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Volume 568, September 10 – September 13, 1942
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Volume 568, September 10 – September 13, 1942
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Henry Morgenthau, Jr. Papers
Diaries of Henry Morgenthau, Jr.
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DIARY
Book 568
September 10 - - 13, 1942
- A -
Book Page
Airplanes
Shipment to British Forces - Hoflich report - 9/11/42..
568
189
Aircraft despatched, week ending September 8, 1942 -
British Air Commission report - 9/12/42
222
- C -
Camden, New Jersey
See Internal Revenue, Bureau of
China
Hong Kong conditions described in William H. Taylor
memorandum - 9/15/42
51
a) Copy to Chen - 9/14/42: See Book 569, page 131
Collector of Internal Revenue - Camden, New Jersey
See Internal Revenue, Bureau of
Contracts, Government
See Government Contracts
Correspondence
Mrs. Forbush's mail report 9/11/42
159
Customs, Bureau of
Navy asks for stringent investigation of seamen -
9/10/42
14
- D -
Daniels, Josephus
See Revenue Revision
Delvin, Donald
Mrs. FDR asks for job in Treasury - 9/11/42
156
- F -
Financing, Government
Announcement of $1.5 billion of 0.65% Certificates of
Indebtedness, Series C-1943, and $1.5 billion of 12%
Treasury Notes, Series C-1945; books open 2 days; all
subscriptions up to $25,000 to be allotted in full -
9/10/42
1
a) Closing of subscription books - 9/11/42
73
b) Rouse-HMJr conversation 9/11/42
98
c) Subscription figures and bases of allotment -
9/16/42: Book 569, page 246
d) Final subscription and allotment figures -
9/19/42: Book 570, page 229
Colonel Pope (First Boston Corporation) suggests three
advisers to HMJr in connection with financing programs -
9/11/42
125
Government securities - recent changes in prices and
yields: Murphy memorandum - 9/11/42
128
- 1- (Continued)
Book Page
Financing, Government (Continued)
War Savings Bonds:
Sales report for July, August, and September, 1942 -
9/10/42
568
44
Voluntary savings program - "failure stories"
discussed by Treasury group - 9/11/42
111
a) Suggested statement by HMJr
122
Payroll Savings Plan: Analysis of - 9/11/42
131
Foreign Funds Control
Parrama: Investigators would not receive diplomatic
status; nevertheless Paul suggests sending - 9/10/42..
48
- G -
Government Contracts
"Subcontractor" and "materialman" discussed in
Sullivan memorandum in connection with renegotiation
of contracts to eliminate excessive profits -
9/11/42
138
- I -
Internal Revenue, Bureau of
Camden, New Jersey, District: Low morale discussed
with Collector Maloney - 9/10/42
38
- J -
Joint War Production Committee
See Lend-Lease
- L -
Latin America
Panama: See Foreign Funds Control
Lend-Lease
Joint War Production Committee reports revised to
September 1, 1942 - 9/12/42
213
- M -
Magowan, Robert (Merrill-Lynch)
Discussed at 9:30 meeting - 9/10/42
17
- M - (Continued)
Book Page
Military Reports
British operations - 9/10/42, etc
568
57,58,60,
196,227,229
Office of Strategic Services reports transmitted by
Donovan - 9/10/42, 9/12/42
63,224
Hoflich summaries - 9/10/42, 9/11/42
70,197
"The War This Week, September 3-10, 1942" - Office
of Strategic Services report
72
American public opinion - trends since Pearl Harbor:
Office of War Information report - 9/11/42
199
- N -
Navy Department
See Customs, Bureau of
New Jersey - Camden
See Internal Revenue, Bureau of
- 0 -
Office of Price Administration
Use of banks in connection with rationing discussed
at 9:30 meeting . - 9/11/42
79
- P -
Panama
See Foreign Funds Control
Philippine Islands
Exchange of United States Officials: HMJr asks that
Treasury personnel be included - - 9/11/42
187
a) State Department report: See Book 569, page
214 - 9/15/42; Book 572, page 148 - 9/26/42
- R -
Rationing
See Office of Price Administration
Revenue Revision
Josephus Daniels article in "Raleigh (North Carolina)
News and Observer" to be inserted in Congressional
Record - 9/10/42
9,154
a) HMJr thanks Daniels
26
b) Report on insertion in Congressional Record:
Book 569, page 192 - 9/15/42; Book 570, page
240 - 9/19/42
c) Daniels sent a copy - 9/25/42: Book 572, page 40
Regraded Unclassified
- R - (Continued)
Revenue Revision (Continued)
Book Page
Runl Plan: Byrd tells HMJr subcommittee records only
three votes in favor - 9/11/42
568 104,200
Mrs. FDR-Treasury correspondence concerning tax
provisions 9/11/42 referring to divorced wife and alimony -
146
Depletion (intangible drilling expense) discussed by
Paul with Treasury group - 9/11/42
203
Ruml Plan
See Revenue Revision
- S - -
Shostakovich, Dmitri
"Hymn to the United Nations" - playing of discussed
in Mrs. FDR--Treasury correspondence - 9/11/42
106
Smith, Winthrop
Discussed at 9:30 meeting - - 9/10/42
18
Stabilization Agreements
Report as of August 31, 1942 - 9/10/42
49
- T -
Taxation
See Revenue Revision
- Y -
War Savings Bonds
See Financing, Government
1
9/9/42
TREASURY DEPARTMENT
Washington
FOR RELEASE, MORNING NEWSPAPERS,
Press Service
Thursday, September 10, 1942.
No. 33-15
9/9/42
Secretary of the Treasury Morgenthau today announced the
offering, through the Federal Reserve Banks, for cash subscrip-
tion at par and accrued interest, of $1,500,000,000, or there-
abouts, of 0.65 percent Treasury Certificates of Indebtedness of
Series C-1943, and of $1,500,000,000, or thereabouts, of 1-1/4
percent Treasury Notes of Series 0-1945. In order to insure more
extensive participation in this offering the subscription books
for both issues will remain open two days, and all subscriptions
up to $25,000 will be allotted in full. There will be no re-
strictions as to the basis for subscribing to these issues.
The certificates will be dated September 21, 1942, will be
payable on May 1, 1943, and will bear interest at the rate of
0.65 percent per annum, payable on an annual basis at the matu-
rity of the certificates. They will be issued in bearer form
only, in denominations of $1,000, $5,000, $10,000 and $100,000.
The notes will be dated September 25, 1942, will mature
March 15, 1945, and will bear interest at the rate of 1-1/4 per-
cent per annum, payable on a semiannual basis on March 15 and
September 15 in each year until the principal amount becomes pay-
able. They will be issued in bearer form only, in denominations
of $100, $500, $1,000, $5,000, $10,000 and $100,000.
Pursuant to the provisions of the Public Debt Act of 1941,
interest upon the securities now offered shall not have any
exemption, as such, under Federal Tax Acts now or hereafter en-
acted. The full provisions relating to taxability are set forth
in the official circulars released today.
Subscriptions for both issues will be received at the Federal
Reserve Banks and Branches, and at the Treasury Department,
Washington. Banking institutions generally may submit subscrip-
tions for account of customers, but only the Federal Reserve Banks
2
- 2 -
and the Treasury Department are authorized to act as official
agencies. Subscriptions from banks and trust companies for
their own account will be received without deposit, but sub-
scriptions from all others must be accompanied by payment of
5 percent of the amount applied for.
The bases of allotment of subscriptions over $25,000 will
be publicly announced. Payment for any certificates allotted
must be made or completed on or before September 21, 1942, or
on later allotment, and for the notes on or before September 25,
1942, or on later allotment. The certificates will be redeemed
in cash at maturity and will carry no exchange privileges.
The texts of the official circulars follow:
3
UNITED STATES OF AMERICA
0.65 PERCENT TREASURY CERTIFICATES OF INDEBTEDNESS OF SERIES C-1943
Dated and bearing interest from September 21, 1942
Due May 1, 1943
1942
TREASURY DEPARTMENT,
Department Circular No. 691
Office of the Secretary,
Washington, September 10, 1942.
Fiscal Service
Bureau of the Public Debt
I. OFFERING OF CERTIFICATES
1. The Secretary of the Treasury, pursuant to the authority of the Second
Liberty Bond Act, as amended, invites subscriptions, at par and accrued interest,
from the people of the United States for certificates of indebtedness of the
United States, designated 0.65 percent Treasury Certificates of Indebtedness of
Series C-1943. The amount of the offering is $1,500,000,000, or thereabouts.
II. DESCRIPTION OF CERTIFICATES
1. The certificates will be dated September 21, 1942, and will bear interest
from that date at the rate of 0.65 percent por annum, payable on an annual basis at
the maturity of the certificates. They will mature May 1, 1943, and will not be
subject to call for redemption prior to maturity.
2. The income derived from the cortificates shall be subject to all
Federal taxes, now or hereaftor imposed. The cortificates shall be subject
to estate, inheritance, gift or other excise taxes, whether Foderal or State,
but shall be exempt from all taxation now or hereafter imposed on the principal
or interest thereof by any State, or any of tho possessions of the United
States, or by any local taxing authority.
3. The certificatos will be acceptablo to securo deposits of public
moneys. They will not be accuptable in payment of taxes and will not bear
the circulation privilogo.
4. Bearor cortificatos with one intorost coupon attached will be issued
in donominations of $1,000, $5,000, $10,000 and $100,000. The cortificates
will not be issued in registored form.
5. The certificates will be subject to the general regulations of tho
Treasury Dopartmont, now or horeafter proscribod, governing United States
cortificates.
Regraded Unclassified
- 2 -
III. SUBSCRIPTION AND ALLOTMENT
1. Subscriptions will be received at the Federal Reserve Banks and
Branches and at the Treasury Department, Washington. Subscribers must agree
not to sell or otherwise dispose of their subscriptions, or of the securities
which may be allotted thereon, prior to the closing of the subscription books.
Banking institutions generally may submit subscriptions for account of
customers, but only the Federal Reserve Banks and the Treasury Department
are authorized to act as official agencies. Others than banking institutions
will not be permitted to enter subscriptions except for their own account.
Subscriptions from banks and trust companies for their own account will be
received without deposit. Subscriptions from all others must be accompanied
by payment of 5 percent of the amount of certificates applied for.
2. The Secretary of the Treasury reserves the right to reject any sub-
scription, in whole or in part, to allot less than the amount of certificates
applied for, and to close the books as to any or all subscriptions at any
time without notice; and any action he may take in these respects shall be
final. Subject to these reservations, subscriptions for amounts up to and
including $25,000 will be allotted in full. The basis of the allotment on
all other subscriptions will be publicly announced, and allotment notices
will be sent out promptly upon allotment.
IV. PAYMENT
1. Payment at par and accrued interest, if any, for cortificates
allotted hereunder must be made or completed on or before Soptomber 21, 1942,
or on later allotment. In every case where payment is not so completed, the
payment with application up to 5 percent of the amount of certificates
applied for shall, upon doclaration made by the Secretary of the Treasury
in his discretion, be forfeited to the United States. Any qualified de-
positary will be pormitted to make payment by credit for certificates
allotted to it for itsolf and its customers up to any amount for which
it shall be qualified in excess of oxisting deposits, when 30 notified by
the Federal Reserve Bank of its District.
V. GENERAL PROVISIONS
1. As fiscal agents of tho United Statos, Fedoral Roserve Banks are
authorized and requested to receive subscriptions, to mako allotmonts on the
basis and up to the amounts indicated by the Socretary of the Treasury to
the Fedoral Roserve Banks of tho respective districts, to issue allotment
notices, to receive payment for certificatos allottod, to make delivery of
certificates on full-paid subscriptions allotted, end they may issue intorim
receipts pending dolivery of the definitive certificates.
Regraded Unclassified
5
- 3 -
2. The Secretary of the Treasury may at any time, or from time to time,
prescribe supplemental or amendatory rules and regulations governing the
offering, which will be communicated promptly to the Federal Reserve Banks.
HENRY MORGENTHAU, JR.,
Secretary of the Treasury.
6
UNITED STATES OF AMERICA
1-1/4 PERCENT TREASURY NOTES OF SERIES C-1945
Dated and bearing interest from September 25, 1942
Due March 15, 1945.
Interest payable March 15 and September 15
1942
TREASURY DEPARTMENT,
Department Circular No. 694
Office of the Secretary,
Washington, September 10, 1942.
Fiscal Service
Bureau of the Public Debt
I. OFFERING OF NOTES
1. The Secretary of the Treasury, pursuant to the authority of the
Second Liberty Bond Act, as amended, invites subscriptions, at par and
accrued interest, from the people of the United States for notes of the
United States, designated 1-1/4 percent Treasury Notes of Series C-1945.
The amount of the offering is $1,500,000,000, or thereabouts.
II. DESCRIPTION OF NOTES
1. The notes will be dated September 25, 1942, and will bear interest
from that date at the rate of 1-1/4 percent per annum, payable on a semi-
annual basis on March 15 and September 15 in each year until the principal
becomos payable. They will mature March 15, 1945, and will not be subject
to call for redemption prior to maturity.
2. The incomo derived from the notos shall be subject to all Federal
taxes, now or hereafter imposed. The notes shall be subject to estate, in-
horitance, gift or other excise taxes, whether Fodoral or Stato, but shall be
exempt from all taxation now or hereafter imposod on the principal or interest
thereof by any State, or any of the possessions of the United States, or by
any local taxing authority.
3. The notes will be accopted at par during such time and under such
rules and regulations as shall be prescribed or approved by the Socrotary of
the Treasury in payment of income and profits taxos payable at the maturity
of the notes.
4. The notos will be acceptable to sccure doposits of public monoys,
but will not. bear the circulation privilege.
Regraded Unclassified
- 2 -
5. Bearer notes with interest coupons attached will be issued in de-
nominations of $100, $500, $1,000, $5,000, $10,000 and $100,000. The notes
will not be issued in registered form.
6. The notes will be subject to the general regulations of the Treasury
Department, now or hereafter prescribed, governing United States notes.
III. SUBSCRIPTION AND ALLOTMENT
1. Subscriptions will be received at the Federal Reserve Banks and
Branches and at the Treasury Department, Washington. Subscribers must agree
not to sell or otherwise dispose of their subscriptions, or of the securities
which may be allotted thereon, prior to the closing of the subscription books.
Banking institutions generally may submit subscriptions for account of
customers, but only the Federal Reserve Banks and the Treasury Department
are authorized to act as official agencies. Others than banking institutions
will not be permitted to enter subscriptions except for their own account.
Subscriptions from banks and trust companies for their own account will be
received without deposit. Subscriptions from all others must be accompanied
by payment of 5 porcent of the amount of notes appliod for.
2. The Secretary of the Treasury rosorves the right to reject any sub-
scription, in whole or in part, to allot less than the amount of notes applied
for, and to close the books as to any or all subscriptions at any time without
notice; and any action he may tako in theso respects shall be final. Subject
to these reservations, subscriptions for amounts up to and including $25,000
will be allotted in full. The basis of the allotmont on all other sub-
scriptions will be publicly announced, and allotment notices will be sent
out promptly upon allotmont.
IV. PAYMENT
1. Payment at par and accrued intorest, if any, for notes allotted
herounder must be made or completed on or before September 25, 1942, or on
later allotment. In overy caso whore payment is not so completed, the pay-
mont with application up to 5 percent of tho amount of notes applied for shall,
upon doclaration medo by the Secretary of the Treasury in his discrotion, be
forfoited to the United Statos. Any qualified depositary will be pormittod
to make payment by crodit for notos allottod to it for itsolf and its
customors up to any amount for which it shall be qualified in excess of
oxisting doposits, whon so notified by the Fodoral Rosorvo Bank of its district.
V. GENERAL PROVISIONS
1. As fiscal agonts of the United Statos, Foderal Reservo Banks are
authorized and requested to recoivo subscriptions, to make allotmonts on the
Regraded Unclassified
8
- 3 -
basis and up to the amounts indicated by the Secretary of the Treasury to
the Federal Reserve Banks of the respective districts, to issue allotment
notices, to receive payment for notes allotted, to make delivery of notes
on full-paid subscriptions allotted, and they may issue interim receipts
pending delivery of the definitive notes.
2. The Secretary of the Treasury may at any time, or from time to time,
prescribe supplemental or amendatory rules and regulations governing the
offering, which will be communicated promptly to the Federal Reserve Banks.
HENRY MORGENTHAU, JR.,
Secretary of the Treasury.
9
September 10, 1942
9:30 a.m.
GROUP
Present: Mr. Bell
Mr. Gaston
Mr. Sullivan
Mr. Buffington
Mr. Schwarz
Mr. Haas
Mr. Paul
Mr. Kuhn
Mr. Graves
Mr. Blough
Mr. Odegard
Mr. White
Mr. Thompson
Mrs. Klotz
H.M.JR: Are you staying or are you rushing out
this morning?
MR. PAUL: No, I think it would be well for me
to stay, and I arranged to stay a short time by hav-
ing Tarleau take up a couple of matters first.
H.M.JR: Because your man on the Hill, if he
would ask Colonel Halsey for me whether he could get
this editorial put into the record, plus the cartoon -
I know they have never done it - I know they will
do the editorial any time I want it.
But this is the only thing on our side that I
have seen. If Danaher sees it - it is by the old
man, himself. (Article by Josephus Daniels in "The
News and Observer" of September 6, 1942.)
MR. PAUL: Who should get it put in the record?
10
- 2 -
H.M.JR: Your man that covers the Hill, who goes
to see Colonel Halsey. That is the way I have done
it before. Halsey has always put it in for me. They
will have to get this little piece snipped off there.
But read it. I would like to have it photostated
because it is simply marvelous.
It say 8 here: "Day by day, night by night, the
highly paid lobbyists and attorneys of Privilege by
the use of every species of propaganda known to Big
Business have been seeking in open and secretive ways
to give escape from just taxation to the Big Boys by
saddling the taxes on the Little Man. They began
their campaign of scuttle and sabotage by sending big-
wigs from the National Chamber of Commerce and the
Manufacturers' Association who told the committee
that they were ready and happy to pay heavy taxes for
the successful conduct of the war. They spoke so
patriotically and unselfishly that they received high
commendation for changing their attitude of seeking
favoritism for the rich. They waited to get the acco-
lades and then, again proffering unselfish patriotism,
came forward with the proposal that taxes on wealth
(proposed by Morgenthau) be reduced, taxes on wages
and small incomes be increased, and that the big cost
of the war be levied upon consumption by means of a
sales tax, but always protested that they were not ask-
ing for a sales tax because they wished it, but only
as a "last resort."
MR. PAUL: We got quite a boost in the "PM" for
our fight against the sale B tax, too.
H.M.JR: This thing being by Josephus Daniels,
they cannot refuse to run it - and the cartoon. I
mean it just goes on like that, just the old-time
southern orator. It is marvelous.
MR. KUHN: Does he still write editorials himself?
H.M.JR: You know what has happened, don't you?
You see, in order to make it possible for his son,
Jonathon, to come up here, he said, "I will go back
and run the paper. And he is having such a good
Regraded Unclassified
11
- 3 -
time that Jonathon is out of a job. The old man won't
give it up, and this is the kind of stuff he is writ-
ing. He is writing it personally, in his own hand-
writing, and he won't give it up.
MR. KUHN: He is almost eighty, isn't he?
H.M.JR: Yes, but he is writing that kind of
stuff, which is the most virile stuff I have seen,
and with that cartoon - that is the way to get it
in, I think, through Colonel Halsey.
MR. GASTON: That is a St. Louis Post Dispatch
cartoon by Fitzpatrick.
H.M.JR: That, plus the cartoon - who covers the
Hill for you now?
MR. THOMPSON: John Shea.
MR. KUHN: Shea.
H.M.JR: But the thing is to try to get that car-
toon in. It certainly is refreshing. You cannot do
the "PM" because "PM"--
MR. PAUL: No, I just mentioned it.
H.M.JR: But you cannot take old Josephus Daniels
is the bulwark of the Democratic party, the leading
editor of the South, and 80 forth - Secretary of the
Navy, Ambassador to Mexico - you cannot say he is a
pink.
MR. PAUL: I got the "Red Tape Cutter" award from
"PM" yesterday.
H.M.JR: Did you? What did you do, get in to see
me? (Laughter)
MR. PAUL: I do not know why they call it that.
H.M.JR: I congratulate you. You are in no hurry
today?
12
- 4 -
MR. PAUL: No. I fixed it 80 - I think it is
well for me to stay for a few minutes. I cannot stay
too long.
H.M. JR: We will take you first, anyway. What
happened after lunch yesterday?
MR. PAUL: We had a number of technical matters,
like powers of appointment. The principal thing they
did - we had quite a fight on the forty thousand
insurance estate tax exemption, and we had gotten it
out of the House bill and fixed the total exemption
at sixty thousand. Danaher made quite an effort to
get it back in, and the fight ended with a motion
keeping it out, but raising the exemption from sixty
to eighty thousand. It is now, eighty, but it consists
of part non-insurance and part insurance. That is
pretty good, because now they cannot bring back, from
a parliamentary standpoint, the insurance into the
battle, and they will simply drop the sixty or seventy
or eighty in the conference.
H.M.JR: One thing that was not clear, and I have
not had a chance to talk to you about - you were sort
of - I do not know - jockeying, that you should not
put in this resolution until the bill passed, and I
take it that the reason you did not want it passed
now was because you thought that that would close the
door to get anything else in the bill.
MR. PAUL: No.
H.M. JR: I could not understand it. I saw you
jockeying 80 I stopped pressing you.
MR. PAUL: I thought yesterday it might be a
good thing to get something in this bill and I thought
I would talk to George about it. I agree with you
that we should change the date of the other resolution
from January 11 to December 1; but it would be even
better if we could get something in this bill, and
then if it does not stay in, it is the House's fault.
13
- 5 -
H.M.JR: What I was thinking about was this, that
if they get a resolution through, say to bring in a
report, even December 1, or January 11, on pay-roll
allotment, volunteer pay, and 80 forth, that they did
it now, they will say, "Well, we are going to have it.
We do not have to do anything in the bill." I thought
you thought that if they did not do it until the bill
passed--
MR. PAUL: This thing wouldn't be until the bill
passed. This resolution that they passed yesterday of
the Committee--
H.M.JR: I thought they were going to put it right
straight through.
MR. PAUL: That would be part of the revenue bill.
H.M.JR: Wait a minute. Roy, didn't you under-
stand it was to be separate?
MR. BLOUGH: George indicated that it could be
either way. As it is now set up, it would be part
of the bill, but he indicated that it would be possible
to have a special resolution pushing it right through,
if that were desirable; but as it was passed in the
Senate yesterday, it would be part of the revenue bill.
MR. GASTON: I do not see why they need a joint
resolution at all. Why doesn't Doughton simply order
a subcommittee of the Joint Committee on the Internal
Revenue Taxation to go to work on it?
MR. PAUL: You could do it that way, but it seems
to me the best thing to do is to work out something,
as George suggested after we have finished in the
next few days the remainder of the bill, they have to
be drafting it for a couple of weeks, and you have a
clear time in which to do it. I think we could do it
in two weeks, and stick it in the bill and then you
have something in the conference, and then, if it does not
go through, it is the fault of the House. The Treasury has
done its part.
14
- 6 -
H.M.JR: That is all right.
MR. PAUL: We have been studying this. You do
not need a month or & monthand a half to do it.
H.M.JR: What else?
MR. PAUL: I only have one thing, that is, that
Fish was at the Treasury yesterday. He just wanted
some information about the procedure for filing Foreign
Funds census reports. We had to give him this routine
information the way we give it to anybody. That is all.
I thought you might be interested in that because of
this Fish thing.
H.M.JR: I already knew about it, but I just want
to caution everybody to be awfully careful not to dis-
cuss the Hamilton Fish case with anybody - any angles
of it - not anything about it, please.
Herbert?
MR. GASTON: You recall General Strong's letter
about the search of these people in Tampa. We have
not received the written report yet, but we have some
verbal reports that this search was made at the insis-
tence of Military Intelligence over the protest of the
Customs man; and they finally consented to do it, and
the request came, not from the local officer of Military
Intelligence, but from Headquarters G-2 in. Washington,
which insisted on the search being made.
H.M.JR: I would love to because - I mean--
MR. GASTON: When we get that report we will have
a good letter to write to Strong.
H.M.JR: Just as strong as his letter.
MR. GASTON: There is another thing that is dis-
turbing us quite a little. The Navy is insisting on
having a new system of search put into effect for sea-
men. They first started with alien seamen, and now
broaden it to include all seamen.
15
- 7 -
The system they want to put into effect is to have
a panel, a committee, at each port consisting of ONI,
FBI, and Immigration and Customs, to. go through the
crew, examine the entire crew, every vessel that comes
in from a foreign port, and decide which ones shall
be permitted to go ashore and which ones shall not be
permitted to go ashore. Then they want to have all
the men who go ashore searched to the skin, completely
searched - every seaman who goes ashore.
The War Shipping Administration is tremendously
concerned about the consequences, and I talked to Land
about it yesterday, and I am going to talk to Berle
today. It certainly will make a -lot of trouble for
them, with their crews. The Navy says--
H.M.JR: Well, Herbert, you handle it; I can't
handle it.
MR. GASTON: I just thought I would let you know
about it.
H.M.JR: You handle it, because--
MR. GASTON: We are trying to stop it.
H.M.JR: When Cooper comes in I have got to see
him. I will have to stop at ten.
Lew Douglas told me that there were ships in
Iceland - merchant ships - I think from March until
either July or August, and nobody was allowed to go
ashore. They would not even let them go ashore at
all. He ordered the ships to London, and all the men
to get shore leave. The Navy may have a good reason,
you know.
MR. GASTON: Well, the reason is they want to
make the search thorough. They think that some of
Regraded Unclassified
16
- 8 -
these people may carry communications, but we think
the dangers are too great. The trouble is too great
to justify what they are doing, and we have a contrary
suggestion to make.
H.M.JR: Supposing you take care of it.
MR. GASTON: Yes.
H.M.JR: Anything else?
MR. GASTON: I think that is all.
H.M.JR: Sullivan?
MR. SULLIVAN: The Office of War Information is
distributing & lot of films and they wanted to know
if they couldn't have some more of the Donald Duck.
I said we would be very happy to do that when we
found out how we wanted to change it for next year.
I don't think we can let any more copies of that film
out until we know just what changes--
H.M.JR: What do they want it for?
MR. SULLIVAN: They are sending them around to
all the camps and schools, and 80 forth.
H.M.JR: In other words, you have got to wait
until the tax bill passes.
MR. SULLIVAN: That is what I think. The minute
it does I think we ought to get going on it pretty
fast, because we have all those films and they can be
changed at very slight expense and be made quite
useful.
H.M.JR: Norman raised the question as to whether
we wanted a new film. I said, "No, we will just bring
this up to date."
17
- 9 -
MR. THOMPSON: I thought if we had new ones - we
would have to have legislation - there would be diffi-
culty on the appropriation.
MR. BUFFINGTON: The sixteen millimsters are worn
out; they have been used 80 much.
H.M.JR: Good.
Anything else?
MR. SULLIVAN: That is all, sir.
MR. BUFFINGTON: I have that article out of For-
tune. Maybe you would like to wait and discuss that
with me.
H.M.JR: Ask Stephens for an appointment. Is there
such a man?
MR. BUFFINGTON: Yes, Robert Magowan of Merrill-Lynch.
H.M.JR: Do they describe him?
MR. BUFFINGTON: Yes, formerly with R.H. Macy and
Safeway Stores.
H.M.JR: That is the fellow.
MR. BUFFINGTON : He married Charley Merrill's daugh-
ter.
H.M.JR: How long ago is that?
MR. BUFFINGTON: June, '41.
H.M.JR: I told him to look up Fortune. There was
an article about stock exchange houses. There was a
man in this new big one that did publicity, and I told
him to go through the file. When was it?
MR. BUFFINGTON: June, '41.
18
- 10 -
H.M.JR: And he used to be with Macy's and in
the stock exchange. Wasn't he advertising man?
MR. BUFFINGTON: He is advertising man - partner
in charge of advertising.
H.M.JR: Isn't that the kind of fellow we ought
to get?
MR. BUFFINGTON: His experience has been more
along stock lines.
H.M.JR: Yes, but if he had been with Macy's - we
will look at it.
MR. BUFFINGTON: O.K. I will check with Stephens.
H.M.JR: Why don't you ask some of your friends
in New York what he is doing. He may be down here as
a colonel or a general now.
MR. BUFFINGTON: O.K. He is still listed as a
partner. I do not happen to know him.
MR. PAUL: I know Mr. Pierce very well in that
firm. Do you want to find out anything?
H.M.JR: Yes.
MR. BUFFINGTON: I know Pierce.
MR. PAUL: I know Pierce; I used to represent him.
H.M.JR: Who wants to do it?
MR. BUFFINGTON: There is another man there who
would be more active in it than Magowan is - Winthrop
Smith. I know him very well. He is Charley Merrill's
second partner. Smith is not as active as he used
to be.
19
- 11 -
H.M.JR: It appeals to me. If the man had regular
merchandising experience, he would appeal to me.
MR. BUFFINGTON: I will check before I see you.
That is all.
H.M.JR: Who is in back of Paul? Good morning.
MR. ODEGARD: Good morning.
H.M.JR: How is your cold?
MR. ODEGARD: It is much better.
H.M.JR: I don't know whether you like thrillers,
but we had a good one last night. I heard you had to
nurse your cold.
MR. ODEGARD: I slept long and well.
H.M.JR: Good.
MR. ODEGARD: I have nothing. There are & couple
of things I would like to speak with you very briefly
about today.
H.M.JR: Would you ask Steve to put your name down?
We are not very busy; all we are doing today is watching
them buy the money - the bonds. Is that right?
MR. BELL: Yes. Tomorrow we can watch them better.
H.M.JR: Kuhn?
MR. KUHN: You asked me yesterday about some announce-
ments concerning nickels and pennies.
H.M.JR: Yes.
MR. KUHN: I have twelve very good announcements
that caused a lot of wagging of heads last July when
we tried it. I still think they are good; I think
they are exactly right for the purpose.
20
- 12 -
H.M.JR: Give us a sample. I have on my
bureau a glass ball about this big which is full of
pennies.
MR. BELL: I have one too - a hundred pennies.
MR. SULLIVAN: That shows your children are grown
up. (Laughter)
MR. WHITE: Wagging of head, you mean. (Laughter)
MR. KUHN: Shall I read & couple of these?
H.M.JR: Who got the best of that argument?
MR. WHITE: We disagreed on the facts.
MR. ODEGARD: The semantics.
MR. BLOUGH: I think there was only one head that
didn't wag. (Laughter)
H.M.JR: What is semantics? I have got to learn
what the upper and lower abdomen means. Semantics?
MR. ODEGARD: Semantics has to do with the science
of words and symbols.
H.M.JR: All right, go ahead.
MR. KUHN: I will read two of these little ones.
"Did you ever hear of lazy money? Sure, money can be
lazy. Take, for example, that box of pennies lying
in the back of your bureau drawer - or that jar half-
full of nickels. That's lazy money -- because it isn't
working for you. The best way to make that lazy money
go back to work is to take it down to the bank or post
office and swap it in for War Stamps or Bonds. As a
War Bond it will be working to help win the war as well
as helping to build up interest for you. Today, let's
everyone of us make sure that there is no idle, lazy
coin collection around our house. Swapping coins for
Stamps or Bonds is a fine way to add to our savings in
the War Bond Ten Percent Club, too.
21
-13-
The second one is a little more direct: "A lot
of us have at home bottles, boxes and jars which are
full, half-full or contain just a few pennies, nickels,
dimes and quarters. Now, of course, we should keep on
saving - but we should not keep any more coins at home
than we absolutely need. Because by keeping those
coins idle, we may force our Government to mint new
coins which takes needed strategic metals away from
our war effort. Instead of saving odd pennies, nickels
and dimes, why not save War Stamps and save toward War
Bonds? Your savings bring you interest, that way!
Let's take all our idle coins to the bank or post office,
immediately. Let's each turn in our idle coins for War
Stamps or War Bonds, today!"
H.M.JR: I have got one suggestion. Those are good,
but are a little out of date. You could put in a
sentence in each one, keep repeating it over again -
this is a double-barreled suggestion, the second
barrel being - I mean, you do not have to use that exact
phraseology - make a study of ceramics, is it? (Laughter)
MR. BELL: That is what we are going to make the
coins out of. (Laughter)
H.M.JR: Well, anyway, as I suggested - We have got
to potter 8. little bit with these phrases. What I
would like to get, the idea - this is a suggestion, but
please remember the double-barreled effect is, and keep
repeating it through each one, "We just haven't enough
pennies to go around, and through keeping these on your
desk you are hampering the general well-being of the
country" - whatever you want to call it.
MR. BELL: War effort.-
H.M.JR: War effort.
MR. KUHN: Most of these have got the angle--
H.M.JR: I repeat it, that "there are just not enough
pennies to go around, so won't you help us by putting
22
- 14 -
your pennies back into circulation?" Get that thing. I
mean, I would say, which you don't in any of that, that
today there are not enough pennies to go around.
MR. KUHN: The emphasis here is, don't force the
Government to go minting new coins which would use up
materials.
H.M.JR: But we can't get any more copper. I mean,
we have crossed that bridge, so now it is not a question
of forcing us, we have reached the stage - if you could
bring it up to date by saying we can't get any more
copper.
MR. KUHN: That is easy.
H.M.JR: "There are not enough coins to go around,
80 why keep them on your desk where they are not doing
anybody any good. Won't you please put them back into
circulation; and while you are putting them back into
circulation, why not buy yourself a few war stamps?"
I would like to put the emphasis on putting them back
into circulation.
MR. KUHN: That can be done easily.
MR. WHITE: There is a wee small voice of protest
against it. It seems to me that by combining those--
H.M.JR: Why do you compliment yourself so? (Laughter)
MR. WHITE: I know nobody would believe it, that
it is a wee small voice. (Laughter)
H.M.JR: Go ahead.
MR. WHITE: I think that the need right now is to
get those pennies and nickels out into circulation. I
think a plea from you or from the Treasury - I think
either you or Dan should make it - that it is necessary -
to the effect that we have no more copper and no more
nickel; and don't tie it up with the bonds at all. I
don't think you would get much results from savings stamps.
Regraded Unclassified
23
- 15 -
They are not going out and spend money just because
they are changing & jar; they are not going to buy
goods; they are very apt to buy savings stamps. I
think you reduce the effectiveness of your plea for
copper and nickel very substantially if you tie it up
with savings, because then they think that is the
real reason, rather than the other.
H.M.JR: Well, on the other hand, if I simply -
your suggestion, to simply make the plea, to put it
back into circulation, they could ask perfectly well,
"With all this talk about buying stamps, why does he
omit to say that?"
MR. WHITE: Then possibly that bridge could be
met - that argument - this way, by asking them to
change it for larger currency. Of course, you would
prefer that they buy stamps, but in any case they ought
to change it for bills.
H.M.JR: Well, you have made your wee protest;
I have listened to it; and if you don t mind, what I
would like to do is to put the emphasis on the fact
that we haven't got enough copper, we haven't got
enough coins, that we would like to have them turned in.
"While you are turning them in, by the way, why don't you--
MR. BELL: "Incidentally, why don't you--"
H.M.JR: "Incidentally, why don't you" - put the
emphasis on turning the coins in - "and, incidentally,
why don't you buy some stamps?" How soon could that go
out?
MR. KUHN: I will have to find out how soon. We
have just sent out a batch of new announcements on spend-
ing which the radio stations will just be getting this
week, and I would like to wait a week before sending
out this batch and asking the radio stations to use them.
H.M.JR: You mean on the spending?
24
- 16 -
MR. KUHN: We sent out about twelve announcements,
special announcements, on unnecessary spending, which
were quotations of yours and the President's, tied in
with general policy, and we asked the stations if they
wouldn't substitute those new ones for the announce-
ments they already have. We can't ask them to do the
same thing immediately. I would like to wait a week.
H.M.JR: Where are you on this, Peter?
MR. ODEGARD: Where am I on what?
H.M.JR: This thing that we are talking about.
MR. ODEGARD: This is the first I have heard of it.
H.M.JR: Why?
MR. ODEGARD: That is perfectly all right. These
announcements have been coming to Ferdie.
H.M.JR: Now that you are back?
MR. KUHN: These were done in July, Mr. Secretary.
MR. ODEGARD: Now that I am back, I am afraid
Ferdie will probably have them on my desk.
H.M.JR: I hope your fears come true.
MR. KUHN: The ones on spending were written
while Peter was away and were shown to him.
H.M.JR: When will they begin to flop on Peter's
desk?
MR. GRAVES: They are flopping on Peter's desk
now; these originated in July. The current ones are
going to Odegard now.
25
- 17 -
H.M.JR: Well, how about this question? This is
something new now, the copper coins, and all that.
Would he pick that up now?
MR. KUHN: I was going to suggest that they be
rewritten and when rewritten they should come to Peter.
H.M.JR: Rewritten by whom?
MR. KUHN: Rewritten by Mr. Waldman of the Radio
Staff in accordance with your idea.
H.M.JR: And then they go to whom?
MR. KUHN: Odegard.
H.M.JR: And is he going to begin to take on
that responsibility now?
MR. ODEGARD: I am afraid so, Mr. Secretary.
H.M.JR: I would just like to know when it starts.
MR. GRAVES: It has already started. I don't know
what is the matter with those fellows. But it has
already started.
H.M.JR: As a lawyer who listens to practice
before a court here, would you like to go before a
court on that? (Laughter)
MR. GRAVES: I wouldn't want to take witnesses
like that before any court. (Laughter)
MR. KUHN: It has started in & big way. (Laughter)
H.M.JR: I am just curious, that is all.
MR. PAUL: That is more than leading the witness;
that is shoving him. (Laughter)
pee Paul's wens of
9-11 for 4. editional
26
September 10, 1942
Dear Mr. Daniels:
It was very thoughtful of you to send no
the editorial, Has the Little Fellow a Chance?".
This made very heartening reading just at this
time, when the large metropolitan newspapers
have been practically 100 per cent opposed to
what I have been suggesting and almost unani-
mously for a sales tax. I was 80 impressed
with the contents of the editorial that I have
asked that it be reprinted in the Congressional
Record. If this is done, I shall be glad to
... that you receive a copy of the Record.
I had the pleasure of having luncheon a
couple of weeks ago with your son, Worth, at
Fort Bragg, and found him in the best of spirits
and thoroughly enjoying his work.
With kindest regards,
Sincerely yours,
(Signed) Henry
=
Hon. Josephus Daniels,
Editor,
The News and Observer,
Raleigh, North Carolina.
editorial
Orig. cartoon - on "Hil_"
File - Diary
GEF/ik
Regraded Unclassified
27
THE SECRETARY OF THE TREASURY
WASHINGTON
September 10, 1942
Dear Mr. Daniels:
realing
It was very thoughtful of you to send me the
WBS out heartening for me to read this editorial pust
editorial, "Has the Little Fellow a Chance?". # This make reag-
at this time, particularly when almost all the practicly
large metropolitan newspapers have been (100 per cent
opposed to what I have been suggesting and almost
unanimously for a sales tax. I was 80 impressed
excluded
with this editorial that I have asked that they Four
it in the Congressional Record, and if they de I- this is am
is he refunds
will send you a copy of the Record.
I had the pleasure of having luncheon & couple
he flao receiventz the I Shalp
of weeks ago with your son, Worth, at Fort Bragg,
and found him in the best of spirits and thoroughly
enjoying his work.
With kindest regards,
Sincerely yours,
Hon
Mr. Josephus Daniels,
Editor,
The News and Observer,
Raleigh, North Carolina.
Regraded Unclassified
Γ
28
September 10, 1942
10:29 a.m.
HMJr:
Hello.
Operator:
Mr. Sproul.
HMJr:
Hello.
Allan
Sproul:
Good morning.
HMJr:
Allan.
S:
Yeah.
HMJr:
Good morning. How 18 the street accepting
our offering?
S:
Very well.
HMJr:
Very well.
S:
They say they think it's based right on the
market.
HMJr:
Good.
S:
You might say they're a little more enthusiastic
about the one and a quarters than they are about
the certificates, but that's natural because
the one and a quarter will carry some premium
whereas the certificate as should be in the
case of such a short obligation won't carry a
premium. And the rest of the market 18 firm -
there's not much doing yet, but our whole
market's acting well.
HMJr:
And on the .65 - that's all right?
S:
That's all right. They quibble a little and -
but think it's right on the market and where it
should be for a certificate.
HMJr:
Okay. Thank you.
8:
All right.
29
September 10, 1942
MEMORANDUM FOR THE SECRETARY
From:
Mr. Blough
Subject: Supplement to the memorandum on the luncheon
conference of September 9, 1942.
Senator Barkley said that the Treasury proposal
for the spendings tax came too late in the session,
that the Treasury waited too long to present it. As
a result, he said the Committee did not have a chance
really to understand the tax and give it proper con-
sideration. The Secretary said that he recognized the
recommendation came late in the session, but that this
was due to the fact that he had waited through July and
August to see what the returns from the voluntary plan
of bond sales would produce. He indicated that the
decision to ask for compulsory savings had been a
difficult one for him to make.
Senator George said that he had talked with five
or six members of the Committee and asked them what
they thought about the principle underlying the spend-
ings tax. He said he found that none of them was in
favor of the principle. For this reason, he came to
the conclusion that the Committee would not be inter-
ested in the tax, however it might be modified.
RB
Regraded Unclassified
30
TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION
DATE September 10, 1942.
TO
Mr. Gaston
FROM
Miss Newcomer
I have been working on the assumption that the spendings tax
will probably come up again even though the Senate Finance Committee
has turned it down for the time being.
In this connection I have talked with Miss Dennison of the
League of Women Voters and she has agreed to send out an information
leaflet on the spendings tax. This will go to all members (2,500).
The tax will also be discussed briefly in other current materials
that they send out. Dr. Franklin of the AAUW has agreed to devote
the next issue of the Social Studies Series "Contemporary America,"
(which goes out in the next few days) to this problem, and I have
written the enclosed article for this purpose. It will go under
my name at their request. This goes to all AAUW study groups.
I plan to see Miss Cummings of the National Federation of
Business and Professional Womens' Clubs in New York on Saturday to
discuss the matter with them. I have also written to Dr. Walker
of the Tax Institute asking her if she will consider taking up
current tax measures, and especially the spendings tax, in the
next issue of "Tax Policy."
I am leaving tomorrow, Friday, for Poughkeepsie. I shall do
what I can informally when the opportunity offers. I can come down
occasionally if it seems desirable and shall be glad to do any
writing or other wórk when you think I can be useful.
malal nurserver
31
TN E.W FEDERAL XES
MABEL NEWCOMER
The importance of preventing serious inflation is well understeed 1
average consumer, but the danger of sush inflation grows daily with the
passion of the var program. Federal expenditures of so billion dollars
contemplated this year. This - is greater (in dellars) than the total
national income in 1940. Some increases in production are pessible, and
being realised, but a large part of essential var production must be secur
at the expense of consumer goods. If consumer buying is not greatly reduc
by other means, it will be out by rising prices. To have the cost of livi
deuble or triple in a few months would spell disaster for most families. 2
only drastic measures one prevent this. Price controls and rationing. -
aided by taxes, sannot withstand the pressure of consumer demand.
The Federal Budget
The estimated yield of Federal taxes new in ferse is 18 billion dellars
for the current fiscal year. The propesed changes under the Heuse Revenue
Bill (H.R.7378) would presumably increase tax yields to 24 billion dollars.
This is less than ene-third of estimated expenditures, as shown belows
Billion Dellars
Income and profite taxes (individual
and corporation)
17.5
Consumer taxes (mestly on liquor, tobacco,
and (aseline)
4.2
Other taxes (weetly employment taxes and
estate taxes)
2.5
Non-tax revenues
J
Total November
24.5
Deficit
55.5
Rependitures
50.0
Actually, tax revenues will fall short of this, since the tax bill has not
yet been passed, and the fissal year began en July 100.
Regraded Unclassified
32
-2-
FEDERAL TAXES AND THE DEFICIT
Under H.R.7378
Income
Taxes
22 x
7
Deficit
Consumer
TO $
Other
Revenue
Some of this deficit will be covered by voluntary savings, but voluntary
savings thus far have not reached the goal of one billion dollars a month, and
if
over this goal were achieved these savings would not cover one-quarter of the
deficit. This means that the Treasury will whave to borrow large suze from the
banks. To the extent that this is done, the Government will be taking goods -
but not money - away from private consumers. The result will be goods shortages,
and the competition of individuals to obtain their usual share will result is a
rising 0088 of living.
Federal Tax Bill
The House Bill (E.R.7378) would yield much less than the Secretary of the
Treasury has not as a minimum, and the delay in passing any seasure reduces the
possible yield this year.
Further increases in revenue may be obtained by increased rates or lowered
exemptions for taxes now in effect, but in addition to these serious considers-
ties is being given to the levy of three nov Federal taxes - a general sales
33
-3-
tax, a gross income tax, and a spendings tax. The "Mail plan." which has
ceived so much publicity. is a plan for putting the income tax partly on a
pay-as-you-go basis, and would not increase tax receipts.
general Sales Tax
General sales taxes are in use in many States and their advantages and
limitations are too well known to be net forth here. It should be noted,
however, that as adequate Federal tax would be much heavier then any of the
State taxes now inforce. And if food and other necessities are exempted fro
such a tax, its yield 10 relatively small. A 5 persent retail sales tax 02-
empting only sales to the Federal Government and its agencies would yield
3,100 million dollars; but if tobacco, liquor, and other commodities now on)-
jest to heavy Federal taxes are exempted. the yield is out to 1,700 million
dollars; and if feed and medicine are exempted, the yield is out further to
800 million dollars. Only by taxing necessities can such a tax be really
productive.
Gress Income Yoz
The Senate Finance Committee 10 urging a pross income tax the "Victory
Tax." The proposed levy is 5 percent on income in excess of $624. It makes
no allowance for dependents, and does not permit the ordinary deductions of
the income tax. It would tax the not profits of a business rather than gross
receipts, however, and in this respect resembles a net income tax more than a
gross income tax. A true gross income tax would provide noither personal
exemptions mr the deduction of business expraces.
In view of the exemption, this "Vistory Tax is preferable to a sales
tax. Also, since it would reach income spent for services and income saved
(as the sales tax would not). the yield of a 5 perceat levy would exceed that
Regraded Unclassified
34
- Is -
of a 5 persent sales tax in spite of the exemption. It has been preposed
that this tax be withheld from wages and other income payments, and that a
substantial part of it should be refunded after the var.
The Spendings Tax
To meet this crisis the Secretary of the Treasury has recomended the
immediate levy of spendings taxes, in preference to either a general sales tax
or a gross income tax. Two taxes have been proposed: a flat 10 persent
levy and a graduated surtax. Married couples spending not more than
$1,000 (plus $250 for each dependent) would be exempt from both taxes.
Those spending more than these suas would pay 10 percent on total expenditures.
Married couples spending not more than $2,000 (plus $500 for each
dependent) would be exempt from the surtax. Thus a man and wife with
two children would pay nothing if they spent $1,500 and $300 if they
spent $3,000. If they spent more than $3,000 they would be subject
to a graduated tax on the excess over $3,000. The graduated tax suggested
begins with 10 percent and rises to 75 percent. The top rate would
apply to expenditures in excess of $11,000 for a single person, and
$13,000 for a family of feur.
It is proposed to refund the 10 percent tax after the war. It is,
therefore, a forced loan without interest, rather than a tax. The surtax
would not be refunded. The following table shows the amounts of these
taxes for families of different sises, with different incomes and different
expenditures.
