Volume 612, February 25 – February 28, 1943

DIARY Book 612 February 25 - 28, 1943 - A - Book Page Attorney General Salary of official or employee of United States Government on leave with pay from private employment: General Counsel's opinion - 2/26/43 612 123 - 3 - Babcock, H. 1. (Chairman of Board of Trustees, Cornell Univ.) See Financing, Gover ment: Var Savings Bonds (College Reunions) Board of Economic Warfare Minutes of meeting 2/25/43 76 a) Discussion of merchant shipping service to other American republics - 0 - Coast Guard HMJr to be provided with new "Lodestar" plane prior to March 1 - 2/26/43 122 College Reunions See Financing, Government: War Savings Bonds Correspondence Mrs. Forbush's mail report - 2/26/43 125 - D - Deferments, Military Lindow, Wesley: Six months' request - 2/27/43 220 - 7 - Financing, Government Non-defense Expenditures: Senator Nye's statement concerning purchase by Procurement Division of railroad cars for hospital and medical purposes refuted by Bell - 2/25/43 69 Meeting on February 25, 1943 - 2/27/43 188 a) Discussion of 1) Fars Credit Administration 2) National Resources Planning Board 3) Home Owners' Loan Corporation Tax Anticipation Notes: Availability at all banks discussed by HMJr and Heffelfinger - 2/25/43 16 Federal Reserve operations in Government securities - 2/27/43 186 Regraded Unclassif - - (Continued) Book Page Financing, Government (Continued) Var Savings Bonds: Reorganisation: Sproul-HMJr conversation - 2/25/43 612 18 a) Clarification of Treasury's new plan attempted by HMJr 1) Reported to Buffington and Gamble by HMJr 25 C. 8. Young-HMJr conversation - 2/25/43 29 a) Sproul explanation repeated by HMJr 1) Young and Sproul conversations repeated to Bell, Graves, Gamble, Buffington, Odegard, and Miss Elliott - 2/25/43 42 2) Clarifying telegram sent to presidents of all Federal Reserve Banks. 50 Promotional Activities: Amounts available - 2/25/43 67 Conference; present: HMJr, Bell, Graves, Buffington, Odegard, and Miss Elliott - 2/27/43 155 a) State Chairman and administrators - responses from discussed (For list see page 168) 1) War Savings Staffs: Abolishment not intended; clarification to States asked for by Miss Elliott 164 College Reunions: Purchase of bonds to be substituted - suggestion of H. 1. Babcock, Chairman of Board of Trustees, Cornell University - 2/25/43 39 - G - General Counsel Opinion on salary of official or employee of United States Government on leave with pay from private employment - 2/26/43 123 - J - Justice, Department of Salary of official or employee of United States Government on leave with pay from private employment: General Counsel's opinion - 2/26/43 123 - I - Knutson, Harold (Congressman, Minnesota) See Revenue Revision - L - Lindow, Wesley See Deferments, Military - M - Book Page Merchant Shipping See Board of Economic Warfare Military Reports British operations - 2/25/43, etc 612 111,112,154, 223,225 Morgenthau, Henry. Jr. To be provided with new "Lodestar" plane prior to March 1 - 2/26/43 122 - N - Non-defense Expenditures See Financing, Government North Africa See Occupied Territories Norway HMJr's statement in regard to 3rd anniversary of invasion - 2/25/43 107 Eye, Gerald P. (Senator, North Dakota) See Financing, Government: Non-defense Expenditures - 0 - Occupied Territories North Africa: Developments in program discussed in White memorandum - 2/27/43 149 - P - Paul, Handolph See Revenue Revision: Rual Plan Potomac Electric Power Company Treasury to participate in hearings scheduled to consider reduction in rate - 2/25/43 72 Procurement Division For Senator Nye's discussion of purchase for War Department of railroad cars for hospital and medical purposes, see Financing, Government: Non-defense Expenditures - R - Revenue Revision Forgiveness plan resembling that of Congressman Robertson's reviewed in Paul memorandum - 2/27/43 191 Ruml Plan: Copies of Paul speech in Brooklyn giving Treasury point of view to be sent to Cabinet officers - 2/27/43 192,193 Broadcast by Sullivan, Congressman Knutson (member of House Ways and Means Committee), and Senator Vandenberg (ranking Republican member of Senate Finance Committee) - 0 2/27/43 198 - 8 - Book Page Salary of official or employee of United States Government on leave with pay from private employment General Counsel's opinion - 2/26/43 612 123 Shipping See Board of Economic Warfare Speeches by HMJr In connection with captured German war film - 2/27/43... 216 Sullivan, John L. See Revenue Revision - I - Taxation See Revenue Revision - V - Vandenberg, Arthur H. (Senator, Michigan) See Revenue Revision - Y - War Savings Bonds See Financing, Government 1 February 25, 1943 9:33 a.m. HMJr: Hello. Operator: Donald Davis. HMJr: Right. Donald Davis: Hello. HMJr: Hello, Mr. Davis. D: Yes. HMJr: Morgenthau. D: Good morning, Mr. Secuetary. HMJr: How are you? D: Fine. I talked to Mr. Wilson last night, and we were going over some very important organizational matters here.... HMJr: Right. D: ....and I must be very frank and state that my previous obligation to him.... HMJr: Yes. D: ....he 18 very desirous, in fact, insistent upon my carrying it out until we get some of this thing straightened out over here, and I'm equally frank in saying that I feel that I have the obligation to do it and should carry on with him in the situation as it exists. HMJr: Well, now look, Mr. Davis, supposing I can get you released of that obligation 80 that you can decide what you want to do? D: Well, that would - to be perfectly frank, that would be very embarrassing to me. HMJr: It would be? D: It would be, yes. 2 - 2 - HMJr: I see. D: Because I have - - I have been thrown into this picture here, and I know that he's depending on it for at least awhile, and it would be - in terms of his request to me ánd my commitmente to him, it would be very embarrassing to have that happen, Mr. Secretary. I regret exceedingly to have to-say that. HMJr: I see. Well, of course, the way I sort of feel 18 a.6 though O.P.M. is part of the Government the way the Treasury 1s. D: Yes, that's true. HMJr: Sometimes it's hard to realize it, and I'm going to say this - but then if you say that you don't want 1t- but I would like to go to the President and have him release you of any obligation, then let you make up your own mind where he thinks it would be most important to have you serve his Government. D: Well, that's perfectly true, and 8.8 - and I - all I can say 1s that I'm here under orders. HMJr: Yes. D: On the other hand, I would say that if there's any - if there can be any consideration given to personal preference HMJr: Yes. D: in terms of what I've undertaken here and gotten into HMJr: Yes. D: I would have to xpress to you HMJr: Yes. D: that I would have & 'sonal preference .... right at this time, even though being - being very appreciative of the compliment paid, I would have a personal preference to stay right on here and see this thing through. 3 - 3 - HMJr: Yes. D: I would - I have to be. perfectly honest in saying that, sir. HMJr: Yes. D: But beyond that, of course, I have - I have nothing to say. HMJr: Well, I wouldn't - I don't want anybody to come over here under duress, see? D: Well, I - that's why I'm 80 frank... HMJr: You - you.... D: ....and prompt in trying to report it to you in that manner. HMJr: You feel you would be coming under duress? D: No, I don't think - I don't think it's durese in anything the Commander-in-Chief tells you to do. HMJr: Yeah. D: But, on the other hand, if there is a place for an expression of personal preference, why, this is the place, and I'm - I'm trying to be perfectly frank and honest in expressing it. HMJr: Well, let's - let's take another minute - supposing I say - I said to the President that I want an opportunity to talk to you, at least see whether we see eye to eye. D: Yes, sir. HMJr: And then if we did and I still wanted you - that I asked him for you, you see? D: Well, wouldn't it - would it be proper to suggest .... HMJr: Yes, anything's proper. D: ....that you - that you talk it over with Mr. Wilson? 4 - 4 - HMJr: I'd rather talk it over with Mr. Nelson. D: Or with Mr. Nelson, either one. HMJr: Well, I would do that in the first instance. D: Yes. Well, I - - all I can do (laughs) in the - in the position in which I find myself. HMJr: Yeah. D: ....18 to be - try and be perfectly frank with you, and all I can say further 18 that whatever my assignment might be I would give it all that there 18 in me. HMJr: So I've - I understand from your reputation. D: But, on the other hand, I felt that our talk yesterday was of the nature that I - I could properly express a personal point of view to you. HMJr: You - you (laughs) could even if you were over here. Otherwise I wouldn't want you. D: Okay, sir. (Laughs) HMJr: But I would like to be in a position to talk further with you to find out whether we might hit it off. D: Yes, sir. HMJr: And the only way that I could do it would be to talk with Nelson and then, depending how Nelson talked, would be to go to the President. As I say, it's a question of - what I think we have over here 1s moderately important, and for him to decide where you could serve your country best. D: Well, I think that that's entirely - that's - that's entirely up to you, sir, and that - my only suggestion to make. HMJr: Yes. 5 - 5 - D: after having made my own personal statement HMJr: Right. D: 1s to suggest that you talk with Mr. Nelson or Mr. Wilson. HMJr: Well, I've only met Mr. Wilson once in my life. D: Yeah. HMJr: I happen to know Mr. Nelson very well. D: Yeah, yeah. HMJr: I don't, so I think I will call up Mr. Nelson. D: All right, sir. HMJr: And then, all I'm asking - and I'd like to be able to sit down and talk with you, and then after we've had our talk we may find, well, there's no use. D: Yes, sir. HMJr: Do you see what I mean? D: Well, all I've attempted to do is I cleared it with Mr. Wilson and got an expression of his ideas, and I've been try.. - I tried to be frank with expressing my personal inclination, and I won't say desire HMJr: Yes. D: to you. HMJr: Well.... D: Beyond that point, I don't think I can go at the present time. HMJr: Well, I'll have a - I appreciate your frankness and I'm going to call up Mr. Nelson and see if I get anywhere. D: Thank you, 81 6 -6- - - HMJr: Thank you very much. D: You bet. 7 February 25, 1943 9:39 a.m. HMJr: Hello. Operator: Mr. Nelson. HMJr: Hello. Donald Nelson: Hello. Good morning, sir. HMJr: How are you, Don? N: Fine, thank you. HMJr: Good. Well, you seem to be getting along better. N: Well, they're just getting me mad now. HMJr: (Laughs) Well, it seems to be working all right.... N: Well.... HMJr: ....and don't let the columnists get you down. N: They never will. HMJr: No. N: I - I just stopped - I was thinking the other day while reading Dave Lawrence's cracks, remembering when I was back out in civilian life of reading.... HMJr: Yes. N: the same Dave Lawrence on you and others around here, and.... HMJr: And believed it. N: (Laughe) No, I didn't believe it. HMJr: (Laughs) N: (Laughs) But I couldn't help but think that - just what you fellows have gone through.... 8 - 2 - HMJr: oh, yeah. N: ....1n ten years down here in this place. HMJr: Yeah. Well, 1f - - it would all be 80 much easier if everybody helped each other. Yeah, but they don't do it and they won't do it, I guess. HMJr: That's right. Well, I'm calling up for a little help now. N: All right, sir. What 1s it we can do for you? HMJr: Well, I've been looking around for somebody who 1s connected with a concern that has national sales organization, who could come in and sort of head up this drive on Federal securities.. N: Yes. HMJr: ....and one of the men that's been recommended the most highly is this Donald Davis, who was an assistant to Eberstadt. Now I had a talk with him yesterday, and he said that he had sort of given his word to Wilson that until he sort of reorganized the thing and found a place for him that he would stay with him, do you see, for awhile. N: Yes. HMJr: Now he called me up this morning and he said Wilson wants to hold him. Well, whatever he's doing couldn't have been BO important, because as of yesterday he had no definite niche, you 800? N: Well, of course, that was only because of the reorganization of duties following Eberatadt's removal, you see? HMJr: Yeah. Do you know Davis? N: Oh, very well. 9 - - HMJr: Do you think N: He's a very fine fellow. HMJr: Now evidently he doesn't want to ask Wilson even for the right to - to talk with me, see? Now what I'd like to have is - I don't know the man * well enough. I've had one talk with him, and what I'd like to have is the right to sit down and talk with him, you see? N: All right. I'll talk it over with him and Charlie this morning. HMJr: And see if we can't get together, and then 80 a.e to put all my cards on the table, if I decide that he's the fellow to head up my sale of financial securities, you see - and if - - if you won't release him, and I - - then I'd like to go - I'd hate to do it, but I would - I would like to go to the President and say, well, let him make up his mind, see? N: No. HMJr: But I - - I don't want to do that.... N: Well.... HMJr: because I don't think I N: There 1s - there is some doubt in my mind as to whether he would be the - the ideal man to head that sales organization. I think he's a very good man. HMJr: Yes. N: I think he's an outstanding fellow.... HMJr: Yeah. N: ....as a matter of fact. HMJr: Yeah. N: I don't think of him in - as - I know him very well. I know his work before he came here, and know his work here. 10 - 4 - HMJr: Well.... N: I don't think of him as the sales organizing type. HMJr: No, but he's had this publicity experience. They're having a - they spend $9 million dollars a year for advertising. N: Yes, he's had that. HMJr: He was in charge of advertising there for ten years. N: Yes, I know that. HMJr: And - and he started in the radio business, and he's had some banking experience. I don't want to - you see, I don't want a banker. I don't want an investment... N: No, I.... HMJr: ....fellow, 30.... N: can - I'll never have one again as long as I live. HMJr: (Laughs) So I - - I want to go to commercial life just the way I went to you. After all, you owe me something anyway. N: No... HMJr: You never gave me something in return for your- self. N: (Laughs) HMJr: See? N: Well, I'll do whatever we can, and I'll talk to Charlie. HMJr: I - well, I'm - - Don, I'm awfully serious about this.... N: All right. 