclassified CONFIDENTIAL 157 UNITED STATES SAVINGS BONDS - TOTAL Comparison of June sales to date with sales during the same number of business days in April and May 1942 (At issue price in thousands of dollars) : June : Cumulative sales by business days Date : daily : : : : May June as June April : sales : : : :percent of May June 1942 1 $ 29,539 $ 29,539 $ 19,981 $ 24,980 147.8% 2 15,903 45,442 39,430 45,933 115.2 3 21,604 67,046 72,048 64,147 93.1 4 31,162 98,208 88,605 82,937 110.8 5 34,132 132,341 122,575 111,289 105.0 6 21,744 154,085 157,866 129,786 97.6 8 38,574 192,659 181,431 149,409 106.2 9 13,863 206,523 201,464 168,289 102.5 10 30,029 236,552 232,801 185,904 101.6 11 23,220 259,772 246,756 196,667 105.3 12 21,952 281,724 271,525 229,895 103.8 13 21,439 303,163 296,152 242,969 102.4 15 31,235 334,398 317,861 257,280 105.2 16 11,099 345,497 337,371 279,933 102.4 17 23,285 368,782 371,066 295,244 99.4 18 18,587 387,369 385,098 309,780 100.6 19 27,435 414,804 409,987 339,594 101.2 June 20, 1942. Office of the Secretary of the Treasury, Division of Research and Statistics. Source: All figures are deposits with the Treasurer of the United States on Note: Figures have been rounded to nearest thousand and will not necessarily account of proceeds of sales of United States savings bonds. add to totals. Regraded Unclassified CONFIDENTIAL 158 UNITED STATES SAVINGS BONDS - SERIES E Comparison of June sales to date with sales during the same number of business days in April and May 1942 (At issue price in thousands of dollars) : June : Cumulative sales by business days Date : daily : : : : June as June : : : May sales : April :percent of May June 1942 1 $ 19,834 $ 19,834 $ 12,679 $ 12,993 156.4% 2 8,008 27,841 24,263 24,256 114.7 3 12,970 40,811 46,532 35,050 87.7 24 17,388 58,199 55,460 47,119 104.9 5 24,789 82,988 73,824 65,115 112.4 6 15,209 98,197 97.049 73.795 101.2 8 27,048 125,245 114,218 85,714 109.7 9 8,912 134,157 128,670 97,925 104.3 10 20,085 154,242 151,956 108,707 101.5 11 15,678 169,920 161,346 116,081 105.3 12 16,550 186,470 177,133 138,272 105.3 13 15,230 201,700 194,047 146,937 103.9 23,984 225,684 208,939 154,623 108.0 15 16 7,535 233,218 223,242 168,103 104.5 17 15,815 249,033 247,532 178,870 100.6 18 12,288 261,321 257.374 189,156 101.5 19 19,421 280,742 271,079 207.742 103.6 June 20, 1942. Office of the Secretary of the Treasury, Division of Research and Statistics. Source: All figures are deposits with the Treasurer of the United States on Note: Figures have been rounded to nearest thousand and will not necessarily account of proceeds of sales of United States savings bonds. add to totals. Regraded Unclassified 159 BRITISH EMBASSY WASHINGTON,D.C. 20th June, 1942. Dear Mr. Secretary, Thank you for your letter of June 19th. It is very good of you to send me the two newsreel films of the visits of the American and British War Heroes to New York and Boston. I shall certainly forward one copy to The King and Queen and I look forward to seeing the film myself. It is splendid to hear from you that our men have had such a fine reception. Believe me, Yours sincerely, Halifax The Honourable Henry Morgenthau, Jr., Secretary of the Treasury, WASHINGTON, D.C. Regraded Unclassified 160 TO: Min Charmery I think the mly thing 5 do is h he it. of me drint want to lnne There's no use arpuing about ] it. wr. FROM: MR. GASTON C OLIVER K. BOVARD 161 CONWAY AND BALLAS ROADS CLAYTON, MISSOURI June 20, 1942. my dear Securetary: Isbruld be glad to br K service to the Government in any live in which l filt qualified, but the field you su ggest, from the, is so foreign to my training and ex perience l from in l would mey be in the way it. Thank mg you for Thinking of one, l am, Ven, sincerely yours, Ok Amal Hon Hurry C Secretary Z the Treasury has Lugton, D.C. BOVARD, O. K. 162 My dear Mr. Bovard: Knowing that you have been detached from active newspaper work for some time, it has occurred to me that you might be interested in doing some work for the Government. We have a big job on our hands in the promotion of the sale of War Savings Bonds and it is w belief that you could help us materially. Would you care to come to Washington to discuss the matter with me? Sincerely yours, 15/ N. Margenthau Jr Secretary of the Treasury. Mr. 0. K. Bovard, Ballas & Conway Roads, Clayton, Missouri. HEG:pm 163 June 16, 1942. MEMORANDUM TO: Secretary Morgenthau FROM: Mr. Gaston I talked to Pete Brandt of the St. Louis Post-Dispatch. He says that Bovard is in good health and would pro- bably welcome a chance to do some worth- while war work. He thinks Bovard would be ideal for the sort of work I outlined, that is the supervision of promotional copy. Bovard, he says, has a great fhair for typography and lay-outs and likewise a great contempt for the ad- vertising profession. Re also said that e thinks Bovard would be much more likely to come if you were to sign the letter. Hence, I prepared it for your signature. 151 N. E. D. HEG:pm 164 UNITED STATES GOVERNMENT CORDINATOR XXX XXX WASHINGTON, D.C. OFFICE OF STRATEGIC SERVICES June 20, 1942 Honorable Henry Morgenthau, Jr., Secretary of the Treasury, Washington, D. C. Dear Mr. Secretary: Replying to your letter of June 17 to Colonel Donovan, I beg to state that he will return from London to this office the latter part of next week, about June 26. I know he will deeply appreciate your letter and will be most anxious to be helpful in any way pos sible. At the moment, as you will realize, we are in the midst of some reorganization and unscrambling, but the next few days should restore us to orderly house- keeping. Respectfully, G. Edward Buston G. Edward Buxton Assistant Director Regraded Unclassified 165 EXECUTIVE OFFICE OF THE PRESIDENT OFFICE FOR EMERGENCY MANAGEMENT WASHINGTON,D.C. Office of War Information June 20, 1942 The Honorable The Secretary of the Treasury Washington, D. C. Dear Mr. Morgenthau: My thanks for your good wishes and I hope the pleasure in your mind will continue after I have been working a while. I shall lean upon your generous offer of cooperation. Cordially, Elmertians Elmer Davis Director POPVICTORY BUY UNITED STATES gersens BONDS AND STAMPS Regraded Unclassified 166 June 19, 1942. Dear Mr. Davist It vas with pleasure that I learned of the President's choice for the difficult appointment of the Director of Var Information. As you take up year nov work, I want to send you my congratu- lations, and my best wiches for success. If there is any vay by which my office can be of cervice to you, I hope you will not besitate to cell upon no. with cordial regards, Sincerely, (Signed) 1. Morganthan. Ja. Honorable Bluer Davis, Director of the Office of Was Information, 815 - 22nd street, N.W., Washington, D. 0. n.m.c. GEF/dbs Regraded Unclassified 167 Photo. No. Records No. KY 46104 UNITED STATES OF AMERICA For use in the case of Registered Letters (If unregiatered, insert "NONE") THE OFFICE OF CENSORSHIP Registered No. LONE A,I. Mail No. PRIVATE Serial No. To- "HARS" LR. R. W. SINSABAUGH EURICH, SEITZERLAND 247 Park Avenue New York, N, Y. to of letter APRIL 7, 1942. etter postmark undated) For intersifica - by A. c. EVIOUS RECORDS, IF RELEVANT or D. A. c. enly. Allocation of this comment sheet: Division of Reporta 6/27/42 No iether to be photographed- DISPOSAL OF ORIGINAL LETTER- Released Released, held, condemned ID, in whom photograph la to be sen!- or sent with comment to- COMMENT LIST. BY THE-S. CUSRO POLITICAL ATU NAR ENGLISH CUST SS REPORT ON GERMAN CORALE COMING ! ROM SWITZERLAND FFC MR INTEL -IC The writer of the letter, signed only "HAIS", makes the following state- nents: (#2, lines 2-17) BEW "Victory is your unaninous desire which brings about your decision and ONI efforts, This no longer applies to Gormany, A Germen returning from .10 ID Berlin reported: In Berlin, optinists say "We'll lose the war", and pessimists: "but when". -- There is an increasing opposition to the re- gine; they would prefer to lose the var (though they fear the Aussians). The number of unfavorable runours make people hesitate. -- One of the cost vide-spread rusours concerns the death of General von Reichenau: It in -MEW said that Goering wished to withdraw the front in the East for the dura- tion of the winter, so did von Brauchisch. During a discussion on the sane point, Bitler and V. Reichenau got mad at each other, the first 60 tore off the choulder-straps of the General, who then attacked Hitler, but well finally killed by Hitlor's body-guard. 