Pearaded
35
AMOUNT OF PROPOSED INCOME AND SPENDINGS TAXES
INCOME
$2,500
$2,500
$5,000
$5,000
$10,000
$10,000
EXPENDITURE
1,250
2,500
2,500
5,000
5,000
10,000
Man with Wife and Two Children
Income tax*
175
175
680
680
2,050
2,050
Spendings surtex
-
-
-
200
200
1,200
Total nonrefundable taxes
175
175
680
880
2,250
3,250
Refundable spendings tax
-
250
250
500
500
1,000
Total taxes
175
425
930
1,380
2.750
4,250
Man with Wife and No Dependents
Income tax
270
270
790
790
2,220
2,220
Spendings surtax
-
50
50
400
400
2,000
Total nonrefundable taxes
270
320
840
1,190
2,620
4,220
Refundable spendings tax
125
250
250
500
500
1,000
Total taxes
395
570
1,090
1,690
3.120
5,220
Single Person
Income tax**
365
365
920
920
2,390
2,390
Spendings surtax
25
280
200
1.000
1,000
2.400
Total nonrefundable taxes
390
565
1,120
1,920
3.390
5.790
Refundable spendings tax
125
$50
250
500
500
1,000
Total taxes
515
815
1.370
2,420
3.890
6.790
7378
e
H.R.1 with lowered exemptions
Comparison of Spendings Tax and Sales Tax
The preposed spendings taxes should check consumer buying where It will
cause the least hardship. In this respect these taxes are superior to a
sales
tax. They do not fall on families with very small incomes, and for
families with moderate incomes they will be largely refundable after the war.
Even though families with very mall incomes are exempt, the spendings
tax will reach as large an amount of consumer spending as a retail sales tax
without exemptions, and a considerably larger amount than a sales tax exempt-
ing food. This is because it reaches expenditures for services which normal-
ly escape a sales tax.
Regraded Unclassified
36
- 6 -
The estimated yield of the proposed spendings taxes, together with
the additional revenues from the accompanying reduction in personal
income tax exemptions (10 $500 for single person, $1,000 for married
persons, and $250 for dependents) is 6.5 billion dollare. This is more
than the estimated yield of a 10 percent sales tax exempting only sales
to the Federal Government and its agencies.
The administrative problem is a difficult one, but it should be no
greater than for a sales tax, Administration of spendings taxes can
be integrated with that of the income tax, whereas administration of a
sales tax would require setting up entirely new administrative machinery.
The taxes might conceivably be simplified. but simplification would be at
the expense of justice.
Comparison of Spendings Taxes and Income Tax
Under normal circumstances an income tax alone is of course preferable
to combined income and spendings taxes. Today. however, the spendings tax is
believed to be an essential veapon in combatting inflation. Additional in-
come taxes yielding comparable sure would discourage saving as well as spend-
ing. The spendings tax definitely encourages saving. In fact, the surtax
is designed to increase savings rather than to increase tax revenues.
Individuals will have the option, not offered by an income tax, of
reducing taxes by investing income instead of spending it.
The Choice Before Us
The choice is not, of course, between spendings taxes and sales taxes,
or between spendings taxes and income taxes. We already have income taxes
and special sales taxes. The question is how such the total tax revenue
37
- 7 -
should be increased and whether it should come in still larger proportion
from income taxes, or whether general sales or spendings taxes should be
developed.
Among the various plans that have been considered, the Treasury plan
for spendings taxes should go farther toward checking the rising cost of
living. and in the end should cause less hardship than any of the other
plans. This is because it directly discourages needless spending. and
offers a definite stimulus to ving.
The proposed taxes are heavy. They will probably reduce spending
sharply. They might conceivably be modified, but if substantial modifica-
tions are made, the and - checking inflation - may be defeated.
The cost of living has risen 15 percent in the past three years. and a Galf
This is costing the family that spends all of its income for ordinary
living as much as a 15 percent gross income tax exemptions.
It has cost nine-tenths of the families in the United States much more
than the proposed spendings taxes.
If taxes and savings are not increased materially the cost of
living will almost certainly rise much farther. This would injure
consumers far more than a spendings tax.
Regraded Unclassified
38
MEMORANDUM
September 10, 1942.
TO:
The Secretary
Ths
FROM:
Mr. Sullivan
Today Collector Harry T. Maloney of the Camden, New Jersey
District met with Commissioner Helvering, Deputy Commissioner
Schoeneman and myself. It was stated to Collector Maloney that we
three were convinced that the spirit and the moraleof the employees
in-his District was very low and that we felt unless this situation
was improved there would have to be a change in the collectorship.
Collector Maloney acknowledged there was a bad situation for which
he did not feel he was responsible. He announced his determination
to improve the morale of his District and expressed his confidence
in his ability to do 80. He further stated that he felt that unless
he could solve this morale problem he should resign. We all agreed
with him.
We will keep in touch with the developments in this District
and advise you as to the Collector's success in improving the situa-
tion.
39
Sept. 10, 1942.
HM Jr informed the President about this
today.
Regraded Unclass
40
THE UNDER SECRETARY OF WAR
WASHINGTON
OFFICE SEAL
September 9th, 1942.
Dear Henry:
The New Hackensack airport is to be taken
on as an auxiliary field to Stewart Field. I shall
see to it that the two houses that you mention are
not disturbed.
RhyPPit Sincerely yours
The Honorable
Henry Morgenthau, Jr.,
Department of the Treasury,
Washington, D. c.
41
September 10, 1942
TO:
MR. KUHN
FROM: THE SECRETARY
It seems to me that if I am going to thank
people for assisting on the "Air Cavalcade" tour
that it ought to be done promptly and not wait
six weeks before thanking them.
In the future, if you think I ought to thank
people for helping the Treasury, I wish that the
letters would be given to me within & week of the
time they were of assistance to the Treasury. I
should think & letter coming six weeks late would
not be appreciated by anybody.
started in ny. June 16
Financed Chgo July 25.
Regraded Unclassified
SEP 10 1942
42
Dear Major McKasson:
You are to be congratulated on the part you
played in making the "Air Cavaloade" tour in behalf
of Mar Savings and Aviation Recruiting such an out-
standing
I have been acquainted with the admirable my
in which you communted yourself on this tour and I
want you to know that I sincerely appreciate the
particularly fine cooperation you personally rendered
our Har Savings empai.gn,
As you & to your now duties, my sincere good
wishes go with you for a full measure of success in
all your undertakings.
Sincerely,
(Signed) H. Morgenthau, Jr.
Major Klassr 4 Wakesoon
Flight Test Section
Wright Field
Dayton, Ohio
RH/Mh
Extra copies to Mr. Thompson's ORI.
cc and list - Diary
Regraded Unclassified
43
Similar letter was also sent to the following:
Capt H. A. Haines
Mr. Harry M. Hafele
Corporal H. F. Hoenhne
Sergeant C. M. Johnson
Mr. Robert Shaw
Corporal James W. Schultz
Private Phillip Ellison
Lieutenant Luther W. Cartwright
Lieutenant Theodore Marxson
Mr. Jerry Slusser
Captain W. A. Stevens, Jr.
Lieutenant Carter C. Porter
Major William J. Wrigglesworth
Mr. L. P. Knoles
CONFIDENTIAL
44
UNITED STATES SAVINGS BONDS - SERIES F AND G COMBINED
Comparison of September sales to date with sales during the
same number of business days in August and July 1942
(At issue price in thousands of dollars)
:
September :
Cumulative sales by business days
Date
:
daily
:
:
:
:
September
August
July
September as
:
sales
:
:
:
:percent of August
ptember 1942
1
$ 7.528
$ 7,528
$ 12,222
$ 12,597
61.6%
2
9,811
17,339
28,810
21,986
60.2
3
9.397
26,735
41,258
32,441
64.8
4
10,678
37.414
54,105
49,175
69.2
5
10,713
48,127
71,552
62,561
67.3
8
18,550
66,678
84,777
84,413
78.7
9
6,072
72,749
92,566
101,585
78.6
fice of the Secretary of the Treasury,
September 10, 1942.
Division of Research and Statistics.
furce! 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
45
UNITED STATES SAVINGS BONDS - SERIES E
Comparison of September sales to date with sales during the
same number of business days in August and July 1942
(At issue price in thousands of dollars)
:
September :
Cumulative sales by business days
Date
:
daily
:
September
:
August
:
July
#
September as
:
sales
:
:
:
:percent of August
ptember 1942
1
$ 11,634
$ 11,634
$ 14,044
$ 15,821
82.8%
2
14,748
26,381
36,222
30,701
72.8
3
18,305
44,687
50,797
47,523
88.0
4
17,804
62,491
63,785
77.320
98.0
5
19,166
81,657
86,789
95,044
94.1
8
49,400
131,057
111,748
116,643
117.3
9
13,295
144,352
128,176
139,390
112.6
fice of the Secretary of the Treasury,
September 10, 1942.
Division of Research and Statistics.
burce: 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.
CONFIDENTIAL
46
UNITED STATES SAVINGS BONDS - TOTAL
Comparison of September sales to date with sales during the
same number of business days in August and July 1942
(At issue price in thousands of dollars)
:
September :
Cusulative sales by business days
Date
:
daily
:
:
:
sales
September
:
August
:
July
September as
:
:
:
:percent of August
sptember 1942
1
$ 19,162
$ 19,162
$ 26,267
$ 28,418
73.0%
2
24,558
43,720
65,032
52,687
67.2
3
27,702
71,422
92,055
79,964
77.6
4
28,482
99,904
117,890
126,495
84.7
5
29,880
129,784
158,341
157,605
82.0
8
67,950
197,734
196,524
201,056
100.6
9
19,367
217,101
220,742
240,974
98.4
fice of the Secretary of the Treasury,
September 10, 1942.
Division of Research and Statistics.
burce: 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.
Sales of United States savings bonds
47
September 1 through September 9, 1942
CONFIDENTIAL
Compared with sales quota for same period
(At issue price in millions of dollars)
:
Series E
:
Series 7 and G
:
:
Actual sales
:
Quota,
Sales :
Total
:
Actual sales
:
Quota,
:
Sales
:
Actual sales
:
: Sept. 1
:
Sept. 1
to date :
Quota,
:
Date :
:
: Sept. 1
Sales
:
Sept. 1
:
to date
:
Daily
:
:
:
as % of
I Sept. 1
=
to
to
:
Daily
Sept. 1
:
:
:
to
:
as % of
to date
to
:
:
Daily
:
to
:
date
date
to
:
:
:
:
quota
:
:
date
date
: as x of
:
:
quota
:
:
date
:
date
1
quota
1
$ 11.6
$ 11.6
$ 14.9
77.9%
$ 7.5
$ 7.5
$ 6.9
108.7%
$ 19.2
$ 19.2
2
26.4
$ 21.8
14.7
34.5
76.5
9.8
17.3
16.6
58.1%
104.2
24.6
43.7
3
44.7
51.1
18.3
55.5
80.5
9.4
26.7
26.4
85.5
101.1
27.7
71.4
17.8
62.5
81.9
4
81.0
87.2
77.2
10.7
37.4
35.6
105.1
28.5
99.9
116.6
19.2
81.7
85.7
5
98.3
83.1
10.7
48.1
42.2
114.0
29.9
129.8
140.5
92.4
8
49.4
131.1
143.3
91.5
18.6
66.7
58.1
114.8
67.9
197.7
201.4
98.2
9
13.3
144.4
168.8
85.5
6.1
72.7
67.8
107.2
19.4
217.1
236.6
10
193.4
91.8
76.7
270.1
11
220.6
84.4
305.0
12
239.2
90.1
329.3
14
272.7
99.7
372.4
15
288.2
105.0
393.2
16
307.6
112.1
419.7
17
327.2
119.2
446.4
18
350.1
125.7
475.8
19
365.4
130.5
495.9
21
399.6
141.0
540.6
22
415.7
147.0
562.7
23
436.2
155.2
591.4
24
457.1
163.4
620.5
25
481.4
171.0
652.4
26
497.4
176.6
674.0
28
532.7
188.7
721.4
29
549.2
195.5
744.7
30
570.0
205.0
775.0
Office of the Secretary of the Treasury, Division of Research and Statistics.
September 10, 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.
Note: Quota takes into account both the daily trend during the week and the monthly trend during the month.
TREASURY DEPARTMENT
48
INTER OFFICE COMMUNICATION
DATE SEP 1 0 1942
10
Secretary Morgenthau
FROM Randolph Paul
In the attached memorandum of August 26, 1942,
it was suggested that we should send two Foreign Funds
Control investigators to Panama in response to requests
of the Embassy and the State Department. You approved
this suggestion provided our men were given diplomatic
status.
We have raised this question with the State
Department, and it seems to be impossible to get
diplomatic status for them. They will be there on
temporary assignments and will not, in any case, be
representing this Government in a way which would be
recognized by a foreign government as entitling them
to diplomatic status. At present, we are advised,
only foreign service officers can get diplomatic
passports.
After considering the question further, it
seems to me and to Pehle that it would be too bad to
pass up this chance to send some good Treasury people
to do this investigative work in the Central American
field. Accordingly, it is suggested that we proceed
to make appropriate arrangements even though diplomatic
passports cannot be obtained. Please indicate below
if you approve.
REP.
Secog wants 9/12/42 talen Peblic
Approved:
Regraded Unclassified
49
TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION
DATE September 10, 1942
TO
Secretary Morgenthau
FROM
Mr. White
ubject: Status of Stabilization and Gold Agreements on August 31.
1. Stabilization Agreements in Operation.
Amount
ountry
Dated
Expires
Commitment
Outstanding
Collateral
razil
7/15/37
7/15/47
$100,000,000
None
None
gold
hina
7/14/37
12/31/42
50,000,000
$19,112,500
$19,379,000
gold
hina
4/ 1/41
6/30/43
50,000,000
None
None required
celand
5/1/42
6/30/43
2,000,000
None
None required
2.
Stabilization Agreements Concluded but
not yet effective
entina 1/1/41
6/30/415
50,000,000
None
None required
exico
11/1/41
6/30/43
40,000,000
None
None required
cuador
3/1/42
6/30/43
5,000,000
None
None required
3.
Gold Purchase Agreement.
Delivery Commitment Gold still Advance still
buntry
Dated
by
to buy
undelivered
outstanding
ussia
1/3/42
12/29/42
$21,070,000
$ 4,953,792
$ 2,505,856
4. Gold Sale Agreement
Gold Sales not yet Paid For
Payment due
buntry
Dated
Expires
Commitment
Outstanding
within:
uba
7/6/42
6/30/43
$5,000,000
$5,000,008
120 days from
each sale 81
/
This agreement, as amended, also provides for sale to Brazil of up
to $100,000,000 in gold, of which $40,438,335 has been sold.
Argentines informed agreement can be revived on ratification.
Cuba allowed to pay for the $5 million outstanding with U. S. cur-
rency at Habana.
50
TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION
DATE September 10, 1942
TO
Secretary Morgenthau
FROM
Mr. White
This is a comparative statement of the earnings and
expenses of the Stabilization Fund for the months of July and
August 1942.
Earnings
July 1942
August 1942
Interest earned on investments
$ 20,110.20
$ 20,110.20
Interest earned on Yuan
24,360.81
24,391.84
Total
$ 44,471.01
$ 44,502.04
Profits on handling charges on gold
63,213.78
77,552.47
Grand Total
$107,684.79
$122,054.51
Expenses
Salaries
$ 16,853.65 $ 19,843.34
Travel
83.53
172.69
Subsistence
96.00
908.22
Telephone and Telegraph
1,699.92
2,381.33
Stationery
141.84
29.70
All others
104.51
676.87
Total
$ 18,979.45 $ 24,012.15
Net earnings
$ 88,705.34 $ 98,042.36
Regraded Unclassified
Treasury Department
5
Division of Monetary Research
Sept. 15
42
Date
19
To:
Miss Chauncey
Appended is a report of the Hong
Kong situation by Mr. Taylor. I have
indicated a few paragraphs that the
Secretary might be interested in
glancing at.
H.D.W.
MR. WHITE
Branch 2058 - Room 214
52
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE Sept. 10, 1942
TO
Mr. White
FROM
Mr. Taylor
Subject: Conditions in Hong Kong
1. When the Japanese marched into Hong Kong on December 26, 1941, one
of their earliest actions was to seize the godowns. Many of the ware-
houses were filled with essential goods - foodstuffs, tin ingots,
crated motor vehicles, medicines, etc. In one godown 1,500 tons of
cracked wheat belonging to the Red Cross were seized. British doctors
estimated that the drugs seized were enough to constitute a two-year
supply for Hong Kong's pre-war population of 1,500,000. Most of these
goods have been earmarked for army or navy use, though through "squeeze"
some are finding their way into the market.
2. The Colony of Hong Kong, though pocked and scarred by aerial bombs
and artillery fire, was virtually intact. A few areas, such as Wanchai
and Happy Valley, where heavy fighting had taken place were severely
battered. The British had not destroyed anything of consequence. When
they retreated from Kowloon, the railway, wharves, oil installations,
naval stores were left intact, and the damage done to water pumps and
electrical apparatus was repaired in a few days. Some damage was sub-
sequently done by British artillery fire but suchwas insignificant.
Within a few weeks the Japanese had all public utilities functioning in
the Colony.
3. Under a Gendarmerie order of January 4, 1942, the American, British
and Dutch population were rounded up and interned. At first imprisoned
in unsanitary Chinese hotels in town, many of which had been brothels,
the people were subsequently moved to Stanley Peninsula where they were
housed in prison warders' apartments and Indian guard barracks. On
May 30, 1942, the number of civilian internees at Stanley was as follows:
British
2,481
American
316
Dutch Belgian
70
2,867
Besides these, it was estimated that approximately 75 Americans and 200
British civilians were living outside the Camp - medical workers,
bankers and families interned in town, people released to custody of
neutrals or to Chinese wives, etc.
Doaraded
53
Division of Monetary
- 2 -
Research
The civilians interned were allowed to take with them limited
personal effects and no opportunity was afforded them of returning to
apartments, homes, or hotels to salvage possessions or to provide for
their removal to places of safety. Within the Camp the people suffered
from overcrowding and starvation. During March and April the calorific
content of the food ration per person per day fell to 1,000, compared
to the League of Nation's "minimim for non-working adults" of 2,400. At
no time was the daily calorie rating over 1,800.
4. Not interned were persons of Chinese, Filipino, Russian, Portuguese,
and Indian nationality or extraction. A system of hostages was put into
effect by which prominent political and business leaders were held in
protective custody as assurance that their organizations would cooperate
with the Japanese. Individuals of note suspected of being pro-British
were imprisoned and released only when sufficient evidence or guaranty
of change of heart was forthcoming.
5. Wherever and whenever the Japanese came into control of an area
looting became the order of the day. British police patrols were dis-
armed and detained. Japanese soldiers, individually and in small
groups, helped themselves freely to whatever they wanted. Chinese
looters, armed with abandoned British service revolvers and carbines,
systematically pillaged houses, apartments, and offices without restraint
by the Japanese gendarmerie. What could not be carried off conveniently
was oftentimes smashed or burned. Japanese troops and cavalry units were
quartered in homes and upon leaving them engaged in wanton destruction.
Since the surrender the looting has proceeded apace. Even flooring and
bathroom fixtures have not escaped the looter. Clothing, furniture,
books, art objects, knick-knacks are sold everywhere by street hawkers
and secondhand shops. Neutrals have not escaped and in February some
Scandinavian seamen were murdered while resisting the looting of their
premises.
6. The Japanese are systematically emptying the city of everything that
may be of service to the war effort. Cargoes of automobiles, scrap
metal, foodstuffs, tires, etc., have been shipped back to Japan. Even
metal frames from office building windows and metal fixtures from now
empty private homes are being utilized.
7. Few factories have been permitted to resume operations. The shortage
of materials would in any event render operations difficult. The
cigarette factories of the British-American Tobacco Company have resumed
production. The naval dockyard, ship repair and construction yards are
or have been repaired and are being worked to full capacity.
8. Hong Kong faces a serious food crisis. It is removed from agricul-
tural centers of supply and has always been dependent on large food
imports. The Japanese press has ballyhooed the arrival of rice ships
from Siam. Formosan tinned pineapple can be procured in the markets.
Regraded Unclassified
54
Division of Monetary
- 3 -
Research
Some imports of meat and vegetables have arrived from Portuguese Macau,
French Kwangchowan and Canton. Rice rationing has prevailed throughout
Japanese occupation. In several instances riots have developed and
Chinese have been beaten by guards with bamboo poles or shot. British
sanitary doctors, still functioning in town, have reported many cases
of the sale of human flesh in restaurants, a practice the Japanese have
done nothing to discourage even when brought to their attention.
9. All American, Belgian, British and Dutch banks are in process of
liquidation. Four Chinese banks are also being liquidated - the Central
Bank, the Farmers Bank, the Bank of Canton and the Manufacturers' Bank
of China. The Yokohama Specie Bank and the Bank of Taiwan have assumed
control of bank affairs. Chinese banks other than those specified, and
the Banque de 'Indochine have been allowed to continue operations. The
foreign banks destroyed little before the occupation either in the way
of records or notes. Under control of the Yokohama Specie there has,
however, been no looting of records and these remain intact to date.
The liquidating banks have been allowed to make payments on deposits -
a first payment of HK 850 in January was subsequently raised to $500
plus 20 percent of the deposit above $500. Safety deposit boxes have
been opened in an orderly fashion, though foreign currency, gold, and
silver are subject to confiscation against a chopped receipt. The cash
reserves of the banks were tallied immediately and later centrally pooled.
Attempts have been made to collect on overdrafts and obligations due.
Bank notes unissued were seized and the British have been forced to sign
them for issuance under the Japanese. According to latest advices, the
Chartered Bank has issued $2,000,000 in small notes and the Hongkong
Shanghai Bank over $10,000,000 including large notes.
10. Hong Kong dollars and Military yen are the only legal tender
currencies in circulation. The pre-war official rate of exchange gave
the dollar and the yen approximately equal value. This has been replaced
by a military rate of Y 1:HK $2. Even at these rates Hong Kong "big
notes" of $50, $100 and $500 denomination are subject to a 20 to 30 per-
cent discount by merchants and exchange shops. Bank of Japan yen,
British Empire currencies, U. S. dollars, Chinese national dollars, etc.
are dealt in extensively in an active black market, where quotations
are greatly affected by wer developments. It is widely believed that
the Japanese are issuing counterfeit American currency.
11. White military prisoners of war numbering about 5,000 have been
interned at Shamshuipo and North Point Barracks. Within recent weeks
officers have been segregated at the Argyle St. Barracks. No communica-
tion has been allowed between the military and civilian camps and people
oftentimes do not know what has happened to friends or family members.
Two British doctors who had served in these camps and were recently
transferred to Stanley stated that conditions within the camps were
deplorable. Collective punishment had been instituted as a result of
Regraded Unclassified
55
Division of Monetary
4
Research
escapes. Due to a shortage of medicines and adequate attention, mary
preventable deaths are recorded.
Indian troops, which helped defend Hong Kong, were interned
separately. Many have since been "permitted" to enlist in Japanese
army units to fight for "the liberation of India". To obtain such en-
listments, the Japanese utilized propaganda, starvation, solitary con-
finement and force. According to a reliable source, it is learned that
three Indian soldiers were bayoneted to death in June for refusal to
take advantage of the Japanese offer.
12. When Hong Kong was occupied, the Japanese allowed Dr. Selwyn-Clarke,
of the Medical Department, his freedom. In the early months he was
allowed to retain a few trucks with American drivers. This corps did
herioc work in salvaging firewood, camp cots and bedding, foodstuffs,
clothing and personal effects for the Chinese hospitals in town and the
Stanley Civilian Internment Camp. With the passage of time the restric-
tions imposed by the Japanese became increasingly ongrous until it was
impossible to maintain the trucking service any longer. Dr. Selwyn-
Clarke himself was suspected of being a spy and was placed under such
close surveillance that his effectiveness was seriously impaired. At
the present time his department is undergoing 8 reorganization in func-
tion, no longer will it be a medical department but a relief agency
through which friends may contribute funds and commodities for the
relief of the destitute in camp. In May and June this organization
raised some HK $140,000, which was used for the purchase of essential
clothing, dress materials, and drugs for distribution to internees.
13. In their propaganda the Japanese make a great point about winning
the cooperation of the Chinese population. Fortunately, however, that
is about as far as it goes for through harsh treatment, unjustifiable
detention, unwarrented confiscation, forcible deportation and through
liberties taken with Chinese women, the Japanese have lost all possibility
of winning over the masses of the people. Until the time is auspicious,
however, the people will undoubtedly reluctantly comply with the orders
of the Gendarmerie. There is some rumor of Chinese sabotage and guerilla
activity in Hong Kong but reliable quarters say that it 18 very small.
14. In their press and conversations the Japanese make no secret of
their plans for the future of Hong Kong. Hong Kong is to become a large
airport terminal and important naval base and a hospital center. In
Kowloon, where Kai Tak airport is located, the Japanese have already
given notice to Chinese occupants of houses in the immediate vicinity
that they must vacate for the houses are to be demolished and the sirport
area to be increased many times over. On the waterfront in Hong Kong
conscripted Chinese labor is busy working in the shipyards or repairing
damage done to shipyard facilities. Many of the boats scuttled by the
British have already been refloated and are being reconditioned for
Regraded Unclassified
56
Division of Monetary
- 5 -
Research
service. From Stanley a steady procession of Red Cross ships could be
seen coming into Hong Kong and people in town told us that all of the
major hospitals had been cleared of Chinese and taken over for the ex-
clusive use of the Military and Navy. In order to facilitate such a
program the Japanese have carried out a systematic policy of depopulating
Hong Kong. Entire areas have been roped off and their inhabitants
forcibly ejected. The vagrants on the street have been picked up, taken
to the border line and told not to return. It has been made extremely
easy through cheap steamer and rail fares for the Chinese to return to
their native villages in Kwangtung Province. Any attempt to estimate
the number of people who have left Hong Kong would be precarious, but an
American who was in town until repatriation stated that on the basis of
the best estimates that he could gather about one-third of the entire
Chinese population have been forced out of the Colony.
15. Throughout January, February and March the civilian internees at
Stanley were treated like hardened criminals. Following upon Mr. Anthony
Eden's speech in the House of Commons anent atrocities in Hong Kong, the
treatment became less severe. A new administrator was appointed in
April and conditions improved. The Japanese press went to great lengths
to prove that Mr. Eden's charges could not be true; that in fact the
British and Americans were commiting atrocities against Japanese civilians
within their control.
Regraded Unclassified
57
NOT TO BE RE-TRANSMITTED
COPY NO. 13
BRITISH MOST SECRET
U.S. SECRET
OPTEL No. 313
Information received up to 7 A.M., 10th September, 1942.
1. NAVAL
Attacks on trade from 5th to 8th September. 10 ships were re-
ported torpedoed. A British tanker and a U.S. ship in West Atlantic, 2 British
ships and a Greek ship in the Mouth of St. Lawrence, a Mexican tanker in Gulf of
Mexico, 2 British ships in FREETOWN area, E. British ship in Arabian Sea and a
Palestinian ship in Eastern Mediterrancan.
2. MILITARY
EGYPT. Patrolling activity continued along the entire front.
In Southern sector the enemy has established some strong points.
3. AIR OPERATIONS
WESTERN FRONT. 8th/9th. A total of 423 tons of bombs were
dropped at FRANKFURT, scattered fires were started, somo in centro of town, others
near main railway station and docks. 9 aircraft were employed on intruder opera-
tions over HOLLAND, 3 of these aircraft are missing.
9th. MUNSTER, OSNABRUCK and BIELEFELD were bombed by 3, 2 and 1
Mosquitos respectively. Whirlwinds escorted by fighters sank two 1,200 ton ships
off cherbourg.
9th/10th. Aircraft despatched sea mining 34 (1 missing), anti-
shipping 11. Hits are claimed on 2 ships in convoy off BORKUM.
MEDITERRANEAN. 7th/8th, A southbound convoy WELS attacked north
of DERNA, 3 hits were claimed on a destroyer, a vessel approximately 6,000 tons
was probably hit and another ship was damagod.
EGYPT. 8th. Fighters intercepted a large formation of heavily
scorted dive bombors. 3 enemy aircraft destroyed, 4 probably destroyed and 5
comaged. 1 of our fighters lost (pilot safe). Long range fighters attacked noad
tr.ffic mainly westbound between MERSA MATRUH and SOLLUM destroying or damaging
about 50 vehicles and shooting down 1 enemy aircraft. A considerable number of
damaged M.f. were also seen along the road.
Regraded Unclassified
58
NOT TO BE RE-TRANSMITTED
COPY NO. 13
BRITISH MOST SECRET
U.S. SECRET
OPTEL No. 314
Operations in MADAGASCAR were resumed during night 9th/10th
September.
First reports indicate that initial operations were successful
and that MAJUNGA has surrendered.
OPTEL No. 315
Information received up to 7 A.M., 11th September, 1942.
1. MADAGASCAR
Three military convoys from KILINDINI and one from DIEGO SUAREZ
made rendezvous with a strong naval force at noon on the 9th in the MOZAMBIQUE
CHANNEL. A successful landing was made at MAJUNGA and by 5:30 A.M. 10th the town
was in our hands and the aerodrome captured. There was only slight opposition.
By 0747 A.M. our ships had entered the harbour and FORT KALSEPE had been captured
At 1023 A.M. & landing on the Island of NOSIBE 180 miles north of MAJUNGA had been
completed with five casualties, by & detachment of Royal Marines and two platoons
of South African Infantry landed from one of H.M. Cruisers. A successful diver-
sionary landing from one of H.M. Destroyers also took place at 1025 A.M. at
MORONDAVA, no opposition was met and & key position occupied. A force is now ad-
vancing from MAJUNGA to TANANARIVE and by 2:30 P.M. had covered 50 miles.
Air reconnaissance showed that up to 5 P.M. 10th all bridges on
the MAJUNGA-TANANARIVE Road were still intact.
2. NAVAL
On the 10th our submarines patrolling off the north coast of NORWAY
ighted the TIRPITZ, HIPPER, KOLN and six destroyers steering a northerly course
Une of H.M. Submarines attacked with torpedoes but claims no hits. Subsequently
another of H.M. Submarines sighted three ships possibly proceeding into a. Fjord.
3. MILITARY
RUSSIA. There has been no substantial change in the situation at
STALINGRAD. German forces have made further progress eastwards along the north bank
of the TEREK but the Russians continue to attack the German bridgeheads across the
river. In the Western Caucasus the Russians are attacking the German positions on a
line running from Northeast of TUAPSE to Northeast SUKHUM. The Russians are still
holding in the southern part of the town of NOVOROSSISK.
Regraded Unclassified
59
- 2 -
4. AIR OPERATIONS
WESTERN FRONT. 9th/10th. Ten Hudsons attacked a convoy of about
17 ships off the FRISIAN ISLANDS. Two ships were hit with bombs and a number of
near misses were obtained.
10th/11th. 475 bombers, including 192 heavy, were sent to attack
890lms,
DUSSELDORF. 32 are missing and six crashed. Preliminary reports state that
weather was cloudless over the objective with slight haze. The attack was very
successful.
EGYPT. TOBRUK HARBOUR was bombed by our aircraft on the 8th/9th
and by U.S. Aircraft on the 9th. Two Wellingtons are missing. Attacks were also
made on QHA boats off MERSA MATRUH and on road traffic between SIDI BARRANI and
MERSA MATRUH. Several lorries were destroyed.
RUSSIA. 8th. German long range bombers attacked a Russian aero-
drome at KOLA and MURMANSK HARBOUR. On the 9th the Baltic Fleet Air Arm success-
fully raided an unspecified German aerodrome.
BURMA. 9th. Ten Blenheims and six Hudsons attacked shipping at
AKYAB HARBOUR. A 1,500 ton ammunition ship was hit and believed sunk and a small
escort ship was damaged. Four of our aircraft are missing.
08
475/380
60
NOT TO BE RE-TRANSMITTED
COPY NO. 13
BRITISH MOST SECRET
U.S. SECRET
OPTEL No. 321
Following is supplementary rosume of operational events covering the
poried 3rd - 10th September, 1942.
1. NAVAL
Aircraft and submarine attacks on enomy shipping in the MEDITERRANEAN
continued. 6 and possibly 7 merchant ships were hit and probably seriously damaged
if not sunk. 3 Italian destroyers were damaged by our aircraft.
Naval aircraft continued to attack land objectives in the Egyptian
battle area and torpedoed off the CALABRIAN COAST a ship which was later seen beached.
The Battleship LITTORIO has left dry dock and is now presumed to
effective.
U-BOAT WARFARE. A number of enemy submarines are operating off the
GOLD and IVORY COASTS, and it is probable that their operations will extend further
south towards the Mouth of tho CONGO in the near future. One promising attack by
surface craft and seven by aircraft were reported by British forces and one promisin
attack by U.S. aircraft.
Shipping losses in August as recorded to date at 603,000 tons were
heavier than in July but lighter than in June, May or April. The August figure in-
cludos 98,000 tons lost in the MALTA Convoy.
Casualties were almost entirely duo to U-Boats and the bulk of the
losses occurred in the West Atlantic and North-Western Approaches. Slightly more
than one-sixth took place in the FREETOWN-AZORES area. Tankers formod 141,000 tons
of the total.
During August, 14 homeward convoys totalling 367 ships arrived without
loss. Out of three convoys totalling 107 ships, 17 were lost. 16 outward convoys
totalling 418 ships arrived without loss while 7 ships were lost out of two convoys
totalling 76 ships. Imports in convoy into the UNITED KINGDOM for the week ending
5th amounted to 539,000 tons, including 143,000 tons of oil.
2. MILITARY
EGYPT. It is now clear that the main purpose of the German attack on
the 31st August WELS the defeat of the British forces with a view to the occupation of
the Delta, the proliminary objective being the capture of the ALEM & HALFA RIDGE and
other strategic points in that district. During the week's operations, the enemy
suffered heavy losses in tanks and mechanical transport, largely owing to the vigour
of our tank attack well supported by our artillery and air forces. One regiment of
artillery fired 300 rounds por gun during e. single day.
MADAGASCAR. See Daily OPTELS.
FAR EAST. CHINA: The Japanese withdrawal eastwards along the CHEKLANG-
"GSI railway has halted west of KINHWA. It is unlikely that a further withdrawal
take place, and, while this keypoint is hold by the Japanese, little benefit
the withdrawal can accrue to the Chinese.
3. AIR OPERATIONS
WESTERN FRONT. Bomber Command made three medium scale attacks on
BREMEN, DUISBURG and FRANKFURT. They also sent out 39 aircraft on BISCAY patrols, and
in addition laid 220 sea mines. About 776 tons of high explosive and 655 tons of in-
condiaries were dropped. Coastal Command sent 239 sorties on anti-submarine operations
MEDITERRANEAN. Several successful attacks on Axis shipping by aircraft
and submarines are reported in paragraph one.
Regraded Unclassified
61
2 , 1
RUSSIA. About 2500 Gorman aircraft continuo to be employed on the
whole Russian Front, about 1500 of them in the southern sector, of which about 1,000
egainst STALINGRAD in recent weeks where air operations have been intensive. About
450 are thought to be operating on the MOSCOW front, which 80 far seom to have been
ufficient to cope with Russian offensives in this area. It is unlikely that
Russian activity here has attracted any of the Gorman Air Force from the Southern
sector, although reinforcements have arrived from the LENINGRAD Front, whore only
about 150 eircraft of all types are at present loft. Gurman policy appears to be
to conserve their air force as much as possible by limiting operations to one main
sector only, consequently lossos and wastage are likely so fur to have been much
less than up to September, 1941. Considerable Russian activity has takon place
over various sectors of the front.
4. EXTRACTS FROM PHOTOGRAPHIC AND INTELLIGENCE REPORTS ON RESULTS OF AIR ATTACK ON
ENEMY TERRITORY IN EUROPE.
BREMEN. Attacked 4th/5th. Photographs 5th show many firos still
burning in factories and warehouses in docks area, machino shop almost completely
destroyed and other buildings blasted at an aircraft factory two workshops Atlas
Shipyards gutted. Many warehouses burnt out. Railway shede still burning and over
200 yards of covered good sidings appear destroyed. Fires burning fiercely in
business area at one point extending over about six acros.
NURPMBERC. Attacked 28th/29th August. Photographs 3rd though in-
complete show six noin areas of damage, including industrial property. At M.A.N.
Works c. very large shed completely destroyed and large building partially destroyed.
At SIEMENS SCHUCKERT, one large building completely destroyed. Much damage to resi-
dences from heavy bombs.
KASSEL. Attacked 27th/28th August. Photographs 3rd show largest
building at Henschol Locomotive Works damaged by fire and other buildings partially
destroyed or damaged. Repairs already being carried out indicato importance at-
tached to factory. Eight other factory buildings burnt out, damage at railway
station. Very heavy damage to residential property in two streets.
KARLSRUHE. During the attack on 2nd/3rd September, 200 firos were
burning at one time. Goods station still burning Into following afternoon. Ad-
jacent warehouses said to be severely damaged. On 4th and 5th coal traffic through
the town has fallon by thirty per cent.
DUISBERG. Attacked 6th. Photographs 7th although incompleto show
Large building, probably part of Maschinofabrik, burnt out, buildings damaged at
another works of Maschinenfabrik, at Stahlwerke and at & chemical factory, six
crators at the aerodrome.
SAARBRUCKEN. Permanent way and sidings have been so much damaged
that full traffic will not be possible for some time.
MEAULTE. Attacked 28th August by U.S. Fortresses. Photographs 5th
sliow direct hit on a hangar which is partially destroyed.
ROUEN RAILWAY CENTRE. Attacks 5th. Photographs 8th show ongine shod
workshop and transshipment sheds severely damaged. Over 30 hits on track and rolling
stock, severe damago to sidings, wagons damaged and derailed.
OPERATIONAL AIRCRAFT BATTLE CASUALTIES
METROPOLITAN AREA
BRITISH AND ALLIED
ENEMY
Prob.
In the Air
Dest.
Dost.
Damaged
Bombers
35
Bombers
6
3
6
Fighters
18
Fighters
23
29
48
Coastal
B
Miscellaneous
Nil
Nil
2
Total
61
Total
29
32
56
Regraded Unclassified
62
- 3 -
MIDDLE EAST
(Including MALTA)
BRITISH AND ALLIED
ENEMY
Prob.
In the Air
Dest.
Dest.
Damaged
Bombers
16
Bombers
28
5
9
Fighters
46
Fighters
29
22
35
Miscellaneous
1
2
1
Total
62
Total
58
29
45
6 crews and 22 pilots are safe
Of the above 4 were destroyed by A.A.
NOTE: No account is taken of enemy aircraft destroyed on
the ground in any theatre, or of British Naval air-
craft casualties.
6. HOME SECURITY
Estimated civilian casualties for week ending 6 A.M., 9th. Killed,
76, seriously wounded 81.
63
OFFICE OF STRATEGIC SERVICES SECRET
WASHINGTON, D. C.
September 10, 1942
The Honorable
The Secretary of the Treasury
Washington, D.C.
My dear Mr. Secretary:
The attached memoranda contain certain
economic intelligence material which we have just
received from London.
Sincerely,
him William Nowman J. Donovan
Director
Enclosures
64
SECRET
Military Supplies
The new ships being built for Germany in
Spain are adapted to handling the small landing
barges being constructed at Varna is indicated by
their hold and derrick equipment.
Two thousand Norwegian fishing boats have
been requisitioned by Germany.
65
SECRET
Agriculture and Living Standards
All hides in the Baltic states have been com-
mandeered by the Germans.
According to an intercept source, Italy has
been trying to barter barbed wire for Turkish hides.
There are conflicting reports as to whether
the food needs of the German army can be fully met in
occupied Russia. It seems certain that at least half
though probably not all German military requirements
can be met by the food available in this area.
500 grams per day has been fixed as the producers
bread ration in France. Presumably it is hoped that a
generous ration will reduce peasant hoarding.
Due to a reduction in the amount of barley made
available for use in coffee substitute the German coffee
substitute ration has been reduced.
Due to lack of clothing for the children schools in
Karzlia district of Finland have been forced to close.
Regraded Unclassified
66
SECRET
Labor Supplies
For work in Germany, Arab workers in North Africa
have been offered 900 francs a day by the Germans.
According to reports, the French have tried to
recruit in French West Africa for French factories, and
seven hundred were secured in mid-July. Stories that real
destination is Germany have held up recruiting.
From a CX report there is indication that shipyard
workers are being transferred from the Brest arsenal to
Dakar and Toulon for work on the Richelieu. Aerial tor-
pedo manufacture is taking place at Roulon.
In occupied countries, the working hours are to be
raised to 54 a week with work on holidays and Sundays com-
pelled. According to official reports, Belgium workers
have been made to work such long hours that they have had
no opportunity to go to Church. This has given rise to
official representations by the Belgian Government which
the Germans have rejected.
67
Industrial
SECRET
CX reports of heavy oil shipments from the Caucasus
fields across the Caspian via Krasnovodsk Ashkabad and
Tashkent. No reliable figures are available.
According to a fairly good CX report the Germans
have oil installation reconstruction crews training in
Hanover. Such crews are said to be organized in two mili-
tary divisions and to be practicing construction of sto-
rage tanks.
Despite the doubling of the Constanza - Cerenavoda
line it appears that the Ploesti - Cernavoda pipeline will
not be doubled since the eighteen French welders who were
working on the Constanza - Cerenavoda line from January
through July have now returned to France.
Germans steel mills furnishing material to Italian
shipyards are not willing to meet Italian specifications
regarding knock test.
302,000 tons of coal moved to Italy in June and
266,000 tons in July through Chiasso. There have been none
through the Brenner OBQGN (sic) to military movements.
No reliable figures are available for coal shipments over
the Taritza and Simplon routes. It is believed that unless'
there is a sudden increase in shipments Italy will be short
of coal this winter. Several sources have commented on
the slackness of the Italian coal traffic on the Karlsruhe
main line recently.
Employed in this traffic are approximately 15,000
German cars and 10,000 Italian cars.
12,000 tons of petroleum products were shipped from
Hungary to Italy in July. This amount was made up of 4300
tons gasoline, 2500 tons crude oil, 3000 tons kerosene and
the balance diesel oil.
1500 tons of wild rubber were shipped to Europe in
1941. This is about the ten year average and could pro-
bably be increased to about 5000 tons.
Regraded Unclassified
68
-2-
The French electrical industry is being told to
substitute aluminum for copper.
Link and brake parts for type 50 locomotives are
being sub-contracted to French factories which have had no
previous locomotive manufacturing experience. All French
locomotive manufacturers are adhering to established schedule
and are working on locomotives for Germany.
Five German officers have been sent to the Carnullem-
Bauxite mines to supervise production.
The power situation in France continues to deteriorate.
Industrial units not producing for the German war effort are
rationed to 60 per cent of last Aprils consumption.
ACX report of an intercepted telephone conversation
indicates that the air raid on May 13 inflicted heavy damage
on the Goodrich rubber factory. It is hoped that by October
or November the plant will get back to 50 or 60 per cent pro-
duction. Assistance for rehabilitation may be furnished by the
French Government conditional on ownership by French citizens
of 60 per cent of the company's stock. 200 workers formerly
employed by the plant are to be sent to Germany and others are
to be forced to go.
Pulp imports in France have practically ceased.
In addition to track requisitions already mentioned,
10,000 tons of new railroad ties are being furnished to Germany
by France.
According to a CX report, all Wehrmacht trains in
North France are to have one and usually two Fist cars with
anti-aircraft guns mounted on them.
A definitely declining tendency in the number of
freight cars in French yards 18 indicated after a study of
aerial photographs.
An offer of the Bulgarian War Ministry to purchase
69
-3-
1,300 tons of steel has been rejected by a German steel firm.
An additional 4,000 tons of nichel chrome iron ore has
been shipped from Greece to the Krupp works in Germany.
An article in a back number of a German technical
publication which has recently been received confirms the
shortage of antimony in Germany.
Economy in the use of industrial diamonds is being
urged on German industry.
The Swiss have been asked by the Germans to process
about 1,000 tons of natural rubber. 10% of the raw material
is to be retained by the Swiss in return.
The lifting of load limit of German freight cars has
now been extended to the use of such bars in occupied ter-
ritories except as to twenty ton cars in the Balkans.
The repot has not been confirmed that travel permits
were to be required for passenger travel in Germany. This
report 18 probably unfounded except in so far as certain local
applications my be involved.
A power shortage in Scandinavia has led to the
announcement of rationing and the drastic curtailment of domestic
use.
200 locomotives and 150 cars have been requistioned
from Belgium by Germany.
70
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE Sept.10,1942
TO
Secretary Morgenthau
Mr. Hoflich
FROM
Subject: Summary of Intelligence Reports
Flying Fortress Raids
On September 5, 37 Flying Fortresses dropped about 70
tons of bombs on the railway center of Rouen. This was
about three times the number of these bombers taking part
in any previous raid over Western Europe. Two days later
29 Fortresses were sent to attack the shipyards at Rotter-
dam. Heavy enemy fighter opposition was encountered and
only seven of the American planes actually bombed their
target. No Fortresses were reported missing.
(British Operations Reports, September 6, 8, 1942)
Dakar
The German-controlled press has charged recently that
the United States is planning to seize Dakar as & convenient
base for the transfer of troops from Brazil across Africa to
Egypt.
It 1s reported that discussions concerning Dakar took
place on August 27 between Laval and German representatives,
and that the Germans requested (1) a German military observer
or control commission at Dakar, and (2) an agreement between
France and Germany for the defense of French North and West
Africa. It is believed that the French assented to the first
proposal. It is said that Laval favored the defense plan,
but relinquished the idea for the time being when Admiral
Auphan (Minister of Marine) threatened to resign, objecting
that such a pact would invite an attack by Britain and the
United States.
General Barreau, the commanding officer in Dakar, said
to be friendly toward the United States, is expected to go
on indefinite leave, to be replaced by a naval officer whose
sympathies are unknown.
(0.3.3., "The War This Week", August 27-September 3,1942)
71
- 2 -
Dieppe
The British report that, according to reliable
sources, German staff officers have stated that R.A.F.
aggressiveness gave them the most difficult defense
problem during the raid on Dieppe, and that the R.A.F.
plan was bold and well-executed. They fear that
heavier bombs may be used on a larger scale in the future.
The Nazi officers, it is reported, admit the loss of
about 170 aircraft during the attack.
(British Operations Report, August 27-September 3,
1942)
72
NUMBER 48
SECRET
OFFICE OF STRATEGIC SERVICES
THE WAR
THIS WEEK
September 3-10, 1942
Printed for the Board of Analysts
Copy No. 6
The Secretary
Regraded Unclassified
SEPTEMBER 3-10, 1942
SECRET
Office of Strategic Services
THE WAR THIS WEEK
As the Russians continue to beat off German attacks of
almost unparalleled intensity before Stalingrad, observers are
laying increasing emphasis on the shortness of the fighting
season on the Eastern Front, and Prime Minister Churchill
has remarked cryptically: "Of the Russian front I will only
at this moment say it is the 8th of September."
Meanwhile the British have blunted & heavy attack by
Rommel and have forced him back substantially to the line
from which he initiated an apparently ambitious offensive.
The reverse was punctuated by heavy losses in enemy motor
transport. Anglo-French differences in the Levant are reach-
ing a crisis stage, with De Gaulle apparently determined to
stand his ground.
In Spain reliable observers see in recent government shifts-
and notably in the ousting of Suñer-changes reflecting
primarily the domestic situation but generally favorable to
the interests of the United Nations. On its side, the Vichy
regime continues to yield concessions to the Germans, but an
unusually well informed observer believes that Laval is still
determined to conclude no military agreement with the
Nazis, a situation now considered to reflect in part his doubts
of eventual German victory.