11 - 5 - HMJr: ....and.... N: I'll talk to Charlie right away and I'll call you back. HMJr: ....he - he's one of 22,000 you've got over there. N: Well, he's not one of 22,000. He's one of, I'd say, ten. HMJr: Well.... N: I mean I'd rank - - he - he ranks right in with the top ten we've got. HMJr: But he - he hasn't got that position now. I mean he didn't have up till yesterday. N: No, because - only because of the - of the reorganization of the.... HMJr: Yeah. N: ....of the work, you see. HMJr: Well, all I'm asking 1s I'd really like to have a chance to sit down and talk with the fellow, see? N: Okay. Well, I'll.... HMJr: And then.... N: ....talk to Charlie Wilson right away. HMJr: And he does feel under obligations but - well, anyway, do as - see what you can do for me. N: I will. I'll call you back. HMJr: I thank you. N: All right, sir. 12 February 25, 1943 10:24 a.m. HMJr: Hello. Donald Nelson: Hello, Mr. Secretary. This is Don Nelson again. HMJr: Right. N: I talked O Charlie Wilson and there's no objec- tion to your talking to Don Davis. Charlie feels that he has to have some time because of the way he's using Don Davis and plans to use him, he'd have to have some time to - to replace him. He feels that it would be bad for him at the moment, because he just 18 under such pres- sure and hasn't anybody that can help him. HMJr: Yes. N: But there's certainly no objection to your talk- ing to him. HMJr: There isn't? N: If you - if we can get time to replace him, that's the main thi we want. HMJr: Well, that's all I - - I wanted to ask for. And, ae I say, after - I've only had a very short talk with him and he's a very loyal fellow and he was telling me he was under moral obligations and he doesn't want to do anything. N: Well, and - and he's really helping Charlie tremendously at the moment, because Charlie 18 just under tremendous pressure, naturally. HMJr: And if - after we've had several talks we might not hit it off. N: Well, I have an idea you won't, but then that's HMJr: You don't think we will? N: No, I just don't think 80. I mean that would be my opinion, and I'm not - I'm being absolutely honest with you. 13 - 2 - HMJr: Why, Don't N: Well, I don't - I doubt . - it's hard to explain. It's one of those intuitive things. HMJr: (Laughs) I Bee. N: Now I think the man is fine. I think he's a swell fellow, a grand fellow, but whether he'll be pliable enough tw.Work this thing out I don't know. HMJr: Pliable enough? N: Yes. HMJr: Well, you - you - you don't feel that he's the kind - his backing is the kind of fellow? N: Well, I mean I just think for that - I think he's - he's better equipped, better adapted for a production and administrative job than he is for that organizing and selling campaign. That's my only feeling about it. Now I'm - I may be entirely wrong and it's a enap judgment, I'll admit. HMJr: Now you got another minute? N: Yes, sir. HMJr: Well, there was another fellow suggested. You'll think I'm concentrating on you. His name 1e Robbins. You most likely never heard of him. N: oh, yes, from General Foods. HMJr: That's right. He's - he's president of their sales organization. N: Now he's R much - - in my opinion, & much better balanced man for that job. Robbins is a - is a - is a fine fellow. HMJr: Yeah. N: He's more of the sales type. 14 - 3 HMJr: Well, I've had a sort of an advisory sales committee headed up under Grant of General Motore... N: Yes. HMJr: and he's been on this committee for three or ur months, and he's very keen about the work that we're doing over here, and I think he'd kind of like to do it. N: Well, now let me - let me look into that. I think we could - I'm sure we could spare Robbine much better than Don Davis, and in my opinion he would be a better type of man for that be- cause I think he's more flexible, and if he can't just get his way, he won't just back up and stop. HMJr: I see. N: And that's the thing in Government I've found. As you know, Mr. Secretary, there are a lot of people who feel, well, you've just got to beat everybody in the head and do it Just one way. HMJr: Yes. N: Well, that won't work in Government. HMJr: Well, I've - after ten years I've learned it. (Laughs) N: (Laughs) Well, I - - I've learned it myself. HMJr: Well, as I say, Robbins is another possibility. N: Well, this boy, Robbins, I think very highly of HMJr: Yeah. N: and I think - I think of him 8.6 being a very unusual sales type fellow. HMJr: Yeah. 15 - 4 - N: Robbins came down from General Foods and originally worked in our Priorities Section. HMJr: Yeah. N: Everybody around here likes Robbins. HMJr: Yeah. N: Likes him very much; he's very flexible; he's a good administrator; he's got a lot of tenacity.... HMJr: He's got.... N: .without - he's got tenacity without feeling that if you don't go along with him, you're dead wrong. HMJr: He's got 8. lot of drive. N: I think 80. HMJr: Terrific drive. N: I - I think very highly of Robbins, and while I'd hate like the devil to lose Robbins, at the same time it would be my opinion that he would be a better man for you not - not - and this - - Don Davis is the more able man in every way, but not in the sales picture as I see it. HMJr: Yeah. Well, would you mind giving me another ring on Robbins? N: I'll be glad to do it. HMJr: Thank you 80 much. N: All right, sir. HMJr: Do - - do you think you can do it today? N: Yes, I'll do it today. HMJr: Thank you. N: Okay. 16 February 25, 1943 11:02 a.m. William Heffelfinger: Yes, sir. HMJr: Yesterday, Heffelfinger, when some of the O.W.I. people were in they said that the bank out at Falls Church - if you went there and tried to get a tax anticipation note, you couldn't get one. H: Uh huh. HMJr: Now I wonder how general that 1s? Don't the banke have them on hand? H: They don't have them on hand. They take applications for them and send them to the Fed. They're only issued at the Fed. Banks. HMJr: Well, why - why don't they have them on hand? H: Well, because of the registration and things of that sort. The records are all kept at the Feds. HMJr: Well.... H: They're not kept here at the Treasury. HMJr: Tell Mr. Bell to talk to me about that.... H: I'll do that, sir. HMJr: ....this afternoon, will you? H: Okay, sir. HMJr: Because one of the people - they couldn't understand why they can't just walk in and get one like they can a bond. H: Well, they handle them the same way F and G Bonds are handled, you know. They have to take the application for those and eend to the Feds. HMJr: Well, you talk to me - tell Bell.... 17 - 2 - : H: I'll have him - okay, sir. HMJr: Thank you. H: You bet. 18 February 25, 1943 11:18 a.m. HMJr: Hello. Operator: Mr. Sproul. HMJr: Hello. Allen Sproul: Good morning, Mr. Secretary. HMJr: Hello, Allen, are you alone? S: Yeah. HMJr: Because I am. S: Yeah. HMJr: And I just wanted to have R little heart-to- heart talk with you.... S: Yeah. HMJr: ....and - because I - I think that you must have misunderstood the - the underlying motive of this telegram of mine, and that - I'd like to get it settled once and for all in my mind and yours also. S: Yeah. HMJr: Now what I got in mind -- let me say it over again -- in this coming drive, I want the fiscal agents to be the boss in their district, 80 we get that straight, see? S: Uh huh. HMJr: There can't be any misunderstanding about that. Hello? S: Yeah. HMJr: The only thing there seeme to be a misunder- standing on 1e this, I want both the Victory Fund and the War Savings to give you everything that they've got. S: Yes. 19 - 2 - HMJr: Now in order to do that at the level, we've got a lot of personalities, you nee - and these managers of the Victory Fund plus these State chairmen, the thought that I had was that those -- I don't know - half a dozen people. under your leadership would form a committee at just that level Uh huh. HMJr: ....and that they would be assist you. Now if we don't do something like that, too many feelings are going to be hurt and too many of these prima donnas are going to have their nose out of joint. I wasn't thinking of it except at that level. I wasn't thinking of it in the counties or half a state or anything else, but just at that level, and it would make my Job much easier if we could do it that way. Now from the telegram that we got from you and Chicago -- I gather you must have been talking with each other, because I got more or less the same telegram -- but I - I can't - I've thought a lot about it, and it seems to me it's on the plus side in taking care of these people, and a lot of them, these State chairmen, have done a lot of good. In other words, they won't be called in - the thing that they feel is that they won't be called in to assist the Victory Fund Committee, they'll be called in to assist you. St I see. HMJr: Do you see what I mean? S: Yeah. HMJr: Now that's the whole thing. Now I don't see why that won't work, and and they got a thing called "face-saving" which 1s important where you have a lot of people who have - who have done a lot of good work. S: No, there's no question about.... HMJr: Now -- this 18 for you Dick Patterson came down here the other night and raised unshirted hell. He upset me; I was sick afterwards; and (cont.) 20 - - HMJr: what he wanted I refused to do pointblank, and (cont.) that was to make him co-chairman. S: oh, I see. HMJr: And I said, no, I wouldn't do it. Bo I've turned that down flat, and I don't - I can re- word the telegram any way anybody wants it to make it understood that there's only one boss in the Federal Reserve District and that's the fiscal agent. But you get the distinction of - of having - - calling it a committee at the top level. Otherwise they feel that they've been called in to assist the Victory Fund Committee. Now the whole thing isn't terribly important, but it does take care of certain faces - face-saving - and I'd like it very much because it would help me. Now I told you if anybody gets hard or tough, I'll come and take care of him, and I've taken care of Diok Patterson. S: Yeah. HMJr: He was very tough. 8: Well, then the only - the - I agree with you it - it really shouldn't make much difference 80 long as it's understood where the responsibility and the authority lies. The question I'll have 1s with people feeling that way that if - if you do it one way they're being called on to assist the Victory Fund Committee, and if you do it the other way that they retain some authority, whether they, in view of the past fifty and their current dis- cussions - whether they won't continue this debate and argument and division which I think 18 - is just too bad for the Treasury's main objective. HMJr: Well, I can promise you it won't. Now I - I settled the thing the other night with Dick Patterson. I told him pointblank I wouldn't. S: Yeah. HMJr: You see? S: Yeah. 21 - 4 - HMJr: Then there'll be no misunderstanding as to who is bose and who represents me. But you get the difference -- I'd like to go over it once more -- the difference 18 one way, as I get it you have it, you'd like them to come in to assist the Victory Fund. I'm simply suggesting this commit- tee of which these State chairmen will be a member, the managers of the Victory Fund, and yourself a.s. chairman and bose. S: Well, they - the one other aspect is the public aspect of it - is having the two committees already in existing - existence HMJr: Well 8: the appointment of a third committee which may be looked upon as a HMJr: Well, call it an executive committee, if you want to. S: Well, suppose HMJr: The com. - supposing you call it an executive committee? 8: Well, even then the - the question of a division of responsibility may continue to exist. HMJr: No. S: in the public mind even though we know just HMJr: Well, I'll make it - in my public statement and at the press conference, I'll make it very, very clear, because there isn't a shadow of doubt in my mind S: Yes. HMJr: and there won't be, and you know me well enough after these years that when I say some- thing no matter how tough the going goes, I stick by it and stick by my people. 8: No question about it. 22 - 5.- HMJr: I mean I never let them down. S: No question of that. HMJr: And there'll be absolutely no question about the authority. S: Well, suppose I take.a look at this telegram and Bee.... HMJr: I've read your telegram very carefully. S: No, I mean your telegram which - and see whether there are any changes which could be made ther which would make it clear just how the land lies even though we retain the committee form. HMJr: Retain the committee form but - but strengthen the thing that - that you're the bose. S: Yeah. HMJr: I'll do that. S: I thought I might try my hand at it and let you have the result. HMJr: But leaving the committee thing? S: Yeah. HMJr: Well, supposing you do that and get me off a telegram as soon as you can, will you? S: I'll do that, yes. HMJr: And I'm spending all of my time looking for "Mr. X". S: I see. HMJr: I got a couple of very good people but it 80 happens that both of them are with Donald Nelson, and - which 1s an advantage that they're here 80 they don't have to go through the process of getting a board of directors to give them the permission to come. S: Yeah. 23 - 6 - HMJr: But he's wrestling about letting me have them. But he's been very fair, and he said that he's thinking it over. I've talked to him twice this morning. They're top-notch fellows. 8: Well, I hope you can get one of them be.