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    "title": "Volume 591, November 28 – November 30, 1942",
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        "Henry Morgenthau, Jr. Papers",
        "Diaries of Henry Morgenthau, Jr."
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    "ocrText": "DIARY\nBook 591\nNovember 28 - 30, 1942\n- A -\nBook Page\nAmerican Bankers' Association\nSee Financing, Government: War Savings Bonds\n- B - -\nBailey, J. Lawrence\nSee Deferments, Military\nBusiness Conditions\nHaas memorandum on situation, week ending November 28,\n1942 - 11/30/42\n591 125\n- C -\nCurtes, Morris\nSee Deferments, Military\n- D - -\nDeferments, Military\nBailey, J. Lawrence\nCurtes, Morris\nFischer, John A.\nHeffelfinger, William\nKaplan, Louis\nLazarus, Louis J.\nNelson, Emil J.\nNickell, Richard\nPerry, Walter D.\nPorcelli, Attilio F.\nPotthoff, Herbert\nRomig, George W., Jr.\nDeferment requests granted - 11/30/42\n53\n- I -\nEditors of Industrial Publications\nSee Financing, Government: War Savings Bonds\n\"Everybody Every Payday\"\nSee Financing, Government: War Savings Bonds\nExports\nTo Russia, Free China, and selected blocked countries,\nduring 10-day period ending November 20, 1942 -\n11/30/42\n140\n- F -\nFinancing, Government\nGovernment securities - Federal Reserve operations in -\n11/28/42\n11\n- 1- (Continued)\nBook Page\nFinancing, Government\nWar Savings Bonds:\nKansas City meeting of Victory Fund Committee: HMJr\ninvited to attend - 11/28/42\n591\n1\na) HMJr describes visit to Kansas City and to\nSt. Louis: See Book 592, page 1\n1) 1, F, and G Bonde called Eleanor,\nFranklin, and God - 12/1/42: Book 592,\npage 12\nIndustrial publications editors thanked for cooperation -\n11/28/42.\n4\nGovernors asked to promote sales - 11/28/42\n5\nAmerican Bankers' Association publicity on financing\nthe war -(11/20/42)\n31,34\n\"Everybody Every Payday\": Records sent to FDR, Cabinet\nofficers, etc. - 11/30/42\n45\nFischer, John A.\nSee Deferments, Military\nFood\nSee Foreign Funds Control\nForeign Funds Control\nFood parcels from Portugal to Poland and from United\nStates to Norway in Swedish ships discussed in Paul\nmemorandum - 11/28/42\n16\nSwitzerland: Swiss Bank Corporation and Credit Suisse\naccused of falsifying reports of holdings - Paul\nmemorandum - 11/28/42\n13\nVatican: Incorrect use of accounts, etc., brought to the\nattention of the Apostolic Delegate - 11/28/42\n14\n- G.-\nGeneral Counsel, Office of\nReport for November 1942 - 11/30/42.\n59\nGovernors\nSee Financing, Government: War Savings Bonds\n- H -\nHeffelfinger, William\nSee Deferments\n- I -\nIndustrial Publications, Editors of\nSee Financing, Government: War Savings Bonds\nRegraded Unclassified\n- X -\nBook Page\nKansas City, Missouri\nSee Financing, Government: War Savings Bonds\nKaplan, Louis\nSee Deferments, Military\n- L -\nLazarus, Louis J.\nSee Deferments, Military\nLend-Lease\nUnited Kingdom: Federal Reserve Bank of New York\nstatement showing dollar disbursements, week ending\nNovember 18, 1942 - 11/28/42\n591\n19\n- M -\nMilitary Reports\nBritish operations - 11/28/42, etc.\n24,26,28,147\nMissouri - Kansas City\nSee Financing, Government: War Savings Bonds\n- N -\nNelson, Emil J.\nSee Deferments, Military\nNickell, Richard\nSee Deferments, Military\nNorway\nSee Foreign Funds Control: Food\n- P -\nPerry, Walter J.\nSee Deferments, Military\nPoland\nSee Foreign Funds Control: Food\nPortugal\nSee Foreign Funds Control: Food\nPotthoff, Herbert\nSee Deferments, Military\n- R -\nRevenue Revision\nCorporate profits after taxes only 5% lower in first\n9 months of 1942 than in first 9 months of 1941 -\n11/30/42\n49\nRegraded Unclassified\n- 8 - -\nSweden\nSee Foreign Funds Control: Food\nSwitzerland\nSee Foreign Funds Control\n- T -\nTaxation\nSee Revenue Revision\n- V - -\nVatican\nSee Foreign Funds Control\n- W -\nWar Savings Bonds\nSee Financing, Government\nPrivate Wire\n1\n142\nTELEGRAM\nED. RES. BANK OF K.O.\nG33KC H16 STL 28-1046\n1942 NOV MM 11 02\nHON HENRY MORGENTHAU JR\nCARE FRB\nPRIVATE WIRE DEPT.\nI VERY MUCH HOPE YOU CAN ARRANGE TO BE WITH US MONDAY THROUGH THE\nLUNCHEON HOUR. OUR EIGHTH DISTRICT VICTORY FUND COMMITTEE MEETS\nHERE AT TEN OCLOCK. AT NOON WE ARE GIVING LUNCHEON TO SIX HUNDRED\nVICTORY FUND WORKERS IN METROPOLITAN STL WALTER HEAD PRESIDING\nW L HEMINGWAY PRESIDENT AMERICAN BANKERS ASSN ED HILLIARD\nOF LSVL AND OTHERS MAKING BRIEF TALKS. FOLLOWING LUNCHEON\nMEETING I AM HOLDING CONFERENCE AT BANK WITH PRESIDENTS AND SECRETARIES\nOF STATE BANKERS ASSNS THIS DISTRICT, ALSO WITH STATE BANK\nSUPERINTENDENTS. THIS IS OUR BIG DAY AND YOUR PRESENCE WILL GUARANTEE\nITS SUCCESS. AT BUFFINGTONS SUGGESTION HAVE ARRANGED HOTEL\nACCOMODATIONS HERE SUNDAY EVENING. PLEASE CALL ME FROM KC\nways MON\nIF POSSIBLE\nCHESTER c DAVIS.\nEED BEST BVNK OE K*0*\nRegraded Unclassified\n2\nAPPOINTMENTS FOR THE SECRETARY\nSATURDAY, NOVEMBER 28, 1942\n11:00 A.M. - Meet with the Victory Fund Committee\nin the office of H. G. Leedy, President\nof the Kansas City Federal Reserve Bank.\n12:00 NOON - Meet with Evan Griffith, State Adminis-\ntrator for Kansas, and Dan Nee, State\nAdministrator for Missouri, in the\nKansas City, Missouri, War Savings\nOffice.\nLt ,C minder Sinton\nKansas city\nHarrison 6040\nHotel Continental\nRegraded Unclassified\n11/28/42\nFor:\n1130AM.\nFrom: Secretary morgenthan (en route\nUto City VISE)\nIn manhattan Kansas, cercular\nreceived one were ago by\nfrom Victory Fund Committee\nnational Banks only\n- Circular from Federal Receive\ndescribing 3 issue received Friday\nby national Banks only\nJoint statements of 3 Banks\nExamining agencies received by\nState Banks only\n-\nCircular dated november\nand signeh by Engene Seran\nmaterial received by Home\ndescribing 40g Bonds only\nBuilding and Loan ass.\n- nobody has received\nanything The whole from ABA. matter deserves\nI\nserious checking up\nCopy to mrs. Kestz\n4\nNovember 28, 1942\nTo the Editors of Industrial Publications:\nThe Treasury Department is deeply grateful\nto the industrial editors of the nation for their\nsplendid cooperation on our War Savings Bond\nprogram.\nThrough your publications you have given\nvaluable help to the Payroll Savings Plan and\ngenerally promoted War Savings Bonds. You have\nperformed an outstanding service and we wish to\nextend to you our sincere thanks.\nYour publications are an important line of\ncommunication between the Treasury Department\nand the workers of your organizations. Your\nassistance in acquainting your readers with our\nprogram and the necessity of purchasing War\nSavings Bonds will accelerate the War financing\neffort.\nÀs our nation's war activity rises to an\never increasing tempo, we look forward to your\ncontinued cooperation.\nSincerely,\nH. MORGENTHAU JR\n5\nNOV 2 8 1942\nKy dear Governor Jefferies:\nIn announcing the terms of the various securities\nto be offered by the Treasury to raise $9,000,000,000\nduring the month of December to help pay the enormous\ncosts of our war effort, I AM counting on the whole-\nhearted support of every public official, business man\nand private citizen. The new issues which go on sale\nNovember 30 are designed to meet the needs of investors\nwith accumulated savings and idle funds.\nI, therefore, earnestly request that you bring\nthis to the attention of your State treasurer and\ntrustees of pension, sinking and other public funds,\nand also lend your fullest support to the Victory Fund\nConsittee in your Federal Reserve District, which is\ndirecting the sales campaign for the Treasury.\nVe have undertaken a tremendous task, and ve must\nnot fail.\nSincerely,\n(Signed) H. Morgenthau, Jr.\nHonorable a. M. Jefferies,\nGovernor of South Carolina,\nColumbia, South Carolina.\nSWP:ewieh\nCopy (and list) in Diary\nCopies to Thompson 17 CC to Mrs.\nBrown in Buffington B of fice)\n(Sent \"Air Mail\" to B.F.STa.\n12/3/42)\nRegraded Unclassified\n6\n(Attached letter sent to following governors of the 48 States:\nHon. R. M. Jefferies,\nHon. Julius P. Heil,\nGovernor of South Carolina,\nGovernor of Wisconsin,\nColumbia, South Carolina\nMadison, Wisconsin.\nHon. John W. Bricker,\nHon. Harlan J. Bushfield,\nGovernor of Ohio,\nGovernor of South Dakota,\nColumbus, Ohio.\nPierre, South Dakota.\nHon. Charles A. Sprague,\nHon. Robert O. Blood,\nGovernor of Oregon,\nGovernor of New Hampshire,\nSalem, Oregon.\nConcord, N. H.\nHon. Sam C. Ford,\nHon. Arthur B. Langlie,\nGovernor of Montana,\nGovernor of Washington,\nHelena, Mont.\nOlympia, Wash.\nHon. George A. Wilson,\nHon. Henry F. Schricker,\nGovernor of Iowa,\nGovernor of Indiana,\nDes Moines, Ia.\nIndianapolis, Ind.\nHon. Coke R. Stevenson,\nHon. Chase A. Clark,\nGovernor of Texas,\nGovernor of Idaho,\nAustin, Texas.\nBoise, Idaho.\nHon. Sam H. Jones,\nHon. Dwight H. Green,\nGovernor of Louisiana,\nGovernor of Illinois,\nBaton Rouge, La.\nSpringfield, Ill.\nHon. Eugene Talmadge,\nHon. Prentice Cooper,\nGovernor of Georgia,\nGovernor of Tennessee,\nAtlanta, Ga.\nNashville, Tenn.\nHon. Paul B. Johnson,\nHon. Murray D. Van Wagoner,\nGovernor of Mississippi,\nGovernor of Michigan,\nJackson, Miss.\nLansing, Mich.\nHon. Colgate W. Darden, Jr.,\nHon. John Moses,\nGovernor of Virginia,\nGovernor of North Dakota,\nRichmond, Va.\nBismarck, N. Dak.\nHon. J. Melville Broughton,\nHon. Frank M. Dixon,\nGovernor of North Carolina,\nGovernor of Alabama,\nRaleigh, N.C.\nMontgomery, Ala.\nHon. Charles Edison,\nHon. William H. Wills,\nGovernor of New Jersey,\nGovernor of Vermont,\nTrenton, N.J.\nMontpelier, Vermont.\nHon. Herbert B. Maw,\nHon. Forrest C. Donnell,\nGovernor of Utah,\nGovernor of Missouri,\nSalt Lake City, Utah.\nJefferson City, Missouri.\nRegraded Unclassified\n- 2 -\n7\n(Letters sent to Governors continued:)\nHon. Spessard L. Holland,\nHon. Arthur H. James,\nGovernor of Florida,\nGovernor of Pennsylvania,\nTallahassee, Fla.\nHarrisburg, Pa.\nHon. Matthew M. Neely,\nHon. Payne Ratner,\nGovernor of West Virginia,\nGovernor of Kansas,\nCharleston, W. Va.\nTopeka, Kansas.\nHon. Nels H. Smith,\nHon. Keen Johnson,\nGovernor of Wyoming,\nGovernor of Kentucky,\nCheyenne, Wyoming.\nFrankfort, Kentucky.\nHon. Walter W. Bacon,\nHon. Sumner Sewall,\nGovernor of Delaware,\nGovernor of Maine,\nDover, Delaware.\nAugusta, Maine.\nHon. Harold E. Stassen,\nHon. Robert A. Hurley,\nGovernor of Minnesota,\nGovernor of Connecticut,\nSt. Paul, Minn.\nHartford, Conn.\nHon. Herbert R. O'Conor,\nHon. E. P. Carville,\nGovernor of Maryland,\nGovernor of Nevada,\nAnnapolis, Md.\nCarson City, Nevada.\nHon. J. Howard McGrath,\nHon. Leon C. Phillips,\nGovernor of Rhode Island,\nGovernor of Oklahoma,\nProvidence, Rhode Island.\nOklahoma City, Okla.\nHon. Herbert H. Lehman,\nHon. Culbert L. Olson,\nGovernor of New York,\nGovernor of California,\nAlbany, New York.\nSacramento, Calif.\nHon. Ralph L. Carr,\nHon. Homer M. Adkins,\nGovernor of Colorado,\nGovernor of Arkansas,\nDenver, Colorado.\nLittle Rock, Ark.\nHon. Sidney P. Osborn,\nHon. Dwight Griswold,\nGovernor of Arizona,\nGovernor of Nebraska,\nPhoenix, Ariz.\nLincoln, Nebr.\nHon. Leverett Saltonstall,\nHon. John E. Miles,\nGovernor of Massachusetts,\nGovernor of New Mexico,\nBoston, Mass.\nSanta Fe, N.M.\nUNITED STATES OF AMERICA\n8\n2½ PERCENT TREASURY BONDS OF 1963-68\nDated and bearing interest from December 1, 1942\nDue December 15, 1968\nREDEEMABLE AT THE OPTION OF THE UNITED STATES AT PAR AND ACCRUED INTEREST ON AND\nAFTER DECEMBER 15, 1963\nInterest payable June 15 and December 15\n1942\nTREASURY DEPARTMENT,\nDepartment Circular No. TOI\nFiscal Service\nOFFICE OF THE SECRETARY,\nBureau of the Public Debt\nWashington, November 30, 1942.\nI. OFFERING OF BONDS\n1. The Secretary of the Treasury, pursuant to the authority of the Second Liberty Bond Act,\nas amended, invites subscriptions, at par and accrued interest, from the people of the United States\nfor bonds of the United States, designated 21/2 percent Treasury Bonds of 1963-68. These bonds\nwill not be available for subscription, for their own account, by commercial banks, which are defined\nfor this purpose as banks accepting demand deposits. The amount of the offering is not specifically\nlimited.\nIL DESCRIPTION OF BONDS\n1. The bonds will be dated December 1, 1942, and will bear interest from that date at the rate\nof 2½ percent per annum, payable on a semiannual basis on June 15 and December 15, 1943, and\nthereafter on June 15 and December 15 in each year until the principal amount becomes payable.\nThey will mature December 15, 1968, but may be redeemed at the option of the United States on and\nafter December 15, 1963, in whole or in part, at par and accrued interest, on any interest day or days,\non 4 months' notice of redemption given in such manner as the Secretary of the Treasury shall pre-\nscribe. In case of partial redemption the bonds to be redeemed will be determined by such method\nas may be prescribed by the Secretary of the Treasury. From the date of redemption designated in\nany such notice, interest on the bonds called for redemption shall cease.\n2. The income derived from the bonds shall be subject to all Federal taxes, now or hereafter\nimposed. The bonds shall be subject to estate, inheritance, gift or other excise taxes, whether Fed-\neral or State, but shall be exempt from all taxation now or hereafter imposed on the principal or\ninterest thereof by any State, or any of the possessions of the United States, or by any local taxing\nauthority.\n3. The bonds will not be acceptable to secure deposits of public moneys before December 1,\n1952; they will not bear the circulation privilege, and they will not be entitled to any privilege of\nconversion.\n4. Bearer bonds with interest coupons attached will be issued in denominations of $500, $1,000,\n$5,000, $10,000 and $100,000. Bonds registered as to principal and interest will be issued in denom-\ninations of $500, $1,000, $5,000, $10,000, $100,000 and $1,000,000. Provision will be made for\nthe interchange of bonds of different denominations and of coupon and registered bonds, and for the\ntransfer of registered bonds, under rules and regulations prescribed by the Secretary of the Treas+\nury, except that they may not, before December 1, 1952, be transferred to or be held by commercial\nbanks, which are defined, for this purpose, as banks accepting demand deposits. However, the bonds\nmay be pledged as collateral for loans, including loans by commercial banks, but any such bank\nacquiring such bonds before December 1, 1952, because of the failure of such loans to be paid at\nmaturity will be required to dispose of them in the same manner as they dispose of other assets not\neligible to be owned by banks.\n5. Any bonds issued hereunder which upon the death of the owner constitute part of his estate,\nwill be redeemed at the option of the duly constituted representatives of the deceased owner's estate,\nat par and accrued interest to date of payment,¹ Provided:\n1 An exact half-year's interest in computed for each full half-year period irrespective of the actual number of days\nin the half year. For a fractional part of any half year, computation in on the basis of the actual number of days in\nsuch half year.\n(a) that the bonds were actually owned by the decedent at the time of his death; and\n(b) that the Secretary of the Treasury be authorized to apply the entire proceeds of redemption\nto the payment of Federal estate taxes.\nRegistered bonds submitted for redemption hereunder must be duly assigned to \"The Secretary of\nthe Treasury for redemption, the proceeds to be paid to the Collector of Internal Revenue at\nfor credit on Federal estate taxes due from estate of\n\" Owing to the periodic closing of the transfer\nbooks and the impossibility of stopping payment of interest to the registered owner during the closed\nperiod, registered bonds received after the closing of the books for payment during such closed\nperiod will be paid only at par with a deduction of interest from the date of payment to the next\ninterest payment date;* bonds received during the closed period for payment at a date after the books\nreopen will be paid at par plus accrued interest from the reopening of the books to the date of pay-\nment. In either case checks for the full six months interest due on the last day of the closed period\nwill be forwarded to the owner in due course. All bonds submitted must be accompanied by Form\nPD 1782,' properly completed, signed and sworn to, and by a certificate of the appointment of the\npersonal representatives, under seal of the court, dated not more than 6 months prior to the submis-\nsion of the bonds, which shall show that at the date thereof the appointment was still in force and\neffect. Upon payment of the bonds appropriate memorandum receipt will be forwarded to the repre-\nsentatives, which will be followed in due course by formal receipt from the Collector of Internal\nRevenue.\n6. Except as provided in the preceding paragraphs, the bonds will be subject to the general reg.\nulations of the Treasury Department, now or hereafter prescribed, governing United States bonds.\nIII. SUBSCRIPTION AND ALLOTMENT\n1. Subscriptions will be received at the Federal Reserve Banks and Branchès and at the Treas-\nury Department, Washington. Banking institutions and securities dealers generally may submit\nsubscriptions for account of customers, but only the Federal Reserve Banks and the Treasury De-\npartment are authorized to act as official agencies. Subscriptions must be accompanied by payment\nin full for the amount of bonds applied for.\n2. The Secretary of the Treasury reserves the right to reject any subscription, in whole or in\npart, to allot less than the amount of bonds applied for, and to close the books as to any or all\nsubscriptions at any time without notice; and any action he may take in these respects shall be final.\nSubject to these reservations, all subscriptions will be allotted in full. Allotment notices will be sent\nout promptly upon allotment.\nIV. PAYMENT\n1. Payment at par and accrued interest, if any, for bonds allotted hereunder must be made on\nor before December 1, 1942, or on later allotment. One day's accrued interest is $0.068 per $1,000.\nAny qualified depositary will be permitted to make payment by credit for bonds allotted to its eus-\ntomers up to any amount for which it shall be qualified in excess of existing deposits, when 50\nnotified by the Federal Reserve Bank of its District.\nV. GENERAL PROVISIONS\n1. As fiscal agents of the United States, Federal Reserve Banks are authorized and requested\nto receive subscriptions, to make allotments up to the amounts indicated by the Secretary of the\nTreasury to the Federal Reserve Banks of the respective Districts, to issue allotment notices, to\nreceive payment for bonds allotted, to make delivery of bonds on full-paid subscriptions allotted, and\nthey may issue interim receipts pending delivery of the definitive bonds.\n2. The Secretary of the Treasury may at any time, or from time to time, prescribe supplemental\nor amendatory rules and regulations governing the offering, which will be communicated promptly\nto the Federal Reserve Banks.\nHENRY MORGENTHAU, JR.,\nSecretary of the Treasury.\n(Filed with the Division of the Federal Register, Nov. 30, 1942)\nsive) each year.\n3 in The transfer books are closed from May 16 to June 15, and from November 16 to December 15 (both dates inclu-\nWashington, D. C.\n8 Copies of Form PD 1782 may be obtained from any Federal Reserve Bank or from the Treasury Department,\nU.S. GOVERNMENT PRINTING OFFICE 496819\nRegraded Unclassified\n9\nUNITED STATES OF AMERICA\n1% PERCENT TREASURY BONDS OF 1948\nDated and bearing interest from December 1, 1942\nDue June 15, 1948\nInterest payable June 15 and December 15\n1942\nTREASURY DEPARTMENT,\nDepartment Circular No. 703\nFiscal Service\nOFFICE OF THE SECRETARY,\nBureau of the Public Debt\nWashington, November 30, 1942.\nI. OFFERING OF BONDS\n1. The Secretary of the Treasury, pursuant to the authority of the Second Liberty Bond Act,\nas amended, invites subscriptions, at par and accrued interest, from the people of the United States\nfor bonds of the United States, designated 18/4 percent Treasury Bonds of 1948. The amount of\nthe offering is not specifically limited, although allotments to commercial banks, which are defined\nfor this purpose as banks accepting demand deposits, for their own account will be limited to\n$2,000,000,000, or thereabouts. The books will be open today and until further notice for the receipt\nof subscriptions from others than commercial banks for their own account, and today, December 1\nand December 2 for the receipt of subscriptions from commercial banks for their own account.\nIL DESCRIPTION OF BONDS\n1. The bonds will be dated December 1, 1942, and will bear interest from that date at the rate\nof 1ª/4 percent per annum, payable on a semiannual basis on June 15 and December 15, 1943, and\nthereafter on June 15 and December 15 in each year until the principal amount becomes payable.\nThey will mature June 15, 1948, and will not be subject to call for redemption prior to maturity.\n2. The income derived from the bonds shall be subject to all Federal taxes, now or hereafter im-\nposed. The bonds shall be subject to estate, inheritance, gift or other excise taxes, whether Federal\nor State, but shall be exempt from all taxation now or hereafter imposed on the principal or interest\nthereof by any State, or any of the possessions of the United States, or by any local taxing authority.\n3. The bonds will be acceptable to secure deposits of public moneys, but will not bear the circu-\nlation privilege and will not be entitled to any privilege of conversion.\n4. Bearer bonds with interest coupons attached will be issued in denominations of $500, $1,000,\n$5,000, $10,000 and $100,000. Bonds registered as to principal and interest will be issued in denomi-\nnations of $500, $1,000, $5,000, $10,000, $100,000 and $1,000,000. Provision will be made for the\ninterchange of bonds of different denominations and of coupon and registered bonds, and for the\ntransfer of registered bonds, under rules and regulations prescribed by the Secretary of the Treasury.\n5. The bonds will be subject to the general regulations of the Treasury Department, now or here-\nafter prescribed, governing United States bonds.\nIII. SUBSCRIPTION AND ALLOTMENT\n1. Subscriptions will be received at the Federal Reserve Banks and Branches and at the Treas-\nury Department, Washington. Subscribers must agree not to sell or otherwise dispose of their sub-\nscriptions, or of the securities which may be allotted thereon, prior to December 3, 1942. Banking\ninstitutions and securities dealers generally may submit subscriptions for account of customers, but\nonly the Federal Reserve Banks and the Treasury Department are authorized to act as official agen-\ncies. Others than banking institutions and securities dealers will not be permitted to enter subscrip-\ntions except for their own account. Subscriptions from commercial banks for their own account will\nbe received without deposit. All other subscriptions must be accompanied by payment in full for\nthe amount of bonds applied for.\n2. The Secretary of the Treasury reserves the right to reject any subscription, in whole or in\npart, to allot less than the amount of bonds applied for, and to close the books as to any or all subscrip-\ntions at any time without notice; and any action he may take in these respects shall be final. Subject\nto these reservations, subscriptions for amounts up to and including $100,000 from commercial\nRegraded Unclassified\nbanks, and subscriptions in any amount from all other subscribers, will be allotted in full; subscrip.\ntions for amounts over $100,000 from commercial banks will be allotted on an equal percentage\nbasis, to be publicly announced. Allotment notices will be sent out promptly upon allotment.\nIV. PAYMENT\n1. Payment at par and accrued interest, if any, for bonds allotted hereunder to or for the\naccount of others than commercial banks must be made on or before December 1, 1942, or on later\nallotment. Payment at par and accrued interest to December 11, 1942, for bonds allotted here-\nunder to commercial banks must be made on that date. One day's accrued interest is $0.048 per\n$1,000. Any qualified depositary will be permitted to make payment by credit for bonds allotted to\nit for itself and its customers up to any amount for which it shall be qualified in excess of existing de-\nposits, when so notified by the Federal Reserve Bank of its District.\nV. GENERAL PROVISIONS\n1. As fiscal agents of the United States, Federal Reserve Banks are authorized and requested to\nreceive subscriptions, to make allotments on the basis and up to the amounts indicated by the Secre-\ntary of the Treasury to the Federal Reserve Banks of the respective Districts, to issue allotment\nnotices, to receive payment for bonds allotted, to make delivery of bonds on full-paid subscriptions\nallotted, and they may issue interim receipts pending delivery of the definitive bonds.\n2. The Secretary of the Treasury may at any time, or from time to time, prescribe supplemental\nor amendatory rules and regulations governing the offering, which will be communicated promptly\nto the Federal Reserve Banks.\nHENRY MORGENTHAU, JR.,\nSecretary of the Treasury.\n(Filed with the Division of the Federal Register, Nov. 30, 1942)\ns.\nPRINTING\nOFFICE\n496820\nRegraded Unclassified\n10\nUNITED STATES OF AMERICA\n⁷/₈ PERCENT TREASURY CERTIFICATES OF INDEBTEDNESS OF SERIES E-1943\nDated and bearing interest from December 1, 1942\nDue December 1, 1943\n1943\nTREASURY DEPARTMENT,\nDepartment Circular No. 708\nOFFICE OF THE SECRETARY,\nFiscal Service\nBureau of the Public Debt\nWashington, November 30, 1942.\nI. OFFERING OF CERTIFICATES\n1. The Secretary of the Treasury, pursuant to the authority of the Second Liberty Bond Act, as\namended, invites subscriptions, at par and accrued interest, from the people of the United States for\ncertificates of indebtedness of the United States, designated ½ percent Treasury Certificates of In-\ndebtedness of Series E-1943. The amount of the offering is not specifically limited, although allot-\nments to commercial banks, which are defined for this purpose as banks accepting demand deposits,\nfor their own account will be limited to $2,000,000,000, or thereabouts. The books will be open today\nand until further notice for the receipt of subscriptions from others than commercial banks for their\nown account, and on December 16, December 17 and December 18 for the receipt of subscriptions\nfrom commercial banks for their own account.\nII. DESCRIPTION OF CERTIFICATES\n1. The certificates will be dated December 1, 1942, and will bear interest from that date at the\nrate of ½ percent per annum, payable semiannually on June 1 and December 1, 1943. They will\nmature December 1, 1943, and will not be subject to call for redemption prior to maturity.\n2. The income derived from the certificates shall be subject to all Federal taxes, now or here-\nafter imposed. The certificates shall be subject to estate, inheritance, gift or other excise taxes,\nwhether Federal or State, but shall be exempt from all taxation now or hereafter imposed on the\nprincipal or interest thereof by any State, or any of the possessions of the United States, or by any\nlocal taxing authority.\n3. The certificates will be acceptable to secure deposits of public moneys. They will not be ac-\nceptable in payment of taxes and will not bear the circulation privilege.\n4. Bearer certificates with two interest coupons attached will be issued in denominations of\n$1,000, $5,000, $10,000 and $100,000. The certificates will not be issued in registered form.\n5. The certificates will be subject to the gener regulations of the Treasury Department, now or\nhereafter prescribed, governing United States certificates.\nIII. SUBSCRIPTION AND ALLOTMENT\n1. Subscriptions will be received at the Federal Reserve Banks and Branches and at the Treas-\nury Department, Washington. Subscribers must agree not to sell or otherwise dispose of their sub-\nscriptions, or of the securities which may be allotted thereon, prior to December 19, 1942. Banking\ninstitutions and securities dealers generally may submit subscriptions for account of customers, but\nonly the Federal Reserve Banks and the Treasury Department are authorized to act as official agen-\ncies. Others than banking institutions and securities dealers will not be permitted to enter sub-\nscriptions except for their own account. Subscriptions from commercial banks for their own ac-\ncount will be received without deposit. All other subscriptions must be accompanied by payment in\nfull for the amount of certificates applied for.\n2. The Secretary of the Treasury reserves the right to reject any subscription, in whole or in\npart, to allot less than the amount of certificates a pplied for, and to close the books as to any or all\nsubscriptions at any time without notice; and any action he may take in these respects shall be final.\nSubject to these reservations, subscriptions for amounts up to and including $100,000 from commercial\nbanks, and subscriptions in any amount from all other subscribers, will be allotted in full; subscrip-\ntions for amounts over $100,000 from commercial banks will be allotted on an equal percentage basis,\nto be publicly announced. Allotment notices will be sent out promptly upon allotment.