Exceptional Japanese maritime activity in Melanesia sug-
gests an early intensification of operations in the Solomons
and in New Guinea, while the Japanese continue to relinquish
their earlier gains in Chekiang-a move which remains
enigmatic to date.
Indian disorders are entering their second month and
some observers still believe that the real campaign of civil
1
SECRET
disobedience lies in the future. Reports indicate meanwhile
that the Hindu Mahasabha is seeking permission to com.
municate & significant compromise proposal to the jailed
Congress leaders.
The Defense of Stalingrad
Hemmed in on three sides, the defenders of Stalingrad have
thus far beaten off German ground and air assaults of as
intensity unparalleled since the siege of Sevastopol. To the
west, the attackers have apparently reached the suburbs of
the city, leaving the Russians little maneuver space for their
mechanized units. The Soviet forces, however, apparently
intend to resist to the last, and hand-to-hand fighting alone
can reduce this "Red Verdun." After failing to find & soft
spot, the Germans have now resorted to costly frontal attacks.
Observers emphasize that with the supply position of both
sides extremely critical, each day that Stalingrad holds out is
of real significance in the timetable of events on the Eastern
Front. The Russians are practically cut off from supplies
and reinforcements: the attackers are now bombing the
Astrakhan-Saratov railway east of the Volga, the last free
road to the north. And the Germans themselves have been
obliged to commit increasing numbers of men and quantities
of mechanized equipment along the two single-track railways
that serve as their supply lines. In the opinion of air experts,
the Soviet estimate of 1,000 German planes, almost half of
them dive-bombers, now concentrated before Stalingrad,
may not be far from the truth. Some observers conclude
that the Nazis are so heavily committed around Stalingrad
and have been delayed 80 long, that they may find it too late
to launch another major offensive on the Eastern Front this
year.
Elsewhere, the Axis mop-up on the Taman Peninsula and
the fall of Novorossiisk have long been discounted as the
2
Regraded Unclassified
SECRET
inescapable consequences of the German drive toward the
Caucasus. Similarly, the fall of Groznyi-now threatened by
a Nazi bridgehead across the Terek River-would not deci-
sively alter the Russian military position; in this sector the
Germans have evidently been held up by a lack of air strength,
now massed before Stalingrad. But the Nazis infiltration of
the Caucasus passes represents a real and growing danger.
While Russian mountain troops have counterattacked in the
Klych Valley south of the Klukhor pass, small Nazi units
have continued to filter over the lesser passes to the south.
Such infiltrations could eventually threaten the whole Soviet
position in the Trans-Caucasus.
Rommel Withdraws in Egypt
The German attack in Egypt has proved & tactical failure,
and Marshal Rommel has now withdrawn his forces behind
an antitank screen only slightly east of the line from which
he launched his drive on the night of August 30.
The high percentage of Rommel's total available strength
concentrated for this attack has led military observers here
to feel that this was probably planned as the first step of a
major offensive. Rommel's two German armored divisions,
supported by other German and Italian units, struck north-
eastward through the British minefields, apparently trying
to lure British tank forces into a pitched battle. Avoiding
such an action, the British harassed Axis forces with artillery,
mobile units, and air attacks. They then forced the Germans
to withdraw by coordinating a sharp New Zealand attack
from the north (threatening to cut off advance German
forces) with intense air raids on enemy columns. British
units constantly harassed the enemy during the retreat.
Axis losses in tanks were considerable.
A major factor in the German reverse was the Allies'
unquestioned command of the air. Allied air forces
3
Regraded Unclassified
SECRET
inflicted heavy losses on enemy motor transport, and with-
drawal of these columns began early-an indication that this
particular attack was over. Enemy fighters were kept on
the defensive, and apparently the Germans did not use dive
bombers. This has caused further speculation as to the
strength of German air reserves available at this time,
although some observers suggest that the principal limiting
factor in this theater may have been gasoline.
Axis forces are now digging in behind their anti-tank
screen. They apparently still hold sections of the British
minefields. Although their supply situation is presumably
increasingly tight, especially with regard to gasoline and
motor transport, there is no indication that the Axis is
planning to retreat beyond the present line. The rate of
sinking of enemy supply ships has been extremely heavy.
Nevertheless some observers do not exclude the possibility
that Rommel might shortly renew his attack, if he feels
that time is running against him. Forces are still con-
centrated in the southern sector and the situation remains
tense.
Anglo-French Crisis in the Levant
In Syria De Gaulle appears determined to force the issue,
and has implied that he expects the British to be prepared to
hand over the military command of the Levant as of Sep-
tember 10. He bases this demand on the De Gaulle-Lyttle-
ton agreements of 1941, which provided that command would
rest with whoever had the larger forces in the area. The
British deny De Gaulle's claim that his troops outnumber
British forces there.
Meanwhile De Gaulle and Casey have not yet arranged a
place of meeting.
4
Regraded Unclassified
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Spanish Cabinet Changes: Suñer Ousted
The important changes which Franco made in his Govern-
ment on September 3 were dictated primarily by internal
pressures. Heightened by economic strain and wartime con-
ditions, tension has long been mounting within the Falange,
and between the Falange and such conservative groups as the
Army, the Church, and the Monarchists. The bomb outrage
committed at Bilbao by prominent Falangists precipitated a
crisis; and Franco has attempted to restore harmony and
stabilize his regime by severely punishing the guilty and re-
moving key figures about whom antagonism centered. Well
qualified observers feel that the net result indicates the Army
has won the first round of its fight with the Falange; that
Franco may have strengthened his own position; and that the
changes in general favor Allied interests, 80 far as they affect
foreign policy at all.
Most important was the removal of the unpopular Serrano
Suñer from two high offices. Franco has himself succeeded
Suñer as president of the Junta Politica of the Falange and
has appointed to the Foreign Ministry General Gomez
Jordana. The latter has been a staff officer during most of
his career, and is considered something of an old guard
bureaucrat, loyal to Franco, and satisfactory to the con-
servative groups. He is not believed to have any pro-
German sympathies, and is credited with resisting Italian
pressure when Foreign Minister in 1939. Suñer had reput-
edly been growing less pro-German than formerly, but he
remained the principal exponent and symbol of close rela-
tions with the Axis. Although removed primarily because
of internal opposition, his departure is a blow to Nazi prestige
in Spain and may suggest that the Franco regime is now
less certain of ultimate Axis victory.
5
Regraded Unclassified
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Other Shifts in Franco's Government
The three other changes are of less clear-cut significance,
but in general Franco seems to have fallen back on competent
administrators of less decided political commitments.
After others had refused, Franco persuaded his Chief of
Staff, General Carlos Asensio, to succeed the Royalist Varela
as War Minister. Asensio is considered a man of intelligence
and efficiency, who joined the Party as a matter of form but
who is without any special political aspirations.
The new Minister of the Interior, Blas Perez, is & former
teacher of law who joined the Party but who has taken no
active part in its activities. He has previously held impor-
tant posts in the judicial hierarchy.
As a measure of appeasement to the Army group, Franco
has ousted José Luna from the Vice Secretary-Generalship of
the Falange. The latter was associated with the worst ele-
ments of the Party, and was implicated in the Bilbao incident.
The office has been filled, however, by Manuel Mora Figu-
eroa, a Falange leader who has recently "crusaded" with
the Blue Division against the Soviet.
Although the conservative groups appear to have gained
from the Cabinet reshuffle, powerful Falangists still remain
in office, and it is probably too early to consider Suñer com-
pletely out of the picture. He may reappear either in an
important position at home or as Ambassador to Rome.
The Spanish press had made no comment except to state
that the Cabinet shifts involve no change in internal or
external policy. Some observers suggest that with these
changes Spain moves one step nearer to & Monarchist restors-
tion, engineered by the conservative groups, who are mili-
tantly opposed to any return of the Republic.
6
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Laval Weighs Further Concessions
Although the French press carried an official denial of the
presence of German troops at Dakar, Laval is believed to
have consented to the sending there of two German military
observers, probably passing as civilians. The State Depart-
ment has protested the turning over to Germany of any
merchant shipping, either French or foreign, now stationed
in French ports. Such a step exceeds the demands of the
Armistice agreement, but Laval has stated that it will be
"difficult" not to let Germany have about 40,000 tons of
shipping belonging to nationals of occupied countries.
An unusually well qualified observer, however, feels that
Laval will not conclude any general military agreement with
the Germans-it being the basic principle of his policy not to
draw France into the war on either side.
In Alsace-Lorraine the Germans are reported to be en-
rolling boys of 14 to 16 for German labor camps and planning
to conscript men 17 to 45 for the German Army. Laval
apparently kept Pétain in the dark about this for several
days, and then finally submitted a protest to the Germans,
allegedly sent merely as a matter of form. Vichy officials
admit that no such provisions were included in the Armistice
conventions, but they are completely apathetic about the
question. In Alsace the Germans are apparently taking
strong action against resistance to the execution of their plans.
On the occasion of the abolition of the last vestiges of
parliamentary institutions, Eduard Herriot, President of
the Chamber, and Jules Jeanneney, President of the Senate,
are reported in the press to have addressed a letter to Pétain
warning that France would not follow along the path leading
to war against "our allies." In their unusually outspoken
letter, the two leaders also protested against the establish-
ment of a dictatorial regime at Vichy, in violation of earlier
pledges.
7
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Axis activities in North Africa are generally more quiet
now than they have been over the past eighteen months,
according to a highly-placed observer. Nevertheless, the
press in Morocco, following the anti-Anglo-Saxon line taken
by Vichy propaganda, is reported by another source to be
definitely more pro-Axis than previously.
Japanese Pressure on the Middle Melanesian Front
Local enemy pressure continues on the Middle Melanesian
front, where further Japanese operations against Allied posi-
tions in New Guinea, the Solomons, or both, are expected.
On September 6, 3 light cruisers and 26 destroyers-an
unprecedented concentration of destroyers in these waters-
were sighted in the Shortland Harbor-Buin (Bougainville
Island) area, about 350 miles northwest of Tulagi. The day
before, more than 100 landing barges were counted at Rabsul
Harbor, and both here and in the vicinity of the Trobriand
Islands, northeast of Milne Bay, cruisers and destroyers were
sighted.
These evidences of Japanese reluctance to lose the initiative
in this theater were coupled with continuing heavy pressure
on Allied positions in the Kokoda area, and small-scale pene-
trations elsewhere. At Kokoda Japanese troops have fought
their way through "The Gap" in the Owen Stanley Range to
Efogi, and are now on the southwestern slopes of these moun-
tains, about 35 miles air distance from Port Moresby. In the
southeastern Solomons, small night infiltration parties have
succeeded in landing on several islands from which the Jap-
anese recently were ejected. These parties, equipped with
radio, land at points outside the immediate reach of United
Nations' ground forces and set up machine gun posts. By
September 2, five such posts had been located on or near
Guadalcanal, three on Malaita Island, one on Florida Island,
and one at least on the Russell Islands.
8
Regraded Unclassified
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The Japanese also are becoming increasingly active in the
Gilbert Islands. On Abemama and Tarawa Islands, par-
ticularly, military observers believe sufficient Japanese land,
sea, and air forces are now available to carry out attacks on
the strategic Pacific islands to the eastward which dot the
Allied supply line to Australia.
These moves, both at Kokoda and in the Solomons, have
been countered by United Nations ground and air forces.
Japanese casualties at Kokoda are estimated at more than
1,000. United Nations' planes inflicted relatively heavy
casualties on Japanese troops attempting landings September
3 on San Jorge Island, 65 miles northwest of Guadalcanal, and
September 5 on Guadalcanal itself. At Milne Bay, where an
enemy landing party was forced to withdraw after falling into
an Allied trap, the Japanese lost some 600 troops.
Japanese Moves in Chekiang
The withdrawal in Chekiang has now slowed, and the
Japanese continue in possession of the railroad and airport
town of Chin-hua, former provincial capital. There is, how-
ever, no indication that the Japanese are preparing important
counterattacks in this region, and it seems clear that for the
present at least they are resigned to relinquishing most of the
gains of their summer campaign.
These gains were of considerable importance in both nature
and extent. By July the Japanese had seized all important
airfields in Chekiang Province. They had succeeded in
occupying the Hangehow-Nanchang Railway and had opened
a potential land communication route to their base at Nan-
chang. They had pushed south and west of Nanchang,
threatening a drive along the Kiangsi-Hunan railway, and
they had driven some distance northward from Canton along
the Canton-Hankow Railway. Occupation of Nan-ch'eng,
in northeastern Kiangsi, had cut off the better of the two
9
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roads which link the province of Fukien with the remainder
of Free China. Moreover, the Japanese had drawn & semi-
circle around the Chekiang seaboard from Wenchow through
Ch'U-hsien and Chin-hua to Hangchow, which denied to
Chungking important smuggling centers and salt supplies.
Reasons for the Japanese withdrawal are not yet clear.
It is fairly certain that withdrawal was not occasioned by
Chinese pressure, but there is no real indication yet 88 to
why the Japanese High Command came to this decision. The
relinquishment of the Chekiang airfields at a time when the
United States Army Air Force in China is showing increasing
activity is puzzling, particularly in view of the phobia of the
Japanese regarding bombing raids against Japan proper.
Some observers believe that the Japanese may be hoping
to cut off air raids by action elsewhere, possibly some move
against the India-to-China air route, intended to intercept
aircraft before they reach China. Japanese bombers and
fighters recently have flown over Chittagong, but as yet
there have been no other signs of offensive action, and no
significant movement of troops or aircraft toward India have
been reported.
Renewed Predictions of Japanese Attack on Siberia
Predictions that Japan will soon attack Siberia continue to
appear, but the more cautious versions forecast that she will
do 80 only if the Germans crush Russia in Europe or if the
United States uses Siberian territory for bases.
The Japanese are now fully prepared for an invasion, which,
if it occurred, would doubtless be unannounced, of lightning
rapidity, and simultaneous at all selected points along the
2,500 mile line from Vladivostok to the railroad terminals in
Inner Mongolia. Various informants place the Japanese
forces in Manchuria at from 650,000 to 1,000,000 men, and
rough estimates locate half or more of their available combat
10
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planes in this area-about equally divided between Japan
(including Karafuto) and Manchuria-Korea. Observers,
using previous Japanese training schedules as & basis, consider
that the ten divisions of recruits in Japan are now ready for
active duty, and that Japan has port facilities and shipping
available to ferry these divisions, or such of the garrison divi-
sions in Japan as they might replace, to the mainland in &
month's time. Chinese sources, which for some time have
vaguely reported movements of Japanese units northward
from China into Manchuria, have recently become more
specific about such movements to Kalgan and other points
along the southern fringe of the Mongolian plateau. Finally,
the Japanese have apparently completed all contemplated
transfers in the high command.
The Greater East Asia Ministry
Premier Tojo has announced the creation of & new "Greater
East Asia Ministry" to be headed by a Minister of Cabinet
rank. The new department is to be the "general organ for
conducting administrative work covering the fields of politics,
economics, and culture within the Greater East Asia sphere,
excepting Japan proper, Korea, Formosa, and Karafuto."
Previously Japanese administrative activites in Manchuria,
Occupied China, and the newly occupied areas in the south-
west Pacific have been guided by & multitude of separate
boards and agencies. The consolidation of these functions
under one Ministry is a significant administrative reform,
reflecting long-term Japanese planning for the areas she has
conquered. Should General Teiichi Suzuki, long-time Presi-
dent of the highly important Planning Board, be appointed
to the new Ministry (a likely possibility according to current
report), a further indication would be given of the political
importance of the new development.
The creation of the new Ministry clarifies the resignations
11
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of Foreign Minister Togo and Vice Foreign Minister Nishi,
which occurred last week. The Ministry of Foreign Affairs
is hardest hit of all the Ministries which have been obliged to
relinquish functions to the new organ. Togo and Nishi, as
the ranking career men of their Ministry, evidently felt COD-
strained to resign, either as & measure of protest, or to avert
the loss of face which might result for Ministers who remained
in office after their power had been curtailed.
India: The Hindu Mahasabha's Proposals
The proposals for limited independence and the formation
of & national government advanced by the Hindu Mahasabhs
are, in the opinion of an American observer in New Delhi,
the single positive plan for & settlement put forward by an
important political group since the imprisonment of the
Congress leaders (The War This Week, August 27-September
3, p. 17). Furthermore, according to the author of the
Mahasabha draft, they represent the position held by Nehru
and Azad just before they were jailed-a view that they felt
sure the Mahatma would accept. Now the Mahasabha has
approached the Viceroy with its proposals, apparently seek-
ing his permission to establish contact with the Congress
chiefs.
Our observer surmises, however, that the Government
will not prove accommodating. In his latest statement to
the House of Commons, Prime Minister Churchill has de-
clared that with [more "white" troops in India than at any
time since the beginning of the British connection, the course
of events in India is improving and on the whole is reassur-
ing; the British Government, he concludes, intends to give
all possible support to the Viceroy and Government of India.
12
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Retrospect on the Disorders
With the current disorders in India going into their second
month, it is now possible to recapitulate briefly some of their
consequences and the partial recovery from them that has
taken place. Advices from New Delhi summarize the
disturbances to date.
Interruptions of railway service have occurred most ex-
tensively on the East Indian Railway, the premier line of
India, and the route from Calcutta to the north and north-
west, and one of the two routes from Calcutta to Bombay.
Although the railway has established limited service over the
"Grand Chord" line, the "Main Line" running through Patna
is still out between Patna and Mogul Serai. Between
Lucknow and Cawnpore similar interruptions of service have
occurred. The Bengal and Northwestern Railway has like-
wise suffered serious interruptions, while temporary suspen-
sions of service have occurred between Madras and Calcutta
and on the Bengal and Nagpur railway, the second route from
Calcutta to Bombay. These disorders, coupled with flood
washouts along the Northwestern Railway from Karachi to
Lahore, and from Karachi to Baluchistan, seriously affected
India's entire transportation system during August, and re-
covery is as yet by no means complete.
Industrial Disturbances
While the strike in the Tata Steel Plant at Jamshedpur is
now in process of settlement, employees of the Steel Cor-
poration of Bengal and of the Mysore Iron and Steel Works
are still on strike. These three produce all but a minute
fraction of India's steel. In Bombay, 64 out of 67 textile
mills are now back in production, but in Ahmedabad the
employees of 50 mills have not yet returned to work. In
Bangalore, India's one aircraft factory has apparently
resumed production. Although many private plants working
13
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on government contracts have been obliged to close down,
the government ordnance factories have been able to main-
tain operation. By the payment of "dearness allowances",
the establishment of food shops selling goods at regulated
prices, and the use of police and troops, the Government has
tried to keep dislocation of its industrial program down to 8
minimum.
In general, opinion reaching this country differs 88 to
whether the disorders have been the work of Congress groups
or of hooligan elements. The Government claims that these
outbreaks conform to a plan formulated by Congress leaders
before the Bombay meeting of August 7. Congress sympa-
thizers maintain, however, that the disorders are not Con-
gress-directed, and that Congress nonviolent noncoopers-
tion when it begins will be far more general and far less
controllable than the anti-British activity to date.
With this latter opinion an American observer on the spot
is in substantial agreement. He believes that an intensified
civil disobedience campaign will start very soon, and that it
will be 80 powerful that the Government will be unable to
suppress it. The present tendency to minimize the possibility
of & Japanese invasion of India, he maintains, is strengthening
the position of the Government in its refusal to reach & clear-
cut settlement of India's current difficulties. Unless the
British offer the Indian people a constructive, workable pro-
gram, he concludes, India cannot become an effective United
Nations base for military operations against Japan.
Significance of General Justo's Offer
The offer of the Argentine General Justo to serve against
the Axis in the Brazilian army adds considerably to the
embarrassment and discomfort of the adamantly isolationist
Castillo Government. Though General Justo may be moti-
vated to some extent by personal political aspirations, the
14
SECRET
fact that he, an ex-President of Argentina with pronounced
conservative leanings, has decided to throw his full weight on
the side of the United Nations is further indication of the
narrow political base which supports the Castillo semi-
dictatorship.
General Justo's petition to the Argentine Congress for
permission to serve in the Brazilian army has been referred
to B subcommittee on constitutional affairs. Significantly
enough, Deputy Raffo de la Retta, & member of Castillo's
own party, has already publicly recommended that Argentine
citizens be granted the right to serve in any American
army. In the meantime, General Justo has made political
capital of his situation. He has appeared jointly with
President Vargas and Nelson Rockefeller at a huge public
meeting celebrating the 120th anniversary of Brazilian
independence.
Brazil Expropriates an Axis Estate
The recent expropriation for defense purposes of & $100,-
000,000 Italian owned estate (the property of Henrique
Lage), with wide holdings in shipping, mining, and industry,
indicates the vigor of the Vargas administration in prosecut-
ing the economic phase of the war. This act is also in line
with the recent trend in Brazil toward state ownership of
basic industries. The federal government already owns the
Lloyd Brasileiro, principal steamship line of the country,
the new steel mill at Volta Redonda, and many railroad lines.
The shifting of submarine packs to the South Atlantic has
increased the food shortage in the bulge area of Brazil, al-
ready serious because of two years of drought and wartime
demands upon existing stocks. Coastwise traffic which nor-
mally brings surplus foodstuffs of the rich agricultural south-
ern states to northeastern Brazil has been disrupted by recent
ship sinkings and by reluctance of vessels to leave port with-
out naval escort.
15
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Regraded Unclassifie
APPENDIX I
INDIAN OPINION IN THE CURRENT CRISIS
Since the arrest of the Congress leaders on August 8, the Government of India
has imposed 5 severe censorabip on the publication of news about the current die-
orders. It has not, however, seriously interfered with the expression of opinion.
The following commentary on the present state of Indian opinion has been &
pared by the British Empire Section of the Office of Strategic Bervices (for the
attitude of the Congress, see The War This Week, July 30-August 6, pp. 22-24).
Possibilities of Compromise
With an astonishing degree of unanimity, the English and vernacular prem, the
leaders of political parties, the Archbishop of Calcutta, and many other promises
Indians and British in India have urged the Government to seek & solution for the
country's present difficulties through negotiation with the Congress. Although
the proposed terms of a compromise vary widely, all speakers have deplored the
methods of repression currently employed by the Government. Many have sug-
gested mediation by the United Nations or by the United States alone.
Before being jailed, the Congress leaders themselves apparently hoped for
discussion and compromise. Of these leaders Nehru had the clearest Idea of the
terms on which negotiation might proceed, while Gandhi seemed less certain and
less sure that discussion would be profitable. Rajagopalachariar, ex-member of
the Congress Working Committee, and Sapru and Jayakar, leaders of the Mod-
erates, now seem to be outstanding figures who offer hope for a reconciliation of
India's divergent elements.
Moelem Opinion in India
Alone among important parties, the Moslem League has not insisted upon &
compromise with the Congress-maintaining that the Government should first
grant the League's own demand for the division of India into separate Hindu
and Moslem States (the Pakistan proposal). Though urgent in demanding in-
dependence, the League refuses to consider any solution that would leave India
& united nation. Yet there are reports that several members of the League's
Working Committee, including the vice-president, have suggested negotiation
with the Congress.
Furthermore, & number of Moslems holding high elective office, object to the
intransigence of the League's president, Mr. Jinnah. These include the premiers
of the four provinces with Moslem-dominated ministries. Such men, since they
represent Moalem constituencies, presumably are aware of their constituents'
sentiments, Moreover, the Jamiat-ul-Ulema-i-Hind, the association of Moslem
divines in India, In August adopted a strongly pro-Congress and anti-League
resolution. The Asad Moslem Conference and & number of lesser Moelem groups
are also opposed to the League. While the League's present strength is 8 matter
16
SECRET
of considerable doubt, it is apparently at lesst the strongest single Moelem party
in India, though not necessarily stronger than all the others combined.
Moslem Opinion Outside India
Outside India, the Moslem Near East seems little interested in the success of
the Moslem League's Pakistan proposals, according to recent confidential reports
from American observers. In Egypt the dominant Wafd party maintains cordial
and sympathetic relations with the Indian National Congress. Turkey under-
stands India's demand for independence. Some Turks consider the present an
inopportune time to insist on freedom, while others are in sympathy with the
Congress. Iraq is impressed with the vigor of British repressive action, though
the anti-British masses tend to applaud Gandhi and the Congress. Public
opinion in Iran wants to see the British expelled from India and favors the
Indian Nationalist cause.
Only Saudi Arabia, which is Wahhabi and therefore religiously conservative
and fundamentalist, views the Indian problem as & struggle between the true
faith of Islam and the heathenism of the Hindus. In Afghanistan the desire for
& greater Afghanistan creates support for & Pakistan state-presumably domi-
nated by Afghanistan. In general the Islamic world is apparently more interested
in nationalism and the removal of British imperialism in the Near East and else-
where than in pan-Islamism or religious self-assertion.
The Depressed Classes (Untouchables)
Although the opinion of the depressed classes is frequently mentioned, it is not
clear that these classes actually have an "opinion." Dr. Ambedkar and Mr. M.
C. Rajah profess to be their leaders and venture to speak for them. Mr. Gandhi
also professes to be one of their leaders. Ambedkar and Rajah both oppose the
Congress program.
The difficulty is that the 48 million untouchables are the least politically con-
scious of all India's 388 millions, and no organization claiming to represent them
can show any sizeable membership. Neither in it likely that many of these
people respond to the programs advanced by self-nominated spokesmen. Most
of the untouchables are still submissive to the theory and practice of traditional
Hinduism and can hardly see any realism in proposals to relieve their social and
economic degradation. The few that do, like Ambedkar and Rajah, want the
Depressed Classes to keep as free as possible from entanglements with other
political organizations in order to increase their bargaining power. On the other
hand, Gandhi declares that the Depressed Classes should remain with Congress
and not become & divisive element in Indian politics.
The Hindu Mahasabha
The third most powerful political party in India, the Hindu Mahasabha voices
the communal interests of the Hindus, as the Moslem Lengue does for the Moslems.
It feels that the Congress has been too subservient to the Moslems, and has not
taken & sufficiently strong stand in protection of the rights of the majority. It
stands primarily on the principle of majority rule, that is, rule by the group
(Hindu) which it representa. The Mahasabha has just reiterated ita unyielding
17
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opposition to Pakistan and has demanded immediate independence (subject le
the limitations iniposed by the war) and the formation of a government represents.
tive of all parties. Though Hindu, the Mahasabha is not averse to violence; it
asserts that a partitioned India will fall into civil war (the Moslem League prophe.
sies civil war if India is not partitioned).
On one issue, however, all Indian parties are in agreement. They all demand
the rapid transfer of administrative control to native Indians and the abolition
of the post of Governor-General (Viceroy) and the Secretaryship of State for
India in London. At the present time, although 11 out of 15 members of the
Viceroy's Executive Council are Indians, they do not enjoy the country's 600-
fidence, since they have no parliamentary responsibility. Furthermore, the
Governor General has an ultimate veto over any of their decisions. Finally, the
positions which Indians consider most important, the Finance Ministry and the
Home Department (which controls the police and internal affairs), are as
held by Englishmen.
APPENDIX II
FOOD SUPPLIES IN CAUCASIA
The loss of territory and the transport difficulties imposed on Russia by the
German invasion of the North Caucasus will accentuate the present serious
problem of food supply in Russia as & whole and will have immediate reperoumions
in the Trans-Caucasus, according to & report prepared in the East-Europess
Section of the Office of Strategic Services. The North Caucasus normally yields
a surplus of grain, vegetable oils, livestock, and fish (caught in the northern
waters of the Caspian). The Trans-Caucasus normally has & surplus of cotton,
tobacco, tea, and citrus fruits, but & serious deficit of grain.
Although the effects of the loss of the North Caucasus on Russia's over-all food
position are etill under study, it is obvious that unoccupied Russia to the north
and east has been denied important grain supplies as & result of the present partial
occupation of the North Caucasus. A further occupation of the entire North
Caucasus would similarly deny this region's livestock resources to the rest of
Russia. As for the Trans-Caucasus, the current German advance to the north
has already complicated its food position by decreasing its outside supply and by
increasing its demand (owing to the influx of soldiers and refugees)-a situation
which the complete occupation of the North Caucasus would only intensify.
Bread Grains
Both the North and Trans-Caucasus areas produce 8 considerable volume of
agricultural supplies, as is indicated in the following tables:
18
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Area sown to principal crops, 1938
[Thousands of screa]
Total
Trans-
Georgia
Armenia
Aserbaid-
Caucasus
shan
Wheat:
Winter
2,012.4
647. 4
266. 9
1,098.1
Spring
520, 8
141. 6
319. 2
60. 0
Oata
52. 9
15. 1
6.9
30. 9
Winter rye
34. 6
8.4
22 5
3.7
Barley:
Winter
477. 7
53. 4
7.2
417.1
Spring
530. 0
196. 2
219. 2
114.6
Corn
995. 6
973. 1
22
20. 3
Rice
64. 7
1.0
22
61. 5
Potatoes
121. 6
56. 8
29. 2
35. 6
Vegetables
78. 3
36. 3
11. 1
30. 9
Melons
46. 9
10, 6
5.2
31. 1
Legumes
97. 1
21. 5
5.9
69. 7
Sunflower seed
54. 1
33. 6
1.2
19. 3
Tobacco
72. 1
52. 1
7.2
12. 8
Cotton
530. 0
5.2
42 2
482. 6
Forage and hay crops
300. o
106. 5
65. 0
128. 5
Other crops
225.0
76.9
67. 5
80. 6
Total
6,213.8
2,435.7
1,080.8
2,697.3
Output of principal agricultural commodities, 1937
[Thousands of tons]
Trans-
Caucasus
Georgia
Armenia
Aserbaid-
shan
All grains
2,381.5
1,107.0
402 9
871. 5
Cotton
255. 5
13.0
23. 8
228. 8
Tobacco
24. 1
17. 9
1.9
4.3
I Estimated on the basis of 1938 acreage.
Output of principal agricultural commodities, 1934
[Thousands of tons)
[Exclusive of Stalingrad Kral)
Total North
North Can-
Asov-Black
Kalmyk
Causesus
casus Kral I
Bes Kral
Autonomous
Republic I
All grains
7,921.2
3,463.9
4,355.9
92. 3
Potatoes
1,207.0
648. 7
548. 8
8.5
Cotton
12. 4
10. 6
1.8
0,1
Legumes
51. 1
20. 2
30. 8
Sunflower seed
683. 0
206. 9
474.0
0.9
I 1934 boundaries.
. Estimated on the basis of sown area in 1938 and 1934 yield for Stallngred Kral, of which the Kalmyk
Republic was part.
19
Regraded Unclassified
SECRET
The North Caucasus normally yields & grain surplus of about 1,800,000 100
annually. A third of this surplus, some 600,000 tons, has usually been required
to meet the grain deficit of the Trans-Caucassus region. The remainder la me.
able for general distribution. The Germans now occupy almost all of the grain
area in the North Caucasus, and although the current harvest may well have been
gathered before the invasion, it is certain that it was not fully transported from
the battle gone.
The normal grain deficit of the Trans-Caucasus will, in the coming year, be
augmented by the presence of at least 1,500,000 refugees. Should the Germaas
complete the conquest of the North Caucasus, additional refugees can be expected,
raising the total accretion in the civilian population to perhaps 3,000,000. Under
normal conditions, the Trans-Caucasus deficit for civilian uses might thus be
raised from 600,000 tons annually to almost 1,600,000 tons. It is believed that
under war conditions this figure might well be reduced to somewhat more the
1,000,000 tons. Thus approximately 100,000 tons per month of shipping upace
on the railways to Guriev and Krasnovodsk, and an appropriate volume of
merchant shipping on the Caspian, may have to be allocated to this civilian need,
complicating the already difficult and costly problem of military supply in the
Trans-Caucasus. When the civilian population is short of food, it is obview
that the entire food supply of the Russian army in the Trans-Caucasus constitute
an additional deficit item.
Vegetable Oils
German occupation of the North Caucasus will deny to Russia important off-
seed resources, in the form of castor oil beans and sunflower seed. The ares in
the largest producer of castor oil beans in the country. The loss of the vegetable
oils from these sources not only will affect human consumption, but will also
reduce the supply of lubricating oil, since castor oil is, in part, used for the lubrica-
tion of airplane engines in Russia. There is a very small production of sunflower
seed in the Trans-Caucasus.
Livestock
The major livestock regions in the North Caucasus have not yet been fully
occupied by the Germans. If the whole of the North Caucasus is occupied, large
quantities of meat and meat products, as well as 33,000 tons of hides per year
(about 8 percent of the total national hide output) will be lost.
The substantial livestock population of the Trans-Caucasus will undoubtedly
suffer from an acute shortage of feed and forage crops which are normally imported
in quantity, from other areas. This shortage will result in extensive alsughtering
of the Trans-Caucassus herds in the course of the coming year, at a time when meal
would also be used to supplement the probable scanty bread ration of the region.
The loss and decimation of the Caucasus herds would constitute a serious long-rur
blow to Russian animal-husbandry and agriculture.
Miscellaneous Products
In 1938 more than 60,000,000 pounds of fish were caught in the waters of the
Caspian Sea. The main fishing area lice in the northern part of the Carpian
which would, of course, be particularly vulnerable to German air attack, should
20
SECRET
the North Caucasus be fully occupied. It is likely that the flah requirements of
the Trans-Caucasus could be met under these circumstances, but relatively little
of the Caspian eatch would be available to the rest of Russia.
The Trans-Caucasus produces & sizeable proportion of the Russian ootton
crop. Transport difficulties, however, and the need for reserving transport
facilities for the shipment of oil and manganese from Trans-Caucasia to Central
Russia will undoubtedly force the Russian industry to rely almost exclusively on
the cotton crops of Central Asia.
Some 72,000 acres in the Trans-Caucasus produced, in 1938, 24,000 tons of
tobacco. It is probable that this crop will be moved, owing to its relatively small
bulk and the importance of tobacco in maintaining civilian and military morale.
Finally the Trans-Caucassus virtually monopolises the cultivation of tea and
citrus fruits in the U. 8. 8. R. The compact tea crop (11,000 tons in 1938), like
that of tobacco, would probably get relatively high priority for transport. It is
doubtful, however, if the more bulky lemons and tangerines of the Trans-Caucasus
will be generally available in Russia in the course of the next year.
APPENDIX III
RUSSIA AND THE SECOND FRONT: A SOVIET ACCOUNT
(The following account of the evolution of Russia's attitude toward & second
front is based on remarks made to reliable sources by prominent Soviet citisens
now in this country.)
Early Russian Attitude
Before the Russo-German war and during the first months of that conflict there
was & strong tendency among young army commanders of the U. 8. S. R. to dis-
trust the Allies, politically as well as militarily. Voroshilov was considered the
spokesman of a number of Russian commanders and certain high officials when be
remarked of the British and French in 1939, "Let us see what kind of fighters they
are." Though ardently anti-German and insisting on the necessity of an un-
compromising struggle, this group has felt that the Soviet Union must rely upon
her own resources and consider the war exclusively her own.
Such was not Stalin's point of view. With the agreement of the leading men
of his government, of the Political Bureau of the Party, and of the High Command,
Stalin consistently spoke of the Russian struggle as part of & common fight on
the side of the Allies. Stalin is convinced that Russia cannot win the war alone;
he is fully aware of the necessity of a good understanding with the Allies.
Nevertheless he agreed that it would be & mere cautious internal policy to make
the people of Russia consider this struggle as their supreme national fight, and not
arouse exaggerated hopes of Allied aid. With this policy in view, the war was
called in official statements "The Second National War" (the first was the campaign
against Napoleon). In this early period, propaganda organs made no mention of
& "second front." The official line taken by press and radio was that a friendly
21
Regraded Unclassified
SECRET
relationship prevailed among the U. 8. 8. R., Britain, and the United States, the
the Allies gave what help they could, and that there was no reason to worry,
The Intermediate Stage
After the winter campaign, the appeal to the Allies for & second front grow the
insistent. The official stand was revealed in Ambassador Litvinov's speeches of
February and April, in which be called for the utmost aid and the fullest Date of
Allied armies, navies, and air fleeta. The parts of these addresses that deals with
the Allies were all worded in Moscow.
But while the Soviet Government negotiated, the Russian press kept des
editorially, on the second front. A Soviet citizen could learn of the problem in
his newspaper only from short reports of news from London and Washington
The tendency in official statementa was to be optimistic about Allied aid, For
political and military reasons, the Moscow Government did not want to make
public its anxiety and annoyances about supplies. The public impression the
assistance from abroad was satisfactory was strengthened by the June announces
ment of the Russo-British treaty, and by the public mention in Russia of an 4pm
ment on the second front Issue.
The Current Demand for a Second Front
At the end of June and the beginning of July the situation changed. Hints
about the second front appeared more and more frequently in the Boviet pres,
until now the subject is in the forefront of the news.
This new public demand for a second front springs from the critical military
situation, from German technical superiority, from the warnings of the Russiss
High Command, from the growing pressure of opinion in the Army and in the
country. The Russian High Command and leading officials are concerned lest
the lack of a second front impair morale and bring disillusionment after the hopes
aroused by the announcement of Molotov's visit to London and Washington.
For the first time, the 80 called "political commissaries" reported that soldiers
were asking, "And where are our Allies? Why do they not help us?" Although
not always expressed in the press or in public meetings or in the forms familiar
to the democracies, Russian public opinion exista as & real and powerful form
that the Kremlin must take into account.
No Separate Peace
The force of this opinion is one reason why fears of & separate Russian peace
are groundless, our Soviet sources continue. The harm Hitler has done to the
country is BO great, the hatred he has provoked 80 intense, that the Rusist
people are ready to fight to the bitter end, Never before has there been in Rasis
such & rise of national spirit. The days when the Soviet Government could do
what it would with the people ended when the latter were given arms. Today
powerful as Stalin is, be could make peace only if the Army and the armed people
consented. And the popular attitude of today is not that of 1917.
The ruling group in Russia, moreover, realizes that from the political point of
view the only way to preserve the Soviet system is to continue the war. Anything
else would be suicide both for the system and its leaders. The scorched earch
22
Regraded Unclassified
SECRET
policy and Russia's unrelenting struggle are proof of her determination to fight
to the end.
Nor is there any party in the Soviet which could come to the surface in case of
defeat. "Appeasers" do not exist in Russia. The Germans themselves can not
name any important Russian Quislings. Even the minority groups are strongly
anti-Nasi, except the Turks of Azerbaldshan, whom the Russians distrust. More-
over, Hitler could not be satisfied with dividing Ruasia into free and occupied
zones; his objective is to smash forever the Russian state, politically, economically,
militarily.
But while a separate pesce is excluded, the possibility exists that Russia might
suffer a military collapse. If her armies were broken and forced to retreat to the
Urals, the Russian theater would be reduced to a secondary front of large-scale
guerrilla warfare, with only local operations on various small fronts.
It is this possibility, our Soviet informants conclude, that has occasioned
Russia's criticisms of the war effort of her Allies and her current demand for a
second front.
23
U.S. GOVERNMENT PRINTING OFFICE: 1941
Regraded Unclassified
73
TREASURY DEPARTMENT
Washington
FOR RELEASE, MORNING NEWSPAPERS,
Press Service
Friday, September 11, 1942.
No. 33-22
1
Secretary of the Treasury Morgenthau announced lest
night that the subscription books for the current offering
of 0.65 percent Tressury Certificates of Indebtedness of
Series C-1943 and of 1-1/4 percent Treasury Notes of Series
C-1945 will close at the close of business today, September 11.
Subscriptions for either issue addressed to a Federal
Reserve Bank, or Branch, or to the Tressury Department, and
placed in the mail before 12 o'clock midnight Friday,
September 11, will be considered as having been entered
before the close of the subscription books.
Announcement of the amount of subscriptions and the
bases of allotment will probably be made on Wednesday,
September 16.
-o0o-
74
September 11, 1942
9:35 a.m.
GROUP
Present: Mr. Bell
Mr. Gaston
Mr. Sullivan
Mr. Buffington
Mr. Graves
Mr. Gamble
Mr. Thompson
Mr. Kuhn
Mr. White
Mr. Odegard
Mr. Blough
Mrs. Klotz
H.M.JR: Harold, which one of your many assistants,
or associates, or collaborators, do I speak to about this
Minute Man movie that I saw the other night?
MR. GRAVES: Mr. Gamble is the movie man.
H.M.JR: I just wanted to say that I thought it was
terribly good.
MR. BELL: Terribly good? (Laughter)
H.M.JR: Where do you show it?
MR. GAMBLE: That is attached to newsreels and is
shown all over the United States.
H.M.JR: Now, one thing, Ted, which I asked for
originally - I may have it, but I don't know it - is
that I wanted to tie it up with people within the State.
That is what I asked for originally.
MR. GAMBLE: That is right. That has been done,
yes, sir, but any good short, like this Maritime short
that you saw, would get general distribution by and large.
75
- 2 -
These have been more or less community activities. They
go into a State and tie it up with some outstanding event
or incident in that particular State.
H.M.JR: Take a note for Mrs. Klotz (to reporter).
On this Maritime movie that I saw, send it over to Miss
Grace Tully and ask her the next time the President has
movies, if she will show it to him. It is only two
minutes.
Now, the other thing - I have never seen this one
on 8. State-wide basis. In fact, this is the first one
I have ever seen. I have never seen one before.
(Mrs. Klotz entered the conference.)
MR. GAMBLE: Would you like to see one every time
you screen - put one on every time you screen?
H.M.JR: I would like to see one that has something
to do with locality.
MR. GAMBLE: All right, sir.
H.M.JR: I would like - how many of these do you do?
MR. GAMBLE: Those average one a week.
H.M.JR: I can see one a week. I would like to see
one tied up with the locality.
Norman?
MR. THOMPSON: We had about twenty-four hundred
reinstatements and appointments in the month of July.
H.M.JR: What is that?
MR. THOMPSON: In the month of July in our personnel
turn-over we had about twenty-four hundred appointments,
thirty-one percent men, and sixty-nine percent women.
It is going up.
76
- 3 -
H.M.JR: Now, do you have to be excused at ten
o'clock for your meeting?
MR. THOMPSON: Yes, sir.
H.M.JR: I have a little message that I would like
you to take to these people, and that is this, that if
this thing goes on and they continue to lose 80 many
people and you can't find people to replace them, we
are going to move some of these bureaus out of Washington.
MR. THOMPSON: We have been through that.
H.M.JR: You will have to move some more. You
take New York City, for instance; you can get all the
help you want in New York City. We may not be able to
in Chicago, but the unemployment problem in New York is
terrific.
MR. BELL: There is a good editorial on that in
this morning's Post.
H.M.JR: In what?
MR. BELL; In the Post.
H.M.JR: If their answer is that after trying
every method, going through everything, they can't
get help, then we will move some of these divisions
up to New York. They can get space.
MR. THOMPSON: That is going to be tough. We
have just agonized through moving.
H.M.JR: You have got to get people to do the work.
MR. THOMPSON: I think we can get people in Washington.
H.M.JR: O.K. That is a dagger hanging over their
heads. You tell them that if after they have tried
everything they can't get help, then some of them are
going to be moved out of Washington.
77
- 4 -
MR. THOMPSON: That will accelerate their efforts.
H.M.JR: This isn't a threat, this is just - if
they can't do it, we will do it that way, because there
is plenty of help in New York. There is almost grass
growing, and if there isn't--
MR. THOMPSON: I think the kind of help they are
going to get in Washington is a little below the level
of efficiency.
H.M.JR: You can get office space and you can get
the help up there. This man said he couldn't get a
certain kind of an operator; you can get all that in
New York. They have four hundred thousand people
unemployed in New York right now.
MR. THOMPSON: We will do it.
H.M.JR: Bell?
MR. BELL: Mr. Nelson wrote you a letter on the
second regarding the use of the five million ounces of
so-called free silver. This is & reply. (Letter to
Mr. Donald Nelson signed by the Secretary.) The
manager of the National Theater wrote to you, or called
on the telephone, and made & suggestion concerning
investment of war savings bonds. Miss Chauncey thought
that you might like to answer it due to the fact that
he has been rather nice to you in meeting your require-
ments. (Letter to Mr. Edward Plohn, Manager, National
Theater, signed by the Secretary.)
H.M.JR: I pay cash. (Laughter)
MR. BELL: These are the circulars on the tax savings
note.
H.M.JR: Well - oh, that is just straight--
MR. BELL: Just the official circular.
H.M.JR: If anybody wants to see a very silly, but
a very amusing play, I recommend the one at the National
now, called "Vickie". I was there last night. There
78
- 5 -
are lots of good laughs. It is just good low comedy.
MR. BELL: We have & press release on this, which,
with the circulars, went to the Federal Reserve Banks
last night to be released, or at least to be released
for printing Saturday morning and released to the press
on Monday morning.
George Buffington has been working with the
Philadelphia man on & type of circular somewhat along
the line of the tax savings note plan we had before.
That will be available today.
H.M.JR: We have a meeting, supposedly, at ten-thirty
on publicity on this.
MR. BELL: That is what I was going to bring up,
that I thought there ought to be some publicity and--
H.M.JR: Can't we do that at ten-thirty? Isn't
that the time?
MR. BUFFINGTON: Yes, ten-thirty.
H.M.JR: And I would like Odegard to sit in 80 that
you will know in War Savings what I am trying to do.
I mean, what I am going to try to do on anything from
now on to do with publicity I want anybody that has
anything to do with--
MR. ODEGARD: That is ten-thirty?
H.M.JR: Yes.
MR. SULLIVAN: I would like to be here.
MR. BUFFINGTON: I think it would be a good idea.
MR. BELL: Yes, since it is tax notes he ought to
be here.
H.M.JR: O.K.
MR. BELL: I have & telegram from Mr. Miller, who
is the vice president of the Citizens Union--
79
- 6 -
H.M.JR: Will you be here?
MR. BELL: Yes, I will be here. ...Citizens Union
National Bank of Louisville. He has been in a number of
times and he has been very cooperative; he sends this
telegram. He says: "The Treasury has removed the limit
on subscriptions for Government bonds of banks, firms,
individuals, and corporations. It would be a tremendous
help to banks on account of the shortage of help, wear
and tear on machines, paper, and 80 forth, if the Treasury
Department would not compel us to give the names of the
individual subscribers." I think that-is 8. good suggestion.
You see, we have had those names because of the policing
and the limitations that we have put on individual subscrip-
tions. I think maybe we might want some break-down as to
corporations, insurance companies, and 80 forth.
H.M.JR: You use your own judgment.
MR. BELL: I think it is a good suggestion if you
don't think you will ever want individual names for
statistical reasons.
H.M.JR: Where is Haas?
MR. BELL: He is sick, I understand. I will discuss
it with him and consult New York and Chicago before--
H.M.JR: Use your judgment.
MR. BELL: Leon Henderson has written Delano, saying
that the Office of Price Administration would like to use
the banks in controlling the rationing system.
H.M.JR: One minute you read me something about the
machinery wearing out because I ask for some names, and
the next minute you want to do the other thing. (Laughter)
MR. BELL: I didn't say I wanted to do it. He wants
the banks to set up accounts with all the local people
who will be handling coupons - - the retailer, the wholesaler,
and everybody.
80
- 7 -
H.M.JR: They had better use some other method.
MR. BELL: And they have gone to the banking
people, and they don't want to refuse to do it because
of the public relations; but they say they just can't
do it without reimbursement, and the Price Administrator
is willing to reimburse them. The minute we start
reimbursing one department for work of this character,
then you are going to have to reimburse them for all
the Treasury work. Furthermore, you are using them,
it seems to me, up to the limit in our financing, and
I question the advisability of doing this.