1 have no idaa as to the truth of this runour but wish to emphasize that it goes around in 4/42 Germany. Gernane have begun to doubt as well as to change their minds. Germany becomes core and nore a powder-box that my blow up at any time. I know that in a South German town, flane-throwers have been put in strategical positions, ready to fight any uprising. In lig cities people (who can afford it) move to the countryside. In tom, they are too much afraid of revolution and famine. The Znglish naval attacks on the Con- tinent have created a favorable atmosphere: Germans are afraid of an Allied invacion in Scandinavia. At Paris topo believe the French will fight together with the English and Americans this year." (all under- linings are those of the writer) quoted from # 3, lines 2-5) "In recent months, the German effort to produce var materials has been terrific. Gergan industry is geared for war by 85%! German visitors to Switzerland buy here a number of cheap things that you would think they should be able to buy everywhere," Division TABLE EXAMINER D.A.C. DATE (or section) Private 0. 201 5666 5067 June 20, 19/2 5866 GLO Regraded Unclassified Furns OC-6 167 Photo. No. Records No. NY 46104 UNITED STATES OF AMERICA For use In the case of Registered Letters (If unregistered, insert "NONE") THE OFFICE OF CENSORSHIP Registered No. NONE A.I. Mail No. Serial No. PRIVATE To- "HANS" LR. R. W. SINSABAUGH EURICH, SEITZERLAND 247 Park Avenue New York, N. Y. te of letter APRIL 7, 1942. etter postmark undated) The intendias - by A. a EVIOUS RECORDS, IF RELEVANT or D. A. c. only. Allocation of this comment sheet: Division of Reports 6/27/42 ether to be photographed- No DISTORAL OF ORIGINAL LETTER Released Released, held, condemned to whom photograph is to be aent- or sent with comment to- COMMENT LIST. BY THES. CUDHO POLITICAL ATU NAR ENGLISH CUST SS REPORT 05 GERMAN L'ORATE COMING ! ROM SWITZERLAND FFC MR INTEL -IC The writer of the letter, signed only "HANS", makes the following state- hento: (#2, lines 2-17) BEW ONI "Victory is your unaninous desire which brings about your decision and efforts, This no longer applies to Gormany. A Germen returning from MID Berlin reported: In Berlin, optimists say "We'll lose the mar", and pessiciate: "last when". -- There 16 an increasing opposition to the re- gine: they would prefer to lose the war (though they fear the Russians). -SD The misber of unfavorable runours make people hesitate, -- One of the cost vide-spread rumours concerns the death of General von Reichenau: It is MEW said that Goering wished to withdraw the front in the East for the dure- 13 tion of the winter, so did von Brauchitsch. During a discussion on the same point, Hitler and V. Reichenau got mad at each other, the first : tore off the choulder-straps of the General, who then attacked Hitler, but WILD finally killed by Hitler's body-guard. 1 have no idea as to the truth of this runour but wish to emphasize that it good around in 2/42 Germany. Germans have begun to doubt as well as to change their minds. Germany becones core and more a powder-box that may blos up at any time, I know that in a South German town, flane-throwers have been put in strategical positions, ready to fight any uprising. In lig cities people (who can afford it) Love to the countryside. In tom, they are too much afraid of revolution and famine. The English naval attacks on the Con- tinont have created a favorable atmosphere: Germans are afraid of an Allied invacion in Scandinavia. At Paris topo believe the French will fight together with the English and Americans this year." (all under- linings are those of the writer) quoted from * 3, lines 2-5) "In recent months, the German effort to produce var materials has been terrific. German industry 18 geared for war by 85%1 German visitors to Switzerland buy here a number of cheap things that you would think they abould be able to buy everywhere." Division TABLE EXAMINER D.A.C. DATE or section) Private U, 201 5/6/m 5067 June 20, 1942 5066 GIC Regraded Unclassified FORM 004 April 1952 168 10 Photo. No. Records No. KY 46104 UNITED STATES OF AMERICA For use in the case of Registered Letters THE OFFICE OF CENSORSHIP (If unregistered, insert "NONE") Registered No. NONE A.I. Mail No. PRIVATE Serial No. To- BOM- "HANS" LR. R. W. SINSAMUGH ZURICH, SWIT ERLAND 247 Park Avenue New York, N. Y. APRIL 7, 1942. Date of letter or postmark letter undated) For Intereffice - by A. C. REVIOUS RECORDS, IF RELEVANT or D. A. C. only. Allocation of this comment sheet: Nos. Division of Reports 6/27/42 No Whether to be photographed- DISPOSAL OF ORIGINAL LETTER- Released Released, held, condemned If so, to whom photograph is to be sen!- or sent with comment to- COMMENT The writer also makes the following statement in an N.B. (P.S.) at botten of page: "Canedion bonds sell here at 33% of Toronto quotation ($ at par), respectively at 226 without affidavit. -- U. S. bank notes at 55% of exchange rate." Enclosure: one (1) Division (or section) TABLE EXAMINER D.A.C. DATE Private Unit 201 5466 5067 June 20, 1942 5866 GIC Regraded Unclassified Form OC-8 April 1912 Treasury Department 169 Division of Monetary Research Date June 22 19 42 To: Miss Chauncey From: Mr. White The tables for transmittal to the Secretary of State, the Coordinator of Information and Mr. Perkins differ from those being sent to the President in that certain military figures are not broken down. Treasury Department Division of Monetary Research 170 Date July 22 1942 To: Secretary Morgenthau From: Mr. White Original of this report appended to prepared letter to the President. SECRET 171 June 20, 1942 Exports to Russia, Free China, Burma and other blocked countries, as reported to the Treasury Department during the ten-day period ending June 10, 1942 1. Exports to Russia Exports to Russia as reported during the ten-day period ending June 10, 1942 amounted to about $12,764,000, represent- ing the lowest total for any ten-day period since the begin- ning of February. Among the military equipment exported were thirteen light bombers. (See Appendix C.) 2. Exports to Free China and Burna Exports to Free China during the ten-day period ending June 10, 1942 amounted to about $3,399,000 of which military equipment accounted for about 90 percent. (See Appendix D.) Exports to Burma amounted to $234,000. Military equipment accounted for the entire amount. (See Appendix B.) 3. Exports to France No exports to France were reported during the period under review. 4. Exports to other blocked countries Exports to other blocked countries are given in Appendix A. Most important were exports to Switzerland amounting to $343,000. ISF/efs 6/22/42 Regraded Unclassified STRICTLY CONFIDENTIAL 172 SUMMARY or UNITED STATES DOMESTIC EXPORTS TO SELECTED COUNTRIES AS REPORTED TO THE TREASURY DEPARTMENT FROM EXPORT DECLARATIONS RECEIVED DURING THE PERIOD INDICATED w July 28, 1941 to June 20, 1942. (In thousands of dellars) July 28 3 Period ended Period ended Total May 20 May n June 10 Denestic Exports U. S. S. R. 8495,318 $26,180 $12,575 $534,073 Free China 75,061 2,533 3,399 81,793 Burna 3/ 12,201 s 234 12,435 France 2/ 56 I - x da 2,549 5/ 5/ 2,849 Switzerland 10,118 249 363 10,710 Sweden 17,731 47 s/ 17,778 Portugal 8,919 93 15 9,027 French North Africa w 6,283 - - 6,283 freasury Department, Division of Menstery Research June 18, 1942 Many of the export declarations are received with a lag of several days or mere. Therefore this compilation does net ascurately represent the netual shipment of a particular period. The lenger the period devered, the closer will these figures come to Department of Cemeres revised figures. From September 11, 1941 to date - 10 is presuned that a large persentage of material