\nRegraded Unclassified\nDI\nЛОТЯЗМА\nIV. PAYMENT\n1. Payment at par and accrued interest, if any, for certificates allotted hereunder to or for the\naccount of others than commercial banks must be made on or before December 1, 1942, or on later\nallotment. Payment at par and accrued interest to December 28, 1942, for certificates allotted\nhereunder to commercial banks must be made on that date. One day's accrued interest is $0.024\nper $1,000. Any qualified depositary will be permitted to make payment by credit for certificates\nallotted to it for itself and its customers up to any amount for which it shall be qualified in excess of\nexisting deposits, when so notified by the Federal Reserve Bank of its District.\nV. GENERAL PROVISIONS\n1. As fiscal agents of the United States, Federal Reserve Banks are authorized and requested to\nreceive subscriptions, to make allotments on the basis and up to the amounts indicated by the Secre-\ntary of the Treasury to the Federal Reserve Banks of the respective Districts, to issue allotment\nnotices, to receive payment for certificates allotted, to make delivery of certificates on full-paid sub-\nscriptions allotted, and they may issue interim receipts pending delivery of the definitive certificates.\n2. The Secretary of the Treasury may at any time, or from time to time, prescribe supplemental\nor amendatory rules and regulations governing the offering, which will be communicated promptly\nto the Federal Reserve Banks.\nIIIW\nbe\nor\nto\nbad\nInformation\nHENRY MORGENTHAU, JR.,\nSecretary of the Treasury.\nIn\n2015\n...\n(Filed with the Division of the Federal Register, Nov. 30, 1942) Insured at you was\nand\n10\nWORL\nof\nPRINTING\namount\nonly\nto\nHarls off bonogred will\n2019 Increased - and The and tatal TO invobed tradition\nTHE TO a You TO you qd TO\nguixat Dear\n-on of 2011 the special bilding The of Aditizione od Illa adT .6\ndive liter Bas essed 20 themysq in aldetion\nThe will 1 Give Individual we dRW was +\nartos INT Improved = time\n30 WENT will TM Brown How\nindians uninzevog\nnorman OKA\nwith 4a the missist les claim 20 Levidors Ow ,1\n-das 30 To VITER instruction NYB\nJust or without at all That birth sull to 10\n2nd In Landa profesh withouse bas\nD M at 014 Insurance) creamy self Ean orman Instrict add Visa\n19/19 - believe of Md the late personal and\nat Insurance the 116 think both becomes of Illw Invoice\n04 CND This of moligise\nDate at: 1 state and - of anger adj ml 20 off =\n10 Iddition 10%\ndeath 10 The M 100% - the billege 30 And milt not will fille of\nDab vič nist X politive yas bes and THE In\nHert n) Instruction XY Insurance all Low\noz\nand provided :- what 000,0018 2WG set\nThinking gd OF\nRegraded Unclassifie\n11\nPage 1\nFEDERAL RESERVE OPERATIONS IN GOVERNMENT SECURITIES\nSTRICTLY CONFIDENTIAL\nColumn A shows Federal Reserve sperations\nMarket purchases 1/\n*\nColumn 1 above price changes is 32ada for\nis millions of dollars - follows:\nMarket sales\nall securities except certificates.\nDirect purchases free Treasury\n+d\nFor certificates, Column , above yield\nMaturities\n,\nchanges is decimale.\nLast Vesit\nThis Vanit\nMonday\nTunning\nVelanday\nTearsday\nPriday #\nReturday\nFull York\nIndex\nDescription\nMonday\nTuesday\nVelnesday\nThursday\nFriday\nSaturday\nFull Vesitz\nNov. 16\n17\n18\n19\n20\n21\nNov. 23\n24\na\n26\n27\n26\nA\n1\n&\n3\n&\n3\nA\n3\n&\n3\n&\n3\n&\n3\nA\n3\nA\n3\nA\nB\nI\nA\nB\n&\nB\nA\n3\nI. Numary\nA\n+15.2\n+53-3\n+13.6\n+18.1\n+45.8\n+12.3\n+199.3\nMarket purchases\n+38.8\n**7.7\n+49.6\nNol\nday\n+67.2\n+98.6\n+321.9\n-27.0\n-4.0\n-8.0\n-,5\n-8.1\n-2.0\n-53.6\nMarket sales\n-50.0\n-4,3\n-2.0\n-11.4\n-67.7\nDirect purchases from Treasury\n+d139.0\n+d139.0\n-a31.7\n-431.7\nMaturities\n-a16.2\n-a16.2\n-11.8\n+45.3\n-26.1\n+17.6\n+78.7\n+10.3\n+114.0\nTotal net decrease (-)\n-11.2\n+47.7\n+29.1\n+$5,2\n+226.2\n+377.0\n4695.0\nWednesday report of total portfolio\n4843.0\nII. famile Securities\nBills - all issues combined\n+2.2\n+.5\n+3.2\n+2.6\n+54.2\n+1.7\n+64.4\nMarket purchases\n3.\n+4.3\n+17.6\n+84.5\n+114.9\n-27.0\n-8.0\n-8.0\n-.5\nall\n-2.0\n-53.6\nMarket sales\n-50.0\n-4.)\n-2.0\n-11.4\n-67.7\n-a31.7\n-031.7\nNaturities\n-a16.2\n-m16.25\n-24.6\n-7.5\n-36.5\n+2.1\n+46.1\n?\n-20.9\nTotal net increase or decrease (-)\n-41.5\n+4.3\n-20.5\n+15.6\n+73.1\n+31.0\nCertificates\n+6.2\n.015\n+5.0\n+11.2\n.015\n5/0% 1. 2-1 43\n+5.5\n+10.0\n+.4\n+15.9\n-,015\n+3.8\n+.1\n-015\n+3.9\n.015\n65 0 - 5-1 43\n.01%\n+.1\n+,4\n-015\n-015\n4,015\n+.5\n-035\n7/8 1. 8-1 43\n-.01%\n-015\n+20.0\n+3.5\n+23.5-.02%\n+23.3\n-015\n+23.3\n,01$\n7/6 D - 11-1 43\n-,015\n+5.4\n+5.4-01$\nSpecial one-day certificates 2/\n+4139.0\n+4139.0\nfrequery soles\n12\n3/45 D - 3-15 43\n-1\n-1\n\" 9\nD - 9-15 M\n-2\n-2\n+2\n3/4\n1\n-1\n+2.7\n+2.7\n# 11\n1-1/4 C - 3-15 is\n+2.3\n+1.3\n+3.0\n+6.6\n2\n+1\n+3\nN 12\n3/4\n) 12-15 as\nA - 3-15 46\n+1.3\n-1\n+1.3\n-1\n-\n+1.0\n+1.0\n+2.0\n+2.0\n+6.0\n13\n2\n+3.8\n+1.0\n+4.0\n+1.6\n+10.4\n# 14\n1-1/2 I 12-15 46\n+,1\n+3.1\n+.1\n+3.3\nTreasury bonds\n+1\n+1.0\n+.7\n-1\n+3.1\n-1\n+.1\n+5.4\n-1\n32\nof\n-\n3-15\n48-50\n+,2\n+2.1\n+,5\n+3.3\n+2.1\n+6.2\n+.5\n+2\n+.5\n+.7\n-1\n+.2\n+1.5\n+1\n3 16\n2\n- 6-15 49-51\n+.6\n+3.4\n+2.0\n+.5\n+1.0\n+7.5\n+.1\n+1,8\n+1.9\n+5.4\n7\n+9.4\n+1.0\n+1.0\n+.4\n+2.6\n+1\nB 17\n2\n- 9-15 49-51\n+1\n+.2\n+1.6\nv.1\n+.2\n+1.9\n+1\n316\n2\n- 12-15 49-51\n+4.0\n+3.9\n+2.2\n+3.0\n+1.6\n+14.7\n+1\n+.1\n+.1\n+2\n3 21\n2\n- 3-15 50-52\n+3.2\n+2.3\n+6.0\n+6.0\n+3.5\n+23.0\n+2\n+1\n+1\n-1\n+1\n$ 26\n2\n- 12-15 51-55\n-2\n+2.7\n-5\n327\n2-1/2\n- 3-15 52-54\n-1\n&\n-1\n+1,0\n-1\n-1\n+1.0\n-6\n+.5\n+.5\n+.5\n+1.2\n-3\n+4.7\n+6.6\n-1\n-2\n-3\n1\n328\n2-1/4\n- 6-15 52-55\n+.8\n+1.0\n+2.1\n+1\n+1\n-6\n32\n2-1/2\n- 3-15 56-58\n-1\n-3\n+1\n-2\n&\n&\n+1\n-1\n-3\n-3\n-1\n1\n5\n-9\n-5\n36\n2-1/2\n- 6-15 62-67\n1\n+1\n-1\n-1\n-1\n-10\n7\n-14\n37\n2-1/2\n- 9-15 67-72\n-1\n-1\n-1\n-1\n1\nQuaranteed securities\n-1\n-1\n07\nEFC 1-1/85 7-15 43\n+1\n+1\n:\nEPC 1 1 - 4-15 -\n+1\n02\n000 1-1/8 0 - 2-15 is\n+1\nAll tamble securities\n+5.6\n+136.6\nMarket purchases\n+26.2\n+29.0\n+34.5\n+55.0\n+96.6\n+243.3\n+6.6\n+36.5\n+6.9\n+9.3\n+71.7\n-53.6\n7\n-2.0\n-11.4\n-67.7\n-27.0\n-6.0\n-8.0\n-f.1\n-2.0\nMarkets sales\n-50.0\n-.5\n+d135.0\n+4139.0\nDirect purchases from Treasury\nMaturities\n-m16.2\n-a16.2\n-031.7\n-831.7\n-20.4\n463.6\n+3.6\n+51.3\nTotal not increase or decrease(-)\n-21.8\n+29.0\n+14.0\n+53.0\n+224.2\n+298.4\n+28.5\n-32.8\n+8.8\nOffice of the Secretary of the Treasury, Division of Research and Matierics.\nF Original figures revised.\n. less this $50,000.\nPurchases and sales reserded as of day of transaction and not day of delivery. Transactions after \" s'olock are included is the next day.\n2/\nThe income and redemption of special une-day certificates are treated miss 1.0., only the change from the day before is considered as as issue or redemption. Transactions are\nentered as of the day fallowing that to which they apply. class date are ant available until the following norning.\nRegraded Unclassified\n12\n12\nPage 2\nFEDERAL RESERVE OPERATIONS IN GOVERMENT SECURITIES\nColumn A above Federal Reserve operations\nSTRICTLY CONFIDENTIAL\nLa millions of dollars as follows:\nMarket purchases 1/\nMarket sales\nColumn B shows price shanges La 32nds.\nDirect purchases from Treasury\n+d\nMaturities\n,\nlast Wesk\nMonday,\nTuesday\nWednesday\nThursday\nThis Vesit\nFriday\nSaturday\nNov. 16\n17\n18\n19\n20\nFull Yesk\nIndex\nDescription\nMonday\nTuesday\nMetnesday\n21\nThursday\nFriday\nA\n3\nA\n3\n&\n3\nA\n3\nNev. 23\n24\nA\n3\nC\n26\nFull Wesk\nA\n3\n27\n28\nA\n3\n&\n3\nA\n3\nA\n3\nIII. Tax-exempt securities\nA\nB\n&\n»\nA\n.\nA\n3\nTreasury notes\n-1\n-1\n1\n1-3/45 C 12-15 42\n-1\n13\n1-1/8 A - 6-15 43\nHollday\n7\n---\n2 5\n1\n0 - 9-15 43\n+1\n-1\n+1\n#5\n1-1/8\n-1\n+1\n+1\n: own\n12-15 43\n-1\n+1\n-1\n-1\n1\n3- 3-15 %\n-1\n+1\n\"\n3/4\n+1\n1- 6-15 *\n+1\n\"\n1\nC - 9-15 -\n+1\n+1\n# 10\n3/4\n1 - 3-15 45\n+1\n+1\nTreasury bonds\n+.1\n+.2\n+1.3\n&\n+1.6\n-2\n11\n3-3/8%\n-\n6-15\n43-47\n+.1\n+1.1\n+,6\n+1.1\n+2.4\n+2.3\n+3.9\n4\n-2\n+4.2\n+7.3\n7\n-2\n12\n+3.0\n+4.2\n3-1/4\n- 10-15 43-45\n+.9\n-2\n?\n+12.1\n+.1\n+.3\n+12.4\n-2\n-2\n+8.5\n-2\n33\n3-1/4\n- 4-15 44.46\n+,1\n+2.6\n+3.8\n-2\n+2.7\n3 E\n+.2\n+6.7\n7\n-1\n+2.7\n-1\n- 12-15 4-54\n-1\n-1\n+2.1\n+3.0\n+1.0\n7\n+.7\n+3.6\n-1\n+.2\n+10.6\n-3\n-1\n3 5\n2-3/4\n- 9-15 45-47\n+,2\n1'+\n+1.6\n+1.9\n-1\n-1\n16\n2-1/2\n- 12-15 45\n+5.0\n+3.6\n+3.1\n+1.1\n3 7\n3-3/4\n. 3-15 46-56\nLL\n-1\n+11.7\n-1\n11\n-1\n+.6\n?\n-1\n-2\n-1\n+.2\n+4.9\n-1\n1\n+.6\n+1.8\n-1\n+.3\n+7.8\n-1\n3 I\n,\n- 6-15 46-48\n+,1\n-1\n+,1\n+.2\n+,4\n-1\n+.3\n+1.7\n-1\n+,1\n+2.1\n-1\n\"\n3-1/8\n- 6-15 46-49\n+1.1\n-1\n+3.4\n+.1\n+1.2\n-1\n+,1\n05.9\n-1\n-1\n3 10\nL1/4\n- 10-15 47-52\n-2\n-1\n-1\n71\n-1\n-2\n-)\n11\n2\n- 12-15 47\n-2\n4\n-1\n&\n+.3\n+,2\n-2\n+.5\n-2\nB 13\n2-3/4\n- 3-15 48-51\n-1\n-1\n-1\n&\n77\n-5\n+.2\n7\n+,2\n-2\n3 14\n2-1/2\n. 9-15 45\n-3\n-2\n-1\n&\n7\n?\n-1\n-2\n+3\n-3\n15\n2\n- 12-15 48-50\n-1\n-2\n:\n.\n4\n19\n&\n-1\n&\n-1\n-8\n3-1/8\n-12-15 49-52\n+,2\n-1\n+.1\n+.3\n&\n+.1\n+,4\n+1,1\n3\n+.3\n+.1\n-1\n+.2\n-2\n+.6\n-3\n3 20\n2-1/2\n- 12-15 49-53\n+.5\n+3.0\n-1\n+2.3\n-1\n+1.2\n+7.0\n-2\n+1.0\n+.2\n+.9\n+3.0\n-1\n+.9\n-2\n+6.0\n-3\nB 22\n2-1/2\n- 9-15 50-52\n+2.2\n-1\n+5.3\n+1.3\n-1\n+3.2\n+.3\n+12.3\n-2\n+2.0\n+,2\n+1.2\n-1\n+2.0\n-1\n+5.4\nto\n3.23\n2-3/4\n- 6-15 51-54\n+6.2\n-1\n+,6\n-1\n-3\n124\n3\nWA\n-1\n+,6\n-1\n+.3\n+.3\n+6.0\n-3\n-2\n- 9-15 51-55\n-1\n&\n-2\n-3\n35\n2-1/4\n- 12-15 51-53\n-1\n+.7\nA\n+.5\n-2\n-2\n1\n18\n2\n. 6-15 53-55\nW & & & WILLIAM & 11\n+.5\n+1.7\n7\n&\n-1\n-9\n+1\n-3\n-2\n&\n30\n2-1/4\n- 6-15 54-56\n&\n&\n-3\n-12\n+.6\n+1.3\n+2.2\n-2\n-2\n+4.1\n1\nD-31\n2-7/8\n- 3-15 55-60\n-2\n+.1\n-2\n-2\n+.1\n333\n. 9-15 56-59\nhis\n-3\n4,8\n-3\n+1.2\n+,2\n7\n42.2\n-18\n&\n2-3/4\n-2\nA\n-1\n-15\n7\n-2\n-2\n+.)\n4\n134\n2-3/4\n- 6-15 58-63\n-2\n&\n-2\n-3\n-16\n+.5\n+1.5\n+2.6\n+2.0\n-2\n-2\n+6.6\n1\n335\n2-3/4\n- 12-15 60-65\nA\n-3\n-3\n-3\n-15\nQuaranteed securities\n+1\n-1\n#1\nCCC 3/45 1- 5-1 43\n6\nUSMA 1-3/6 - 2-1 \"\n+1\n+1\n0\nTTMC\n3\n-\n3-15\n44-4g\n1\n-1\n-3\n03\nme 3-1/4 - 3-15 44-64\n-1\n-1\n&\n+1\n+1\n05\nBOLC 3 A- 5-1 M-52\n-2\n---\n-1\n-3\n+1\n-1\n-1\n-1\n0 6\nBOLG 1-1/2 x 6-1 45-47\n-1\n-1\nde\nE securities\n+6.6\n+16.8\n+6.7\n+6.8\n+15.1\n+6.7\n+62.7\nMarket purchases\n+10.6\n+18.7\n+15.1\n+32.2\n+2.0\n+78.6\nMarket sales\nDirect purchases from Treasury\nMaturities\n+8.6\n+16.8\n+6.7\n+6.5\n+15.1\n+6.7\n+62.7\nTotal net increase or decrease\n+10.6\n+18.7\n+15.1\n+32.2\n+2.0\n+78.6\nOffice of the Secretary of the Treasury, Division of Research and Diatistics.\nF Original figures revised.\n. loss than $50,000.\ny Purchases and sales recorded as of day of transaction and not day of-delivery. Transactions after la e'clock are included in the sext day.\nRegraded Unclassified\n13\nTREASURY DEPARTMENT\nINTER OFFICE COMMUNICATION\nDATE\n8 1942\nTO\nSecretary Morgenthau\nFROM Randolph Paul\nIn the course of the recent Foreign Funds\nControl investigations of the New York agencies of the\nSwiss Bank Corporation and the Credit Suisse, evidence\nwas uncovered indicating that both agencies wilfully\nfiled false TFR-300 reports with respect to securities\nheld by them in accounts in the names of their home\noffices. Apparently both agencies were parties to almost\nidentical plans to conceal the real ownership of such\nsecurities. Although it would appear that in many cases\nthe agencies themselves were ignorant of the real owners,\nnevertheless in numerous instances where they were fully\ninformed, they failed to report the true ownership of the\nsecurities.\nIn view of the gravity of the charges it seems\ndesirable to institute administrative proceedings at which\nthe officials of the agencies may be confronted with the\nevidence and given every opportunity to explain their con-\nduct. The institution of such proceedings will, further-\nmore, have the salutary effect of serving notice on the\nfinancial community that the Department Is inquiring into\nthe truth of reports filed with it under Executive Order\nNo. 8389, and intends to take appropriate action when such\nreports have been wilfully falsified. Consequently, it is\nintended to notify the New York Agency of the Swiss Bank\nCorporation the early part of next week that hearings will\nbe commenced on December 16, 1942, with respect to speci-\nfied TFR-300 reports filed by it, and certain miscellaneous\nmatters which also seem to call for explanation. When this\nproceeding is completed, hearings will be commenced with\nrespect to the New York Agency of the Credit Suisse, and\nits subsidiary, the Swiss-American Corporation.\nMr. Sam Bass Warner, of my office, will preside\nat the hearings. A graduate of Harvard College, class of\n1912, and of the Harvard Law School, class of 1915, Mr.\nWerner has been for the past number of years a member of\nthe Harvard Law School faculty.\nher\nRegraded Unclassified\n14\nTREASURY DEPARTMENT\nINTER OFFICE COMMUNICATION\nDATE NOV 8 1942\nTO Secretary Morgenthau\nFROM Randolph Paul\nInformation coming to our attention during\nthe past several months indicated that the accounts of\nthe Vatican and other facilities of the Roman Catholic\nChurch were being used to effect certain transactions\nof a type which did not fall within the intended scope\nof General License No. 44.\nThe following remedial action has been taken:\n(1) The problem was discussed with Monsignor\nMcShea, acting for the Apostolic Delegate, who was\nfurnished with a number of examples of such transactions.\nMonsignor McShea readily agreed that the Apostolic\nDelegate would take the necessary steps to prevent\nthe church facilities from being used for such purposes.\n(2) With the approval of the Apostolic\nDelegate, the banks holding the principal Vatican\naccounts were instructed that no funds may, except\nunder specific license, be credited to such accounts\nby any person other than the Apostolic Delegate or\npersons designated by him unless the bank has received\nspecific notice from the Apostolic Delegate of his\napproval of such transaction.\n(3) An arrangement has been made with the\nApostolic Delegate and the Office of Censorship in\naccordance with which instructions being sent to\nblocked countries requesting the saying of masses or\nremitting of funds in payment therefor will be returned\nby the Office of Censorship to the sender, together\nwith an advice that, in view of the financial\ntransaction necessarily involved, a special Treasury\nlicense is required and that applications for such\nlicenses must be filed through the Apostolic Delegate,\nWashington, D. C. This step will increase the\neffectiveness of our control over funds which were\nRegraded Unclassified\nTREASURY DEPARTMENT\n14\nINTER OFFICE COMMUNICATION\nDATE NOV 8 1942\nTO\nSecretary Morgenthau\nFROM Randolph Paul\nInformation coming to our attention during\nthe past several months indicated that the accounts of\nthe Vatican and other facilities of the Roman Catholic\nChurch were being used to effect certain transactions\nof a type which did not fall within the intended scope\nof General License No. 44.\nThe following remedial action has been taken:\n(1) The problem was discussed with Monsignor\nMcShea, acting for the Apostolic Delegate, who was\nfurnished with a number of examples of such transactions.\nMonsignor McShea readily agreed that the Apostolic\nDelegate would take the necessary steps to prevent\nthe church facilities from being used for such purposes.\n(2) With the approval of the Apostolic\nDelegate, the banks holding the principal Vatican\naccounts were instructed that no funds may, except\nunder specific license, be credited to such accounts\nby any person other than the Apostolic Delegate or\npersons designated by him unless the bank has received\nspecific notice from the Apostolic Delegate of his\napproval of such transaction.\n(3) An arrangement has been made with the\nApostolic Delegate and the Office of Censorship in\naccordance with which instructions being sent to\nblocked countries requesting the saying of masses or\nremitting of funds in payment therefor will be returned\nby the Office of Censorship to the sender, together\nwith an advice that, in view of the financial\ntransaction necessarily involved, a special Treasury\nlicense is required and that applications for such\nlicenses must be filed through the Apostolic Delegate,\nWashington, D. C. This step will increase the\neffectiveness of our control over funds which were\nRegraded Unclassified\n15\n- 2 -\nhitherto being held by clerics throughout the country\nfor account of persons in Europe and which were being\nused to effect unlicensed offset transactions.\nLast Tuesday the Apostolic Delegate invited\nPehle and me to luncheon. He was very friendly and\nwas grateful for the frank and cooperative way in which\nthe Treasury is handling these problems.\nIt is believed that these steps will go far\ntoward remedying the situation about which several\ngovernmental agencies were concerned.\nKA\nRegraded Unclassified\n16\nTREASURY DEPARTMENT\nINTER OFFICE COMMUNICATION\nDATE\nNOV\n8\n1942\nTO Secretary Morgenthau\nFROM Randolph Paul\nThere is transmitted herewith for your\ninformation a copy of a letter which has been sent\nto Breckinridge Long with respect to the shipment\nof food parcels from Portugal to Poland. This letter\nwas sent after Pehle had discussed the matter with\nBreckinridge Long. Upon receipt of the State\nDepartment's view with respect to the matters\nindicated therein, it is contemplated that we will\nbe in a position to issue a license to the\norganization selected by the Department of State.\nYou may be interested to know that\nBreckinridge Long told Pehle informally that the\nPresident has instructed State to arrange for the\nshipment of 750,000 food packages to Norway. These\npackages will be of a value of approximately $20\neach; will be purchased by the American Red Cross\nout of the President's special fund; and will be\nsent in Swedish ships through Sweden to Norway.\nGerman consent to send such shipments through the\nblockade will have to be obtained, as well as\nGerman permission for the Swedish ships which are\nnow in the Baltic to come to this country to pick\nup the food packages. If the trial shipment of\n750,000 food packages is successful, it is\nanticipated there will be further shipments. The\nsending of food packages to Norway in this amount\nwould appear to indicate that a definite shift in\nthe Government's relief policy is under way.\nbet\nRegraded Unclassified\n17\nCOPY\n30168\nNovember 28, 1942\nDear Mr. Long:\nReference is made to Mr. John Pehle's conversation\nwith you with regard to the proposed sending of food\nparcels from Portugal to the Jewish communities in Poland.\nThere is now pending with the Foreign Funds Control\nthe following applications with respect to this matter:\nNY 479110 - filed on behalf of the World Jewish\nCongress; and\nNY 479663 - filed by the American Jewish Joint\nDistribution Committee, Inc.\nPhotostatic copies of such applications are transmitted\nherewith.\nThis Department would appreciate being advised as to\nthe decision of the Department of State with respect to the\norganization which should be licensed to engage in these\nactivities.\nWe should also like to have the views of the Department\nof State with respect to the following:\n1. It is assumed that food parcels aggregating four\ntons per month are to be purchased in Portugal for\nshipment to Poland. This Department would like\nto be formally advised as to the products which\nmay be included in such food parcels. It is\nassumed that parcels may not contain products\nwhich are not produced in Portugal.\n2. Are the food packages to be sent to communities\nin Poland for distribution by trusted persons in\nthe communities or are the parcels to be addressed\nto individuals in such communities for consumption\nby such individuals.\nRegraded Unclassified\n18\n- 2 -\n3. Does the Department of State desire the\nAmerican mission in Portugal to supervise\nthe purchases of products in Portugal.\nIt is proposed by this Department that licenses be\nissued for a period of two months; that monthly reports\nbe required as to the activities under the license; and\nthat every effort be made to ascertain whether the\nparcels are actually received in the communities for\nwhich they are intended.\nVery truly yours,\n(Signed) Randolph Paul\nActing Secretary of the Treasury.\nHonorable Breckinridge Long,\nAssistant Secretary of State.\nEnclosures\nRegraded Unclassified\n19\nTREASURY DEPARTMENT\nOFFICE OF SEE SECRETARY\nNovember 25, 1942\nCOMPIEMENTAL\nReceived this date from the Federal Reserve\nBank of New York, for the confidential informa-\ntion of the Secretary of the Treasury, compile-\ntion for the week ended November 18, 1942, showing\ndollar disbursements out of the British Impire and\nFrench accounts at the Federal Reserve Bank of\nNew York and the means by which these expenditures\nvere financed.\n(Init.) E.M.B.\n1mc:12/7/42\n20\nC\no\nP\nY\nFEDERAL RESERVE BANK\nOF NEW YORK\nNovember 27, 1942\nCONFIDENTIAL\nDear Mr. Secretary: Attention: Mr. H. D. White\nI am enclosing our compilation for the week ended\nNovember 18, 1942, showing dollar disbursements out of the\nBritish Empire and French accounts at this bank and the\nmeans by which these expenditures were financed.\nFaithfully yours,\n(Signed) L. W. Knoke,\nL. W. Knoke,\nVice President.\nThe Honorable Henry Morgenthau, Jr.,\nSecretary of the Treasury,\nWashington, D. C.\nEnclosure\nRegraded Unclassified\nANALYSIS OF BRITISH AND FRENCH ACCOUNTS\nWeek Ended\nNovember 18, 1942\nStrictly\n(In Millions of Dollars)\nConfidential\nBANK OF ENGLAND (BRITISH GOVERNMENT)\nBANK\nOF\nFRANCE\nDEBITS\nCREDITS\nDEBITS\nCREDITS\nProceeds of\nNet Incr.\nNet Incr.\nGov't\n(+) or\nGov't\nProceeds\nSales of\n(+) or\nTotal\nExpendi-\nOther\nTotal\nSecurities\nOther\nDecr. (-)\nTotal\nExpendi-\nOther\nTotal\nof Gold\nOther\nDecr. (-)\nPERIOD\nDebits\ntures(a)\nDebits\nCredits\nGold\n(filcial)\nCredits(c)\nto & Punde(d)\nDebits\ntures (e)\nDebits\nCredits\nSales\nCredits\nin $ Funds (d)\nFirst year of ware\n1,793.2\n605.6\n1,187.6\n1,828.2\n1,356.1\n52.0\n420.1\n+ 35.0\n866.3(D)\n416.6(f)\n449.7\n1,095.31)\n900.2\n195.1(f)\n+229.0\nMar period through\nDecember, 1940\n2,792.3\n1,425.6\n1,356.7\n2,793.1\n2,109.5\n108.0\n575.6\n+ 10.8\n878.3\n421.4\n456.9\n1,098.4\n900.2\n198.2\n+220.1\nSecond year of ware\n2,203.0\n1,792.2\n410.8\n2,189,8\n1,193.7\n274.0\n722,1\n- 13,2\n38.9\n4,8\n36.1\n8,8\n-\n8.8\n- 30.1\nThird year of ware\n11,235.6\n904.8\n330.8\n1,361,5\n21,8\n5.5\n1,334.2\n+125.9\n18.5\n-\n18.5\n4.4\nI\n4.4\n- 14.1\n1942\nSept. 3- Sept. 30\n56.1\n37.1\n19.0\n81.6\n-\n0.5\n81.1\n+ 25,5\n10.1\n-\n10.1\n0.4\n-\n0.4\n- 9.7\nOct, 1- Oct. 28\n46.7\n27.4\n19.3\n57.5\n-\n-\n57.5\n+ 10.8\n-\n-\n-\n0.3\n-\n0.3\n+ 0.3\nOct. 29 - Dec. 2\nDec. 3- Dec. 30\n-\nAEEK ENDED:\nOct. 33\n7.3\n4.1\n3.2\n10.3\n-\n-\n10.3\n+ 3.0\n-\n-\n-\n0.1\n-\n0.1\n+ 0.1\nNov. 4\n55.9\n12,3\n44.5\n6.4\n-\n-\n6.4\n- 50.5\n0.1\n-\n0.1\n-\n- 0.1\n10\n10.1\n5.5\n4.6\n12.6\n-\n-\n12.5\n+ 2.5\n-\n#\n.\n0.3\n-\n0.3\n+ 0.3\n18\n12.8\n0.5\n13.2\n21.0\n-\n-\n21.0(c)\n+ 8.2\n0.1\n-\n0.1\n-\n-\n.\n- 0.1\nAverage Weekly Expenditures Since Outbreak of War\nTransfers from British Purchasing Commission to\nFrance (through June 19, 1940) $19.6 million\nBank of Canada for French Account\nEngland (through June 19, 1940) 27.6 million\nWeek ended November 13, 1942\nEngland (since June 19, 1940) 33.7 million\nCumulation from July 6, 1940\n-\n-\nmillion\n162.7\nmillion\n*For monthly breakdown sec tabulations prior to April 23, 1941\n**For monthly breakdown see tabulations prior to October 8, 1941.\n***For monthly breakdown see tabulations prior to October 14, 1942.\n(See attached sheet for other footnotes)\nRegraded Unclassified\n(a) Includes payments for account of British Purchasing Commission, British Air Maintry, British Supply Board, Ministry of\nSupply Timber Control, and Ministry of Shipping.\n(b) Estimated figures based on transfers from the New York Agency of the Bank of Montrail, which apparently represent the\nproceeds of official British sales of American securi ties, including those effected through direct negotiation. In addition\nto the official selling, substantial liquidation of securities for private British account occurred, particularly during ,the\nearly months of the war, although the receipt of the proceeds at this Bank cannot be identified with any accuracy. According\nto data supplied by the British Treasury and released by Secretary Liorgenthau, total official and private British liquidation\nof our securities through December, 1940 amounted to 0334 million.\n(c) Includes about $85 million received during October, 1939 from the accounts of British authorized banks with New York banks,\n1939 apparently represent the acquisition of proceeds of exports from the sterling area and other currently accruing\npresumably reflecting the requisitioning of private dollar balances. Other large transfers from such accounts since October, dollar\nreceipts.\n(d) Reflects changes in all dollar holdings payable QD demand or maturing in one year.\n(e) Includes payments for account of French Air Commission and French Purchasing Commission,\n(f) Adjusted to eliminate the effect of $20 million paid out on June 26, 1940 and returned the following day.\n(g) Includes $10.6 million to be held for credit of U. S. armed forces abroad\n4.8 million deposited by dritish Ministry of Supply.\nRegraded Unclassified\nANALISTS OF CANADIAN AND AUSTRALIAN ACCOUNTS\nStrictly\n(In Millions of Dollars)\nWeek Ended november 13, 1942\nConfidential\nBANK\nOF\nCANADA (and Canadian Government)\nCOMMONWEALTH BANK OF AUSTRALIA (and Australian Government)\nDEBITS\nCREDITS\nDEBITS\nCREDITS\nTransfers\nto\nProceeds\nTransfers from Official\nTransfers\nof\nBritish A/C\nNet Incr.\nto\nOfficial\nProceeds\nNet Incr.\n(+) or\nOfficial\nTotal\nBritish\nOther\nTotal\nGold\nof\nFor Own\nFor French\nOther\nDecr. (-)\n(+) or\nPERIOD\nTotal\nBrttish\nOther\nDebits\nA/C\nCredits\nTotal\nDebits\nSales\nA/C\nA/C\nCredits\nes Si I\nA/C\nGold Other\nDecr. (-)\nDebita\nDebita\nCredits\nSales\nCredits\nin\nFirst year of ware\n323,0\n16,6\n306.4\n504.7\n412,7\n20,9\n38.7\n32.4\n+ 181,7\n31.2\n3,9\n27.3\n36,1\n30,0\n6.1\n. 4.9\nWar period through\nDecember, 1940\n477.2\n16.6\n460.6\n707.4\n534.8\n20.9\n110,7\n41.0\n. 230.2\n57.9\n14.5\n43.4\n62,4\n50.1\n12.3\n+ 4.5\nSecond year of wares\n460.4\n-\n460.4\n462.0\n246,2\n3.4\n123,9\n88.5\n+ 1.6\n72.2\n16,7\n55.5\n81.2\n62,9\n18.3\n. 9.0\nThird year of waress\n525,8\n0.3\n525.5\n566.3\n198,6\n7.2\n-\n360.0\n+ 40.5\n107.2\n57.4\n49.8\n112.2\n17,2\n95.0\n- 5.0\n1942\nSept. 3- Sept. 30\n46.3\n-\n46.3\n53.6\n13,2\n-\n-\n40.4\n+ 7.3\n28,0\n20.5\n7.5\n18,1\n-\n18,1\n- 9.9\nOct. 1 - Oct. 28\n44.9\n-\n44.9\n51.5\n15.6\n,\n-\n34.9\n+ 6.6\n14.3\n12.0\n2.3\n14.6\n.\n14.5\n* 0-3\nOct. 29 - Dec. 2\nDec. 3- Dec. 30\nWEEK ENDED:\nOct. 28\n7.7\n-\n7.7\n12.0\n3.7\n-\n-\n8.3\n* 4.3\n0.9\n-\n0.2\n2.0\n-\n2.0\n1.1\nNov. 4\n12.5\n-\n12.8\n15.6\n3.4\n-\n12.2\n+ 2.8\n2.8\n0.5\n2.3\n0.1\n-\nC.1\n- 2.7\n10\n12.5\n-\n12.5\n19.8\n2.8\n-\n-\n17.0\n+ 7.3\n1.1\n-\n1.1\n1.3\n-\n1.3\n= 0.2\n18\n3.5(N)\n-\n3.5\n14.7(b\n2.8\n-\n-\n11.9(c)\n+ 11.1\n0.5\n-\n0.5\n0.1\n-\n0.4\n- 0.1\nWeekly Average of Total Debits Since Outbreak of War\nThrough November 13, 1947 $ 8.4 million\n*For monthly breakdown see tabulations prior to April 23, 1941.\n**For monthly breakdown see tabulations prior to October 8, 1941.\n***For monthly breakdown see tabulations prior to October 14, 1942.\n(a) Reflects changes in all dollar holdings payable on demand or maturing in one year.\n(b)Does not reflect transactions in U. 3. Treasury bills and certificates.\n(c) Incluies $4.0 Billion deposited by hr Supplies, Ltd.\nRegraded Unclassified\n24\nNOT TO BE RE-TRANSMITTED\n13\nCOPY NO.\nBRITISH MOST SECRET\nU.S. SECRET\nOPTIL No. 373\nInformation received up to 7 A.M., 28th October, 1942.\n1. MILITARY\nEGYPT. In the Northern sector during the night 26th/27th, movement\nby enemy infantry against 9th Austrulian Division's foremost defonded localities\nwas checked by defensive fire. Further south infantry of First Armoured Division\ncarried out a successful attack, capturing KIDNEY RIDGE 5 miles west of TEL EL MAKH\nKHAD and boat off a counter attack by tanks with considerable enemy loss. At 8 a.m.\n27th, the attack was supported by armour which, however, WELD unable to exploit fur-\nther westwards owing to heavy anti-tank fire. Another small advance was made by New\nZealand and South african troops in the DEIR EL DHIB area where our troops moved\nforward to the edge of an enemy minefield and eventually occupied 4 platoon posi-\ntions 1000 yards further west. In the EL HEMEIMAT area 44th Division cleared all\ngaps but one in the second minefield despite enemy interference.\nMADAGASCAR. Owing to extensive obstructions on the direct road to\nALAKAMISY, our forces have been compelled to advance on 3 roads. At 8 p.m. 26th,\nour leading troops were 12 miles north of ALAKAMISY. Weather in good, but road\nblocks continue to delay our advance.\nR. AIR OPERATIONS\nWESTERN FRONT. 27th. Submarine slipways at FLENSBURG were bombed by\nMosquitos and a 2500 ton ship was set on fire in the port. Other Mosquitos attacked\nobjectives in HOLLAND. During sweeps off the French coast, 2 enemy fighters were\ndamaged, 2 Spitfires are missing. A Beaufighter damaged a JU 88 off the SHETLANDS.