- - and I think myself that your Job 1e just as important as his and that he ought to let them go. HMJr: Well, he - he's being very nice about it. of course, each person has his own problems, but as I - I said, "I don't want to go to the President about it," - "oh, you won't have to do that," you see? S: No. HMJr: Well, you take another hand - pointing up your authority as the fiscal agent, will you? S: All right, I'll do that. HMJr: And I'll take 8 - I'll - - I'll take another look at it. 8: Right. HMJr: Because I want to get this organization thing settled, and - and it - it would be helpful to me. You understand my position. I mean you understand why I want to do it? 8: Yes, I do. HMJr: Yes. But I - - I settled Dick Patterson the other night, and he will stay settled. And, inci- dentially, he's been talking to the newspapers and one of them came in to see me from P.M. yesterday, and I gave him the whole story, as the result of which he's not going to run any- thing. S: Well, I'm sorry about him because I've got the feeling that he tells me one thing and he tells other people other things, and I Just have lost confidence. HMJr: Well, it's - it seems to be very much of a personal issue, but I think you'll find that (cont.) 24 -7- - - HMJr: once I give out the statement it's settled, (cont.) and you will have 1000% backing from this office. S: Well, I'm sure of that. HMJr: And he hasn't threatened to resign or anything like that, you see? S: Yeah. HMJr: Well, take another look at it. S: All right, I'll do that. HMJr: Thank you. S: Thank you. 25 February 25, 1943 11:30 a.m. FINANCING Present: Mr. Buffington Mr. Gamble Mrs. Klotz H.M.JR: This is what I want you for: I just had & long heart-to-heart talk with Allan Sproul. I said, "Now look, Allan, get this thing straight. You are to be the boss in this district. There is such a thing 8.8 face-saving, and I want the State chairman of War Bonds to be & member of the committee, plus the executive manager, of which you are chairman, for this drive." I don't know whether you have seen these long telegrams or not. I said, "I don't care about it going below that level; I don't care about the county, or the State, or anything else." I think I have sold him. He said, "Can you change your telegram 80 that it would make it perfectly clear that I am to be the boss during this drive?" So, I said that we would. I would like you two fellows to get together and take a look at that telegram again and see what we can put into it which would make it clear that during this drive the fiscal agent of the Treasury is to be the boss in the district. MR. GAMBLE: I think that is perfectly reasonable. He is the only one who is recommending the change, isn't he? 26 - 2 - H.M.JR: Chicago is the same. I told him so, and he didn't deny it. MR. BUFFINGTON: It can go in after "chairmen," and say, "with full authority." MR. GAMBLE: I think you can go further than that and say that you recognize the necessity of placing the authority in some one person, and it is going to be the president of the Federal Reserve Bank, because this drive must not fail. There is no reason for not doing that. MR. BUFFINGTON: If you are going to give them the responsibility, you ought to give them the authority. MR. GAMBLE: No hesitancy. H.M.JR: Do you want to take that thing out of the Farm Credit and say that I am going to follow the model - the plan which I used in Farm Credit, where I had all these lending agencies, and appointed these general agents? They had full authority to act for the governor of the Farm Credit in the district. MR. BUFFINGTON: I think for these men, if you just added after-this word "chairmen," the words, "with full authority for the April drive, that is all that is necessary. MR. GAMBLE: This wire says that on Monday you are going to release substantially the following. That is about what it says. When the wire goes out on Monday, it can be directed to, say-- H.M.JR: He asked if I could look at it, and he is sending me down a suggestion. I thought if we could have something - I am going to call Young. He is the only one, isn't he, who is kicking about this? MR. BUFFINGTON: I haven't seen those. 27 - 3 - MR. GAMBLE: Obviously, they have talked. H.M.JR: I have gotten the same telegrams. Obviously, they have talked. MR. BUFFINGTON: They are the greatest objectors to the waste in the Government, and are the greatest users of the telephone. They criticize us for expenditures down here. H.M.JR: They have all this money from the interest on the bonds, which they don't know what to do with. You know the Federal Reserve is worried about their la rge income, and they think Congress will take it away from them. They have to spend it somehow. I will call up Hap Young; and sometime after lunch if you fellows - Bell will be back then. You think it can be done? MR. GAMBLE: Yes. The thing is, they have to be sold, because I think this is just a temporary effort, and that we are going to be confronted with the same problem in May. They have to be sold that there is a definite value in the War Savings organization throughout the country that you want salvaged, and it is their business to salvage it. H.M.JR: I wish you could have heard me. I said, "Now, listen, these fellows are there, and let's call it 8. spade." I said, "I don't want my State chairmen of War Savings to feel that they are becoming--" MR. BUFFINGTON: Less important? H.M.JR: No, I said, "No, they are serving under the Victory Fund; they are on the same level with the Victory Fund." I said, "I want this committee." He said, "You will have three committees." Regraded Unclassified 28 - 4 - I said, "Call this the executive committee. In other words, the State chairmen aren't going to report to the manager of the Victory Fund in that way. Those at the top level should be there as members of this committee." MR. GAMBIE: You aren't going to change the name of the drive? You are not going to permit them to call it the "Second Victory Fund Drive"? H.M.JR: No. MR. GAMBLE: You are going to call it the "Treasury War Finance Committee"? H.M.JR: Yes. MR. GAMBLE: I think that is very important. MR. BUFFINGTON: You have to designate it some way . H.M.JR: I haven't had my publicity people in yet. But the whole point they are finding out is, they want to keep the - they want to keep this a Victory Fund drive. I said that the State chairmen come here (indicating) with the managers of the Victory Fund, and on the top of that is the Federal Reserve. MR. GAMBLE: Yes, and the boss. There is no quarrel. H.M.JR: Is there any quarrel? MR. BUFFINGTON: We will look that wire over. 29 February 25, 1943 11:54 a.m. HMJr: Hello. Operator: C. S. Young in Chicago. HMJr: Right. Hello. C. S. Young: Hello, Mr. Morgenthau. HMJr: How are you? Y: All right, sir. HMJr: Mr. Young, I got your telegram and I also have one from Allen Sproul. Y: Oh, yes. HMJr: And after reading them, I said that I guess you two fellows have had your heads together. Y: Well, we - we were thinking along the same lines as to the April drive. We thought that the - the first plan there was - was more work- able. HMJr: Well, now I've had a long talk with - hello? Y: Yes. HMJr: With Allen, and I think I've made my point - my - what I got in mind clear to him, and he seemed - hello? Y: Yes. HMJr: We've got a lot of clicks - clear to him, and I'd like to go through the same thing with you. Y: All right. HMJr: Now what I have is this, for the April drive - it would make my job much easier if instead of asking these State chairmen to come under the Victory Fund Committee at the top, that.... Y: Uh huh. Inclassified 30 - 2 - HMJr: Hello? Y: Yes. HMJr: .... that you as my fiscal agent with full authority and all the backing that I can give you as the bose in the district Y: Uh huh. HMJr: would invite these State chairmen plus the managere of the Victory Fund to sit with you as a committee, of which you would be complete boss. Y: Uh huh. HMJr: But only to do it at that lèvel. It would not go down any further, you see? Y: Oh, yes. HMJr: Itwould be just at that level. Y: Uh huh. HMJr: Now if we do it that way these State chairmen of War Bonds who have done a very fine job - it would be a "face-saving" thing for them. Y: Sure. HMJr: The other way they would be invited to come in under the Victory Fund Committee Y: I see. HMJr: which they don't like and I don't blame them. Y: Uh huh. Well, I'd have no objection because it 1en't the - we don't care as to who the directive will be issued to, whether it would be to them or to us, and that the - we could work that out all right. HMJr: No, the - no, the directive would go to you as the boas for me in the district. Regraded Unclassified 31 - 3 - Y: The only thing that I was worried about, Mr. Secretary, was that the - if we're going - having these committees at the district level, and I thought that might just be more confusing HMJr: No. Y: speaking to the public. HMJr: No, just at the top level. Y: Uh huh. HMJr: Now what I - - and Allen said he he kind of thought that was all right if I could make it perfectly clear that he was the boss. Y: Yes. HMJr: Now I'm taking another look at my telegram and I'm going to see how we can strengthen that up, and I will send that to you sometime this afternoon. Y: All right. HMJr: But he said if I made it perfectly clear that the fiscal agent was the boss, why, he said - I gathered that from what he said - that the committee idea at the top would be all right. Y: Yes, I was just afraid of going down to the county and township HMJr: No. Y: level that you'd have a lot of confusion and the - it wouldn't do any good. HMJr: I didn't have that in mind. Y: Uh huh. Well, that - we can work that out, Mr. Secretary. HMJr: Well, don't you think you could work that out? Y: Oh, yes, we can work that out. Regraded Unclassified 32 - 4 - HMJr: I think 80. Y: I - yeah, we can do that, and - but it was just these committees under the - the district level and, of course, we can work 80 much better if we - 1f we just have the State Administrators and we can get along all right. HMJr: Well, that's all I had in mind. Y: Uh huh. HMJr: But what I had in mind was that you would invite them in to sit with you and that they would not be invited in to sit under the chairmen of the Victory - I mean under the managers of the Victory Fund, you see? Y: Yes, uh huh. HMJr: Now granted that there'll be three names - but it's just that it - it makes it nicer. I mean you put yourself in their place, you see? Y: Sure. HMJr: But don't you think that sounds all right? Y: Well, I - we can work that out all right. HMJr: Well, take - take another look at the telegram, and if - if you had some thought as to how to strengthen your authority along the lines I'm talking, I'd appreciate it if you'd send me a wire. Y: All right. HMJr: Then I'll take what you send me and what Allen sends me plus what my own boys are working on, and I'll get you off something this afternoon. Y: All right. HMJr: See? Y: All right, and - and I'll look that over. Regraded Unclassified 33 - 5 - HMJr: Yes - now this looks pretty good to you? Y: And the only thought that I had was that the - we wanted the - for your sake, we wanted to do an excellent job, and I didn't want B. lot of confusion and - as to who's going to have the place in the sun and all that, you know. HMJr: Well, do you think this would make confusion? Y: I - I don't think BO. It would be a little, but it wouldn't be - we can - we can handle that all right. HMJr: But, on the other hand, it would - it would, you know, smooth over some personal feelings. Y: Oh, sure, I know - and I understand. They - we have to - we have to take that into considera- tion. I understand your viewpoint on that too. HMJr: And I think it's worthwhile doing. Y: And the - the only thing we want is just to be sure that we can all work together and do the good job. HMJr: Right. Well, if we can work out this one little detail, I think the rest is going to flow all right. Y: Well, that little - that will be all right. HMJr: Good. Y: And that'll be all right, and I'll - and I'll look that over and if you want a telegram from me, why then, I'll look it over - why, I'll send it to you. HMJr: I wish you would. Y: All right. HMJr: Thank you. Y: All right. 34 February 25, 1943 2:10 p.m. HMJr: Hello. Gen. Gordon P. Saville: Hello. HMJr: Morgenthau speaking. S: Sir, this 18 General Saville. HMJr: Yes, General. S: I have - you may remember me. We went up to the First Air Force together to look over air defenses. HMJr: At Glenn Martin. S: Yes, sir. HMJr: That's right. S: I have been detailed by the Chief of the Air Staff to prepare a presentation for you.... HMJr: Right. S: on this question that you asked about. HMJr: That's right. S: When would be convenient for you next week, Mr. Morgenthau, for me to present that? HMJr: Next week? S: Yes, sir. HMJr: You won't be ready until then, what? S: No, sir. I want to - to try to assemble as complete dope as I can, and I'm assembling that now. HMJr: Well, now let's just take a look. Just a moment, please. You - they told you what - what I wanted? S: Yes, sir. 35 - 2 - HMJr: Uh - oh, now wait a minute, I'm going out of town. Can you do it - would - would you be ready by Tuesday? S: Yes, sir. HMJr: How long will it take, General? S: Well, I would like to take about an hour and a half, if I could. HMJr: Surely. And is it to be somewhere with the Air Corps? 8: Yes, sir. My hope was that I could get you over to our air room where we present our summaries and have all kinde of maps. HMJr: That's all right. Well, I could - I could go there directly Tuesday morning. S: All right, sir. HMJr: I mean - 1s that too early? 8: No, sir. That - that 18 fine. HMJr: That would be fine? S: Yes, sir. HMJr: Now supposing I got there, say, around nine o'clock? S: That would be fine. HMJr: And where - where would that be? S: Well, sir, I'll tell you, I think the best thing, Mr. Morgenthau, would be for me to ar- range to meet you, possibly at your home 8.8 I did last time.... HMJr: Fine. S: before you left. HMJr: Fine. 36 - 3 - S: What hour would that be? HMJr: Eight-thirty? S: Eight-thirty. HMJr: Eight-thirty. S: Eight-thirty a.m. HMJr: All right. S: And your home address, sir, may I have that? HMJr: 2434 Belmont Road. S: Belmont Road. HMJr: Now did - did you go there before? 8: Yes, sir. HMJr: You know, it's just off Massachusetts. S: Yes, sir. HMJr: 2434 - and that will be eight-thirty Tuesday morn- ing. Now shall I have a car or will you have a car? S: Either one, sir. You'll - you'll be wanting to go back to the Treasury, and being much higher ranking than I am, I think it would probably be easier for you to get the car. HMJr: Well, I have a car. S: I will then be at your house at eight-thirty... HMJr: Fine. S: planning to ride out here in your car. HMJr: Right. S: Then I'll let mine go. Regraded Unclassified 37 - 4 - HMJr: Thank you. S: Thank you very much, sir. Goodbye. HMJr: Goodbye. 38 February 25, 1943 Ted Gamble Secretary Norgenthau Please take care of this suggestion from Mr. E. E. Baboook of Ithaca, New York, today. Mr. Baboook is chairman of the Board of Trustees at Cornell University. cc-Mr. Gamble 39 February 25, 1943 2:38 p.m. Operator: Go ahead, HMJr: Hello. H. E. Babcock: Hello. Hello, Henry. HMJr: Hello, Ed. B: It's awfully nice of you to talk to me. HMJr: That's my privilege. B: (Laughs) I hope I've got something for you. I - I don't know. The - we were having a 75th reunion here at Cornell. HMJr: God, I didn't know you were that old. B: Yes, sir, we are. HMJr: No, I mean you. B: Oh - oh, no, I'm not that old. I was fifty- four the other day, and I pitched manure and shoveled gravel all day. HMJr: (Laughs) Well, that's pretty good. B: And as the committees got to working around, they hit on a scheme of calling it off -- of course, there's nothing else to do -- and calling off the reunions HMJr: Yes. B: ....and then they hit on this idea of every- body who would normally go to a reunion in the universities of the country -- and it's a big movement in June -- sending what they'd ordinarily spend in bonds to their universi- ties. HMJr: Well, that sounds good. B: Oh, it - now if that sounds good to you, all we want you to do 1s to say 80, and then I want to talk to Joe Eastman and have him endorse it 40 - 2 - HMJr: Yes. B: keep the people off the roads and off the trains HMJr: Yes. B: ....and that - I think that we can put all these alumn1 associations clear across the United States to selling bonde for you. HMJr: I think that would be wonderful. B: Well, now Vincent Callahan - do you know who he 187 HMJr: Yes, I do. B: Well, he has the story.... HMJr: I see. B: ....and if you care to give it your blessing, and it would be - the boys up here who originated the idea would be awfully proud, and.... HMJr: Yes. B: ....furthermore, I think it would kick it along. HMJr: Well, I'll - I'll get in touch with him right away. B: That's swell of you. HMJr: I'll do it right away. B: How are you? HMJr: I'm all right. B: How's with the farm? Are you running the herd? HMJr: The farm - the farm 1s all right, still solvent. B: Yeah. (Laughs) Well, you always had it 80. HMJr: And Mrs. Klotz is sitting here and sends you her regards. 