listed here, consigned to Barna, 10 destined for Free China. Includes both Occupied and Uneccupied Transe - no breakdewn is obtainable from Department of Comeros. Includes Maresse, Algeria, and Tunicia. Less than $500. JMVefs 6/18/42 Regraded Unclassified SECRET APPENDIX B 173 Exports from the U. S. to Free China, Burma and U.S.S.R. as reported to the Treasury Department July 28, 1942 - June 10, 1942 (Thousands of Dollars) 1/ Exports to Exports to Exports to Free China Burma 3/ U.S.S.R. July 28 - Aug. 2 395 4,523 Aug. 4 - Aug. 9 - 551 Aug. 11 - Aug. 16 309 986 Aug. 18 - Aug. 23 2 2,735 Aug. 25 - Aug. 30 1 1,023 Sept. 2 - Sept. 6 204 4,280 Sept. 8 - Sept.13 2,281 5,217 Sept.15 - Sept.20 3,822 Sept.22 - Sept.27 110 449 2,333 Sept.29 - Oct. 4 1,225 684 Oct. 6 - Oct. 11 5,312 1,157 6,845 Oct. 13 - Oct. 18 5 35 Oct. 20 - Oct. 25 269 403 Oct. 27 - Nov. 1 4.772 58 Nov. 3 - Nov. 8 1,672 342 Nov. 10 - Nov. 15 2,851 88 Nov. 17 - Nov. 22 1,228 1,021 3.5 Nov. 24 - Nov. 29 3,239 1,364 2,436 Dec. 1 - Dec. 6 791 6h Dec. 8 - Dec. 13 2,337 18 12,040 Dec. 15 - Dec. 20 111 8 4. Dec. 22 - Dec. 27 1 196 Dec. 29 - Jan. 3 35 2 3.993 Jan. 5 - Jan. 10 91 1,073 Jan. 12 - Jan. 17 1,695 447 5,874 Jan. 19 - Jan. 24 - - Jan. 26 - Jan. 31 6,938 923 9,608 Feb. 1 - Feb. 10 ¥ 4,889 1,054 13,315 Feb. 10 - Feb. 20 4,853 583 26,174 Feb. 20 - Feb. 28 5/ 2,921 - 28,119 Mar. 1 - Mar. 10 2,879 23 32,50 Mar. 10 - Mar, 20 8,058 NW 3 28.55 Mar. 20 - Mar. 31 61 2 2 42 Apr. 1 - Apr. 10 4,836 447 51 Apr. 11 - Apr. 20 5.335 639 66,90 Apr. 21 - Apr. 30 2,827 - s May 1 - May 10 I/ 296 - 28 May 11 - May 20 1,872 5 18,000 May 21 - May 31 6/ 2,533 - 26,180 June 1 - June 10 3.399 234 12,764 Total #84,396 $11,322 $534.776 1. These figures are in part taken from copies of shipping manifests. SECRET 174 APPENDIX B Page 2 2. Figures for exports to Free China during these weeks include exports to Rangoom which are presumed to be destined for Free China. 3. It is presumed that a large percentage of exports to Burma are destined for Free China. 4. Beginning with February 1 figures will be given for 10-day period instead of week except where otherwise indicated. 5. 8-day period. 6. 11-day period. 7. Due to changes in reporting procedure by the Department of Commerce this report is incomplete for the period indicated. Treasury Department, Division of Monetary Research June 20,1942 ISF/efs 6/20/42 SECRET 175 APPENDIX C Principal Exports from U. S. to U. S. S. R. as reported to the Treasury Department during the ten-day period ending June 10, 1942 Value Unit of (Thousands Quantity Quantity of dollars) TOTAL EXPORTS $ 12,764 Principal Items: Landplanes - light bombers (2 engine) No. 13 1,950 Motor trucks No. 735 1,242 Sausage, canned Lb. 2,634,916 1,023 Iron and steel plates, sheets and strips Lb. 17,066,418 673 Ammunition 608 30 caliber balls No. 7,000,000 30 caliber armor piercing No. 150,000 30,38, and 45 balls No. 1,050,000 37 m.tank and anti-tank armor piereing shells No. 30,800 37 m. mm.tank and anti-tank high explosive shells No. 18,200 small are components - - Steel bars Lb. 7,618,510 542 Sole leather Lb. 651,666 369 Lard Lb. 2,439,845 345 Wheat flour Bbl 37,413 344 Pork, pickled or salted Lb. 1,426,000 342 Milling machines No. 16 327 Metal-grinding machines and parts No. 20 272 Telephone equipment and parts - - 228 Brass and bronse plates and sheets Lb. 1,131,974 218 Wool cloth and dress goods Lb. 133,289 203 Treasury Department, Division of Monetary Research June 20, 1942 ISF/efa 6/20/42 Regraded Unclassified SECRET 176 APPENDIX D Principal Exports from U. S. to Free China as reported to the Treasury Department during the ten-day period ending June 10, 1942 (Thousands of Dollars) TOTAL EXPORTS $ 3.399 Pri ncipal Items: Military equipment 3,082 Construction equipment and parts 163 Relief supplies 70 Coal-tar colors and dyes 44 Lubricating oil, N.E.S. 32 Treasury Department, Division of Monetary Research June 20, 1942 ISF/efs 6/20/42 Regraded Unclassified SECRET 177 APPENDIX E Principal Exports from U. S. to Burms as reported to the Treasury Department during the ten-day period ending June 10, 1942 (Thousands of Dollars) TOTAL EXPORTS $ 234 Principal Items Military equipment 234 Treasury Department, Division of Monetary Research June 20, 1942 ISF/er. 6/20/42 178 U.S. SECRET BRITISH MOST SECRET COPY NO. 13 OPTEL NO. 208 Information received up to 7 A.M. 20th June, 1942, 1. NAVAL 18th/19th. One of H.M. destroyers and 2 steam gun- boats attacked two escorted Merchant Ships near Havre. 1 Ship was torpedoed and the other hit by 4 inch shell. 1 Gun Boat is missing. An anti-submarine schooner was sunk by U-Boat gun-fire North of Beirut on the 13th. One of H.M. Submarines sank an 18,000 tons ship on 3rd/4th in the Malacca Strait. 2. MILITARY LIBYA - 18th. The Acroma defended locality was still held by us in the afternoon. Our mobile columns shelled enemy M.T 5 miles North of El Gobi and also El Adem Aerodrome. By dusk the limit of the enemy advance was about 30 miles West of Sollum. Our armoured car patrols were active by an approximate North-South line about 30 miles West of Bardia. During the withdrawal a battalion of South Wales Borderers and another of Garhwal Infantry of our rearguard were cut off by enemy tanks and armoured cars and suffered heavy losses. We have occupied the frontier position and have manned the Tobruk defences. The destruction of Bardia has been carried out and removal of all valuable stores completed. Our mobile forces are active on the enemy's Southern flank. 3. AIR OPERATIONS WESTERN FRONT - 19th. Spitfires, 3 of which are missing, attacked and damaged 3 armed minesweepers and one coastal vessel off the French and Belgian Coasts. They also shot down 4 enemy fighters, probably destroyed 1 and damaged 4, 19th/20th - 205 Aircraft were despatched, 194 of them to Emden which was attacked by the majority in bad visibility, others bombed Osnabruck in good weather. 9 are missing. LIBYA - 18th. Our fighters flew continuous protective patrols over our troops and destroyed 2 enemy fighters. BURMA - 18th. Blenheims bombed the Harbour at Akyab and the landing ground at Myitkyina. Regraded Unclass fied C 179 0 P Y BAS Habana This telegram must be paraphrased before being Dated June 20, 1942 communicated to anyone other than a Governmental Rec'd 3:10 p.m. agency. (BR) Secretary of State, Washington. 449, June 20, 2 p.m. Embassy's telegram no. 442, June 19, 7 p.m. Decree establishing controls over importation of United States currency was signed last night and pursuant thereto the Minister of Finance this morning issued orders blocking $80,000 of the amount which Constantino Gonzalez y Compania has on deposit with Habana branch of First National Bank of Boston pending outcome of investigations regarding origin of $80,000 United States currency brought to Cuba by Miguel Mauricio. Although balance currency from SS ICIAR has ap- parently been blocked by Dominican Government steps will be taken to have Gabriel Piedra Martinez detained and searched upon his return and careful consideration given to desirability of including firm of Constantino Gonzalez y Compania in Proclaimed List. Copy and translation of above mentioned currency control decree by airmail. Repeated to Cuidad Trujillo. MRM BRADEN Copytemk:6.25.42 Regraded 180 C 0 P Y HEL Managua This telegram must be paraphrased before being Dated June 20, 1942 communicated to anyone other than a Governmental Rec'd 3:20 a.m., 21st agency. (BR) Secretary of State, Washington. 