\n27th/28th. 36 aircraft were sent mino-laying and 4 to drop leaflets. All returned\nsafely.\nEGYPT. 26th. 602 bomber and fighter norties were flown over the\nhattle area. 15 enemy aircraft were destroyed, 8 probably destroyed and 14 damaged\nM our aircraft and anti-aircraft fire destroyed another. 4 of our fighters are\n:lusing. 7 attacks were made by medium bombers on enemy M.T. in the northern sector\nto provent onemy counter attacks which did not develop. Light bombers made 4 raids\nCO enemy landing grounds, 2 aircraft were damaged on the ground. Fighters disabled\n4 tanks, 2 armoured cars and 3 petrol lorries. Several attacks on an escorted tanker\nand 2 ships resulted in the destruction of one ship, the tanker being sot on fire\nand 2 anomy aircraft being' shot down and 3 damaged from an ascort of 5. 6 of our\naircraft were lost. 26th/27th. A threatened counter attack was prevented by\nRegraded Unclassified\n- 2 -\n25\naccurato bombing. Scattered bombing by the enemy had little effect. 27th.\nThroughout the morning enemy concentrations in the northern sector were bombed\nsuccessfully.\nMALTA. 27th. Betweon 6 A.M. and 2 P.M., 124 bomb-carrying\nfighters with escort operated against the Island. Only a fow crossed the\ncoast, bombs round TAKALI aerodrome caused no serious damage, but at LUQA &\nHellington was destroyed and a Spitfire damaged. One enemy aircraft was probably.\ndestroyed by antiaircraft fire and 3 were damaged by fighters.\nBURMA. One Blenhoim was destroyed at CHITTAGONG Aerodrome by\nJapanese aircraft on the 25th. During 25th and 26th about 95 onemy aircraft\nattacked aerodromes in north east ASSAM, some U.S. aircraft were destroyed on\nthe ground (details unknown) and at loast 4 enemy aircraft were shot down.\n26\nNOT TO BE RE-TRANSMITTED\nU.S. SECRET\nBRITISH MOST SECRET\nCOPY NO. 13\nOPTEL NO. 414.\nInformation received up to ? A.M. 28th November,\n1942.\n1.\nNAVAL\nTwo Norwegian-manned motor torpedo boats returned\nfrom Norwegian waters yesterday. They report having\ntorpedoed and left sinking two fully laden 5,000 ton ships\nin Askevold Bay, North of Bergen. The Russian Ice-breaker\n\"MIKOYAN\" was damaged by explosion at the entrance to the\nWhite Soa on 26th but could proceed. The only official\nreport so far received confirms that at least part of the\nFrench Fleet at Toulon has been scuttled. Early on 27th\none of H.M. submarines torpedoed a ship in Southbound convoy\nNorth of Tunis.\n2.\nMILITARY\nLibya - 26th.\nAir reconnaissance showed continued digging on the\nEl Agheila defences.\nFrench North Africa\nThe first Army has continued to advance in three\ncolumns. One moving along the Constal road from Tabarka\nhas reported fighting West of Mateur. On the 25th a\nstrong armoured column penetrated the enemy outpost line and\nby evening was half-way between Mateur and Tebourba. On\n26th this centre column co-operating with aircraft destroyed\n40 enemy aircraft on an advanced landing ground. The\nthird column drove the enemy from Medjes El Bab. French\nForces have taken up covering positions on our right flank.\nRussia\nThe Germans announce that the Russians have\nlaunched the 'Expected' offensive on the Central sector\nWest of Moscow and that the attacks have everywhere been\nrepulsed with heavy Russian losses. There is no mention\nin the Soviet Communiques of the scale of the operation.\nThe Russian attacks North-West and South of Stalingrad have\nmade further progress and their forces are now established\nfor some distance on both banks of the Don Bond. The German\nforces East of the Don Bend are thus surrounded and the\nRussians are making every effort to exterminate them.\n3.\nAIR OPERATIONS\nWestern Front - 27th,\nMustangs and Spitfires attacked transport\nobjectives in Northern France and the Low Countries. Several\nlocomotives were disabled, one Mustang is missing. Three\nBostons successfully bombed Ijmuiden Steel Works and a\nfactory in Holland. A Hurtson bombed and hit a 2,500 ton\nship off Texel. Two F.W. 190's attacked with cannon-fire\nRailway property in Kent, one of them was destroyed.\nRegraded Unclassified\n- 1\n27\n27th-28th\nTen of our aircraft carried out sea-mining.\nFrench North Africa - 23rd/24th.\n15 Bisley's bombed Bizerta docks. Enemy aircraft\nbombed Bone airfield setting fire to petrol and ammunition\ndumps.\n25th\nHeavy air fighting developed in Tunisia. Enemy\ncasualties 12-13-22. Ours 7-0-0. Three pilots safe.\nLibya - 26th\nLiberators bombed the harbours of Tripoli (L) and\nHoms (L) hitting two ships.\nSICILY - 26th/27th\n9 Wellingtons bombed Gerbini Airfield hitting runways\nand hangars.\n25th/26th\n9 Liberators bombed an oil refinery at Bangkok.\nRegraded Unclassified\n28\nNOT TO BE RE-TRANSMITTED\nCOPY NO.\nin\nBRITISH MOST SECRET\nU.S. SECRET\nOPTO No. 415\nInformation received up to 7 A.M., 29th November, 1942.\n1. NAVAL\nBONE. 28th. One of H.M. Destroyers was damaged during continuous\nbombing from midnight to 6.30 a.m. The German S.S. RAMSES (8,000 tona) bound from\nKORE to GERMANY via BATAVIA was intercepted yesterday south of COCOS ISLANDS by one\nof H.D. Australian Cruisers and 8 Dutch Cruiser. The ship was scuttled and 78\nGermins captured and 10 Norwegians rescued.\nTOULON. Air reconnaissance 28th showed following French warships\nigarently undamaged. Two old battleships, one eight inch cruiser, two six inch\ncruisers, five contre-torpilleurs and two destroyers, also four submarines under\nconstruction. All the remaining Naval units located were either sunk or damaged.\nlo submarines afloat were seen. No fires were seen burning on land and no major\ndestruction was apparent. Magazines at MILHAUD and oil cisterns at MONDRIER were\nintact. Merchant shipping, including five tankers, all appeared undamaged except\nfor one ship partly sunk. A small Norwegian Petrol Carrier in an castbound convoy\nM.S sunk off BOUGIE by air attack yesterday.\nR. MILITARY\nLIBYA. 27th. Our advanced armoured elements made contact with the\nenemy 25 miles east of AGHEILA and to the South. Considerable enemy activity was\nseen south of MARSA EL BREGA, and air reconnaissance reported movement in both\ndirections between & AGREILA and SIRTS.\nFRENCH NORTH AFRICA. 27th. The advance of the First Army continues\nstendily, although the enemy has attempted to slow it down by blowing bridges and\ntratering roads. The enemy's attitudo is mainly defensive. Our armoured units are\ntow operating west of DJEDEIDA, fifteen miles west of TUNIS and have destroyed 15\nmemy tanks. 7 of our tanks were knocked out but were recovered. Our infantry\ntolumno are advancing steadily and have thrown off onomy counter attacks. TEBOUBA\nLa now in our hands and the enemy is believed to have evacuated MATEUR. Our Commandos\noro active east of DJEBEL ABIOD on 23/24 and 24th.\nRUSSIA. DON SECTOR. The Russians appear to have formed & defensive\nront facing West and are actively mopping up the area of the DON Bond, having now\naptured KLETSKAYA. They are pressing from all sides against the Gorman forces\nnoircled east of the DON Bond but their progress is not yet known. The Germans\nlain to have hold these attacks.\nAIR OPERATIONS\nWESTERN FRONT. 23th. Fighters attacked locomotives and transport\nbjoctives in Occupied territory. Enemy casualties one, nil, nil. Ours 4, nil, 3.\n28th/29th. 277 aircraft were sont out - TURIN 228, Intrudors 25,\nmining 19, leaflets 5. 3 aircraft are missing and one crashed. TURIN - pre-\nliminary report weather good, many large fires started, including some in the Fint\nWorks and an exceptionally big one in the Royal Arsenal.\nFRENCH NORTH AFRICA. 27th. United States aircraft hombed MATEUR\nand at night Wellingtons dropped 31 tons of bombe on BIZERTA docks.\nMEDITERRANEAN. 27th. Fortresses dropped 10 tons of bombe on docks\nat LEHOS ISLAND. 28th. Spitfires attacked COMISO Airfiold, SICILY.\nRegraded Unclassified\n29\nMr. Bell recommended that this not\nbe done.\nRegraded Unclassit\n\"py for\nTreasury Department\nmrs Klotz\nTELEGRAPH OFFICE\nwe20 54 GOVT NL COLLECT\nKANSASCITY MO NOV 29 1942\n1942 NOV 30 AM 8 01\nDAN BELL\nOFFICE OF THE SECY TREASURY\nWISH YOU WOULD DISCUSS WITH KUHN G BUFFINGTON AND HAROLD THOMAS\nHAVING ADVERTISING AGENCY MAKE A STUDY PROMPTLY OF ALL LITERATURE\nTHAT WE SEND TO BANKS AND SEE IF THEY CANNOT PUT SOME SALES APPEAL\nINTO IT. PERIOD PLEASE LET ME KNOW TUESDAY WHAT CAN BE DONE PERIOD\nCOPY TO MRS KLOTZ\nHENRY MORGENTHAU JR\n746A NOV 30.\nRegraded Unclassified\n30\nTREASURY DEPARTMENT\nINTER OFFICE COMMUNICATION\nDATE November 30, 1942.\nTO\nSecretary Morgenthau\nFROM\nGeorge Buffington G.B.\nSubject: Your message of November 28, 11:30 A.M., to Mr. D. W. Bell.\n1. The Victory Fund Committee and the Federal Reserve Bank mailed circulars\nto all banks prior to last Friday.\n2. The joint statement of three bank examining agencies was sent out by the\nComptroller of the Currency to all national banks, the Federal Deposit\nInsurance Corporation issued the statement to all insured nonmember banks,\nand the Federal Reserve Bank sent the statement to all insured State\nbanks. A copy of the statement is attached.\n3. The F and G circulars are being mailed today by the Kansas City Victory\nFund Committee, in line with the instructions in your wire of November 15,\nstating that the Victory Fund Committee would be responsible for their\nsale as of December 1. Home building and loan associations are on this\nlist.\n4. Mr. Hemingway's letter dated November 20 was mailed to all banks who are\nmembers of the American Bankers Association on or about November 20.\nThe attached booklet was mailed first class on the 25th, to arrive at\nthe most distant points at the latest on November 30.\nAttachments.\n31\nTHE AMERICAN BANKERS ASSOCIATION\nOFFICE OF THE PRESIDENT\nMERCANTILE-COMMERCE BANK AND TRUST Co.\nST. LOUIS, MISSOURI\nW. L.HEMINGWAY\nPRESIDENT\nNovember 20, 1942\nTo Members of the American Bankers Association:\nThis, my first message to you as President of\nyour Association, deals with what is the greatest single problem\nbefore us-that of financing the war.\nAs we all know, the money required to win the\nwar must and will be raised, but it should be raised in a way which\nwill put the least strain on the nation's economic structure and\nhave the least inflationary effect. This means that as much as\npossible of the necessary revenue should be secured through taxa-\ntion and through the sale of government securities outside of the\nbanking system. If such a program is to be successful it must have\nthe active support of the banks.\nWe have received many compliments on our splen-\ndid job in the selling of War Savings Bonds to the public. But it\nis not expected that War Savings Bonds alone will finance this war.\nA still larger volume of these and other government obligations\nmust be taken by non-bank investors.\nThis has seemed so important to the officers of\nthe Association that we offered our services to the Secretary of\nthe Treasury and appointed a special committee to consider what we\nmight do as an Association to cooperate with him to bring about the\nnecessary distribution of government securities. This committee met\nin Washington last week at the invitation of the Secretary and held\na series of conferences. Upon the recommendation of this committee,\nthe officers of your Association have stated to the Secretary that\nwe will undertake to give all-out aid and we urge our members to go\nthe limit in supporting the work of the Victory Fund Committees in\nthe sale of government securities to the public.\nBut after all when the public has taken all the\nbonds that it will take, then the Treasury must look to the banks.\nTherefore, we strongly recommend that you employ your surplus funds\nby investing in government securities and that you take your full\nshare of future issues in some general relationship to your size.\nRegraded Unclassified\n32\n- 2 -\nIn order to discuss with you in more detail the\nways and means of accomplishing these objectives and to answer the\nnumerous questions that will undoubtedly occur to many of you re-\ngarding this program, a booklet is being prepared on the subject.\nA copy will be mailed to every member of the Association shortly.\nWhen you receive it, I earnestly urge you to read it carefully and\ngive the subject the consideration that it deserves. If you have\nany doubts, questions, or suggestions regarding any part of it, I\nwill be glad to have you write me.\nOf all the added responsibilities that our banks\nhave assumed and have had placed upon them in recent months, I know\nof none of more far-reaching importance to our country and to our\nbanks themselves than this job of seeing to it that the financing\nof the war is accomplished in the best possible manner.\nPlease give us your full cooperation.\nSincerely yours,\nRegraded Unclassified\n33\nI am pleased to announce that the following men have\nconsented to serve with me on this special committee:\nEdward E. Brown, President\nThe First National Bank of Chicago\nChicago, Illinois\nW. Randolph Burgess, Vice Chairman of the Board\nThe National City Bank of New York\nNew York, N. Y.\nRobert V. Fleming, President\nRiggs National Bank\nWashington, D. C.\nWilliam C. Potter, Chairman of the Executive Committee\nGuaranty Trust Company of New York\nNew York, N. Y.\nThomas M. Steele, President\nFirst National Bank & Trust Company of New Haven\nNew Haven, Connecticut\nRobert Strickland, President\nTrust Company of Georgia\nAtlanta, Georgia\nW. H. Wood, President\nAmerican Trust Company\nCharlotte, North Carolina\nA. L. M. Wiggins, President\nBank of Hartsville\nHartsville, South Carolina\nVice President, American Bankers Association\nW. L. Hemingway, President\nMercantile-Commerce Bank and Trust Company\nSt. Louis, Missouri\nPresident, American Bankers Association\nHarold Stonier, Executive Manager\nAmerican Bankers Association, Secretary\nRegraded Unclassified\n34\nFINANCING\nTOTAL WAR\nOUR JOB IN DECEMBER\nAMERICAN BANKERS ASSOCIATION\n22 East 40th Street\nABA ORGANIZED 1875\nNew York City, N.Y.\nA. B. A. COMMITTEE ON TREASURY WAR BORROWING\nEdward E. Brown, President\nThe First National Bank of Chicago\nChicago, Illinois\nW. Randolph Burgess, Vice Chairman of the Board\nThe National City Bank of New York\nNew York, N. Y.\nRobert V. Fleming, President\nRiggs National Bank\nWashington, D. C.\nWilliam C. Potter, Chairman of the Executive Committee\nGuaranty Trust Company of New York\nNew York, N.Y.\nThomas M. Steele, President\nFirst National Bank & Trust Company of New Haven\nNew Haven, Connecticut\nRobert Strickland, President\nTrust Company of Georgia\nAtlanta, Georgia\nW.H. Wood, President\nAmerican Trust Company\nCharlotte, North Carolina\nA.L.M. Wiggins, President\nBank of Hartsville\nHartsville, South Carolina\nVice President, American Bankers Association\nW. L. Hemingway, President\nMercantile-Commerce Bank and Trust Company\nSt. Louis, Missouri\nPresident, American Bankers Association, Chairman\nHarold Stonier, Executive Manager\nAmerican Bankers Association, Secretary\nRegraded Unclassified\nTHE TREASURY has just announced the greatest drive for funds in\nhistory. It is asking every one of us to take part in a gigantic war financing\ncampaign to sell $9,000,000,000 of government securities during December.\nSecurities that will appeal to every type of investor from the individual\nwho buys a $25 U. S. Savings Bond to corporations and other organizations\nthat invest millions are to be offered.\nThe December campaign with its $9,000,000,000 goal includes a wide\nvariety of government securities, many of them already well known, and\nothers new in their appeal. Included are Treasury Bills, Certificates of In-\ndebtedness, and Tax Savings Notes A and C which are rapidly growing in\nimportance. There are included, too, the familiar United States Savings\nBond of Series F and G (formerly called War Savings Bonds, Series F and G)\nand Treasury Bonds.\nThe three new offerings are - the Twenty-Six Year 21/2% Bonds, the\nSix and One-Half Year 13/4% Bonds, and the Seven-Eighths of 1% Certifi-\ncates of Indebtedness.\nThe distinctive characteristics of these securities are clearly outlined in\nthe inside pages of this booklet. In addition, you will receive complete\ninformation regarding them from the sales organization that has been\nestablished in your Federal Reserve District.\nTHE VICTORY FUND ORGANIZATION\nThe challenging job of selling $9,000,000,000 worth of securities in\nDecember has been placed in the hands of a group called the Victory Fund\nCommittee. It operates in every Federal Reserve District, every state, most\ncounties, and many cities. It is a nationwide organization of bankers, security\ndealers and other business leaders. Its operations extend from the headquar-\nters in each reserve district to your community.\nPerhaps you have been named to membership in a formal committee or\nperhaps you are one of the 45,000 volunteer workers from the banks of the\ncountry who will patriotically contribute their experience and skill in\nfinance, their knowledge of the investment habits of their communities and\ntheir time and effort. Officially or otherwise, we are all a part - and a vital\npart - of this great sales organization.\nYou undoubtedly will be given specific tasks to perform in order to\nassure the quick and complete success of this $9,000,000,000 drive. These\ntasks will be made known to you by those in charge of the campaign in your\ndistrict. But don't wait for formal instructions. You are now acquainted\nwith the securities that are included in the December offering. You know\nthe people of your community and they know you. Start now to take part\nin the nation's drive for the money that must be raised to win the war.\n1\n(Continued on page 4)\nRegraded\nDistinctive Characteristics of\nMATURITY\nOFFERED\nTREASURY BILLS\nUsually 91 days.\nbidder. Weekly on discount basis to high\nTime to time at par, plus accrued\nterest on subscription. There are\nCERTIFICATES OF\nSeries E-1943.\nrently three issues outstanding mate\nINDEBTEDNESS\ning quarterly as follows:\n5/8% due 2-1-43\n0.65% due 5-1-43\n7/8% due 8-1-43\nTREASURY TAX\nSAVINGS NOTES\nSept. 1, 1945.\nAvailable at all times during 1942\nTax Series A-1945\npar, plus accrued interest.\nTREASURY TAX\nSAVINGS NOTES\nThree years from first day\nchased. of month in which pur-\nAvailable at all times at par in\nTax Series C\namount in multiples of $1,000.\nAvailable at all times at 74% of\nUNITED STATES\nSAVINGS BONDS\nturity value to all buyers, other that\n12 years from first day of\ncommercial banks.\nSERIES F\nmonth in which purchased.\nNot more than $100,000 cost price an\nnually of Series \"F\" and/or Serior\n\"G\" Bonds.\nUNITED STATES\nAvailable at all times at par to all buys\nSAVINGS BONDS\n12 years from first day of\ners other than commercial banks.\nSERIES G\nmonth in which purchased.\nNot more than $100,000 cost price #\nnually of Series \"G\" and/or Serior\n\"F\" Bonds.\nTREASURY\nBONDS\n1948\nPar, plus accrued interest.\nTREASURY\nBONDS\n1963-68\nPar, plus accrued interest.\nRegraded Unclassified\nStates Government Securities\nRETURN\nCOMMENT\ncount bid.\nrage rate accepted for\nTraded in open market.\ndue 12-16-42 was\nFederal Reserve Purchase and Resale rate 3/8% per annum.\n9%.\nTraded in open market.\n5%.\nAvailable as collateral for bank loans.\nPrincipal plus interest may be applied in payment of Federal income,\nestate and gift taxes.\nproximately 1.92% per\nNot more than $5,000 plus interest may be applied in payment of any\num when applied in\none class of tax in any one year.\nment of taxes.\nRedeemable for cash at purchase price, on demand.\nIssued in denominations of $25, $50, $100, $500, $1,000 and $5,000.\nNot salable or available for hypothecation.\nPrincipal plus interest may be applied in payment of Federal income,\n-est accrues each month\nestate and gift taxes.\n.aduated scale. Aver-\nRedeemable at option of holder, for cash at par and accrued interest,\ninterest return about\nafter 6 months from issue date, on 30 days' notice, or at maturity.\n7% a year if held to ma-\nIssued in denominations of $1,000, $5,000, $10,000, $100,000,\nty.\n$500,000 and $1,000,000.\nMay be pledged as collateral for loans from banking institutions.\nPayable at face amount if held to maturity.\n3% per annum (if held\nNot salable or available for hypothecation.\nnaturity).\nRedeemable after 6 months from issue date, on one month's notice, at\ncost plus interest at reduced rate.\nInterest paid semi-annually.\n0% per annum (if held\nNot salable or available for hypothecation.\nmaturity).\nRedeemable after 6 months from issue date, on one month's notice,\nat various discounts over life of bond.\nTraded in open market.\nAvailable as collateral for bank loans.\n5% per annum.\nIssued in denominations of $500, $1,000, $5,000, $10,000, $100,000\n($1,000,000 registered only).\nTraded in open market but not eligible for transfer to commercial\nbanks until 12-1-52.\nper annum.\nAvailable as collateral for bank loans.\nIssued in denominations of $500, $1,000, $5,000, $10,000, $100,000\n($1,000,000 registered only).\nRegraded Unclassified\nBUILDING A PROSPECT LIST\nWhether you are cooperating with other members of the regularly\norganized Victory Fund Committee in your area, or whether in the absence\nof such a committee you are acting alone, one of your first contributions to\nthe success of the campaign will be the preparation of a prospect list of\ninvestors who can and should purchase some of the securities offered by the\nTreasury. Your list should include such investors as:\n1. Individual investors capable of making substantial purchases, say in\nexcess of $5,000. Whether or not they have bought their quotas of\nUnited States Savings Bonds, they may be prospects for other issues;\n2. Counties, various school funds, pension funds, and other sinking\nfunds; cities, towns and villages; school districts; and other political\nsubdivisions;\n3. Savings banks;\n4. Endowed institutions; universities, colleges, hospitals, orphanages,\nreligious institutions;\n5. Insurance companies: life, casualty, fire;\n6. Labor organizations, service groups, fraternal organizations;\n7. Corporations which may have idle cash available (due perhaps to\npriorities) which cannot be used for the present in the normal course\nof business.\n8. Small corporations having war contracts which may have produced\nnew money for investment.\nYOUR VICTORY FUND COMMITTEE WILL COOPERATE\nIf you cannot call on all these prospects yourself, you can obtain com-\npetent and effective help by appealing to the chairman or manager of the\nVictory Fund Committee in your district. He will provide trained salesmen\nwho will help you cover the field. Make use of these men when you yourself\ncannot personally visit all your prospects to tell them the merits of the\nvarious offerings, to recommend the securities that best serve their invest-\nment needs, and to urge their unlimited support of the war fund drive.\nYou should receive from your Victory Fund Committee in your area\ncomplete information regarding the offerings, including order forms, adver-\ntising and publicity material, posters, booklets and folders. If this material\nhas not reached you, get in touch immediately with your area chairman or\nwrite directly to the executive manager of the Victory Fund Committee\nlocated at the Federal Reserve Bank of your district.\nYou have already established a splendid record in selling War Savings\nBonds to the public and it is important that you continue to give whole-\n4\nRegraded Unclassified\nhearted support to the Series E War Savings Bond Program.\nThe importance of your activity in selling as many Government securities\nas possible to investors other than commercial banks is obvious. The greater\nthe amount of Government securities purchased by these investors, the more\neffective will the control of inflation become. In carrying out this assignment\nyou will be doing much more than raising urgently needed money for war\nfinance. You will be strengthening the controls on inflation, protecting the\nbanking system, and performing a service to the people of America who\nlook to you for guidance and leadership in maintaining a sound economy.\nBANKS SHOULD BUY THEIR SHARE\nAll of the Treasury's securities will not be bought by non-bank investors.\nAs President W. L. Hemingway pointed out in his recent letter to the mem-\nbers of the American Bankers Association, \"When the public has taken all\nthe bonds it will take, the Treasury must look to the banks.\n\"Therefore,\" Mr. Hemingway continued, \"we strongly recommend that\nyou employ your surplus funds by investing in Government securities and\nthat you take your full share of future issues in some general relationship\nto your size.\n\"Of all the added responsibilities that our banks have assumed and have\nhad placed upon them in recent months, I know of none of more far-reaching\nimportance to our country and to our banks themselves than this job of seeing\nto it that the financing of the war is accomplished in the best possible\nmanner.\"\nThe sale of $9,000,000,000 of Government securities in December is vital\nto the prosecution of the war. Banking knows the needs of the nation and\nstands ready to do its part. The banks will help America - swiftly, eagerly,\neffectively, and with all the skill, experience, and facilities at their command.\nAMERICAN BANKERS ASSOCIATION\nYou will receive directly from the Treasury Department a news-\npaper advertisement in mal form announcing the $9,000,000,000\ncampaign, which the Treasury suggests be used on November 30\nor as soon thereafter as possible. This advertisement may be pub-\nlisbed by banks individually or cooperatively in groups.\n5\nRegraded Unclassified\n35\nNovember 30, 1942\nDear George:\nI am glad that you sent me a copy of your\ncircular letter to life insurance companies\nregarding the use of insurance agents in the\nsale of E, F and G Bonds and other Treasury\nissues. It is a tremendous help to us to have\nthe services of life insurance agents in the\nsale of our securities, and I feel sure that\nthey will do just as well under the Victory\nFund Committees as they would have done under\nthe original War Savings Staff plan.\nAs I read your letter, it should make clear\nto every insurance agent the distinction between\nSeries X Bonds and those in the \"basket\" of\nsecurities to be sold in December through the\nVictory Fund Comittees.\nPlease don't worry about giving = a middle\ninitial to which I as not entitled. It isn't\nimportant, but I appreciate your letter of\nexplanation all the same.\nSincerely,\n(Signed) H. Morgenthau, Jr.\nMr. George L. Harrison,\nLife Insurance Coordinating Committee,\n51 Madison Avenue,\nNew York, N. Y.\nFK/cgk\nFile in Diay\nRegraded Unclassified\n36\nLife Insurance Coordinating Committee\n51 Madison Avenue, New York, N.Y.\nChairman:\nNovember 24, 1942\nExecutive Committee:\nGEORGE L. HARRISON\nFRANKLIN D'OLIER\nGEORGE L. HARRISON\nCLARIS ADAMS\nLEROY A. LINCOLN\nWILLIAM H. ANDREWS, JR.\nGERARD S. NOLLEN\nPATRICK A. COLLINS\nHon. Henry Morgenthau,\nJOHN A. WITHERSPOON\nFRANKLIN D'OLIER\nSecretary of the Treasury,\nW.T. GRANT\nTreasury Department,\nLEROY A. LINCOLN\nWashington, D.C.\nJAMES Lee LOOMIS\nA.J. McANDLESS\nDear Mr. Secretary:\nGERARD S. NOLLEN\nR. B. RICHARDSON\nFor your information and files I em enclosing a.\nGRANT TAOGART\ncopy of a letter which I have today sent to all American\nSTABORN T. WHATLEY\nlegal reserve Life Insurance companies concerning the use\nJOHN A. WITHERSPOON\nof insurance agents to facilitate the sele of \"E\", \"p\" and\n\"G\" bonds as well 8.8 other Treasury market issues. I am\nalso sending B. copy to Mr. Buffington and to Mr. Graves\nfor their information.\nMay I assure you that the Life Insurance\nCoordinating Committee, the various Life companies and their\nagents are enthusiastically responding to this opportunity\nto aid in the sale of Treasury issues.\nI hope you will observe that as you requested in\nyour letter of November 17th we have endeavored to make\nsure that the selection of agents to aid the Victory Fund\nCommittees in the sale of \"P\" and \"G\" bonds and other\nTreasury market issues will not interfere with the fine\nwork that Life Underwriters have been doing in the matter\nof Payroll Savings and \"E\" bonds under the jurisdiction\nof the War Savings Staffs.\nFaithfully yours,\nGeorge L. Harrison\nChairman\nGLH=RB\nEncs.\nRegraded Unclassified\n37\nLife Insurance Coordinating Committee\n51 Madison Avenue\nChairmane\nExecutive Committee\nCharge L Harrison\nNew York, N.Y.\nFranklin D'Oller\nClaris Adams\nGeorge L Harrison\nWilliam H. Andrews, Jr.\nParrick A. Collins\nNovember 23, 1942\nLeroy A. Lincoin\nGerard S. Nollen\nFranklin D'Olies\nJohn A. Witherspoo\nW. T. Grant\nLenoy A. Lincoln\njust Lee Loomis\nLETTER TO ALL AMERICAN LEGAL RESERVE LIFE INSURANCE COMPANIES\nA.J. McAndless\nGerard S. Nollen\nR.B. Richardson\nGrant Taggart\nSeshorm T. Whatley\nJohn A. Wichempoon\nOn September 11, 1942, I wrote to you and all other\nlife insurance companies outlining the program which had been\nworked out with the Treasury to make available a selected group\nof life insurance agents to assist the Treasury Department in\nthe salo of F and G Bonds.