41 - 3 - B: Well, that's fine. Is - and Callahan will get in touch with me, will he? HMJr: No, I think it will be Ted Gamble, a man by the name of Gamble. B: Yeah, I see. But it will clear through Callahan. HMJr: That's right. B: Thanks ever so much. HMJr: I'll do it right away. B: Okay. HMJr: Thank you. B: Goodbye. 42 February 25, 1943 2:50 p.m. FINANCING Present: Mr. Bell Mr. Graves Mr. Gamble Mr. Buffington Mr. Odegard Miss Eiliott H.M. JR: I made some progress this morning with Chicago and New York. I asked these fellows to fix me up a telegram. Have you done it? MR. GAMBLE: We haven't typed it out for you. H.M.JR: I don't have the original. MR. GAMBLE: I will read you the preceding sentence to show where this goes in. "Details of the respective tasks of each organisation at the State, county and community level shall be worked out by the Treasury War Finance Committee in your district on which you will serve." Then add: "The Federal Reserve Bank president, as responsible head of the April drive, shall have final authority over and*responsibility for these details." H.M.JR: Where would this go? MR. GAMBLE: Where we are describing what is going to take place. That does two things. It not only places the respe sibility and the authority on them, but it also makes clear that it will be his determination as to what those details shall amount to. If he decides that he doesn't want to do something at some community or county level, that is his responsibility. 43 - 2 - H.M.JR: We haven't said that before, that the Federal Reserve Bank president is the responsible head of the April drive? MR. GAMBLE: Not that way. MR. BUFFINGTON: Mr. Secretary, might I make 8 suggestion? Earlier in that same wire, there is this sentence, "Therefore, I have this day requested the presidents of each of the twelve Federal Reserve Banks, Treasury fiscal agents, to serve as chairmen of a United States Treasury War Finance Gommittee--" H.M.JR: Where is that? MR. BUFFINGTON: That is earlier in that wire, the seventh sentence down. Then add: "With full authority to direct this drive." It seems to me that that is the first place where there is the question of direction. That is where you want to give them the authority. H.M.JR: I would put it in here earlier, "to serve as chairmen of the United States War Finance Committee," and then put it right there. MR. BUFFINGTON: "With full authority and respon- sibility." H.M.JR: Yes. MR. BUFFINGTON: That is all right. That is better wording. H.M.JR: "The twelve Federal Reserve Bank presidents to serve as chairmen of the United States Treasury War Finance Committee, with full responsibility." What did you say? MR. BELL: Say, "and authority." 44 - 3 - H.M.JR: I would say, "with full responsibility and authority." I want to get "to me" in there. MR. OD EGARD: Say, "acting fiscal agent." H.M.JR: You could say, "as chairmen of the Treasury War Finance Committee, and as my representative, will have full responsibility and authority in their respective districts," or something like that. I mean, I am not saying - but that is the place to put it, in my opinion. I have five minutes to go, and then I would like to have it within an hour - something to go out. .I talked to Sproul first, and then the other fellow. They have been talking to each other. I told them 80. What they thought was that this War Finance Committee went right down to the county. They wouldn't have time to do that. I told them, "No," but I said that in fairness to the State chairman-it wasn't right to invite him to come and serve under the Victory Fund Committee in the district; that the State chairman should be invited by the fiscal agent to come and be a part of - if you want to call it that - an executive committee, because they have Bo many committees, and I didn't expect to organize the thing below that level. But, the State chairman would be invited by the fiscal agent to come in, and the administrator of the Victory Fund would be invited to come in; and they would meet around the table as a committee, he to be chairman and the boss in the district. They both said, "O.K.," if I would make clear the fact that they were the bosses in their districts - that both of them would be satisfied. MR. BELL: Do they want that wire right away? 45 - 4 - H.M.JR: I said I would get it off tonight. I want to settle it. I am getting sick of it. They were both very nice. MR. BELL: Yes, I talked to them. I told them the same thing. I don't know how they could get cut of that wire any indication that you intended to organize down to the grass roots. H.M.JR: I can see that, Dan. It says-- MR. BELL: ... that the Federal Reserve president should act as chairman. How could he act as chairman of a thousand committees? MR. GAMBIE : It says that the details of doing the work is the specific task of each organization. H.M.JR: "Therefore, I have this day requested the presidents of each of the twelve Federal Reserve Banks, Treasury fiscal agents, to serve as chairmen of a United States Treasury War Finance Committee, with full authority as my representative in their respective districts, to direct the April drive." MR. GAMBLE: Say, "full authority and responsibility." H.M.JR: "Full authority and responsibility as my representative." Say, "representing the Secretary of the Treasury," if you want to be formal. MR. BELL: That is better. H.M.JR: Say, "representative of the Secretary of the Treasury," because that includes you. MR, BELL: No, I think it is better - I don't mean because it includes me, but I think it is better to represent the Secretary of the Treasury. You are sort of putting it on a formal basis, and it isn't when you put in "my." 46 - 5 - H.M.JR: If you just would - that ought not to be too difficult. MR. BUFFINGTON: I can write that up if you want it done, or read it now as it should be. H.M.JR: Read it once more. MR. BUFFINGTON: "Therefore, I have this day requested the presidents of each of the twelve Federal Reserve Banks, Treasury fiscal agents, to serve 8.8 chairmen of a United States Treasury War Finance Committee, with full authority and responsibility as my representative--" H.M.JR: Say, "as the representative of the Secretary of the Treasury. MR. BUFFINGTON: ... "to have full authority and responsibility in their respective districts to direct this drive." H.M.JR: Is that all right? MR. GRAVES: Yes. It seems to be clear. MISS ELLIOTT: Yes, sir. H.M.JR: Ted? MR. GAMBLE: Yes. MR. BELL: Does this go to the presidents? H.M.JR: I would say something like this, if you could get off a telegram to the presidents of all twelve: "After having your telegram, we would like to make the following clarifying statement." MR. BELL: Say, "In order to clarify the intention, we have amended the telegram as follows. MR. BUFFINGTON: Put in the lines that are involved, and then put it in as quoted. 47 - 6 - H.M.JR: Get that off to them tonight. Sproul is sending us another. You might just read it over the phone to Eccles. MISS ELLIOTT: May I ask a question here, Mr. Secretary? Was there any confusion. - any evidence of confusion in the minds of State administrators that these committees were to be organized down to the county level? MR. GRAVES: I think not in the minds of those who were here. They now understand. MR. BELL: In the replies there was none. MR. GAMBLE: The replies from the administrators were all very good. MISS ELLIOTT: They weren't confused on this organiza- tion in thinking there was to be this reorganization clear down to the county level? MR. GAMBLE: No. MISS ELLIOTT: May I ask another question? Will there be any confusion - these questions come into my mind - were the people who worked for the Victory Fund Committees paid, the volunteers who went out and worked for them in this special drive in December? MR. BUFFINGTON: No. MISS ELLIOTT: They will not be paid in this drive? MR. BELL: No. MISS ELLIOTT: If we set up one-- MR. BUFFINGTON: I think that some kind of 8. statement, which was suggested, might be made March 1, but nobody is expecting it definitely. 48 - 7 - MR. BELL: I understood that the organization said that that question was out. I don't see why the Secretary should make any statement on it. H.M.JR: The answer to the question is that they will not be paid - is that right? MR. BELL: I understand they do not want pay, and the question will not come up again. H.M.JR: What else? Those are good questions. MR. ODEGARD: I would like to raise one. We have some farm advertisements that I think are very excellent. They are made on the basis of an investigation and study made by the Irwin-Wasey Advertising agency. They have sent down a copy of their preparation, indicating the basis upon which they proceed with this advertising program. I would like to have you see that, if you would care to take it home and read it. It was made 80 that you could understand-- H.M.JR: I don't take any more work home, Peter. MR. ODEGARD: If you have a chance to look at it here-- H.M.JR: Can you put it up on one of those boards here? MR. ODEGARD: No, it is a book. It was made especially for you. H.M.JR: I am not trying to say - Randolph Paul has been waiting since Saturday to see me on things. Sullivan has been waiting since last week. MR. ODEGARD: This wouldn't involve seeing you, Mr. Secretary. H.M.JR: But, I have to read - I can't, I just haven't the time. The day isn't long enough. I can't do it any more. 49 - 8 - MR. ODEGARD: The second question is whether we should go ahead with the production of those ads for the farm war bond program, or whether we should hold them up. H.M.JR: My answer to you is that I would hold everything up, certainly until the middle of next week. MR. BELL: I agree with that. H.M.JR: Don't think I am not interested, but there is no use of my saying I will take them home and then not read the stuff. MR. ODEGARD: By holding up, you mean that our people, for example, who have been working on plans - copy - looking forward to the April drive and to other things - that you would have them just not go ahead with those? H.M.JR: I would have them mark time for another week and make it up at the other end, that is all. Do you agree with me? MR. BELL: I do. MR. ODEGARD: Of course, there are some things - of course, you lose out. That is, deadlines are con- stantly coming up. H.M.JR: I can't help it. MR. ODEGARD: Once you get out of papers you have difficulty getting back into them. H.M.JR: I can't help it. Secretary 50 EXPENSES OF LOANS February 25, 1943 To Presidents, Federal Reserve Banks: Boston, Mass. Chicago, Ill, New York, N. Y. St. Louis, Mo. Philadelphia, Pa. Minneapolis, Minn. Cleveland, Ohio Kansas City, Mo. Richmond, Va. Dallas, Texas Atlanta, Ga. San Francisco, Calif. Your wire replying to my wire of February twanty-second received. In order to clarify as to where the authority rests the second sentence within the quotation is amended to read as follows Quote Therefore I have this day requested the Presidents of each of the twelve Federal Reserve Banks, Treasury Fiscal Agents, to serve as chairmen of & United States Treasury War Finance Committee and you will represent the Secretary of the Treasury with full authority and responsibility in your district to direct this drive Unquote (Initialed) D. W.B. H. Morgenthau, Jr. Secretary of the Treasury DWB:NLE 51 February 25, 1943 3:43 p.m. HMJr: Hello. Donald Nelson: Hello, Mr. Secretary. I spoke.... HMJr: It's Henry to you. N: Sir? HMJr: Henry. N: Yes, sir, Henry. HMJr: Right. N: I called you before lunch. HMJr: Yeah, they - I got the message, and they said I couldn't reach you for awhile. N: Well, I - I had to go over to a luncheon with a - a group of editors. HMJr: Right. N: But the - the suggestion has come back to me that I think might appeal to you.... HMJr: Please. N: ....and that's Jim Bruce my - we might be able to pry him loose to help you with that job. HMJr: Who? N: Jim Bruce. You know him of National Dairy. HMJr: No, I don't know him. N: Why, I thought you - you worked with him in H.O.L.C. Don't you - you rem.... HMJr: Oh, from Baltimore? N: Well, his - his - from Baltimore, yes. HMJr: No. He's from Baltimore, isn't he? Regraded Unclassified 52 - 2 - N: That's right. He - his home 1s near Baltimore. HMJr: I didn't know he went with National Dairy. N: Yes, he's been with them now about two years, and while there might be some difficulty prying him loose, we might be able to pry him loose - - help you pry him loose. We think he's a crackerjack of a man. HMJr: Yeah. N: Now either one of the other two men at the moment would be awfully difficult to take out of this organization. HMJr: Well, I don't know anything about Jim Bruce. N: Well, I thought you knew him. HMJr: Well, I may.... N: I'm sure that your people do, because he's done a lot of work with your organization. He was with H.O.L.C. for awhile, and did & lot of work with your organization. HMJr: Well, I remember the fellow, yeah, I do. N: He's.... HMJr: I didn't know - I didn't associate him with National Dairy. His - well, his - was it his brother married Mellon's daughter.... N: That's right. HMJr: What? N: That's. - I think that was it. HMJr: Yeah. N: His brother, Howard. HMJr: Yeah. N: Howard 1s down here, by the way, working in the - - in the War Department. 