292, June 20, 3 p.m. Reference Legation's telegram number 239, May 25, 3 p.m. I have been informed by the Ministry for Foreign Affairs that Rafael Huezo of the National Bank of Nicaragua together with Nicaragua's Minister to the United States will constitute a joint mission to the conference of Central Bank representa- tives meeting in Washington late in June or early in July. Huezo expects to leave Managua by air June 21 and will be traveling with his wife. STEWART wwo Copy: 1c:6/22/42 Regraded Unclassified 181 HRL Ciuded Trujillo This telegram must be paraphrased before being Dated June 20, 1942 communicated to anyone other thana Covernmental REC'd 9:12 p.m. agency. (Bit) Secretary of State, Washington. RUSH 275, JUNE 20, 3 D.m. Ky 272, June 19, 1 2.00 The Dominican Government issued a decree late yesterday freezing the 220,000 in the Banco de Reserves. The Legation has just verified that the sun is intact and it will inform: the Department by cir mail of minor corrections in the serial numbers. The Dritish Minister 5678 he will request state- ments from cll exporters holding navicerts for shipping tobacco on the ICIM regarding method of pay- ment for such tobacco. Ile understands now that the ICIAN is to stop it Habana on it's raturn journey. Please cable instructions CB to what further action, if sty, it would DE advisable for Dominican Republic to take with respect to the 220,000. Lirmail despatch follows. Repeated to Habana and Fort-nu-Prince. LINTON MM 182 TELEGRAM SENT AS June 20, 1942 This telegram must bE paraphrased before being 4 p.m. communicated to anyone other than a Governmental agency. (BR) AMLEGATION, CIUDAD TRUJILLO, (DOMINICAN REPUBLIC). TRIPLE PRIORITY 186 Your 272, June 19, 2 p.m. Habana has informed the Department that the 80,000 has been deposited by Constantino Gonzalez y Compania in the First National Bank of Boston in Habana. The Department assumes that this money was the paid for Cuban tobacco which is either on/Iciar or which has already been shipped to Spain. On this assumption Department recommends that you suggest to your British colleague that he continue to refuse to navicert the Iciar at least until arrange- ments have been made for the opening of a letter of cradit in favor of Constantino Gonzalez y Compania in the sum of $80,000 so that this firm may bE paid for its tobacco and the question of disposing of the $80,000 in currency presently with the First National Bank of Boston bE Regraded Unclassified 183 -2- #186, June 20, 4 p.m., to Ciudad Trujillo (Domini- can Republic) Boston bE reserved for future decision by this Govern- ment and the Cuban Government. The Embassy in Habana is being informed that pending a decision on the question of the navicert and the suggested issuance of the letter of credit the 80,000 in currency should bE blocked by the First National Bank of Boston and no (repeat no) credit should bE given to Constantino Gonzalez y Compania. HULL (DH). FF;TTJr:MKG RA Regraded Unclassified 183 -2- #186, June 20, 4 p.m., to Ciudad Trujillo (Domini- can Republic) Boston bE reserved for future decision by this Govern- ment and the Cuban Government. The Embassy in Habana is being informed that pending a decision on the question of the navicert and the suggested issuance of the letter of credit the $80,000 in currency should bE blocked by the First National Bank of Boston and no (repeat no) credit should bE given to Constantino Gonzalez y Compania. HULL (DH). FF;TTJr:MKG RA Regraded Unclassified 184 TELEGRAM SENT HEL June 20, 1942 This telegram must bE paraphrased before being 4 p.m. communicated to anyone other than a Governmental agency. (BR) AMEMBASSY, HABANA. 374 TRIPLE PRIORITY. Your 442, June 19, 7 p.m. The following telegram has been sent to the Lega- tion at Ciudad Trujillo: QUOTE Your 272, June 19, 2 p.m. Habana has informed the Department that the 80,000 has bEEn deposited by Constantino Gonzalez y Compania in the First National Bank of Boston in Habana. The Department assumes that this money was paid for Cuban tobacco which is Either on the Iciar or which has already bEEn shipped to Spain. On this assumption Department recommends that you suggest to your British collEaguE that hE continue to refuse to navicert the Iciar at lEast until arrange- ments have bEEn made for the opening of a letter of credit in favor of Constantino Gonzalez y Compania in the sum of $80,000 so that this firm may bE paid for its Regraded Unclassified 185 ⑉2⑉, 9374, June 20, 4 p.m., to Habana. its tobacco and the question of disposing of the $80,000 in currency presently with the First National Bank of Boston bE reserved for future decision by this Government and the Cuban Government. The Embassy in Habana is being informed that pending a decision on the question of the navicert and the suggested issuance of the letter of credit the 80,000 in currency should bE blocked by the First National Bank of Boston and no (repeat no) credit should bE given to Constantino Gonzalez y Compania. UNQUOTE. Please advise whether the Department's assumption concerning the Cuban tobacco is correct. If it is not (repeat not) correct and the tobacco is still in Cuba, it is assumed that the Cuban Government will not (re- pEat not) permit the tobacco to bE aported until the matter of disposing of the 80,000 in currency has been settled. Please attEmpt to carry out the suggestion made in the above quoted tElEgram concerning the blocking of the 80,000 by the First National Bank of Boston. Please keep Cuidad Trujillo fully informed. HULL (DH) FF:TTJr:DCR RA Regraded Unclassified 186 ORGO UNITED STATES GOVERNMENT CONDINIATION OK ANF WASHINGTON, D. c. OFFICE OF STRATEGIC SERVICES June 21, 1942 Honorable Henry Morgenthau, Jr., Secretary of the Treasury, Washington, D. C. Dear Mr. Secretary: In Colonel Donovan's absence, let me acknowledge on his behalf receipt of a copy of the Report on Exports of Some Selected Countries for the Period Ending May 31, 1942. I am confident that Colonel Donovan will wish to continue receiving figures of this character and that they will be most useful in his new work. Respectfully, I.Edward Buxton G. Edward Buxton Acting Director Regraded Unclassified 187 BR PLAIN Chungking Dated June 21, 1942 Rec'd 9:51 a.m. Secretary of State, Vashington. PRIORITY 728, Twenty-first. TO SECRETARY TREASURY FROM ADLER FOR ATTENTION DR. WHITE. DEEPLY regret to inform you that Manuel Fox quistly passed away this morning while sleeping. Please inform Mrs. Fox and convey to her sympathies of associates in Stabilization Board and Embassy. GAUSS HPD Regraded Unclassified 188 CJ Ciudad Trujillo This telegram must bE paraphrased before being Dated June 21, 1942 communicated to anyone other than a Governmental Rec'd 5:50 p.m. agency. (BR) Secretary of State, Washington, RUSH 279, June 21, 2 p.m. Your 186, June 20. British Minister is cabling to London for instructions regarding suggestion that he refuse navicert for the ICI.R until a credit is arranged to pay $80,000 to Constantino Gonzalez and Company for its tobacco. HE will withhold navicert until he hears from London, The British Minister is, however, under the impression, based on cables from the British Legation in Habana, that this tobacco has not (repeat not) been shipped as yet. HE is Endeavoring to obtain clarification on that point. Repeated to Habana. LAWTON MRM Regraded Unclassified 189 HEL PLAIN Helsinki Dated June 21, 1942 Rec'd 11:15 a.m. Secretary of State, Washington. 520, twentyfirst. Government yesterday issued official statement "It's now stated most important task in monetary policy to maintain value of money and obtain income covering increased expenses. This requires deliberate mutually complementary and quickly effective measures in financial policy comprising necessary mensures. Government deems it necessary that this program be carried out as 8 whole. Besides Government will support measures to preserve value of money by firm policy on prices, rents and wages" Statement says Government will introduce tax legislation including single levy incomes and capital extra forest tax increased inheritance, gift, stamp, real estate taxes. Postal, telephone, and travel taxes will be increased. Other measures increase income in preparation tax administration to be re- organized. Saving to be stimulated and means used to "tie down superfluous purchasing power". Statement says unavoidable lower standard living all classes but "care must be taken not to inflict serious damage on productive life". Concludes "Ite Government aim stabilize State's economy and if necessary by radical measures create firm basis for value currency." SCHOENFELD HPD Copy:1c:6/22/42 Regraded Unclassified 190 COPY NO. 13 BRITISH MOST SECRET U.S. SECRET OPTEL No. 209 Information received up to 7 A.M., 21st June, 1942. 