\nThe response to that letter was excellent and many\ncompanies have since then sent to the Coordinating Committee or\nto the local state chairman of the Life Underwriters Committee\nlists of agents who might be considered available. for this work\nor the names of general agents and managers who could provide\nsuch lists. Over 5,000 names have come directly to the Coordin-\nating Committee and many others have been sent directly to the\nlocal state chairmen of the Life Underwriters Committees. On\nthe whole, therefore, we have fairly well prepared our part of\nthe program agreed upon with the Treasury. I have to inform you,\nhowever, that while a Treasury drive for the sale of F and G\nBonds under the auspices of the various State War Savings Staffs\nhad been arranged to begin on December 1, it has now been decided\nby the Treasury not to pursue that particular program for the\nreasons indicated in the enclosed letter from the Secretary of the\nTreasury.\nThe Executive Committee of the Coordinating Committee\nhas authorized mo to inform the Secretary, in reply to his communi-\ncation, that the groups of agents selected to aid the War Savings\nCommittees in the sale of F and G Bonds may be made available to\nthe Victory Fund Committees on substantially the same basis as was\nplanned for use through the War Savings Committees. In either\ncase the aid is to the Treasury which has now simply selected a\ndifferent set of committees to assume responsibility for the sale\nof F and G Bonds. In working for the Victory Fund Committees it\nis contemplated that agents may be asked to facilitato the sale\nnot only of F and G Bonds but also other available Treasury market\nissues as woll. It is assumed that this will meet with your ap-\nproval since it should afford selected agents an even more impor-\ntant and interesting opportunity for patriotic and useful service.\nRegraded Unclassified\n38\nLETTER TO ALL AMERICAN LEGAL RESERVE LIFE INSURANCE COMPANIES\n- 2 -\nNovember 23, 1942\nYou will notice that the Secretary of the Treasury has\nasked that this program be adopted without interfering with the\nwork that many life underwriters are already doing in the estab-\nlishment of Payroll Savings Plans and the sale of E Bonds which\nwill continue to be pressed through the War Savings Committees.\nThe Coordinating Committee recognizes, as does the Treasury, what\na fine job the life underwriters have done and are still doing in\nthose fields and it is hoped that the various companies will give\ntheir blessings to those efforts as well as the work other agents\nmay now be asked to perform in connection with the drive planned\nto begin November 30, 1942, under the jurisdiction of the Victory\nFund Committees. Both the Treasury and the Coordinating Committee\nwill appreciate the continued cooperation of the companies in those\nall-important efforts.\nFor your information I am enclosing a copy of a letter\nwhich I em today sending to the chairmen of each of the local State\nUnderwriters Committees.\nSincerely yours,\nGury & Marrison\nChairman\nEnos. (2)\nRegraded Unclassified\n39\nLife Insurance Coordinating Committee\n51 Madison Avenue\nCharman\nExecutive Committee\nGerre L Harrison\nNew York, N.Y.\nFranklin D'Olier\nGeorge L Harrison\nClars Adams\nWilliam H. Andrews, Jr.\nLeroy A. Lincoln\nParrick A. Collims\nNovember 23, 1942\nGerard &. Nollen\nFranklin D'Olier\nJohn A. Witherspoon\nV.T. Crant\nLeroy A. Lincoln\nlumo Lee Loomis\nA.J. MiAndies\nGerand 5. Nollen\nLETTER TO CHAIRMEN OF LOCAL STATE UNDERWRITERS' COMMITTEES\nR.B. Richanfam\nGeant Tagen\nSestion T. Whatley\nJulin A. Waherspoon\nYou are, of course, acquainted with the plans\nwhich this Committee has worked out with the Treasury\nDepartment relative to the utilization of life insurance\nagents in the sale of \"F\" and \"G\" bonds. Those plans\nhave been somewhat changed as a result of the fact that\nthe responsibility for the sale of \"F\" and \"G\" bonds has\nbeen shifted from the War Savings Staffs to the Victory\nFund Committees and their subordinate committees. It\nis hoped that this change will make no difference in the\neffective use of life underwriters in the sale of these\nsecurities and that you will be prepared to cooporate\nwith the Treasury through working with the Victory Fund\nCommittee just as you were prepared to do with the War\nSavings Staff.\nThe War Savings Staffs will maintain complete\njurisdiction over the development of the Payroll Savings\nPlan and the sale of \"8\" bonds as in the past. In this\nconnection, the Coordinating Committee hopes that you\nwill realize how much it and the company managements ap-\npreciate the excellent work which the life underwriters\nhave done in the Payroll Savings Plan. It has been a\nmost important contribution to its success and 1s, I\nknow, much approciated by the Treasury authorities.\nThis Committee has requested all United States\ncompanies and Canadian companies doing business in this\ncountry to cooperato with the Treasury in the \"p\" and\n\"G\" campaign. Their support has been most heartening.\nEach company was requested to forward either to you or\nto this Committee the names of such agents as would in\ntheir opinion be desirable for this campaign. It is\npossible that some such lists have already come to you,\nbut in addition we are now sending to you cards contain-\ning the names and addresses of all those agents which\nhave been sent directly to this Committee.\n40\nLETTER TO CHAIRMEN OF LOCAL STATE UNDERWRITERS' COMMITTEES\n- 8 -\nNovember 23, 1942\nThe responsibility for the use of these men must,\nof course, in the last analysis rest upon you as State\nChairman for the Life Underwriters Committee and it is\nhoped that you will be willing to cooperate with the Victory\nFund Committee in whatever way will best facilitate their\nmost effective utilization.\nIn some cases the Victory Fund Committee may apply\nto you for help in areas not covered by any of the names\nwhich you now have on hand. In such cases it is suggested\nthat you will make the necessary appeal to the companies\nwhich you know are doing business in those areas. This\nappeal, of course, you may make through the local Managers\nor General Agents of the companies themselves, as you deem\nbest. In short, while the responsibility is perhaps a large\none, the Coordinating Committee hopes you will be willing to\nassume it in the interests of doing the job well. The time\nis short in view of the faot that the proposed drive is to\nbegin the end of November, and under the new set-up it may be\nthat the Victory Fund Committee will ask to have available\nagents work not only on the \" and \"G\" bonds but on other\navailable Treasury market issues as well. Any agents who\nvolunteer to do this work will, of course, have to do 80 sub-\njeot to the supervision and direction of the Victory Fund\nCommittee or their local sub-committees in cooperation with\nyourself.\nI am enclosing for your information a copy of a\nletter which was addressed to me by the Secretary of the\nTreasury. It may explain some of the background of this\nmatter to you.\nSincerely yours,\nChairman\nGLH;RB\nEnos.\nRegraded Unclassified\n41\nCOPY\nTHE SECRETARY OF THE TREASURY\nWASHINGTON\nNovember 17, 1948\nDear Mr. Harrisoni\nAs the Chairman of the Life Insurance Coordinating Com-\nmittee, you recently made available to the Treasury a. carefully\nselected group of agents to assist the War Savings Staff in the\nsale of B and G Bonds. This very generous offer of cooperation\nwas accepted and we had completed plans for & program whereby\nwe would be able to take full advantage of this talent.\nAs you know now, however, it has been decided in the light\nof our overall task not to pursue this particular activity.\nI wish to express my appreciation to you and to the mem-\nbers of your committee, as well as to the Insurance Agents who\nhad volunteered their services for this undertaking.\nI would like to suggest further that their services not\nbe lost to us as a result of this decision affecting In and G\nBond promotion. You are somewhat familiar with our whole pro-\ngram, and if you feel that this new group of Insurance Men\ncould give assistance to the program of the Viotory Fund\nCommittees, I would approciate your 80 advising me.\nI am informed by Mr. Graves that a few of these men who\nhave recently been made available to us have already taken\nup new duties in the promotion of the sale of B Bonds. This\nrequest should in no way involve the men who are working\nunder the Life Underwriters Association on Payroll Savings\nnor any others who are currently engaged in various \"3\" Bond\nactivities.\nIn closing, may I thank you and the members of your\ncommittee for your continuing support.\nSincerely yours,\n(Signed) H. M. Morgenthau, Jr.\nMr. George L. Harrison\nChairman, Life Insurance Coordinating Committee\no/o New York Life Insurance Company\nNew York, New York\nRegraded Unclassified\n42\nFIFTY ONE MADISON AVENUE\nNEW YORK\nPersonal\nNovember 25, 1942.\nDear Henry:\nI am deeply chagrined to discover that in\nthe rush incident to forwarding to all life insur-\nance companies as well as to the Chairmen of the\nState Underwriters' Committees, the copy of your\nletter to me dated November 17 the signature was\nquite erroneously typewritten as \"H. M. Morgenthau,\nJr.\" The copy was corrected as soon as the error\nwas discovered but not in time to avoid sending to\nyou the copy which quite gratuitously contributed a\nmiddle initial to your name.\nI hope you will excuse this unpardonable\nerror and attribute it only to the rush incident\nto our desire to communicate, as promptly as possible,\nwith all of the life insurance companies about our\nprogram to make insurance agents available to you in\nthe drive which begins next week.\nPerhaps you did not notice the error your-\nself but somebody else will and I want to make my\nconfession in advance!\nI am enclosing a photostat of your letter\nto me and a corrected copy of that letter which you\nmay care to substitute for the one previously sent\nto you.\nFaithfully yours,\nHon. Henry Morgenthau, Jr.,\nSecretary of the Treasury,\nTreasury Department,\nWashington, D. C.\nEnc.\nRegraded Unclassified\nRECEIVED\n43G. L H.\nTHE SECRETARY OF THE TREASURY\nWASHINGTON\nNGV 18 1942\nANSWERED\nNovember\nDear Mr. Harrison:\nAs the Chairman of the Life Insurance Coordinating Com-\nmittee, you recently made available to the Treasury a carefully\nselected group of agents to assist the War Savings Staff in the\nsale of F and G Bonds. This very generous offer of cooperation\nwas accepted and we had completed plans for a program whereby\nwe woul be able to take full advantage of this talent.\nAs you know now, however, it has been decided in the light\nof our overall task not to pursue this particular activity.\nI wish to express my appreciation to you and to the mem-\nbers of your committee, as well as to the Insurance Agents who\nhad volunteered their services for this undertaking.\nI would like to suggest further that their services not\nbe lost to us as a result of this decision affecting F and G\nBond promotion. You are somewhat familiar with our whole pro-\ngram, and if you feel that this new roup of Insurance Men\ncould give assistance to the program of the Victory Fund\nCommittees, I would appreciate your 80 advising me.\nI am informed by Mr. Graves that a few of these men who\nhave recently been made available to us have already taken\nup new duties in the promotion of the sale of E Bonds. This\nrequest should in no way involve the men who are working\nunder the Life Underwriters Association on Payroll Savings\nnor any others who are currently engaged in various \"E\" Bond\nactivities.\nIn closing, may I thank you and the members of your\ncommittee for your continuing support.\nSincerely yours,\nFORDEFENSE\nBUY\nUNITED\nSTATES\nMr. George L. Harrison\nSIVINGS\nBONDS\nChairman, Life Insurance Coordinating Committee\nc/o New York Life Insurance Company\nNew York, New York\nRegraded Unclassified\n44\nUNITED STATES SAVINGS BONDS - SERIES F AND G\n1942\nDepartment Circular No. 654, Revised\nTREASURY DEPARTMENT,\nFirst Amendment\nOffice of the Secretary,\nWashington, November 30, 1942,\nFiscal Service\nBureau of the Public Debt\n1. The inclusion of United States Savings Bonds of Series If end G\nin the designation United States War Savings Bonds, pursuant to Depart-\nment Circular No. 654, Revised, dated June 1, 1942, having been revoked,\nsaid circular is emended, effective December 1, 1942, by striking out any\nreference to or designation of such bonds AS War Savings Bonds.\n2, The sale of United States Savings Bonds of Series F and G will\ncontinue until further notice under the provisions of Department Circular\nNo. 654, Revised, dated June 1, 1942, and this emendment, The issue of\nbonds of these series bearing the designation \"United States War Savings\nBond\" will be continued until existing stocks are exhausted, after which\nbonds without that designation will be issued.\nHenry Morgenthau, Jr.,\nSecretary of the Treasury.\n(Filed with the Division of the Federal Register, Dec. 3, 1942)\nRegraded Unclassified\n45\nsame letter sent to following: (/s/ Henry)\nMrs. Franklin D. Roosevelt\nThe Honorable, The Vice President\nHon. Cordell Hull, Secretary of State,\nHon. Stephen Early\nHon. Francis Biddle, Attorney General\nMiss Grace Tully\nHon. Frank C. Walker, Postmaster General\nHon. Frank Knox, Secretary of Navy\nHon. Harold L. Ickes, Secretary of Int.\nHon. Claude R. Wickard, Secy of Agric.\nHon. Jesse H. Jones, Secretary of Com.\nHon. Frances Perkins, Secretary of Labor\n(Copies to Thompson)\nThe President, Mrs. Roosevelt, Miss Tully,\nEarly, Hull, Ickes, Knox - delivered by\nManus 9:35 12/2/42.\nJones, Walker, Vice President, Biddle,\nPerkins, Wickard, (Stimson) - delivered\nby Dixon 9:35 12/2/42.\n46\nNovember 30, 1942.\nMy dear Mr. President:\nI think you will enjoy hearing\nthis record of a song that was written\nfor us by two Army boys who were de-\ntailed to the Treasury for a time in\nconnection with the War Bond campaign.\nThe authors, Sergeant Richard usi and\nCorporal Tom Adair, have now gene back\nto military duty.\nI feel that their seng will be &\ngreat help to us in our drive to get\nthirty million Americans to set aside\nat least ten percent of their pay in\nWar Bonds every pay day.\nSincerely yours,\n(Signed) H. Morgenthau, Jr.\nThe President,\nThe White House.\nDel. by Manus 9:35 12/2/42\nCopy in Diary\nCopies to Thompson\n47\nNovember 30, 1942.\nDear Henry:\nI think you will enjoy hearing this record\nof a song that was written for us by two Army\nboys who were detailed to the Treasury for a\ntime in connection with the War Bond campaign.\nThe authors, Sergeant Richard Uhl and Corporal\nTom Adair, have now gone back to military duty.\nIn sending this to you, I should like to\nexpress to you and the War Department my own\nthanks and those of the Treasury Department for\nhaving let us use these two talented soldiers.\nI feel that their song will be a great help to\nus in our drive to get thirty million Americans\nto set aside at least ten percent of their pay\nin War Bonds every pay day.\nIt will be appreciated here if you would\nsend a copy of this letter to their respective\nCommending Officers. Sergeant Uhl is with the\n80th Division at Camp Forrest, Tennessee, and\nCorporal Adair is with the Post Public Relations\nOffice at Fort Jackson, South Carolina.\nSincerely yours,\n(Signed) H. Morgenthan. Jr.\nDel. by Dixon 9:35 12/2/42\nHon. Henry L. Stimson,\nSecretary of War,\nCopy in Diary\nWashington, D. c.\nCopies to Thompson\nFK:eg\nRegraded Unclassified\nTreasury Department\n4\nDivision of Monetary Research\nDate Dec. 1, 194219\nTo:\nMiss Chauncey\nI think the Secretary should\nglance at the appended memorandum.\nCopies have been distributed to\nMr. Bell, Mr. Paul and Mr. Gaston.\nH.D.W.\nMR. WHITE\nBranch 2058 - Room 2141\nTREASURY DEPARTMENT\n49\nINTER OFFICE COMMUNICATION\nDATE November 30, 1942\nTO\nMr. White\nFROM Mr. Gass\nSubject: Corporate Profits and Tax Policy\n1. The Department of Commerce has released a study showing that\nacknowledged corporate profits after taxes were only 5 percent lower in the\nfirst nine months of 1942 than in the first nine months of 1941. The actual\nfigures are $4,903 million in 1942 against $5,150 million in 1941.\n2. There is every reason to believe that these figures understate actual\ncorporate profits after taxes. It is quite likely that corporate profits,\neven after the new and increased taxes, will be larger in 1942 than they were\nin 1941.\nI have discussed this issue with the author of the Commerce study.\nHe agrees that corporations have made greater efforts to conceal their profits\nthis year than ever before. Excessive depreciation and depletion have been\nclaimed. Capital improvements have been charged to current expense. High\nlevels of operation have furnished opportunities for concealment, and high\ntaxes have provided the incentive.\n3. Corporate profits, after taxes, have increased over 60 percent since\nthe outbreak of war. On a base of 1939 - 100, profits in the third quarter\nof 1942 were equal to 161.\n4. Unless corporate tax rates are increased, corporate profits after taxes\nwill probably be larger in the calendar year 1943 than they are in 1942. The\ntotal of corporate profits is lower in 1942 than it would have been otherwise\nbecause of a temporary reduction in the profits of such industries as auto-\nmobiles due to the curtailment in activity incident to their conversion to\nwar production. Such \"growing pains\" will be much less in 1943. We started\nthe calendar year 1942 with war expenditures at an annual rate of $26 billion;\nwe will start the calendar year 1943 with war expenditures at an annual rate\nof about $76 billion.\n5. In the light of these high corporate profits, it may be desirable to\nreview the suggestion made by the Secretary on March 3, 1942 that the normal\ncorporate tax rate be fixed at 55 percent. If a 55 percent rate was justified\nthen, when we were contemplating a war expenditure program at an annual rate\nof $56 billion, it is doubly justified now when war expenditures are substan-\ntially above an annual rate of $70 billion and are reaching towards a rate of\n$100 billion.\nNovember 28, 1941\nMr. Tynan Smith\nRegraded Unclassified\n)\n50\nNovember 30, 1942\nDear General Fleming:\nI an returning herewith the amended contracts\ncovering the construction of the East Wing of\nThe White House, which you forwarded to me under\ndate of November 20, 1942 in compliance with the\nPresident's request.\nThe contracts have been reviewed and the\nproposed modifications are satisfactory to the\nTreasury Department.\nSincerely yours,\n(Signed) D, W.BELL\nAstin\nSecretary of the Treasury.\nPhilip B. Fleming\nMajor General, U. S. A.\nAdministrator\nFederal Works Agency\nWashington, D. C.\nNOT:AS\n11/28/42\nTo:\nThe Telpers\nthe Buran\nin unt regard\ntis as taxath\ngpt\n11/28/47\nMR. WENCHEL\nRegraded Unclassified\nmay\n1942\nThe Honorable\nThe Secretary of the Treasury\nAttention: Mr. Daniel K. Bell\nMy dear Mr. Secretary:\nI have been directed by the President to work out with\nMr. Charles H. Tompkins whatever details may be necessary to give\neffect to the desire of Mr. Tompkins to have the work done by his\norganization at The White House since last December performed\nwithout fee or profit.\nIn accordance with General Watson's suggestion that it\nnight be well to clear the proposed changes in Mr. Tompkins'\ncontracts with you before they are finally made, I enclose herewith\ncopies of two proposed agreements which appear necessary to\neffectuate such changes.\nI will appreciate your returning the proposed agreements\nwith whatever comments you may have.\nRespectfully yours,\nPhilip Tienting\nMajor General, U. S. A.\nAdministrator\nRECEIVED\nCoordinating Practice\n24 1942\nRegraded Unclassified\nTHE WHITE HOUSE\nWASHINGTON\nNovember 30, 1942\nMy dear Mr. Secretary:\nI have by reference from the President\nyour letters of November 19 and November 25 requesting\nauthority to ask for deferment from induction into\nmilitary service on the following cases:\nWilliam Heffelfinger\nLouis Kaplan\nHerbert Potthoff\nMorris Ourtes\nGeorge W. Romig, Jr.\nJohn A. Fischer\nEmil J. Nelson\nWalter D. Perry\nLouis J. Lazarus\nRichard Nickell\nJ. Lawrence Bailey\nAttilio F. Porcelli\nThese cases were referred to me along with\nother such requests with instruction \"to take care of.\"\nPursuant to this instruction I have examined these\ncases and unhesitatingly approve your requests.\nVery sincerely yours,\nFor the President:\nVm. H. McReynolds\nAdministrative Assistant\nThe Honorable\nThe Secretary of Treasury\nRegraded Unclassified\nTHE UNDER SECRETARY OF THE TREASURY\nWASHINGTON\nNovember 30, 1942.\nTo the Secretary:\nThe proposals recently presented to you regarding\nthe negro employees of the Chicago Office of the Bureau\nof the Public Debt were discussed with Mr. Houghteling\nand, at his suggestion, -ith Mr. Thomas, 8 leading negro\non Mr. Houghteling's staff, As you will r-call, two\nproposals were made: (1) that the separate units of negro\nemployees shall be discontinued, and that all employees\nshall be assigned to duty without r-gard to their race;\nand (2) that a properly qualified negro be appointed on\nthe staff of the Denuty Commissioner in charge, as\npersonnel assistant.\nMr. Houghteling and Mr. Thomas expressed their approval\nof these proposals, and also agreed that any question about\nnegro supervisors would have to be worked out and would take\ntime. Both counseled that precipitated action not be taken\nbut that the change be made at our early convenience and\nafter talking with two inentnegro leaders in Chicago,\nwhich Mr. Thomas undertook to arrange, Mr. Spencer Thompson\nadding the suggestion that Miss Carr be invited.\nDWB\nApproved: December 1, 1942\nSecretary of the Treasury.\nGEORY\nthe\nBUY\nSTATES\nWAR\nRegraded Unclassified\n55\nTREASURY department\nFISCAL SERVICE\nWASHINGTON\nBUREAU OF THE PUBLIC DEBT\nOFFICE OF THE COMMISSIONER\nNovember 21, 1942\nMEMORANDUM FOR THE FILES:\nRecently, on visiting the Chicago Office, on Monday,\nNovember 9, on instructions from the Secretary through\nMr. Bell, I telephoned Miss Charlotte Carr, Director of\nHull House, and extended to her an invitation to visit our\nChicago Office. Miss Carr accepted and spent about two\nhours with Mr. Spencer Thompson and myself on Tuesday after-\nnoon, November 10. During that time the colored situation\nwas exhaustively discussed and we made a complete tour of\nthe office. It was explained to Miss Carr that colored\nemployees constituted about 17 percent of the entire force\nof about 4,000 employees and about 13 percent of the clerical\nemployees; that there were two small colored units in the\nDivision of Loans and Currency and one in the Register's\noffice, and that more than 80 percent of the colored en-\nployees were not segregated but were employed with white\nemployees. Colored employees, on appointment, were designated\nwhere needed, and if assigned either to colored units or to\nother units, requests for re-assignment would receive con-\nsideration. It was further explained that there was under\nconsideration breaking up the colored units, as such, and\nthe appointing on the staff of the Deputy Commissioner a\npersonnel assistant, if a properly qualified coloredperson\ncould be found. A complete tour of the office followed,\nincluding the Chicago branches of the Division of Loans and\nCurrency, the Office of the Register of the Treasury, the\nDivision of Public Debt Accounts and Audit, and the Office\nof the Treasurer of the United States.\nAfter the tour of the office, I conveyed to Miss Carr\nthe Secretary's request that she write him personally if she\napproved what we were doing, or had other suggestions to offer.\nMiss Carr then expressed the opinion that any semblance of\nsegregation should be done away with, and that it probably would\nbe wise to appoint a proper colored person on the staff as\nPersonnel Assistant. As regards colored employees as supervisors,\nwhich was brought up, she agreed this would have to be worked out\nand would take time. In particular, Miss Carr expressed the\nPOPVICTORY\nBUY\nWAR\nBONDS\nare\nSTAMPS\nRegraded Unclassified\n56\n-2-\nopinion that the picket line was a reproach, and that it was her\nbelief that with some slight concession it probably would be aban-\ndoned. She further stated it was believed in Chicago the policy\nregarding colored employees was imposed by Washington and did not\noriginate in Chicago.\nOn returning to Washington, I reported to Mr. Bell, and later,\ncalling Mr. Spencer Thompson to Washington, Mr. Bell arranged a con-\nference in his office on Wednesday, November 18, at which, in addi-\ntion to Mr. Bell, there were present Mr. Kilby, Mr. Spencer Thompson,\nMr. Ross Heffelfinger, Mr. Bush, Mr. Wesley, Dr. Dolan and myself\nfrom the Bureau of the Public Debt, and Mr. Norman Thompson and\nkr. Ted Wilson. The colored situation at the Chicago Office was\nexhaustively discussed, and conclusions generally reached that the\nso-called segregated units should be broken up, a personnel assistant\nappointed, and the matter of supervisory colored employees worked\nout in due course.\nOn Thursday, November 19, the Secretary saw Mr. Bell, Mr. Norman\nThompson, Mr. Spencer Thompson and myself. The foregoing conclusions\nwere presented, and the Secretary directed that Mr. Houghteling be\nconsulted, and if he approved, such would be the policy.\nMeanwhile, Ex-Congressman DePriest telephoned and asked for an\nappointment to see me, which was made for 3 p.m., Friday, November 20.\nWhen Mr. DePriest appeared, he was accompanied by Mr. Edgar G. Brown,\npreviously unknown to me, but whom I later learned ie rather well\nknown as a promoter of colored interests. When the object of the call\nwas made known, as it concerned the Chicago Office, I called in\nMr. Spencer Thompson, and Mr. Norman Thompson also joined us. Mr. DePriest\nspoke of the Chicago situation and made a plea for doing away with segre-\ngation in that office. We explained what we were doing, and told him\nwe were working on the situation, with every confidence of a proper\nsolution. And then Mr. Brown began, and in a loud voice expressed\nhis opinions and made several charges and accusations which either were\nnot true, or were beside the question. At several points Mr. Norman\nThompson and I stopped him and he would start on another track.\nBy arrangement previously made by Mr. Norman Thompson, later in\nthe same afternoon, Mr. Houghteling called at my office and we die-\ncussed with him the Chicago situation. He expressed general approval\nof the proposals under consideration, but as regards certain aspects,\nhowever, he stated he would like to take counsel with Mr. Thomas, of\nhis staff, who would be available on Saturday morning. The DePriest-\nBrown call, and the conference with Mr. Houghteling on Friday were\nreported to Mr. Bell that evening.\nRegraded Unclassified\n57\n-3-\nOn the following morning, Saturday, November 21, Mr. Houghteling\nand Mr. Thomas called, and with Mr. Kilby, Mr. Spencer Thompson and ay-\nself, the colored situation in the Chicago Office was again gone over.\nar. Houghteling and Mr. Thomas approved of discontinuing the separate\ncolored units, and the appointment of a colored personnel assistant on\nkr, Spencer Thompson's staff. Both said not to worry about the call by\nKr. DePriest and Mr. Edgar Brown, that the changes should be made without\nprecipitation. Mr. Thomas suggested the advisability of talking with\ntwo substantial colored leaders in Chicago when we were ready to act,\nKr. Barnett, influential with the colored press, and Mr. Foster, Executive\nManager of the Urban League (Mr. Thompson had already talked with Mr.\nGould, Industrial Manager of the Urban League). The question was raised\nas to publicity and Mr. Thomas counseled against it, stating that the\nobject of talking to Mr. Barnett was to prevent publicity. He thought\nit would be wise to make the change in regular course and let results\nspeak for themselves. Mr. Houghteling expressed agreement. Mr. Spencer\nThompson asked Mr. Thomas if he knew the colored woman under consideration\nfor personnel assistant. Mr. Thomas stated that he did, and that he en-\ndorsed her.\nMr. Thomas attempted to get in touch with Mr. Barnett by telephone,\nbut was unable to do so, and stated he would get in touch with him later.\nHe offered to make arrangements for a meeting in Chicago with Mr. Barnett,\nMr. Foster, Mr. Spencer Thompson and himself, which, subject to Mr. Bell's\napproval, was agreed to. Mr. Thompson suggested that Miss Carr also be\ninvited to the meeting.\nNovember 24, 1942.\nOn Konday morning, November 23, Mr. Thomas' office called, requesting\nthe full name, title, and address of Mr. Spencer Thompson, stating that\nMr. Thomas had been in touch with Mr. Barnett and found that Mr. Barnett\nwould not be in Chicago until December 10 or 11, and that he wished to write\nKr. Thompson to this effect and ask if one of those days would be convenient.\nOn Tuesday, November 24, I reported to Mr. Bell the Saturday meeting,\nand Mr. Thomas' call on Monday. Mr. Bell expressed approval of the plans and\ninstructed me to prepare a memorandum for the approval of the Secretary\nmaking effective the Chicago policy.\nMr. Thompson having returned to Chicago on Saturday, I thereupon tele-\nphoned advising him of Mr. Bell's approval of the program, of Mr. Thomas'\nsuggestion for & meeting on December 10 or 11, and of the memorandum to be\nprepared for the Secretary's approval. He expressed approval on all counts.