53 - 3 - HMJr: Well, let - let's - let's not just talk about Bruce first. (Laughs) N: Well, but - I mean these two men - we're right in the midst of a - of getting this organization back to functioning again, and it would juet be R terrific handicap to take either one of these two men if there's somebody else that can do the jab as well. HMJr: Yeah. Well, I - - I - I hadn't thought of - I mean Bruce, as far as I know, he's had no sales experience. N: Oh, yes, I think you - I think you'll find he has a lot of sales experience. I think you'll find that he has sold just this type of thing. I wish - I would appreciate it if you'd look into it, merely because we think that he's a crackerjack of a man. HMJr: Yeah. N: And either one of these other two men would - would cripple us badly any time during the next month or two. HMJr: Well, is - is Robbins - I didn't gather from Robbins that he was doing anything very important over there. N: You see, what we've had to do is to reshuffle some of the responsibilities HMJr: Yeah. N: ....and we're thinking of building very strongly on him. As B. matter of fact, I could tell you what -- I wouldn't like to talk to you about it over the phone -- just what organizational change 1s expected to take place, and he's important in it. HMJr: Yeah. Well, I!ll inquire about Bruce. N: W111 you do that? HMJr: Yes. 54 - 4 - N: Well - because I'm - I'm sure that you'll find him a very capable fellow. In fact, I wouldn't hesitate to take him. We haven't done it, but - because the company would be reluctant to do it, but I think we can pry him loose. HMJr: Well, what - you don't know what position he holds with the National Dairy? N: He's a vice president. HMJr: Vice president. I Bee. Okay. Well, you'll be hearing from me again. N: All right, sir. HMJr: I haven't let up yet. N: All right, Mr. Secretary. HMJr: Thank you. N: Goodbye, Henry. 55 February 25, 1943 4:05 p.m. Operator: Go ahead. HMJr: Hello. Clarence Francis: Hello, Mr. Secretary. HMJr: How are you? F: Well, I'm first-rate. I hope you are. HMJr: I'm fine. F: Good. HMJr: Mr. Francis, let me tell you a little problem I've got. We've been looking around for some- body, a real salesman, to help us on this war financing. F: Yeah. HMJr: and Mr. Robbins - your Mr. Robbins - was one of the people who's been recommended very highly. F: Uh huh. HMJr: I had Robbins over the other night to talk with me, just informally, and I think he's the kind of fellow that would be extremely helpful to us - hello? F: Yes. HMJr: I've been talking with Don Nelson about him, and naturally Nelson doesn't want to let him go.... F: Uh huh. HMJr: although up to very recently, I don't think that they've given Robbins very important work down there. F: Not since the change. 56 - 2 - HMJr: Now I didn't tell Robbins I was going to call you because I didn't think there was any use in going any further until I had talked to you because I understand you're paying him a salary and you're still his boss. F: Yes, (laughs) that's right. HMJr: Now the thing that we've got here - we're trying - we've had this Advertising Council who've worked with us, you know? F: Yes. HMJr: And they've recommended very strongly that at this stage on these Government drives that we need a man who knows how to handle salesmen and sales organization, and he's been on this little informal group with Grant of General Motors F: Yeah. HMJr: and has come in here, and while I've never offered the thing to Robbins, he looks at it as a great challenge, which it 1s. It's one of the greatest selling jobs in the world. F: Yes. HMJr: And we need professional salesmen to help us out and sales brains, you see? F: Yeah. HMJr: Now I've - the reason I'm calling you is that I'd like you to think about it. I'd like, if you would, to have a talk with Robbins. F: All right. HMJr: And, as I told Nelson, after all his department and mine are both working for the same man al- though sometimes the people kind of forget it. F: Yeah, yeah. HMJr: I mean that we're all working for the Commander- in-Chief. 57 - 3 - F: Correct. HMJr10 Now I don't want to have to go to the President and say - tell him - let's say he decides that Robbins is the man and he should direct him to go from one to the other, because I don't want anybody to come unless they'd like to come, you see what I mean? F: Yes, definitely. HMJr: I mean I - I want him to feel this is what he'd rather do than - for the Government than anything else and it's the best job he could get. F: Well, you can rely on Bill on that, if he said that, why HMJr: Well, he hasn't said that. F: Yeah. HMJr: Because I - - I haven't made him a. definite offer and I wouldn't until I talked to you. F: Yes, sir, I see. HMJr: But he did say he considered it a great challenge, and F: Well, now tell me something about this. Could he be retained on the same basis? Have you any rules, regulations, or restrictions about dollar-a-year men? HMJr: Uh F: In this capacity. HMJr: As far a.8 I know - that we haven't. F: Uh huh. HMJr: I - I don't know of any rules or regulations. F: Well, I - - I presume you would make them. I just didn't 58 - 4 - HMJr: Yes, I talked to F: Secretary Wickard has. He has decreed that he'll have no dollar-a-year men. HMJr: Well F: And it makes it very difficult, in my judgment, for him to get men. HMJr: Well, here's the point. I would much rather have a man come down here and work for $8 or $9 thousand dollars for us. F: Yeah. HMJr: I quite frankly wouldn't take an investment banker and have him come down here and keep his salary from his firm. F: Yeah, yeah. HMJr: But what the hell good 18 the Treasury to General Foods? F: No. HMJr: What? F: No - yeah, I see your point. HMJr: I mean I wouldn't take a banker and have him come down here and work for me and have the bank pay him. F: Of course, there's one thing that you might - that you might want to do and that's the way Joe Eastman works, and that is if there is any benefit in getting him on the payroll, 8.8 - as Joe Eastman seems to think HMJr: Yes. F: fix him on the payroll but still permit the company to pay him the difference. HMJr: I see. 59 - 5 - F: Do you see? HMJr: Well, that part - I went into it with him. I did talk to him - I mean I never met a man who answered my questions as frankly as he did. F: Yeah. HMJr: He's one of the frankest, most direct fellows I've ever met. F: Oh, yes. HMJr: And I like him. F: Yeah. HMJr: I asked him about it, and he said, well, he could but it would be a great sacrifice. He's got four children in school and all the rest of that thing. F: Yes - he has some income. HMJr: And he told me he had some income. F: Yeah. HMJr: I would rather, all things being equal, have a man come down here and - and sever his connections. F: Yes, I can see that. HMJr: I've reached the point - I mean I'm doing something now which I've never done before, I'm taking the man with the best training to do a highly technical job for me. F: Yes. HMJr: Now in order to get it - - well, I can't make my rules too stiff. I might just as well be honest about it. F: Now how long - how long a time.... HMJr: I mean I wouldn't - hello? 60 - 6 - F: ....now are you talking months or years or.... HMJr: Well, if he comes I'd like to have him see me' through until my term, which is a little less than two years now. F: Woo, woo, woo! Two years of it - 1s - would that be a positive stipulation. That may make it difficult. HMJr: Well.... F: Or HMJr: Well, don't F: Is that.... HMJr: Don't you think this, Mr. - if a man gets down here, he's not going to be much good to me for the first three months. F: No, but I was thinking, for instance, suppose we said for the balance of this year and then take a look at it HMJr: Well, that F: ....and see what the conditions are, and under no conditions, of course, would he leave unless he had somebody to carry on. HMJr: Well, that's fair. F: Huh? HMJr: That's fair. F: Yeah, I - - I think a two-year commitment 18.... HMJr: Well, that's fair - I mean.... F: Huh? HMJr: That - that's fair. F: All right. 61 - 7 - HMJr: That's fair. F: All right, and that's through - through 1943 and then look. I'm just making a note on this, and see - well, now all right, Mr. Secretary, let's do this. I'll - I'll talk this over with - with my associates here. I've got to see just what their plans were because I know they had some thoughts with this possible change over there -- with the Eberstadt situation -- that Bill might find himself in a - well, relieved after sixty or ninety days or something of that sort. You never know which way the wind will turn. So let me check it over with him. I'll talk with Bill, and when - when would you like to hear from me? HMJr: I'd like to hear from you by forenoon tomorrow. F: Oh-oh! All right, all right, we'll do it. HMJr: Forenoon tomorrow. F: I'll do it. HMJr: Now when you call, will you call me on District 2626? F: District 2626. HMJr: Yes, that goes right to my own telephone operator. F: I'll do that before noon tomorrow. HMJr: If you - and I didn't tell him I was calling you. F: I see. HMJr: Do you think I should? Maybe it would be nice. Hello? F: Yes, let's do that. HMJr: Should I tell him I called you? F: Let's - let's do that.... HMJr: Yes. 62 - 8 - F: ....and are you going to get him now? HMJr: I - - I can, or do you want to get him? F: No. Why don't you tell him that and ask him if he'll call me at my home about seven o'clock tonight. HMJr: To call you at your home about seven tonight. F: Yeah. HMJr: I'll do that. F: Fine, and I'll call you before noon tomorrow sure. HMJr: If you please. F: Fine. HMJr: Thank you. F: Goodbye. 63 February 25, 1943 4:15 p.m. HMJr: Hello. Operator: Mr. Robbins. HMJr: Hello. W. M. Robbins: Yes, good afternoon, sir. HMJr: Good afternoon, Mr. Robbins. I've done some- thing that I hope is not displeasing to you. I've just called up Mr. Clare Francis R: Yes. HMJr: and told him my little story and also told him that I've been talking with Donald Nelson and have got nowhere - hello? R: Yes. HMJr: And that I felt that after all he was paying you your salary (laughs), and had something to say about where you would work. R: That's correct. HMJr: Also, in the final analysis, Mr. Nelson also works for the Commander-in-Chief the way I do, and while - 80 in the final analysis I could go to the President. R: Yes. (Laughs) HMJr: Well.... R: I - I don't get the significance, Mr. Secretary, of - you say you got nowhere with Mr. Nelson. HMJr: Well, I - - I asked Nelson about you. R: Yes. HMJr: I mean I said we - we've been talking, nothing definite, but how would he feel about your coming over here. 64 - 2 - R: Yes. HMJr: Well, suddenly you're very, very important. R: (Laughs) HMJr: See? (Laughs) I hope you don't mind my saying that. R: (Laughs) HMJr: And they've got great things in store for you R: Uh huh. HMJr: ....now that I've put my finger on you. R: Oh, my ! HMJr: And - and BO he comes along and recommends some- body else who we've checked here. He's just a third or fourth-rater. R: Uh huh. HMJr: It's ridiculous and I'm angry - and I got angry and I called up Mr. Francis while I was angry - I mean because I didn't think it was fair that they should recommend somebody else who - well, I just wouldn't give him any job in the Treasury. R: Uh huh. HMJr: And.... R: You're entitled to - - of course, I've - I've been close enough to this, Mr. Secretary, to realize, I think, and have an appreciation of what you're entitled to. HMJr: Well, I'm entitled to the best. R: My great doubt 1s whether I can fill that bill. HMJr: Well, now Mr. Francis would like you to call him up tonight at his home at seven o'clock. R: All right. 65 - 3 - HMJr: And he said he - as far as the Jompany is concerned, he'd give me an answer by forenoon tomorrow. R: Uh huh. All right, sir. Well, now I - - I will call him. HMJr: Yes. R: ....and - well, then - then where do I stand? HMJr: Well, then after he - after you've talked to him he's going to call me tomorrow. R: I see. HMJr: Then I want to get together with you and really talk business. R: All right. HMJr: See? R: All right. HMJr: I mean we haven't really talked business yet. R: No, we really haven't. HMJr: But there was no use in my doing that. I thought I should ask Mr. Nelson, and he's given me the run-around; and I talked to Mr. Francis and he's talking business. He understands and he asked me a lot of questions, all of which I answered. R: Uh huh, uh huh. HMJr: How long and all the rest of that. R: That's right. HMJr: And he said that from the company standpoint what they'd say would be - they agreed it would be the balance of this year, and then have a fresh look at it the first of next year. R: Uh huh, uh huh. 66 - 4 - HMJr: Then he asked me about your salary and all of that. We - we went into the whole business. R: I see. Well - well, sir, I'll - I'll call Clare - Clare Francis HMJr: Yes. R: ....and I can do it either now or later this evening. He suggested at his home at seven? HMJr: That's what he suggested. R: Well, then I'll do it that way. HMJr: And then I told him that we just had an informal talk and hadn't arrived at anything, and - but now that - I wanted to get more formal and that - 80 he said to talk to you, and he thought it would be nice if - I said I wanted to tell you about it and he wanted me to talk to you. R: Yes, yes. HMJr: So - and I might say that Mr. Bell was extremely well impressed after he had talked with you. R: Yes, we had a nice visit together. HMJr: Right. R: A nice visit together, and I enjoyed very much meeting him. HMJr: Okay. R: Well, then after - well, you will hear then HMJr: After I hear from Mr. Francis, then I'll call you. R: All right. HMJr: Right. R: Thank you very much. HMJr: Right. R: Goodbye. 