H.M.JR: You had better talk with Henderson or
somebody very close to him and explain it to him, but
he had better find something else. The banks can't
do any more than they are doing for us, and the Federal
Reserve, and everything else.
MR. BELL: That is the way the supervising authorities
feel about it, that is quite a burden to put on the
banks at this time.
-
H.M.JR: Take it up with Henderson direct and tell
him it is best to use the post offices.
MR. BELL: I think he has been trying that, but I
agree that there--
H.M.JR: I am serious. Tell him you suggest they
use the post offices.
MR. BELL: All right.
H.M.JR: And I know that is the way the President
feels on the thing. He thinks they should use the post
offices in & lot more stuff.
MR. BELL: Of course this is an accounting problem,
and the post offices are not equipped--
81
- 8 -
H.M.JR: Take it up with Henderson direct, will
you?
MR. BELL: All right. That is all I have.
H.M.JR: You can relax, Harold. I saw you getting
ready to get in on my argument - unless you want us to
use the banks. (Laughter)
MR. GRAVES: No, indeed.
MR. BELL: You don't want to pay them, either.
MR. GASTON: Use the collectors of internal
revenue. (Laughter)
MR. GRAVES: Yes, they won't have anything to do.
Do you still want to see our group at ten about this
matter of accelerating the delivery of bonds on pay-
roll allotment? We have, I would say, something over
& thousand answers to the telegrams we sent out. We
will ultimately have pretty close to four thousand.
Mr. Tickton is going to--
H.M.JR: You are not ready yet?
MR. GRAVES: ...analyze and classify those, and I
would think possibly you might want to postpone this
ten o'clock conference, although we can come and
comment on these replies.
H.M.JR: You would be better off next week?
MR. GRAVES: Yes. Mr. Tickton will have 8.
complete tabulation about the middle of next week,
I would say.
H.M.JR: I can use that time very nicely this
morning.
MR. GRAVES: I will not be here myself from
Tuesday through Friday of next week.
82
- 9 -
H.M.JR: Gamble will be here?
MR. GRAVES: Gamble will be here.
H.M.JR: O.K. Fine.
MR. GRAVES: So we will skip this ten o'clock
meeting.
H.M.JR: When are you leaving?
MR. GRAVES: Monday afternoon.
H.M.JR: Well, let's see each other before you
go.
MR. GRAVES: All right. Monday morning?
H.M.JR: It depends on what time I get back.
What time do you leave?
MR. GRAVES: I am not sure. I think it is late
Monday afternoon.
H.M.JR: All right.
Harry?
MR. WHITE: Yesterday--
H.M.JR: You can have his ten o'clock appointment.
I want to hear what happened over at the State
Department afterwards.
MR. WHITE: All right, sir. That telegram came
yesterday from one of the independent movie producers,
who is coming in today and would like to talk with you
about block balances of theirs. I don't think it is
very necessary to see him.
83
- 10 -
H.M.JR: I can only see them as & group. I
can't start seeing them individually.
MR. WHITE: I don't imagine it is anything that
requires your attention, but if it is I will call it
to your attention.
H.M.JR: Is he bringing any stars with him?
(Laughter)
MR. WHITE: No. I don't recognize the name of
the company. I don't think it has any stars.
H.M.JR: If you should be wrong let me know,
Harry. (Laughter)
MR. WHITE: I will. I think possibly we will
be satisfied with something less than stars.
On this matter of the Canadian orders, I wonder
whether you want to reconsider the procedure and
think of this as a possible way of handling it.
H.M.JR: Don't do - let's do it right after
this meeting. There is no use in tying up everybody.
MR. WHITE: You sent an editorial about silver
to me whi made several statements about the
Treasury. There were many misstatements in there.
I discussed it with Ferdie Kuhn, and his opinion
was that we ought not to go into it or do anything
about it.
MR. KUHN: It is only because the column is
Waldrop's, a notoriously unreliable fellow who will
not print corrections; and if you take notice, he
will make matters worse; and he works for Eleanor
Patterson.
H.M.JR: Of course I don't agree with you. I
mean, there is just no use ever trying to get any
of these corrections made. He wrote a second
84
- 11 -
column on the thing. I have handled much worse
people than Waldrop. I made the suggestion over a
week ago. I can't get anything done. I am really
getting very, very much displeased, Ferdie.
MR. KUHN: My opinion was asked about it.
H.M.JR: I have handled people much, much
worse than that, and darn it, there must be somebody
in the Treasury 80 that when people attack me they
are willing to write a letter and point out the
mistakes in the statement. I really think it is
getting to be up to the limit. I mean the thing
is happening day in and day out. I make these re-
quests that a factual letter go out, and I don't think
I am asking too much. I am constantly given reasons
after reasons why you can't do it.
I have handled people like Pearson and Allen
and others, a half a dozen columnists much worse
than Waldrop; and I don't see why, when I make a
request like that, that somebody in this whole
Treasury can't do some thing to see that I am not
constantly defamed and misrepresented, and so forth
and so on.
MR. KUHN: It often happens that when you get
people like that and you point out their errors, they
will go to work and go after you again, precisely as
the New York Times did on silver. They admitted one
misstatement, and then they went and delivered an
attack much worse than the first one.
Waldrop andhis paper will do that every time.
H.M.JR: Have you tried Waldrop?
85
- - 12-
MR. KUHN: I have not tried Waldrop, but I know
what Waldrop and his paper are like. Only my opinion
was asked on it.
H.M.JR: But it is always the thing. I am con-
stantly being - I mean, nobody here - there is not a
single person here when these people constantly make
misstatements and lie about the Treasury - it is not
about me. He did not attack me personally.
I need somebody here who will take up the cudgels
and go to bat.
Now, I want somebody to do it, and I am not going
to do it myself. I have reached the limit on this
thing.
When I asked for a factual correction, it seems
to me that in the whole Treasury, with all the news-
papermen in the Treasury and all the people here,
that somebody could take it on himself and do it.
MR. WHITE: I think this episode may be mis-
understood. I think it is a little unfair to
Ferdie.
The note read to talk this over with Ferdie
Kuhn, and we prepared answers to the misstatements
and spoke to Ferdie about it and asked his opinion.
His opinion was that it would be unwise to handle it.
I don't think that anybody regarded your request as
instructions. If they had been so interpreted I think
it would have gone forth.
86
- 13 -
H.M.JR: I am not going to issue instructions.
But this thing goes on every single day. Every single
day, I mean, there are misstatements about the Treasury.
It isn't that I am not asking somebody - Waldrop did
not attack me, personally - I am not asking somebody
to defend me. It is a question of simply doing the
thing and nobody is doing it, Ferdie.
MR. KUHN: I am not sure the procedure is right.
You see, that is my feeling, that you get nowhere, as
the experience of Mr. Ickes has shown. He used to go
to work and reply to every little attack made on him.
He made himself and his department the most unpopular
in Washington. Now, do we want to do the same thing?
Should we take notice of every little - every little
attack in a paper that anyway is bound to attack us
because that is their policy?
H.M.JR: You and I differ fundamentally.
MR. KUHN: That is right, sir.
H.M.JR: You do not believe in it. Who can I
get to do it?
MR. KUHN: If you want it done, it will be done.
If you want it done in this case or in any case, it
will be done. I do not think it is good policy, that
is my opinion, but--
H.M.JR: There is one thing, Mr. Ickes - what
Mr. Ickes - we have had this thing discussed. I
cannot - oh, let's skip it. What is the use? I have
got so many important things to do.
MR. WHITE: I wonder whether one further comment
might not straighten things out. If that is to be
the policy, then somebody is tagged with the responsi-
bility of answering - that is that person's responsi-
bility. Now, that came from you, I mean, the editorial
came from you. I think we would all agree that you
shouldn't be bothered with that,s it ought to be easy to
87
- 14 -
establish the policy - determine the policy, and then
it will be somebody's responsibility to answer every
one of those, and we can prepare answers. I do not
think it can be left in the air this way.
H.M.JR: I do not have the memorandum before me,
but as I remember it, I said I wondered if there were
any factual mistakes. I just wanted them pointed out.
Now, what Harold Ickes did was to get personal. He
would attack Mr. Waldrop, and he would do it publicly.
Now I never suggested that. What I am suggesting -
Mrs. Klotz, ask for a copy of the memorandum, will you?
It is a memorandum - who was it to?
MR. WHITE: To me. I think it was in pencil -
in handwriting. You can get it from my office.
H.M.JR: There is all the difference in the world
in doing what Harold Ickes does, to get personal and
nasty to Mr. Waldrop, or write Waldrop a little note
saying, "My dear Mr. Waldrop, I think you would like
to know that these are the facts," and that is all. Now,
if he does not want to do it, drop it. What was the
name of the man that used to attack us 80 - McClure syndi-
cate, who used to write misstatements?
MR. GASTON: Ray Tucker.
H.M.JR: Now there is a man - we would have Ray
Tucker come around and talk to him. I used to have to
do the thing - I used to have to do it, but I cannot
do it any more. Do you see anything--
MR. GASTON: I do not think there is a fundamental
difference, as you said, between you and Ferdie. Ferdie
will admit some stories are so outrageous and incorrect
you ought to put out a public denial, or talk to the man
himself on the cases when you do not want a public denial,
but call attention of the man to the fact that he has made
a mistake, perhaps honestly, perhaps not. In the case
of Waldrop it is probably not, but I think it is just
a question to agree whether the thing is worth calling
to his attention. I think you have to judge
Regraded Unclassified
88
- 15 -
that on the individual case. I think it might be
worth while to let Waldrop know that he has made a
misstatement of fact in this argument.
H.M.JR: That is all I am asking for. But,
Ferdie, I will never ask anybody to do anything as
long as he is associated with me, that he does not
believe in. Now, if you do not believe in it, it
is your privilege to say so. There will be no hard
feelings, and I will simply ask somebody else to do
that kind of work for me. If you do not believe in
it, just say, "Mr. Morgenthau, I cannot do that kind
of stuff; I do not believe in it." Now, if that is
the way you feel, O.K. I will ask somebody else to
do it.
MR. KUHN: I do not, as a general rule, except
for their information, to see that they get the facts
before them - as a general rule--
H.M.JR: But this thing goes on all the time.
Now, if you do not believe in it, say so, and then I
won't have to feel that I am not getting what I want
and I will get somebody else to do that particular
kind of work.
MR. KUHN: It would be perfectly simple to send
Waldrop that memorandum.
H.M.JR: I do not want anybody in the room to
-ever stultify themselves in the least, or do anything
he does not believe in. Nobody has to do that. There
will never be any feeling on my part if you say, "Mr.
Morgenthau, I cannot do that sort of thing." O.K. I
mean on this kind of thing it is different. It isn't
like Wayne Taylor, who did not believe in what we were
trying to do on the war effort - that is something
else. But on a matter like this, which is not a
fundamental difference - it is just a difference of
method of approach. I want you to know this now, or
anybody else in the room, if you say, "I cannot do
it; I think it is wrong, O.K. So we understand each
other?
89
- 16 -
MR. KUHN: Yes.
H.M.JR: That goes for anybody else in the room.
On the other hand, when somebody says, "Mr. Morgenthau,
I think that we should - I do not think that you should
press so hard for buying supplies for Russia - I do not
want to give them precedence over anybody else," that
is a fundamental difference. But this is not. Now,
do you and I understand each other?
MR. KUHN: Yes.
H.M.JR: You can have your come-back.
MR. KUHN: No, I will be glad to do this.
MR. WHITE: I gather it is not a question of this
particular episode. What the Secretary is searching
for is a policy. I do not know who brought that to
your attention. It should be brought to your attention.
H.M.JR: I read it myself.
MR. WHITE: There is something wrong there, isn't
it? I mean, if somebody is to be tagged with the
responsibility of seeing any statement that relates
to Treasury matters that may or may not be wrong,
there ought to be a routine that should be followed
without any attention being required. So the thing
to do, it seems to me, is to establish the policy and
tag somebody with it and forget it.
H.M.JR: The trouble is this, I asked Ferdie to
do this because I want, when somebody writes something
that is incorrect, a courteous letter to go to him.
No newspaperman - I don't care, starting with
Colonel McCormick up or down - can object to getting
a letter from an Assistant Secretary, a man in public
relations, saying, "My dear Mr. Jones, yesterday you
wrote such-and-such a letter. I would like to bring
the correct facts to your attention to make such use
of as you wish." I don't see howanybody can object
to that. That would go for the same thing if it
Regraded Unclassified
90
- 17 -
were a Senator or a Congressman. Simply state the
correct position, not the Treasury's position, but
the factual position.
MR. GASTON: Again I say, if you don't mind, it is
not a matter of fundamental principle, it is a matter of
application to the individual cases. It is a question
of how important the error was and how widely circulated
it was, and how important it is to us to correct it. You
cannot follow all the mistakes that are made - all the
misstatements affecting the Treasury. I do not think it
would be good policy to follow all of them, but a great
many of them you can. And it gets back to the--
H.M.JR: My dear Herbert, it gets back to the ques-
tion of judgment.
MR. GASTON: Yes, the question of judgment on the
individual case, and I think all of us will agree there
are some cases of which we ought to take notice, and
probably you would want to take notice of more than
Ferdie would want to take notice of; and if you do not
mind, I will say that probably you would want to take
notice of more cases than I would want to take notice of.
There are some cases you would want to call the newspaper-
man in on and complain. Probably I wouldn't. Now, some
cases I might agree with you and some cases I might agree
with Ferdie.
H.M.JR: All right. Now, in the nine years that
we have been here, how many cases do you know of that
I have personally ever sent for a newspaperman?.
MR. GASTON: I do not know. It hasn't been very
frequent. There have been a good many cases, yes, and
I think usually it has worked out pretty well. (Discus-
sion off the record.)
H.M.JR: All right. Well, now, I will tell you what
I will do 80 we can have this thing on & basis. I am go-
ing to appoint Kuhn and Gaston a committee of two to next
week recommend somebody to go into the Office of Public
relations, to head it up, so that we won't have this
thing. I am dissatisfied. Will you do that Ferdie?
MR. KUHN: I did not hear the question.
Regraded Unclassified
91
- 18 -
H.M.JR: I want you and Gaston, next week, to
make & recommendation to me.
MR. KUHN: Yes.
(Mr. Thompson left the conference.)
H.M.JR: Where did we leave this thing in regard
to Waldrop?
MR. KUHN: I would be glad to send & letter to
Waldrop embodying that memorandum of White's, which
was very clear, pointing out the mistake. It was
rather technical for his usage, but I would be glad
to send it to him as & statement of fact with a
letter pointing out the errors.
H.M.JR: O.K.
MR. BUFFINGTON: Might I say one thing? Could
I submit to Ferdie a letter to Frank Kent in answer
to that editorial of his?
H.M.JR: No, no. Now Ferdie is working to help
me. I mean, he is here exclusively to help me. No,
definitely not. I mean, that is just what I have been
trying to get Ferdie out from under 80 he can help me.
He isn't here for that sort of thing, definitely not.
(Discussion off the record.)
MR. GASTON: There are too many people reporting
to the Secretary on those things. If we could coordi-
nate the thing under one man it would take a great
deal of pressure off the Secretary.
H.M.JR: Well, if you had a man like "Fussell, how
would you feel about it?
MR. GASTON: I would feel that he could report
directly to you and not take a great deal of your time,
and, of course, consult with other people in the Treasury.
Regraded Unclassified
92
- 19 -
MR. BLOUGH: May I be excused for some matters
on the Hill?
H.M.JR: Go ahead.
(Mr. Blough left the conference.)
H.M.JR: As I say, this has been boiling inside
of me for 8. long time.
How far did I get? Peter?
MR. ODEGARD: I have nothing.
H.M.JR: Have you got any ideas on this, Peter?
MR. ODEGARD: I have an idea I would like to -
I wouldn't like to bring it up here now.
H.M.JR: Will you let me know?
MR. ODEGARD: Yes.
H.M.JR: Ferdie?
MR. KUHN: I have one little message from Chick's
office. They wonder whether it is O.K. to release on
next Thursday the list of salaries of seventy-five
thousand or over. They have itall ready, and they just
wanted to get your clearance on it.
H.M.JR: Sure.
MR. KUHN: O.K.
H.M.JR: Is that all?
MR. KUHN: There is one thing, I do not know
whether you saw in last month's Fortune the Walt Disney
picture and the article? Did you see that?
H.M.JR: Yes.
93
- 20 -
MR. KUHN: So it shows that the picture is in
the works.
H.M.JR: Yes, I was glad to see it.
MR. KUHN: That is all.
H.M.JR: Gamble?
MR. GAMBLE: I have nothing.
H.M.JR: You fellows, Kuhn and Odegard and Gaston -
you better get together on this question of public
relations for the Treasury, because you are going to
have me upset until you do.
MR. KUHN: Herbert and I had a good talk about it
yesterday.
H.M.JR: I will be just continually upset because
this thing is beginning to get tougher and tougher.
MR. WHITE: Mr. Secretary, I feel rather badly
about that remark of mine.
(Discussion off the record.)
H.M.JR: George?
MR. BUFFINGTON: We directed a letter to the banks
asking them to designate a place in each bank for the
sale of applications to be made for the sale of tax
notes. (Letter to presidents of banking institutions
signed by the Secretary.)
H.M.JR: Who does this go out to?
MR. BUFFINGTON: We are going to send it out
through the Federals.
H.M.JR: Will we get copies of this?
Regraded Unclassified
94
- 21 -
MR. BUFFINGTON: Yes. That is all, sir.
MR. SULLIVAN: On the renegotiating provisions
put in the supplemental appropriation bill last April,
the Army and Navy and Maritime Commission took over
the rules and regulations We had for forcing the Vinson-
Trammell Act to determine what was a contract and what
was a subcontract. Last month We tried two cases before
the Board of Tax Appeals and in each case the Board of
Tax Appeals determined that a material man was not a
subcontractor. The Army is very anxious not to have to
renegotiate contracts with material men, and they talked
with us to find out whether or not we were going to
appeal that decision from the Board of Tax Appeals.
They were very anxious that we should not appeal, but
rather that we should acquiesce in the decision of the
Board of Tax Appeals.
Then the Navy and the Maritime Commission were
very anxious that we should appeal, and I got them
together yesterday afternoon - the War Department,
the Navy Department, and the Maritime Commission. As
a result of that conference Judge Patterson is going
to talk to the men on the Hill and find out whether
they can get clarifying legislation so that Congress
will know just what they are deciding, and no action
of ours will be decisive in the matter. I just thought
I should bring that to your attention in case any of
the other men mention that.
Yesterday the Commissioner and I had quite a talk
with the collector in that Camden district. He acknow-
ledged that there was a situation, but he thought he
could clear it up. He felt that if he tried it and failed
that he should resign. We all agreed with him. So
I think we have made some progress on that.
In these special cases on which we are making
the early audit, there are five hundred and twelve
cases where we are collecting an additional seven mil-
lion seven hundred thousand. There are an additional
Regraded Unclassified
10
95
- 22 -
five hundred seventy-eight cases in which there is
a recommendation of forty-four million, 80 there
will be additional taxes for around fifty million in
about eleven hundred cases;the total now in process
are eighteen hundred.
H.M.JR: Good. That is good.
MR. SULLIVAN: I don't think - I haven't bothered
you with this because I didn't think it would be
possible to get that committee together while they are
working 80 hard on the tax bill, but I have all the
reports whenever you are ready to go over it.
H.M.JR: Will you remind me again?
MR. SULLIVAN: Yes, sir, I will. There is a
meeting of three thousand women in Pittsburgh on
October 2. I think it was started by the Federated
Women's Clubs and all of the other women's organiza-
tions are in it. The woman who is president of the
Pennsylvania Federated Women's Clubs was down here
and asked me if I would come up and talk on the general
Treasury fiscal problems. I told her I didn't know
whether I could or not. There might be somebody else
you would rather have do that. I think she heard me
when I spoke to the Federated down here on sales taxes
last February.
H.M.JR: When is that going to be?
MR. SULLIVAN: October 2.
H.M.JR: Well, look, I wish you would stall on
that. I mean, I would be more than pleased to have
you do it, but what we are trying to do here is to
get out a booklet which would be really formulating &
Treasury policy.
MR. SULLIVAN: I am very much in favor of that, and
I think that anybody who talks on this now is going
out on the end of a limb, because the situation is a
96
- 23 -
little volatile. But they will want to have somebody,
because it is really quite 8. show; and I think that
if there is any chance of this being out in time - the
policy decided - I would be delighted to do it.
H.M.JR: Let's see where we get next week. I
think when we get into this question of writing this
booklet I may have to settle a lot of problems as we go
along.
MR. SULLIVAN: I will just stall it.
H.M.JR: Bring it up the middle of next week.
O.K.?
MR. SULLIVAN: Yes, sir.
MR. GASTON: Miss Newcomer talked, at my request,
to several women's organizations on this matter of the
tax situation. The League of Women Voters is going to
send out 8. leaflet written by themselves, on the tax
situation to twenty-five hundred members. At the request
of Dr. Franklin of the American Association of University
Women, Miss Newcomer has written an article on the tax
problem, "New Federal Taxes" for their series of publica-
tions, "Contemporary America, that is going to go out
in the next few days. I have the article here. It is
a very excellent job of simple writing, covering the
whole tax situation and ending with the spendings tax.
It is really a fine job.
H.M.JR: Good.
MR. GASTON: It will serve as an outline for some
of our other work. She is seeing tomorrow Miss Cummings
of the National Federation of Business and Professional
Women's Clubs in New York, and also Dr. Walker of the
Tax Institute.
H.M.JR: She is getting somewhere?
MR. GASTON: Yes, she is going after these four
organizations. She has made definite arrangements with
97
- 24 -
two of them, and she has written this article for the
University Women, which is a very good job. I don't know
whether you would like to see it or not.
H.M.JR: I would. O.K.
98
September 11, 1942
12:54 p.m.
Robert
Rouse:
Good morning.
HMJr:
Bob, good morning. How's our issue going?
R:
Coming along very well here.
HMJr:
Good.
R:
And I was talking with Young in Chicago
....
HMJr:
Yes.
R:
.... about an hour ago, and I had a pretty good
report from him.
HMJr:
Good. I have nothing - just wanted to make
sure everything was all right. I mean, have you
had to do much buying?
R:
No, very little.
HMJr:'
Good.
R:
The market's very quiet today, and there's
practically nothing going on.
HMJr:
Well, it'd been most unfortunate if the Fed.
had announced that increase yesterday, wouldn't
it?
R:
Yes, I think it would have been.
HMJr:
Yeah.
R:
What did they finally decide to do? Wait until
next week?
HMJr:
They didn't tell me, but the last I heard it was -
to do - announce it Monday.
R:
Well, that would be all right.
HMJr:
Yeah.
R:
I understand.
HMJr:
They didn't tell me, but that's what I understood.
Regraded Unclassified
- 2 -
99
R:
They'll do it Monday morning, and that would
be even better than Monday afternoon.
HMJr:
Yeah. Well, they didn't tell me but that's
what I understood.
R:
Uh - huh. Fine. Well, I was out yesterday and
the day before, and ....
HMJr:
Are you sick?
R:
Yeah, I had a bad cold develop, and everything
was settled, 80 I didn't come in.
HMJr:
Okay. Are you all right now?
R:
Yeah, I'm much better.
HMJr:
Take care of yourself.
R:
I shall.
HMJr:
Thank you.
R:
Thank you.
100
September 11, 1942
12:56 p.m.
Ronald
Ransom:
Off the record, I'd like to have your help
on a problem if I could.
HMJr:
Well, it'll have to - I've just got a guest
outside for lunch, Ronald.
R:
Well, I just want to propose a question, and
ask you to call me back.
HMJr:
Yeah.
R:
As between the 14th and the 19th for action
on reserve requirements in Chicago and New York,
there are some arguments on - in favor of both
dates. I'd like you to think about it a little.
HMJr:
Well, I can tell you right now.
R:
Yeah.
HMJr:
I - I think I'd do it the morning of the 14th.
R:
And announce it effective that date?
HMJr:
No. Just announce it.
R:
Yeah.
HMJr:
I don't - I thought ....
R:
Well, there's some advantage in making it
effective the date we announce it, but it - it
isn't very great.
HMJr:
Well, I don't care. I think you ought to
announce it the morning of the 14th, though.
R:
And, regardless of the effective date?
HMJr:
That's right.
R:
Well, that is my own preference, There are
some arguments the other way
....
HMJr:
Well, I
....
R:
but, if anything develops on it, I'll give
you .... a ring back later in the afternoon, if I may.
101
- 2 -
HMJr:
Will you please do that?
R:
Yes. You'll be in town?
HMJr:
Well, yes, up until about 4:30, and then let
Bell know.
R:
Well, the point is that there is some work
depending on this particular issue that's now
out, if it goes over as well as it looks like
it does, the 14th is the day for action.
HMJr:
Okay.
R:
All right. That would suit ....
HMJr:
You let either Bell or me know.
R:
I'll do that.
HMJr:
I thank you.
R:
All right.
102
September 11, 1942
12:58 p.m.
HMJr:
Ransom called me and said they were arguing as
to whether they should lower this two per cent -
you know
....
Daniel
Bell:
Yeah.
HMJr:
.... reserve - either the 14th or the 19th. -
would I think it over. And I said I didn't have
to think it over. I'd said - I still said the
morning of the 14th.
B:
Well, that was the announcement.
HMJr:
They - they haven't announced anything yet.
B:
No, I mean, the 14th was to be announced
....
HMJr:
Yeah.
B:
....
and effective date was to be sometime around
payment date.
HMJr:
Well, now they want to make it - both the
announcement and effective on the 14th. So, I
said I had no - I had no opinion on that.
B:
I don't think it makes a bit of difference.
HMJr:
I said - but I still stuck to the morning of the
14th, and I just got through talking to Rouse
and Rouse said, "Gee, I hope they're going to
make it the morning of the 14th".
B:
He does? Well, of course, it - it relieves
their problem in New York if they do that.
HMJr:
Well, I said I had nothing, and then Ransom
said they can't make up their mind until late
this afternoon, until they see how this issue
goes.
B:
Yeah.
HMJr:
So I said that if I wasn't here to - to talk
to you.
B:
All right.
103
- 2 -
HMJr:
But as far as I'm concerned, I'd like to see
it the morning of the 14th, and when it is
effective, I don't care. Do you?
B:
No, I don't care, here. But I can see where
it would relieve Bob's problem.
HMJr:
Yeah, well ....
B:
Because you - after this thing is closed, you
may have some turning, see?
HMJr:
Yeah.
B:
And getting - - getting ready for the payment
date, but on the other hand, if the banks have
the knowledge that it's going to be done before
payment date, why they won't do the turning.
HMJr:
No. All right.
B:
But, I think we can stand by Bob if he wants
the 14th.
HMJr:
Well ....
B:
Very easily.
HMJr:
.... I didn't quote him.
B:
No, I won't. No. All right. I'll handle it.
HMJr:
Thank you.
B:
Good-bye.
104
September 11, 1942
Senator Byrd told me at luncheon today that Ruml
only got three votes on his plan, and those were the
votes of the subcommittee which brought in the report.
All the rest voted against it.
I
105
September 11, 1942
3:32 p.m.
HMJr:
How are you?
Prof. Roy
Welch:
First rate. I have an answer for your - to
your memorandum which I was dictating when your
secretary called me. This thing was played on
WINX today at 12:30. It will be played on a
Coast-to-Coast broadcast on NBC on Saturday,
October 19th, from 10:00 to 10:30.
HMJr:
Well, look - could I have that, for I'm seeing
Mrs. Roosevelt Sunday night, and I'd like to
give it to her?
W:
I'll get it up to you in about five minutes
....
HMJr:
And you ....
W:
....
and will leave it with Lt. Comdr. Stephens.
HMJr:
And tell him I want to take it with me.
W:
Very good.
HMJr:
I thank you.
W:
Thanks very much.
Regraded Unclassified
9/11/42
106
The Secretary talked to Mrs.
Roosevelt about this.
Regraded Unclassified
107
THE WHITE HOUSE
WASHINGTON
September 8, 1942
Dear Henry:
The orchestra of the Navy Band
played Shastokovitch's Hymn to the United
Nations at the last meeting of the Inter-
national Student Assembly. This had
never been orchestrated before and they
worked practically all night to have it
ready for Saturday night.
I thought it was particularly
stirring, and I wondered if you could
make it possible for them to play it
over the air.
I know they would be
delighted to have a chance.
Affectionately,
Than Rotseach
Near Roy Welch:
Please have this
time andadoise so
Ican let Mrs R. know.
Herry
108
September 11, 1942
Dear Captain Netwons
In commention with your letter of September 100b,
addressed to the Secretary, and quoting from
Mrs. Reservalt's note about the Restaberitch - of
the United Nations, I - passing - to you the is-
formation in a to the Bearebary
from Prefessor a. D. Walch of the Was Dont Staff.
Professor Velch informe Mr. Nongenthan that the
Mastehovitah Apra me played today, September 11th,
at 18:30 p.m. one claim VISIK. All his suggestion 10
will also be used on a coast to coast breatment over
- ⑉ Saturday, September 19th. 10 will ⑈ on the sir
at 10:00 a.m. Professor Welch is also looking into the
possibility of using this mate a & Treasury Star
Parade.
Sincerely,
(Signed) H. S. Klotz
a. s. Klets,
Private Secretary.
Captain John 3. Matron, V. s. 3.,
Naval Mês to the President,
The White Home,
Washington, D. c.
GMP/1k
Delivered by Service 5:50 9/1./42
Regraded Unclassified
109
THE WHITE HOUSE
WASHINGTON
September 10, 1942.
My dear Mr. Secretary:
I have this date received a note from
Mrs. Roosevelt in which she made reference to the
Hymn of the United Nations played by the Navy or-
chestra at the evening session of the International
Students Assembly in the Departmental Auditorium
on September 5th, 1942. I quote the following
paragrach from Mrs. Roosevelt's note for your
information:
"The orchestration of the Shastokovitch
Hymn of the United Nations was very stirring
and many people spoke to me about it. I am
hoping Henry Morgenthau can give them a chance
to play it over the air - I think it would be
a fine thing to do."
The orchestration referred to above
was made by Lieutenant Charles Brendler, Leader
of the Navy Band, copy of the score of which has
been given to Mrs. Roosevelt by Lieutenant Brendler.
Very respectfully,
John hotris
JOHN L. McCREA
Captain, U. S. Navy
Naval Aide to the President
The Hon. Henry Morgenthau, Jr.,
Secretary of the Treasury,
Treasury Department,
Washington, D. C.
110
September 11, 1942
My dear Mr. Morgentham:
The Director of the Orthestra of the Navy Band reporte
that his version of the Systekevitch Ryses to the United
Nations was played today (Deptember 11th) at 12:30 over
Station WINK,
At my suggestion 11 will be used on a coast to coast
broadcast over NBO on Saturday September 19, at 10:00 A.M.
I shall look into the possibility of using this piece on
a Treasury Star Parade.
Very sincerely yours,
R. D. Welch
RDW:RLB
111
September 11, 1942
3:35 p.m.
WAR BONDS
Present: Mr. Bell
Mr. Gaston
Mr. Graves
Mr. Kuhn
Mr. Gamble
Mr. Odegard
Mrs. Klotz
H.M.JR: Go ahead.
MR. GRAVES: We find that there has been a lot of
distortion in the press - I think you perhaps noticed
it, too - of what you said yesterday about the voluntary
bond program. You noticed the headline, probably, in
the Herald Tribune. We find that the thing has been
similarly headlined in a good many places. Cagney, for
instance--
H.M.JR: Who?
MR. GRAVES: Jimmy Cagney, for instance, called
up, in his capacity as head of the Screen Actors Guild,
saying that he had seen in the Detroit papers that the
voluntary plan had been found a failure. He felt that
these motion picture people should stop their jobs and
go home.
Another example is Mr. Harrison of the New York
Life, who was in the process of organizing for us a
committee which is going to work on F and G bonds.
He phoned and said that he had seen this thing and
thought he should abandon any program that they were
starting.
There are other instances. I believe some of our
State people have called in and thought they should
abandon meetings that they had scheduled for pay-roll
allotment. We all think that you should issue & state-
ment that will clarify this position - your position,
Regraded Unclassified
112
- 2 -
and make it clear that there is no intention to abandon
the voluntary plan, and that you have never said that
there was any.
H.M.JR: Did you look at what I said?
MR. GRAVES: I did.
H.M.JR: I sensed what this was and I just--
(Reading from Press Conference of September 10, 1942.)
"Mr. Secretary, in the spendings tax you came
around to what is, in effect, a type of forced savings.
Is that an admission of voluntary sales not doing the
job which some had hoped previously?
"A. I have not the language here, but if you
don't mind I will ad lib and then I would like to have
them look up the language in my statement, because,
after all, every word is - I think we said 'added to'
or 'supplement to' the voluntary."
Then I will go on to where they brought in the
statement. "The new proposals are intended, therefore,
to supplement the bond purchasing program.
"Q. In connection with forced savings of some
type or shape, do you think that if we don't get it
in this tax bill, in future tax bills we are in for
it?
"A. I feel just the way I said here, that we
have to supplement the voluntary bond purchase pro-
gram." There is nothing in there.
MR. GRAVES: Absolutely, and even the Herald
Tribune story, itself, didn't bear out the headline
they used on the story.
MR. KUHN: It did at the end, Harold, it said
the Secretary's remarks were an admission, or some-
thing of that kind - that the bond program had been a
failure. It was down toward the end of the story.
113
- 3 -
H.M.JR: It was on the ticker and I called up
Schwarz twice yesterday to correct the thing - twice,
and he said he had been down in the press room. I
said, "Go down to the press room again and make sure
that story--" I don't know whether you know I did
that.
MR. GRAVES: Yes, I did know you did it. I
think that is one of the places where it--
H.M.JR: All right. He said, "I have done every-
thing." I said, "Go down and do it all over again."
What is the statement that - you all look 80 sad--
(Statement handed to the Secretary, copy attached.)
MR. BELL: Colonel Pope called on me this morning
and said that his brother, who is working on your
committee, and Nevil Ford came over to see him and they
were quite worried about it. They thought they might
as well close up if that is the way the Treasury felt
about it.
H.M.JR: How many have seen this statement?
MR. GRAVES: I think all of us have seen it.
(Statement read by the Secretary.)
H.M.JR: What is the matter with this?
MR. GRAVES: We think it is all right.
H.M.JR: One, two, three, four, five, six of you!
MR. ODEGARD: We think it is all right.
H.M.JR: Why does it take six people? (Laughter)
MR. GASTON: May I be excused? (Laughter)
H.M.JR: Where do you want to go?
114
- 4 -
MR. GASTON: Wouldn't that leave five?
H.M.JR: Six people!
MR. GASTON: We were all prepared to make a case
on this if we had to.
MR. BELL: We just brought a force to convince
you.
H.M.JR: I know, but the thing that bothered me
was your bringing in Bell. (Laughter)
MR. BELL: Well, I guess the reason I am in - I
called Harold and asked him if there was anything to
this story, and he said, "Yes." And apparently you
had made some remark which had been misinterpreted
and misquoted, and he said, "You had better come in
with us at three-thirty." That is the reason I am
here, by invitation.
MR. GRAVES: I had no idea I could settle this.
H.M.JR: Am I as tough as all that? Six of them -
did you really look for & fight? You are honest, Ted.
MR. GAMBLE: No, we did not look for a fight,
Mr. Secretary. We thought this was & very good and
direct statement, and would undo all the harm that has
been done.
MR. GASTON: I am not 80 sanguine as Ted. I think
it is awfully hard to catch up with & printed story. I
think we may have to go to short radio announcements, that
is in addition; we have a lot of people scared and
upset.
MR. GRAVES: I think we ought to.
MR. BELL: The only question I raised was about
the last sentence in the statement.
MR. GRAVES: Wasn't that fixed?
Regraded Unclassified
115
- 5 -
MR. BELL: It helped it some, but it didn't cure it.
H.M.JR: "We shall, however, continue to rely upon
voluntary lending for a large part of our financing.
The mounting requirements of the war demand that our
sale of War Bonds be continued and intensified. As I
told the Senate Finance Committee last week, it is my
belief that the voluntary War Bond program has produced
and will continue to produce a great contribution to the
nation's war effort. Regardless of the other measures
that are needed, the voluntary savings program will be
essential and irreplaceable for the duration of the war."
That is a stretch of the imagination. When a
bank subscribes, that is volunteer, still, isn't it?
MR. GASTON: Yes, that is not forced lending.
MR. KUHN: You can add the words, "voluntary lend-
ing by the public."
MR. BELL: Why don't you put "savings" in that -
"war savings bond program"? Say, "the voluntary War
Savings Bond program has produced and will continue
to produce a great contribution to the nation's war
effort."
H.M.JR: Where is that?
MR. BELL: The next to the last sentence. It
would help what you were questioning in the previous
sentence.
H.M.JR: Oh, no, that is all right. I mean, if
you wanted to be strictly critical, but this is all
right. Would you say, "As I told" or "As I informed"?
MR. ODEGARD: "As I said to--"
H.M.JR: I never liked "told".
MR. KUHN: "As I said to the Senate Finance
Committee," that is better.
116
- 6 -
H.M.JR: There is just one suggestion, if you are
going to put this as & sort of a proclamation, I would
like to ask the hundreds of thousands of devoted volun-
teers to continue on their effort.
MR. BELL: You have said that in your telegram.
H.M.JR: Yes, but I mean--
MR. ODEGARD: The telegram is to the motion picture
people.
H.M.JR: Why not add the sentence, "To the hundreds
of thousands of volunteers who have been helping us" -
I would like to ask them to continue their effort.
MR. KUHN: That their efforts are more urgently
needed as the expenditures of the war increase?
H.M.JR: I think I would make it - - no I won't -
I would simply say "the hundreds of thousands of
volunteers who have beenhelping us day and night
for the past year, I ask them to continue their splen-
did effort" or something like that.
MR. GASTON: "Your work was never more valuable
or necessary than it is now."
MR. KUHN: That is the thought; that has it.
H.M.JR: Something like that might be put in.
MR. BELL: Do you want to say that the savings
program is "essential and irreplaceable for the dura-
tion of the war"?
H.M.JR: Where do I say that?
MR. BELL: That is the last sentence.
H.M.JR: I think "irreplaceable" is too strong.
MR. ODEGARD: We do not need it.
117
- 7 -
H.M.JR: We do not need it; I would take it out.
MR. GRAVES: "--would be essential for the dura-
tion."
H.M.JR: "Regardless of the other measures that
are needed, the voluntary savings program will be
essential. I think Bell is right.
MR. ODEGARD: Take out "irreplaceable."
H.M.JR: I think what you ought to do is this. I
know we do not have a county chairman in every county,
but I think this statement should go - we tried to do
it once from here?
MR. GRAVES: What we ought to do is send it to
our administrators. They always send it to their
county people.
H.M.JR: But can't you say, specifically--
MR. GRAVES: Yes, we can tell them to see that it
gets in the hands of our county chairmen promptly.
MR. GASTON: Ask them to see that the local papers
handle the Secretary's statement from Washington. They
can take the copy to the local papers and see that they
handle it as a Washington dispatch.
H.M.JR: Have we any Treasury radio program that
we could bust in and put this on?
MR. GRAVES: I think S0.
MR. ODEGARD: Yes.
H.M.JR: Haven't we got some radio programs?
MR. GAMBLE: Yes, we have one almost every day.
H.M.JR: Can't you bust in on some of them?
118
- 8 -
MR. GAMBLE: Not only that, we can get special
news commentators to handle it.
H.M. JR: I have another suggestion. We could
put this on one page, with the facsimile signature,
and that could go out tomorrow night to every State
administrator - enough to be distributed to all the
volunteer workers, if you wanted to.
MR. GRAVES: Would you rather do that, or would
you rather telegraph them today?
H.M.JR: I would do that. I would telegraph and
tell them to distribute it, but then follow this up
with a letter from the Office of the Secretary of the
Treasury, this thing, with a facsimile of my signature.
MR. GRAVES: All right. We will do it.
H.M.JR: I mean "Office of the Secretary of the
Treasury" on this thing. Get them working on it to-
night and be ready to mail it tomorrow morning to the
forty-eight States, and an accompanying letter saying
one of these should be put in the hands of everybody.
MR. ODEGARD: That is very important.
H.M.JR: How would that be?
MR. KUHN: Good.
H.M.JR: Now, I am sorry, but I called up Schwarz
as soon as I saw it. I said, "Schwarz, this is terrible;
fix it." Then somebody spoke to me about it again, and
I called the second time, "Have you been down to the
press room?" He said, "Yes." I said, "Go down the
second time and do it all over again." So the second
I saw it I was disturbed.
MR. GASTON: It is awfully hard to catch it once
it is out.
H.M.JR: The trouble is, gentlemen, the advocates -
let's call a spade a spade - the advocates of the sales
Regraded Unclassified
119
- 9 -
tax have been sitting back watching for this to happen
before, and I have been 80 careful not to say anything.
Now I said this thing, and they take it and twist it.
I was saying to Ferdie this morning, "I am not one of
the gang. By "gang" I mean I do not belong to any
of these big insurance companies or any big bank, and
so forth and 80 on. They know I don't now and never
will. Just as long as I am here they will always be
doing something like this to make life difficult for
me. And this is almost the only department left in
Washington that hasn't been taken over by the Willkie
cohorts. They have pretty well taken all the other
departments over.
MR. ODEGARD: People throughout the country have
been terribly worried about this, and this statement -
I know just exactly how it affected them.
H.M.JR: You will not get much in the papers, but
I think if you could bust in on every radio program -
who does that come under, mostly?
MR. GAMBLE: Callahan.
H.M.JR: Who is he under?
MR. ODEGARD: Me, and I am seeing Callahan at
four o'clock.
H.M.JR: And tell him to get this on every pro-
gram today and tomorrow that we have any influence
with. I will tell you what else you can do, young
fellow, as long as you are coming here - as long as
I am one of you, and you are not going to sit there
and. fight me - (Laughter) I would ask the sixteen thou-
sand theaters to make a slide of this and show this in
every theater - the statement of the Secretary of the
Treasury.
MR. GAMBLE: We can do that.
MR. BELL: We will have to condense it a little;
it is rather long for that.
Regraded Unclassified
120
- 10 -
MR. GAMBLE: No, the statement is not too long.
H.M.JR: I would ask the sixteen thousand theaters
to just make a slide, the good old-fashioned kind of
slide - the old-fashioned corner drugstore kind. You
never had that in your theater.
MR. GAMBLE: Yes, sir. I was brought up on
stereopticons. Only some three or four thousand
theaters today are equipped to do that, but all six-
teen thousand could use a trailer. It would be better
to make a running roll trailer of it.
H.M.JR: It takes too long.
MR. GAMBLE: Oh, no, we could have it on the
screen tomorrow.
H.M.JR: I mean, as long as - if you are going
to catch up ith it, I would put it in the moving
pictures, put it on the radio, and I would have some
come-backs. I would have some people answering me,
like James Cagney saying, "Glad to learn you were mis-
quoted. We will carry on; we will carry the ball over
the line, signed by Cagney - and then put that on the
air, and 50 forth and 80 on. Get some other people
like that to make an answer to my letter. "In reply
to your letter, Mr. Morgenthau, of course we are going
to continue. So glad to know that you were misquoted.
We were sure that you were going to say that.' Get a
flood of answers coming in to me to put back on the
air.
MR. GAMBLE: Mr. Harrison suggested that if we
were successful they were getting up a statement they
would like to issue tomorrow to the effect that t heir
committee was going right ahead with that job.
H.M.JR: That is all right, but I wouldn't say
anything about the--
MR. GASTON: That is our old friend George, isn't
it?
MR. GRAVES: Yes.
121
- 11 -
H.M.JR: Well, anyway, that is all right, but I
think if you get this thing - Cagney and the other
people to do the thing - and I would get this in
the hands of every one of these movie stars, 80 they
can read it to their audiences. Do you want any more
publicity suggestions? (Laughter)
MR. GAMBLE: I think you have given us a twenty-
four-hour job.
H.M.JR: If you do everything I have said between
now and Saturday night you can go pretty far toward
counteracting it.
MR. GAMBLE: We will.
H.M.JR: I am serious. I appreciate your all
coming in, because when I saw you this morning you
did not say anything to me about a bad reaction. I
mean, when you fellows left here at ten-fifteen there
was nothing at that time.
MR. BELL: I meant to raise the question as to
whether or not your statement was correct, and forgot
it. I did not raise it.
H.M.JR: Do you think that most of these things
can be done?
MR. GRAVES: Yes.
MR. ODEGARD: The radio can be done.
MR. GAMBLE: They can all be done.
122
SUGGESTED STATEMENT BY SECRETARY MORGENTHAU
The impression seems to have spread that I regard the
voluntary War Bond program as & failure. This is not only
a distortion of anything I have said on the subject but
it is also an injustice to the hundreds of thousands of
devoted volunteers in all parts of the country who are
working night and day to enlist the nation's savings for
the war. In view of our swiftly rising war expenditures
I have said that the voluntary War Bond program cannot
alone close the gap between the amount of money available
for consumer spending and the supply of goods available
for civilian use. I have said that it must therefore be
supplemented by a more drastic and comprehensive tax program,
including a tax on spendings, a part of which would be
treated as a debt to the taxpayer and repaid after the war.
We shall, however, continue to rely upon voluntary lending
for a large part of our financing. The mounting requirements
of the war demand that our sale of War Bonds be continued and
intensified. As I told the Senate Finance Committee last
week, it is my belief that the voluntary War Bond program
has produced and will continue to produce a great contribu-
Regraded Unclassified
123
- 2 -
tion to the nation's var effort. Regardless of the other
neasures that are needed, the voluntary savings program
will be essential and irreplaceable for the duration of
the war.
Regraded Unclassified
124
September 11, 1942
3:56 p.m.
HMJr:
Harold.
Harold
Graves:
Yes, sir.
HMJr:
This statement which 1s being given out
....
G:
Yes.
HMJr:
.... I wish that - that everybody in the War
Savings Staff before they go home, should be
given a copy of it.
G:
All right. I'll see that they do.
HMJr:
Before they go home.
G:
Yes, sir. I'll see that that's done.
HMJr:
Will you do that?
G:
Yes, sir.
HMJr:
Fine. Thank you.
G:
You're welcome.
125
THE UNDER SECRETARY OF THE TREASURY
WASHINGTON
MEMORANDUM FOR THE SECRETARY'S FILES:
The Secretary asked me on Friday, September
eleventh, to attend a conference which he had given
Colonel Pope of the First Boston Corporation for
eleven o'clock.
Colonel Pope said that he came down with a
suggestion for the Secretary in connection with
his consideration of financing matters but he had
approached the subject DM some trepidation. He knew
that it was a little out of his bailiwick, but
nevertheless he had given this matter a great deal
of consideration and he was really trying to be
helpful to the Treasury.
He said he realized that the Secretary saw a
great many people before each financing and he did
not want to discourage this. He knew that when these
people came down to see the Secretary, they usually
consulted one another as to what they were going to
recommend and also many of them had axes to grind.
He would like to suggest that the Secretary pick out
three individuals who are familiar with the Treasury's
problem to be his confidential advisers, it to be
definitely understood that the three people 80 picked
would not advise their companies as to what they had
told the Secretary. If they did, the Secretary could
readily tell them that their services could no longer
be used by the Treasury.
He said he had been thinking about the type of
person that the Secretary would need in this particular
job, and he had tried to pick individuals merely as
a suggestion who would understand the whole problem.