1. NAVAL MURMANSK was heavily raided by enemy aircraft on the 18th and it is estimated that 1/3 of the town is in ruins. There were no casualties to H.M. ships or merchant shipping, but work in the docks has practically ceased. 2. MILITARY LIBYA. 19th. The enemy made no further advance towards the frontier, but appears to be preparing to attack TOBRUK from the South East. Our garrison at ACROMA was withdrawn and the enemy was digging in on the line EL ADEM - ACROMA. Our mobile forces continue to operate West of the frontier especially in the ZL GOBI area. 3. AIR OPERATIONS WESTERN FRONT. 19th/20th. About 250 tons of H.E. and incondiaries were dropped on the EMDEN area and 60 tons on OSNABRUCK. 20th. 12 Bostons attacked the power stution at HAVRE. Escort and diversionary sweeps were provided by 27 Squadrons of Spitfires which destroyed 4 F.W.190's, probably destroyed another, and damaged 3. 6 Spitfires are missing. 20th/21st. 193 aircraft were sent out - EMDEN 185, Dutch aero- dromes 5. 6 are missing. Weather was moderate and about 70% of the aircraft attacked the EMDEN area. LIBYA. 18th/19th. Our bombers attacked BENGHAZI and mined the harbour. 19th. Baltimores bombed TMIMI landing ground. BURMA. 19th. Our aircraft attacked KALEWA and HOMALIN. 4. BALKANS The ARDA and MARITZA bridges were scheduled to be reoponed for traffic on the 15th June. Work on the Bulgarian shipyards at VARNA is progressing. Regraded Unclassified 191 JG Habana This telegram must bE paraphrased before being Dated June 22, 1942 communicated to anyone other than a Governmental Rec'd 1:20 a.m. 23rd agency. (BR) Secretary of State, Washington. RUSH 44, June 22, 7 p.m. Department's telegram number 374, June 20, 4 p.m. ..ccording to Constantino Gonzalez y Compania the $80,000 they received from the SS ICI.R and which have been blocked in the First National Bank of Boston here were in part payment of tobacco which has not yet been shipped. Constantino Gonzalez y Compania informed British Consulate that they have pending orders for about 1200 tons of tobacco from the Spanish Tobacco Monopoly for Spenish Morocco valued at $234,000. This appears to bE confirmed by report from British Consulate that Navierto covering 1220 tons of tobacco for Morocco have been issued to Constantino Gonzalez y Compania which are being withheld pending outcome of in- vestigations. Repented to Ciudad. BRADEN KLP Regraded Unclassified 192 HEL Ciudad Trujillo This telegram must bE paraphrastd before being Dated June 22, 1942 communicated to anyone other than a Governmental Rec'd 6:20 p.m. agency. (BR) Secretary of State, Washington. RUSH 282, June 22, 4 p.m. The following telegram has been sent to the Embassy at Habana: "June 22, 4 p.m. In case you are interested in ES- tablishing a legal Case against the Constantine Gonzalez Company with respect to its possession of the $80,000, Minister White in a letter just received informs me that when Miguel Mauricio Gonzalez Entered Haiti on June 11 he declared that hE had only 0350. This false statement was presumably inde in connection with Hai- tian import regulations with which however I am not familiar. Piedra Martinez is Endeavoring to secure return Pan-American Airways reservations to Cuba hoping to leave tomorrow. Will keep you informed of his move- ments. REPEATED to Department. If LAWTON CSB Regraded Unclassified C 193 0 P Y DEPARTMENT OF STATE Washington In reply refer to June 22, 1942. FD 851.516/291 13 The Secretary of State presents his compliments to the Honorable the Secretary of the Treasury and encloses a copy of a confidential despatch, no. 972, dated May 19, 1942 from the American Embassy at Vichy, France, concerning the creation in Paris of an organ- ization to be known as the Societe de Credit Inter- continentale. Enclosure: From Embassy, Vichy, no. 972, May 19, 1942. Copy:vw:6-23-42 Regraded Unclassified 194 0 0 P Y AIR MAIL. Ho. 972 Vichy, May 19, 1942. CONFIDENTIAL. Subject: Formation in Peris of the SOCIETE DE CREDIT INTERCONTINENTALE. The Honornble The Secretary of State, Washington, D. C. Sir: I have the honor to report as follows: Recently, Comte Rene de CHAMBRUN, (M. Pierre Laval's son-in-law) called at the Embassy to report the creation in Paris of an organi- sation to be known as the SOCIETE DE CREDIT INTERCONTINENTALE. The Societe in question, according to M. de Chambrun, is made up of a group of French industrial and commercial insurance bankers and has the following aims: 1. To organize a group of former French directors of American deposit banks in France as well as the clients of such banks; 2. To study the possibilities of renewing, as soon as possible, financial and commercial relations between Europe and the United States; 3. To conduct, on an international basis, affairs which would permit Paris to resume, in the future, its past position of importance; This Societe intends eventually to return both personnel and clients to such American deposit banks, or, if they so desire, will agree to act as their correspondent in France. The Embassy also learns that the Administrators and directors of the NATIONAL CITY and CHASE banks, as well as M. Seymeur Weller, European representative of DILLON REED & COMPANY, are interested in Regraded Unclassified 195 -2- this project and have decided to give it their active support. According to M. de Chambrun, the French authorities, anxious to maintain the best possible relations with America, and particularly with the United States, and to prepare for the future, have authorized the creation of the Societe in question. The German authorities in Paris, who had to be informed of its creation, are not opposed to it, but have insisted that & French bank, controlled by Dr. KREUTER, German trustee both of Dutch interests and those of Dillon Reed & Company in Germany, should underwrite 20% of the capital of this new company. M. de Chambrun stated that in view of the small extent of such proposed German participation, the organizers have decided that this fact should not prevent the creation of the Societe. The principal companies participating in the Societe de Credit Intercontinentale are: Union Europeene; Banque de l'Indo-Chine; Societe Francaise Assurance Credit; Assurances Generales Phenix, Societe Assurances et Reassurances; Societe des Grands Hotels; Ford, Gibbs, Segard & Cie. Respectfully yours, S. Pinkney Tuck Charge d'Affaires ad interim In triplicate da/las Copy:1c:6/23/42 Regraded Unclassified 196 COPY NO. 13 BRITISH MOST SECRET U.S. CRET OPTAL Nos. 210 and 211 TOBRUK attack began morning twenty June. Heavy air bombardment ms followed by infantry attack which succeeded in making an initial breach in south eastern face of perimeter. Enemy tanks and lorried infuntry passed through this cap and were brought to battle inside perimeter during afternoon. We lost very heavily in tanks and ne a result situation deteriorated rapidly. During night mobile portion of garrison began to fight its way out. No further information regarding it has yet been received. OPTEL No. 212 Information received up to 7 A.M., 22nd June, 1942. 1. NAVAL During night 20th/21st our light forces engagod and set on fire an enemy patrol vessel off BOULOGNE. A U.S. vessel sank after an explosion while at anchor in KOLA INLET (NORTH RUSSIA). 2. AIR OPERATIONS WESTERN FRONT. 20th/21st. About 325 tons of bombs, more than half incendiary, were dropped by 157 aircraft on EMDEN and area. The objective was somewhat obscured by cloud and haze but fires were reported. Two or more hits were mide on a 1,500 ton vessel off Dutch coast. 21st. 12 Bostons, with fighter escort, successfully bombed DUNKIRK docks, ono Spitfire missing. One ME 110 was shot down off CORNWALL. 21st/22nd. 77 aircraft were sent out - seamining 57, enemy aero- drome patrols 18, one missing. About 50 enemy aircraft were reported over GREAT BRITAIN, about 40 of them over the SOUTHAMPTON area where scattered bombing took place, 10 others operated between SHOREHAM and GUILDFORD. 