67 February 25, 1943 To: Secretary Morgenthau From: Mr. Thompson Referring to your request for information on the amount of funds available for promotional activities in connection with the sale of Govern- ment securities: After allowing for continuance of present activities of the War Savings Staff and the Victory Fund Committees at approximately their current levels, it appears that $3,000,000 can be made available for promotional activities incident to the April drive. Up to $1,500,000 of this amount could be used for printing within statutory limitations. Otherwise the $3,000,000 could be expended as you might direct, for radio, motion pictures, newspaper advertising, etc. The $3,000,000 has been computed from existing allotments as follows: War Savings Staff $2,000,000 Victory Fund Committees 1,000,000 Total $3,000,000 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE February 25, 1943 TO Dr. Harry White FROM Secretary Morgenthau Effective this date, I would like you to take supervision over and assume full responsibility for Treasury's participation in all economic and financial matters (except matters pertaining to depository facilities, transfers of funds, and war expenditures) in connection with the operations of the Army and Navy and the civilian affairs in the foreign areas in which our smied forces are operating or are likely to operate. This will, of course, include general linison with the State Department, Army and Navy, and other departments or agencies and representatives of foreign governments on those matters. In the above connection, you will, of c. urse, keep Under Secretary Bell advised with respect to All matters affecting gold, coins, coinage, currency, or rates of exchange. You will also consult with Mr. Paul or Mr. Luxford and Mr. Pehle in all matters which come within the juris- diction of the Foreign Funds Control. Regraded Unclassified TREASURY DEPARTMENT 69 INTER OFFICE COMMUNICATION DATE FEB 25 1943 TO Secretary Morgenthau FROM Mr. D. W. Bell You will recall that at a recent meeting of Senator Byrd's Committee on the reduction of non- defense expenditures Senator Nye criticized a procurement transaction of the War Department involving the purchase of a number of railroad cars equipped for hospital or medical purposes, and indicated that it was his understanding that the Procurement Division of the Treasury Department required the Surgeon General's office to purchase cars from a particular company, even though such cars were higher priced and involved higher operating costs. Senator Nye was apparently confused, inasmuch as we cannot find that the Procurement Division was ever involved in any such transaction as he described. I have written letters to Senators Nye and Byrd, copies of which are attached, and I believe that this is all we need do about the matter. DWB Enclosures 2 carbon copies 70 FEB 25 1943 My dear Senator: My attention has been called to a matter discussed briefly during a recent meeting of the Committee on the reduction of non-defense expenditures hold February 10, 1943. Although as stenographic resord of the meeting vas nade, ay information is to the general effect that you described a transaction involving the purchase, by the office of the Burgeon General of the Var Department, of a maker of vailred care equipped for hospital or medical perposes, and suggested that the Committee night well Leek 1999 this particular transac- tion. You seem to be under the impression that the Precurement Division of the Treasury Department insisted that the Burgeen General's office doal with a particular company and purchase a particular type of equipment, OTHER though another available type which had lever operating cents, could have been procured at a lever price, I have checked into this matter very carefully, and an unable to find that the Procurement Division of this Department participated in say degree in the transaction to which you refer. I - confident that further investigation will demonstrate that the matter was handled entirely in the War Department and that the Proverement Division of the Treasury Department was not involved. Sincerely yours, 151 ow Bee Vader Secretary of the Treasury. Non. Gerald 2. Rye United States Senate Vackington, 2. a JJO'0JR/lsw 2-22-43 WTH:mlb 2-24-43 Regraded Unclassified 71 FEB 25 1943 My dear Senstor: I on enclosing a copy of & letter I have just sent to Senator Eye. Its contents are self-explanatory, and the letter is sent you in order to correct any mistaken impression with which you may have been left as a result of Senator Eye's remarks at the meeting of your Committee on February 10. Sincerely yours, /SID.W. Beee Under Secretary of the Treasury. Home Harry Flood Byrd United States Senate Washington, D. c. Enclosure. JJO'C.Jr/1sw 2-28-43 72 Mrs. Klotz Will you give the Secretery the atteched, please, as a suggestion for press conference? @ @Ar FROM: MR. SCHWARZ TREASURY DEPARTMENT 73 INTER OFFICE COMMUNICATION DATE 2-25-43 TO Secretary Morgenthau FROM Mr. Schwarz s The Treasury's Procurement Division is planning to ask to be allowed to intervene in the electric rate hearings scheduled to be opened next week by the local Public Utilities Commission and to contend that the costs to consumers in the District of Columbia area are unreasonably high. As the purchasing agent for electricity for practically all Federal activities in the District, the Procurement Division last year was billed for approximately $4,000,000 by the Potomac Electric Power Company and its affiliates. Further discussion should be reserved until a petition for intervention is filed. 74 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE TO Secretary Morgenthau February 25, 1943 FROM Frances McCathran CONTROVERSIAL ISSUES BEFORE CONGRESS 1. Tax: Ruml Plan - Plan to force Congressional vote on the Ruml plan by discharging the stalemated House Ways and Means Committee of further responsibility in drafting pay-as-you-go legislation was indicated to be gathering force on Capitol Hill yesterday. Republican representatives especially appeared to be strongly in support of the move. In the House Ways and Means Subcommittee, too, Republican members, Knutson and Reed urged that one of two actions be pursued immediately: (1) The Ruml Plan or something similar be submitted for the full committee's approval; or (2) Knutson's plan of working out pay-as-you-go legislation now and deciding what to do about 1942 taxes later, be adopted. 2. Manpower - As rumors persist of labor and manpower shake- ups, WMC McNutt again was rebuffed in Congress yesterday when the House Appropriations Committee slashed his request for $2,454,000 from the Deficiency Appropriations Bill. He needed the money, McNutt told the committee, for the U.S. Employment Service whose wages, below the Federal wage scale, are causing large numbers of the employees to leave. If this agency fails in its program of transfering workers from nonessential jobs to war work, he will know "where. the reason is" McNutt added, But Congressman Taber resented the statement as a "threat". The Department of Labor also was refused $337,000 in the Appropriations Bill. In subcommittee hearings Secretary Perkins, who said the funds would be used for improvements in plants which she thought would be a cure for absenteeism, was told by Representative Johnson of "deep-seated feeling" that she was "not very much disturbed or even concerned" about "the shocking situation of absenteeism in the various industries", The Labor Secretary also felt called upon to assure the Committee that she had never "encouraged strikes" but in- stead believed "methods must be developed" to prevent them. C, National Resources Planning Board - The Deficiency Regraded Unclassified 75 Appropriations Bill was also a. disappointment to the NRPB. Extra funds for this agency were postponed until Congress could decide whether to continue the life of the board next year, even though the House has already voted down its regular funds. 4. The Farm Issue - Reiterating the policy of incentive pay- ments instead of raising farm parity, Secretary Wickard yesterday asked for "a clear mandate from Congress immedi- ately" for his Food-For-Freedom production program. Representative Dirksen, however, said that. what the nation needs is a "good tough food Ozar" who will "slug it out with social reformers" like McNutt and Farm Security Ad- ministrator C. B. Baldwin. There was no evidence to indicate that Wickard would do the job, he added. 5. McKellar Bill - Bitter debate for almost 2 hours between Senators Hatch and Wheeler in the Senate Judiciary Commit- tee delayed until Monday final vote on the McKellar Bill, requiring, with certain exceptions, Senate confirmation of Federal appointments receiving $4,500 or over. Hatch said the bill would be "completely distructive of the merit system" and "the greatest setback of the civil service which has transpired in many years". But Senator Wheeler claimed that in the last few years the Civil Service System had "practically been destroyed" anyway. 76 AGENDA 20 BOARD OF ECONOMIC WARFARE DOWN TO BE HELD WARY 25. 1943 AT 10:00 A.N. ROOM 201, THE OFFICE Discussion of "Report to the Board of Economic Warfare Regarding Merchant Shipping Services to the Other American Republies". (Copy attached.) copy 3 2/23/45 SECRET 77 Report to the Board of Economic Warefare Regarding Merchant Shipping Services To the Other American Republics At the meeting of the Board of Economic Warfare of January 14, 1943 a subcommittee was appointed to report on the export shipping situation to the other American republics, with particular reference to the programming of materials for projects in which the United States is especially interested in relation to the purely civilian requirements of the other American republics. At the mecting, Mr. Lewis W. Douglas, Deputy War Shipping Administrator, stated that the present target tonnagos of merchant shipping for the other American republics represented the maximum tonnage which could be expected unloss ships were to be divorted from military theatros. The represontatives of the War and Navy Depart- ments indicated that no such diversions were possible. It thus appeared that only by a decision on the highost policy lovel could any additional tonnage be made available for the other American republics, and the subcommittec was, by implication at least, influenced by this factor in the range of its possible conclusions. Aspects of the Shipping Problem There appear to be three chief aspocts to the ship- ping problem: (1) The recommended minimum programs of shipping to each republic with commodity and project breakdowns - the targot programs within the limits of available shipping. (2) Administrativo mochanisms for insuring that the available vessels are loaded in accordance with the programs. (3) The gearing of production in the United States to match the export shipping programs - which involves the backlog problem. This таяза - 2 - This report of the subcommittee will undertake to consider only the first problem - the expression of our export and shipping policy towards the other American republics in concrete terms through the target programs. The other two aspects are obviously of an administrative character, and while difficult, flow out from the broader policy decisions involved in the first point. History of the Target Programs In May 1942 the Board of Economic Warfare considered a report on merchant shipping policy with respect to the other American republics which outlined the broad factors to be considered in determining such policy. During the month of June there were prepared the first target programs- for the east and west coasts of South America - and the Priorities and Allocations Advisory Committee to the Com- bined Shipping Adjustment Board on June 9 and Juno 26 accepted these targets as goals for ship allocations. Target programs for the Caribbean countries were delayed in preparation, as the problems were of quite a different nature and the naval routing consideratione during the summer of 1942 made determinations much more difficult. It was not until December 1942 that complete target pro- grame for ench of the American republics were announced, by the War Shipping Administration. These target tonnages, which are still in effect, are indicated in Table 1. The only factors taken into consideration early last summer in preparing the proposed target tonnages were the civilian requirements of the countries in question, in- cluding coal requirements. The discussion at the meeting of the Priorities and Allocations Advisory Committee to the Combined Shipping Adjustment Board on June 9, 1942 specifically pointed out that no Lend-Lease or Pan American Airways cargoes were included. Since that period there has occurred, in the case of a number of the American repub- lios an extromely large increase in special demands for shipping, including Lond-Lease tonnages for military equip- mont, the rubber program in the Amazon Valley and elsowhere, coppor and other mining developments put forward by the Office of Imports of the Board of Economic Warfare and the Metals Reservo Company, the air transportation program of the Defenso Supplies Corporation, other strategic materials projects Regraded Unclassified 78 3 - projects such as quartz crystal and mica projects, and requests of the Potroloum Administrator for War for 10- pressive quantities of materials for the maintenance and extension of petroleum operations in the several petroleum producing And refining countries. In Central America the War Department has requested considerable tonnages for materials and equipment for the carrying out of the pioneer road project. Morcover, in certain of the other American republics projocts of local intorest long under discussion and in preparation have developed to the voint where largo quan- tities of finished products are boing turned out for ship- ment to the countries in question. The original targots took into consideration virtually none of these special domands, although some have moved be- cause reductions have boen found possible in a number of civilian supply items. Since preparing the original targets, some modifica- tions have been made by agreement among the War Shipping Administration, the Board of Economic Warfare, and the State Department. The original Brazil program WAB broken down into 70,000 long tons of coal and 28,000 long tons of general cargo. Beginning in January of this year, the breakdown was altered to 50,000 tons of coal and 48,000 tons of general cargo. Thus within the original target total savings in coal consumption have mado possible a measure of reliof for the excoodingly great demands made upon the general cargo tonnngo by the Brazilian lend-loase, Brazilian steel mill, Itabira, Rubber Reserve, and several other programs. Similarly, some other more minor adjustments have been made in the targets for other republics and in the case of a number of the smaller countries the total target has been altered slightly from time to time. Statistics of Shipping to the Other American Rebublics There are attached Tables 2,3,4, and 5 based on the data of the War Shipping Administration indicating tonnage shipped during 1942 and January 1943 to the several American republics. In analyzing these figures there are a number of points which should be kept in mind: Shipmonts Regraded Unclassified 4 Shipments to the land-locked countries of Paraguay and Bolivia do not appear soparatoly but are included with those to Argontina or Uruguay and Chile rospoctively. In addition, shipmonts to El Salvador through Puerto Barrios may appear in the Guatomala statistics, and shipments to the Canal Zone and to the Republic of Panama are hopclossly confused. Cortain other transshipments involving two countrics may occur in n limited number of instances, A8 the War Ship- ping Administration statistics indicate the port of discharge rather than neçossarily the final dostination. It will be noted that those figures indicnto that in general the lovol of targot programs has not been attained in connection with Brazil, Peru, Ecundor, Colombia, Costa Rica, Nicaragua, El Salvndor and Vonozuela. It should bo notod