\nNaty\nRegraded Unclassified\nFOM CONNALLY, TEX., CHAIRMAN\n58\nWALTER F. GEORGE, GA.\nHISAM W. JOHNSON, CALIF.\nROBERT F. WAGNER. M. Y,\nARTHUR CAPPER. KANS.\nINDERT D. THOMAS. UTAH\né I Firm, i 5 ROMERT\nEDERICK VAN NUYS, IND.\nARTHUR H. VANDENBERG, MICH.\nMER E. MURRAY, MONT.\nWALLACE H. WHITE, a MAINE\nCLAUDE PEPPER. FLA.\nHENRIK SHIPSTEAD, MINN,\nUnited States Senate\nTHEODORE FRANCIS GREEN, M.I.\nBERALD P. NTE, N. BAK,\nALBEN w. BARKLEY, KY.\nROBERT R. REYNOLDS, N. c.\nCOMMITTEE ON FOREIGN RELATIONS\nJOSEPH en GUPPLY. PA.\nBUT M. GILLETTE, IOWA\nBEINETT CHAMP CLARK. MO.\nCARTER BLASS. VA.\nJOBN LEE, OKLA.\nNovember 30, 1942,\nJAMES M. TUNNELL, DEL\nBOLAND YOUNG. CLERK\nHonorable Henry Morgenthau,\nSecretary of the Treasury,\nWashington, D. C.\nDear Henry:\nThank you very much for your fine interest\nand splendid cooperation in having the film sent\nto Sergeant Donald Huntley's mother.\nI am advising Mr. Lafe Pfeifer of your\nfine spirit of cooperation.\nSincerely,\nTC/3s\nRegraded Unclassified\n59\nTREASURY DEPARTMENT\nINTER OFFICE COMMUNICATION\nDATE\nTO Secretary Morgenthau\nFROM 1r. Paul\nIn accordance with the existing instructions, there\nis submitted herewith a summary report of activities and\naccomplishments carried on by the Legal Staff for the\nmonth of November, 1942.\nPer\nAttachment.\nRegraded Unclassified\n60\nSUMMARY REPORT ON ACTIVITIES AND ACCOMPLISHMENTS\nIN THE OFFICE OF THE GENERAL COUNSEL\nNOVEMBER, 1942.\nThe following matters received attention in the Office\nof the Chief Counsel for the Bureau of Internal Revenue:\n1. Court Decides in Favor of Ford Motor Company in\nRefund Case. On November 2, 1942, the Court of Claims ren-\ndered 8. decision in favor of the Ford Motor Company in its\nsuit for refund of income taxes for 1921 to 1926, inclusive.\nThe principal sum of the judgment to be entered, exclusive\nof interest, is approximately $2,002,000. The company had\nbrought a prior suit for a larger sum for 1920, which was\ndefeated when the Government pleaded an offset on account\nof barred deficiency for the same year attributable to\nliquidation of a subsidiary corporation. This operated to\ngive the company 8. stepped-up basis for depreciation in\nthe later years. Counsel now proposes to relinquish\n$100,000 of the interest on the judgment if paid by Dec-\nember 21, 1942. Justice has been informed that certiorari\nis not recommended. The judgment may not be paid prior to\nthe expiration of time for certiorari, unless the parties\nstipulate a waiver of right to petition. Justice has\nagreed to follow that course to expedite payment of the\njudgme nt.\nRegraded Unclassified\n61\n- 2 -\n2. Important Case involving Incentive Compensation\npaid Corporation Officers. A suit was brought in the Court\nof Claims by the American Tobacco Company to recover, in\nround figures $2,817,000, plus interest, for 1929, 1930, and\n1931. The principal issue is the reasonableness of compensa-\ntion paid to the president and four vice-presidents of the\ncorporation, characterized as incentive compensation. The\nCommissioner disallowed deductions for all incentive com-\npensation; doubled the regular salaries paid to these\nindividuals, andallowed for 1930, $640,000, in the aggregate,\nand for 1931, $581,600. By amended petition, the company re-\nduced the amount of its original claim to approximately\n$426,300 based upon a formula prescribed by a State court\ndecision, in which stockholders were litigating the same\nquestion from their standpoint. The litigation between the\ncompany and its stockholders is discussed in \"Corporate\nExecutive's Compensation\" by Washington, pages 270 to 279,\nwhere it is stated that Judge Manton's conviction was based\nin part upon the receipt by him of payments aggregating $250,000\n(loans which were never repaid) from a firm which handled the\nadvertising for the company. An informal inquiry was received\nrecently from the Department of Justice to know the attitude\nRegraded Unclassified\n62\n- 3 -\nof the Chief Counsel's Office concerning a possible proposal\nof the company to accept $300,000 to settle the pending suit.\nJustice has been informed the Commissioner prefers that the\ncase be tried. Special preparations are being made by the\nDepartment of Justice to defend the suit.\n3. Tax Court Passes upon Status of Oklahoma Community\nProperty Law for Income Tax Purposes. Upon advice of the\nChief Counsel's Office, the Commissioner declined to give\neffect to the Oklahoma community property law (effective\nAugust 12, 1939) for Federal income tax purposes. The\nquestion was made 8. special study in the case of C. C.\nHarmon, 1 T.C. #8, which was decided November 18, 1942,\nadversely to the Government. The Government contended the\nlaw was not self operating, came into operation only when\ninvoked by voluntary agreements between the spouses, and such\nagreements contravened the rule of Lucas V. Earl requiring\n.\nincome be reported by the spouse who earns it. The Tax\nCourt held this contention unsound, saying they could see\nbut little practical difference between 8. community property\nlaw \"which is operative only when expressly invoked and one\nwhich operates unless expressly revoked,\" citing contracts\nbetween husbands and wives changing or modifying operation\nRegraded Unclassified\n63\n- 4 -\nof community property laws of other states which have been\ngiven effect. It is the purpose of the Chief Counsel's\nOffice to request authority to file & petition for review.\n4. Recommendation to Joint Committee based on Litigation\nHazard. In 1934 and 1935 Mr. Josiah K. Lilly, Jr., of\nIndianapolis, Indiana, one of the principal stockholders of\nRli Lilly Company, transferred to himself as trustee two\nlarge blocks of the stock of the Eli Lilly Company, making\nhis wife, Mrs. Ruth B. Lilly, and two children the beneficiaries\nbut reserving to himself as trustee complete control of the\ncorpus with large discretion as to the income. For the years\n1938, 1939, and 1940 the beneficiaries reported the income\nfrom the trusts and paid an income tax on it. The revenue\nagent thought the income was taxable to Mr. Lilly and\nrecommended deficiencies amounting to $405,235.07 against\nhim and overassessments amounting to $240,085.30 in favor\nof his wife and children. The Technical Staff has settled\nthe tax liability on the basis of deficiencies in the amount\nof $315,085.30 against him and overassessments of $240,085.30\nto the wife and children, a net increase of $75,000 in tax\nliability, as against a net increase of $165,149.77 proposed\nby the revenue agent. The Chief Counsel's Office recommended\nRegraded Unclassified\n64\n- 5 -\nthat the settlement be approved and reported to the Joint\nCommittee on November 20. Obviously, the settlement cannot\nbe supported on legal grounds or on any other basis than an\nattempt to appraise the litigation hazard. On this basis\nthe settlement appears to be favorable to the Government;\nbut it is the type that the Staff of the Joint Committee\nhas repeatedly criticised. If the cases are tried the\nGovernment will win net additional taxes of $165,149.77\nor nothing.\n5. Treatment of Patents as Emergency Facilities for\nAmortization Purposes. The cases of the Todd-California\nShipbuilding Corp. and Goodyear Aircraft Corporation involve\ndeductions for amortization of alleged emergency facilities\nconsisting of patents, applications and licenses for mag-\nnesium processes, etc., for which the War and Navy Depart-\nments have issued necessity certificates for purposes of\namortization deductions. The Chief Counsel's Office has ad-\nvised the Income Tax Unit that the patents, etc., as such,\nare not emergency facilities within the revenue statute,\nsection 124 (e)(1), but the bases thereof may be otherwise\ndeductible. However, if the patents, etc., constitute a\nproper part of the adjusted basis of any emergency facility\nRegraded Unclassified\n65\n- 6 -\nunder the statute, with proper certification, deduction with\nrespect to amortization of the entire adjusted basis of the\nemergency facility may be allowed under the statute, but ex-\ncluding the part of the basis attributable to the patent\nmonopoly.\n6. Alimony and Income Tax Difficulties of Joseph Briggs\nWells. Information has been received that Wells has been\nindicted for willful failure to file an income tax return for\nthe years 1939 and 1941. This is a peculiar case in that the\ndefense is based on Wells' contention that he should be allowed\na deduction for alimony payments to two former wives. Every\nopportunity was afforded him to file a return for 1939, but\nhe refused, stating that he believed the quickest way to get\nhis case before the Tax Court was refusing to file a return.\nThe procedure for placing his case before the Tax Court was\nexplainedto him in detail on several occasions, Thus, the\ncase was referred to the Department of Justice with a recom-\nmendation for prosecution.\n7. Regulations - Revenue Act of 1942. Considerable\nheadway has been made. All of the excise tax regulations\nmade necessary by Title VI have been prepared and reviewed\nexcept one. Other excise tax regulations made necessary by\nRegraded Unclassified\n66\n- 7 -\nthe 1942 Act have been prepared and are under review. Of the\n173 subjects covered by the act, 122 involve income and excess\nprofits taxes. Approximately 40 Treasury decisions are made\nnecessary by these income and excess profits tax sections.\nFor these sections several miscellaneous Treasury decisions\nare being prepared (grouping the less involved subjects dealing\nwith the same kind of taxes), and separate Treasury decisions\nare being prepared for a number of important and involved sub-\njects including non-trade or non-business deductions, pension\ntrusts, victory tax, post-war refunds of excess profits tax,\nalimony and separate maintenance payments, last-in first-out\ninventory, withholding, etc. Many of these subjects have\nbeen considered and drafts of regulations prepared. It is\nexpected that a number of Treasury decisions will be forwarded\nto the Commissioner in the near future, including the regula-\ntions to be issued under the Canadian Treaty, recently ratified\nby the Senate.\n8. War Bond Advertising by Newspapers and Broadcasters\nas Business Expense. With respect to questions presented by\nthe Marshall Evening Chronicle and National Association of\nbroadcasters, the Chief Counsel's Office has ruled that 8.\nnewspaper which devotes part of its space to the promotion\nRegraded Unclassified\n67\n- 8 -\nof the sale of war bonds and stamps and the furthering of\nRed Cross drives may deduct the cost thereof as a business\nexpense. Since such cost is included in the regular expenses\nof publishing the paper, which are deductible, no segregation\nof the cost of space devoted to the sale of war bonds, etc.\nis necessary. A similar ruling has been made with respect to\nexpenses incurred by radio stations which broadcast informa-\ntion as to war bonds. It will be noted that these rulings\ndiffer somewhat from the published ruling which sanctions\ndeduction of reasonable expenses for institutional or good-\nwill advertising which promotes the sale of war bonds and\nstamps. In the cases first discussed it is the newspaper\nor the broadcasting company itself which is doing the pro-\nmotion.\nThe following work was done under the supervision of\nAssistant General Counsel Cairns:\n9. The Direct Sales Company, Inc. Case. The Direct\nSales Company, Inc., was a registered manufacturer of narcotic\ndrugs in the form of hypodermic tablets, which it sold directly\nto medical practitioners throughout the United States. The\ncompany encouraged sales by reducing prices. Many of its\nRegraded Unclassified\n68\n- 9 -\ncustomer-physicians were diverting narcotic drugs 80 purchased\nto improper purposes. Notwithstanding warnings, the company\ncontinued to sell narcotics to such customers. After & care-\nful Investigation, the Direct Sales Company and one of its\nphysician-customers, with two other persons, were indicted\nfor conspiracy to violate the Federal narcotic law, on the\nbasis of improper sales by the physician of quantities of\nnarcotics purchased from the company. The physician and the\ncompany were convicted, the company appealing to the Circuit\nCourt of Appeals for the Fourth Circuit, On November 12,\n1942, that Court affirmed the judgment of conviction. The\ncase is unique in that it is the first case in which &\nwholesale dealer and a physician have been joined in an\nindictment for conspiracy to violate the narcotic law.\n10. Participation of 8. Naval Reserve Officer in Profits\nof a Firm Engaged in Federal Tax Practice. An opinion,\naddressed to Mr. Hanna, which was prepared by Mr. Meyer and\nsigned on November 3, 1942, stated that a Naval Reserve officer\non active duty may accept his share of the firm's profits\nfrom its tax practice before the Treasury Department, by\nvirtue of special statutory authorization applicable to\nNaval Reserve officers (U.S.C., 1940 ed., title 34, sec. 853b).\nRegraded Unclassified\n69\n- 10 -\n11. Admission Free of Duty of Emergency Acquisitions of\nWar Materials Abroad. An opinion, addressed to Secretary\nMorgenthau, pertaining to the bringing into the United States\nby armed forces of (1) captured materials, (2) materials\nrequisitioned by United States forces abroad, (3) rebuilt\nmaterials, and (4) material received from abroad for study\nand testing, was prepared by Mr. Meyer and Mr. Feidler and\nsigned on November 6, 1942. The opinion concluded that the\nTariff Act should not be construed to require that war\nmaterials brought into the United States by the armed forces\nin the conduct of war be subject to customs procedures and\nduties. However, should there be any doubt on the point, the\nacquisition of those materials could probably be certified\nby officers of the War Department as an \"emergency purchase\nof war material abroad\" entitled to be admitted free of duty\nunder the Act of June 30, 1914, 38 Stat., 399 (U.S.C., title 34,\nsec. 568) and Executive Order No. 9177 dated May 30, 1942.\n12. Membership on a Regional Board of the Board of Legal\nExaminers as Affecting Eligibility to Practice Before Treasury\nDepartment. An opinion, in the form of a letter to Professor\nRoswell Magill, was prepared by Mr. Meyer and signed on\nNovember 23, 1942. It concluded that the appointment of\nRegraded Unclassified\n70\n- 11 -\nVr. Magill as a member of the New York Regional Board of the\nBoard of Legal Examiners, a part time and uncompensated posi-\ntion under the Civil Service Commission, will not prevent him\nfrom practicing before the Treasury Department. Since section\n190 of Rev. Stat. (U.S.C., title 5, sec. 99) is limited to\nofficers and employees of \"departments\", it has no application\nto one serving under the Civil Service Commission. Sections\n109 and 113 of the Criminal Code (U.S.C., title 18, secs. 198\nand 203) are probably inapplicable to an uncompensated position\nnot under any executive department. of the United States.\nThe following work was done under the supervision of\nAssistant General Counsel Tietjens:\n13. Public Debt. (a) Financing. On November 20\nMr. Tietjens and Mr. Cunningham examined the papers in con-\nnection with the following offerings for their legal sufficiency:\n1-3/4 Percent Treasury Bonds of 1948, dated December 1, 1942;\n2-1/2 Percent Treasury Bonds of 1963-68, dated December 1,\n1942; and 7/8 Percent Treasury Certificates of Indebtedness\nof Series E-1943, dated December 1, 1942.\n(b) Proof of death of Army and Navy Personnel. A recom-\nmendation was prepared, addressed to the Secretary of the\nRegraded Unclassified\n71\n- 12 -\nTreasury, providing for the acceptance of original letters\nfrom the War or Navy Department, or photostatic copies thereof,\n8.8 proof of death.\n(c) Tax Notes. The first case involving payment of Tax\nSavings Notes as 8. result of judicial proceedings has come\nto our attention. No [rovision was made in the circular for\ntransfer of such notes through judicial proceedings, although\nin the applicable FRB Memorandum it might be considered that\nthere was an implication to that effect in that the banks\nwere advised to refer such cases, among others, to the Treasury.\nA letter was prepared for the Under Secretary's signature sug-\ngesting that payment to a creditor who has reduced his claim\nto judgment and purchased the notes at execution sale would\nbe considered. The evidence called for is similar to that\nin other judicial transfer cases.\n(a) Corporate succession by Operation of Law. In the\npast voluminous evidence has been required where bonds registered\nin the name of a corporation were presented for reissue\n(re-registration) in the name of another corporation alleged\nto have succeeded it as the result of a merger, consolidation\nor similar succession. This, of course, necessitated com-\nplicated correspondence and subsequent lengthy examination of\nRegraded Unclassified\n72\n- 13 -\nevidence submitted. Where it is possible to presumethat the\nissuance of a certificate by the proper state authority evi-\ndencing such transactions is predicated upon examination and\napproval of evidence showing due compliance with applicable\nstatutes, requirements of stockholders' and directors' reso-\nlutions and other similar documents as original evidence of\nstatutory compliance is being eliminated.\n(e) Commodity Credit Corporation. Mr. Tietjens and\nMr. Cunningham attended, with Mr. Heffelfinger, a meeting\nwith representatives of the Commodity Credit Corporation\nand Mr. Awalt, counsel for a New York bank, with reference to\nshort term letters of credit applications in use by the\nCommodity Credit Corporation and which the New York banks\nwere of the opinion should be approved by the Secretary of\nthe Treasury. The Commodity Credit Corporation is to prepare\nand submit forms for specific approval in order to satisfy the\nbank's request that the Treasury approval be couched in\nspecific rather than general terms.\n(f) Claims Cases. For the purpose of simplifying pro-\ncedure, a memorandum for the signature of the Secretary,\naddressed to the Commissioner of the Public Debt, supplementing\nand amending to some extent the instructions on Form PD 1048,\nRegraded Unclassified\n73\n- 14 -\nApplication for Relief on Account of the Loss, Theft, or\nDestruction, of United States Savings Bonds, was drafted in\ncollaboration with Mr. DeMik, Manager of Claims and Ruling\nSection, by Mr. Fuller. Provision was made for certain\ncases in which the owner or coowner should not be required\nto execute the form, for acceptance of statements certified\nby officers authorized to certify requests for payment of\nsavings bonds in lieu of affidavits, for requiring that\napplications in coownership cases be sworn to or affirmed\nby one coowner and merely signed by the other, for the de-\nlivery of substitute bonds to recognized agents, for the\napplication of redemption provisions to Claims cases, and\nfor correction of errors in approved schedules and cancella-\ntion of items therefrom without resubmission to the Secretary.\n(g) Department Circular. Mr. Tietjens and Mr. Cunningham\nassisted in the drafting of a Department Circular pursuant to\nwhich the Secretary will designate United States Savings Bonds\nSeries E, F and G as the bonds, the purchase of which will be\nallowed as 8. credit against the Victory Tax as provided in\nSubchapter D, Part I, Sec. 453(a)(3) of the Internal Revenue\nCode.\n(h) Savings Bonds. Extended conferences were held with\nthe administrative people concerning proposed changes in the\nRegraded Unclassified\n74\n- 15 -\nregulations governing Savings Bonds. One of the most trouble-\nsome problems has been the policing of excess holdings, and\nadministrative procedure has been suggested whereby the\nproblem of handling these cases will be lightened to a very\nsubstantial degree. It has also been recommended that the\nregulations be changed in order to permit the elimination or\nchange of designated beneficiary upon the request of the\nregistered owner alone. This change would, of course, apply\nonly to bonds issued after the regulations had been amended.\n(i) Litigation. A hearing was held in the Deyo V. Adams\ncase in New York on November 4, and a hearing in the Andrew S.\nLevy Estate case in Camden, New Jersey, on November 5, both\nof which were attended by Mr. Norr of the Department of Justice.\nMr. Sloan of the War Savings Staff and Mr. Wesley, Chief of\nthe Division of Loans and Currency, went às witnesses in the\n_>vy case. Mr. Norr has told us that there is 8. very real\npossibility that the Deyo case will be settled although he\nstrongly urged counsel not to take such action. Mrs. Adams,\nthe defendant, is very old and in a nervous condition. This\nhas been given as the reason for considering settlement.\nMr. Norr further reports that he was encouraged by the attitude\nof the presiding Justice in this case.\nRegraded Unclassified\n75\n- 16 -\nThe Levy case has developed in such a manner that it is\ndoubtful whether it will be of value to us. It has developed\ninto a dispute between a second wife and children by the first\nwife with 8. very strong likelihood that the Court may find that\nthe funds with which Mrs. Levy purchased the bonds were not\nher funds but were funds earned by the husband and his first\nwife. This kind of a case does not involve a direct attack\nupon the validity of our regulations.\n14. Subpoena Served on Guy F. Allen, Chief Disbursing\nOfficer, to Appear as a Witness in Case of Thompson V. Deal.\nMr. Guy F. Allen, Chief Disbursing Officer, conferred with\nyr. Tietjens about a subpoena ordering him to appear as a\nwitness in the case of Thompson V. Deal. This case, now being\ntried before the United States District Court for the District\nof Columbia, in which Mr. Julian, Treasurer of the United States,\nis one of the defendants, involves 8 class suit brought by\ncertain cotton producers against the manager of the National\nSurplus Cotton Tax Exemption Certificate Pool, 1935, and other\nFederal officers to recover amounts paid for tax exemption\ncertificates and enjoin payment to producers who had deposited\nsuch certificates in the Pool. After it was determined from\nthe attorneys in the Department of Justice representing the\nRegraded Unclassified\n76\n- 17 -\ndefendants in the case that there would be no objection to\nMr. Allen testifying, there was prepared, in compliance with\nDepartmental regulations governing the disclosure of official\ninformation, a letter for signature by the Under Secretary\nauthorizing Mr. Allen to testify in court with respect to\nmatters relating to the Division of Disbursement which are\nnot of a confidential nature.\n15. Authorization of Foreign Exchange Transactions in\nConnection with Military Activities. Mr. Tietjens and Mr. Reeves,\nalong with representatives of the War and Navy Departments,\nattended a conference in Mr. Heffelfinger's office concerning\nproposed legislation to be sponsored by the War Department\nwhich would authorize disbursing officers of the United States\nto make exchange transactions of certain types. Such legisla-\ntion would authorize the exchange of United States currency\nand coin and foreign currency and coin for checks of dis-\nbursing officers drawn in their official capacities, United\nStates Postal Money Orders, or for such foreign currency,\ncoin, or checks of such classes as the Secretary of the Treasury\nmay from time to time approve.\n16. Recovery of Excess Profits in Connection with Re-\nnegotiation of War Contracts. At the request of Colonel\nRegraded Unclassified\n77\n- 18 -\nKenneth C. Royall, Chief of the Legal Section of the Fiscal\nDivision, Service of Supply, and with the approval of Under\nSecretary Bell, Mr. Reeves and Mr. Bartelt attended a conference\nin Colonel Royall's office which had been called to discuss\ncertain problems relating to the recovery of excess profits\nin connection with the renegotiation of war contracts. The\ndiscussion at the conference was confined largely to problems\narising in connection with the use of the credit memoranda\nprocedure whereby the War and Navy Departments and the Maritime\nCommission accept in lieu of a cash refund of excessive profits\n8. credit memorandum which may be applied to future payments\non the same or another contract. Mr. Bartelt and Mr. Reeves\nmade it clear that they were attending the conference solely\nin an advisory capacity with respect to appropriation procedure\nand that the manner in which repayments resulting from the\nrenegotiation of war contracts are handled is one for deter-\nmination by the agencies concerned and by the General Accounting\nOffice.\n17. Release of Gold Bullion to the Chartered Bank of\nIndia, Australia and China (See September 1942 report, item\n19(b)). A request of the above bank for the release and\npurchase by the United States of three bars of gold bullion\nRegraded Unclassified\n- 19 -\n78\nproduced by the Tambis Gold Dredging Company, Inc., which\nwere delivered to High Commissioner Sayre during the emergency\nin the Philippines and are now held in custody by the United\nStates Mint at San Francisco, was considered. There were\nprepared an agreement of indemnity for execution by the New\nYork agent of the Bank, and a letter of transmittal advising\nhim that upon receipt of the executed agreement of indemnity,\nthe Treasury Department will direct the Superintendent of the\nUnited States Mint at San Francisco to receive the gold in\nquestion for purchase by the United States in accordance with\nthe provisions of the Gold Reserve Act of 1934 and the regu-\nlations issued thereunder. Payment therefor will be made by\ncredit to a special blocked account in the name of the Cebu\nbranch of the Bank and the Tambis Gold Dredging Company, Inc.\n18, Material for Inclusion in 1941 Supplement to the Code\nof Federal Regulations. At the request of Miss Chatfield,\nTreasury Archivist, galley proofs of regulations issued by the\nFiscal Service of the Treasury Department during the calendar\nyear 1941 which will be included in the 1941 Supplement to\nthe Code of Federal Regulations were reviewed for accuracy\nand completeness. Various corrections and suggested changes\nwere made on the page proof.\nRegraded Unclassified\n79\n- 20 -\n19. Elimination of F.D.I.C. Assessment of and Maintenance\nof Reserves for War Loan Account Deposits. Considerable time\nwas devoted to a proposal that, in the interest of facilitating\nthe war financing program, the existing requirement that banks\npay the Federal Deposit Insurance Corporation assessment upon\nWar Loan Account deposits and maintain the usual reserves\nagainst such deposits be eliminated. These deposits arise solely\nas a result of subscriptions made by or through banks for United\nStates Government securities and are fully secured by collateral\nsecurity. In this connection, Mr. Reeves, along with Mr.\nBatchelder of the Under Secretary's office, conferred with\nFrancis Brown, General Counsel of the Federal Deposit Insurance\nCorporation.\n20. Rai lroad Reorganization. (a) Claim of the Prince\nGeorge and Chesterfield Railroad V. Seaboard Air Line Railway\nfor Payment of Rental (See September 1942 report, item 23(b)).\nOn November 12, 1942, Mr. Proctor and Mr. Zarky traveled to\nNorfolk, Va., for a conference on the petition of the Govern-\nment in the 8. bove matter, with the special master, attorneys\nfor the receivers of the Seaboard, and attorneys for other\ninterested parties. After some perfunctory discussions of the\nmerits of the Government's petition and of the Receiver's\nRegraded Unclassified\n80\n- 21 -\nanswer, Mr. W. R. S. Cocke, one of the attorneys for the\nReceivers, proposed that the Government and the Receivers\nendeavor to enter into a stipulation of certain correspondence\nrespecting this action. Messrs. Proctor and Zarky agreed to\nthe proposal.\n(b) Washington, Brandywine and Point Lookout Railroad\n(See October 1942 report, item 22). Mr. Tietjens and\nFr. Proctor attended a conference with Mr. Heffelfinger and\nofficials of the above Railway on the subject of the Treasury's\ninterest in the condemnation proceedings now pending against\nthe railroad in the United States District Court in Baltimore.\nAs the Navy Department's appraisal of the railroad property\nwas not known, it was impossible to enter into any real dis-\ncussion of the approximate value of the Treasury's claim\nagainst this railroad. The officials of the railroad were\nadvised to confer with the Navy Department, and were invited\nto return again for further discussions.\n21. Mexican Claims Act, 1942. Mr. Proctor attended the\ncommittee conference of the House and the Senate on the dis-\nagreeing votes of the two bodies on the amendment of S. 2528,\nto provide for the settlement of claims of American nationals\nagainst the Government of Mexico, and, after conference agreement,\nRegraded Unclassified\n81\n- 22 -\nassisted Mr. Wood, Legislative Counsel of the Senate, and\nMr. English, attorney. for the State Department, in redrafting\nthe bill in accordance with the views of the conference.\n22. Chicago Office - (Division of Loans and Currency).