4 enemy aircraft were destroyed, including n Heinkel 177, (new type heavy bomber with four engines driving two propellors) and 4 others damaged. LIBYA. On the 20th our bombers attacked enemy columns at TOBRUK and on 21st fighter bombers attacked M.T. in the SIDI AZEIZ area. At night BENGHAZI and TMIMI landing ground were bombed. 3 of our fighters are missing and 1 JU 88 was probably destroyed. MEDITERRANEAN. 21st. 8 Boauforts, escorted by 6 Beaufighters, hit with torpedoes two 8,000 ton vessels and 1 escort ship off CAPE BON. 3 enemy aircraft were destroyed and 4 Beauforts are missing. Regraded Unclassified 197 - 2 - 3. HOME SECURITY 21st/22nd. SOUTHAMPTON was attacked for about forty-five minutes. There are no reports of any serious damage. Some bombs also fell at EASTLEIGH and in rural districts of HAMPSHIRE, SURREY and SUSSEX. Regraded Unclassified 198 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE June 22,1942 Secretary Morgenthau TO Mr. Kamarok FROM Subject: Summary of Military Reports Libya (The Axis forces which took Tobruk had a tank strength of scarcely more than 100 tanks. The Allied troops holding the town must have been thoroughly demoralized to fall victim to the attack. The British have 8. couple of tank brigades (150-200 tanks) in Egypt which were to be ready for action by June 30. These forces may be able to stop Rommel's decimated army which but for the stores in Tobruk would probably be out of supplies by now). Supply Route to Russia Murmansk WAB heavily raided by German airolanes on June 18. One-third of the town 1° in ruins. There were no casuelties to shipping but work in the docks has practically ceased for the time being. (The movement of tank landing craft up the Norwegian coast and this raid undoubtedly indicate A forthcoming German offensive against this port. Fortunately, Archangel 18 open to shipping). (U.K. Operations Report, June 21, 1942) Conditions in German Europe Mobilization of labor in Axis-controlled countries is increasing. In Norway, large-scale conscription for work on defenses 18 announced and activity in all industries other than those engaged on armaments and production of food and other absolute necessities is to be drastically curtailed. In Finland, where the labour situation 16 particularly acute, a thorough round-up of All available labour 18 to be carried Regraded Unclassified - 2 - 199 out. In Hungary, 8. special labour corps for women between 16 and 50 18 being formed. In Croatia, a general measure of labour conscription for all males between 18 and 60 is to be brought into force. (U.K. Operations Report, June 19, 1942) Russian Air Force The British magazine "The Aeroplane" gives the follow- ing description of the Russian rocket bomb which was one of the surprises of the war: "Surprisingly few new tactical weapons have been evolved so far in this War. The magnetic mine dropped from the air is probably the new weapon which has had the greatest effect 80 far "Possibly the most important tactical advance in air weapons 18 the rocket bomb invented by the Russians and used by them from the Iliuchin Stormovik--and from the Hawker Hurricane. Few details have been given about the rocket bomb and the Germans have confirmed its potency by an ominous silence on the subject. However, the Russians have said enough about it for its general principle to be gathered. Apparently the rocket bomb is slung on a guide rail under the wing of an aeroplane intended for low-attack work. The machine 18 flown low down and aimed at the target in much the manner of 8 ground strafing cannon-fighter. When the sights are on the target the electrical firing button is pressed and the bomb is projected forwards by rocket apparatus in its tail. The effect is the same AS that of A very large low-velocity cannon shell. "The advantages are great hitting power sufficient to knock out tanks --and greater accuracy of bomb delivery than either dive bombing or low-level attack bombing. The disadvantages are that the rocket apparatus obviously reduces the weight of the charge in the bomb and that, compared with the fighter armed with big cannon, rela- tively few projectiles can be carried. "There can be no doubt that for close-support work with troops the Russians have evolved A very fine wespon....' ("The Aeroplane", May 29, 1942) Regraded Unclassified 200 TREASURY DEPARTMENT Washington FOR IMMEDIATE RELEASE, Press Service Monday, June 22, 1942. No. 32-15 Secretary of the Treasury Morgenthau today announced the subscription figures and the basis of allotment for the cash offering of 5/8 percent Treasury Certificates of Indebtedness of Series A-1943. Reports received from the Federal Reserve Banks show that subscriptions aggregate $3,113,000,000. Subscriptions in amounts up to and including $25,000, totaling about $61,000,000, were allotted in full. Subscriptions in amounts over $25,000 were allotted 50 percent, on 8 straight percentage basis, but not less than $25,000 on any one subscription, with adjustments, where necessary, to the $1,000 denomination. Details 88 to subscriptions and allotments will be announced when final reports are received from the Foderal Reserve Banks. -o0o- Regraded Unclassified 201 June 22, 1942 11:30 a.m. GROUP MEETING Present: Mr. Bell Mr. Buffington Mr. Schwarz Mr. Haas Mr. Thompson Mr. Gamble Mr. Odegard Mr. Graves Mr. Gaston Mr. Kuhn Mr. Sullivan Mrs. Klotz H.M.JR: Bell, have you got a report on the financing? MR. BELL: They are not all in yet, but I don't think the final figures will change much from what we had Saturday night. We had three billion one hundred million. It looks like about a fifty-percent allotment. H.M.JR: Will you have something for me, say, by four o'clock? MR. BELL: Yes. I would like to make the allot- ment before one so I can get it out to the banks. Time is very short. H.M.JR: When do we announce it? MR. BELL: Right away. H.M.JR: That is all right. MR. BELL: Just as soon as the final report is in We will have something for you. Regraded Unclassified 202 - 2 - H.M.JR: What else? MR. BELL: I have a couple of letters I would like to have you sign. That is in connection with that donation you signed the other day. (Letter addressed to A. F. Whitney, President, Brotherhood of Railroad Trainmen, Cleveland Ohio; and letter addressed to Mr. Robert A. Lovett, Assistant Secretary of War for Air, signed by the Secretary.) MR. BELL: When I rode to the airport, I think a week ago Friday, I gave you two letters, one from Leffingwell and the other from Eccles. I think your office is inquiring what I have done with them. Do you remember them? You took them to the farm that week end. The one from Leffingwell hasn't been acknowledged. H.M.JR: Do you want the Leffingwell letter? MR. BELL: If you will let me have them, I will acknowledge them. The one from Eccles was on that Chicago situation. 11.M.JR: Oh, yes, you have a suspicion it is here. I have a suspicion you are right. (Laughter) MR. BELL: I am just raising the question. I think they are there, though. H.M.JR: What else? MR. BELL: That is all. H.M.JR: Norman? MR. THOMPSON: I have a deferment case, thirty to xty days, for Mr. Melcher in the Educational Section of War Regraded Unclassified 203 - 3 - Savings. They would like to keep him on long enough to finish up some important projects and to train a replacement. I should think we might give him the short period. H.M.JR: Well, I am having a - I don't want to take the time. Will it go until tomorrow? MR. THOMPSON: Yes. H.M.JR: I put down White, you and Gaston for tomorrow on deferments. MR. THOMPSON: We have completed our negotiations with the Bureau of the Budget on decentralization of Internal Revenue. We only moved about three hundred people out of Washington from that bureau. We still have Narcotics and Customs and Foreign Funds that we are negotiating on. We will probably do those this week. That is all. H.M.JR: You are taken care of? MR. BELL: Yes. I don't know whether you read in the Times this morning that A. Manuel Fox died in China. H.M.JR: I just saw it. I feel very badly about it. MR. BELL: Very sudden. H.M.JR: Does anybody know anything about it? MR. SCHWARZ: Harry is going to give us a memorandum which I was going to suggest you might