that complete shipping programs for the last five countrics mentioned were not finally dotermined until December 1942. The statistics do not permit an adequato appraisal of the situation with respect to Bolivia, Para- guay and Panana. On the other Hand, the statistics for December, and tho proliminary partial figures for January indicato a. great improvement in the situation of Peru, Colombia, Costa Rioa, Nicaragua, El Salvador and Vonozucla. In Decomber, the Inst month for which complete figures are available, the targot programs were met or excooded in practically all of the countries except. the Enst Const of South America. Proliminary information indicates that the shipping tonnagos are boing rathor well naintained in Fobruary as woll. Colombia, which has been a vory difficult problem, will again in February receive con- sidorably more than its targot tonnago, thus making up further for somo of the vory low months in the late fall of 1942. In appraising these results a number of factors should be kopt in mind: (1) The extromoly difficult and changoable situations with respect to submarino warfare, naval routings and convoys in the Caribbean and East Coast trades. (2) The failure of Brazil to keep its vossels in efficient "poration. In the last six months only one Brazilian vossel a month has cleared United States ports. This situation appears to be improving, as the War Shipping Administro- tion is placing into service the thirtoon Brazilian Regraded Unclassified 79 IS I I Brazilian vessels which it has chartered, and Brazil 1s placing into operation approximately twenty-two vessels which it has committed to the United States trade. These developments will render more probable the attainment of the 98,000 ton target in coming months. (3) The failure of some other American republics to make the most efficient use of their vessele. Attempts are being made to improve the situation by charter and by agreement. (4) At the end of the year the port of Buenaventura, Columbia, was badly congested following railway washouts which, along with routing problems in the Caribbean, complicated the delivery of goods to Colombia. Shipping Requirements - The Case of Brazil There are attached (Appendix A) the breakdowns of the target programs submitted for the month of March to the War Shipping Administration by the Board of Economic Warfare and the Department of State for each of the American republics. Perhaps the most difficult problem, and certainly one which illustrates all of the policy considerations involved, 18 that of Brazil. The Brazil program PB submitted for March is mede up roughly 88 follows: Coal 50,000 Civilien requirements 20,100 Rubber Reserve program 10,000 Itebire 4,000 National Steel Mill 2,400 Other projects 1,400 Lend-Lease 7,600 Tinplate for British mest-pack 2,500 Total- 98,000 The target tonnage for coal hes been reduced from 70,000 tons per month to the present figure of 50,000 tons. Shipments in the last e1x months have overaged 39,800 tons, At the level of 50,000 tons, the principal consumers ere the Lloyd Brasileiro for bunkering, the goe companies, the Brazilien Novy and importent Brazilien railways. It Regraded Unclassified - 6 - It 18 the firm conviction of the requirements officers in the Board of Economic Werfare and the Department of State that the civilian requirements have already been sleshed below the minimum desiroble level which should be considered 25,000 tons. The Rubber Reserve figure is below that deemed 08- sential by the Rubber Reserve Company for the mere carrying out of their present program and the necessities for sup- plying the lerge number of workers being moved to the Amazon in accordance with the recent agreement with the Brozilion Government. There is attached (Appendix B) e separate memorendum prepared by the Rubber Reserve Company. The Rubber Reserve requirements may be summerized AB followe: February 17,863 Merch 15,548 April 14,000 May 13,250 June 11,600 # July 3,900 *If tenkage will be ready by July, June ehipments of potroleum products, can be mode in bulk. The 4,000 ton rate for Itabire 18 not sufficient to take up meterials being delivered for shipment in PC- cordence with the program determination of the Wer Production Board. A figure of pt least 6,000 tons for the next three months would be required for the purpose, and P figure of 5,000 or 6,000 tone F month thereefter. The tonnage requirements of the National Strel Mill project, to which the Brazilien Government attaches no. 1 priority, PS indicated in en Executive Decree of the President of Brozil, will overage slightly over 5,000 tons E month for the next two years if carried out OR plenned. While certain of the projects included in the "Other projects" cetegory are being completed, other projects still in the mill, including large quentities of metoriele for the disappeerence. Central Reilway of Brazil, will more then make up for their Although Regraded Unclassified 80 7 Although the Lend-Lease shipments in March contain an exceptionally heavy. item of meterials for the sirplane engine factory, direct military equipment has been entered at e very low figure, end to dete less then 10% of the totrl Lend-Lease program hos been delivered. The Govern- ment of Brezil attaches no, 1 priority to Lend-Lepse mill- tery shipments, PB well AB of the National Steel Mill. No requirements Are listed for the Prn American Airweys since errongements have been mede for the Army to transport the 1100 tons of cargo for this purpose. It 18 obvious that Pll of the listed requirements of Brazil can not be scheduled PB planned within the existing target shipping progrem even if that terget 18 met, Policy Considerations 1. The United States feels that materials for EB- sential import progrems must receive adequate opnsideration in the distribution of shipping space. 2. Military necessities of the other American republics must move. 3. Civilian requirements of the other American repub- lice must move in amounts sufficient to mrintain public health and order, and to permit st least D minimum level of conomic activity. The maintenance of such e level of economic activity, and resulting political end social stability mey be of the greatest importance to the prose- cution of the war, to our own military plans, and to the production of essential stretogic matericle. 4. Certain projects of somewhat 1088 direct wor significance may enjoy P local position of overwhelming importence. 5. At least An important part of the total tohnege to be moved must the carried in vessele of the country in question. The terget tonneges include tonnegee of Pll flegs. The Wer Shipping Administration hre been removing ite own vessels 88 local tonnages come into the trode, and conversely attempting to meke up the gape fe loosl vessels have been sunk or have feiled to operate efficiently. 6, Regraded Unclassified - 6 - 6. The target tonneges for South America nt least were announced some time rgo. At that time they came EB 8 distinct shock to the countries in question, end in ad- dition these countries have come to feel that their 08- sential civilien requirements would be hendled within the target figures. Although it he's elways been mode clear that the exigencies of war might force reductions in the tergets and in performence, the encroschment of United States end other projects, end militery supplies, not only effects 8 real reduction in the amount evoilable for civilien requirements, but reises psychological and political questions. 7. Where the torgets are already tight, the failure to perform reises additional problems of priority of several types of corgoos, it 18 clear that United States project materials can not in all cases be accorded first priority, end the wishes of the Governments of the other American republice must be given every precticable con- sideration. The Case of Brozil Agein Returning to the CPBP of Brazil, we find that projects not originally given much or any consideration - nemely, the Rubber Reserve, Itebire, Steel Mill end Lond-Lerse programs - have in March been tentatively allotted a total of 24,000 tone or more than P quarter of Brezil's total terget tonnage. Calculated requirements for these four programs for Merch ere even greater - about 34,000 tons. Moreover, there 18 no merked bunching of requirements except in the 0886 of Rubber Reserve which has special non-recurrent requirements everoging to over 11,000 tone in February, March, April and Mey. It mey be leid down 88 definite that the Government of Brezil regards AB of first priority the shipment of Lend-Lesse end Steel Mill metericle. President Vorges hes ordered Lloyd Brasileiro if necessary to drop fll other cargoes in order to cesure that theer are carried. The Itobire project WAR initieted by the United States end Great Britein to pasure 8 supply of high-grade iron ore - especially for Great Britcin. Brozil's interest hes by these efforts been eroused end & large amount of Brazilion capital has been invested in the project. The Regraded Unclassified ⑉9⑉ The Rubber Reserve program is similarly primarily of United States interest but is also of concern to Brazil as the continuing tonnages of cargo are for the maintenance of Brazilian workers in the Amazon, including the 50,000 now being transported to that area by arrangement between the two Governments. Other Countries No attempt will be made in this report to analyze in detail each country program. There is attached, however, Table 6 indicating the distinguishable tonnages included in the March 1943 programs. A great deal of reservations must be adopted in using this table, as it includes projects both of interest to the United States and to the countries in question, and, moreover, the line of demarcation between a project of interest to the United States and one of interest to another republic is almost impossible to define. Beyond this, the figures probably understate what might probably be considered to be project tonnages, since a considerable amount of the coal and other supplies listed for civilian consumption are for the maintenance of rail- way operations, public utilities, and other enterprises, a portion of the activity of which is directly related to the projects. Analysis of this table and of the general program indicates that in many of the republics the targets appear to be fully workable. This is probably the case in all of the republics except the South Américan republics, and in any event, minor adjustments have boen and can be made from time to time in the small target figures applying to the Caribbean republics. Among the South American countries project tonnages loom large in the casos of Poru, Bolivia and Chile. More- over, if the roquirements being submitted by the Petroloum Administrator for War for the second quartor are accepted, the programs for Venezuela and Ecuador will bo thrown out of balance, and the situation of Poru furthor impaired. In the Regraded Unclassified -10- In the caso of Chilo, spocial arrangoments have been made wheroby the Corporación do Fomonto oporatos ships out- sido of the targot figuro, and this has rolieved in part at least the prossuro of tho projects. The Corporación's tonnago is only tomporary, however, and discussions now in progross looking toward the maintonance of this oxtra ton- nago in the trado should bo pressed to a satisfactory con- clusion. Tho difficult situation of Colombia has alroady boon montioned, and the groatly improved dolivorios in January and Fobruary citod. The problem of Colombia appoars to be largoly ono of carrying out the targot program rather than one rolating to the amount of the targot itsolf, Conclusions: As a rosult of its invostigation and analysis, tho subcommittoo prosonts the following recommondations and commonts: 1. The subcommittoo bolioves that, within tho over-all limitations on shipping which have boon imposod by the oxigoncios of war, the actual por- formanco in shipping to most of the Amorican republics is sufficient to maintain thoir civilian oconomios at roasonable wartimo lovels and also provido sufficient spaco for tho projects pro- sontly sponsored by the various governmontal agoncios. Tho spocial caso of Brazil is takon up indopondontly. The subcommittoo furthor boliovos that tho present systom of consultation botwoon tho War Shipping Administration, tho Board of Economic Warfaro and the Department of Stato for laying down dotailed shipping programs within tho targots appoars to be working satisfactorily. It rocom- monds that such consultation bo oxtended to dis- cussions of such modifications in tho targots thomsolvos as may appoar dosirable from timo to timo. Somo Regraded Unclassified 81 -11- Somo of tho mombers of the subcommittee have suggested an immediate discussion of the oases of the targets for Bolivia and Peru. Some of the members of the subcommittee have pointed out that, although the treatment no- corded these American republics appears in absolute terms thus to be satisfactory, there is no basis for comparison of this treatment with that accorded in shipping services to other areas, 2, Especially in the cases of those South American countries where the target tonnages are tight the failure to meet the target tonnages will result in serious strains unless priorities are 30 arranged that the project material takes 8 place definitely subordinate to direct civilian requirements, Similarly, in the cases of the same South American republics there is absolutely no room for expansion of project tonnages at the expense of the civilian requirements even if the target tonnages are met. As a corollary, the Rubber Reserve Company, the Petroleum Administrator for War, the Board of Economic Warfare, and any other agoncies which may propose projects should do so in full realiza- tion of the tightness of the shipping situation, and should not sponsor any additional projects or any increase in the present projects unless these can be shown to be absolutely essential to the war effort and, if of largo magnitude, to warrant divorsion of shipping tonnage from other areas. Specifically, it is recommended that the second quarter tonnage requirements put forward by the Petroleum Administrator for War for Venezuola, Ecuador, Poru and other petroleum producing or re- fining countries be studiod within such critoria. 