\nDuring the week of November 30 Mr. Tietjens spent several\ndays in the Chicago office for the purpose of familiarizing\nhimself with the organization and getting at first hand some\nof the problems with which the legal unit there is faced.\nFr. Cunningham, who accompanied him, remained in Chicago\nfor another week to permit Mr. Fuller to take a well-earned\nrest.\nThe following work was done under the supervision of\nAssistant General Counsel O'Connell:\n23. Interpretation of Exemption Clause in Renegotiation\nLaw. Representatives of the Chief Counsel's Office of the\nProcurement Division held two meetings with representatives\nof the War and Navy Departments and the Maritime Commission\nrelative to the interpretation of the clause of the renegotiation\nlaw exempting products of mines, oil and gas wells, other mineral\nor natural deposits, and timber from renegotiation. It was\nagreed that each department would write the regulations which\nit believes will best define and interpret this exemption, and\nRegraded Unclassified\n82\n- 23 -\nthat the representatives would meet again to agree upon a\nuniform regulation. It was further proposed that a meeting\nbe held with Senator Vandenberg, who was responsible for\nthe inclusion of this exemption in the amended renegotiation\nlaw, to determine whether the proposed regulation exempts\nthe products he had in mind.\n24. Standards of Profit Control Used in Negotiation and\nRenegotiation Contracts. In response to the letter of\nNovember 23, 1942, from James F. Byrnes, Economic Stabiliza-\ntion Director, requesting to be advised as to the standards\nof profit control used by the Treasury Department in the\nnegotiation and renegotiation of contracts, a reply was pre-\npared for the signature of the Secretary by Mr. Stephens and\nrewritten by Mr. O'Connell.\n25. Russian Oil Refinery Program. As a result of two\nconferences held with E. B. Badger & Sons Company relative\nto the Russian Oil Refinery program, Badger agreed to accept\na fixed fee of $1,079,000, based on an estimated f.a.s.\nmaterial cost of $26,975,000, provided that the contract\nwould provide for the reimbursement of all direct costs\nand of certain items of cost which would ordinarily be in-\ncluded in overhead, but which it may be possible to allocate\nRegraded Unclassified\n83\n- 24 -\ndirectly to the work. He is to submit a list of such items\nto the Procurement Division, and the Chief Counsel's Office will\ndraft a contract on the aforesaid basis.\nAlso, a conference was held with Mr. C. D. McCoy, of the\nFoster Wheeler Corporation, representing the Petroleum\nRectifying Corporation of California, owner of the Petreco\ndesalting and dehydrating processes, who agreed to proceed\nwith the ordering of materials for the Petreco units upon\nthe settlement of certain specifications by the Russians and\nE. B. Badger & Sons Company. Letters containing offers for\nthe use of the process involved in the refinery program were\nprepared and sent to the owners of such processes, Foster\nWheeler Corporation, Houdry Process Corporation, International\nCatalytic Oil Processes Corporation, Max B. Miller Company,\nTexaco Development Corporation and Universal Oil Products.\nThe letters stated a fixed amount which is to be paid as\ncompensation for the use of the process during the war.\n26. War Communications Board (for description see\nNovember 1940 report, item 23). Mr. Shea attended a meeting\nof the Law Committee of the War Communications Board on\nNovember 5.\n27. Board of Legal Examiners (for description see\nRegraded Unclassified\n84\n- 25 -\nJuly 1941 report, item 15). On November 21, 1942, Mr. Shea\nsat on the Examining Committee of the Board of Legal Examiners,\nand on the 27th attended the examination of an attorney con-\nsidered for appointment in the Treasury Department.\n28. Coordination Conference of Treasury Law Enforcement\nAgencies. Mr. Shea attended a meeting of the enforcement\nagencies on November 24.\n29. Opium Poppy Control Bill (See October 1942 report,\nitem 27). Mr. Shea and Miss McDuff prepared a letter to the\nSecretary of State, in answer to his letter relative to our\nproposed legislation, the Opium Poppy Bill(H.R. 7568). On\nNovember 3, Mr. Shea and Mr. Tennyson, Chief Counsel of the\nBureau of Narcotics, conferred at length with Mr. Oscar R.\nEwing, a representative of the three large manufacturers of\nopium products, who had suggested several changes to this\nbill. No commitments were made on behalf of this Department.\nOn November 13, these proposed amendments were discussed at\n8. conference in Assistant Secretary Gaston's office.\nMr. Shea accompanied Mr. Gaston to the hearing on\nNovember 19 before the Senate Finance Committee on the Opium\nPoppy Control Bill, and on November 25, he attended, with\nCommissioner Anslinger, another hearing before that committee\nRegraded Unclassified\n85\n- 26 -\nand testified in favor of the proposed legislation. The\ncommittee voted that the bill be favorably reported with\nthree amendments. At the request of Chairman George a com-\nmittee report was prepared by Mr. Shea and Miss McDuff. On\nNovember 30 the bill was reported in the Senate (Rept. No.\n1764) and passed.\n30. Proposed Legislation Relating to Suspension of\nCustoms Barriers. (see October 1942 report, item 28).\nMr. Speck attended a conference in the War Department on\nNovember 6 to consider the anticipated hearings on the\nPresident's message of November 2 to the Congress on proposed\nwar legislation to provide for the free movement of persons,\nproperty and information into and out of the United States.\nThe bill was subsequently introduced as H.R. 7762 and on\nNovember 18 the House Ways and Means Committee met in execu-\ntive session to consider it. Assistant Secretary Gaston\nrepresented the Treasury Department and read a prepared\nstatement. The bill was referred to a subcommittee of the\nWays and Means Committee and was considered by the subcommittee\nin executive session on November 20 and November 30. Mr. Speck\nwas in attendance at the executive session and handled the\nmatter for the Legislative Section.\nRegraded Unclassified\n86\n- 27 -\n31. Minor Coinage Bill. A memorandum pertaining to\nS. 2889, our proposed legislation to further the war effort\nby authorizing the substitution of other materials for stra-\ntegic metals used in minor coinage, to authorize the forming\nof worn and uncurrent standard silver dollars into bars, and\nfor other purposes, was given to Senator Wagner and Congress-\nmen Somers. This memorandum, which was prepared by Mr. Shea\nand Mr. Brenner, was printed in the Congressional Record for\nNovember 9. In response to a request from the Senate Committee\non Banking and Currency, a report was prepared on this bill.\nOn November 17 and 18, Vr. Shea attended, with the Director\nof the Lint, the hearings before the Senate Banking and Currency\nCommittee and testified in favor of the bill. It was reported\nwith minor amendments on November 19, 1942. On November 23,\nMr. Shea conferred with Congressman Somers about this proposed\nlegislation.\n32. Proposed Bill to Authorize Acceptance of Permanent\nLoan Made By Board of Trustees of the National Gallery of Art.\nA certain charitable organization has proposed to give to the\nNational Gallery of Art $5,000,000 in cash to be held and\nadministered by the Board of Trustees in the establishment\nof an endowment fund for the benefit of the Gallery, the\nRegraded Unclassified\n- 28 -\n87\nincome from which, it will be specified, shall be used and\napplied for stated purposes of the Gallery other than those\nfor which public funds are made available. In response to an\ninformal request of Mr. Donald Shepard, Secretary-Treasurer\nand general counsel of the National Gallery of Art, a proposed\nbill was drafted (1) to authorize the Secretary of the Treasury\nto receive the funds as a permanent loan and to pay 4 percent\ninterest thereon and (2) to permanently appropriate such\ninterest for payment to the Board of Trustees of the National\nGallery of Art. Nr. Shea and Miss McDuff prepared drafts of\nthe letters of transmittal to the Congress.\n33. Free Importation of Soldiers' Gifts. The Ways and\nYeans Committee met in executive session on November 19 to con-\nsider H.R. 7792, to permit the free entry of gi fts from members\nof the armed forces serving abroad. Mr. Speck and representa-\ntives of the Bureau of Customs were in attendance. This bill\nwas prepared in the Treasury Department.\n34. Proposed Legislation to Aid in the War Production\nof Hemp. It is understood that a large part of the supply of\nimported hard fiber on which the manufacturers of rope and other\nhard fiber products have depended has been cut off by the war\nconditions, and that an adequate supply of domestic fiber\nfrom American hemp (marihuana) is an absolute necessity to\nRegraded Unclassified\n88\n- 29 -\nsupply rope and fiber products essential for war needs of the\nNavy, Army, and Merchant Marine. This Department has been in-\nformally requested by the Commodity Credit Corporation and the\nWar Production Board to present legislation to the Congress to\namend the Internal Revenue Code so as to provide for a reason-\nable method of taxation of persons who manufacture or produce\nhemp, twine, or fiber products from marihuana, and for other\npurposes. In connection with the consideration d such le gis-\nlation, Miss McDuff attended a conference on November 23, at\nwhich Mr. Tennyson and Mr. Mitchell of the Bureau of Narcotics,\nMr. McIntire of the Commodity Credit Corporation, and Mr. Gilmore\nwere present.\n35. Proposed Legislation Authorizing Department of Agri-\nculture to Compromise Certain Indebtedness Due United States.\nMr. Shea attended a conference on November 19 in Mr. Bartelt's\noffice to consider S. 1339, which would authorize the Governor\nof the Farm Credit Administration and the Secretary of Agri-\nculture to compromise, adjust, or cancel certain indebtedness\ndue the United States. There was discussed 8. redraft of the\nbill, which was submitted by the Department of Agriculture to\nremedy the objections advanced against the original bill by\nthis Department in a letter to the Bureauof the Budget dated\nRegraded Unclassified\n89\n- 30 -\nApril 6, 1942.\n36. Proposed Executive Order Authorizing the Treasury\nDepartment to Acquire and Dispose of Property. A proposed\nexecutive order, to authorize the Secretary of the Treasury\nto exercise, through such officials of the Department of the\nTreasury and its bureaus aná divisions as he may designate,\nthe power contained in Title II of the Second War Powers\nAct, 1942, pertaining to the acquisition, use and disposition\nof real property, and a letter of transmittal to the President,\nwere prepared by Miss McDuff.\n37. Proposed Executive Order Authorizing the Treasury\nDepartment to Contract for Architectural Engineering Services.\nOn November 2, Mr. Shea, with Mr. Davis of the Procurement Divi-\nsion, conferred with the Director of the Bureau of the Budget\non our proposed executive order authorizing the Treasury Depart-\nment to contract for architectural and engineering services and\nlimiting the fees to be paid for such services. The order had\nbeen, in accordance with Budget's suggestion, redrafted to only\napply to Lease-Lend projects. Several changes in form were\nagreed to at this conference. The order was signed by the\nPresident on November 11, 1942, and is Executive Order No. 9269.\n38. Proposed Executive Order Consolidating Certain\nRegraded Unclassified\n90\n- 31 -\nAgricultural Lending Agencies. Mr. Shea conferred with\nMr. Droste and Mr. McConnaughey, of the Farm Credit Adminis-\ntration, on November 9, 1942. An executive order proposed\nby that agency was discussed. The order would consolidate\ncertain agricultural lending agencies and functions into an\nagricultural loan agency to be administered under the direction\nand supervision of the Governor of the Farm Credit Administra-\ntion, subject to the general direction and supervision of the\nSecretary of Agriculture.\n39. Proposed Executive Order Establishing Interdepart-\nmental Board to Consider Subversive Activities. Mr. Shea\nconferred with members of the Bureau of the Budget on an\nexecutive order proposed by the Department of Justice. The\norder would establish an interdepartmental board to consider\ncases of subversive activity on the part of Federal employees.\nMr. Ranta prepared a letter to the Bureau of the Budget stating\nthat this Department had no objection to the approval of the\norder.\n40. Memoranda Re Salary of Treasury Employee Presently\nInterned by the Enemy. A memorandum discussing whether or\nnot salary and per diem allowance checks of a Treasury em-\nployee at present interned by the enemy (Maxwell Anderson)\nmight be issued and transferred to his account in a bank in\nRegraded Unclassified\n91\n- 32 -\nthe United States, pursuant to 8. power of attorney, was pre-\npared by Mr. Filachek.\n41. Reproduction of War Savings Stamps. Mr. Ranta pre-\npared a letter for Mr. Gaston's signature advising Senator\nConnally that the Department had no objection to the use of\nan illustration of a War Savings stamp in the A W V S News\nof Houston, Texas, inasmuch as the illustration was to be in\nblack and white and about one-half the size of an actual stamp.\nA letter addressed to Mr. Fred Knoop, which was prepared\nby Mr. Filachek, denied a request to use a reproduction of\nWar Savings stamps for the December cover of Minicam\nPhotography.\n42. Threats Against the President. In response to 8.\nrequest from Assistant Attorney General Berge for our views on\nUnited States V. Metzdorf, 252 Fed. 933, relating to an alleged\nthreat against the President, Mr. Filachek prepared a letter ad-\nvising that this Department was of the opinion that the con-\nclusion reached in the decision was unsound.\n43. Dismissal of Indictment. Mr. Filachek prepared a\nletter to Assistant Attorney General Berge advising that in-\ndictments against Mr. and Mrs. Creed J. Short should not be\nremoved from the court docket at this time to permit further\nRegraded Unclassified\n92\n- 33 -\nsearch for counterfeiting plates believed to be in Short's\npossession. Mr. Ranta prepared a letter advising that this\nDepartment had no objection to the dismissal of three counts\nof an indictment charging William Butynski with possessing\nand passing countefeit Federal Reserve notes.\n44. Compromise Offers. The offers made by John Preuss,\nGrants Pass, Oregon, and the United States Hoffman Machinery\nCorporation, in settlement of claims in favor of the United\nStates were duly accepted by the Acting Secretary of the\nTreasury. A letter recommending acceptance of the offer made\nby Clark L. Corey in settlement of a debt due the United States\nwas prepared. Miss McDuff handled these cases.\n45. Congressional Action on Treasury-sponsored Legislation.\n(a) Minor Coinage Bill. On November 9, 1942, Senator Wagner\nIntroduced S. 2889, \"To further the war effort by authorizing\nthe substitution of other materials for strategic metals used\nin minor coinage, to authorize the forming of worn and un-\ncurrent standard silver dollars into bars, and for other pur-\nposes\", which bill was referred to the Senate Committee on\nBanking and Currency. The bill was introduced by Representa-\ntive Somers as H.R. 7767 on November 10, 1942, and referred to\nthe Committee on Coinage, Weights and Measures. S. 2889 was\nRegraded Unclassified\n93\n- 34 -\nreported with amendments (s. Rept. No. 1699) on November 19.\nIt was passed by the Senate on November 23 and referred to\nthe Committee on Coinage, Weights and Measures on November 24.\n(b) Huntsville, Texas, First National Bank. On November 16,\n1942, S. 2761, for the relief of the First National Bank of\nHuntsville, Texas, was reported from the Senate Committee on\nClaims without amendment (s. Rept. No. 1676). It was passed\nby the Senate on November 23 and on the next day referred to\nthe House Committee on Claims.\n(c) G. F. Allen Relief Bill. On November 16, 1942,\nH.R. 6990, for the relief of G. F. Allen, Chief Disbursing\nOfficer, Treasury Department, and for other purposes, was\nreported from the Senate Committee on Claims, without amend-\nment (s. Rept. No. 1694), and was passed by the Senate on\nNovember 23, 1942. This bill was presented to the President\nfor his approval on November 25.\n(a) Free Importation of Soldiers' Gifts. On November 19,\n1942, Representative Doughton introduced H.R. 7792, \"To accord\nfree entry to bona fide gifts frommembers of the armed forces\nof the United States on duty abroad\", which was referred to\nthe Committee on Ways and Means. On November 23 it was\nreported (H. Rept. No. 2643), and passed by the House. It\nRegraded Unclassified\n94\n- 35 -\nwas reported from the Committee on Finance (s. Rept. 1706)\nand passed by the Senate on November 25.\n(e) Opium Poppy Bill. H.R. 7568, \"To discharge more\neffectively the obligations of the United States under certain\ntreaties relating to the manufacture and distribution of nar-\ncotic drugs, by providing for domestic control of the produc-\ntion and distribution of the opium poppy and its products,\nand for other purposes\", was reported from the Committee on\nFinance (s. Rept. No. 1764) and passed by the Senate on\nNovember 30, 1942.\nThe following work was done under the supervision of\nAssistant General Counsel O'Connell and Mr. Luxford, Chief\nCounsel of Foreign Funds Control:\n46. Staff Reorganization. On November 20, 1942, a\nGeneral Counsel's staff letter was issued, designating Yr.\nAnsel F. Luxford as Chief Counsel of Foreign Funds Control and\nMessrs. Josiah E. DuBois, Jr. and Lehman C. Aarons as Assistants\nChief Counsel of Foreign Funds Control, under the general super-\nvision of Mr. Joseph J. O'Connell, Jr., Assistant General\nCounsel. The following assignment of duties was made:\nDivision A, headed by Mr. DuBois, is concerned with the\nissuance of public documents; Latin American and neutral\ncountry problems; stabilization operations and matters relating\nRegraded Unclassified\n95\n- 36 -\nto silver; liaison with the Army regarding fiscal operations\nand problems connected with allied occupation of enemy terri-\ntory; foreign decrees, and certifications under the Federal\nReserve Act.\nDivision B, under the supervision of Mr. Aarons, is\nresponsible for the preparation of briefs, legal research,\nand study of litigation affecting Foreign Funds Control, and\nhandles censorship problems and matters relating to control\nof currency, securities, and negotiable instruments. It also\ndeals with territorial problems, questions arising under\nscorched earth regulations, the China program, questions re-\nlating to gold, coinage, and the Mint Bureau, and provides\ngeneral assistance to Foreign Funds Control on licensing and\nadministrative problems.\nDivision C, headed by Mr. Lesser, does legal work con-\nnected with enforcement, selecting and developing cases for\ncriminal prosecution, initiating grand jury proceedings, cooper-\nating with Department of Justice and United States attorneys\non criminal matters and on foreign agent registration problems,\nand participating in the work of the Committee on Enforcement\nand Investigations. It is responsible for holding hearings\nand conducting investigations relating to enforcement, including\nthe Swiss Banks investigation.\nRegraded Unclassified\n96\n- 37 -\nDivision D, headed by Mr. Lawler, deals with ad hoc blocking,\nparticipating in the ad hoc committee, and conducts hearings\nunder General Ruling No. 13 on applications for unblocking. It\nhandles business enterprise problems, including investigations,\ninvestigations of blocked insurance companies doing business\nin the United States and of I. G. Farben connections in the\nWestern Hemisphere, and participates in the work of the Com-\nmittee on Enforcement and Investigations. It deals with vesting\nproblems, does liaison work with the Alien Property Custodian,\nand handles questions involving conflicting allied Alien\nProperty Custodian claims, patents, trademarks, and copy-\nrights, repatriation cases, and internees.\nDivision E, under the supervision of Mr. W. H. Reeves,\nhandles all matters relating to TFR-300 and TFR-400 and any\nother census reports, including drafting work and studies of\nhow census reports may most effectively be utilized. It ad-\nvises Foreign Funds Control on applications involving attach-\nments or other types of litigation, including attorneys fees\ncases, and deals with problems arising under General Ruling\nNo. 12. It is responsible for matters involving trusts and\ndecedents estates, insurance and reinsurance.\n47. Continental France as Enemy Territory. On\nRegraded Unclassified\n97\n- 38 -\nNovember 8, 1941, as a result of the Nazi invasion of unoccupied\nFrance, General Ruling No. 11 was amended so as to include all\ncontinental France in the definition of enemy territory. Prior\nto this, occupied France was enemy territory, but unoccupied\nFrance was not so designated. On November 27, 1942, by Public\nInterpretation No. 9, attention was called to the fact that\nMonaco was also considered enemy territory. In order to\nassuage the fears of resident French nationals who were not\nenemy nationals, Messrs. DuBois and Murphy participated in the\npreparation of a press release pointing out that their status\nwas not affected by the amendment to General Ruling No. 11.\n48. Conflicting APC Claims. A conference was held at the\nState Department at the request of the Canadian Alien Property\nCustodian. Representatives of our Alien Property Custodian,\nof the British Ministry of Economic Warfare, and of the Foreign\nFunds Control were present. It was proposed by the Canadians\nand the British that the conference arrive at general principles\ngoverning the handling of assets with respect to which the\nallied governments had conflicting claims. The Treasury re-\npresentatives agreed to assist in working out the solution to\nspecific problems of an urgent character but were not hopeful\nof being able to work out overall solutions to conflicting\ncustodian claims until after the war. A number of pressing\nRegraded Unclassified\n99\n- 40 -\npublished. This request was made because of certain language\nused by the Comptroller General with respect to the relation-\nship between the Geneva Convention of 1929 and section 5(b) of\nthe Trading with the Enemy Act.\nEvery civilian who has been interned for the duration of\nthe war is being notified that his assets held outside of the\ncamp are frozen. Withdrawals not to exceed $150 per month will\nbe permitted to defray the support of his dependents, and to\nmeet his current obligations, and the sum of $30 & month may\nbe withdrawn to pay his personal expenses in the camp. Messrs.\nAarons and Alk worked on this matter in conjunction with members\nof the administrative staff.\n51. Estates (See October 1942 report, item 43). Prior\nto the issuance of General License No. 30A, the consuls of\nvarious neutral and enemy occupied countries appeared in estate\nproceedings to represent the interest of their nationals. The\nvarious neutral general licenses were also frequently used to\nreceive payment of distributive shares. Under General License\nNo. 30A, however, unless a special license is obtained, 8\nblocked national cannot act as personal representative or\nrepresent any person in estate proceedings. The neutral general\nlicenses have thus been amended SO as to be inapplicable to\nRegraded Unclassified\n100\n- 41 -\nadministration of decedents' estates.\nBlanket licenses were, therefore, prepared and issued to\nthe Legation of Switzerland, the Legation of Portugal, the\ninister of Sweden, and the Spanish Embassy, authorizing the\nconsuls of the respective countries to represent their nationals,\nand to receive payment of distributive shares, provided the pay-\nments are made in the manner specified by General License No. 30A,\nor by deposit in a blocked account in a domestic bank in the name\nof the appropriate consul in trust for the beneficiary. In\naddition, blanket licenses were issued to the Norwegian Embassy\nend the Netherlands Embassy, which authorized the respective\nconsuls to act as personal representative of a decedent's estate\nand provided for payment of distributive shares by deposits in\nSpecial Custodian Accounts established by the embassies. Con-\nferences were held with representatives of the various embassies\nexplaining the various documents. Messrs. Aarons and Alk worked\non this in conjunction with members of the administrative staff.\n52. Changes in Patents Procedure (See October 1942 report,\nitem 54). General Licenses No. 72, as amended, and No. 72A,\nand Public Circular No. 5, as amended, relating to patent,\ntrademark, and copyright transactions were issued on November 17,\n1942. General License No. 72 was amended so as to relinquish\nRegraded Unclassified\n101\n- 42 -\nto the Alien Property Custodian authority over United States\npatents, trademarks, and copyrights in which there is a blocked\ninterest. The Alien Property Custodian has now assumed the\njurisdiction given to him under section 2(d) of Executive Order\nNo. 9193 with respect to the filing and prosecution of appli-\ncations for United States patents, trademarks, and copyrights,\nand transfers or other dealings with respect thereto, if any\nblocked interest is involved. The Treasury Department retains\njurisdiction over payments and financial transfers incident to\nthese transactions. General License No. 72A authorizes per-\nsons not nationals of any blocked country to file and prosecute\napplications for patents, trademarks, and copyrights in any\nforeign country in which 8. blocked national, other than an\nenemy national, has an interest. This general license also\nauthorizes the receipt of documents issued in connection with\nsuch applications, the payment of fees currently due to foreign\ngovernments, and, within limitations, the payment of attorneys'\nfees. Public Circular No. 5 explains the general licenses and\nadvises of the relinquishment of jurisdiction by the Treasury\nDepartment in the domestic patent field, and the taking over\nof that field by the Alien Property Custodian. Messrs. Aarons,\nMurphy and Kehl worked on these matters.\nRegraded Unclassified\n102\n- 43 -\n53. Securities Control (See October 1942 report, item 56).\n(a) General License No. 84 -- Importation of War Savings Bonds.\nGeneral License No. 84 was issued on November 25, 1942, exempting\nUnited States War Savings Bonds or Stamps and tax notes from\nthe importation restrictions of General Ruling No. 5. The li-\ncense was issued so that servicemen buying such securities\nabroad might send them to the United States. Messrs. DuBois\nand Daum handled this matter.\n(b) General License No. 29 -- Confidential Circular No. 8A.\nGeneral License No. 29 was amended on November 6, 1942, to pro-\nvide that no coupons might be removed for collection from &\nGeneral Ruling No. 6 account unless the bonds to which the cou-\npons relate are in such General Ruling No. 6 account. Con-\nfidential Circular No. 8A, which was prepared by Mr. Daum,\ninstructed the Federal Reserve Banks to deny applications to\ncollect detached coupons held in General Ruling No. 6 accounts\nwhere such coupons were imported from any country which has\nnot broken off diplomatic relations with the Axis.\n(c) Study of Applications Involving Securities Trans-\nactions. An analysis was made by Mr. Kehl of an application\nby General Safety, Inc., to purchase 10,800 shares of stock\nof Houston Milling Company, a Texas corporation, from\nRegraded Unclassified\n103\n- 44 -\nComptoir Generale, a Swiss corporation. The application was\ndenied because of its repatriation aspects and possible pre-\njudice to unrepresented persons in France. Because of the\ncomplicated nature of the transactions, and prior actions\ntaken by Foreign Funds Control, a letter was sent to the\nattorneys for the applicant giving the reasons for denial of\nthe pending application.\n(d) Philippine Securities (See October 1942 report,\nitem 59). A plan has been prepared whereby securities and\nobligations of the government of the Commonwealth of the\nPhilippines, its political subdivisions, or corporationsor-\nganized under its laws, and \"frozen\" in reputable banks in\nvarious countries in the generally licensed trade area, may\nbe released. The program contemplated calls for the reports\nof these securities to be filed by the New York agency of the\nPhilippine National Bank, the transmission of Form TFEL-2 by\nthe Federal Reserve Bank of New York to the bank holding the\nsecurities and the release of the securities after attachment\nof Form TFEL-2. The basic documents, which were drafted in\nthe past months and cleared in the Treasury Department, the\nDepartment of State, Interior Department, and informally by\nthe Philippine Government, have been transmitted to the\nRegraded Unclassified\n104\n- 45 -\nResident Commissioner of the Philippines from the United States.\nThey are pending before him and President Quezon at the present\ntime. Mr. Murphy worked on this matter.\n54. Sale of Assets to Residents of Blocked Territory.\nA general ruling is being prepared by Mr. Daum which will pro-\nhibit the sale of assets owned by persons in the United States\nto persons residing in blocked territory.\n55. Checks and Drafts Sent from Blocked Areas. Study is\nbeing made by Messrs. Rains, Daum and Mrs. Rogan, with members\nof the administrative staff, of a proposed general ruling re-\nstricting the receiving or holding of checks, drafts and pro-\nmissory notes sent from blocked areas.