The following were his suggestions:
1. Henry J. Schuler, Executive Vice President,
VICTORY Bank of New York and Trust Company, who, he said,
BUY
STATES
WAR
BONDS
126
- 2 -
thoroughly understands the banking viewpoint and
also the bond market and the type of securities the
Treasury should sell the banks. He said he was a
man of high qualifications and could be trusted to
do a good job.
2. Dwight Beebe, Vice President, Mutual Life
Insurance Company. I understood him to say that this
man is in charge of the investment policies of this
company. He said he would know what to recommend from
the standpoint of the insurance companies and also
knew a great deal about corporate investments.
3. Aubrey Lanston, of his own Corporation.
He said he realized that he might be accused of
trying to get in on the know, by recommending Lanston,
but he said that was not the case and he would not
expect Lanston to tell him what he recommended to
the Secretary or keep him advised of his conferences
with the Secretary. He said he recommended Lanston
because, after looking over the entire field, there
was no man better qualified, who knows the Treasury's
requirements because he worked down here a year, and
knows the market better; and there is no one more
honest in making his recommendations to the Treasury
even though they are against the best interests of his
own firm.
The Secretary told him that he had his viewpoint
and thanked him very much for coming down. He asked
him if he would be good enough to go into it in a
little more detail in my office.
I conferred with Colonel Pope at some length
and he had very little to add to what he had already
said in the Secretary's office. He did say that he
felt that the Secretary and I were too busy to be
constantly studying these problems and he thought it
would be a good thing to get outside viewpoints from
the angle he had mentioned. He said he would not
suggest that these people be brought to Washington
because they would then get out of touch with the
market, the banks, and the insurance companies. He
127
- 3 -
said he hoped they would continue right on with
their present duties so that they would be in a
position to know exactly what the banks, insurance
companies, and the market all want in connection
with Government financing.
He said that he would not want to suggest a
way of handling it. He thought that possibly the
Secretary or I could see them once in a while, but
possibly most of the contacts could come through
Bob Rouse of the Federal Reserve Bank of New York.
DWB
128
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATESeptember 11, 1942
TO
Secretary Morgenthau
FROM
Mr. Murphy Hey
Subject: Recent Changes in Prices and Yields of Government
Securities
The offering yesterday of $1.5 billions each of 0.65
percent certificates due May 1, 1943 and of 1-1/4 percent
notes due March 15, 1945 had no appreciable effect on the
market for outstanding Government securities. During the
day, the certificate maturing in 1942 declined slightly,
but the 1943 maturities were firm. Taxable notes were
either unchanged or 1/32 lower.
During the week ended last night, declines in the
prices of outstanding Government securities were general,
but in no case substantial. Taxable bonds gave the best
performance, the prices of the majority of these issues
remaining unchanged or showing some improvement. The tax-
able 2's of December 1949-51 (offered in July) were up 2/32
during the week, closing last night at 100-8/32. The tax-
able 2-1/2's of 1967-72 closed at 101-5/32, a decline of
1/32 from the quotation of last week. The 1-1/2 percent
notes due December 1946 closed yesterday at 100-3/32 as
compared with 100-4/32 a week ago.
Prices of all taxable bonds and notes outstanding on
March 19, except for the 2-1/2's of 1967-72, are below their
levels of that date. Prices of short- and medium-term tax-
exempt securities have also declined, while longer-term
partially tax-exempt bonds are generally in a slightly
improved position relative to the March 19 benchmark. (See
attached chart and table.)
The average rate on the weekly offering of bills was
0.368 percent, up slightly from the previous week. Some
improvement occurred in the price of the certificates due
February 1943, but prices of the other maturities declined.
Purchases by the Federal Open Market Account during the
week amounted to $159 millions, the heaviest since the com-
parable period ending August 6. They consisted of $69 millions
of bills, $64 millions of certificates, $17 millions of
partially tax-exempt bonds, $1 million of taxable bonds, and
$8 millions of guaranteed issues. Sales, which consisted
solely of bills, amounted to $16 millions and bill maturities
totaled $30 millions, with the result that the net increase
in the Account's portfolio was $113 millions.
Regraded Unclassified
129
Table I
Price and Yield Changes of United States Securities
September 3, 1942 to September 10, 1942
(Based on mean of closing bid and asked quotations)
Prices
:
Yields
Security
Sept. 3, 1942
Sept. 10, 1942
Change
Sept. 3, 1942
Sept. 10, 1942
Change
(Decimals are thirty-seconds)
(Percent)
TAXABLE SECURITIES
1110
Average rate last issue
-
-
-
.37
+37
.00
rtificates
1/2%
11/1/42
100.023
100,020
-,003
.35
5/8
2/1/43
100,050
.36
100.055
+,01
+.005
.50
7/8
100,105
.48
8/1/43
100.095
-.02
-,010
.76
.77
+,01
amble Notes
3/4%
3/15/43
100.03
100.03
.00
.57
3/4
9/15/44
99.17
.57
99.16
.00
-.01
.98
1.00
3/4
12/15/45
98.31
+.02
98.29
-.02
1.07
3/15/46
99.04
1,09
+.02
1
99.03
-.01
1.25
1,26
1-1/2 12/15/46
100.04
+.01
100.03
-.01
1,47
1.48
+,01
arable Bonds
25
3/15/48-50
101.05
101.06
+,01
1.78
1.77
6/15/49-51
-.01
100.11
100.11
.00
1.95
1.95
.00
2
9/15/49-51
100.08
100.09
+.01
1.96
1,96
.00
P.
12/15/49-51
100.06
100.08
+.02
1.97
1.96
-,01
2
12/15/51-55
100.02
100.02
.00
1.99
1.99
.00
2-1/2
3/15/52-54
103.22
103.21
-.01
2.07
2.07
.00
2-1/4
6/15/52-55
101.04
101.03
-.01
2.12
2.13
+.01
2-1/2 3/15/56-58
103.03
103.04
+.01
2.23
2.23
.00
2-1/2 6/15/62-67
100.13
100,14
+,01
2.47
2.47
.00
2-1/2 9/15/67-72
101.06
101.05
-.01
2.44
2.44
.00
TAX-EXEMPT SECURITIES
holly Tax-exempt Notes
2%
9/15/42
100.02
100.01
-.01
0/32*
0/32*
0/32*
1-3/4
12/15/42
100.13
100,12
-.01
.29
.30
+,01
1-1/8
6/15/43
100.19
100.18
-.01
.36
.38
+.02
1
9/15/43
100.21
100.20
-.01
.36
.35
+.02
1-1/8 12/15/43
100.29
100.28
-.01
.41
.43
+,02
1
3/15/44
100.25
100.24
-.01
.49
.50
+.01
3/4
6/15/44
100.13
100.13
.00
.52
.52
,00
1
9/15/44
101.00
100.31
-.01
.50
.52
+,02
3/4
3/15/45
100.15
100.13
-.02
.56
.59
+.03
artially Tax-exempt Bonds
3-3/8%
6/15/43-47
102.07
102.05
-.02
.52
.53
+.01
3-1/4 10/15/43-45
102.27
102.26
-,01
.68
.66
-.02
71/4 4/15/44-46
103.28
103.27
-,01
.82
.82
.00
12/15/44-54
106.29
106.28
-.01
.93
.92
-.02
2-3/4
9/15/45-47
105.08
105.08
,00
.99
.98
-,01
2-1/2
12/15/45
104.31
104.30
-,01
.96
.96
.00
3-3/4 3/15/46-56
109.00
109.00
.00
1,14
1.13
-.01
3
6/15/46-48
106.30
107.00
+.02
1.12
1.09
-.03
3-1/8
6/15/46-49
107.13
107.14
+.01
1.12
1.10
-.02
4-1/4
10/15/47-52
114.28
114.26
-,02
1,24
1,24
.00
2
12/15/47
104.09
104.06
-.03
1,16
1.18
+.02
2-3/4
3/15/48-51
107.11
107.11
.00
1.37
1.36
-,01
2-1/2
9/15/48
106,27
106.26
-.01
1,32
1,32
.00
2
12/15/48-50
104.06
104.05
-.01
1.30
1,31
+,01
3-1/8 12/15/49-52
110.19
110.19
.00
1.58
1.58
.00
-1/2 12/15/49-53
106.09
106.09
.00
1,58
1,58
.00
2-1/2
9/15/50-52
106.20
106,20
.00
1.62
1.62
.00
2-3/4
6/15/51-54
108.11
108.11
.00
1.72
1.72
.00
2-1/4 12/15/51-53 9/15/51-55
3
110.16
110.14
-.02
1,74
1.74
.00
105.00
104.30
-,02
1.67
1.67
.00
2
6/15/53-55
103.14
103.13
-,01
1.65
1.65
.00
2-1/4
6/15/54-56
105,12
105.09
-.03
1.74
1.75
+,01
2-7/8
3/15/55-60
2-3/4
110.01
109.31
-,02
1.97
1.97
.00
9/15/56-59
109.08
109.00
-,02
1.99
2.00
+,01
2-3/4 12/15/60-65 6/15/58-63
2-3/4
109.14
109.13
-,01
2,05
2.05
.00
110.02
110.00
-,02
2.09
2,09
.00
reasury Department, Division of Research and Statistics.
September 10, 1942.
Decimals in prices of certificates are true decimals.
Excess of price over zero yield.
Regraded Unclassified
Table II
130
Price and Yield Changes of United States Securities
March 19, 1942 to September 10, 1942
(Based on moan of closing bid and asked quotations)
:
Prices
:
Yields
Security
:
March 19, 1942
Sept. 10, 1942
Change
March 19, 1942
Sept. 10, 1942
!
(Decimals are thirty-seconds) 21
(Peroent)
TAXABLE SECURITIES
-
nile Average rate last issue
-
-
-
.20
-37
+.17
ertificates
11/1/42
-
100.020
-
1/2
-
36
-
5/8
2/1/43
-
100.055
-
-
.46
-
7/8
8/1/43
-
100.095
-
-
=77
terable Notes
100.12
100.03
VAN
3/15/43
-.09
.37
+57
+.20
1/4
9/15/44
99.31
99.16
-,15
.76
1.00
4.24
1/4
12/15/45
99.21
96.29
-.24
.84
1.09
4.85
3/15/46
99.29
99.03
-.26
1,02
1,26
4.24
1-1/2 12/15/46
-
100.03
-
-
1.48
farable Bonds
X
3/15/48-50
101.28
101.06
-.22
1,67
1.77
+,10
2
6/15/49-51
101.04
100.11
-,25
1.83
1.95
4.12
2
9/15/49-51
-
100.09
-
-
1.96
I
2
12/15/49-51
-
100.08
1.96
12/15/51-55
100.12
100.02
-.10
1.96
1.99
4.03
2-1/2 3/15/52-54
103.23
103.21
-,02
2.09
2.07
30° -
2-1/4 6/15/52-55
101.06
101.03
-.03
2.12
2,13
#,01
2-1/2
3/15/56-58
103.05
103.04
-.01
2.24
2.23
-,01
2-1/2
6/15/62-67
-
100.14
-
2.47
2-1/2
9/15/67-72
100.27
101.05
+.10
2.46
2,44
-.02
TAX-EXEMPT SECURITIES
holly Tax-exempt Notes
25
9/15/42
101.04
100.01
-1.03
0/32*
-5/32°
1-3/4 12/15/42
101.11
100.12
-.31
2/32*
.30
-5/32*
1-1/8
6/15/43
101.04
100.18
-.18
.22
.38
4.16
1
9/15/43
101.03
100.20
-.15
.26
.38
4.12
1-1/8 12/15/43
101.16
100.28
-.20
.26
.43
4.27
1
3/15/44
101.10
100.24
-,18
.34
.50
4.16
3/4
6/15/44
100.27
100.13
-.14
-37
+52
9.15
1
9/15/44
101.16
100.31
-.17
.39
-52
X
3/4
3/15/45
101.00
100.13
-.19
.41
.59
Partially Tax-exempt Bonds
3-3/8%
6/15/43-47
103.21
102.05
-1.16
.41
+53
+.18
3-1/4 10/15/43-45
104.06
102.26
-1.12
-57
99°
4.09
E 3-1/4 4/15/44-46
105.06
103.27
-1.11
-72
.82
4.10
12/15/44-54
(2-3/4
108.11
106.28
-1.15
.91
.92
4.01
9/15/45-47
106.06
105.08
-.30
.94
.98
4.04
2-1/2
12/15/45
105.28
104.30
-.30
.90
.96
4.06
3-3/4 3/15/46-56
110.08
109.00
-1.08
1.11
1.13
4.02
6/15/46-48
107.28
107.00
-.28
1.09
1.09
.00
3-1/8
6/15/46-49
108.08
107.14
-.26
1,13
1,10
-.03
4-1/4
10/15/47-52
115.20
114.26
-.26
1.33
1,24
-,09
2
12/15/47
104.23
104.06
-.17
1.15
1.18
+.03
2-3/4 3/15/48-51
107.28
107.11
-.17
1.38
1.36
=,02
2 2-1/2 9/15/48
106.26
-.13
1.33
1.32
-.01
107.07
12/15/48-50
104,21
104.05
-,16
1.28
1,11
+.03
3-1/8
2-1/2 2-1/2 12/15/49-53 12/15/49-52
110.22
110.19
-.03
1.65
1.58
⑉607
106.16
106.09
-,07
1.60
1.56
-.02
9/15/50-52
106.20
106.20
.00
1.66
1.62
-.04
2-3/4 6/15/51-54
108.18
108.11
-.07
1.74
1.78
-.02
3
9/15/51-55
110.20
110.14
-.06
1.78
1.74
-.04
2-1/4
12/15/51-53
104.30
+.01
1.70
1.67
-+03
2
104.29
6/15/53-55
1.65
103.10
103.13
4.03
1.68
-.03
2-1/4
6/15/54-56
2-7/8
105.09
+.13
1.50
1.75
-.05
104.28
2-3/4 9/15/56-59 3/15/55-60
110.00
109.31
-,01
2.00
1,97
-.03
109.06
-,04
2.01
1.00
+.01
2-3/4 6/15/58-63
109.10
109.12
109.13
+,01
2.07
2.05
-.00
2-3/4 12/15/60-65
110,00
110.00
.00
2.10
2.09
-.01
Treasury Department, Division of
September 10, 1948.
dististion.
Decimals in prices of certificates
Sectemls.
Excess of price over sero yield.
Regraded Unclassified
131
Analysis of Exposure to Payroll Savings Plans
September 5, 1942
Total number
Number exposed
in the
Percent
to payroll
savings plans
country
of total
(estimated)
exposed
Part A - Summary by Number of Organisations Exposed
I. Business organizations
(1) Firms with 5,000 employees or more
484
487
99
(2) Firms with 500 to 4,999 employees
5,308
6,100
87
(3) Firms with 100 to 499 employees
22,583
27,262
83
(4) Subtotal - large firms
28,375
33,849
84
(5) Firms with less than 100 employees
110,366
#
.
(6) Total business organizations
138,741
4
a
II. Governmental organizations
#
III. Grand total
138,741
Part B - Summary by Number of Employees Exposed
I. Business organizations
(1) Firms with 5,000 employees or more
7,854,262
(2) Firms with 500 to 4,999 employees
7,051,683
*
(3) Firms with 100 to 499 employees
5,200,795
(4) Subtotal - large firms
20,106,740
(5) Firms with less than 100 employees
2,770,187
(6) Total business organizations
22,876,927
30,000,000
76
II. Governmental organizations
(1) Federal Government
1,551,186
2,200,000
71
(2) State and local governments
1,217,189
2,700,000
45
(3) Total governmental organizations
2,768,375
4,900,000
56
III. Grand total
25,645,302
34,900,000 1/
73
Office of the Secretary of the Treasury,
September 11, 1942.
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
131
Analysis of Exposure to Payroll Savings Plans
September 5, 1942
Total number
Number exposed
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
484
487
99
(2) Firms with 500 to 4,999 employees
5,308
6,100
87
(3) Firms with 100 to 499 employees
22,583
27,262
83
(4) Subtotal - large firms
28,375
33,849
84
(5) Firms with less than 100 employees
110,366
*
(6) Total business organizations
138,741
#
II. Governmental organizations
*
4
III. Grand total
138,741
Part B - Summary by Number of Employees Exposed
I. Business organizations
(1) Firms with 5,000 employees or more
7,854,262
(2) Firms with 500 to 4,999 employees
7,051,683
.
(3) Firms with 100 to 499 employees
5,200,795
(4) Subtotal - large firms
20,106,740
.
#
(5) Firms with less than 100 employees
2,770,187
#
(6) Total business organizations
22,876,927
30,000,000
76
II. Governmental organizations
(1) Federal Government
1,551,186
2,200,000
71
(2) State and local governments
1,217,189
2,700,000
45
(3) Total governmental organizations
2,768,375
4,900,000
56
III. Grand total
25,645,302
34,900,000
73
Office of the Secretary of the Treasury,
September 11, 1942.
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
132
Piras Employing 100 to 499 Persons Participating in Payroll Savings Plane
(As reported by the War Savings Staff's State Administrators)
:
Number of firms with payroll
:
Total
1
Percent of total having payroll
:
savings plans
:
number
1
savings plans
State
:
1
:
:
of firms
:
I
-
:
Apr. 18
:
Aug. 29
:
Sept. 5
(estimated)
Apr. 18
Aug. 29
I
Sept. 5
Alabama
149
250
250*
285
52
88
88
Arizona
43
67
67
67
64
100
100
Arkansas
all
55
55*
142
31
39
39
Northern California
512
657
658
658
78
99
100
Southern California
756
993
1,001
1,178
64
&
85
Colorado
113
134
135
135
84
99
100
Connecticut
277
436
452
622
45
20
73
Delaware
21
55
55
87
24
63
63
District of Columbia
52
128
134
152
34
&
88
Florida
147
196
198
198
74
99
100
Georgia
133
388
389
417
32
93
93
Idaho
31
31
32
34
91
91
94
Illinois
1,300
1,829
1,847
2,253
58
81
82
Indiana
415
624
625
625
66
99
100
Iowa
165
204
204»
272
61
75
75
Kansas
276
285
286
286
97
99
100
Kentucky
136
187
187
313
43
60
60
Louisiana
179
272
273
385
46
71
71
Maine
60
152
159
198
30
77
80
Maryland
177
271
275
405
44
67
68
Massachusetts
639
928
942
1,532
42
61
61
Michigan
689
908
914
1,030
67
88
89
Minnesota
376
435
436
436
86
99
100
Mississippi
59
74
78
110
54
67
71
Missouri
472
661
661*
664
71
99
99
Montana
40
49
49
49
82
100
100
Nobraska
103
113
113
123
Bla
92
92
Novada
14
18
18
21
69
86
86
New Hampshire
89
135
136
145
61
93
94
New Jersey
463
894
911
911
51
98
100
New Mexico
33
39
39
42
79
93
93
2,060
3,444
3,478
4,257
48
81
82
New York
North Carolina
282
436
441
499
57
87
88
North Dakota
14
19
19
19
74
100
100
Ohio
1,126
1,475
1,484
1,740
65
85
85
166
289
289»
349
48
83
B3
Oklahoma
211
281
283
283
75
99
100
Oregon
Pennsylvania
1,682
2,096
2,111
2,111
85
99
100
Rhode Island
154
251
253
335
16
76
B4
64
149
150
178
40
South Carolina
71
South Dakota
21
25
25
25
84
100
100
199
330
334
his
44
75
74
Tennessee
589
1,378
24
42
43
Texas
326
576
36
44
44
44
82
100
100
Utah
59
61
61#
63
94
97
97
Vermont
Virginia
281
384
387
387
73
99
100
348
67
100
100
Washington
234
348
348⑉
West Virginia
134
192
199
272
49
72
73
278
436
437
680
hi
64
64
Wisconsin
Wyoming
17
21
21
21
81
100
100
2
2
2+
2
100
100
100
Alaska
49
49
49
52
94
94
94
Railroads
Total
15,365
22,376
22,583
27,262
56
82
85
Office of the Secretary of the freasury, Division of and Statistics.
September 11, 1942.
4 Data are for August 29, insumuch as no September 5 report was received.
Regraded Unclassified
133
Firms Employing 500 Persons or More Participating in Payroll Savings Plans
(As reported by the War 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
:
:
Aug. 29
Sept. 5
Apr. 18
:
:
(estimated)
:
Ang. 29
Sept. 5
Alabama
41
65
65»
83
49
78
78
Arizona
9
14
14
14
64
100
100
Arkansas
16
17
17+
22
75
77
77
Northern California
122
134
136
175
70
77
78
Southern California
121
143
144
146
83
98
99
Colorado
25
31
31
31
81
100
100
Connecticut
114
138
142
158
72
87
90
Delaware
15
18
18
22
68
82
82
District of Columbia
32
42
42
42
76
100
100
Florida
28
36
39
43
65
84
91
Georgia
86
123
123
123
70
100
100
Idaho
11
11
11
11
100
100
100
Illinois
391
459
463
559
70
82
83
Indiana
88
132
132
165
53
80
Bo
Iowa
22
29
29e
39
56
74
74
Kansas
23
24
2h
24
96
100
100
Kentucky
38
48
48
71
54
68
68
Louisiana
29
44
45
76
38
58
59
Maine
48
57
57
60
Bo
95
95
Maryland
84
99
101
106
80
94
96
Massachusetts
237
301
305
338
70
89
90
Michigan
265
281
281
303
87
93
93
Minnesota
79
81
81
82
96
99
99
Mississippi
26
32
33
33
79
99
100
Missouri
103
128
128»
142
73
90
90
Montana
3
4
4
4
75
100
100
Nebraske
23
25
25
32
72
78
78
Nevada
4
4
4
5
80
80
80
New Hampshire
29
32
32
32
91
100
100
New Jersey
142
182
182
211
67
86
86
New Mexico
5
5
5
5
100
100
100
New York
759
869
872
1,087
70
80
80
North Carolina
103
132
132
139
74
95
95
North Dakota
o
o
o
o
-
-
Ohio
412
447
449
499
83
90
90
Oklahoma
31
51
51+
51
61
100
100
Oregon
48
54
54
54
89
100
100
Pennsylvania
551
590
594
629
88
94
94
Rhode Island
61
76
76
97
63
78
78
South Carolina
84
97
97
99
85
98
98
South Dakota
5
5
5
100
100
100
5
Tennessee
50
70
73
115
43
61
63
Texas
100
104
104
61
96
100
63
Utah
8
10
10
11
73
91
91
Vermont
12
12
12+
12
100
100
100
Virginia
93
105
105
105
89
100
100
68»
77
64
88
88
Washington
49
68
West Virginia
36
68
70
70
51
97
100
Wisconsin
127
142
143
154
B2
92
93
Wyoming
1
4.
4
4
25
100
100
Alaska
3
3
30
3
100
100
100
Railroads
109
109
109
115
95
95
95
Total
4,864
5,751
5,792
6,587
74
87
88
Office of the Secretary of the Treasury, Division of Research and Statistics.
September 11, 1942,
. Data are for August 29, insumuch as no September 5 report was received.
Regraded Unclassified
CONFIDENTIAL
134
UNITED STATES SAVINGS BONDS - SERIES I
Comparison of September sales to date with sales during the
same number of business days in August and July 1942
(At issue price in thousands of dollars)
:
September :
Oumulative sales by business days
Date
:
daily
:
September
:
August
:
July
--
September as
:
sales
:
I
:
:percent of August
sptember 1942
1
$ 11,634
$ 11,634
$ 14,044
$ 15,821
82.8%
2
14,748
26,381
36,222
30,701
72.8
3
18,305
44,687
50,797
47,523
88.0
4
17,804
62,491
63,785
77,320
98.0
5
19,166
81,657
86,789
95,044
94.1
g
49,400
131,057
111,748
116,643
117.3
9
13,295
144,352
128,176
139,390
112.6
10
16,430
160,781
154,981
164,161
103.7
ffice of the Secretary of the Treasury,
September 11, 1942.
Division of Research and Statistics.
curce:
All figures are deposits with the Treasurer of the United States on account
of proceede of sales of United States savings bonds.
Note:
Figures have been rounded to nearest thousand and will not necessarily
add to totals.
CONFIDENTIAL
UNITED STATES SAVINGS BONDS - SERIES 7 AND G COMBINED
Comparison of September sales to date with sales during the
same number of business days in August and July 1942
(At issue price in thousands of dollars)
I
September :
Cumulative sales by business days
Date
I
daily
:
September
:
sales
August
:
:
July
#
September as
I
:
I
!percent of August
Sentember 1942
1
$ 7,528
$ 7.528
$ 12,222
$ 12,597
61.6%
2
9,811
17,339
28,810
21,986
60.2
3
9,397
26,735
41,258
32,441
64.8
4
10,678
37,414
54,105
49,175
69.2
5
10,713
48,127
71,552
62,561
67.3
8
18,550
66,678
84,777
84,413
78.7
9
6,072
72,749
92,566
101,585
78.6
10
6,279
79,029
106,782
124,568
74.0
Office of the Secretary of the Treasury,
September 11, 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.
CONFIDENTIAL
136
UNITED STATES SAVINGS BONDS - TOTAL
Comparison of September sales to date with sales during the
same number of business days in August and July 1942
(At issue price in thousands of dollars)
:
September :
Cumulative sales by business days
Date
:
daily
:
September
:
August
:
July
:
September as
:
sales
:
:
:
:percent of August
September 1942
1
$ 19,162
$ 19,162
$ 26,267
$ 28,418
73.0%
2
24,558
43,720
65,032
52,687
67.2
3
27,702
71,422
92,055
79,964
77.6
4
28,482
99,904
117,890
126,495
84.7
5
29,880
129,784
158,341
157,605
82.0
8
67,950
197,734
196,524
201,056
100.6
9
19,367
217,101
220,742
240,974
98.4
10
22,709
239,810
261,763
288,729
91.6
Office of the Secretary of the Treasury,
September 11, 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.
Sales of United States savings bond 137
CONFIDENTIAL
September 1 through September 10,1942
Compared with sales quota for same period
(At issue price in millions of dollars)
Series È
:
Series y and G
:
:
Total
Actual sales
:
Quota,
:
Sales
:
Actual sales
:
: Quota,
:
Sales
:
Actual sales
#
Quota,
:
Sales
: Sept. 1
:
Sept. 1
I
to date
:
:
Sept. 1
:
Date
: Sept. 1
to date
:
: Sept. 1
:
Sept. 1
:
to date
Daily
:
to
:
to
:
as $ of
:
Daily
:
to
:
to
:
as $ of
:
Daily
:
to
:
to
I as x of
:
date
:
date
:
:
quota
:
:
date
#
date
:
quota
:
:
date
:
date
:
quota
1
$ 11.6
$ 11.6
$ 14.9
77.9%
$ 7.5
$ 7.5
$ 6.9
108.7%
$ 19.2
$ 19.2
$ 21.8
88.1%
2
14.7
26.4
34.5
76.5
9.8
17.3
16.6
104.2
24.6
43.7
51.1
85.5
3
18.3
44.7
55.5
80.5
9.4
26.7
26.4
101.1
27.7
71.4
81.9
87.2
4
17.8
62.5
81.0
77.2
10.7
37.4
35.6
105.1
28.5
99.9
116.6
85.7
5
19.2
81.7
98.3
83.1
10.7
48.1
42.2
114.0
29.9
129.8
140.5
92.4
8
49.4
131.1
143.3
91.5
18.6
66.7
58.1
114.8
67.9
197.7
201.4
98.2
9
13.3
144.4
168.8
85.5
6.1
72.7
67.8
107.2
19.4
217.1
236.6
91.8
10
16.4
160.8
193.4
83.1
6.3
79.0
76.7
103.0
22.7
239.8
270.1
88.8
11
220.6
84.4
305.0
12
239.2
90.1
329.3
14
272.7
99.7
372.4
15
288.2
105.0
393.2
16
307.6
112.1
419.7
17
327.2
119.2
446.4
18
350.1
125.7
475.8
19
365.4
130.5
495.9
1
399.6
141.0
540.6
22
415.7
147.0
562.7
23
436.2
155.2
591.4
24
457.1
163.4
620.5
25
481.4
171.0
652.4
26
497.4
176.6
674.0
28
532.7
188.7
721.4
29
549.2
195.5
744.7
30
570.0
205.0
775.0
Office of the Secretary of the Treasury, Division of Research and Statistics.
September 11, 1942.
Sourcet 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.
Note: Quota takes into account both the daily trend during the week and the monthly trend during the month.
Sales of United States savings bond 137
CONFIDENTIAL
September 1 through September 10,1942
Compared with sales quota for same period
(At issue price in millions of dollars)
Series E
:
Series 7 and G
1
:
Total
Actual sales
:
Quota,
:
Sales
:
Actual sales
:
Quota,
:
:
Sales
:
Actual sales
:
Quota,
:
Sales
: Sept. 1
:
Sept. 1
:
to date :
: Sept. 1
: Sept. 1
:
Date :
to date
:
: Sept. 1
:
Sept. 1
#
to date
Daily
:
to
:
to
:
as $ of
:
:
Daily
:
to
:
to
:
as $ of
:
Daily
:
to
:
to
I as X of
:
date
:
date
1
:
quota
$
:
date
:
date
:
quota
:
:
date
=
date
I
quote
1
$ 11.6
$ 11.6
$ 14.9
77.9%
$ 7.5
$ 7.5
$ 6.9
108.7%
$ 19.2
$ 19.2
$ 21.8
88.15
2
14.7
26.4
34.5
76.5
9.8
17.3
16.6
104.2
24.6
43.7
51.1
85.5
3
18.3
44.7
55.5
80.5
9.4
26.7
26.4
101.1
27.7
71.4
81.9
87.2
14
17.8
62.5
81.0
77.2
10.7
37.4
35.6
105.1
28.5
99.9
116.6
85.7
5
19.2
81.7
98.3
83.1
10.7
48.1
42.2
114.0
29.9
129.8
140.5
92.4
8
49.4
131.1
143.3
91.5
18.6
66.7
58.1
114.8
67.9
197.7
201.4
98.2
9
13.3
144.4
168.8
85.5
6.1
72.7
67.8
107.2
19.4
217.1
236.6
91.8
10
16.4
160.8
193.4
83.1
6.3
79.0
76.7
103.0
22.7
239.8
270.1
88.8
11
220.6
84.4
305.0
12
239.2
90.1
329.3
14
272.7
99.7
372.4
15
288.2
105.0
393.2
16
307.6
112.1
419.7
17
327.2
119.2
446.4
18
350.1
125.7
475.8
19
365.4
130.5
495.9
1
399.6
141.0
540.6
22
415.7
147.0
562.7
23
436.2
155.2
591.4
24
457.1
163.4
620.5
25
481.4
171.0
652.4
26
497.4
176.6
674.0
28
532.7
188.7
721.4
29
549.2
195.5
744.7
30
570.0
205.0
775.0
Office of the Secretary of the Treasury, Division of Research and Statistics.
September 11, 1942.
Sourcet 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.
Note: Quota takes into account both the daily trend during the week and the monthly trend during the month.
138
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE SEPTEMBER 11, 1942.
TO
SECRETARY MORGENTHAU
FROM MR. SULLIVAN
TUS
SUBJECT: Whether a "materialman" is comprehended in
the term "subcontractor" within the meaning
of the Viason Act and within the meaning of
the Sixth Supplemental National Defense Ap-
propriation Act of 1942 authorizing renego-
tiation of contracts to eliminate excessive
profits.
TIME:
2:30 P.M., September 10, 1942.
PRESENT: Judge Patterson
Julius Amberg,
War Department
H. I. Hensel
John Kenney,
Navy Department
R. E. Anderson
F. B. Guertner
F. M. Bradley
Lt. Com. Rystrom,
Maritime Commission
Mr. Wenchel
Mr. Leming,
Chief Counsel's Office,
Bureau of Internal Revenue
The conference was arranged because of the interest of
the other Departments and the Maritime Commission in what ac-
tion the Commissioner's office might take concerning a recent
decision of the Board of Tax Appeals in the case of Aluminum
Company of America. In that case the Commissioner determined
139
-2-
deficiencies in excess profits liability under the Vinson Act
on the ground the Company was a "subcontractor". The Company
argued that by all recognized standards of definition, custom
and law, it was a materialman in the particular circumstances
of that case and could not be charged with excess profits lia-
bility. The Board agreed with the Company.
The main concern of the other Departments is the probable
effect of this decision upon the administration of Section 403
of the Sixth Supplemental National Defense Appropriation Act,
1942, which authorizes renegotiation of war contracts. The
definition of a "subcontractor" laid down by the Board of Tax
Appeals is somewhat broader than the definition contained in
Treasury regulations. The War Department favors the broader
definition established by the Board because it will out down
the number of contracts to be renegotiated. The Maritime Com-
mission, on the other hand, favors a narrower definition. The
personal views of the Navy representatives in conference were
substantially with the Maritime Commission, but they said they
had their instructions to go along with the views of the War
Department. It was suggested on the part of the Treasury that
if the War and Navy Departments and the Maritime Commission
could agree upon a definition of a "subcontractor", the Treas-
ury would acquiesce or nonacquiesce-in the decisien of the
Board according to what definition was so agreed upon, because
looking this of suggested the contracts Vinson time. to they Act adoption It they was arrange is are the apparent of least to a a renegotiate; conference joint they important resolution could with more angle not Congressional to get particularly, of clarify together, the problem the leaders kind the and at I
distinction between a materialman and a subcontractor. This
suggestion met with favor and the conference adjourned with
the understanding that would be done. In the meantime, we are
to take no action in the way of acquiescing or nonacquiesoing
in the decision of the Board of Tax Appeals.
140
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE September 11, 1942
TO Secretary Morgenthau
FROM Mr. Savington Crampton
Re: Tax Notes
1. New Series A tax notes open a mass market to this
type of government security.
2. New Series C notes appeal to a specialized financial
market, will chiefly interest corporations and similar
investors.
3. "Tap" issues and other government securities have &
broader market but appeal mostly to large investors.
1. Series A Notes:
The general public should be made thoroughly familiar with
these tax notes and their advantages by the time the new tax bill
is passed. They fill the need for what might be described as a
"short-term War Bond" that can be used to pay taxes.
The first recommendation would be to change the name "Tax
Savings Notes" in order to dramatize the importance of tax saving and
to give the notes some "box-office" appeal to the public.
The new name could be "Victory Tax Notes," in line with the
"Victory Tax" proposed by the Senate Finance Committee, or if 8.
different name from the tax is desirable, "Liberty Tax Notes."
This new name should be incorporated in the circular now
being prepared for release on September 14th.
News stories should be sent out immediately to the press and
radio describing these more liberal Series A notes as the Treasury's
effort to help tax-payers save for the greatly increased taxes
they must pay.
If possible, this should be followed up by getting a well
known magazine writer like Jack Alexander, Walter Davenport
or Milton MacKaye, to do an article on this theme for Collier's,
to be condensed afterwards for Reader's Digest.
- 2 -
141
Meanwhile, for the promotional job on Series A notes we
should go to the Advertising Council for all the professional
help we can get. The Council should analyze the appeal of
these notes to the self-interest of tax-payers --"New, Easy Way
to Pay Taxes" -- and make a recommendation.
Sponsored advertising on Series A notes in run-of-paper
position is 8. possibility. For this job R. 0. P. position is
preferable to financial pages.
Special folders and circulars directed to the general public
(like the "Know Your Taxes" folder) should be prepared for banks,
building and loan associations, and labor and fraternal organizations.
Envelope stuffers should be put in every pay envelope and
clipped to salary and dividend checks.
The door should not be closed on paid advertising, but if
it is used at all it should be reserved for 1943.
All the foregoing supplements the run-of-the-mine job to
be done through the regular promotional channels of the financial
community. This job should be left in the hands of the specialists
in that field, and until the tax bill is passed this is the most
important part of the tax note promotion.
The moment the tax bill is passed, we should release a
previously prepared movie short, directed by 8. top-flight director,
featuring a tax discussion by the Secretary with Chairmen George
and Doughton.
The Secretary should make a radio speech emphasizing the
magnitude of the Treasury's job in collecting wartime taxes and
of the individual's problem in paying them. This ought to represent
the Treasury not as a "tax policeman" but as & public agent trying
to help the public with a difficult job. Series A notes would be
presented as an effort by the Treasury to make tax saving as
painless as possible.
The revised version of the 1942 Walt Disney "Pay Your Taxes"
movie, or even an entirely new picture, should be prepared and
released in 1943.
142
- 3 -
In January 1943 the radio set-up now being used for War Bond
commercials should be temporarily transferred to the "Pay Your
Taxes" message, featuring Series A notes as & simple, practical
way to save for taxes. This should be followed up by & billboard
campaign, and during the first two weeks of March by & nation-wide
spot radio campaign.
Special drives, with publicity, circulars and sponsored advertising,
should be directed at labor organizations and publications, and the
Army and the Navy. Display cards should be prepared for Paymasters'
offices, Ship's Service Stores and Post Exchanges.
Special appeals should be made to women as bosses of the home
budget -- through the General Federation of Women's Clubs, etc.,
and the women's magazines such as Ladies Home Journal, McCalls, etc.
2. Series C notes:
The best way to promote these notes is to call in a specialized
financial advertising agency to work under the direction of the
Victory Fund Committee.
Sponsored advertising by banks and financial houses should be
secured for the financial pa, ges of newspapers and for the business
and financial weeklies like Forbes, Barron's, and Sales Management.
Also Fortune, Time and Newsweek. A personal letter from the Secretary
could be sent to a list of presidents of large corporations, life
insurance companies, and labor and fraternal organizations. Letters
could also be sent to governors of states and mayors of cities with
funds to invest.
Spedal letters might be sent from the president of the National
Association of Manufacturers to all members, following up the
Secretary's letter.
Publicity should be supplied to house organs of corporations
and trade associations.
The Victory Fund Committee would merchandise the notes and
follow up individual prospects.
3. "Tap" Issues and Similar Securities:
This is a broader financial field, offering the opportunity
to do public relations job on behalf of Government credit in general,
but it is still a financial market and promotion should be run by
143
- 4 -
the specialists. Again, the Victory Fund Committee provides a
ready-made organization for the actual work of direction, selling
and merchandising.
Any promotion should build a back-log of confidence in
Government securities generally. Sponsored ads could tell this
story in the quality group of magazines, such as Harpers, Atlantic
Monthly, New Yorker, Fortune, Town and Country -- maybe even Vogue.
A direct mail campaign showing special advantages of the many
different types of Government securities might be sent to treasurers
of labor and fraternal organizations, building and loan associations,
charitable institutions and colleges. Circulars should go to churches,
together with letters from high churchmen.
To many of these groups who are not financially sophisticated,
8. travelling display exhibit might be sent to illustrate the
diversity of the Government securities and to show that there is
8. Government security to fit anybody's financial needs. This
display exhibit would be a miniature "Futurama of Finance" and
should show actual samples of each type of security.
0:
144
Miss Chauncey
Mr. Sullivan says it relates to having
one unit of the Board of Tax Appeals
set up in Washington to hear in.
Washington alone appeals for relief
because of abnormality from excess
profits tax provisions.
kb
From MR. SULLIVAN
145
MEMORANDUM
September 11, 1942.
TO:
The Secretary
ins
FROM:
Mr. Sullivan
Since receipt of the memorandum from Commissioner
Helvering regarding the effect of the relief provisions upon
decentralization, Messrs. Paul, Tarleau and Surrey have met
with Mr. Cann and Deputy Commissioner Marrs of the Bureau.
As a result of that conference the Bureau is preparing a further
memorandum to be submitted to Mr. Paul tomorrow.
The Bureau feels strongly that this provision would
have a very damaging effect upon our decentralized organization
and states that Chairman Murdock of the Board of Tax Appeals is
in accord with the Bureau's views.
146
SEP
11.1942
Dear Eleanor:
This is in reply to your letter of September 8,
1942, enclosing letters from Mrs. Alma Clayburgh pro-
testing against the provisions in the pending revenue
bill which would tax a divorced wife upon the alimony
she receives.
I agree with you that the proposed provisions
are fair ones. You will understand, I know, that the
matter is a complicated one and that it has been care-
fully studied by the Department. The proposal to tax
a wife who is divorced or legally separated from her
husband upon the alimony she receives appears to be
the most equitable solution of the problem and the
one most in accord with the sound principle of taxation
that taxes should be imposed in accordance with ability
to pay.
I an returning herewith your enclosures.
Affectionately,
Mrs. Eleanor Roosevelt
(Signed) Henry
The Shite House.
Enclosures.
HC/fn
Sent by Secret Service
IK 9/10/42
12:30 9/11/42
147
SEP 11 1942
Dear Eleanor:
This is in reply to your letter of September 8,
1942, enclosing letters from Mrs. Alma Clayburgh pre-
testing against the previsions in the pending revenue
bill which would tax a divorced wife upon the alimony
she receives.
I agree with you that the preposed provisions
are fair ones. You will understand, I know, that the
matter is a complicated one and that it has been care-
fully studied by the Department. The proposal to tax
a wife who is divorced or legally separated from her
husband upon the alimony she receives appears to be
the most equitable solution of the problem and the
one most in accord with the sound principle of taxation
that taxes should be imposed in accordance with ability
to pay.
I an returning herewith your enclosures.
Affectionately,
Mrs. Eleanor Roosevelt
(Signed) Henry
The White House.
Enclosures.
HC/fn
9/10/42
148
Rewritten
Dear Eleanor:
This is in reply to your letter of September 8,
1942, enclosing letters from Mrs. Alma Clayburgh
protesting against the provisions in the pending
revenue bill which would tax a divorced wife upon
the alimony she receives.
I think we must all recognise that in cases of
divorce it is impossible to adjust tax consequences
according to which spouse is to be blamed for the
break-up of the marriage. The spouse who is granted
the decree may not necessarily be the injured party.
Although in many cases such as Mrs. Clayburgh's the
husband may have been at fault, there are probably
just as many cases in which the wife is at fault.
The question must, therefore, be resolved by regarding
only the respective abilities of the ex-husband and
ex-wife to pay taxes.
Under the present law, a husband is given no
deduction for alimony payments to an ex-wife. This
149
- 2 -
has resulted in many cases of undue hardship, partic-
ularly where the husband has remarried and must now
support a second family. If no deduction for alimony
is allowed in the case of a man having an income of
$30,000, who must pay his former wife $12,000 a year,
his tax will, under the rates adopted in the House
bill, be about $13,300, thus leaving his only about
$4,700 with which to support himself and a second wife.
In very extreme cases, mostly involving irrevocable
trusts established to pay alimony, the income tax of
an ex-husband may actually exceed the income which he
has free for his own use.
Turning to the situation of the ex-wife, it is
hard to see in what respect she is less able to pay
tax upon the alimony income which she receives than
are other unmarried women receiving income from other
sources. A widow with several children to support,
having income from her own earnings or from such prop-
erty as say have been left her by her husband, must
pay income tax although she is in no better position
to pay than is a woman in the situation of Mrs. Clayburgh.
149
- 2 -
has resulted in many cases of undue hardship, partic-
ularly where the husband has remarried and must now
support a second family. If no deduction for alimony
is allowed in the case of a man having an income of
$30,000, who must pay his former wife $12,000 a year,
his tax will, under the rates adopted in the House
bill, be about $13,300, thus leaving his only about
$4,700 with which to support himself and & second wife.
In very extreme cases, mostly involving irrevocable
trusts established to pay alimony, the income tax of
an ex-husband may actually exceed the income which he
has free for his own use.
Turning to the situation of the ex-wife, it is
hard to see in what respect she is less able to pay
tax upon the alimony income which she receives than
are other unmarried women receiving income from other
sources. A widow with several children to support,
having income from her own earnings or from such prop-
erty as may have been left her by her husband, must
pay income tax although she is in no better position
to pay than is a woman in the situation of Mrs. Clayburgh.
150
- 3 -
It might even be said that the widow's position is
more precarious because she must rely entirely upon
her own resources without outside assistance.
For the above reasons, it appears to me that the
proposal to tax alimony payments to the ex-wife and
to give the ex-husband a deduction for such payments
is eminently justifiable.
I an returning herewith your enclosures.
Affectionately,
Mrs. Eleanor Roosevelt,
The White House.
Enclosures.
Jus
RBE:hdr p 9-10-42
Regraded Unclassified
151
THE WHITE HOUSE
WASHINGTON
September 8, 1942.
Dear Henry:
What is your opinion about
this law? It would seem fair to me,
but I may be wrong.
Affectionately,
dis
152
COPY
MOUNTAIN VIEW HOUSE
In the White Mountains
Whitefield, New Hampshire
September 4, 1942
Dear Lady--
I want to call your attention to the Amendment now before the Senate
Committee--imposing the income tax upon periodic payments received
by the wife--in discharge of legal obligations of the husband under
written separation agreements; the husband being permitted to deduct
the amount taxable-the wife having to pay same.
In my case, as in many others, the separation was forced by my husband.
I want to call your attention to the unfairness of changing the
method of taxation upon those - who have entered into such instruments-
under the Government policy imposing a tax upon the husband.
To change this tax with respect to separation instruments heretobefore
entered into - imposes a great hardship upon the wife. I have many
obligations: my daughter, my family, my country. I have to spend a
great deal of money on medical attention because of ill health and
lameness--and any reduction of income would be fatal. I have no way
of earning money, but spend a great deal of my income and my time in
welfare and war work.
Do you think that when a great war is being fought it is wife to
harrass the women who are working for the war effort -- with this
added burden?
Please do what you can to fight this issue, and believe me, with
best wishes,
Gratefully yours
Alma Clayburgh /s/
152
COPY
MOUNTAIN VIEW HOUSE
In the White Mountains
Whitefield, New Hampshire
September 4, 1942
Dear Lady--
I want to call your attention to the Amendment now before the Senate
Committee--imposing the income tax upon periodic payments received
by the wife-in discharge of legal obligations of the husband under
written separation agreements; the husband being permitted to deduct
the amount taxable-the wife having to pay same.
In my case, as in many others, the separation was forced by my husband.
I want to call your attention to the unfairness of changing the
method of taxation upon those - who have entered into such instruments-
under the Government policy imposing a tax upon the husband.
To change this tax with respect to separation instruments heretobefore
entered into - imposes a great hardship upon the wife. I have many
obligations: my daughter, my family, my country. I have to spend a
great deal of money on medical attention because of ill health and
lameness--and any reduction of income would be fatal. I have no way
of earning money, but spend a great deal of my income and my time in
welfare and war work.
Do you think that when a great war is being fought it is wife to
harrass the women who are working for the war effort - with this
added burden?
Please do what you can to fight this issue, and believe me, with
best wishes,
Gratefully yours
Alma Clayburgh /s/
153
COPY
Mountain View House
Whitefield, New Hampshire
Friday - Sept. 4th, 1942
Dear Mrs. Roosevelt:
Do read the enclosed paragraphs--and do what you can-and I an
sure--your voice--would do a great deal to change this unfair bill.
There are many women-who have sued their husbands--and
"gold
diggers" (to use a
)
but there are serious women-whose whole
life has been changed and ruined by mean who want & "change of wife"
and give as little as the law allows. I had to sign a separation
agreement--was forced to, and now that I have made a new life-this
bill comes to change it all again. It isn't as though we were to give
this money to our country, no indeed. It will cost the country over
10 million dollars! All it does is to relieve some rich men of their
obligations and harrass the women who 80 gladly take in any war effort
possible.
I work-though 1ll-- and lame. You know the fine things I have
worked stand for. I think I deserve to have my voice heard. Don't you?
I am not divorced, but hold a separation agreement and must help
my young Grens--in many ways-- as Jim has only a small income and there
are many demands on me. (The children (Alma & Jim) have gone to be
with the Grens in Canada. While I have my beautiful granddaughter
and nurse with me)--Again I did this at great expense 80 that Alma
and Jim could get a rest and a real vacation--away from all respon-
sibility. I have a brother to support and as I say in my "little
# I have my country- and I have put every cent possible in
war bonds.