make use of at four o'clock and pay a little tribute to him. H.M.JR: What about his wife? MR. WHITE: I heard about it yesterday. The State Department received a cable, and I think they tried to get in touch with me yesterday morning, apparently couldn't, and got in touch with Currie. Currie got in touch with me, and I got in touch with the family. Regraded Unclassified 204 - 4 - H.M.JR: Anything I can do? MR. WHITE: No. I think you might want to write a little note. We are finding out from the State Depart- ment what is done under those circumstances officially. We haven't heard anything yet. H.M.JR: I don't think a note means much. I would like to call on her when she is ready. MR. WHITE: She is not here; she is in New York. H.M.JR: Why not write a letter for me, which I will sign, and say that when she comes back I would like to call on her. MR. WHITE: All right. H.M.JR: Then find out if there is anything about his finances, anything we can do to help her any. MR. WHITE: I don't think there is, but I will find out. H.M.JR: Will you? MR. WHITE: Yes. H.M.JR: Harold, how many nights did you sleep on a train? MR. GRAVES: About four, I think. H.M.JR: Is that all? MR. GRAVES: Oh, more than that, maybe five or six. H.M.JR: Now listen, you didn't go to the West Coast and back taking locals all the way and not-- MR. GRAVES: Eight. We had some trouble, or it wouldn't have been that bad. There were heavy rains out in the Middle West. Our train was fifteen hours Regraded Unclassified 204 - 4 - H.M.JR: Anything I can do? MR. WHITE: No. I think you might want to write a little note. We are finding out from the State Depart- ment what is done under those circumstances officially. We haven't heard anything yet. H.M.JR: I don't think a note means much. I would like to call on her when she is ready. MR. WHITE: She is not here; she is in New York. H.M.JR: Why not write a letter for me, which I will sign, and say that when she comes back I would like to call on her. MR. WHITE: All right. H.M.JR: Then find out if there is anything about his finances, anything we can do to help her any. MR. WHITE: I don't think there is, but I will find out. H.M.JR: Will you? MR. WHITE: Yes. H.M.JR: Harold, how many nights did you sleep on 8. train? MR. GRAVES: About four, I think. H.M.JR: Is that all? MR. GRAVES: Oh, more than that, maybe five or six. H.M.JR: Now listen, you didn't go to the West Coast and back taking locals all the way and not-- MR. GRAVES: Eight. We had some trouble, or it wouldn't have been that bad. There were heavy rains out in the Middle West. Our train was fifteen hours 205 - 5 - late getting to Chicago yesterday. H.M.JR: Did you go out and thank the man? (Laughter) MR. GRAVES: So that accounted for one of those days. H.M.JR: Where were you all the time? MR. GRAVES: West Coast. I was at the Rose Festival in Mr. Gamble's town of Fortland, three days in Los Angeles, came by Salt Lake and Denver. H.M.JR: Do you really feel pretty well? MR. GRAVES: I feel fine. H.M.JR: I think you bond men might stay behind a few minutes after. I have a couple of things that I would like to talk to you about. Chick? MR. SCHWARZ: Nothing. MR. WHITE: Nothing. H.M.JR: George? MR. HAAS: I was glancing through the files of replies you got when you wrote to these companies asking them to discontinue the new orders. There are several letters I think you would enjoy reading. Regraded Unclassified 206 - 6 - H.M.JR: George, I want you to stay behind, too. I want you to get me some figures, and Bell, also, please. Peter? MR. ODEGARD: Nothing. H.M.JR: Kuhn? MR. KUHN: Nothing. H.M.JR: Kuhn, there are five reels I know - I want one for Halifax to send to the King. How about the other four? MR. KUHN: I sent four up to him, because the various ministries in London were interested and wanted to see those. H.M.JR: Any note from me with them? MR. KUHN: No, there was only the note to Halifax. H.M.JR: How will they know that they come from me, the other four? MR. KUHN: Because RAF people here will tell them SO. They are the ones that are flying them over. They want the chief of the air staff to see them, particularly, because he was responsible for this thing. Regraded Unclassified 207 - 7 - H.M.JR: Who else gets one? MR. KUHN: I think the Minister of Information will get one, and I don't know who else. H.M.JR: Well, the bond people over there - I wanted them to have one, their war bond people. MR. KUHN: That can be arranged. H.M.JR: I mean, how many did you send up? MR. KUHN: Four. H.M.JR: One was for the King. MR. KUHN: That is right, three for these ministries. H.M.JR: One is air, one is information; what is the third? MR. KUHN: I don't know whether - I think the military people. H.M.JR: Do you want to find out? Those war bond people sent us a reel. MR. KUHN: There isn't much war bonds in those first reels. The war bonds would be in later ones. You might want to see what a leading German- American city did about these boys who have been bombing Germany. (Mr. Kuhn handed the Secretary a newspaper.) H.M.JR: That is the Milwaukee Journal; that happens to be a good paper. MR. KUHN: There is more on the yellow page. H.M.JR: A very good paper. MR. SCHWARZ: That is the one that Lucius Nieman founded. Regraded Unclassified 208 - 8 - H.M.JR: That is very nice. Anything else? MR. KUHN: That is all. MR. BELL: The OEM apparently has gotten out a film called "Keep 'em Rolling. They were showing it to the ambassador Friday night. Mrs. Bell saw it, and she said she has never seen an audience so enthusiastic about a film. They just clapped and hollered after the thing had finished, and there is 8. line in there about War Savings Bonds. It gives the industry, the tanks rolling off the line. She said it was very interesting. MR. KUHN: It is a film about the song, "Keep 'em Rolling," and the film tries to get the audience to sing the song with them. MR. BUFFINGTON: Could I have five minutes today or tomorrow? I would like to go over this list of executive managers with you. H.M.JR: Ask Stephens, will you? What else? MR. BUFFINGTON: That is all. H.M.JR: Leaving out the executive managers, do you know any place now where the War Savings Bonds are not getting the cooperation from the bond men? MR. BUFFINGTON: I don't know that they are using it in all sections. Mr. Space from Atlants is in my office now. There are two States and part of four others in- volved, and the State administrators from two States have checked with Mr. McLarin and said they didn't need help now. He had not heard from the other four State administrators, but generally I think they are cooperating perfectly. H.M.JR: Anything else? MR. BUFFINGTON: No, sir. H.M.JR: Edward? Regraded Unclassified 209 - 9 - MR. FOLEY: I talked to Judge Rosenman on Saturday morning. He called up and he said that he had spoken to Milo Perkins, and couldn't get hold of Oppenheimer. H.M.JR: Will you speak louder? I can't hear you, and neither can the operator hear you. MR. FOLEY: Judge Rosenman had spoken to Milo Perkins. He hadn't been able to get hold of Monroe Oppenheimer, the counsel for the Board of Economic Warfare. H.M.JR: Could I just interrupt. Was Oppenheimer an old "ashington Government man or somebody new? MR. FOLEY: Yes, he was general counsel for the Resettlement Administration when General Fleming was over there after Tugwell had had so much trouble. MR. BELL: A good man. MR. FOLEY: ne is a good man and our fellows know him. They always get along very well with Oppenheimer, as Harry does with Milo. We have had no trouble, and I don't think we will with this agency insofar as this order is concerned, and we - we have got it ready and are sending a copy up to the Judge in his chambers and he will be down again on Thursday. In the meantime, we are going to try to have a meeting before he gets back here to see if we can't get together. As a matter of interest, although it is no longer of any concern to the Treasury, an order was entered in New York last week directing the payment of some four million two hundred thousand dollars, with interest, in connection with the new post-office site up there, so the Government