\n56. Census of American-owned Property Abroad. (See\nOctober 1942 report, item 62). Proposed regulations and\ninstructions concerning the census of American-owned property\nabroad have been redrafted and forms revised by \\essrs. Reeves,\nArnold and Warner to incorporate suggestions and ideas which\nwere made by the administrative and legal staffs of Foreign\nFunds Control, by the Monetary Research Division, and by\nother agencies of government.\n57. Litigation (See October 1942 report, item 57). In\ntwo recent cases, Justice Collins of the New York Supreme Court\nRegraded Unclassified\n105\n- 46 -\npermitted actions to be brought by corporations--one French\nand the other Dutch--located in enemy territory, and directed\nthat the proceeds of any judgment be paid to the Alien Property\nCustodian. A letter has been prepared by Messrs. Aarons,\nGolding, Murphy and Alk calling the Justice's attention to\nthe fact that two agencies are administering the powers of the\nPresident under section 5(b), and requesting & revision of the\ndecision so as to direct that the proceeds be subject to the\nTrading with the Enemy Act, as amended, the Executive Orders\nthereunder, and action pursuant thereto. In this manner,\nappropriate action may be taken by the proper agency. It has\nbeen suggested that the Alien Property Custodian send a letter\napproving the proposed action, and action is being delayed until\nhe has had an opportunity to study the matter.\nThe Department of Justice transmitted for consideration a\nproposed state bill submitted by the Alien property Custodian\nto provide for service upon him of process or notice. In 8.\nconference held with representatives of the Alien Property\nCustodian the bill was discussed and objections presented.\nA memorandum was sent to the Alien Property Custodian em-\nbodying the criticisms of this Department. Messrs. Reeves,\nAlk and Warner handled this matter.\nRegraded Unclassified\n106\n- 47 -\nA study is being made of the various cases now in litiga-\ntion or out of which further litigation may arise. This in-\ncludes Littau V. Ore & Chemical, Brown V. Morgan, and\nFeuchtwanger V. Central Hanover Bank. Brown V. Morgan involves,\namong other things, the obligation which one party to a law\nsuit has vis-a-vis the other parties with respect to applying\nfor a Treasury Department License. Inasmuch as the prohibi-\ntions in Executive Order No. 8389, as amended, are coming into\nplay more and more, as legal defenses, the holding in Brown V.\nMorgan (that before a person may plead the freezing order as a\ndefense, he must first show that 8. license was applied for and\ndenied) are receiving greater consideration. For example, the\nBrown V. Morgan problem has been raised in Aickelin V. General\nAniline & Film discussed last month. Messrs. DuBois, Reeves,\nGolding, Alk and Murphy are working on these cases.\nTwo problems in public relations have arisen as the result\nof the decision of the New York State Court of Appeals in the\nPolish Relief case. An article appeared in the American Banker\nwhich, it was felt, contained an erroneous interpretation of the\ndecision, as well as the position of the United States as amicus\ncuriae and that of the Treasury Department in General Ruling\nNo. 12. A letter was prepared by Messrs. DuBois, Reeves, Alk,\nRegraded Unclassified\n107\n- 48 -\nGolding, Arnold and Murphy explaining these matters in detail\nand setting forth the feeling of this Department that the\ndecision of the Court of Appeals was consistent, in all respects,\nwith our position. Also, Messrs. DuBois and Murphy prepared a\nletter pertaining to a note on the Polish Relief case appearing\nin the Illinois Law Review.\n58. Hawaiian Scorched Earth Program (See October 1942\nreport, item 58). Efforts have been made to complete the\nvarious phases of this program. Conferences were held with\nrepresentatives of the Bureau of the Public Debt, the Treasurer's\noffice, and the Foreign Funds Control with respect to measures\nto handle the Hawaiian Series currency imported into the United\nStates. Since most of these imports appear to have been acci-\ndental and perhaps unavoidable, emphasis has been to facilitate\nthe ready exchange of any Hawsiian currency which turns up in\nthe United States.\nConfidential Circular No. 173 and instructions to Collectors\nof Customs which provided that they should permit persons having\nHawaiian series currency to pass through customs, upon executing\na certification that they will exchange the currency promptly\nwith a bank in the United States, were issued. Banks were\nauthorized to effect such exchanges and to deliver the currency\nRegraded Unclassified\n108\n- 49 -\nso received to a Federal Reserve Bank. A plan is being worked\nout which will authorize any bank in the United States to\nreceive Hawaiian currency from any person having possession\nof it and to turn such currency over to a Federal Reserve\nBank. A letter has been prepared by Mr. Murphy for Mr. D. W.\nBell's signature and is presently awaiting clearance.\n59. Strategic Information (See October 1942 report,\nitems 65 and 55; August 1942 report, item 51). Many depart-\nments of the government have been concerned lest strategic\ninformation with respect to war production, shipping dates,\ncargoes, etc., be sent to the enemy through certain insurance\nand reinsurance transactions, particularly those involving\nforeign countries or their nationals. In that connection, a\nstudy has been made of the Secretary of the Treasury's authority\nin World War I to control the transmission of Insurance informa-\ntion and the activities of foreign insurance companies within\nthe United States. Upon the basis of this study a conference\nwas held and arrangements made for further control over this\nfield. Messrs. Aarons, Kehl, Golding and Murphy worked on this.\nA study is also being made by Messrs. Lawler and Proctor\nwith respect to freight forwarding concerns for the purpose of\ndetermining whether general government control over such firms\nRegraded Unclassified\n109\n- 50 -\nis advisable in view of their access to confidential information\nconcerning ship movements and the possibility that they might\nmake such information available to the enemy. Mr. Marcel\nHolzer of the American Union Transport Company is lending\nassistance in furnishing information concerning the freight\nforwarding business as a whole and concerning particular firms\nabout which he has knowledge. When this study has been completed,\nthe Treasury will be in a position to propose action which should\nbe taken by this Department or other Government agencies.\n60. Enforcement and Investigations (See October 1942 report,\nitem 65). (a) Draeger Shipping Company. An investigation has\nbeen made of the possible violation of 8. directive license by\nthe Draeger Shipping Company, Inc., in conspiracy with\nCH.CH.Sztejn and Harry Sztein relative to the sale of certain\nhorse and cattle hair. Under the directive license, Draeger\nwas authorized to sell horse and cattle hair at the prevailing\nmarket price, as agent for A. G. Schnyder of Switzerland. Be-\ncause of the large profit which Messrs. CH. CH. Sztejn and Harry\nSztein, purchasers of the hair from Draeger, made on the resale,\nthere is reason to believe that Draeger did not sell at the pre-\nvailing market price. A study was made of WPB and OPA regulations\nand of practices of reliable firms in the horse hair business\nRegraded Unclassified\n110\n- 51 -\nin an effort to determine whether the directive license was\nviolated. In connection withthis, the Swiss firm has sued\nDraeger, the Alien Property Custodian, and CH. CH. Sztejn and\nHarry Sztein for fraud. While no decision has been reached,\nit is likely that Draeger will be prosecuted for 8. violation\nof the directive license. Messrs. Lawler, Proctor and Locker\nare working on this case.\n(b) Viktor Bator. In cooperation with the Bureau of\nInternal Revenue, an investigation is being made of Viktor\nBator, a Hungarian national, who entered the United States on\nFebruary 26, 1939. Since his arrival in the United States, it\nappears that he has acted on behalf of the Hungarian Government\nand other nationals of Germany. There is some indication also\nthat Bator failed to report certain profits realized in trans-\nactions involving nationals of Hungary. Miss Klein is working\non this case.\n(c) Swiss Insurance Investigation. The investigation of\nthe Swiss Insurance Company and the Switzerland General Re-\ninsurance Company, Ltd., is continuing. Reports of the investi-\ngation to date indicate that certain omnibus accounts contained\nfunds of enemy nationals. Mr. Lawler is handling this matter.\nRegraded Unclassified\n111\n- 52 -\n(a) Other Investigations and Studies Connected with Enforce-\nment. Field investigations were concluded and final reports\nsubmitted with respect to Ferd. Muelhens, Inc. and Maxwell C.\nKatz by Mr. Quint; Anton Smit & Co., Inc. by Mr. Schwartz;\nE. S. Halsted & Company, Scholtz & Co. and Jorge and Juan Caputo\nby Mr. King; and Jules and Suzanne Levee by Vr. King.\nInvestigative studies were concluded and definitive reports\nwere submitted with respect to William J. Topken by Miss Mayer;\nEurasia Import Co. and Paper Co. Van Reekum by Mr. Cook; Swiss\nBank Corporation and Credit Suisse by Mr. Ewing.\nThe following matters are presently being studied and in-\nvestigated: American Giese Wire Corporation and Horst Albrecht\nWegener, accountant and agent for the corporation; Valentine\nJoseph Peter and the law firm acting for him, Peter & Dalton;\nAcme Continental Corporation and George Biedermann, president\nof the corporation (Mr. Ackermann); Auchincloss, Parker &\nRedpath by Miss Mayer; S.K.S. Dyestuff Corporation and its\nmanager, H.A.P. Rossiger by Mr. King; Auchincloss, Alley &\nDuncan, a law firm; Wildenstein, Inc., art dealers, and David\nVan Buuren by Messrs. King and Quint; Draeger Shipping Company\nby Mr. Ewing; and New York Match Company by Mr. Cook. In several\nof these matters, members of the office of the Chief Counsel,\nRegraded Unclassified\n112\n- 53 -\nForeign Funds Control, are working with the Department of Justice,\nand are also cooperating with the Securities & Exchange Commission\nin one case.\n(e) General License No. 58. A study is being made by Mr.\nCook of the operation of General License No. 58 and the use of\nthe offset device as a means of avoiding the prohibitions of\nthe Executive Order, particularly in the case of remittances\nfrom China.\n(f) Reports on Violations. Letters were written by Mr.\nAckermann to twelve persons who appeared to have violated the\nExecutive Order, requiring the submission of oral or written\nexplanations. Eight explanations have been received to date.\nIn all eight cases it would ap pear that further action is\nnecessary in view of the nature of the proffered explanations.\n(g) Hearings on Violations by Swiss Banks. It is con-\ntemplated that within the near future the Swiss Bank Corporation\nend the Credit Suisse will be notified that hearings are to be\nheld, commencing shortly after the first of the year, with\nrespect to their numerous violations of the Executive Order.\nMr. Lesser is working on this'case.\n61. Public Education (See October 1942 report, item 67).\nMessrs. DuBois and Lawler have been working on a revision of.\nRegraded Unclassified\n- 54 -\n113\nthe handbook prepared for the Inter-American Conference on\nSystems of Economic and Financial Controls in order that it\nmay be published. The proposed revision is presently being\nconsidered by other interested agencies of the Government.\n62. Latin American Problems (See October 1942 report,\nitem 46). (a) Mexican Securities Program (See October 1942 re-\nport, item 56). In connection with the program relating to the\nregistration of certain Mexican securities and the vesting of\nthose determined to be \"enemy owned\", the following documents\nhave been drafted:\n(1) A general license permitting the registra-\ntion in the United States of securities presently in\nblocked or General Ruling No. 6 accounts, pursuant\nto the Mexican Registration Decree, with appropriate\nprovisions for continued control by this Department\nof these securities and ultimate return to the blocked\nor General Ruling No. 6 accounts from which they came.\n(2) A decree to be issued by the President of\nMexico providing for the vesting by the Mexican Govern-\nment of certain \"enemy owned\" securities.\n(3) A letter to be sent by the Secretary of State\nto the Secretary of the Treasury recognizing the valid-\nity of the proposed Mexican vesting decree.\n(4) A letter from the Secretary of State to the\nAttorney General instructing the latter to make speci-\nfied representations to indicate that the proposed\nMexican vesting decree was recognized 88 valid by this\nGovernment and that the proposed act involved 8.\n\"political question\", since it arose in connection with\nand in furtherance of an international compact to which\nour Government and the Mexican Government were parties.\nRegraded Unclassified\n- 55 -\n114\n(5) A memorandum of law discussing a number of\nproblems which may arise in connection with the effect\nthat will be given to the proposed Mexican decree by\nthe courts of the United States. The memorandum dealt\nwith such problems as jurisdiction based upon the con-\ntrol of the debtor; United States cases involving seizure\nof securities and other debts, where the physical evi-\ndences of ownership were not within the jurisdiction\nof the United States or otherwise unavailable; similar\naction in connection with shares of stock in domestic\ncorporations physically held outside of the jurisdiction\nof the United States or otherwise unavailable; and the\neffect given State Department representations in con-\nnection with (i) the validity of foreign decrees or\nacts of a foreign sovereign, (ii) the claim of sovereign\nimmunity to suit, and (iii) the problem of whether or\nnot a \"political question\" is involved.\nFurther study is being given to these matters by Messrs. DuBois\nand Minskoff in collaboration with representatives of the\nMexican Government and agencies of this Government.\n(b) Argentina. In cooperation with the Inter-American\nSection of Foreign Funds Control, further measures were taken\nto implement the program which had been agreed upon with the\nState Department. This included the preparation of additional\nlists of names to be investigated for the purpose of blocking as\n\"special blocked nationals\" under existing arrangments. Addi-\ntional cases are being prepared for submission to the State\nDepartment as candidates for ad hoc freezing. In this con-\nnection, it is interesting to note that Shaw Strupp, which\nwas recommended for ad hoc freezing, attempted to transmit to\nChase Bank for collection some 58 checks, all bearing Jugoslav\nRegraded Unclassified\n115\n- 56 -\nnames, all endorsed by the same person, and all 2 or 3 years\nold. Since all but two of the checks had been collected, the\nproceeds were immediately blocked, and a thorough investigation\nof the matter begun.\nThe reports filed on Form TFR-149 under the general li-\ncenses relating to the neutral European countries as they in-\nvolve transactionswith Argentina are being studied. This will\nprovide important background for a proposed general ruling which\nwill require all blocked accounts in which persons outside the\nUnited States have an interest to be regarded as General Ruling\nNo. 6 accounts. In that connection, a comprehensive study of\nArgentine trade and financial transactions is being made to\nestablish whether it is necessary for Argentina to draw on its\nblocked dollar accounts in order to maintain its trade with the\nEuropean neutrals or whether the transactions with European\nneutrals are merely necessary to build up foreign exchange\nbalances. Messrs. DuBois and Moskovitz are working on these\nmatters.\nMr. DuBois prepared a list of firms, including Banco de la\nNacion, proposed for ad hoc treatment, which was transmitted to\nthe State Department. He also prepared a letter to the Secretary\nof State covering the general aspects of Argentine program.\nRegraded Unclassified\n116\n- 57 -\n(c) In General. A number of problems involving the Latin\nAmerican Republics were handled in connection with transactions\nbetween this country and the Latin American Republics and also\nin connection with the freezing control laws of the various\nLatin American Republics. A memorandum was prepared by\nMr. Cassoday discussing the conflicts between Latin American\nlaws and proposedregulations for the removal from the mails of\ncertain dollar currency and dollar drafts being sent between\nLatin American countries. Mr. DuBois participated in further\nstudy of the reinsurance problems.\n(d) Missions. Mr. Froelich, of Foreign Funds Control, and\nMr. Lawrence Moore went to South America to aid in the develop-\nment of the Treasury Department's program with respect to the\nactivities of certain blocked business enterprises, such as\nSterling Products, in that area. Mr. Rains went to Puerto Rico\nto assist in the institution of a Foreign Funds Control office\nand further to develop a Foreign Funds Control program in that\narea.\n63. Currency Control (See October 1942 report, item 52).\n(a) \"Big Money\" Program. A method by which all United States\ncurrency in bills of $500 denominations or over will be called\nin has been considered by Messrs. DuBois and Rains. This\nRegraded Unclassified\n117\n- 58 -\nprogram contemplates the deposit of such bills in domestic\nbanks for exchange into bills of $100 denominations or smaller on\nor before a stated deadline. Persons and banks outside the\nUnited States may deposit the currency held by them in local\nbanking institutions which will take such currency on a col-\nlection basis and forward it to a Federal Reserve Bank in the\nUnited States. This would be a further step to prevent the\nintroduction in the United States of looted currency, much of\nwhich is in bills of large denomination. The \"big money\" pro-\ngram was studied by Mr. Rains with a view toward its possible\nutilization in Puerto Rico.\n(b) Import Controls. Problems connected with the adminis-\ntration and enforcement of currency control measures under\nGeneral Rulings No. 5, 6A, and 14 were handled by Messrs. Rains,\nMurphy and Mrs. Rogan, in collaboration with members of the\nadministrative staff. Instructions were issued to all collectors\nof customs requiring them to report to this office information\nwith respect to all persons leaving the United States who are\ncarrying more than $50 in United States currency. This require-\nment represents a preliminary survey to ascertain the desirability\nof imposing export control restrictions on United States currency.\nLikewise, on November 19, 1942, collectors of customs were\nRegraded Unclassified\n118\n- 59 -\nauthorized to exempt from the currency import controls United\nStates Government funds brought in by members of the armed\nforces. There has also been drafted by Messrs. DuBois, Rains\nand Murphy a plan by which the importation of currency by the\ncrews of merchant vessels and shipmasters may be subjected to\ncontrol through the Maritime Commission.\n(c) North African currency controls. In connection with\nthe Allied occupation of portions of North Africa, 8. special\nissue of currency was printed and made available to the occupy-\ning forces. It is hoped that this will prevent the liquida-\ntion of Axis-looted currency in occupied areas, and will aid\nthe populations of these areas in their financial transactions.\n64. Neutral European Countries (See October 1942 report,\nitem 47). (a) Spain. In conjunction with the recent develop-\nment with respect to Vichy France, 8. program has been prepared\nto meet any contingency which may arise should Spain upon its\nown initiative or through occupation of Axis forces lose its\nstatus as a neutral country. Documents have been drafted by\nMr. DuBois, and a complete program has been worked out with\nrespect to any contingencies which may arise in this connection.\nMr. Rains visited Puerto Rico recently in order to institute 8.\nForeign Funds Control office in that area. At that time, he\nRegraded Unclassified\n119\n- 60 -\nstudied the applicability of the Spanish program in Puerto Rico\nshould this contingency arise.\n(b) Sweden. Mr. DuBois collaborated with the State De-\npartment in the preparation of a memorandum discussing recent\nproblems which have arisen and outlining a program which em-\nbodied the results of this study.\n65. Certifications under Section 25(b) of the Federal\nReserve Act (See October 1942 report, item 51). A number of\nlicenses, ratifications and certifications pursuant to\nsection 25(b) of the Federal Reserve Act, involving the account\nof friendly refugee governments, have been reviewed by Messrs.\nDuBois, Daun and Sommerfield. Among those studied were\naccounts involving Thailand, De Surimnassche Bank, Banque\nde Grece, and the Denmarks National bank.\n66. Diplomatic Pouches. (See September 1942 report,\nitem 62). Mr. Minskoff prepared a draft of a telegram to be\nsent to all collectors of customs directing them to make weekly\nreports containing specific information with respect to all\nmatters for which diplomatic immunity is claimed. These re-\nports would also provide information with respect to the\ncarriers of these matters. It is hoped that the intelligence\nthus obtained will lay the groundwork for tightening the\ncontrol of the diplomatic pouch in order to prevent or minimize\nRegraded Unclassified\n120\n- 61 -\nviolations of Treasury and Censorship regulations through the\nabuse of the diplomatic privilege.\n67. Insurance Problems (See October 1942 report, item 55).\nAn analysis was prepared by Messrs. Aarons, Alk, Murphy and\nKehl of various pending insurance problems with a view to\ndrafting a general license which will obviate the necessity\nof specific licenses in certain insurance transactions in\nwhich a blocked interest exists. Discussions are being held\non the scope of such a general license.\n68. Treatment of Attorneys Blocked \"Ad Hoc\". The study\nof the problems involved with respect to the extent to which\n\"ad hoc\" blocked attorneys should be permitted to represent\nblocked nationals in legal proceedings is being continued by\nMessrs. Aarons and Alk with members of the administrative staff.\nPlans are being formulated to amend all business operating\nlicenses which have been issued so as to require special li-\ncenses for the representation of blocked nationals. No decision\nhas been arrived at as yet with respect to the policies to be\nfollowed.\n69. Censorship (See October 1942 report, item 53). The\nOffice of Censorship has established a Philatelic Control Unit\nin New York which passes on applications for permits to send\nRegraded Unclassified\n121\n- 62 -\npostage stamps and other philatelic material outside the United\nStates and examines all stamps imported into the United States.\nWhen a report from the Office of Censorship on certain aspects\nof this controDis received, appropriate modifications in pre-\nsent Foreign Funds Control instructions to Collectors of Customs\nmay be made. Mrs. Rogan, with members of the administrative\nstaff, is working on this matter.\n70. Proclaimed List and Trading With The Enemy (See\nOctober 1942 report, item 50). A conference was held and\ngeneral study made by Mr. DuBois of the manner in which the\nintroduction to The Proclaimed List of Certain Blocked Nationals\ncan be revised. As a result of this study, the \"General Notes\",\nwhich is part of the prefatory material, will be altered.\nAt the time Vichy France became enemy territory, 8. critical\nproblem arose with respect to the completion of shipments of\ngoods, etc. Likewise, a similar problem arose with respect to\nthe purchase of critical supplies from blacklisted persons.\nInstructions were sent to American missions concerning these\nmatters as well as general instructions in response to the\namendment to General Ruling No. 11, which brought unoccupied\nEuropean France within the definition of enemy territory.\nVr. DuBois worked on these problems.\nRegraded Unclassified\n122\n- 63 -\n71. Silver (See October 1942 report, item 70). Mr. Brenner\naccompanied a representative of the Mint Bureau to New York for\nthe purpose of studying conditions in the industrial silver\nmarket. Producers, banks, and processors were contacted, and\nit was found that there was a surplus of foreign silver which\nwas probably temporary. Partly as a result of this investiga-\ntion, the Metals Reserve Company began to purchase silver in\norder to build up 8. stock-pile for future use and to keep up\nthe price in order to prevent a disturbance of our relations\nwith Mexico.\nMiss Hodel and Mr. Brenner cooperated with another branch\nof the Government in making arrangements for the use of a\nlarge quantity of \"free silver\" in 8. war project. A contract\nand accompanying documents for the moving of the Spanish silver\nfrom New York to Philadelphia, where its copper content will\nbe made use of in the production of subsidiary silver coins,\nwere prepared.\nIn response to an inquiry from the Defense Plant Corpora-\ntion, Mr. Brenner prepared a memorandum for the Secretary\npointing out that there were no legal obstacles to the use of\nfree silver in the Canadian Plant of the Aluminum Company of\nCanada, pursuant to the terms of an agreement dated May 6,\n1942.\nRegraded Unclassified\n123\n- 64 -\n72. Gold (See October 1942 report, item 73). As a result\nof restrictions on the use of copper, manufacturers of gold\narticles may be unable to use stocks of gold which are not\neligible for sale to the United States. In order to prevent\nthe forced sale of such gold at a price below $35 per ounce, a\nmemorandum was prepared by Miss Hodel and Mr. Brenner for the\nSecretary recommending that it be purchased by the United\nStates where the owner could show that he wanted to dispose\nof it because it could not be used without copper.\n73. Mexican Railways (See October 1942 report, item 68).\nA supplementary memorandum has been prepared by Mr. Minskoff\nproviding further information with respect to the proposed\ngeneral ruling which would immunize Mexican railway property.\nThe purpose of this general ruling is to ease the transporta-\ntion problem with relation to war materials received from\nMexico. At the present time, there is great delay and loss of\ntime and labor which r esults from unloading and reloading trains\nwhich reach the American border. This is substantially\nattributable to the reluctance on the part of the Mexicans to\nbring their equipment within the jurisdiction of the United\nStates for fear of attachment by creditors of the railway.\n74. Exchange Problems (See October 1942 report, item 69).\nRegraded Unclassified\n124\n- 65 -\nAn investigation was conducted with respect to the exchange\nstabilization problem which, according to General Stilwell\nhas caused considerable inconvenience to the members of the\narmed forces stationed in China. A supplementary memorandum\nwas prepared by Mr. Minskoff outlining the procedure to be\nadopted for putting a program into effect by which the mem-\nbers of the armed forces would be compensated for losses which\nwere attributable to exchange fluctuations. It is believed that\nthis program could be put into effect without attendant pub-\nlicity either by Executive instruction or an unpublished Execu-\ntive order. Further study has been given to the Exchange Re-\nlief Act, the Federal Register Act, and attendant regulations.\n75. North Africa Program. Messrs. Bernstein, Luxford\nand DuBois cooperated in the formulation and drafting of various\nmonetary and financial measures which might be necessary in\nconnection with the Allied occupation of North and West Africa.\nA \"cram course\" was given to certain Army officers who were\ngoing to deal with these problems in North Africa.\nRegraded Unclassified\n125\nTREASURY DEPARTMENT\nINTER OFFICE COMMUNICATION\nCONFIDENTIAL\nDATE November 30, 1942\nTO\nFROM\nMr. Haas\nSecretary GR. Morgenthau\nSubject: The Business Situation,\nWeek ending November 28, 1942.\nSummary\nIndustrial production: Expansion in armament output raised\nindustrial production to new high levels in October and the\nfirst half of November. About 41 percent of our total pro-\nduction of goods and services in last quarter will be for\nwar uses, according to Department of Commerce estimates.\nSteel supplies: Production outlook for winter months improved\nby rise in steel scrap supplies. Seven-months' supply of ore\non hand.\nRationing: OPA and WPB take further measures to make price\ncontrol and distribution of civilian supplies more effective.\nRation banking to be inauguerated on nation-wide basis in\nJanuary. Department of Agriculture takes steps to expand\nfood production in 1943.\nWholesale prices: BLS all-commodity index unchanged at 100.1\nin week ended November 21. Basic commodity prices steady\nduring past week.\nRetail trade: Department store sales maintained at recent\nhigh levels. Gain over year-earlier levels widened to 30 per-\ncent from 13 percent due to earlier observance of Thanksgiving\nlast year.