Do help and forgive me for writing you so much. However, you
are generous! With warm thanks and regards and begging you to use
me when you need me, I am
Faithfully
Alma Clayburgh /0/
154
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DAYESeptember 11, 1942.
TO
Secretary Morgenthau
FROM
Mr. Paul
There is attached a photostat of the Raleigh
News and Observer clipping which you gave me yesterday.
The original has been given to Colonel Halsey. He is
going to ask some Senator whose views are in accord
with the editorial to put it in Monday's Record.
R&P
155
M
THE NEWS AND OBSERVER, RALEIGH, N. C., SUNDAY MORNING, SEPTEMBER 6, 1942.
Has the Little Fellow a Chance?
'What You Need Is A Federal Sales Tax
The News and Observer
4M eLP must
- AND Def in OBSERVES The Telf By
From the day that the Secretary
from this ingrmious and deceptive
of the Treasury submitted to Con-
plea if the framers of the measure
et COMPANY
- pasisis, President
gress en estimate of the unprece-
in Its successive stages of prepare-
dented sum which must be raised by
tion had sternly sat down upon all
taxation for the prosecution of the
exemptions and favors for the rich
war, there has been . clear line
and followed in spirit-and mostly in
of division of the seekers after
letter-the early recommendations
&
The
Associated
Press
19th
Privilege and these who wished the
of the Treasury Department. The
Associated
Prop
associately
N
the
for
publication
main taxes levied on those best able
"last resort" argument is an Indict-
and
a
-
disparties
credited
10
"
1
in
and
also
to bear the burdens, with exceptions
ment of the first resort of favors to
this
DATET
published
herein
All
-
republication
special
dis-
to no individual able to help pay
Privilegs. The committee hardly
of
will
-
are
reserved.
the treméndous cost of the war. The
gave decent treatment to President
SUBSCRIPTION PRICES
Treasury Department presented red-
Roosevelt's suggestion of a ceiling of
Payable b Advance
ammendations which would raise the
Mall
e
the
Carolinas
$25,000 on the Income of any person
Virgthia
required sum, lowering the exemp-
or corporation, and lent . favoring
(Tr.
Mo.
I Mo.
Mo
se
EN
tions on incomes without resort to
ear to the volces of Privilegs, "Pray
TAX
CAIP
4.50
120
. sales tax, the most Iniquitous and
have me excused."
Cill
18
EXEMPT
If CARRIER DI TOWNS
indefensible and unjustifiable tax
And now as the time comes for
Daily Only
the ingenuity of the privileged caste
final consideration every friend and
BONDS
Wesk
- une ON RFD ROUTES
has ever been able to devise. Day
attorney and lobbyist of Privilege.
they advised paper W at matted Bunday by Special Car-
stx
days
.
work
by day. night by night, the highly
and some others who have not seen
paid lobbyists and attorneys of Privi-
the sinuous paths made in the
Date and Bunday
1.00
lege by the use of every species
months of hearings and drafting.
of propaganda known to Big Busi-
tell us that "as . last resort we must
De address please give sid
address as well of new
ness have been seeking In open and
take the sales tax."
financial Advertising Representative
secretive ways to give escape from
Fitzpatrick has made . cartoon
THE BRANHAM COMPANY
just taxation to the Big Boys
which tells the whole story. It is so
and New York, Charlotte Atlanta.
Date Dallas, Mansas City Detrait
by saddling the taxes on the Little
good it is being reprinted on this
for Les Angeles, Seattle
Man. They began their campaign
page. He depicts the antagonists who
pared at the Postation at Releigh
first Carolina - Second Class Matter
of scuttle and sabotage by sending
have been waging the real battle-
LOAREAD
big-wigs from the National Cham-
the big, puffy and powerful fellow
Today's Bible Thought
ber of Commerce and the Manufac-
labeled "Tax Exempt Bonds," and
turers' Association who told the com-
the little man "Loaf of Bread." One
Plere wait this when I laid the foun-
of the wirth? Declare if thou
mittee that they were ready and
must win, In the first round the Little
understanding
38.4
happy to pay heavy taxes for the
Man thought he would be given
successful conduct of the war. They
justice when the House enacted the
Morning Tonic
spoke so patriotically and unselfishly
tax bill with no sales tax provision.
(We)t Whitman)
that they received high commenda-
But, having rejected the recom-
47 direuse all and espose all-1 am
tion for changing their attitude of
mendation of the Treasury and
may Inpit operative I my there can
seeking favoritism for the rich. They
granted exemptions and reductions
salvation the There States with-
waited to get the accolades and then,
to special interests, the bill fell short
free tongues,
willing in hear the tongues:
again proffering unselfish patriotism,
of raising the required sum by some-
I annume - a givry of These
came forward with the proposal that
thing like three billion dollars. The
In: that they requestfully Daten to
taxes on wealth (proposed by Mor-
Little Man (whose family needs the
- reforms, fresh viewa and
genthau) be reduced, taxes on wages
loaf of bread for subsistence)
Has The Little Man A Chance?
from successions of men and
and small incomes be incressed, and
breathed easier when he saw the
that the big cost of the war be
House bill contained no sales tax.
tes ⑉ with IM own growth.
Beaders should are be brief. Invided No letter containing more
to
-
5
Chile
levied upon consumption by means
But the advocates of Privilege
Be An American-First
of a sales tax, but always protested
considered is a pyrrhic victory when
The People's Forum
except ever the sure of the writer will
The News and Observer reserves
that they were not asking for a sales
they observed that the tax bill lacked
Flanz and programs to win
tax because they wished It but only
three billion dollars of the necessary
COUNTERFEIT MONEY.
the war and to suin the peace
as a "last resort." Byl all their
revenue. Where was that three bil-
To the Editor: Improved enunterfelt
Today's N. C. Poem
mut grow out of our common
exemptions and reductions and pleas
lion dollars to come from? Then the
money may become our latest and
antional purpose and with dem-
for favoritism were introduced with
drive on the Senate began with all
greatest instrument of war. During the
A CHILL FOR
writte perticipation in plan-
but one purpose: To pull the wool
the armies of Favoritism mobilized.
Russo-Japanese War, Use Japa got up
I used to envy Bill . let
by all of M. Through ef-
over the eyes of the legislators and
First, the advocates and Jobbyists of
a hundred thousand dollar plant to
That that Ue-burnes
counterfeit Chinese money. The Japa
forta to state our objectives and
public, but all designed and pro-
favors urged additional exemptions
did well with this money, as they bought
Don't have
Millie diseusion of their merits,
posed to make a sales tax "the last
for the big interests. Every one
about eighty million dollars worth of
Jan as
se play our parts as free citi-
granted was intended to reduce the
war materials that reused . panic in
IL
resort."
me-President Roosevelt.
Any intelligent man who has fal-
revenue and make stronger the argu-
Asia Anancial exchanges. The True
This in total war, The proposal
ment for "a sales tar as a last n-
any Department thinks a possible
lowed the dubious and zig-zag
Germany and Japan may try to
that lobucco curing barns be con-
course of the making of the tax bill
sort." And now Senators are re-
great quantities of counterfeit
pesting the old. newly furbished
perhaps eausing . money pan]
end into dehydration plants for
has seen from the first that the in-
alogan, "We don't want . sales tax
impossibility to duplicate
TYPE vegetables to be shipped
genious plan has been to bring about
-never if it could be helped-but
States currency. simply
cross brings the war close to East-
a situation that would enable those
as a last resort it seema the only
gravings is hand-work
in North Carolina
who long have wished a sales tax. but
takes two months
unwilling to avow it, to my "We do
way to get enough money to wage
The machinery is
The suggestion appears to be 4
the war successfully."
several types
practical one, For the most
not wish 8 sales tax, but we will
The whole tortuous writing of the
sand dollars 400
pri, tobanco DI not cured by scien-
take it RF # "last resort.'" Nine out
tax bill in the past six months. so
terreiter can
Rx. But the process of curing to-
of ten of the men who are now
far AF the forces of Privilege are
like it. Ley
con is . scientific one and requires
uncludedly proclaiming their per-
concerned. has been for the purpose
pan
with
skilled
reful training. North Carolinians
sonal opposition to the sales tax. but
of imposing a sales tax as the last
counterle
ught the process to Georgians and
saying with crocodile lears in their
even
hers living to the south of us,
eyes, "We must take it as & last re-
resort. will Privilege win?
with
acted
as
Has the Little Man a chance?
United
sort."
have been no danger
Regraded Unclassified
156
SEP 11 1942
Dear Eleaner:
This is in reply to your letter of September oth,
introducing Mr. Donald Delvin, who has called and
left a very favorable ingression with nembers of
by administrative staff. I an pleased to inform
you that Mr. Delvin has been offered a position in the in Trensury
the field of business management, which he has
indicated a willingness to accept effective
October 10th.
Affectionately,
(Signed) Henry
Mrs. Franklin Do Receivelt,
The White Homeo.
time to 80 back with to Canada us. to wind up
P.S. He his wanted offine separe starting
m/
The
CSB:em
9-11-42
Regraded Unclassified
157
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE September 11, 1942
TO
Secretary Morgenthau
FROM
Mr. Thompson
Delvin's disability which prevents him from getting into the armed
forces is a rheumatic heart condition. However, he is quite able to
work, and I plan to use him on our field survey operations in pooling
our typewriters and other equipment, space assignments, etc. He is very
pleased with this prospect and wanted to go back to Canada to wind up
his affairs before starting in, and plans to be back on October 10th.
Am
15
THE WHITE HOUSE
WASHINGTON
September 5, 1942
My dear Mr. Secretary:
I am giving this letter of intro-
duction to Mr. Donald Delvin, who has lived
in Canada for a number of years with his
parents. They are American citizens and
80 18 he.
Mr. Devlin has tried to enlist in
both the Army and Navy and has been turned
down. His preparation has been in economics
and business management and he has had some
practical experience.
Is there any place where you could
use him? He wants to feel that he 18 of
some use in the war effort. If you have
no place available, would you be good enough
to make any suggestions to him which might
help him?
Very cordially yours,
Thean Products
The Secretary of the Treasury
The Department of the Treasury
Washington, D.C.
159
MEMORANDUM FOR THE SECRETARY.
September 11, 1942.
Mail Report
This is the second week in which the subject of
taxes has been paramount among those discussed by
correspondents.
The Ruml Plan has somewhat receded from public
interest, with the spending tax much more in the
foreground of the public mind. Of the letters al-
luding to the Ruml Plan, 6 have been in approval,
1 opposed. Others have discussed the withholding
tax in general.
The proportion of letters mentioning the spending
tax shows 5 favorable to 6 unfavorable. The so-called
"Victory Tax was mentioned in a few letters the very
end of the week, and they were equally divided between
protest and approval. There have been 16 letters
opposing increase in personal taxes to 2 approving
such increase. We are now receiving many letters from
wage earners and their wives giving detailed budgets
as proof of the family's inability to pay more taxes.
There were also letters from those with small incomes
obtained through investments protesting high tax rates
imposed on corporations. Exemptions have been asked
for bond investments, insurance premiums, and alimony
payments.
There has been 8. great increase in letters
approving the sales tax, the ratio being 24 pro and
13 anti out of each 37 letters mentioning this method
of raising revenue. There have also been a great
many letters suggesting variations of a savings sales
tax and other letters telling how the tax has worked
or failed to work when applied locally.
160
- 2 -
Five letters have endorsed a gross income tax,
6 have urged an excess profits tax on individuals,
and many have given the usual varied suggestions for
additional revenue through taxation of advertising,
slot machines, radios, checks, labor unions, etc.
Bond mail took second place this week with both
complaints and suggestions falling off. There were
10 or 12 allusions to the remark You will have to ask
the American public that". Three mentioned Government
extravagance, 3 labor racketeering, and the others
criticized the form of bonds or gave a number of
different reasons. Compulsory savings through Bond
purchase were favored by 4 and opposed by 1, while
suggestions included the issuance of annuity bonds,
the payment of dividends in bonds, and the conversion
of frozen funds of Axis nations into Government
securities. Only 8. few letters reported cashing of
bonds at the expiration of the 60-day period.
Out of 14 complaints, 11 related to delays in
delivery or redemption. The Friday morning mail
brought about 50 letters and telegrams replying to the
wire inquiring about delays in issuing bonds on payroll
deductions. Three-fourths of the replies state that
delivery is made immediately after the last payroll
deduction, and the others explained why some delay is
necessary. The general tone of these communications
is excellent.
In the miscellaneous mail have been many letters
dwelling on the two subjects most frequently appearing
in the unfavorable mail of the past months--resentment
of labor policies and practices and the need for
Government economy. Inflation was the subject of 25
or 30 more. Most of them protested that it was not
8. "threat" but an actuality. There were 5 letters
referred from Congressmen whose constituents asked
the release of silver for commercial use.
Gabuelle E. Fortual
Regraded Unclassified
161
- 1 -
General Comments
W. W. Housewright, Vice President, The San Benito Bank
& Trust Co., San Benito, Texas. We hand you herewith
original and two copies of application of Mrs. Rosa
Gomez Vda de Garza, requesting the return of $1.00,
taken from her at the International Bridge at Browns-
ville, Texas. It occurs to us that in cases like this
one, some way could be devised to comply with the intent
of the law, and yet not cause 8. poor old ignorant
Mexican woman, 58 years of age, the trouble of trying
to recover a measly $1.00 bill. To her $1.00 is con-
siderable money. In fact, it was all that she had. In
addition to the trouble caused her, we are often requested
to fill out applications for parties from whom money has
been taken away, causing us considerable more time and
trouble than the $1.00 is worth. ***
Miss Jeanette M. Jonkman, Grand Rapids, Mich. ***I am
returning herewith 8. letter from your Detroit office
addressed to Miss Alice Yonkman. Miss Yonkman is out
of the country and I am giving you her latest address:
Miss Alice Yonkman, c/o American Red Cross, Hotel
Hanscrescent, London, England. Now as to the complaint.
Your well-meaning but ill-tempered subordinates have in
the past, from time to time, threatened the mother of
Miss Yonkman with dire things over the telephone if she
did not tell them the whereabouts of her daughter.
Miss Yonkman's work during the past five years has taken
her often from one state to another, and her mother
spoke truthfully when she stated that she did not always
know. Mrs. Yonkman is a lady; she is 82 years old and
does not hear too well. But she tried to assure your
very badly mannered representatives that they could rest
assured the letters would be forwarded. They always
were, Mr. Secretary - government mail is always in-
portant. Hence, my prompt answer regarding the enclosed.
(Notice from Collector of Internal Revenue, Detroit,
Mich.) I trust you will see to it that the sloppy
technique of obtaining information, if possible, by
threatening an old lady over the telephone regarding
something 80 simple as 8. forwarding address be dis-
continued.
Regraded Unclassified
162
- 2 -
Christine Verschuur, Oak Park, Ill. Having the good
of my country at heart i would like to go to work.
But my husband says i cant because he would loose his
exemption on me on his income tax. Is this so/ You
want us to win this war. think of the wemon you are
keeping out of industry. the money i would earn would
go into war bonds and my husband would never see a cent
of it, 50 why not be patrotic and for the duration
lift this burden from the people and give us a chance
to do something. dont tell me to knitt for the red cross
or serve at 8. canteen because it would cost me forty
cents care fare and as my husband only makes sixty a
week. and we are paying for our home i just couldnt
afford it.
Benjamin Mosckowitz, S 2/c, Camp Allen, Norfolk, Va.
I am near on to fifty years old, and with no dependents.
Made a comfortable living for myself in civilian life.
Enlisted in the U. S. Navy, asking for no rating. All
I want to do is my bit for my adopted country. On the
21st of June was sent to the Navy Hospital to be operated
on. Was in hospital for a period of forty days. Will
draw my first pay Sept. 5th, 1942, and see where they
pay me for the forty days spent in hospital. I enlisted
in the Navy to help my adopted country and don't think
I am entitled to pay for this time. Am getting salary
of fifty-four dollars per month and enclosed you will
find money order for seventy-two dollars for the
remittance for money paid me forty days. Hope that
this will be kept on the quiet.
Henry L. Stimson, Secretary of War. I enclose a. check
for $10,680.24, which represents funds raised by the
Portuguese Fraternal Societies of California for the
purchase of two 37mm anti-aircraft guns. A copy of
the letter of acknowledgment sent to the President of
the Societies is attached.
163
- 3 -
Dr. Philip Sher, Omaha, Nebraska. Enclosed please
find check for $31.00 which will bring my contribution
to the amount of $300.00 since Pearl Harbor. I consider it
a great privilege to assist our country to purchase
equipments for our brave boys to fight our war for
democracy. I cannot comprehend why you should have to
appeal and urge our people to buy war bonds. They
ought to know by this time the war we are waging is a.
war of win or vanish.
L. A. Lecher, Lawyer, Milwaukee, Wis. I am writing
you in support of the resolution adopted by the Section
of Taxation of the American Bar Association at its recent
Detroit convention urging upon Congress that the
Processing Tax Board of Review be abolished and its
jurisdiction transferred to the Board of Tax Appeals.
I can add nothing to the statement made by Mr. William
A. Sutherland before the Senate Finance Committee on
this matter. I want you to know that many members of
the bar familiar with tax practice, including my humble
self, will be squarely behind you in your efforts to
secure the abolition of the Processing Tax Board of
Review, both in the interest of economy and also in the
interest of efficiency.
164
- 4 -
Favorable Comments on Bonds
Mrs. Stella Lieberman, Chicago, Ill. I hope this line
will reach you personally, and in good health, 80 that
you will see the honest, earnest opinion of a sixty-
year old, heartbroken, bereaved woman who has not
heard from the 6 brothers, 2 sisters, and their
precious families in Prague. I am, Thanks to God, for
the past 26 years 8. proud American citizen, obeying
the laws of this our beloved land, for which I would
die if it be so ordered by our beloved President. ***
Mr. Morgenthau, We are poor but are 10% buyers of U. S.
War Bonds, but if we could buy for $5 8. $5 Bond, and
for $10 buy a $10 Bond, and so on, we would not look
for profit, already this money would be our security,
and to lend Uncle Sam without profit, that is the real
thing, and 80 you would not have to figure out taxes
and taxes again - - perhaps sooner, but not 80 many,
thus saving help, etc. What you say, Mr. Morgenthau?
May God bless you and keep you, we are proud of you -
your honor is honor for us.
Wm. A. Hill, Montpelier, Vermont. No words of mine can
express regret that I feel that I must write this letter.
(1) I am going into the red faster proportionately
than our U. S. A. and (2) if I have not got any money
I cannot lend any to my good old U. S. A., as much as
I would like too, anything and everything I have got
belongs to my America, and all you will have to do is
ask for it and, our U. S. A., it is yours, for the
asking. *** If you stop to think you will understand
why a good business would have to fold up here under
war-time conditions. Our principle industries are
agriculture and granite. *** My business depended
indirectly upon the stone industry, you will understand
that we do not need stone to mop up Tojo with, although
I assure you that I would be willing to give my life
to be able to drop a stone on his head, and it would
not need to be finish granite. Of course you may ask
why don't you fold up entirely and go where there are
165
- 5 -
things doing? My answer is, I built up this business
(motor transfer) after 1918, (for I was considered an
expert mechanic in those days and plenty fell on me)
at my age and physical condition I could never do it
again.
Harold Bell Wood, Crane, Texas, (Addressed to Senator
Tom Connally). I am an average West Texan that does
not understand everything that goes on in this great
democratic government of ours and I would like some
authoritative information from you. *** This morning
while I was standing in line at my local U. S. Post
Office, two persons ahead of me cashed their War Bonds
in. Why does the U. S. Post Offices buy back War Bonds
60 days after purchase? What good would it do for all
of us to buy War Bonds if the Government will buy them
back. It looks to me like the Government would loose
the war if every Tom, Dick, and Harry turns his bonds
back to the Government. I have several neighbors that
does not keep their bonds any longer than they have to
before cashing them in.
Michael Telech, Lopez, Pa. I served eighteen months
of 8. five to ten year sentence and was paroled at the
end of the stated period referred to. Since my parole
I served as lineman for the Sullivan R. E. A. and have
a letter of recommendation from the Board of Directors
of that organization. I have been working at the White
Deer Ordnance Plant. Today I was relieved of my posi-
tion as lineman because of my prison record. I have
purchased $450.00 worth of war bonds. I would like
the opportunity to earn more to put in U. S. War Bonds,
but am unable to see how to do it when I am turned down
for something that happened 8. long time ago. *** I am
enclosing the $450.00 worth of War Bonds and would like
the cash for them inasmuch as the Government I purchased'
them from will not permit me to work on their Ordnance
plant. This Government was perfectly willing to accept
my cash but I wasn't good enough to work for them. In
case you are interested to interfere in this case I
will buy War Bonds until it hurts like hell, providing
I can work to earn the money to buy them.
166
- 6 -
Herbert C. de Bruyn, Illinois Bell Telephone Co.,
Chicago, Ill. I attach 8. clipping from a recent news-
paper article which speaks of a Mrs. Tillie Stark who
is investing 28% of her salary in War Bonds. My clerk,
Mrs. Theresa Kurrasch (nee Theresa Rochetto) has the
following patriotic record: 1. Following Pearl Harbor
she took her life savings ($1800) and invested them in
Series E Bonds. Serial numbers will be furnished upon
request for verification. 2. She is investing 25.3%
of her present salary in Defense Bonds. Verification
can be had through the Treasurer's Office of the Illi-
nois Bell Telephone Company. Mrs. Kurrasch has a
record of 22 years service with the Telephone Company,
and her patriotic purchase of War Bonds I believe merits
some consideration toward granting her & citation.
Ralph C. Hubert, War Production Board, Evansville, Ind.
On the evening of September 7th I listened to & radio
program sponsored by the Treasury Department, entitled
Mr. Jones and George Washington." I found the program
very entertaining, informative and well produced. ***
Purely in the nature, however, of constructive criti-
cism, I would like to offer a suggestion. ### I firmly
believe that economically war bonds represent the best
long-time investment on the bond market today. ***
For this reason, I think that in your bond selling
campaign more emphasis should be placed upon the economic
advantages of war bonds, 8.8 represented by the interest
rate, rather than dwelling entirely upon an appeal to
the purchaser's patriotism or his altruism. *** In
the program I heard last evening, no mention was made
of the interest rate as a selling argument. It seems
to me that most people are inherently selfish and for
that reason anything that appeals to their innate
selfishness will produce more sales than an appeal made
strictly to their idealism. I feel that your bond
selling campaign should be designed partially to appeal
to the thrift of the purchaser in order, for example,
that he may visualize for himself an old-age pension
in 1952, provided by his 1942 bond purchases. ***
Regraded Unclassified
167
- 7 -
Mr. George L. Googe, War Savings Staff, Atlanta, Ga.,
encloses copy of letter written by Mr. Manuel G. Saldana,
Brotherhood of Maintenance of Way Employees, Kent,
Texas, as follows: In reply to your request of July 9,
I wish to notify that, Immediately I call for a meetting
at Van Horn, but I really get desapointed as only Three
members shows up, 80 I decide to make another call for
another meetting on July 26th, and you will be surprised
as I had the same results, so then I decide to make trip
over the line. In that trip I inquired the reason for
not come to the meettings and every body claims thy
do not have no Tires their Automobils and so they cant
go no where. any way am mighty glad to find out how
much bonds they buying now, and here with you will find
8. list of every Foreman and Sec laborers between
Sierra Blanca and San Martien Sec, a Trritey of 85
Miles which I covered in one day. Am mighty glad to
do all I can to help en this Program, as I know we all
have to pull togather, to win this war, but tellin you
the truth, my Tires are as bad as any body else's so
if You dont mind to give some Certificate or some thing
to show to the Rubber Rationing Local Board here in
Van Horn.
Some of the boys over the line,
promise me they may be able buy doble the price they
buying now, en the next Therty days, am afraid if no
one insist en em, they fegeret and keep buying the same
amount, so it depends on you, because Ill tell you the
truth, right now I cant hardly go to town to get my
mail but once 8. week, and am still afraid am may be
steek en the road as am not even have a spar tire now.
Pearl I Young, Hampton, Va., enclosing copy of letter
to Postmaster, Norfolk, Va., as follows: I heard 8.
very constructive suggestion yesterday from one of the
petty officers at the Naval Air Station and I am
passing it on to you.
He
said,
"You
would
think
to hear them talk and read the paper that they wanted
everybody to buy bonds. Then they raise the pay of
the enlisted personnel and when we want to put the new
money into bonds they make it so difficult that we
can't ever get them. It is practically impossible to
168
- 8 -
get one at the Naval Air Station. I have bought three
now but I am going to give up and put the rest of my
money in the bank at home. The main post office at
the Base is so far from the station that the only time
we can get there is by going during our noon hour.
*** It is never open before we go to work or after
we quit. I went down one noon and paid my money but
nobody had time to type my name on the bond; I had
to go back three days later to get it. Most of us are
young and unmarried and there is nothing we would like
better than to soak our extra money in Bonds to redeem
after the war and start up a little business. ***
There is an awful nice boy in our group. He is an
orphan and never had any training in thrift. The other
day he got $75 in back sea pay. I gave him a talking
to just like a father. He gave me the money and I
started out in my lunch period to get him & $50 bond
and a $25 one. The bus was twenty minutes late and I
could not make it down and back. I had to give him
the money back and that night he went down and squandered
$20. They ought to have someone in every barracks or
near the air station when we get paid off. Most of
the boys would buy bonds and be glad to do it.
169
- 9 -
Unfavorable Comments on Bonds
William C. Hare, Suffern, N.Y. *** I went "all out"
for War Bonds and invested every dollar that- I had in
Government War Bonds. Having become necessary to
obtain funds for my living expenses, I instructed the
Federal Reserve Bank of New York to withdraw one bond
on July 22, 1942, for the purpose of redemption. To
this writing I have not received a. Treasury check for
this Bond, and no word from the Federal Reserve Bank,
though I again wrote them August 20. I have had to
borrow from my local bank funds for my living expenses,
at 8. cost of 6%; I have had to let my taxes wait at
a cost of 8%; my automobile insurance is overdue and
may lapse, all because of the delay in cashing this
Government Bond. ***
Bernard Weiss, Counselor at Law, N.Y.C. I should
like to point out that one obstacle to the purchase
of War Bonds is the minimum balance requirements of
most banks. *** Only this morning my own bank
informed me that my special account would have to be
brought up to the minimum requirement, to wit, $500.
In other words, to avoid 8. penalty of $48 a year for
maintaining checking accounts which are essential to
the practice of my profession, it is necessary for me
to freeze $1,000 in cash. Multiply this by the number
of checking accounts in New York City alone, with some
banks demanding as much as $1,000 minimum balances,
and most demanding $500, and one need not be a mathe-
matical genius to figure out how many War Bonds are
not being bought which might otherwise be purchased.
Since all the banks are so patriotically displaying
posters urging their customers to buy War Bonds, it
might be a good idea if the banks themselves practiced
a little patriotism right at home by lifting their
minimum balance restrictions. ***
Regraded Unclassified
170
- 10 -
Horace W. Shepard, Shepard & Morse Lumber Co., Boston,
Mass. *** Quite a few of our employees have allowed
deductions, and as time goes along, we think there will
be more, but let me draw to your attention one or two
things. If this Government would only cooperate 8. little
bit more with individuals, I think they would get along
better. They keep throwing out hints and suggestions
that they are going to make this compulsory. Suppose
some of these employees have taken out Bonds, and then
the Government comes along, and makes compulsory another
demand for more Bonds, it is going to crimp some of
the employees very badly. I think it is up to the
Government either to say they are going to put in 8.
compulsory 10% demand, or they are not going to, and
to stop sitting on the fence", to get on one side or
the other. *** About all the Government can seem to
do today is to help out labor, and penalize everybody
else - still they turn around to the other people and
ask them to please contribute.
###
If you want
people to help the Government out and work with them,
then the Government should work with the people, and
not just one block of people in the United States. ***
C. H. Kemler, Postmaster, Marshalltown, Iowa. I realize
fully that a postmaster, when the holder of Series E,
U. S. Savings Bond requests the payment of same and
we are net satisfied as to identity of the person making
such request, there is nothing to be done but certify
same. However, the writer has for a considerable period
of time, and especially today, been severely distressed
by the number of requests for payment of these Bonds by
working people, and especially employees of the local
factories who have encouraged the payroll deduction
plan on the part of their employees. One firm in par-
ticular, namely the Marshalltown Manufacturing Company,
engaged primarily in defense work, purchased as of
June 30, 1942, better than $20,000 maturity value
Bonds. These Bonds were given to their employees by way
of bonuses and today, exactly at the termination of the
sixty-day period, we have had almost a steady stream
Regraded Unclassified
171
- 11 -
of their employees requesting payment. *** Perhaps
it is because the writer has a. son in the Army Air
Corps, and because I have personally been buying these
Bonds greatly in excess of any 10% quota, even though
I am personally obligated on bank notes and mortgages,
and further, because I am completely sold on that idea
that if war is to be brought to a successful termina-
tion, every citizen should do everything in his power
to further the war effort, that this thing has gotten
80 completely under my hide. ***
Aubrey Maddock, (Real Estate-Insurance), Hartford,
Conn. Yesterday I was in a local bank. I asked if
I could buy some U. S. War Bonds. "Yes, how many
do you want?" I said I wanted one $25 Bond and two
$50 Bonds. The assistant treasurer said he couldn't
sell them that way, that I must take one $100 Bond
and one $25 Bond, explaining that "regulations"
required selling the fewest possible pieces". Why
cannot I buy Bonds as I want them? Must I take such
denominations as the selling bank requires? I realize
that I could have bought a $25 and 8. $50 and gone back
five minutes later for another $50 -- but that isn't
the question.
H. W. Tomlinson, Agricultural Insurance Company,
Watertown, N.Y. Immediately following Pearl Harbor
this Company put in a regular payroll deduction plan
for the purchase of War Savings Bonds. We have reported
to you every month the amount of the subscriptions, and
were, therefore, rather startled yesterday to receive
a voluminous amount of literature urging us to adopt
8. payroll allotment plan.
***
I happen to be a member
of the Executive Committee of the Jefferson County War
Savings Bonds Committee, and it is certainly discourag-
ing to think that our dollars which are being paid in
taxes and loaned to the Government through the purchase
of these Bonds are not used in more productive effort
than any such needless literature as this.
Regraded Unclassified
172
- 12 -
Mrs. W. J. Klessig, Badger, Minn. You told reporters
to "ask the American public" why the August sale of
War Bonds was down. I am glad you did so, for it
gives the American public a chance to tell their
Government what they have felt for some time. Today
I have spent all the time I could spare mending grain
sacks so old and worn that one required nine patches.
*** Every cent I save that way, and every cent I
make picking berries, growing more garden than I can
possibly use, or washing and mending for bachelor
neighbors, is mine and goes into my "war fund" for
U.S.O., Red Cross and Stamps or Bonds. When I had
enough to buy 8. Bond, events were in such confusion
I didn't want to; I didn't know whether my money was
going to help our boys, or whether it was going to
profiteers in Government agencies, or to the further-
ing of Churchill's aims to hold India. *** So I
kept my money in the hope that President Roosevelt
will soon crack down on profiteering and Churchill
imperialism. If he doesn't, I shall divide my earnings
between U.S.O. and the Red Cross. *** My attitude
is typical of that of most people around here. In
our discussion groups, and our township women's club,
organized for war work, we have been uneasy about
Mr. Roosevelt's attitude. We know he has the power,
the courage and the iron will to do what should be
done to handle these two problems. ***
Get
Mr. Roosevelt back on the air to tell us definitely
what he is doing or going to do. We could go any
place with him - through the depression and through
the war. But we must know that he will be on the job
again. It looks now as though he were not. ***
Mr. Roosevelt promised that our purpose should be
the four freedoms for the world, the result of which
would be 8. lasting peace. Has he decided that is
impossible? Or became worn out? Or frightened? We
have to know the answer before we know where we are. ***
173
- 13 -
Mrs. Margaret F. Clark, Merchantville, N.J. I realize
this is presumptuous of me, but I just had to take this
liberty. I'm plain mad inside. Every week I go to
the Post Office in either Camden, or Philadelphia,
to buy Defense Stamps. I see people turning back their
Bonds, and collecting their money. ***
Our boys in
the armed forces cannot turn back. They keep pushing
ahead, some of them give their lives, while & gang of
selfish individuals buy Bonds, and then turn them in
for cash. *** Yesterday was the limit. Five people,
all of them looking as though they were financially
able to carry on, were turning back Bonds and collect-
ing. If I had dared, I would certainly have opened
this big mouth of mine and told them some of the things
that were in my mind and heart. * I take $5 each
week from my table allowance to buy Stamps. Mr. Clark
is permitting his firm to take out 10% of his salary
for Bonds. He is putting in 11 hours each night in a
100% war plant in Philadelphia. We are paying $50 a
month on our home in the hands of the H.O.L.C. Under-
stand the Home Loan hasn't demanded that much from us,
but when they first started to help distressed
homeowners, we couldn't pay. They went along with us.
I will never forget their kindness. Now that Mr. Clark
is working, I am trying to pay up for the time when I
fell down on our obligation. Both Mr. Clark's
parents and my parents came from Europe over 60 years
ago. Why? Because they didn't like what they saw over
there. Why did they stay over here and marry and have
their children over here? Well, you know the answer
to that one too.
Thank you and God bless our
President Roosevelt, our Mr. Morgenthau and all the men
who are doing 50 much for us. I feel very humble when
I think of you all - that's why I'm 50 mad deep down
inside of me when I see how ungrateful people really
are. *** You wrote and thanked me when I bought
our first Bond. Do you realize what a wonderful
privilege it is to be able to buy these Bonds?
174
- 14 -
Karl Sax, Arnold Arboretum, Jamaica Plain, Mass.
You wonder why the American people have not bought
more bonds. Perhaps my own reaction is typical.
I bought several hundred dollars worth of bonds last
spring. Then came the question of taxes for next year.
I am In complete accord with your tax program - but
what can we plan for? Taxes doubled of course; per-
haps a ten percent withholding tax; talk of deductions
for next year's tax while we are paying this year's
tax - and 80 on. There is no merit in buying bonds
if one has to sell them next year to pay taxes, so
I am simply building up a reserve. *** If we ever
learn what taxes are likely to be, then we can plan
8. rational bond buying program.
S. Gwyn Scanlan, President, Scanlan-Morris Co.,
Madison, Wis. Ref: Payroll Savings Plan. Your letter
relative to same. We do not approve of the payroll
savings plan, the deducting from an employee's wages 8.
certain percent of those wages each week. We do not
approve irrespective of how it may be termed. In the
end it is compulsory, not voluntary, and being
compulsory will create B. large amount of dissatisfaction.
The Scanlan-Morris Company and the Scanlan Laboratories
are participating 100% in the sale of defense stamps
and defense bonds. Once a week the treasurer of the
Scanlan-Morris Company Welfare Association solicits
every employee in the office, in the shop, and in the
laboratory, and the response has been voluntary and
100%. That is, all employees in the office, in the
shop, and in the laboratory once 8. week buy defense
stamps and bonds. We believe the plan that we are
using makes for permanency in the sale of defense
stamps and defense bonds inasmuch as it is voluntary.
We are writing to you frankly as we do not believe that
management has any right to make-deductions from payroll
checks except those deductions that have become a law
through Act of Congress.
175
- 15 -
J. A. Boice, Attorney, Lansing, Michigan. I have
noticed that bond sales have not been up to expecta-
tions. *** As one of the public, I should like to
give you at least a partial answer. Your merchandise
does not have sufficient variety. Beginning some
time ago, at my instigation, every loose dollar in
my family has gone into your bonds but I am beginning
to feel the need of a little more variety. *** As
an example, I handle a small trust fund. Sometime
back, in order to invest this money in your bonds,
I borrowed from the trust fund and then bought some
of the original series. This was quite awkward. I
have also bought some of the series which is now open
to trust funds. In my absence, the Federal bank
made so much trouble over the form of my signature
of my name as a trustee that these bonds were finally
bought in my own name. All this seems to indicate
that we should have coupon bonds which are transferrable.
I am so hopeful that this will occur in the near
future that I am holding small sums of money for the
purpose of purchasing these bonds. ###
176
- 16 -
Favorable Comments on Taxation
William Siemon, Cincinnati, Ohio. I have read a good
deal about the Ruml Plan and it seems to me that
the placing of taxpayers on what is practically a
pay-as-you-go basis is one of the finest things that
could be done for individual taxpayers in particular.
It is well known that the average American has been
accustomed to spend as he has earned. *** There
is no denying the advantage both to the Government,
as well as taxpayers of proceeding in accordance with
the Ruml Plan for all the years to come.
Thomas Y. Lawson, Jr., Baltimore, Md. I have been in
the Martin Plant since last November 3rd. I bought
an income tax book and figured to save four dollars,
five cents 8. week, which I have done. I have over
one hundred ten dollars ready for income tax next
November. I make about $184.00 a month; if four
dollars a week is not enough to save, let me know.
Suppose you and Congress keep changing the law and
raise the taxes, and I don't have enough saved to
meet requirements next November, what then? How am
I to know how much to save? How about me paying a
half a year's income tax now, this hundred dollars
is just laying idle, it is not even banked. I just
kept saving for income tax. Please let me know what
to expect next November. I am in inspection department
here, and will keep on the alert for sabotage and
espionage.
Thomas D. Patton, Carthage, Tenn. I have carefully
watched your consistent fight to protect the poor in
the passing of tax bills; you have fought a good
fight and I hope nothing will ever cause you to
falter or waver from your stand. *** Income taxes,
profits taxes, inheritance taxes and the "spending
tax" are all allowable as they do not add to the
poverty of the very poor. Thousands of families are
struggling to live on five or six hundred dollars
per year.
Regraded Unclassified
177
- 17 -
R. M. Richardson, Bloomfield, N. J. I believe I am
expressing the opinion of thousands of angry Americans,
and there is plenty room for our annoyance. We of
the American Public, are not as dumb as the Congress
and the House thinks. What are they trying to do?
Commit financial suicide? The answer is simple, to
the tax situation, and what are they doing, everything
but the only decent thing that should have been done,
& few months after the country was attacked. Tax the
people where they don't mind being taxed, where it
won't hurt their health. That is all the people
except the slackers that are trying to get rich from
this War. I KNOW WHAT I AM TALKING ABOUT, I am
working in a Defense Plant and can see where the
money is spent, thrown away, wasted and also saved.
Ten percent War Bonds, for every war worker, or job must
be given to one who will pledge as long as working in
war work. Many don't give 8. cent as yet.
Robert L. Lasley, Charleston, W. Va. (Enclosing copy
of letter to House Ways and Means Committee). Your
arbitrary unconsidered, and responsibility-dodging
act yesterday in throwing aside the carefully studied
plan of a spending tax struck me like a sickening
bombshell. More appalling was your vote to recommend
a general sales tax. I need not go into the economic,
as well as the moral and equitable viciousness of a
general sales tax. You know that as well as I do.
You, according to press and radio reports, brushed
brusquely, and even discourteously aside the help
brought you by the Treasury Department. *** What
is the use of trying under such leadership as you?
Hitler is at least using the keenest and most
competent expert knowledge available in a nation of
world-leading scientists. We must use every scrap
of such knowledge as we have. As it is you have done
the nation more damage than if you had blown up a
dozen of our battleships.
Regraded Unclassified
178
- 18 -
Louis R. Jones, Philadelphia, Pa. In the near future
Congress will enact 8. revenue bill imposing taxes upon
the citizenry 80 that the government may carry on
during 1943. Everyone is fully aware that of neces-
sity this measure will greatly increase his payment
over any previous year. Everyone hopes that the
increase will be fair to all alike. Among my neighbors
are three splendid couples of about my age and having,
presumably, about the same income. None of these
couples had any children. I have a son who is now &
student in one of the local universities. The course
he is taking (electrical engineering) has been acceler-
ated on the request of the Administration so that he
will be available for induction into the army as soon
as possible. This has resulted in a 50% increase in
educational expenses to me with a loss of some earning
capacity of the boy had he been able to work during
the summer months. He is now 18 so that I can no
longer claim 8. deduction for him on my tax, if the
existing provisions are retained. My father served
in the Union Army during the Civil War. I served in
our A.E.F. during 1917-1918. My son is certainly
headed for similar service. All of this has, or will,
serve to protect my neighbors and their property. Do
you think that it would be just for me to be taxed on
the same basis as the aforementioned neighbors, without
sons and without military service themselves?
R. C. Hoiles, Newspaper Publisher, Santa Ana, Calif.
Allow me to commend you for introducing the idea of a
graduated tax on spending. I have seldom agreed with
the policies of the Administration. This suggestion,
however, I can heartily agree with. The only possible
way we can stop inflation is to put a tax on spending
and not on investing.
Regraded Unclassified
179
- 19 -
A. L. Eastcott, Evanston, Ill. Should the "Ruml"
plan by any remote chance be adopted, taxpayer should
be required to make tax returns and purchase War Bonds
equal to the amount of tax which would have been paid.
(outlines own ideas) *** This proposal may be.
thrown in the waste basket without hurting my feelings
and any plans as finally made into law will be cheerfully
acceptable to me. Just sincerely trying to help the
nation.
J. P. Roach, Bayside, N. Y. You are in a position
where you have got to see that money is raised and
at the same time, justly so, you want purchases cur-
tailed. Why can't the Treasury Department quit
beating the devil around the bush and back an honest
pay-as-you-go sales tax that can be made to accomplish
both these needs? Nobody, under normal conditions,
relishes paying taxes, but the people of whom the
politicians seem afraid are now willing to make greater
sacrifices than is realized. A great majority of the
people would welcome the Ruml Plan, under which income
tax would be paid out of current receipts, but, I
suppose that is too much to hope for. However, you
have shown a happy faculty for being able to change
your mind and may, it is hoped, do so again.
180
- 20 -
Unfavorable Comments on Taxation
J. C. Morehead, Emeritus Professor of Graphics, Carnegie
Institute of Technology, Pittsburgh, Pa. As the father
of 8. First Lieutenant in the Field Artillery of the
U.S.A., and as a retired teacher and mathematician with
special training in the theory of finance, I wish to
urge that everything possible be done to prevent adoption
of the Ruml Plan, or any similar tax scheme whereby one
year's income taxes would be "forgiven". The Plan means
loss of income taxes for 8. "fat" year, in this period
of high national income; while the Government needs, and
will continue to need for years to come, all the money
it can justly obtain from income taxes. On the other
hand, 8. "pay-as-you-go" income tax plan is logical and
sound, provided its introduction is gradual, and provided
8. year's income taxes are not sacrificed in order to
introduce the plan.
(Outlines own suggestion.)
James Cameron, Chicago, Ill. You are young, have 8. good
job and no doubt extra income to fall back upon. How
about the hundreds of thousands of old Single men who
cannot get into Army work and are not wanted in any
organization yet, account the age limit? These men are
existing now earning a small income - about enough to
hold the bones and tissues together. How can they pay
any tax and do anything to help the War effort. If you
tax them you will have them all in Jail for being unable
to pay any income tax - they will have to be supported,
so where is the net gain. *** Old people have to have
Medical attention, buy clothes, pay rent, eat out (expen-
sive now for Single men) more so, in proportion than
for the Married man whose wife will cook for him. #
Have you ever taken a census of the Old Single men who
live in cheap hotels, yet are doing the best they can.
They, after all are doing their best, paying rent,
helping out best they can, hoping for a break for better
things. Why crucify them? # # Why not tax according
to ability to pay - not just on a cut and dried system?
You are not helping the War effort, the President or
anything this way. ***
181
- 21 -
Anonymous - Mailed from Los Angeles, Calif. I am a
simple citizen, no politician, never was. This morning's
paper carried two items about you that really gave me
pause. As you well know this nation is worried about
YOU. Item one was your extraordinary idea of invading
the personal life of America with a sumptuary tax that
can only result in the most widespread and persistent
unrest and dissatisfaction, and in the end, react on
for its thousands sponsors as all such legislation has always done
of
years.
***
The nation of course
needs a sales tax - that's what this thing is all about
- that's why it is sprung. A glance at California
will show the NEW DEAL, WHICH NEW YORK, TEXAS AND CALI-
FORNIA HAVE JUST GIVEN THE GATE To, is all wrong. A
Sales Tax works - the people don't vote against its
sponsors, won't vote against the NEW DEAL if it is
passed.
I have a high regard for you, Mr. Morgen-
thau. You are as good and well may be 8. better American
than
I.
You, Mr. Morgenthau, are a patriot -
spurn the company of these pale, sleezy fellows of the
world of theory and book that have never shed blood or
slept in swampy puddles, or even really earned their
living. DON'T LISTEN TO THEM WHILE THE WAR LASTS. If
you don't, you may be one of the few that will aid the
New Deal to save some shreds of its efforts (some which
are good) when the nation smites it to the ground, as
it already shows signs of doing. Pardon my frankness,
accept my estimate of you, you are ALL RIGHT.
J. Senic, Chicago, Ill. How in the heaven can a single
man live in a big city like Chicago on a salary of
$15.00 per week and pay enormous income tax of about
$50.00 a year, according to the proposed bill in the
Federal legislature. # # # Here is the exemple of the
lowest living cost in Chicago for a single person per
week: A small room with heat, $4.00; Three meals 8. day,
very poor, $7.00; Laundry, street car fare, small
insurance, $2.00; Clothing, medicine, doctor, shoe
repair, etc., $2.00. There are hundreds of tousands
of persons of 50 years of age or more, who work for
Regraded Unclassified
182
- 22 -
such 8. small compesation without any chance for a
raise or a change for better work. They are usualy
glad of what they have in their age. There are many of
these who had some money saved or little business and
lost eveything during the last depression. They have
no reserve to pay the income tax. Nor do they have
credit to loan such enormous sum of $50.00. # # Such
law would drive the poor man into impossibility. It
compells him to break the law one way or the other:
to get the money illigally or not be able to pay the
taxes.
183
September 11, 1942
Dear Mr. Belooms
This is in regly to your letter of September 2,
1942, regarding the disposition of approximately 5
million - of Silver Crdinary held by the Treasury.
Inpresentatives of the Treasury discussed this
anther in fall with representatives of the Mr Pro-
darkies Board and the Metale Reserve Company. It was
agreed that this silver could be made available for
- met expeditionsly directly W the Treasury.
Accordingly, the Treasury is propared to - this
diver swilable to fires belding high priorities for
diver to our production purposes as - w such a
list to admitted by the MP Production Heard.
Sincerely yours,
(Signed) H. Morgenthau, Jr.
Secretary of the Treasury
Menerable Donald No Balson,
Chriress, - Predection Board,
Washington, & c.
mm/ja
By Manus messinger 9/11/43
9/10/42
11am
Regraded Unclassified
WAR PRODUCTION BOARD
WASHINGTON, D. C.
OFFICE OF
DONALD M. NELSON
September 2, 1942
CHAIRMAN
Dear Mr. Secretary:
I an in receipt of your letter of August 26 enclosing
a photostatic copy of a letter from a member of our Miscellaneous
Minerals Branch to Dr. D.K. Bell of your office.
I had understood that representatives of our office
have been conferring with representatives of the Treasury
Department with a view to seeing if it is possible for the
Treasury to release any of its silver for industrial uses in
connection with the war. I had not known that any suggestion
had actually been made to the Treasury with reference to the
release of any silver.
It is my present understanding that the Treasury
does have approximately 5,000,000 ounces of so-called "Silver
Ordinary" which I am told, your counsel considers may legally
be released for industrial uses. Also, I understand your
representatives and ours have considered the possibility of
the Treasury selling this silver to the Metals Reserve Company
to be made available for such industrial war uses.