won that case of specific performance against the City of New York. Judge Clark entered the order reqiring specific performance. They said since the agreement didn't envisage the cost of the demolition of the building that cost was Regraded Unclassified 210 - 10 - to be borne by the Government, but the cost of the acquisition of the Vesey Street post-office site, to- gether with interest from the date of the settlement, was to be borne by the city. H.M.JR: Should I write a little letter to Fiorello enclosing a blank check? (Laughter) MR. FOLEY: It isn't our business any longer. It is the Federal Works Agency, but I thought you would be interested to know that. On this Blackmer thing I sent to the Bureau a memorandum asking them to look into the matter and to let me know what could be done insofar as getting hold of those funds is concerned. H.M.JR: But how about the publicity? MR. FOLEY: And the publicity, let me look into it A. little. H.M.JR: I don't want a memo. If we want it, let's have it this afternoon at four o'clock. MR. FOLEY: I will see what I can get up for your press conference at four. II.M.JR: I mean, I sent it over to them because it was Foreign Funds and I wanted particularly to bring Foreign Funds to the President's attention, and if you give it to me write it this way; "The Secretary of the Treasury announces that Foreign Funds in their work" - throw in a few bouquets for Foreign Funds. See? Have Crowley write it for you. (Laughter) But seriously, I was doing it just for that, and I sent your memorandum to the President as you wrote it to me, also to leave a good taste in his mouth. So evidently he liked it, so let's-- MR. FOLEY: follow it up. All right. Regraded Unclassified 211 - 11 - H.M.JR: I am calling on you to tell me how to do it. What are you going to do with that memo? MR. FOLEY: Bring it back with the memorandum. H.M.JR: All right. Anything else? MR. FOLEY: No. H.M.JR: John, I am seeing you and Paul-- MR. SULLIVAN: Who? H.M.JR: You asked for an appointment about the Board of Tax Appeals-- MR. SULLIVAN: You mean the Processing Tax Board of Review. That is a memo on the Friday meeting-- H.M.JR: Was that interesting? MR. SULLIVAN: ... over at McNutt's. The inter- esting part of it is that of the present unemployed employables in the country of about 8. million seven hundred thousand, almost twenty-five percent of them are in New York City alone, and this was an effort to get more war contracts for New York City. The meeting lasted about two hours, and everybody was very anxious to help; but there wasn't any discussion about anything the Treasury could do to help out in the matter. It is largely a matter of Army, Navy, Maritime Commission and WPB. Regraded Unclassified 212 - 12 - H.M.JR: Incidentally, if anybody is interested in Paul V. McNutt, I suggest they read the article on him in last week's New Republic. Has anybody read that? MRS. KLOTZ: No. H.M.JR: Read it. It is very interesting. It gives all the speeches he has given in the last three months, lists them, what he said, and what he hasn't done. It is very interesting. You take the New Republic, don't you? MRS. KLOTZ: Yes. II.M.JR: Anything else? MR. SULLIVAN: Yes, sir. The Commissioner and I may have to see you this afternoon. The type of with- holding tax that was recommended Friday is something that just cannot be worked, and he feels very keenly about it, and has a memorandum prepared to submit to you. H.M.JR: For the record, the first I knew of that type of withholding tax was when I saw it in the paper. I was not consulted. MR. SULLIVAN: Also for the record, Mr. Secretary, when I saw it Saturday morning I called the Commissioner and wondered why he hadn't mentioned it to me. He was pretty provoked and wondered why I hadn't mentioned it to him, and neither I nor anybody in the Bureau-- H.M.JR: Can I join the club? MR. SULLIVAN: You are a member of the club, and we called up on the Hill-- H.M.JR: I hope I am right. MR. SULLIVAN: and the committee-- H.M.JR: I home I am right - I think I am right. Regraded Unclassified 213 - 13 - MR. SULLIVAN: The committee adopted this ten percent thing Saturday morning, Mr. Secretary. H.M.JR: Well, I am ninety percent sure I never heard of it - I mean, that device. MR. SULLIVAN: It just won't work under this system. H.M.JR: There is no use seeing you fellows without having Paul here. MR. SULLIVAN: No. Well, you see, we haven't had a chance to see Randolph. H.M.JR: Would you mind doing this? To save me a little wear and tear, why don't you and the Commissioner have a trial run with Randolph? MR. SULLIVAN: We have already arranged for that. K.M.JR: And then after you have seen him, come and see me. I will fix a time after you have had your trial run. MR. SULLIVAN: Yes, sir. H.M.JR: And then I thought on the fifteenth of May you were going to have something on these - what do you call them, these organizations that don't make returns, I thought by the fifteenth of May you were going to have-- MR. SULLIVAN: Fifteenth of May was the date when they filed their returns. H.M.JR: When are you going to have something? MR. SULLIVAN: We have been going through them now. The Department of Justice just got over to us Friday afternoon the list they wanted investigated. H.M.JR: Only Friday? Regraded Unclassified 214 - 14 - MR. SULLIVAN: Yes, sir. They had talked with me on the phone many, many times, but the list finally got here Friday. H.M.JR: Then you got heat on that? MR. SULLIVAN: Yes, sir. H.M.JR: Then the other thing - when are the thirty days up on those seven companies I took up on the Hill? MR. SULLIVAN: We will be able to do that the latter part of the week. H.M.JR: You mean the thirty days will have expired? MR. SULLIVAN: Yes. H.M.JR: And when will there be new ones? MR. SULLIVAN: The new ones are coming in all the time. II.M.JR: When do you want to have a session with me and explain them to me? MR. SULLIVAN: When I get something that justifies your spending your time on it. The things we are getting are in little companies, and it isn't the type of thing we are looking for. H.M.JR: Anything else, John? MR. SULLIVAN: That is all, sir. MR. KUHN: Did you see the labor papers on those, the seven companies, Mr. Secretary? H.M.JR: I have rot them here. I took no work with me. MR. KUHN: They gave it a very good play, the best I have ever seen in & labor press for a Treasury job. Regraded Unclassified 215 - 15 - H.M.JR: I took nothing with me over the week end. Whatever the heat was here, I will raise you at least ten degrees. where I was. MR. GASTON It was ninety-three yesterday; that was the top. H.M.JR: The official was ninety-seven in Charleston. MR. GAMBLE: I would like to tell you that Dr. Myers reported for work this morning. He is going to be here for a couple of days in case you would like to see him. He is going to be here this trip a couple of days. H.M.JR: Well, I tell you, let's say eleven o'clock tomorrow morning. MR. SULLIVAN: What time is my appointment? H.M.JR: This isn't up to date. He has it - Stephens has it. I gave it to him. MR. SULLIVAN: I will ask him. H.M.JR: Herbert? MR. GASTON: Nothing. H.M.JR: You had better stay behind on this War Bonds, too. MR. WHITE: Are you going to have an opportunity to look through some of those memos that you might have looked at over the week end? If not, I would like to raise something here. There is one-- H.M.JR: That doesn't - it may be English, but I don't understand it, Harry. Eleven 'clock tomorrow for Gamble and Dr. Myers. Regraded Unclassified 216 - 16 - MR. WHITE: Well, I will resort to the King's English. There is a memorandum on that which I had sent to you that included the report of the conclu- sion of the subcommittees which met a couple of times relating to the International Stabilization Fund. It calls for some action on your part. H.M.JR: You had better arrange to see me through Stephens. I also read a very interesting article in The Nation last week. For anybody interested in what kind of a peace, by del Vayo, the Spaniard, I recommend that, also. MR. GASTON: Not Del Rio? H.M.JR: Del Vayo. Regraded Unclassified