\nInventories: Seasonally-adjusted department store inventories\nin October declined for the third consecutive month. However,\nat the end of the month stocks (in dollar value) were still\n19 percent above year-earlier levels, while average. prices\nwere 6 percent higher.\nCorporate income: Net income of all corporations in the first\n9 months of 1942 (after reserves for estimated tax requirements)\nwas only 5 percent below the corresponding period in 1941,\naccording to Department of Commerce.\nRegraded Unclassified\n126\n- 2 -\nGeneral situation\nIncreasing importance 1s being assumed by problems of\nrationing and distribution of available supplies, and by the\nre-vamping of production schedules to conform to more immed1-\nate war requirements. Meanwhile, the basic production prob-\nlems associated with the initial phases of the war effort are\nreceding somewhat into the background. Thus, coincident with\nheightened concern over food and gasoline rationing and East\nCoast fuel oil supplies, machine tool output (a former bottle-\nneck) has reached such heavy volume that machine tool leaders\nare suggesting that some producers convert their facilities to\nother products, in view of the possible dearth of orders six\nmonths hence. Likewise the tremendous upsurge in contract\nawards for war plant construction has probably passed its\npeak, and structural steel orders and shipments showed de-\nclines in October.\nArmament output pushes industrial production higher\nLargely due to further gains in armament output, industrial\nproduction continues to increase rapidly. The FRB adjusted\nproduction index rose 3 points to 188 in October and showed\nfurther expansion in the first half of November. Currently it\nis estimated by the Federal Reserve Board that approximately\n80 percent of durable goods production consists of products\nessential to the war effort.\nThe October advance carried the FRB index to a new peak\n22 points (over 13 percent) above the levels prevailing in\nNovember 1941 just before our entry into the war. (See Chart 1.)\nDuring the intervening 11 months, the rise in the index has\nbeen led by output of ships, planes, tanks, and other items\ncomprising the transportation equipment component, which has\nadvanced 79 percent. The second largest gain has occurred in\nmachinery output, which has increased about one third during\nthe same period. However, in some lines, such as machine tools,\noutput in this industry appears to be nearing its peak. After\nshowing very little gain since last Spring, steel output spurted\nnoticeably in October and was about 11 percent above pre-Pearl\nHarbor levels. (Refer to Chart 1, lower section.)\nOf our total national production of goods and services in\nthe last quarter of the year, about 41 percent will be for war\npurposes, according to Department of Commerce estimates.\nRegraded Unclassified\n127\n- 3 -\nRise in steel scrap and iron ore supplies\nThe steel industry appears to be going into the winter\nmonths with a somewhat better supply of basic materials than\nwas expected earlier in the year. The steel scrap inventory\nis reported to have been built up to about 4,750,000 tons,\nwhich 1e the highest level since January 1, 1942, when stocks\ntotaled 5 million tons. Moreover, if the present rate of\nscrap collections continues, the WPB Conservation Division\nexpects scrap piles to be built up to the projected goal of\n7 million tons by the beginning of 1943.\nAn even more comfortable position will prevail with respect\nto iron ore supplies as a result of this year's record-breaking\nshipment of ore down the Great Lakes. On November 1 stocks of\niron ore at furnaces and Lake Erie docks totaled nearly 53 mil-\nlion tons, or 20 percent more than a year earlier. This stock\nwas equivalent to nearly 7 months' supply at the current rate\nof use.\nRailroad equipment request partially granted\nSteps are being taken to improve the carrying capacity of\nthe railroads. In view of the unprecedented heavy volume of\nfreight traffic in 1942, and the further gains anticipated next\nyear, the Association of American Railroads some time ago re-\nquested the WPB for authorization to acquire in the next 10 months\nat least 80,000 new freight cars, 900 new locomotives and 2 mil-\nlion tons of rails. The WPB recently met this request in part by\nauthorizing the acquisition of 20,000 freight care and 100 switch-\ning engines in the first 6 months of 1943, in addition to 286\nroad locomotives in the first 8 months of 1943 and 480,000 tons\nof rails in the first quarter of the year.\nAlthough the fall peak in freight traffic has been passed,\nthe President of the Association of American Railroads recently\nreiterated the railroads' need for locomotives as well as\nspecial and open top freight cars. It 18 estimated that this\nyear's total freight traffic in ton-miles will run almost 33 per-\ncent above last year, while a further increase of from 10 to\n15 percent is anticipated in 1943.\nPrice control and distribution action\nUnder growing public criticism of the Government's handling\nof rationing and retail price control, the Government took\nseveral steps last week to make price control and distribution\nof civilian supplies more effective. Measures taken included\nthe following:\nRegraded Unclassified\n128\n- 4 -\n(1) Retailers were warned by the OPA against price\nevasions through changing brand names, whereby resale prices\nare determined by replacement costs rather than by March\nceiling prices. In New York, 35 executives of garment trade\nassociations were charged by an OPA official of violations by\ntheir industry of OPA price regulations. Clinics for \"retail\nmerchants who do not understand Government price and ceiling\nregulations\" are being held throughout the country.\n(2) In accordance with the demand by the Director of\nEconomic Stabilization for simplification and standardization,\nthe OPA has authorized retailers to discontinue or curtail many\nspecified services without requiring reductions in ceiling\nprices.\n(3) Apparently in an attempt to prevent panic buying, the\nWPB has limited deliveries of most canned goods to retailers.\nThis action was taken by restricting deliveries to specified\nmonthly quotas.\n(4) Ration banking, by which the country's commercial\nbanks will handle ration coupons in checking accounts similar\nto those used in the handling of money, will be put into operation\nthroughout the country in January, the OPA has announced. The\nbanks will act as agents for, and will be paid on a cost basis\nby, the OPA.\nThe system will replace the present cumbersome method of\nclearing coupons through local price and rationing boards.\nDecision to use this method was made after a test of the plan\nbegun October 28 in the Albany-Schenectady-Troy area of New York.\nThirty-three banking offices have been cooperating in this test,\nwhich will continue until merged with the national program.\n1943 food production goals\nNew record food production goals for 1943 have been announced\nby Secretary Wickard, reflecting the Government's concern over\nthe wartime food supply. As part of the attempt to increase\nfood production, the program includes specific price supports\nfor many major commodities. The Secretary said that the require-\nments for our own military forces and for our Allies now rep-\nresent about one-fourth of estimated total food production in\n1943. Changes from the 1942 pattern of production will throw\nemphasis on foods of most value in the wartime diet, including\nmeat, egge, milk, feed grains, dried beans and peas, poultry,\nessential vegetables, and oil crops.\nRegraded Unclassified\n129\n- 5 -\nHog prices to be supported\nPreviously established hog production goals for 1943 have\nbeen revised upward by Secretary Wickard from 110 to 115 per-\ncent of this year's record crop. The revision was accompanied\nby announcement of a potential subsidy to ensure maximum pro-\nduction, in that hog prices will be supported through Government\npurchase operations in such a manner as to maintain a price\nlevel of $13.25 at Chicago for good and choice hogs, 240 to\n270 pounds, until the fall of 1944. In order to sustain this\nprice level, the Agricultural Marketing Administration purchase\npolicy will include the following provisions:\n(1) Ceiling prices will be paid by the AMA for pork\nproducts, unless live hog prices appear to have been reduced\nby pork processors unreasonably in view of the ceiling prices,\nor margins appear to have been inflated unduly. In such\ninstances the Agricultural Marketing Administration's price\nwill be reduced proportionately.\n(2) If prices fall below the support level, the Agricultural\nMarketing Administration will buy live hogs at the support price\nand arrange for their processing on a custom basis.\nIn announcing the program, Secretary Wickard said in part,\n\"In view of the constantly increasing demands for pork products\nprices should stay above the $13.25 Chicago level during the next\ntwo years without special Government action\nHowever, since we\nwant no question of prices to exist in the minds of the hog\nfarmers\nthe Department of Agriculture 18 making this guarantee\".\nAs the seasonal movement of hogs to market has slowly got\nunder way, hog prices have declined substantially from their\nwartime peak in early October. (See Chart 2.) In the week end-\ned November 20, slaughter at 27 centers was the largest since\nJanuary. Although it was more than 16 percent larger than a\nyear ago, much greater supplies must come on the market before\nreceipts are in proportion to supplies on farms. It will be\nnoted that the Department of Agriculture's purchases have con-\ntinued relatively emall for several months. Since hog prices\nhave declined, press reports suggest that it 18 unlikely now\nthat ceilings will be placed on live hogs.\nWholesale prices unchanged at high wartime levels\nDespite our intensified war activity in 1942, the rise in\nthe wholesale price level has become more gradual. In the week\nended November 21, the BLS all-commodity index was unchanged\nRegraded Unclassified\n130\n- 6 -\nfrom & week earlier at its 16-year high. Compared with its\ngain of 33.5 percent since the pre-war month of August 1939,\nthe general price index in the corresponding period of World\nWar I rose more than 80 percent. (See Chart 3, upper section.)\nIt will be noted, however, that the latter part of 1917 also\nexperienced a levelling-out of prices, which was followed by a\nsharp rise in 1918.\nIn World War I, prices of foods were among the first to\nbe placed under control, and the control of basic industrial\ncommodities came nearly a year later. During the present war,\nin direct contrast, controls were quickly applied to basic\nindustrial commodities while foods have been allowed to rise.\n(See Chart 3, lower section.) Price controls in World War I\nwere first authorized by the Food and Fuel Control Act, which\nwas approved August 10, 1917. Prices of foods \"and other\nnecessaries\" were administered by the Food Authority set up\nby the President in May 1917 in anticipation of passage of the\nAct. Substantial control over prices was excercised through\nan elaborate licensing system for processors and distributors\nof foodstuffs. It was not until March 1918 that the Government\nactually established a comprehensive price control program, but\nby that time it was too late to prevent general price inflation.\nSince price control in Canada became effective last\nDecember, the Dominion's wholesale price level has continued\nto show general stability with a gradual upward trend. (See Chart 4.)\nIn the period since application of the general maximum price\nregulation in the United States last May, however, the rise in\nour price level has been at a somewhat slower rate than has the\nrecent rise in the Canadian index.\nBasic price index steady\nLast week the BLS price index of 28 basic commodities re-\nmained unchanged close to its wartime high. (See Chart 5.) The\nindex of 9 uncontrolled commodities advanced, following its\nrecession of the preceding week, reflecting increases in prices\nfor grains and steers. As cattle receipts passed their seasonal\npeak and demand for beef continued heavy, prices of steers again\nreached their wartime high. Hog prices declined for the fifth\nsuccessive week.\nA small decline occurred in the index of controlled commod-\nities owing to a marked decrease in the price of wool tops and a\nsmaller decrease in the price of cottonseed oil. A falling off\nin Government orders and restrictions placed on civilian produc-\ntion have effected a decline in activity of wool textile mills\nsince early October.\nRegraded Unclassified\n131\n- 7 -\nRetail sales sustained at high level\nAfter reaching the second highest level on record in\nOctober, retail trade in November has been sustained at high\nlevels. During the week ended November 21 department store\nsales were virtually unchanged from the previous week. How-\never, the gain over year-earlier levels widened from 13 per-\ncent to 30 percent due to the fact that sales in the corres-\nponding week last year slumped because of the earlier Thanks-\ngiving holiday in most states. (See Chart 6.) It will be\nnoted that department store sales during November have been\nrunning at the highest levels (with one exception) since last\nDecember.\nA combination of heavier sales volume, and more cautious\nbuying policies engendered by WPB's plans for inventory re-\nstrictions, kept department store inventories from showing the\nusual seasonal expansion during October. As a result, seasonally-\nadjusted inventories of department stores during the month showed\nthe third consecutive decline from the peak reached at the end\nof July. (See Chart 7.) Despite this sharp decline, stocks at\nthe end of the month were still nearly 19 percent above year-\nearlier levels. Only a moderate part of this rise can be as-\ncribed to price factors, since the price advance in the inter-\nvening period amounted to about 6 percent.\nDecline in corporate net income\nDespite the rise in taxes, net income of all corporations\nin the first 9 months of 1942 is reported by the Department of\nCommerce to have declined only 5 percent below the relatively\nhigh levels attained in the corresponding period of 1941.\nCorporate profits, before deductions for income taxes, rose\nnearly 40 percent during the 1942 period. Reserves for Federal\nincome and excess profits taxes, however, were stepped up to\nnearly two-thirds of such profits as compared with about one-\nhalf a year earlier.\nThe 5 percent decline in corporation net income was largely\ndue to a 15 percent drop in earnings of manufacturing companies.\nWithin the manufacturing group, earnings changes ranged from a\n42 percent drop for printing and publishing concerns to a 60 per-\ncent gain for transportation equipment manufacturers. Companies\nengaged in retail trade showed a 14 percent gain in net income,\nbut wholesale trade registered a 25 percent drop. The most\nfavorable showing of all major groups occurred in transportation\n(mainly the railroad group) which reported net income 35 percent\nhigher than in the first 9 months of 1941.\nRegraded Unclassified\nF.R.B. INDEX OF IND STRIAL PRODUCTION\n1935-39=100, Seasonally Adjusted\n1939\n1940\n1941\n1942\nPERCENT\n1943\nPERCENT\n190\n190\n180\n180\n170\n170\n160\n160\n150\n150\n140\n140\n130\n130\n120\n120\n110\n110\n100\n100\n90\nJ\nF\nM\nA\nM\nJ\nJ\nASONDJFMAMJJ\nA\n90\n5\no\nN\nD\nJ\nF\nM\nA\nM\nJ\nJ\nA\n5\no\nN\nD\nJ\nF\nM\nA\nM\nJ\nJ\nA\n$\no\nN\nD\nJ\nF\nM\n1939\n1940\n1941\n1942\n1943\nSelected Components\nSept. 1942 and Oct. 1942 Compared with Nov. 1941\nPERCENT\nTransportation Equipment\n170\n160\n150\n140\n130\nMachinery\n120\nChemicals\n110\nCOMBINED INDEX\nSteel\nMonufactured Foods\nMetal Mining\n100\nNonferrous Metals\nTextiles\nFuels (Crude)\nLumber, etc.\n90\nLeather, etc.\n80\n70\nNov.\n1941\nSept.\nOct.\n1942\n1942\n132\nOffice of the Secretary of the Treasury\nDivision of Research and Statistics\nRegraded Unclassified\nChart 1\nChart 2\n133\nHOG PRICES COMPARED WITH HOG SLAUGHTER\nAND U.S.D.A. PURCHASES\n1941\n1942\nDEC.\nFEB.\nAPR.\nJUNE\nAUG.\nOCT.\nDEC.\nDOLLARS\nDOLLARS\nPer 100 Lbs.\nPer 100 Lbs.\n15\n15\n14\n14\n13\n13\nPrice of Live Hogs\n12\n12\n11\nII\n10\n10\nTHOUSANDS\nMILLIONS\nOF HOGS\nOF LBS.\n(Slaughter)\n(U.S.D.A.\nPurchases)\n1000\nSlaughter\n27 Centers\n800\n160\n600\n120\nU.S.D.A. Purchases\n80\n400\n40\n200\no\no\nDEC.\nFEB.\nAPR.\nJUNE\nAUG.\nOCT.\nDEC.\n1941\n1942\n. Chicago, good to choice, 180-200 pounds\n,\nWeekly overages since July 3. based on reports for 2-week periods.\nSource: Department of Agriculture\nOffice of the Secretary of the Treasury\nP-248\nDivision of Ressorch and Statistics\nPRICES, 1939 TO DATE COMPARED WITH 1914 TO 1918\nJuly 1914 . 100 World Wor Period; Aug. 1939-100 Present Period\nPERCENT\nPERCENT\nAll Commodities\n200\n200\n1918\n180\n180\n1917\n160\n160\nFeet Ended\n140\nNov. 21\n140\n1916\n120\nFirst Month\n1942\nof Wor\n120\n1915\n1940\n1941\n1939\n100\n1914\n100\n80\n80\nJ\n2\nM\nJ\n$\nN\nJ\nM\nM\nJ\n$\nN\nJ\nM\nM\nJ\nSHJMMJSNJMMJSN\nPERCENT\nPERCENT\nFoods\n200\n200\n1918\n180\n180\n1917\nFast Ended\nNov. 21\n160\n160\n140\n140\n1942\n1941\nFirst Month\n120\nof War\n120\n1916\n1939\n1940\n100\n1915\n100\n1914\n80\nJ\n#\nM\nJ\nS\nM\nJ\nM\nM\nJ\n$\nN\nJ\nM\nM\nJ\n5\nN\nJ\nM\n80\nM\nJ\n5\nN\nJ\nM\nM\nJ\n$\nN\nSource: B.L.S.\n134\nOffice of the Secretary of the Trunary\nDivision d - Statistics\nP-222-A\nRegraded Unclassified\nWHOLESALE PRICE INDEXES IN U.S. AND CANADA\n1926 . 100\n1939\n1940\n1941\n1942\nPERCENT\nPERCENT\n100\n100\n95\n95\nCanada\n567 Commodities,\nBur. of Stat.\n90\n90\nU.S.\n889 Commodities,\nB.L.S.\n85\n85\n80\n80\n75\n75\n-\n70\n70\nA S o N D J F M A M J J A 5 o N D J F M A M J J A S o N D J F M A M J J A $ o N D\n1939\n1940\n1941\n1942\nOffice of the Secretary of the Treasury\n135\nChart 4\nP-240\nDivision of Research and Statistics\nRegraded Unclass\nMOVEMENT OF BASIC COMMODITY PRICES\n1941\n1942\nPERCENT\nPERCENT\nAugust 1939-100\n190\n190\n185\n185\n9 Uncontrolled Commodities\n180\nIBO\n175\n175\n170\n28 Commodities\n170\n165\n165\n160\n160\n19 Controlled Commodities)\n155\n155\n150\n150\n145\n145\n140\nSEPT.\n140\nNOV.\nJAN.\nMAR.\nMAY\nJULY\nSEPT.\nNOV.\n1941\n1942\nPERCENTAGE CHANGE DEC. 6, 1941 TO NOV. 20 AND NOV. 27,1942\nPERCENT\nPERCENT\n19 Controlled\n9 Uncontrolled\n+45\nCommodities\n+45\nCommodities\n+40\n+40\n+35\n+35\nHoge 32/X\n+30\nLard NBX\n+30\nSteerencex\n+25\n+25\n+20\n+20\n+15\nCom 158%\nShellec 12.8%\n+15\nLood IIIX\nCottonweed Oil 9.0%\n+10\nPrint Cloth 7.8%\n+10\nCotton 1962\nSugar 6.9%\nZine an\n+5\n0% Shange\n- Wheet 65%\n+ 5\nNides. Salls\nTin, Rubber,\no\nCoffee, Copper,\n0\nSt.Scrap.dom,\n- 5\nCoose #\n- 5\nTollow-413\nAnkp-4ax\n-10\nWho/ Tope-8.1x\nNov. 20\n-10\nDec. 6\nNov. 27\nDec. 6\n1941\n1942\n1942\n1941\nNew 20\nNew. 27\n1942\n1942\n. 20 Controlled and # Uncontrolled provious to June 26\n-\nOther of the Secretary of the Treasiry\nRegraded Unclassified 136\n- of - and\nChart 6\n137\nDEPARTMENT STORE SALES\n1935-39-100, Unadjusted\nJAN.\nFEB.\nMAR.\nAPR.\nMAY\nJUNE\nJULY\nAUG.\nSEPT.\nPERCENT\nOCT.\nNOV.\nDEC.\nPERCENT\nWeekly\n260\n260\n240\n240\n220\n220\n200\n200\n180\n180\n160\n160\n1942\n1941\n140\n140\n120\n120\n100\n100\n1940\n80\n80\n60\n60\nJAN.\nFEB.\nMAR.\nAPR.\nMAY\nJUNE\nJULY\nAUG.\nSEPT.\nOCT.\nNOV.\nDEC.\nOffice of the Secretary of the Treasury\nC-390-A\nDvide of hord and -\nDEPARTMENT STORE SALES AND STOCKS\nDollar Values. 1923-25-100, Adjusted\nPERCENT\nPERCENT\n140\n140\n130\n130\n120\n120\n110\n110\n100\n100\nSales\n90\n90\n80\n80\nStocks\n70\n70\n60\n60\n50\n1936\n1937\n1938\n1939\n1940\n50\n1941\n1942\n138\nSource: Federal Reserve Board\nChart 7\nthe of the Sumbery of the Insury\n- e - - -\nC-430\n139\nNovember 30, 1942.\nTelephone Conversation\nMr. White - Hr. Reis, Pan Airways\nMr. White informed Mr. Reis that when Secretary Morgenthau\npassed through Fisherman's Lake, Liberia, that the manager of\nthe airport at Fisherman's Lake had discussed the serious situa-\ntion that existed there with respect to the shortage of coins\nof small denomination. Mr. White went on to say that Secretary\nMorgenthau had stated he would be glad to cooperate with Pan\nAirways and provide silver dimes to be sent by air if the Pan\nAirways officials requested it.\nMr. White further stated that we had not heard from Pan\nAirways and he was calling to make certain the next move was\nnot the Treasury's. Mr. Reis stated he would investigate the\nmatter at once and would let Mr. white know. He also said from\nnow on the responsibility with respect to the matter would be\nthe Pan Airway's and the Treasury could forget about it unless\nhe let us know to the contrary.\nH. D. White\nRegraded Unclassified\n140\nTreasury Department\nDivision of Monetary Research\nDate November 30 19 42\nTo:\nSecretary Morgenthau\nFrom: Mr. White\nOriginal of this report appended to\nprepared letter to President.\nSECRET\n141\nNovember 30, 1942\nExports to Russia, Free China and selected blooked\ncountries as reported to the Treasury Department\nduring the ten-day period ending\nNovember 20, 1942\n1. Exports to Russia\nExports to Russia AS reported during the ten-day\nperiod ending November 20, 1942 amounted to $45,867,000\nas compared with $53,144,000 during the previous ten-day\nperiod. Military equipment accounted for $24,452,000 of\nthe total and included 48 light bombers, 87 fighter planes\nand 20 tanks. (See Appendix C.)\n2. Exports to Free China\nExports to Free China as reported during the period\nunder review amounted to $2,032,000, of which military\nequipment accounted for $773,000. (See Appendix D.)\n3. Exports to selected blocked countries\nExporte to selected blocked countries are given in\nAppendix A. Most important were exports to Switzerland\nand Portugal amounting to $443,000 and $396,000 respectively.\nISF/efs\n11/30/42\nRegraded Unclassified\nSECRET\n142\nAPPENDIX A\nSummary of United States Exports to Selected\nCountries as Reported to the Treasury Department\nfrom Export Declarations Received\nDuring the Period Indicated\n(In thousands of Dollars)\nTotal\nTotal\n10-day\n10-day\nDomestic Exports\nDomestic Exports\nPeriod ended\nPeriod ended\nAug. 1, 1942 to\nJuly 28, 1941 to\nNov. 20,1942\nNov. 10,1942\nNov. 20, 1942\nJuly 31, 1942\nU. S. S. R.\n$ 45,867\n$ 53,144\n$ 464,866\n$ 742,941\nFree China\n2,032\n233\n9,198\n97,720\naim\n3\n9\n769\n2,858\nSwitserland\n443\n2\n4,694\n11,537\nSwedem\n-\n1\n2,626\n18,056\nPortugal\n396\n-\n1,192\n9,743\nFrench North Africa 3/\n-\n-\n2,088\n6,305\nTreasury Department, Division of Monetary Research\nNovember 30, 1942\n1/ Many of the export declarations are received with e. lag of several days or more.\nTherefore this compilation does not accurately represent the actual shipment of\na particular period.\n2/ Includes Morocco, Algeria and Tunisia.\nEFR/efe 11/30/42\nRegraded Unclassified\nSECRET\nAPPENDIX B\n143\nExports from the U. 3. to Free China and U.S.S.R.\nas reported to the Treasury Department\nJuly 28, 1941 - November 20, 1942 1/\n(Thousands of Dollars)\nExports to\nExports to\nFree Ohina\nU.S.S.R.\nJuly 28, 1941 - Jan. 24, 1942\n$ 32.758\n$ 98,902\n1942\nJan. 26 - Jan. 31\n6,938\n9,608\nFeb. 1 - Feb. 10\n4,889\n13,315\nFeb. 10 - Feb. 20\n4,853\n26,174\nFeb. 20 - Feb. 26 3/\n2,921\n28,119\nMar. 1 - Mar. 10\n2,879\n32,509\nMar. 10 - Mar. 20\n8,058\n28,556\nMar. 20 - Mar. 31 w\n?\n42,435\nApr. 1 - Apr. 10\n4,836\n51,698\nApr. 11 - Apr. 20\n5,335\n66,906\nApr. 21 - Apr. 30\n2,827\n50,958\nMay 1 - May 10 5/\n296\n28,652\nMay 11 - May 20\n1,872\n18,000\nMay 21 - May 31 4/\n2,533\n26,180\nJune 1 - June 10\n3,399\n12,764\nJune 11 - June 20\n2,707\n53,799\nJune 21 - June 30\n1,664\n49,919\nJuly 1 - July 10\n7,900\n35,657\nJuly 11 - July 20\n590\n33,940\nJuly 21 - July 31 4/\n3,066\n35,669\nAug. 1 - Aug. 10\n208\n14,970\nAug. 11 - Aug. 20\n192\n23,325\nAug. 21 - Aug. 31\n2,850\n112,492\nSept. 1 - Sept.10\n855\n24,339\nSept.11 - Sept.20\n11\n44,434\nSept.21 - Sept.\n902\n30,947\nOct. 1 - Oct. 10\n1,885\n14,564\nOct. 11 - Oct. 20\n30\n55,083\nOct. 21 - Oct. 31 4/\n:\n45,701\nNov. 1 - Nov. 10\n233\n53,144\nNov. 11 - Nov. 20\n2.032\n45,867\nTotal\n$ 109,521\n$1,208,626\n1. These figures are in part taken from copies of shipping manifests.\n2. Beginning with February 1, figures are given for 10-day period\ninstead of week, except where otherwise indicated.\n3. 8-day period.\n4. 11-day period.\n5. Due to changes in reporting procedure by the Department of\nCommerce, this report is incomplete for the period indicated.\nTreasury Department, Division of Monetary Research November 30,1942\nIsf/efs 11/30/42\nRegraded Unclassified\nSECRET\n144\nAPPENDIX 0\nPrincipal Experts from U. 5. to U. S. s. R.\nas reported to the Treasury Department\nduring the ton-day peried ending\nNovember 20, 1942\nValue\nUnit of\n(Thousands\nQuantity\nQuantity\nof dellers)\nTOTAL EXPORTS\n8 45,867\nMilitary Equipment ($24,452)\nAireraft\n13,645\nLight bombers (2 eng. A-20)\nNo.\n46\nFighters (1 eng. P-39)\nNo.\n70\nFighters (1 eng. P-40)\nNo.\n17\nAmmunition\n-\n-\n4,206\nAircraft parts and accessories\n-\n-\n2,439\nOrdnance combat vehicles\n1,200\nSecut ears\nNo.\n1,112\nArmored ears, medium\nNo.\n15\nOrdnance combat vehisles,n.e.s.\nNo.\n11\nExplosives\n-\n-\n1,078\nMilitary tanks\n1,040\nLight tanks (M-3, M-3A-1, M5 or 87)\nNo.\n10\nMedium tanks (M-4, A-8)\nNo.\n10\nAll other\n-\n-\nan\nms-Militery (821,415)\nMotor trucks, metercycles and\nauto replacement parts\n-\n-\n4,525\nMeat products\n-\n-\n3.784\nIndustrial, electrical, agricultural\nmachinery and parts\n-\n-\n3,415\nIron and steel manufactures and\nsomimanufactures\n-\n-\n2,715\nRegraded Unclassified\n145\nAppendix C (Continued)\nPage 2\nValue\nUnit of\n(Thousends\nQuantity\nQuantity\nof Dollars)\n14\nAluminum, copper, sine and\nmolytdenum ore\n-\n-\n1,327\nLeather and rubber manufactures\n-\n-\n1,085\nBrass and bronse and manufactures\n-\n-\n1,009\nPetroleum and products\n-\n-\n853\nRelief supplies\n-\n-\n605\nAll other\n-\n-\n1,794\nTreasury Department, Division of Memetary Research November 30,1942\nEFM/ers 11/30/42\nRegraded Unclassified\nSECRET\n146\nAPPENDIX D\nPrincipal Exports from U. S. to Free China\nas reported to the Treasury Department\nduring the ten-day period ending\nNovember 20, 1942.\n(Thousands of Dollars)\nTOTAL EXPORTS\n$ 2,032\nPrincipal Items:\nPrinted matter\n873\nMilitary equipment\n773\nElectrical machinery and apparatus\n139\nCameras and photographic supplies\n99\nRubber and manufactures\n37\nwriting paper\n26\nGraphite electrodes\n19\nWire rope and eable\n18\nWheels, except automobile and car\n18\nIron and steel hand tools\n10\nIndustrial machinery and parts\n7\nRelief supplies\n6\nTreasury Department, Division of Monetary Research November 30,1942\nEFM/efs 11/30/42\nRegraded Unclassified\n147\nNCT TO BE RE-TRANSMITTED\nMOST SECRET\nCOPY NO. 13\nOPTEL NO. 416\nInformation received up to 7 A.M. 30th.\n1. NAVAL\nAn outward bound blockade runner was sighted off the\nnorth coast of Spain yesterday.\nOn 29th morning a French sub is reported to have\nleft Valencia for Oran damaged and requiring British protection.\nOne of H.M. submarines is overdue and must be\npresumed lost.\nOn 17th another of H.M. submarines torpedoed a north-\nbound 9,000 ton ship off the Nicober Islands. The ship was last\nseen low in the water making for Penang.\nA Fighting French destroyer arrived at Reunion on\n28th and made successful landings, The northern part of the\nisland comprising St. Denis, St. Benoit and Point Des Galets is\nunder control. The Governor has fled to the mountains with\n400 military.\nA 12,900 ton merchant ship with war stores for Middle\nEast struck a submerged object off the southwest African coast\nyesterday and has been beached.\n2, AIR OPERATIONS\nWESTERN FRONT. 28th/29th. Turin. About 182 tons\nH.E. and 189 tons incendiaries dropped including two 8,000 pound\nand 35 4,000 pound bombs. Thick cloud en route but cloudless\nand good visibility over objective although haze and smoke inter-\nfered with visibility. Attack lasted 75 minutes, was successfu.\nand well cencentrated especially near Royal Arsenal. Direct\nhits claimed on Lancia Works. Several direct hits and fires\nseen in Fiat Works. Town confirmed well alight towards end of\nattack. Many fights with enemy aircraft en route. One\nFW 190 claimed shot down. A/A defences ineffective although\nincreased.\nRegraded Unclassified\n29th. Our fighters again attacked locomotives in\nnorthern France, Days casaulties, enemy nil, nil, 5, ours\nsix, nil, nil.\n29th/30th, 36 heavy bombers were sent to Turin and\n5 Intruders to attack railways in Belgium. Owing to late\nstart reports not repeat not yet available.\nFRENCH NORTH AFRICA. 28th. Wellingtons from Malta\ndropped 23 tons of bombs on Bizerta Docks.\n29th. MALTA. Beaufighters destroyed two Italian\nseaplanes at their moorings at Zouara and two J.U. 52's in the\nair. Locomotives and road transport on the Tunisian-\nTripolitanian coast routes were successfully attacked.\nSICILY. 29th. Spitfire bombers attacked Comise\nairfield.\nBURMA. 28th, 12 Blenheims bombed Shwebu Airfield,\n3. LATE NEWS\nBRITISH SOMALILAND. About 60 percent of white and\n25 percent of African personnel of total Djibouti Garrison\nincluding one Senegalese battalion almost complete, and most of\nartillery, crossed frontier into Seila on 28th.\nCORRECTION - TOULON. Ref. Optel 415. For 'Five Contre-\nTorpilleurs' read 'Three'.\nRegraded Unclassified"
}