Accordingly, I should now like formally to request
that the Treasury Department arrange for the release in such
manner as it deems appropriate for industrial uses in connection
with the war, of the approximately 5,000,000 ounces of "Silver
Ordinary" held by it. This request is made on the assumption
that such oilver can legally be released by the Treasury
Department at this time.
Sincerely,
Donald Thilulen V. Nelson
The Honorable
ORDEFENSE
Secretary of the Treasury
Washington, U. C.
BUY
UNITED
STATES
WITNOS
BONDS
Regraded Unclassified
185
genal white to
9/14/42
Acing
18
OFFICE OF LEND-LEASE ADMINISTRATION
FIVE-FIFTEEN 22d STREET NW.
WASHINGTON, D.C.
Administrator
September 11, 1942
Honorable Henry Morgenthan, Jr.
Secretary of Treasury
WASHINGTON, D. c.
Dear Henry,
Thank you very much for your letter of
September 9 advising that the Treasury is
in accord with the directive contained in
the draft cable to London on the subject
of bookkeeping procedures for reciprocal
lend-lease.
As you know, the State Department is in
accord and I an now awaiting final word on
this question from Jack McCloy of the War
Department.
With best wishes,
Sincerely yours,
E
B. R.
187
SEP 1 1 1942
My dear Mr. Secretary:
I have received unefficial information
that arrangements are being made for the
exchange of United States officials in the
Philippine Islands.
I shall be glad if you would inform
me as soon as an exchange has been arranged,
and if you would give me your assurance that
the Treasury persennel in the Philippine
Islands, indicated on the enclosed list, will
be included among the American officials to
be exchanged.
Sinserely yours,
(Signed) 1. Morgenthau. 17.
Secretary of the Treasury.
The Honorable
Cordell Hull,
Secretary of State.
Enclosure.
By These: Strenges 9/11/2 4:30
ISF/efe
9/10/42
Return to Secretary's of fice
Regraded Unclassified
188
Treasury Personnel in the Philippine Islands
Name
Title
Service
Nationality
Maxwell Anderson
Attorney
General Counsel
U. 8. Citizen
filliom L. Hebbard
Economic Analyst
Monetary Research
U. s. Citizen
Thomas Page Nelson
Commercial Spee.
Foreign Funds
U. S. Citizen
Reynolds B. North
National Bank
Comptroller of
Examiner
the Currency
U. S. Citizen
Albert B. Price
National Bank
Comptroller of
Examiner
the Currency
U. S. Citizen
ISP/6 is
9/10/42
Regraded Unclassified
189
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATESept.11,1942
Secretary Morgenthau
TO
Mr. Hoflich
FROM
Subject: Shipment of Planes to British Forces
1. During the two-week period ending
September 1, 1942, 255 planes of all types,
including 184 combat planes, were sent from
the United States to British forces.
2. Of this number, 101 planes were
shipped to the Middle East, and 77 went to
the United Kingdom.
3. Thirty-three Northrop Vengeance
dive bombers were sent to India during the
two weeks, making a total of 126 dive bombers
to India since June 1, 1942.
Regraded Unclassified
- 2 -
Table I-A
190
Shipments by Area
Week
Total shipped
Total shipp
Ending
in 1942
since
Aug.25,1942
to date
Jan. 1, 194
the United Kingdom
Light and medium bombers
0
544
1,705
Heavy bombers
0
142
246
Naval patrol bombers
11
38
140
Pursuit
6
882
1,193
Army Cooperation
0
107
138
Trainers
0
0
24
Total to the United Kingdom
17
1,713
3,446
the Middle East
Light and medium bombers
9
484
814
Heavy bombers
0
0
5
Naval patrol bombers
0
6
6
Pursuit
20
454
1,302
Army Cooperation
0
30
30
Trainers
4
12
154
Total to the Middle East
33
986
2,311
the Canadian Forces
Light and medium bombers
0
59
227
Heavy bombers
0
1
1
Naval patrol bombers
0
23
31
Pursuit
0
30
72
Trainers
9
597
1,838
Total to Canadian Forces
9
710
2,169
D the British Pacific Forces
Light and medium bombers
0
145
245
Naval patrol bombers
0
O
27
Pursuit
o
200
363
Trainers
o
o
105
Total to Pacific Forces
0
345
740
D the British Indian Forces
Light Pursuit and medium bombers
16
109
109
0
40
40
Trainers
13
13
13
Total to Indian Forces
29
162
162
otals
Light and medium bombers
25
1,341
Heavy bombers
3,100
0
143
252
Naval Pursuit patrol bombers
11
67
204
26
1,606
2,970
Trainers Army Cooperation
0
137
168
26
622
2,134
Grand Total
88
3,916
8,828
- 3 -
Table I-B
191
Shipments by Types
Week
Total Shipped
Ending
Total Shipped
in 1942
since
Aug.25,1942
to date
Jan. 1, 1941
Jell Airacobra
0
315
469
Boeing B-17
o
42
62
Boston III
o
15
39
Brewster Buffalo
0
0
168
lessna Crane I-A (AT-17)
o
97
97
T-50
O
86
700
Consolidated Catalina PBY-5B
11
67
204
Liberator
0
101
190
Curtiss Kittyhawk
20
685
1,067
Tomahawk
0
0
544
Douglas Boston I,II,III
o
1
493
Fairchild 24 R-9
0
100
122
PT-26 Cornell
9
71
71
Glenn Martin B-26A (Marauder)
4
40
40
Baltimore
0
276
344
Maryland
0
0
150
Grumman Martlett II
o
57
98
Martlett IV
6
6
6
Lockheed A-29A (AC-151)
o
1
1
Hudson
1
488
1,458
Lightning
0
3
3
Ventura I
0
12
12
Ventura bomber
4
286
286
North American B-25
o
110
110
Harvard II
17
71
968
Mustang
0
535
615
Northrop Vengeance
16
77
77
Pitcairn Autogiro
o
o
5
Stearman PT-27
0.
297
298
Vought-Sikorsky Chesapeake
0
O
50
OS2U
0
27
27
Vultee Stinson 0-49
0
10
14
Vultee Vengeance
o
40
40
Grand Total-All Types
88
3,916
8,828
Light and
Naval
Week
medium
Heavy
patrol
Army
Ended
bombers
Bombers
bombers Pursuit Cooperation Trainers Total
Weekly average
of shipments
in 1941
35
2
3
27
1
29
97
Weekly average
of shipments
in first 6
months of 1942
36
4
1
55
3
18
117
July 7, 1942
77
17
0
17
0
30
141
July 14, 1942
42
11
3
24
0
1
81
July 21, 1942
66
OR
3
0
2
4
83
July 28, 1942
39
0
2
o
6
46
93
August 4, 1942
32
O
4
27
38
8
109
August 11, 1942
59
9
6
70
8
19
171
August 18, 1942
60
3
7
20
o
11
101
August 25, 1942
25
0
11
26
o
26
88
Total shipments
since Jan. 1,
1941 to date. 1/ 3,100
252
204
2,970
168
2,134 8,828
1/ Total includes planes shipped in 1942 prior to March 17 which are not included in the
weekly totals up to that date.
192
Regraded Uno
- 5 -
Table II-A - Shipments by Area
193
Week
Total Shipped
Ending
Total Shippe
in 1942
since
Sept.1, 1942
to date
Jan.1, 1941
to the United Kingdom
Light and medium bombers
5
549
1,710
Heavy bombers
0
142
246
Naval patrol bombers
8
46
148
Pursuit
35
917
1,228
Army Cooperation
12
119
150
Trainers
0
o
24
Total to United Kingdom
60
1,773
3,506
to the Middle East
Light and medium bombers
11
495
Heavy bombers
825
0
00
O
Naval patrol bombers
5
0
6
6
Pursuit
46
500
1,348
Army Cooperation
5
35
Trainers
6
35
18
160
Total to Middle East
68
1,054
2,379
to the Canadian Forces
Light and medium bombers
0
59
227
Heavy bombers
0
1
1
Naval patrol bombers
0
23
31
Pursuit
0
30
72
Trainers
10
607
1,848
Total to Canadian Forces
10
720
2,179
to the British Pacific Forces
Light and medium bombers
o
145
245
Naval patrol bombers
0
0
27
Pursuit
0
200
363
Trainers
12
12
117
Total to Pacific Forces
12
357
752
o the British Indian Forces
Light and medium bombers
17
126
126
Pursuit
0
40
40
Trainers
0
13
13
Total to Indian Forces
17
179
179
otals
Light and medium bombers
33
1,374
3,133
Heavy bombers
0
143
252
Naval patrol bombers
8
75
212
Pursuit
81
1,687
3,051
Army Cooperation
17
154
185
Trainers
28
650
2,162
Grand Total
167
4,083
8,995
- 6.- -
Table II-B - Shipments by Types
194
Week
Total Shipped
Total Shipped
Ending
in 1942
since
Sept.1, 1942
to date
Jan. 1, 1941
Bell Airacobra
o
315
469
oeing B-17
o
42
62
Boston III
0
15
39
rewster Buffalo
o
0
168
Bermuda
1
1
1
lessna Crane I-A (AT-17)
o
97
97
T-50
o
86
700
Consolidated Catalina PBY-5B
OR
75
212
Liberator
O
101
190
Jurtiss Kittyhawk
46
731
1,113
Tomahawk
0
0
544
Douglas Boston I,II,III
0
1
493
sirchild 24 R-9
17
117
139
PT-26 Cornell
10
81
81
lenn Martin B-26A Marauder
5
45
45
Baltimore
o
276
344
Baltimore III
4
4
4
Maryland
0
0
150
rumman Martlett II
0
57
98
Martlett IV
34
40
40
ockheed A-29A (AC-151)
0
1
1
Hudson
1
489
1,459
Lightning
o
3
3
Ventura I
o
12
12
Ventura bomber
5
291
291
orth American B-25
0
110
110
Harvard II
18
89
986
Mustang
1
536
616
orthrop Vengeance
17
94
94
itcairn Autogiro
0
o
5
tearman PT-27
0
297
298
ought-Sikorsky Chesapeake
o
0
50
0S2U
0
27
27
ultee Stinson 0-49
o
10
14
ultee Vengeance
0
40
40
Grand Total-All Types
167
4,083
8,995
Light and
Naval
Week
medium
Heavy
patrol
Army
Ended
bombers
Bombers
bombers
Pursuit
Cooperation
Trainers
Total
Weekly average
of shipments
in 1941
35
2
3
27
1
29
97
Weekly average
of shipments
in first 6
months of 1942
36
4
1
55
3
18
117
July 7, 1942
77
17
0
17
o
30
141
July 14, 1942
42
11
3
24
o
1
81
July 21, 1942
66
8
3
o
2
4
83
July 28, 1942
39
o
2
o
6
46
93
August 4, 1942
32
0
4
27
38
8
109
August 11, 1942
59
9
6
70
OR
19
171
August 18, 1942
60
3
7
20
0
11
101
August 25, 1942
25
0
11
26
0
26
88
September 1, 1942
33
0
OR
81
17
28
167
Total shipments
since Jan. 1,
1941 to date 1/ 3,133
252
212
3,051
185
2,162
8,995
1/ Total includes planes shipped in 1942 prior to March 17 which are not included in the
weekly totals up to that date.
195
Regraded
Uncla
196
NOT TO BE RE-TRANSMITTED
COPY NO. 13
BRITISH MOST SECRET
U.S. SECRET
OPTEL No. 316
MADAGASCAR. 2.55 p.m. 11th. First phase of opera-
tion carried out according to plan and surprise achieved. Initial
landing north of MAJUNGA unopposed, but advance slow owing to diffi-
cult terrain; second landing south of MAJUNGA slightly opposed,
slight casualties both sides. W/T Station captured intact. No
Naval casualties and no bombardment necessary from any ship. Excel-
lent Naval-Military Co-operation, resulting in speed and efficiency
of operation, probably prevented heavy casualties since some French
showed signs of good fighting value. Operations are continuing
satisfactorily. Our forces in the Central sector have reached the
bridge over the BETSABOKA RIVER 80 miles southeast of MAJUNGA, while
our Forces in the North, although delayed by destroyed bridges, are
now 20 miles south of BIRMANJA. The attitude of the civil population
is friendly although somewhat indifferent. The aerodrome at MAJUNGA
is now in use by our aircraft.
197
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE Sept.11,1942
TO
Secretary Morgenthau
Mr. Hoflich
FROM
Subject:
Summary of Military Reports
Size of Japanese Army
A recent British estimate indicates the surprisingly
small number of troops in the Japanese Army. According
to this estimate, the Japanese Army consists of 85 divi-
sions, or approximately 1,275,000 men. This number in-
cludes 16 divisions (about 240,000 troops) stationed in
Japan. It should be noted that, of these 16 divisions
in Japan, 10 divisions (about 150,000 men) are believed
to have been organized last December and to be ready for
service overseas.
(British Operations Report, Aug.27-Sept.3, 1942)
Season favorable for Japanese attack on Siberia
Climatic conditions are favorable for a Japanese
attack on Siberia in the near future. In the Manchurian-
Siberian area, the summer rainy season has ended and the
dry harvesting season is at hand. Operations begun now
could be continued during the winter, which is severe but
marked by only a light snowfall. Furthermore, the frozen
ground and rivers facilitate transportation in the winter
months.
(Institute of Pacific Relations, Far Eastern
Survey, August 24, 1942)
United Nations vs. Axis Tank Production
The War Production Board estimates that in June the
United Nations produced about seven tanks for every four
built by the Axis. The United States produced about half
of the United Netions' total. Germany accounted for about
80 percent of the Axis production, France and Czechoslo-
vakia 10 percent and Japan 10 percent.
- 2 -
198
Germany, however, began building up tank reserves
early in 1934. Despite Germany's heavy losses, her
usable tanks are reputed to exceed in number the total
British and American output of the past two years.
W.P.B. believes that the Nazi lead will soon be over-
come, since (1) United States output will be rising
steadily and (2) German output, due to bombings and
shortages of materials and manpower, has passed its
peak.
(W.P.B., "War Progress", July 31, 1942)
199
9.11.42
TELLIGENCE REPORT
NDS IN AMERICAN PUBLIC OPINION SINCE PEARL HARBOR
\ \ 5 3 S OF A \ THE N WE
OFFICE OF
war INFORMATION
BUREAU OF
INTELLIGENCE
COPY No.
33
Ferdinand Kuhn, Jr.
CONTENTS
INTRODUCTION
SUMMARY
CONCLUSIONS
FOREIGN TIME TABLE
DOMESTIC TIME TABLE
TRENDS IN AMERICAN PUBLIC OPINION SINCE PEARL HARBOR
page 1
Concentration of Effort
page 1
Length of the War
page 2
Satisfaction with Production
page 3
Criticism of Management and Labor
page 4
Criticism of Public Attitudes
page 4
Outcome of the War
page 6
Attitudes toward our Allies
page 7
Russia
page 7
England
page 9
China
page 12
Reliance on our Allies
page 13
Other Strategic Considerations
page 15
Negotiated and Separate Peace
page 18
The Peace Treaty and the Post-War World
page 19
Regraded Unclassified
INTRODUCTION
"Above all, the executive official knows that a.
policy which does not conform to the will of the
people affected creates overwhelming difficulties
in its administration. Real efficiency comes not
only from good organization and smooth procedures
but also to an even greater extent from the will-
ingness of the citizens to accept the policy and
to share in its administration."
Henry A. Wallace and James L. McCamy,
Public Opinion Quarterly, June 1940.
Nine months have passed since the Japanese attack on Pearl Harbor. As the
war has progressed, bringing with it the necessity for making quick and
drastic policy decisions, one of the big problems facing government offi-
cials has been to understand the public mind. As Vice President Henry
Wallace has pointed out, public acceptance of policy is vital to swift
and effective administration. Even more important, high public morale
is a crucial factor in any war effort, and of inestimable military value.
For the first time in history systematic gauging of the public reactions to
policies and events has been possible during war-time. To provide such
information, the Bureau of Intelligence of the Office of War Information
has, since the outbreak of war, made polls of opinion among cross-sections
of the people. It has studied their views on a wide range of military,
economic and other domestic matters.
On many of the most important issues, repeated soundings have been taken
at periodic intervals. They reveal a pattern of American thought devel-
oping under the hammer blows of historic military and political events,
reacting to drastic changes in our domestic life. Certain long-term
trend questions used by Dr. Hadley cantril of the Office of Public Opinion
Research, Princeton University, have also contributed to this analysis of
U. S. attitudes since Pearl Harbor.*
While in no sense a complete profile of sentiment in this country toward
the myriad problems of the past few months, the trends shown here do
present a picture of developing opinion on many of the larger war issues.
And such & guide serves to bring into focus the important motivations that
affect American views, while offering some guide to the directions public
opinion will take in the months ahead.
The results of these questions are property of Office of Public Opinion
Research and have been made available to OWI for administrative use only.
They are not to be quoted or published in any way without the permission of
OPOR.
Regraded Unclassified
SUMMARY
In the nine months since Pearl Harbor, American opinion has been ex-
tremely responsive to news from the fighting fronts, and on many 1a-
sues has fluctuated sharply with the military reports of the moment.
There are some encouraging signs that public attitudes have gravita-
ted toward & more realistic view of the war, although soft spots in
the people's thinking are still apparent.
For example, people have demanded concentration of our efforts against
that member of the Axis which is on the attack. Last spring they
wanted to hit hardest at Japan. But the summer campaign brought back
into better perspective the menace of Nazi power. And Americans are
now convinced that we should turn most of our strength on Germany.
Opinion on length of the war shows that Americans went through a. per-
iod of pessimism after the fall of Singapore, but their spirits rose
very high in early June after the Coral Sea and Midway battles and the
Cologne bombing, only to fall when news of summer reverses poured in.
Although the present trend is toward a soberer and more realistic view
of the situation, there is still a great deal of optimistic insistence
that this war will be a relatively short one.
Despite ups and downs of opinion regarding the length of the war, how-
ever, there has been relatively little variation from the steadfast
majority conviction that we will both win and dictate the peace, At
times this confidence has raised a presumption of complacency on the
part of a large part of the population.
Public appraisal of the progress of production has tended to grow more
critical in recent weeks. Bad news this summer from both the battle
and factory fronts evoked attitudes which sent satisfaction with pro-
duction tumbling downward.
This same growing disapprobation has been registered toward the over-
all war effort of the nation. A majority have always said this country
"is doing all it possibly can to win the war", but this majority drop-
ped from 81 per cent in June to 61 per cent in July. It is notable
that while this trend was accompanied by declining satisfaction with
British effort, over the same period of time there was rising recogni-
tion of Russia as the country trying hardest to win the war.
Perhaps most encouraging of all the developments in American thinking
since the outbreak of war is the strengthening American unity with our
Allies. This comes out in the overwhelming belief that we cannot win
this war alone, and in the demand for a second front, in the belief
that we should continue to send lend-lease supplies abroad.
Regraded Unclassified
Closely related to these opinions is the strong sentiment for sending
our forces abroad to fight the enemy wherever he may be instead of
keeping them at home. Also significant are the many evidences that
Americans want this country to take & more active role in internation-
al affairs after the war.
Nevertheless, Americans have not accepted the motives and fighting con-
tributions of these countries without serious reservations. They have
criticized our main Allies - England and Russia - on different grounds.
While Americans take their hats off to Russia's fighting contribution, a
great many of them continue to suspect that she may make a separate peace
with Hitler, or that she will not cooperate with us after the war,
The American estimate of England is exactly the reverse. Confidence in
her determination not to negotiate & separate peace with Germany and in
her willingness to cooperate with us after the war is very high. But her
contribution in battle is discounted, and a third of the people think she
will let us do her fighting.
China appears to be taken for granted. Confidence in her continued resis-
tance and her desire to work with us has always been very high, but she is
given little recognition for her part in the fighting.
Finally, there is little disposition on the part of the American public
to accept a negotiated peace on any terms which would leave the Axis with
its winnings to date. It should be borne in mind, however, that this
peace sentiment has been measured at & time when the average American has
felt the impact of war very little, when United States casualties have
been relatively light, and while confidence in victory has remained con-
stantly high.
CONCLUSIONS
It is clear from the evidence presented here that the American public has
been moving steadily toward a more sober view of the war. The fact that
many opinions fluctuate 80 sharply in response to news of the moment in-
dicates, however, that a completely realistic evaluation has not yet been
attained. Also, there are many factors which are constantly turning the
people's thinking down blind alleys. These include traditional prejudices
against our Allies, a lack of a complete understanding of the implications
of global war, and cocksureness arising out of the fact that the United
States has never been defeated. There remains an informational task of
strengthening the realization that in more complete union with our Allies
there is strength, and in countering the dangerous assumption that because
our ancestors have never lost a war victory in this one is assured.
Regraded Unclassified
FOREIGN TIME TABLE
Date
Event
Dec. 7
Pearl Harbor
Dec. 25
Fall of Hongkong
Dec. 31
Russians recapture Kerch
Jan. 2
Fall of Manila
Jan. 2
United Nations Declaration
Jan. 20
Russians take Mozhaisk
Jan. 23
Battle of Macassar Straits
Feb. 15
Fall of Singapore
Feb. 25
Staraya Russa surrounded by Russians
Mar. 9
Fall of Java
Mar. 17
Appointment of MacArthur
Apr. 8
General Marshall in London for conferences
Apr. 9
Fall of Bataan
Apr. 17
Bombing of Tokyo
Apr. 26
Hitler's speech requesting additional power to stamp out
treason, sabotage, etc.
May 4
Beginning of Coral Sea Battle
May
5
Announcement of Madagascar attack
May 5
Russians attack Kharkov
(Note: Russians were advancing until May 10 or 15th)
May 6
Fall of Corregidor
May 12
Germans launch Kerch offensive
May 19
Germans claim Kerch occupied
May 28
Heydrich wounded
May 28
General Arnold and General Somervell in London
May 31
1000-plane attack by RAF on Cologne
June 4
Beginning of Midway Battle
June 4
Aleutian landing
June 10
German offensive around Kharkov beginning
June 10
Razing of Lidice
June 12
Molotoff's visit announced
June 13
A.E.F. landing in Ireland announced
June 22
Fall of Tobruk
June 26
Eisenhower named Chief of United States operations in Europe
July 1
British stand at El Alamein
July 4
Sevastopol falls
July 8
Germans reach Voronezh
July 28
Announcement of fall of Rostov
Aug. 7
United States-Australian offensive against Solomons announcement
Aug. 8
Arrest of Gandhi
Aug. 17
Churchill-Stalin conference announced
Aug. 19
Raid on Dieppe
Aug. 22
Brazil declares war on Germany
Aug. 23
Large convoy of A.E.F. arrives in Ireland
Aug. 23
Nazis cross Don River elbow
Aug. 26
Japs attack Milne Bay
Aug. 30
Jap defeat at Milne Bay announced
Aug. 30
Grew's speech on Japan
Sept. 1
Rommel launches offensive at British Egyptian line
Sept. 7
Complete repulse of Rommel announced
Regraded Unclassified
Regraded Unclassified
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Depo
EASUP
LOBEICH LIWE
DOMESTIC TIME TABLE
Date
Event
CUUOHS
Jan. 12
W.L.B. created
Jan. 13
Donald Nelson appointed Chief of Production
Jan. 27
Leon Henderson appointed over rationing
Apr. 18
War Manpower Commission established
Apr. 28
President's 7-point anti-inflation program speech
May 15
Gas rationing
May 18
Price ceilings
May 18
Wallace Peace Aims speech
May 30
Sumner Welles peace aims speech on Memorial Day
June 7
Nelson acclaims auto industry as production pacemaker
June 10
Nelson declares nation has done impossible in war output
June 11
Oliver Lyttleton says United States production ahead of British
June 16
Nelson reports war output at almost two billion dollars
June 16)
July 10)
Rubber salvage drive
June 26
New York Times story reporting that rivalry to secure materials
thwarting the war effort
June 26
Nelson plans more scrap drives
June 27
Production Communique
June 28
Arrest of saboteurs announced
July 9
Andrew May's announcement that war will end in 1942
July 9
Trial of saboteurs begins
July 11
Nelson says war output to be forty billion dollars
July 14
Non-stop campaign for collecting scrap begins
July 18
Higgins ship contract cancelled
July 23
Meat shortage in the East reported
July 24
Chief Justice Stone appointed to survey rubber
July 24
Rayburn blocks move to stay Higgins contract cancellation
Aug. 1
Nelson gives tentative backing to Kaiser plane plan
Aug. 8
Saboteurs executed
Aug. 20
President says he's not "blue" over production
Sept. 1
Announcement that meat will be rationed
Sept. 7
President's message to Congress and fireside chat demanding
anti-inflation legislation
Sept. 7
One hundred and seventy-four ships launched.
Note: Production news was optimistic from first of June until about
July 10 to 15. (Pessimistic from July 15 till end of August)
BIGAT 3/117 DITESMOO
CHART I
SHOULD WE NOW CONCENTRATE ON GERMANY
OR JAPAN?
2
doenge INSTRUCTION
33%
22%
21%
Concentrate
on Japan 1000
YEW
15%
dettine
Is
before
actionbogo
notified
and
40%
34%
wish
5
cee
of
22%
Concentrate
on Germany
SAPE ni time
27%
28/
G
mallob
23%
F
airigod
Concentrate
on both
reducts
Withdraw
7,
7,
87
to home
noticition
117
9%
87
Not
ascertainable
APRIL
MAY
JUNE
JULY
RUSSIANS ADVANCING
RUSSIANS WITHDRAWING
senti at ATTACK OF COLOONS
ALAMON
real
to
SW
(it)
STALL
IRAIL Lts. d
PALL OF
d
Regraded Unclassified
TRENDS IN AMERICAN PUBLIC OPINION
SINCE PEARL HARBOR
Military events since the outbreak of war have had an enormous
impact on the thinking of the American public. Since December 7th the people
have fixed a good share of their attention on the changing fortunes of war.
Their hopes and fears regarding the length and outcome of the war, their
urge to concentrate our energies on Germany or Japan, their approval of the
efforts of our Allies, even their satisfaction with war measures here at
home - all have risen and fallen sharply with the shifting fields of battle
all over the world.
CONCENTRATION OF EFFORT
One of the clearest reflections of the sensitivity of opinion to
military events shows up in the public's view of where we should concentrate
our fighting efforts.
The people have tended to demand strongest
action against that member of the Axis which
is on the attack.
Last spring when Japan was on the march through the Southwest
Pacific, the public said, "Concentrate on Japan". The German summer campaigns
and the Russian reverses have brought people's attention sharply back to Bur-
ope. "Hit Germany," they are demanding, as & large section of the public
clamors for & second front. (Chart I) But a strong resumption of the Jap-
anese offensive may once again turn sentiment back toward & concentration
in the Orient and away from the ultimate menace of Nazism. If this should
happen while the threat of Germany remains great, it might well indicate
a need for a greater information effort to clarify for Americans the full
meanings of global warfare.
Regraded
ИОӀИӀЯ0 CHECK ИАСИЯЗМА MI ВОИЗЯТ
ЯОВЯАН JRAST
WAM 8012
as bed TFR to
562 ats redmeded 90018 and to subjetter odt no tosque
all
to 502 Is state Boog B boxin avad
20
1787 add Dan brue segnn story
X
gm
59%
CHART Il
WAR WILL LAST
150 to sholl
53%
addded to effects
50%
sved lie 47% emort
TWO YEARS
43%
44%
yyo
40%
OR LESS
37%
10
28% 29%
of notata
20%
1942
1943
Jaugh01/8 DCAD
DEC JAN MAR APR MAY JUN
MACATHUR
HEADS
d
FORTO
INOORAM
HARIOR
MANIA
MATANCE
LATION
d
INISON
ATTACK ATTATTLE OF COLOONE the FREE BIO
sas
PEAR
de
TALL
FAIL
THE
If Germany defeats
Russia this summer
and to noldous 31R" -ego
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Regraded Unclassified
- -2-
THE LENGTH OF THE WAR
The public's estimate of the ultimate length of the war has, of
course, also been very sensitive to military events. In general, people
have tended to think in terms of a short war.
Thinking on this issue falls roughly into three periods over the
past nine months. (Chart II)
1). In January, two-fifths were confident that tonios less
would 668 an end to the war.* But the bad news from Malaya and the Philip-
pines had a sobering effect, and the fall of Singapore deepened the gloom.
until by late February only 28 per cent clung to the optimistic belief that
the war would be over within two years.
2). Reports of Russian successes and German difficulties in
occupied Europe again lifted American hopes, and in early June, after the
Coral Sea and Midway Battles and the 1000-plane attacks on Germany, optimism
soared to dangerous heights. At this time almost three-fifths saw the war
ending in two years or less.
3). But the fall of Tobruk and German bludgeoning of Russia again
deflated American optimism, and by July sentiment had descended to a point
near that at the beginning of the war. There it remained through August:
In spite of the passage of eight months, once more about two-fifths of the
public were saying that the war would be over in two years or less.
* Two earlier polls were made in December 1941, and early January 1942, in
which elightly different phrasings of the question were used. Results were
similar to those obtained on the late January poll.
Regraded Unclassified
- S
SAW ЭНТ 10 HTDM31 3HT
to. ,and TAX ed# 20 rigne! comitter odd 10 addition s'ollduq of
algues at of evidiance THEY ased ogån CONTUOD
Imale A to earnt ni service of TOB
67%
CHART III
PRODUCTION
50%
IS GOING WELL
43%
8683
2022
MAY
JUNE
JULY
AUG
OF COLOGNE
niego CORAL SA BATTLE LOAS BATIONING
BATTAINE
COMMISSIONER
OF
d
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[HOONS
OKAISER CANCELLED LOANS
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079W .beau 010W notissup edd TO visitgle dolder
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Regraded Unclassified
- 3 -
These facts have important implications for
an information and morale program. The shifts
from optimism to pessimism and back again
suggest that the public may distort the im-
portance of individual military events.
Also, the morale of a people at war will probably not be bettered
by having soaring heights of complacency followed by deep valleys of gloom.
In any case, the tendency of the "short-war prophets" to be less concerned
about the necessity for sacrifices to win the conflict makes it imperative
to follow closely opinion on this matter.
ROGAJ
DA
SATISFACTION WITH PRODUCTION
JIA
The bad news of summer months not only jolted people's ideas
regarding the length of the war. Apparently, it has also caused them to
turn a more critical eye on the progress of production. News of an impend-
ing raw material shortage was simmering in July and reached a boiling point
in August. The Higgins ship contract was cancelled. Pressure in the metal
salvage drives was being increased. Criticism of W.P.B. and of wasteful
practices in Army and Navy munitions policies broke into print. And all
these factors have undoubtedly influenced attitudes toward production progress.
Only a short-term trend is available, but the drop in satisfaction
from early June to July was quite sharp, and the low level continued in
August. (Chart III) Returns from a survey made in late August indicate
virtually no change from the mid-August figure. 'It is likely that this drop
in satisfaction was accelerated not only by Allied military reverses, but
also by & growing volume of pessimistic reports regarding production.
Regraded Unclassified
tax move world
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20
and Son in 25 Ved edd 100.1A
73% Assigned CHART IV
EXECUTIVES,
Deliveries
not
67%
and
(8860
YMA
111,
WORKERS,
63%
59%
61%
will
57%
913 duode
LABOR LEADERS,
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ARE DOING
EXECUTIVES
ALL THEY CAN
36%
CITDAYSITAS
WORKERS
28%
25%
W
LABOR LEADERS
0
-bread
s
FEB
MAR
APR
MAY
JUNE
JULY
AUG
Issue any ni
EDA
il
PRODUCTION NEWS
PRODUCTION HEWS
OFTWESTIC
PESSIMISTIC
bar
ogavize
Un
wate
TAL
OF FAIL d BATAAN
CORN JOAS
OF COLOGNE INCONSE
CANCRUB
IONI
TOTA
el
APORTMENT
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essits
LONG
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notsonborg introges obselmieseq To emidov gniwors 6 vd onls
Regraded Unclassified
CRITICISM OF MANAGEMENT AND LABOR
Satisfaction with the three groups manning the production front -
management, workers and labor leaders -- also paralleled the rise and fall
of general optimism attributable to military events, and reflected in esti-
mates of the length of the war. Satisfaction was down in March, up in early
June, back down again in July. (Chart IV) Returns from a late August poll
again show virtually no change from the July figures. On all tests approval
of workers and executives almost doubled approval of labor leaders.
ОИМАТ
ТОИ
It is also notable that attitudinal changes follow almost parallel
lines for all three groups. There is little alteration in the relative
ranking of these groups except that workers moved up to top place in public
favor by early June and held this position in July.
This finding is the more interesting because there have been spor-
adic newspaper criticisms of strikes, high wages, and overtime pay for the
48-hour week. In contrast, criticism of management has been more or less
soft-pedaled in the press, although in August the attack on dollar-a-year
men was revived, and the earlier exposé of Standard Oil of New Jersey's
tie-up with German cartels may possibly have influenced opinion toward
management to some extent.
CRITICISM OF PUBLIC ATTITUDES
Opinion on all the above issues has tended to fluctuate with the
tenor of war news. Its general direction has been clear: in response to
the most. foreboding reports from summer battlefields, the people have gravi-
Regraded Unclassified
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AUG
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Regraded Unclassified
- 5 -
tated steadily toward & more realistic view of the military situation and
the task ahead. Attitudes on two other factors - belief in the seriousness
of the public's view of the war, and confidence in our complete victory -
have remained remarkably stable since spring, however, and in some cases
probably still contain dangerous seeds of overconfidence.
DIW SW
First, a majority of the people have consistently stated that the
people of this country are not taking the war seriously enough. This major-
ity dropped, however, from 64 per cent in March to 56 per cent in April and
remained barely above the 50 per cent mark throughout the summer. (Chart V)
This can be considered & rise in complacency, since those criticizing public
attitudes are probably not complacent and this interpretation is supported
by correlation with other trend results.
Criticism of the public's attitude was highest
in March, when most people were saying the war
would be & long one. Criticism reached & low
point in early June when the peak of optimism
regarding the length of the war was attained.
Regraded
Unclassified
è -
been noMarrie quality edo to welv offetises B braword Wilbarde betal
200 al talled -- amount Toddo ow) no bands Head odd
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20085 ODIOS 112 bita Toveworl sonta block videxamer even
20 eboes atstrob Vidadora
WE WILL
69%
CHART VI
VI.7 20717 VES
60%
61%
SURELY WIN juons
54%
the ItreA n1/J00
AND DICTATE
41%
THE PEACE.....
of notta
.bon
DEC
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
IPEAR HARBOR
[PALL OF MANIA AMELION HEADS (PALL MODUCTION di
OF MACASTINUR in 1000
the COLOGNE
SOUTHON'S
AGAINST
* If Germany defeats
(FALL
Russia this summer
Regraded Unclassified
- 6 -
OUTCOME OF THE WAR
Perhaps more important as & possible indicator of over-confidence
is the fact that the ups-and-downe of allied military fortunes have done
little to shake American faith in ultimate victory.
Only in February, after the capture of Manila and about the time
of Singapore's fall, did conviction waver that the United States would both
win one war and dictate the peace. (Chart VI) It dropped from a high 69
per cent in December to 54 per cent in late February, but it climbed back
to 60 per cent in March, and has since persisted on an even keel, in spite
of the trying news of British and Russian summer reverses.* About one-
fourth of the public, however, have consistently indicated belief that our
victory would not be complete. They have clung to the opinion that the Axis
would be strong enough to wring major concessions from us at the end of the
war.
The stability of results on this question, as compared with the
fluctuating findings on others, probably indicates a deep-seated confidence
in our ability to triumph. despite recurring vicissitudes. It also indicates
the persistence of the platitude that Americans can never lose & war because
our ancestors have never lost & war in the past.
*These results were obtained on a four-part attitude scale, which ranged from
absolute victory and domination of the peace to defeat. In the middle ground
were "Victory for the Allies with certain concessions to the Axis," and a
"Draw". About one-fourth of the people consistently chose the "Victory with
concessions" alternative, giving an average of 84 per cent to 90 per cent at
all times who were positive we would win.
Regraded Inclassified
Regraded Unclassified
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COLCOWE Ok THE MYB
- 7 -
ATTITUDES TOWARDS OUR ALLIES
RUSSIA
Relatively few people were willing to believe that defeat of
Russia meant the difference between Allied and Axis victory, but there
was & precipitate (17%) drop in optimism as to the war's outcome when
the public was presented with the hypothetical possibility of Russia's
elimination from the war. (Chart II) Most of those who changed their
opinions fell into the group thinking the outcome would be & draw, or
those foreseeing victory with concessions to the Axis. Only a relatively
small number believed that a Russian defeat would mean an Axis victory
over us. Many, however, were unable to answer the hypothetical question.
Quite naturally, the prospect of a Soviet defeat induced pessi-
mism regarding the length of the war. Thus, 47 per cent thought the war
would be over in two years or less under present circumstances, but only
20 per cent would be that optimistic if Germany defeated Russia this summer.
50 per cent thought the war would be longer
if Russia lost this summer,
16 per cent estimated it would be the same
6 per length, cent thought it would be shorter, and
28 per cent gave no opinion.
Interviewers reported, however, that many respondents simply could not con-
ceive of Russia being knocked out of the war and wanted to argue the point
rather than answer the questions on this issue.
Regraded
IUD SURAWOT
TO
svaline
stew
view
Males
81%
RUSSIA AND
77%
CHART VII
ENGLAND WILL
ENGLAND
NOT MAKE
56%
51%
RUSSIA
A SEPARATE
PEACE
Dot
FEB
MAR
APR
MAY
JUNE
JULY
AUG
76%
77%
72%
68% 72%
ENGLAND
DO YOU THINK
51
RUSSIA AND
45%
45%
43%
38%
ENGLAND WILL
RUSSIA
COOPERATE
WITH US AFTER THE
WAR IS WON?
FEB
MAR
APR
MAY
JUNE
JULY
AUG
RUSSIANS ADVANCING
RUSSIANS WITHDRAWING
PAUL d SINGAPORE
FAIL OF FALL JAVA
FALL Md
the the R MICH COLOGNE IRALL d ROBIOY
COMMON ISTAUNI BROWN ATTACK
as
10
Regraded Unclassified
- 8 -
The fact that elimination of the Red Armies was utterly incon-
ceivable to many people, plus the disinclination of the majority to see
such & defeat as doing anything other than postpone the ultimate Allied
victory, furnish clues to the difficult adjustments in public thinking
which might be necessary should the Nazis knock Russia out of the war.
The findings just presented bring into sharp focus the extent
VATHUOD
of our reliance on Russia as an ally. But to understand American feeling
about this alliance it is important to note that attitudes toward Russia
during the first few months of our partnership with her though increasingly
favorable, have been of an ambivalent character. The shock of the Russo-
German pact and disapproval of the attack on Finland, added to a deep-seated
and long-standing distrust of the Communistic experiment, have not been
suddenly erased from the public mind by the fact that we are now fighting
on Russia's side.
For the past three or four months polls have shown consistently
that almost half of the population suspect that Russia might make & separate
peace with Germany if the opportunity or necessity arose. On the other hand,
eight out of ten were certain that we could depend on England not to nego-
tiate separately with the Axis. (Chart VII)
Similarly, distrust of Russia's post-war behavior has been wide-
spread. Until the end of summer, & minority of the public had confidence
that she would cooperate with us after the war. But events of the last
nine months have caused many Americans to re-examine their stereotypes of
Russia. Confidence in her post-war cooperation climbed steadily from 38
per cent in March to 51 per cent in late August. Appreciation of Russia's
Regraded Unclassified
8
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40%
37%
CHART VIII
COUNTRY TRYING
33%
HARDEST TO
34%
30%
WIN THE WAR
22%
UNITED STATES
el 0,7 Bebbe
14%
13%
good
MA
event
RUSSIA
9%
WOR or 8%
CHINA
7%
6%
ENGLAND
APRIL
MAY
JUNE
JULY
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Regraded Unclassified
- 9 -
war effort, however, has never been low. The Red Armies have always been
credited with "trying harder to win" than our other Allies. And there has
been a steady increase in approbation of the all-out nature of the Russian
war effort. (Chart VIII)
Thus, coupled with a strong but steadily declining, suspicion of
Russia's reliability, there is definite evidence of America's appreciation
of Russia's contribution to the war against the Axis.
ENGLAND
Attitudes toward England as an ally, have been very different from
those toward Russia. People generally have exhibited & fairly steady conviction
of Britain's trustworthiness, but they have also indicated strong reservations
regarding the zeal and effectiveness of her fighting.
Only about 10 per cent have ever expressed fear that Britain might
make peace without consulting her Allies, and the vast majority have expected
her to cooperate with us after the war. However, this majority expecting her
to cooperate has been decreasing slightly - from 78 per cent in February to
72 per cent in late August. And England has consistently been rated low on
her fighting effort. Thus, when people have been asked which of the four
main Allies is doing the most to win the war, England has always ranked behind
Russia, the United States, and even China.
Trend questions used by the Office of Public Opinion Research,
Princeton University, since the beginning of the war give a more precise
measurement of public satisfaction with the English war effort. Also, they
Regraded Unclassified
and acad anterns
this
on
december
in
To
CHART IX
to DO YOU THINK THE UNITED STATES (ENGLAND) IS
DOING ALL IT POSSIBLY CAN TO WIN THE WAR?
80%
81%
78%
73%
74%
70%
69%
67%
62%
65%
63%
62%
61%
58%
58%
49%
49%
vr
UNITED STATES
ENGLAND
FEB
mar
APR
MAY
JUNE
JULY
AUG
100 missions pl
and
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TAL
antital? rod
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- 10 -
furnish an interesting comparable measure of satisfaction with the United
States' effort.* The following questions were used to test the attitudes
toward each of these two countries:
"Do you think the United States is doing
all it possibly can do to win the war?"
"Do you think the British are doing all
they possibly can do to win the war?"
Public satisfaction with England's effort seems to follow closely
British military fortunes. It was low in February and March, when Malaya,
Java and the Solomons were being swallowed by the Japs. It rose to an
all-time high in June, following the occupation of Madagascar and the
1000-plane raids on Germany, but dropped after the fall of Tobruk and the
Russian reverses in the Caucasus and Crimea. During the summer while Britain
made no striking contributions to the fighting, satisfaction with her effort
remained at a low point through the middle of August. ЭИТНОЯ (Chart IX)
ЯЕНТ
In the early part of the year comparable satisfaction with the
United States' war effort tended to follow the same general pattern as
satisfaction with the British effort, although it remained consistently
higher. This satisfaction went down in February and March with the bad
news from the Pacific and rose again in the late spring. With the coming
of summer and the beginning of the German campaign in the East a striking
change occurred. Satisfaction with our part in the war took & nose-dive
of 20 percentage points from June 9th to July 14th. The result very prob-
ably harks back again to growing recognition of our reliance on Russia.
Undoubtedly, impatience over our failure to open a second front, coupled
* (Note):. The results on these and other 0 P OR questions are the prop-
erty of the Office of Public Opinion Research, Princeton, New
Jersey. They have been made available to the OW I for
administrative use only and are not to be quoted or published
further without permission of 0 P 0 R
Regraded Unclassified
401 new to TOTAL IM
out John
30.50
doe
DE
tip
way
CHART X
36%
Percentage saying that
32%
29%
BRITISH WILL
TRY TO GET
US TO DO
THEIR FIGHTING
JAN
FEB
MAR
APR
MAY
& LONDON
MANIA
SIGAPORE
[FAIL OF
TIME)
[PALL OF
PALL
[FAU OF (FALL MVA
&
MADADASCAR
ATTACK LABIOLO, PLANE & OF
W of clays Mozd WITH
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singh address 16 04/220 odd is Was
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ed of and Two rido was
a n to Regraded
Unclassified
- 11- -
with concern over Russian reverses, are at the root of this increased skept-
iciam concerning our efforts.
The Solomon Islands' offensive probably allayed some of the crit-
icism, for satisfaction turned upward in August. However, if any catastro-
phe should befall the Russians, it is probable that the critical trend would
be resumed.
Another trend followed by OPOR sought to determine how much
dissatisfaction with the British was attributable to the belief that "Britain
will fight to the last American". The following question was used:
"Do you think the English will try to get us
to do most of the fighting for them in this
war, or do you think they will do their fair
share of fighting?"
This question does not seem to be influenced 80 directly by British
military successes or defeats. (Chart x) Somewhat more than a third of those
with opinions have consistently accepted the charge that the British will let
us fight their war, and this proportion was alightly higher on the last test,
made in the latter part of May. The stable results on this question suggest
that the critical group probably includes & nucleus of persons with fairly
strongly entrenched anti-British views. And the problem of converting them
to a frame of mind more conducive to all-out cooperation presents an inform-
ational challenge of real magnitude.
Regraded Unclassified
If
bearement about to toon and in UTA 7670 0300000
12/20/10 "IVO restri
-3170 nomoloB off
THE It nt Service TOT 150/01
bluow incoment CHINA Claired bloods mary
ad
Attitudes toward China, our third major ally, have on the whole
been very favorable. Remembering her tenacious struggle against disheart-
ening odds through the 1930's, Americans have overwhelmingly rejected the
idea that she would make a separate peace. An even larger majority have
been sure that China will cooperate with us after the war. Perhaps because
her fighting potential seems small and her continued resistance is taken
for granted, China is given relatively little recognition as the country
trying "hardest" to win the war. She has consistently ranked third, behind
Russia and the United States. (Chart VIII)
that
befores
140 02/30/1914 of PIOB brown to hass? 24 of
lows to oggallado
Regraded Unclassified
- 13 -
RELIANCE ON OUR ALLIES
Further evidence of distrust of our Allies was found in the
general doubt and skepticism with which people regarded the possibility
of repayment for our lend-lease shipments. In February about & fourth
were in doubt as to what Russia would do, and approximately & fifth did
not know whether England would repay us. In both cases the remainder
divided evenly between those who maintained we would and those who thought
we would not be repaid for our lend-lease aid.
HW 9W
Most of those who doubted whether Russia would make restitution,
however, thought she would not be able to pay and only a few commented that
she could not be trusted. In the case of England, on the other hand, a
majority tended to hold her default on her last war debt against her, and
reasoned that because of this she would not pay this time either.
Nevertheless the hangover of emotional indignation caused by the
renunciation of war debts from World War I seemed to be on the decline, for:
22 per cent in February favored giving supplies
to England or to Russia, but
35 per cent in mid-July said we should give and
not expect repayment for supplies sent to
our allies.
In spite of considerable feeling that we might never be reimbursed
for our war aid, most Americans favored maintaining a continuous flow of
supplies to the countries manning the battle lines. After the outbreak of
war in December, even when our own needs for an under-equipped army were
Regraded
et
23NJA RUO MO
está n2 bane't 120.30 to reviews
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direct B toods no 70 to
bib & bring die Gluck alams OF OF Iduct CHART XI
85%
whatevers 78% 80%
ingueds order econt Nha
WE WILL
exten busine
osd! NEED ALLIES rino
8 been reviso add (50
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have
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MAR
is
APR
MAY
JUNE
JULY
1902 ed) noted
seliquin
BATAAN
BATTLE
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90
TALL
ATTACK OF [PAIL OF PAIL COLOGNE
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bsetudator ad TATER ON snds willoot 10 edigo aI
to wo.ft 2 belover Jeom ,bta 152 MISC TOT
to eda TOJIA edo one of
GTOW VINA as not aboom nwo TWO new neve nl TSW
Regraded Unclassified
-
14
urgent, 58 per cent thought we should send Britain and Russia at least as
many supplies as we did before the war. Some of these even advocated in-
creasing our shipments. Total favor for maintaining lend-lease at least
on & par with shipments before the war had not increased by February.
Actually, however, sentiment on the issue had grown more favorable, since
the number who said we should send more supplies rose from 21 per cent in
December to 28 per cent at this later date.
While American approval of individual allies has had both ups
and downs, awareness of our need for allies has been keen from the start,
and has been steadily increasing. In early May when this question was first
asked, the majority were of the opinion that this country required the assis-
ЯЗНТО
tance of other countries to achieve victory and it had increased by late
July when the issue was last put to the public. (Chart II)
There is further wholesome evidence that most Americans conceive
of the relationship with our allies as a give-and-take affair. As already
reported, they have become increasingly aware of the contributions Russia
and other allies are making to our cause. The polls also reveal that people
realize the necessity of repaying these contributions in other than monetary
ways.
enod
Americans definitely favor opening a second front which will rewa add
lieve pressure on the Russians.
Bit
Corrective
Early in August 62 per cent of the public
thought that "in the next two or three months (esol to
the Allies should try to land troops some-
where in Europe to attack Germany".
Regraded Unclassified
- 15 -
They favor this move to divert Nami attention even though many hold grave
doubts as to the success of such action.
46 per cent said the chances of success
were very good,
26 per cent thought they were about 50-50,
13 per cent rated the chances of success
as less than 50-50, and
15 per cent would not express an opinion.
A clue to the probable reason for the sentiment in favor of an
invasion was found in & poll made later in August, which revealed that 42
per cent of the public doubted whether Russia could "hold out until this
winter if she didn't get more help from the Allies than she's now getting".
OTHER STRATEGIC CONSIDERATIONS
There is further evidence that the public would welcome the
institution of more offensive tactics on the part of the United Nations.
The public wants our armed forces to take
the war to the enemy, and
they favor the use of hard-hitting all-out
tactics.
The isolationist argument that we should bring our forces back
home and concentrate on guarding our own shores has never been accepted by
the public since the wan's outbreak. In March when the Japanese were reach-
ing a high water mark of success in the Pacific, and domestic gloom was
unusually heavy (only 28 per cent thought the war would be over in two years
or less), the public overwhelmingly opposed any compromise or withdrawal. Only
Regraded Unclassified
- 16 -
1 per cent wanted to "withdraw from the Far
East and make peace with Japan",
4 per cent wanted to "withdraw to Hawaii,
Alaska and our own Pacific Coast and let
the Japs carry the war to us",
88 per cent wanted to "keep fighting an all-
out war against the Japs wherever we can
possibly attack them", and
7 per cent were uncertain.
SHT
The four part question (see Page 1 and Chart 1) on where we should
concentrate our efforts has also, since May, given people an opportunity to
say that we should "pull our forces close to home and use them to protect
our own shores". In choosing from the four alternatives presented, never
more than 7 or 8 per cent have advocated this defensive policy - not in
early June when the Midway Battle and the bombing of Cologne engendered
high optimism, nor in mid-July when the public was sobered by bad news from
Russia and Egypt.
Also, an OPOR question has drawn the issue sharply by presenting
only two alternatives which forced a choice between offensive and defensive
strategy. The following question was used:
"Which of these things do you think the United
States should do? Send most of our Army abroad
to fight the enemy wherever they are, or keep
most of our Army at home to protect the United
States?"
The results showed that a somewhat larger percentage, but still a minority
favored defensive strategy, and this minority has tended to decline in recent
months. It was:
28 per cent in March
25 per cent in June
24 per cent in July
Regraded Unclassified
- as -
754 edd month RG of betnew Jabo zeq I
Who esseq orien brea TEAM
AtawaB of of bednew JOBO rug 4
sei bria Jeaco octions nwo TWO bre excalA
1"ell at TSW silt VITEO 508% add
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1182 9W reversement one oris Jantage 78% too
Das world NOBIJA
informação GREAW 32100 TOQ Y
Percentage saying
CHART XII
before 02
WE SHOULD FIGHT AN ALL-OUT WAR INCLUDING THE
BOMBING OF JAPANESE CITIES
67%
Josdorg of mouth ow 59%
56%
58%
32d TAX
TEVAN betaeserg soy 50%
III
us
47%
ten
dog
Fight all-out war
entil
loan?
sweet
:
degitil
Bomb Japanese cities even
though it means return raids
bis sieria
ANDEC
JAN
FEB
MAR
APR
mollo
od
di
MAYA
BATRANN
TOTO
d
INAM
TWO
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SALL
STATE
STATE
Winston a litte Jad regist A fads Dework sitt
Another of of babans and wind avidrator. beloval
Horall nil 1000 req as
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visit si Javo 209 AS
Regraded Unclassified
- 17 -
On the other hand, the percent who want to send most of our Army abroad
has risen from 55 to 61 per cent in the same period. And of course, the
minority included many who favored carrying the attack to the enemy even
though they were unwilling to devote the major share of our forces to the
task.
n
807
UOY
ЗЯА
(10)
The public has also not advocated pulling our punches in the war
iodiaH host 390338
against Japan, even though we might suffer hard blows in return. They have,
in fact, grown belligerently more in favor of all-out tactics. (Chart III)
to
you
bluow
won
In December, immediately after the outbreak of war, 59 per cent
said "fight an all-out war including bombing of Jap cities". In late Jan-
uary and early February support for this policy dropped slightly to 56 per
cent. But with the fall of Singapore and Java, attitudes toward Japan
toughened, and support for all-out tactics jumped to 67 per cent. On each
of these polls the fact that such offensive tactics might bring reprisal
bombings of our own cities did not deter more than 11 per cent from's in
all-out attitude.
One reason why the all-aut policy won support, however, may be
the fact-that comparatively few people have ever been very worried about
the prospect of attacks on our own cities. In December people saw only
slight danger of extensive raids on our west coast and even less danger
of raids on the east coast. Fears increased slightly by March, but even
then a large majority continued to discount the possibility of raids, and
the bulk of those who did expect such attacks believed they would be
"few and far between".
Regraded
ARE YOU FOR A NEGOTIATED PEACE?
CHART XIII
BEFORE Pearl Harbor
AFTER Pearl Harbor
QUESTION:
QUESTION:
If peace could be obtained today
If Hitler offered peace now to all countries on
on the basis of Germany holding
the basis of not going any farther, but of
the countries she has conquered so
leaving motters as they are now, would you
for, and Britain keeping the British
favor or oppose such a peace?
Empire as it now stands, would you
be in favor of such a peace?
22%
18%
10%
8%
6%
5%
any
9
DEC
JAN
FEB
APR
to
tabe
add
no
abion
20
to
cirils
mill
$
Date
were
Regraded Unclassified
- 18 -
On Pacific Coast
On Atlantic Coast
December
March
December
March
Believes air raids are:
Very probable
23%
25%
8%
12%
Only fairly probable
41
45
32
37
Not at all probable
25
18
48
37
Don't know
11
12
12
14
NEGOTIATED AND SEPARATE PEACE
Much of the foregoing evidence has indicated that the American people
seem to be preocoupied mainly with the problem of how to fight & hard-hitting,
winning war. They have apparently given little thought to the problem of how
to make peace or come to terms with the enemy. Thus, during the last year -
both before and after the outbreak of the war - American opposition to a
negotiated peace has steadily stiffened. o P OR has used two different
questions to measure this sentiment before and after the outbreak of war,
but the general idea of the two seems close enough to allow qualified trend
comparisons. These questions have been asked by O.P.O.R. over the past year.
(Before Pearl Harbor) "If peace could be
obtained today on the basis of Germany
holding the countries she has conquered
so far, and Britain keeping the British
Empire as it now stands, would you be in
favor of such a peace?"
(After Pearl Harbor). "If Hitler offered
peace now to all countries on the basis
of not going any further, but of leaving
matters as they are now, would you favor
or oppose such & peace?"
There was a continuous decline in sentiment for peace, from 21 per
cent in July 1941, to 5 per cent in July 1942. (Chart XIII) These questions
undoubtedly measure active, outspoken desire for peace at & fairly high price,
rather than willingness to consider specious, plausible-sounding proposals
- BE -
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CHART XIV
61%
elgood naciment tedt
WHICH COUNTRY
Ed-bran
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Night
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WILL HAVE MOST
TO SAY IN WRITING
THE PEACE?
ched
16
Naesdive
12%
UNITED STATES 13%
brend wolls of
ENGLAND
4%
3%
team
RUSSIA
APRIL
MAY
JUNE
JULY
DO
CHIEF
DEPIRUMENT
BOMBIO OF TOKYO CORAL
BATTLE
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EUROPEAN
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Regraded Unclassified
- 19 -
with which the Nazis would surely clothe any peace offensive. But the drop
in outspoken desire for peace at this high price has probably been accompan-
ied also by a drop in willingness to consider proposals of any sort. It is
also perhaps significant that other "trap" questions presenting such plaus-
ible-sounding peace proposals have rarely gained more than 10 or 15 per cent
approval. Also interesting in this connection is the fact that in May 69 per
cent of Americans believed that Germany would like to make peace with us on
the basis of the status quo, which figure dropped to 55 per cent in July,
after German summer campaigns had begun.
It should be realized, however, that this peace sentiment has been
measured during a period when the average American has felt the impact of war
very little, when U.S. casualties have been relatively light, and while con-
fidence in the ultimate victory has been exceedingly high. Should Russia
actually be forced to capitulate, or should some other catastrophe befall
the Allies, it is conceivable that sentiment for & "negotiated victory"
might increase.
The Peace Treaty and the Post-War World
When peace with victory does come, Americans think the United
States will have the strongest voice in fixing the peace terms. (Chart XIV)
In May a majority thought that this country would "have most to say in writing
the peace treaty", and the vote increased in July. Those who did not mention
estal
the United States cited England more often than Russia as the country that
would have the most to say.
benio!
Joal
- 20 -
Since people's ideas regarding the length and difficulty of the
war are changeable and uncertain, opinion concerning the kind of treaty
to be made and the planning of the post-war world must be considered with
much caution. Nevertheless, some current attitudes are worth noting.
There is evidence from polling in both February and July that
while people differ widely in their recommendations for precise treatment of
the Axis after an Allied victory, only about one-fourth of them would go 60
far as to advocate destroying them as nations.
The prospect of additional territory as a result of the war appealed
to few Americans when they expressed themselves on this issue last February.
A fifth thought we ought to get more territory than we had before the war if
the Allies win, but most of these people wanted only strategically-located
territories for military bases.
slears
There are several indications that in the future the public wishes
the United States to take & more active role in international affairs than
it took before this war. In late August, 63 per cent of the public approved
the idea of this country joining an organization of nations after the war.
Growing belief that we made a mistake by staying out of the League
of Nations after the last war provides further evidence of the increase in
seab enseq nedW
internationalism among Americans. Almost exactly & year ago, Dr. Gallup's
(VIX essay nt and ovad EG/w
American Institute of Public Opinion, asked the following question. It was
gatshw The from oved" strit riguords a V.SM nl
repeated by the Bureau of Intelligence on July lst of this year, and again
notiness Jen beasetoni bns eight
in late August. The group disapproving our past isolationism rose 10 per
'Jans 88 cedio ston batto estate bellau edit
cent.
-Yes of deam add evad bloow
"Do you think the U.S. should have joined
the League of Nations after the last war?"
Regraded Unclassified
- 21 -
July 30, 1941 . July 1, 1942 Aug. 25, 1942
(Gallup poll)
Yes
37%
46%
47%
No
37
23
28
Don't know
26
31
25
Another measure of United States' willingness to participate more
directly in world affairs in the post-war period has been obtained by the
Office of Public Opinion Research at Princeton with a slightly different
question:
"Which of these two things do you think the
U.S. should try to do when the war is over:
Stay out of world affairs as much as we can,
or take an active part in world affairs?"
In January, and again in March, 72 per cent favored the United
States taking an active role. This figure dropped slightly in mid-June
(68%), but the majority in favor of international participation remained
high.
Regraded Unclassified
200
r
September 12, 1942
9:29 a.m.
Randolph
Paul:
Hello.
Operator:
The Secretary's here now.
P:
Hello.
Operator:
Hello.
P:
Hello.
HMJr:
Hello, Randolph,
P:
Yeah.
HMJr:
Before you tell me anything - am I on the loud-
speaker?
P:
Do you want to be?
HMJr:
Yeah.
P:
All right, now. Stephens has just fixed it.
HMJr:
Hello.
P:
Yeah.
HMJr:
Am I making a record?
P:
He - he fixed the record.
HMJr:
I had Harry Byrd for lunch yesterday.
P:
Who?
HMJr:
Byrd.
P:
Yeah - yeah.
HMJr:
Harry Byrd.
P:
Yeah. He talked to me about it late yesterday
afternoon.
HMJr:
Now, there were two things that he made - points -
that he may have told you. One was that the
public has never been told that on the Rual plan
they only got three votes from the committee.
201
-2-
P:
Yeah.
HMJr:
And those three votes were on - were the Sub-
committee that heard him.
P:
That's right.
HMJr:
Well, why - - why couldn't the public know that?
P:
Well, I don't see why we revived the Ruml plan
now - it's - it's completely dead 8.8 far as I
can see.
HMJr:
Well - well, why weren't they told that at the
time of the vote?
P:
They were. It was in - - it was in the papers.
HMJr:
What?
P:
It was in the papers.
HMJr:
I never saw it. Well, anyway, 80 much for that.
Now, then he said, that plan that you tried to
explain to me during the lunch hour
....
P:
That's right.
HMJr:
.... the fifteen per cent ....
P:
That's right.
HMJr:
.... and the reduction this year in taxes ....
P:
Yeah.
HMJr:
.... now he says, "You only lost out on that
by one vote".
P:
That's right. And the - we only lost at that
because some of the people on that side that are
against the gross tax, didn't get together.
HMJr:
Right. And his plea was that you revive it.
P:
Yeah. Well, he - he made that plea to me
yesterday afternoon.
HMJr:
Well, I just wanted to pass it along.
P:
Yeah. Well, I think he's going to - he's going -
he asked me how I thought it ought to be done,
202
- 3 -
and I said, "Well, just the way the 'depletion'
boys got their job done. You ought to be in the
back room a little bit with some of these fellows".
HMJr:
(Laughs)
P:
And he said, well he'd - he was going to do what
he could over the week-end that way, and I said,
"Well, I think you certainly better talk to
Senator George about it, because you're - you're
against his plan, and he's your Chairman, and -
and certainly we wouldn't want to do anything
to offend him".
HMJr:
No. Well, he said it was the first time he ever
voted against George.
P:
That's right. And he'd said at the time that he
felt badly about it, and I - I wanted him to be
sure to go to George, because I didn't want to
be in the position of plotting against George.
HMJr:
No. Well, so much for that. Now, where are -
who's all with you?
P:
Well, ah, Roy and Griswold, and Danny Bell just
came in the room.
HMJr:
All right. Isn't - isn't Kuhn there?
P:
No, Kuhn 1sn't here. Do you want me to send
for him?
HMJr:
Yeah. I - I thought that - yeah. I thought
that Kuhn and Gaston were going to be there.
I told them to be.
P:
Well, I didn't hear anything about that, but
we'll send for them.
HMJr:
All right.
P:
Any - anybody else?
HMJr:
No. Now ....
P:
(aside: Kuhn and Gaston)
HMJr:
What?
P:
I was telling Dan to get Gaston too.
203
- 4 -
HMJr:
Mr. Griswold, have you got any 1deas?
P:
Well, Griswold's still thinking the thing over.
Do. you want to talk with him?
HMJr:
Yeah. I'd like to.
Edwin M.
Griswold:
Mr. Secretary.
HMJr:
Yes.
G:
This is Griswold.
HMJr:
Good morning.
G:
Why - you - I - - I'm still trying to think about
this.
HMJr:
Yeah.
G:
And - it - my thought was that as far as I was
concerned, it would help me to try and - and
get something down on paper.
HMJr:
Good.
G:
And, I had had in mind, I'm going to be in -
in Cambridge on Monday ....
HMJr:
Yes.
G:
....
I had had in mind trying to write you a -
a short concise letter on Monday, in which I -
I put down my thoughts. You'd have it Tuesday
morning.
HMJr:
Fair enough. Well - well, let's let it go
that way.
G:
All right, sir.
HMJr:
Now, while I've got Paul there, I'd like to
know where we stand on the tax bill, as of this
morning.
Randolph
Paul:
Well, yesterday we - yesterday we renewed the
fight on - on another aspect of - of depletion,
or rather intangible drilling expense. The
Committee had asked be before to see if we
204
- 5 -
couldn't eliminate the double deduction
....
HMJr:
Yeah.
P:
.... involved in that - that item, and we
worked out a way, and Stam agreed with us,
and we went up on it, and we got licked again
12 to 6. And then afterwards, we were very
careful to put it out - put the story out, and
I think he'll 800 it in the TIMES this morning
that - that we were trying to eliminate a
double deduction. And - but anyway, we were
beaten on it - 12 to 6.
HMJr:
Yeah.
P:
Even Barkley voted against us on this, although
we got six votes. We got George.
HMJr:
Double deduction on what, Randolph?
P:
Depletion and the drilling expense.
HMJr:
Oh, yes. That's right.
P:
They really constitute a double deduction. We
pointed that out before and when we went up on
depletion this time, that aspect of it somewhat
interested the Committee, and they voted against
us on depletion, but asked us to check into the
possibility of eliminating this double deduction.
We did 80, and - and we got a way, and Stam -
even Stam went along with us. But it was the
same old Guffey-lead gang and they voted us
down - 12 to 6. But I wanted to get it out to
the press, that it - that's what they were doing
allowing a double deduction, and I think you'll
find that - that's the way the story is told
in this morning's paper.
HMJr:
Yeah.
P:
Then in the afternoon, we had - we had a lot of
technical things, but the principal thing we
dealt with was mining-company relief. And we
had a - Senator Johnson had abill which gave
away the kitchen stove, and we - we had a
counter proposition which - which was reasonably
liberal, as we ought to be, in connection with
strategic metals and things that are really a
part of the war effort, but ....
205
- 6 -
HMJr:
Hold the wire a minute. My dog's scratching
the door. Hold the wire a minute.
P:
Okay.
HMJr:
Hello. He almost knooked the door down.
Hello.
P:
Yeah.
HMJr:
Have Gaston and Kuhn come in?
P:
Yeah.
HMJr:
Tell them that when I'm through talking with
you, I want to talk to them, and Graves on ....
P:
Graves too?
HMJr:
Yeah. They might be having Graves in there.
It has nothing to do with ....
P:
Yeah, all right. They'll send - they'll start
getting Graves now.
HMJr:
All right.
P:
Well, anyway, on this mining relief, we - we
pretty well beat them down, and we've got a
sensible provision now, instead of the Johnson
amendment.
HMJr:
I Bee.
P:
I - the other things done yesterday were pretty -
pretty much technical amendments. A few - now,
we're - we're having a session this morning and
I don't know what we're going to accomplish at
it, and we're about cleaned up, except for things
the Senators will bring up.
HMJr:
Well, what about ....
P:
But, I haven't done anything on outdoor advertising
yet, because I don't know what the devil to do.
HMJr:
Well ....
P:
-I mean - I can't go up there and say the President
wants this. The ....
206
- 7 -
HMJr:
Tell George.
P:
I did tell him.
HMJr:
Well ....
P:
But - but, and I - - I hate to tell - it's such
a bad tax, that I hate to put the President in
that light, but I - - I think it would be better
for me to take
....
HMJr:
Well, just do the best you can on it.
P:
Well, okay. I'll try it either today or Monday.
HMJr:
Now, when are we going to talk about the five
billion dollars extra that George said he wanted
us to find for him.
P:
Well, we have to have a plan first. We probably
will - Roy - you better talk with Roy about that.
Roy and Harry White's offices are working on
one together.
HMJr:
Well, they'd better show it to me Monday.
P:
You want them to show it to you Monday.
HMJr:
Well, or if they've got something
....
P:
Okay. We'll - they'll have something Monday.
HMJr:
And, it will have to be in tune with the statement
that I gave out last night, because I'm not going
to give out any more statements.
P:
In tune with the statement that you gave out last
night?
HMJr:
Yeah. I mean ....
P:
Okay. Well, I think I - - I think that - that's
pretty general anyway, isn't it? As I read it.
HMJr:
Well just remember that - I mean - I - it has
got to be in tune with that.
P:
Okay.
HMJr:
What?
207
- 8 -
P:
Okay. Well, I don't think there's any trouble
with being in tune with that, because that
statement was fairly general, and that statement
mostly concerned itself with the maintenance
of the voluntary plan, which of course is - is -
which of course any compulsory savings would
want to do.
HMJr:
Well, would you please read it, and let Blough
read it too?
P:
Yeah, well - yeah, okay. (aside: wants you to
read the statement of this morning.) Okay.
HMJr:
And, if you're going to have a plan, let - let
people like Gaston and Graves, White, and Kuhn
have a look at it - before I see it.
P:
Yeah. Gaston and Graves, and White - well -
White will be working on it, and Kuhn, and
Danny Bell too.
HMJr:
And Danny Bell. I almost forgot Danny - - he's
80 quiet.
P:
Yeah. Well, he - - he certainly will get 8 look
at it.
HMJr:
Okay. Before I see it though, but as I say, I - -
then I'll be down Monday.
P:
Well, I - they may not get it in shape to show
it to these people until Monday morning, but
I'll see.
HMJr:
Okay. Now ....
P:
Who do you want to talk with now?
HMJr:
Is Graves there?
P:
Yeah.
HMJr:
Well, I'll excuse you tax fellows, but I'd like
Bell and Gaston and Kuhn and Graves - I want to
talk to them about War Bonds.
P:
Okay. Just a second. (aside: he wants to
talk to you four fellows - you three and ....)
208
- 9 -
Harold
Graves:
Good morning, sir. This is Graves.
HMJr:
Hello, Harold. I've seen the N. Y. TRIBUNE ....
G:
Yes.
HMJr:
.... and they carried the statement on the
front page.
G:
Yes, I saw that.
HMJr:
I can't find it in the TIMES.
G:
Yes, it's in the TIMES - in the tax story.
HMJr:
oh - in full?
G:
Your statement is in full in the TIMES.
HMJr:
Good.
G:
And also some parts of the Patterson statement
which was carried in full in the TRIBUNE.
HMJr:
Patterson?
G:
Yes, Patterson made a statement, too.
HMJr:
I see.
G:
I thought we got pretty good - - pretty good
coverage on that.
HMJr:
How did we do on the radio?
G:
I - I don't know how we did on the radio.
HMJr:
Check up and let me know, Monday?
G:
I will.
HMJR;
And - were you able to do any or all of those
suggestions I made.
G:
Every one.
HMJr:
Good.
G:
We - we sent the - we sent the administrators
a full text of your statement, with the comments
209
- 10 -
as you suggested. We sent the full text of
your statement to the Federal Reserve Banks -
Mr. Bell did that. We have sent to the Government
Printing Office - we sent it last night - the text of
your statement to be reproduced on your letterhead
over your facsimile signature, and I expect we may
get delivery of that today or certainly not later
than Monday. We did everything. Mr. Gamble has
arranged with the motion picture people to have
that - substantially the text of the statement -
in the newsreel. As I understand it, Cagney is to
talk it, as having a message which has been re-
ceived from you.
HMJr:
Uh -- huh. All right.
G:
Yes, I think it's very good.
HMJr:
And to the FDIC banks?
G:
Well, they will receive copies of this facsimile
statement, you see?
HMJr:
When will that come from the printer?
G:
Well, as I said, either late today or Monday.
HMJr:
I see.
G:
We - at least, that's the promise I had last night.
I haven't checked into it this morning. We intend
to get an addition of about 350,000 and send them
to all our committee people, as you suggested, and
to the banks, and I think we might send it also to
our list of corporations having the Payroll Bavings
Plan.
HMJr:
Good. Good. You feel better this morning?
G:
I feel fine, thank you. We spent the evening last
night, until all hours, talking with Patterson
and Nevil Ford and Bayard Pope about the New York
situation.
HMJr:
What's that - what's their trouble?
G:
Well, they're still worried about this Victory
Fund Committee thing, but I think we can straighten
them out.
HMJr:
Well, God, I've sent enough statements and telegrams
210
- 11 -
on that.
G:
(Laughs) Yeah. Yeah, I - - I'm not worried
about that. If there is any trouble there, it
is only New York City. I mean, the rest of the
country seems very complacent under the ....
HMJr:
Well, I think when you see Monday - the Victory
Fund Committee go to work sending and selling
these tax anticipation notes - they'll be busy.
G:
Yes. Yes.
HMJr:
That gives them a job that in no way concerns
the War Savings Bonds, you see?
G:
Yes. Well, some day I'll tell you just what
these great financiers of New York are talking
about. It's nothing important.
HMJr:
What the great financiers are talking about?
G:
Yes.
HMJr:
Oh, I've listened to that for nine years.
G:
They don't have anything radical in mind, beyond
abolishing the War Savings Staff and a few little
details of that kind.
HMJr:
Well, ask Dan to tell you about this friend of
his, Colonel Pope, who came in and was going to
put three spies in my organization and tell me
what to do.
G:
(Laughs)
HMJr:
Nobody was going to know that they were there.
G:
I suppose that's the brother of my Pope, isn't it?
HMJr:
I don't know.
G:
Yeah. I think it 1s.
HMJr:
They were going to put three fellows in there to
tell Danny and me what to do - stay on the payroll
of their companies, and they weren't to tell their
employer what they were doing or anybody else, but
just to tell me.
211
- 12 -
G:
Yes. I think that would be wonderful.
HMJr:
What?
G:
I think that would be wonderful.
HMJr:
(Laughs) What - I don't know - Danny eat
there through the whole thing with a straight
face. I don't know what he thought.
G:
Well, he's smiling now.
HMJr:
All right. Now, what else?
G:
That's all I have. Mr. Gaston and Dan and
Ferdie are here. Would you like to speak to
any of them?
HMJr:
Only if they've got some brilliant ideas.
G:
They seem to me to be full of them.
HMJr:
All right.
G:
I think that - I think that they have nothing.
HMJr:
We have sunshine troubles up here.
G:
Oh, you do? Is the sun shining up there?
HMJr:
Well, that's the trouble.
G:
Oh, well, that's too bad. We're - we're fortunate
down here. It seems to be on the verge of rain-
ing.
HMJr:
Yeah. That's the trouble. We've got all the
MacIntosh on the trees ....
G:
Yeah. Dan says 80 we can work all day here.
HMJr:
(Laughs) I see. All right. Well, I - there's
nothing - - nobody else? I - - I think that was a
good statement.
G:
Why, it was a swell statement. I think it was
fine.
HMJr:
I - my only regret is, that it took - you fellows
thought it would take six of you to sell it.
212
- 13 -
G:
Yeah. Well, I feel awful bad about that, but
....
HMJr:
Yes, the hell you do
....
G:
(Laughs) Anyway, we've sold it, and maybe the
end justified the means.
HMJr:
I don't know. If - if that's the way to sell
it, come in with a steam roller.
G:
(Laughs) Yeah. Well, we feel very good down
here today.
HMJr:
Well, that's the main thing.
G:
Yes, sir.
HMJr:
You see, I'm such an easy fellow to sell
something to.
G:
Yes. Well, you had a lot of good salesmen
yesterday.
HMJr:
I can think of everything - because Callahan
got it on the radio, and you might check up
with him.
G:
Yes, we're going to, and I'm - we'll let you
know Monday.
HMJr:
Right. Now if I could have my operator
....
G:
Yes, sir.
Operator:
Operator.
HMJr:
George Buffington.
Operator:
I'm sorry. I can't hear you, Mr. Morgenthau.
HMJr:
George Buffington.
Operator:
Yes, sir.
213
SEP 1 - 1942
I
TO:
James s. Knowlson
Hile Perkins
J. v. Forrestal
E. 2. Stettinius, Jr.
1. Las Vickery
1. P. Patterson
FROM:
Male T. Shenefield
Executive Secretary
Attached you will find the following statistical reports for the
Jednt liar Production Committee revised to September 1:
1. Contracts with Her Supplies Limited by Months
2. Mar Supplies Limited Contracts Classified by
Type of Hundtions Ordered
3. The Value of Canadian Munitions Production
40 Analysis of Canadian Program by Type of Munition
5. Resert of Deliveries: Har Supplies Limited Contracts
% Changes between August 1 end September 1 in the
Canadian Munitions Production Program
6. Classification of Canadian Numitions Production
by Country of Purchase
le do not have the figures as yet for report No. 6, but expect to
have this report available very seen and will send it to you.
HTS Has
001 Mr. Currie
Secretary Morgenthau
Brig. General Harrison
Mr. White
Commander Straus
Mr. Nathan
Mr. Taub
Mr. Coe
Regraded Unclassified
214
Secret
REPORT NO. 1
Secret
(September 10, 1942)
CONTRACTS /ITH TAR SUPPLIES LIMITED IN AUGUST, 1942
Quantity
Item
Ordered
Value
Minesweepers, Algerine Class
15
$19,125,000.00
Marine Engines
20
1,958,190.00
Nickel Matte
I
1,957,580.41
Shells, 2-Pdr. R.F., H.E.
360,000
1,800,000.00
Fairmile Vessels
8
960,000.00
Coleman Lamp Parts
--
139,465.98
Miscellaneous Items & Corrections
272,208.54
Total August Contracts
$26,212,444.93
SUMMARY OF REPORT NO. 1 TO AUGUST 31, 1942
1941: To June 30
$28,005,168.55
July
31,508,048.67
August
82,792,761.99
September
16,752,199.25
October
57,993,118,96
November
6,429,056.99
December
5,228,988.62
Total for 7 Months, June to December:
$228,709,345.03
1942: January
22,290,717.17
February
26,643,349.03
March
144,838,673.77
April
55,478,635.24
May
67,856,599.29
June
207,820,550.37
July
57,777,181.35
August
26,212,444.93
Total for 8 Months, January to August:
$608,918,151.15
GRAND TOTAL TO AUGUST 31, 1942
$837,627,494.18
215
Secret
REPORT NO. 2
Secret
(September 10, 1942)
WAR SUPPLIES LIMITED CONTRACTS DURING AUGUST CLASSIFIED
BY TYPE OF MUNITIONS ORDERED
&
(Summary)
Subsommittee
Total to August 31, 1942
Mechanization & Mechanical Transport
77,600,619.28
Tank
527,500.00
Guns
111,218,696.96
Shell
146,623,557.80
Small Arms Ammunition
37,933,447.00
Chemicals & Explosives
10,575,153.50
Merchant Shipbuilding
160,101,655.88
Naval Shipbuilding
20,085,000.00
Airplane
172,331,877.84
Communications & Fire Control
67,333,324.65
Unclassified
33,270,711.27
GRAND TOTAL TO DATE
$837,601,544.18
Items Ordered in August, 1942
Item
Value
MECHANIZATION & MECHANICAL TRANSPORT
TANK
3
No Contracts in August
GUN:
Revaluation on carlier contract:
2" Bomb Thrower, Mark II
278,750.00
SHELL:
2-Pdr. Shells, Q.F., H.E.
1,800,000.00
SMALL ARMS AMMUNITION:
Subtract Revaluation on Eurlier
Miscellaneous Contracts
- 18,052.00
CHEMICALS & EXPLOSIVES:
Miscellaneous
19,050.00
MERCHANT SHIPBUILDING:
1,958,190.00
Marine Engines
216
- 2 -
Item
Value
NAVAL SHIPBUILDING:
Algerine Class Minesweepers
19,125,000.00
Fairmile Vessels
960,000.00
20,085,000.00
AIRPLANE:
Subtract Revaluation on
PT-23, F.E., Link Trainers & Other Contracts
- 213,405.10
COMMUNICATION & FIRE CONTROL:
Support Stands for Range Finders
53,418.00
Miscellaneous
11.24
53,429.24
Add Revaluation on Miscellaneous Contracts
225.00
53,654.24
UNCLASSIFIED:
Coleign Lamp Parts
139,465.98
Nickel Matte
1,957,580.41
Miscellaneous
84,448.75
2,181,495.14
Add Revaluations on Miscellaneous Contracts
67,762.65
2,249,257.79
GRAND TOTAL -- August, 1942
$ 26,212,444.93
- Joint Yar Production Committee -
217
Secret
REPORT NO. 3
Secret
(September 8, 1942)
THE VALUE OF MUNITIONS PRODUCTION IN CANADA AND THE UNITED STATES
Total Munitions Program (Unit - Million Dollars)
UNITED STATES
CANADA
Actual Schedule:
1941: First Quarter
1,200.
133.5
Second Quarter
1,530.
165.2
Third Quarter
1,910.
183.3
Fourth Quarter
2,740.
243.4
Total 1941:
7,380.
725.4
1942: First Quarter
4,613.
352,4
Second Quarter
7,594.*
449.6
Forecast Schedule:
Third Quarter
11,909.
569.1
Fourth Quarter
15,818,
653.4
Total 1942:
39,934.
2,024.5
1943: First Quarter
17,502.
703.7
Second Quarter
19,123.
753.0
Third Quarter
19,878.
790.5
Fourth Quarter
20,596.
812.9
Total 1943:
77,099.
3,060.1
* June is Forecast.
- Joint Yer Production Committee -
218
Secret
REPORT NO. 4
Secret
(September 10, 1943)
ANALYSIS OF CANADIAN PROGRAM BY TYPE OF MUNITION
Table A.
Percentage of Total)
1941
1942
1943
Item
First
Fourth
Half
Total
Quarter
Total
Merchant Vessels
4.1
7.1
7.5
6.2
6.6
Naval Vessels
7.2
4.7
4.1
22.7
2.8
Aircraft Production
and Overhaul
12.9
13.3
11,9
17.8
15.1
Automotive Vehicles 25.5
19.6
17.8
12.9
13.8
Armored Fighting
Vehicles
2.7
9.7
9.0
10.2
10.7
Guns (Field A.A.
& Naval)
1.5
5.3
7.7
10,5
10.9
Machine Guns &
Small Arms
1.2
1,9
2.4
2.7
2.7
Small Arms
Ammunition
2.0
2.0
2.2
5.4
4,8
Shells, Cartridge
Cases, Primers,
Fuzes & Bombs
10,9
9,8
9.5
7.8
8,3
Chemicals, Explosives
and Filling
6.8
5.8
4.9
3,6
3.8
Miscellaneous
25,2
22.8
25.
20.2
20.5
Total
100.0%
100.0%
100.0%
100.0%
100.0!
($805.9) ($891.2) ($2249.5)
($903.2) ($3400.1)
Table B
(Percentage of Total)
United States
Canada
Fourth
Item
Fourth
Quarter
Quarter
1943
1942
1943
1942
Armored Fighting Vehicles
9.
10,2
7.1
9.0
Aircraft
11.9
17,8
23.2
33.2
Merchant Ships*
7.5
6.2
5.8
5.6
4.1
2.7
15.2
9.0
Naval Ships
Guns and Amminition
21.8
26.4
30,3
30.3
Other
45,7 36.7
18,4**
12.9**
* Includes Army Transports
** Includes Signal Equipment, Motor Vehicles (non-Combat), and
all other supplies.
- Joint far Production Committee -
219
Secret
REPORT NO. 5
Secret
(September 10, 1942)
RECORD OF DELIVERIES DURING AUGUST:
TAR SUPPLIES LIMITED CONTRACTS
The value of deliveries on Tar Supplies Limited Contracts for the month
of August 1942 is approximately $29.0 million. This compares with a
figure of roughly $38.8 million in July, 1942.
Delivery of Selected Canadian Munitions Items to U.S. During August,1942
Cumulative
Total
Percent of Order
Item
Deliveries
Deliveriesto
U. 3,
Delivered
In August
August 31
Orders
to August 31
Universal Carrier
81
2,792
12,854
21.7%
40 mm Anti-Aircraft
Barrels
724
4,312
18,798
22.96
40 - H. E. Shells
1,177,625*
3,000,000
39.2%
6 Pdr. A. P. Shot
140,111
360,377
4,000,000
9.0%
Harvard AT-16 Airplanes
70
150
800
18.86
Link Trainers
46
197
250
78.8%
3.7" AA Shells
109,752
935,367
1,200,000
77.96
75 Smoke Shell C/R
46,001
224,008
1,700,000
13.2%
#19 Radio Sets
1,839
7,270
2" Bomb Throwers, Mk II
808
4,268
30,071
14.2%
3.7" ЛА Barrels
160
1,930
2,400
80.4%
Lee-Enfield Rifles, Mk I
18,500
39,402
100,000
39.46
Boys Anti-Tank Rifle
918
2,167
34,000
6.4%
6-Pdr. ? Cwt. Guns, Mk II
150
501
1,000
50.1%
6-Pdr. ? Cwt, Carriage, Mk II 16
16
500
3.2%
37 m. S.A.P. Shot
104,998
266,479
500,000
53.3%
2" Smoke Bombs
54,000
170,010
1,000,000
17.0%
Bren Machine Guns
0
5,904
16,800
35.16
,303 Ammunition
31,733,888110,576,098
405,120,000
27.3%
2-Pdr. A.T. Equipment
6
256
360
71.1%
4.5" H.E. Shells
116,445
344,363
852,000
40.4%
5.5" H.E. Machined Shells 1,400
3,000
3,000
100.0%
Universal Bomb Carriers
470
3,522
10,152
34.7%
Hexechlorethane
2,246,000
7,273,040
9,064,110
80.2%
2-Pdr. U.F. Certridges
44,811
486,261
1,540,000
31.6%
Radar Equipments
20
45
45
100.0%
Boys A.P. Shot, .55 Calibre 4,960
57,013,500
:
4,960
.303 Tracer Shells,A.P. 179,712
179,712
75,180,000
**
6-Pdr. 7 Cwt. L.F. Shells 15,000
15,000
15,000
100.0%
#
No Previous Figure Available.
** Negligible,
220
Secret
REPORT NO. ,
Secret
(September 10, 1942)
Changes between August 1st and September 1st in the Canadian
Munitions Production Program
Changes in the Canadian munitions program in the past
month are recorded below, The most notable revisions have to do
with the Bren Gun, the Sten Machine Carbine, and Boys Armor Piercing
Shot, Otherwise, changes simply reflect delays in production.
Table A.
Selected Items for which Schedules have been Increased
Between August 1st and September 1st,
Production Schedule for 1943
Item
August lst
September lst
Bren Machine Gun
54,000
81,250
Sten Machine Carbine
30,000
114,000
G. L. Sets
720
864
51" H. E. Shell (000's)
660
720
.55 A. P. Shot (000,000's)
38
66,5
Table B,
Selected Items for which Schedules have been Decreased
Between August lst and September 1st
Production Schedule for 1943
Item
August 1st
September lst
DH-98 Twin-Engine Fighter Bomber
1,028
903
Cornell Primary Trainer
1,700
1,440
- Joint far Production Committee
221
Secret
REPORT NO. 8
Secret
(September 10, 1942)
CLASSIFICATION OF CANADIAN MUNITIONS PRODUCTION BY COUNTRY OF PURCHASE
The Value of Canadian Mar Production Program, August 1942
uarters
First Second Third Fourth
Percentage of United States Orders to Total Program
To December 31, 1940
0
1941
0.
.1
2.8
4.6
1942
9.
18.1
22.3
22.4
1943
22.1
26.9
27.6
25.7
Percentage of Canadian Orders to Total Program
To December 31, 1940
53,4
1941
47.3
35.4
48,6
42.6
1942
38.7
35.3°
38,5
41,8
1943
44.7
37.1
34.8
35,0
Percentage of United Kingdom and Other Orders
TO Total Program
To December 31, 1940
46.6
1941
52.7
64.5
48,6
52.8
1942
52.3
46,6
39,2
35,8
1943
33,2
36.0
37.6
39,3
- Joint far Production Committee -
222
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. 50 - Aircraft Despatched
- for week ended September 8, 1942.
The Honourable Henry Morgenthau, Jr.
Secretary of the Treasury
WASHINGTON, D. C.
BOND
September 12, 1942.
MOST SECRET
STATEMENT NO. 50
AIRCRAFT DESPATCHED FROM THE UNITED STATES
WEEK ENDED SEPTEMBER 8th, 1942,
FLIGHT DE'D
TYPE
DESTINATION
ASSEMBLY POINT
BY SEA BY AIR FOR USE
IN CAN.
CONSOLIDATED
P BY 5B
U.K.
Canada en route
13
FAIRCHILD
Cornell PT 26
Canada
Canada
6
CURTISS
Kittyhawks
Middle East Port Sudan
10
LOCKHEED
A 28 Hudson VI
U.K.
U.K.
7
A 28 Hudson VIA
Middle East Middle East
1
Ventura
South Africa
South Africa
3
Ventura
Canada
Canada
1
Ventura
U.K.
U.K.
4
GLENN MARTIN
B 26A Marauder
Middle East
Middle East
4
NORTH AMERICAN
Mustang
U.K.
U.K.
1
NORTHROP
Vengeence
India
Bombay
10
TOTALS
21
32
7
BRITISH AIR COMMISSION
60
Sept. 12, 1942.
Regraded Unclassified
224
OFFICE OF STRATEGIC SERVICES
WASHINGTON, D. C.
September 12, 1942
The Honorable
The Secretary of the Treasury
Washington, D. C.
Dear Henry:
Attached is a memorandum of high-
lights of the latest British Ministry of Eco-
nomic Warfare meeting held September 11.
Sincerely,
Bice
William J. Donovan
Director
225
Highlights of the MEW Meeting of September 11
A reliable source who left Astrakhan on August 5,
travelling from Vladivostock to Moscow, Kuibyshev, Stalin-
grad, Astrakhan and out through Persia, reports:
a. Volga shipping was being effectively
bombed between Saratov and the Caspian and navigation was
greatly reduced;
b. Machinery from important armament and
industrial plants and damaged arms were being evacuated.
Large quantities of oil which are stored at Stalingrad
are being moved north on the river;
C. The trip by rail to Moscow from Vladi-
vostock took 12 days and 38 hours from Moscow to Kuibyshev.
There were no observations of congestion on the Trans-
Siberian line.
In all, 18,000 motor vehicles were secured for
Rommel by the German Commission for the Requisition of
Motor Vehicles in North Africa, a large number of which
came from France. The Commission has now completed its work.
Indications from aerial photographs are that
Italian locomotives are being sent to Libya. Three German
ships with cranes and hatches capable of handling loco-
motives are in the Mediterranean.
The Spaniards have yielded to German pressure
for use of Bacchi ships in the Trieste-Piraeus run accord-
ing to a C.X. report.
Flammkohle or Fettkohle are no longer to be
used as fuel on Rhine barges in substantial numbers are
being used on the Rhine for the transportation of coal.
Statements of two industrialists from the
Cologne area agree:
a. That a claim for damages in the amount
SECRET
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226
-2-
of 1.6 billion reichmarks resulting from the 1000 bomber
raid has been accepted by the German Government.
b. 200,000 people in Cologne have been
made homeless.
Shipments of iron ore to Germany from Sweden
through July were 100,000 tons ahead of the shipments for
the same period of 1941.
Additional material will follow with regard to
this meeting.
SECRET
227
NOT TO BE RE-TRANSMITTED
COPY-NO. 13
BRITISH MOST SECRET
U.S. SECRET
OPTEL NO. 317
Information received up to 7 A.M., 12th
September, 1942.
1, NAVAL
NORWAY. Air reconnaissance 11th reported
Pocket Battleship "VON SCHEER" and Cruisers "HIPPER"
and "KOLN" in Altengfjord, West of North Cape. During
night 10th to 11th our light forces had several engagements
with enemy forces off the Dutch Coast during which a
2,000 ton merchant vessel was torpedoed and probably sunk.
One of our motor gun boats was sunk and several sustained
slight damage. The enemy suffered severe damage to an
armed trawler and some E-Boats and R-Boats.
A Canadian Corvette was torpedoed in the mouth
of the St. Lawrence River on the 11th.
2. MILITARY
MADAGASCAR: See OPTEL NO. 316.
3. AIR OPERATIONS
WESTERN FRONT. 10th to 11th. Dusseldorff.
Amended casualty figures. 30 missing 5 crashed. 382 tons
of H.E. and 318 tons of incendiaries were dropped, includ-
ing 1,800 lbs. and 86 4,000 lbs. bombs. Good visibility
and objective clearly indicated by well placed flares
though observation of results was hampered by haze and
smoke. A large part of the force successfully con-
contrated its attack and several very largo fires wore
seen in the town. There were other scattered fires
outside the target area. Intense searchlight activity
and heavy A.A. fire around the objective which gradually
diminished over the objective itself.
11th. A Wellington over the Bay of Biscay
shot down one and damaged a second JU 88. A Spitfire
which is missing probably destroyed a JU 88. One enemy
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228
be 2 -
-
aircraft flew over Southern England at 46,000 feet
and dropped a bomb at Parkstone, Dorset, killing
five people.
EGYPT. 9th/10th. Tobruk Harbour was
again bombed. A Wellington torpedoed a merchant vessel
50 miles off Derna.
RUSSIA. 9th/10th. Russian aircraft bombed
Budapest, Berlin and Koenigsberg. 2 bombers are missing.
NOT TO BE RE-TRANSMITTED
229
COPY NO. 13
BRITISH MOST SECRET
U.S. SECRET
OPTEL No. 318
Information received up to 7 A.M., 13th September, 1942.
1. NAVAL
ATTACKS ON SHIPPING. In the last three days (ninth to eleventh)
ten ships were reported attacked by submarines. An outward bound convoy was at-
tacked three times on 10th Sept. in the North Western Approaches, and two British
ships (one a tanker), two Norwegian tankers and a Belgian ship were torpedood. One
British ship and two Greek ships in convoy were sunk in GULF OF ST. LAWRENCE on 7th.
A Panamanian ship sunk in West Atlantic on 30th August and a Palestinian schooner
shelled and sunk off the Coast of SYRIA on 7th September.
In home waters a British ship was damaged by aircraft in THAMES
ESTUARY and a trawler was mined and sunk off East Coast.
2. MILITARY
MADAGASCAR. On the 11th the Ambanja Column was badly delayed by
destroyed bridges. 11 were repaired during the day. The head of the column reached
a point 20 miles north of AMBANJA. VOHEMAR was occupied without opposition. The
column from MAJUNGA reached BETSIBOKA at 6 A.M. local time but found it damaged.
Infantry crossed and secured a bridgehead, and the bridge is being repaired to take
wheeled traffic. Operations continue satisfactorily.
RUSSIA. The Germans have reached the VOLGA south of STALINGRAD and
now surround the city on its land side. In CAUCASIA the Russians are still resist-
ing strongly on the line of the Rivor TEREX though the Germans are making strenuous
efforts to enlarge their bridgohead in the MOZDOK area.
3. AIR OPERATIONS
12th. A JU 86 was intercepted over WILTSHIRE by a Spitfire at
43,000 feet and WELD damaged. A JU 88 was shot down by a Beaufighter southwest of
LANDS aND.
RUSSIA. The German Air Force claim to have heavily bombod the
STALINGRAD Front on the 10th and 11th.
EGYPT. 10th/11th. TOBRUK was bombed by 8 Halifaxes and 19 Welling-
tons. 11th. Our fightars over the battle area shot down two enemy aircruft, pro-
bably destroyed two and damaged eight. Two of our fightern are missing. ME 109's
machine gunned a landing ground and a military camp near CAIRC. Two of our aircraft
wore destroyed on the ground and 4 wore damaged. One ME 109 WEB shot down.
BURMA. When our aircraft attacked AKYAB on the 9th strong Japanese
fighter opposition was met. There had been no indications of enemy aircraft in this
arda for more than two months and it is evident that the Japaneso are strengthoning
thoir air forces on the Wost Const of BURMA and that greater activity may now be
expected in this region.
Regraded Unclassified