3. A more detailed recommendation is made for the case of Brazil. No ontirely satisfactory pro- gram for Brazil can be worked out within the 98,000 ton target limitation if all of the roquests of the Rubber Resorve Company and the other projects are carried out. The only leoway in tho situation appears to lie in the possibility of reducing tom- porarily coal shipmonts in spite of the strong protests of the Brazilian Government, and deferring temporarily a part of the Itabira and stool mill shipments, Regraded Unclassified - 12 - shipments, with a view to increasing coal, Itabira, steel mill and civilian requirements shipments in June and July as the rubber program drops off from its spring bulge. The subcommittee, after reviewing all of the factors, recommends the following tentative revisions in the March shipping program for Brazil with the indicated ad justments to be made in April and May. These recommendations are based upon the following premises: a. That a rubber program must be carried out. b. That lend-lease shipments can not be reduced, 0. That no ono of the other programs can be climinated entirely. Recommended Program for Brazil Coal 43,000 tons (tentative) The Government of Brazil and the Embassy at Rio have stated emphatically that no reduction below 50,000 tons can be countenanced although deliveries in the past have fallen short of this figure. The Brazilian Maritime Commission has indicated that bunker stocks are very low and that failure to allo- cate more coal to the shipping companies may shortly result in a curtailment of coastal as well as inter- national services. Nevertheless, it might be possible during March to get along with shipments at a lower figure if the position of each consumer is stated carefully and shipments are made only to consumers whose stocks permit no delay. Some relief may be expected from incroased shipments of coal from south- ern Brazil to principal consumers. In April and May this figure may be increased to 45,600 tons if lond-lonse shipments docline to 5000 tons a month as suggested below. In Juno or July, when the Rubber Reserve movement has subsidod, it should be possible to step the figuro up to 50,000 tons within the full target tonnage of 98,000 tons. Rubber Regraded Unclassified 82 - 13 - Rubber Reserve 17,000 tons (tentative) In view of the importance of rubber, the subcom- mittee was loath to recommend any reduction, but the subcommittee believes that the tonnage of rubber to be obtained from the Amazon Basin should be carefully considered in rolation to tho 75,000 tons of shipping space required in the next four months to move the metorials nooded for the furthorance of the program. Reprosontatives of the Rubber Reserve Company failod to present to the subcommittoc a justification for the airport construction and the air transport programs on the grounds that such program is an intogral and insoparable part of tho entire rubber program. If this portion of the program were eliminated it would result in a saving of about 25% of the shipments planned for the first four months. It 18 suggested that the Board consider carefully the essentiality of this portion of the rubbor program and the effocts of its climination, a mattor concorn- ing which the subcommittoe was unable to obtain infor- mation. It 1s also suggested that the Board rocommend that every possible step be taken by the Rubber Reserve Company to the end that petroleum products may be moved in bulk rather than in drums as is being done now. (See memorandum of Rubber Reserve Company attached as Appendix B.) The subcommittee recommends that the total of 60,000 tons be allocated to coal and the Rubber Reserve program, and requests the Board to dctermine whether the air transport program is ossential or whether the tonnage involved (about 4,000 a month) should be devoted to coal. Civilian Requirements 20,000 tons In view of the obvious importance of this item and the cuts that have already been made, no comments are required. At this level each commodity will have to be given the same careful study as indicated in the case of the coal requirements. As lend-lease and rubber requirements permit, this item should be given priority in increases, and an effort should be made to step it up to 25,000 tone by June or July. Tinplate for British Meat Pack 2,500 tons Itabira Regraded Unclassified - 14 - Itabira 3,000 tons The engineers have indicated to the Export-Import Bank that an average of at least 4,000 tons is neces- sary to insure the carrying out of this program, but that they of necessity will accept 3,000 tons a month for B. few months, provided that when some relief is possible in June or July, the figure 1s stepped up to make up for this deficiency. Steel Mill 3,500 tons In view of the economic and political importance attached to this project by the Brazilian Government and the favorable treatment given United States proj- ects in those recommendations, a out of more than 30% would not seem practical. This is another project which must be stopped up to make up for this deficiency. Othor Projects 1,400 tons Sco program for March attached. Lond-Loasc 7,600 tons 4,100 tons of this total represents shipmonts for the airplano engine factory which has obvious military and political value. It is to be hopod that total lond-lonse shipments can be limitod to 5,000 tons in succcoding months, and it is recommended that Army and Navy reprosentatives give this thoir closest considoration. It is recommended that, in view of the Export Control Docentralization Program now in force in Brazil and other countries and in view of the obvious and appropriate interest of the Government of Brazil in this whole matter, this recommendation not be accepted as final, but as a tentative suggestion to be placed before Brazil which may wish to make other modifications in the various projects of interest to it. The subcommittee believes that the greatest possible flexibility should be maintained in the entire system of fixing shipping and export programs, and consequently it does not wish to attempt to set the pattern of exports to Brazil many months in advance. Novertheless, it suggests that Regraded Unclassified 83 - 15 - that in June or July when the Rubber Reserve program has dropped off, the distribution of cargoes within the target tonnage might be somewhat as follows: Coal 50,000 tons Rubber Reserve 4,000 = Civilian Requirements 25,000 = Tinplate for British Meat Pack 2,500 If Itabira 4,500 If Steel Mill 5,000 If Other Projects 2,000 II Lend Lease 5,000 = Total - 98,000 II Priorities The subcommittee understands that the April program being prepared by the Department of State and the Board of Economic Warfare will indicate a priority to be applied if only 80% of the target tonnage is supplied. In the meantime, the subcommittee recommends that if shipping is not available to move the target tonnage to Brazil in March, B priority be given to the following: Coal 3,000 tons Rubber Reserve 3,000 If Itabira 1,000 Il Steel Mill 1,000 If Lend-Lease 2,000 If Neither this recommendation nor the 80% tabulations being prepared by the Department of State and the Board of Economic Warfare for April should in any way be con- sidered to lossen the urgency and necessity of meeting the full program. Regraded Unclassified Regraded Unclassified 454 biother - YURROU STATE 02 me. - July on YOUR pera Ave OF net 427 MATERIAL 2000 OF , TOOD If COO a program - n 27000 CCPS 9 04 Traup 26 para LOTTORY :- 20 cas and Address JOJ TO 100 TI - 7ª 76 OUTA 80-> 96 and is - 10 CVN DE ECONOMIC NJI M to go perms X 6009 DOI LA, BANK THING spo good 100 OF 1 and 112"000 1. process NW - CARDS w Trage 5.200 91 92207 1.000 $ . EDUNTIF The FROM your R% rece now 201600 They DE 12 STATE AV De 2032 0.00 R 84 TABLE 1 DRY CARGO TARGET SHIPPING TONNAGES FOR EACH OF THE OTHER AMERICAN REPUBLICS TOTAL COAL NEWSPRINT TARGET Argentina 40,000 15,000 6,500 Bolivis 4,500 : 120 Brazil 98,000 50,000 (1) 3,000 Chile 10,000 : 408 Colombia 9,200 : 437 Coste Rica 2,400 -- 95 Cuba 60,000 20,000 700 Dominican 2,100 -- 35 Republic Ecuador 2,053 -- 130 Guatemala 3,800 | 120 Haiti 1,700 -- 10 Hondures 2,500 : 10 Nicaragua 1,300 -- 40 Republic of 9,000 : 245 Panama Paraguay 500 : 12 Peru 7,000 -- 400 El Salvedor 1,600 : 100 Uruguay 16,000 I 8,000 (2) 800 Venezuela 12,000 : 190 (1) The coal target for Brazil was 70,000 until January 1943 when it was decreased to 50,000. (2) The original estimate of coal requirements for Uruguay was 14,000 tons per month, which W&B reduced to 8,000 tons because of the receipt of coal from countries other than the United States end because of the use of substitute fuels. Regraded Unclassified TABLE 2 UNITED STATES EXPORTS TO OTHER AMERICAN REPUBLICS JANUARY-DECEMBER 1942 (Dry Cargo in Long Tons) 12 mo.avo, 6 mo.ave, Country Jan. Fob. Mar. Apr. May Juno July Aug. Sept. Oct. Nov. Doe, Jan.-Dec. July-Dec. Argentina 1 101,216 70,219 79,285 68,458 55,230 49,105 45,753 33,557 17,387 15,381 26,765 Dolivia 2 26,799 53,552 27,607 - - - - - - - - - - # - # # Brazil 135,508 114,825 76,086 62,070 78,695 80,034 43,036 81,231 65,225 89,463 49,213 60,217 Chile 3 38,709 85,055 17,654 31,118 64,731 20,020 25,336 23,976 21,168 13,852 13,709 25,645 8,532 19,334 Colombia 11,026 23,550 8,717 7,982 17,040 7,404 10,560 13,535 2,463 6,346 3,477 9,628 763 5,527 Costa Rioa 6,700 7,402 7,417 3,673 3,701 2,922 6,703 11,987 988 1,405 1,968 1,453 692 4,482 Cuba 4,581 108,412 81,554 1,831 78,069 105,381 69,496 65,238 80,745 51,179 79,733 60,560 72,082 Dominican 173,790 85,520 86,348 Republic 7,130 4,751 4,134 6,060 3,106 984 236 2 8,649 593 3,845 4,161 3,974 Ecuador 2,914 3,731 2,239 9,457 2,669 7,226 4,795 6,331 5,289 2,585 2,117 930 2,508 3,989 Quatomala 5,730 5,696 3,293 6,757 7,538 6,255 4,988 4,583 735 4,621 6,587 8,424 5,175 6,099 Haiti 5,021 2,564 1,912 2,411 3,611 3,804 1,022 2,032 3,188 2,167 597 4,746 1,582 2,694 2,385 Honduras 5,772 6,055 8,093 5,533 4,292 5,536 4,062 925 1,775 3,874 3,771 2,791 4,771 2,866 Nicaragua 1,624 1,911 1,968 669 2,353 4,744 879 956 604 658 476 4,283 1,920 1,309 Republic of Panama 4 - - - , - ! - - - - 18,428 15,073 - I Paraguay 5 - - - 1 I - - - - - - - - - Peru 12,669 17,755 20,633 8,364 5,311 11,185 10,653 10,305 8,418 4,456 3,515 10,510 11,251 7,976 El Salvador - 784 403 717 1,038 3,108 467 590 - 442 330 435 757 377 Uruguay 17,677 15,902 8,027 15,682 5,010 10,280 12,095 25,778 13,413 14,721 10,205 10,054 14,413 14,378 Venezuela, 36,419 15,919 25,029 27,761 22,641 23,281 8,561 7,726 5,469 8,078 10,627 11,421 18,448 8,647 TOTAL 494,887 373,310 357,125 344,859 307,056 313,798 244,052 243,064 229,200 238,253 254,564 415,241 346,855 270,729 1 Includes Paraguay 2 Included in Chilo 3 Includes Belivia From January-October, shipments to Republic of Panama and Canal Zone are not shown separately. 5 Included in Argentina Source: Ver Shipping Admini stration. Regraded Unclassifie TABLE UNITED STATES IRON AND STEEL EXPORTS TO OTHER AMERICAN REPUBLICS, JANUARY-DECEMBER. 1942 (INCLUDING TIMPLATE) (Long Tons) 12 months average 6 months starage Pebruary Varah April May June July August Suptember Oct Denember Argentina 25,455 9,552 20,508 10,374 5,062 8,378 9,834 7,252 1,990 2,061 11,401 5,876 9,815 6,409 Bolivia 451 837 509 867 306 1,406 196 756 541 (1) (1) (1) 1 - Brazil 20,305 7,684 9,997 5,559 5,349 7,345 9,107 9,505 3,723 15,560 2,869 9,242 8,854 8,354 Chile 4,793 7,621 6,362 3,682 3,769 3,328 459 2,793 1,415 4,256 3,092 8,709 4,182 3,454 Colombia 1,960 1,528 1,532 1,355 837 837 286 31 1,253 450 112 2,053 1,020 698 Costa Rica 1,517 504 702 568 22 109 57 5 183 58 25 297 337 104 Cuba 4,414 2,545 2,840 3,309 906 641 2,604 4,134 2,893 3,873 7,030 8,537 3,644 4,845 Dominican Republic 212 426 241 130 8 93 224 I 146 522 167 149 Equador 303 338 426 426 189 355 31 487 235 178 84 309 280 223 Quatemala 369 198 221 124 79 68 15 (2) 34 1,829 1,231 1,124 441 706 Haiti " 50 145 100 121 26 5 3 6 - 36 55 51 as Hondurs 653 466 1,021 295 70 3 102 (2) 12 51 17 105 233 48 Nicarague 494 189 142 172 124 58 212 18 17 122 157 409 176 156 Republic of Panama (9) I - - Paraguay 167 693 467 378 170 90 167 197 55 (4) (4) (4) Peru 1,508 2,063 5,700 1,565 1,539 1,288 616 527 302 718 1,267 4,833 1,827 1,377 El Salvador 108 154 74 102 2 28 1 9 (2) 47 We 10 Uruguay 3,736 1,870 2,804 1,946 728 1,558 677 2,716 297 3,070 1,631 4,728 2,145 2,304 Venesuela 7,073 4,620 6,275 10,635 4,751 7,756 2,755 2,283 1,891 719 1,726 2,764 4,432 2,023 Total 104,393 41,737 60,118 41,954 24,171 33,731 27,185 31,015 15,073 32,745 30,740 49,577 41,036 31,056 (1) Included in Chile (2) Loss than one Long Ton (3) Shipments to Republic of Parema a Canal Zone are not shown separately (4) Included in Argentina V. 5. Department of Commerce based on far Shipping Administration statistics: 85 Regraded Unclassified TABLE 4 UNITED STATES COAL EXPORTS TO OTHER AMERICAN REPUBLICS, JANUARY-DECEMBER 1942 (Includes Anthracite, Bituminous, Coal and Coke Briquets, and Coke) (Long Tons) 12 months 6 months January February March April May June July August September October November December average average January- July- December December Argustions. - 39,810 17,767 22,059 10,798 13,481 11,646 19,986 - : 1,031 9,549 16,677 7,035 Bolivia 6,537 - 5,688 1 98 - I - -- -(1) (1) -(1) - 1 Brazil 1,773 2,918 44,088 42,607 14,029 42,225 22,450 72,310 35,995 43,595 31,630 42,746 33,025 41,444 Chil 2,324 2 30 25 10,158 5 11,762 - - 17,294 2,520 191 3,709 5,294 Colombia - - I - -- -- - - - - - - - - Costa Rica 6 6 - -- - -- 6 - - - -- - 1 1 Cubs 11,499 11,816 14,645 7,633 13,945 9,215 8,442 14,320 16,330 9,411 9,189 73,888 16,694 21,930 Dominican Republic 18 - 5 1 38 -- 5 -- 1 - - 11 6 3 Ecuador 123 -- 119 - -- - : - -- - - 99 28 16 Guatemala 6 7 20 -- 11 -- : - | - 36 18 8 9 Haiti 2 - - 24 - 4 - -- -- 14 -- 2 - 3 Honduras W 5 44 -- - I -- - - - 7 -- 8 10 Nicaragua - - 1 - - - -- -- : -- -- -- - Republic of Panama (3) Paraguay - - - -- : -- -- - - (2) (2) (2) - - Peru 35 89 - - 90 52 -- : -- : : - 22 18 El Salvadr 30 8 10 - - 5 - -- - - - 4 - 1 Uruguay 6,700 10,156 8,094 - 5,462 18,152 -- - 6,203 - - -- 4,563 4,970 Venezuela 4 9 I - - 30 -- 4 - 34 -- 135 18 29 TOTAL 29,105 64,737 247,766 80,525 49,143 64,956 59,831 124,772 52,326 113,809 41,719 126,637 87,944 86,516 (1) Included in Chile (2) Included in Argentina (3) Shipments to Republic of Panama and Canal Zone are not shown separately Source: U.S. Department of Commerce based on Var Shipping Administration statistics. Regraded Unclas fie 86 TABLE 5 UNITED STATES EXPORTS TO CERTAIN AMERICAN REPUBLICS January 1943 Preliminary. (Dry Cargo in Long Tons) Argentina 26,354 Brazil 85,720 Chile 10,120 Colombia 9,445* Ecuador 500 Peru 14,175 Uruguay 16,309 * In addition 8,287 tons were shipped to Panama for transshipment to the north coast of Colombia. Source: War Shipping Administration Regraded Unclassified TABLE 6 DISTINGUISHABLE PROJECT TONNAGES IN MARCH 1943 PROGRAM (long tons) Total Target Project Percentage Argentina 40,000 1/ Bolivia 4,500 1870 42 Brazil 98,000 27900 28 Chile 2, 10,000 4200 42 Colombia 9,200 735 8 Costa Rica 2,400 235 14 Cuba 60,000 3/ Dominican Republic 2,000 540 27 Ecuador 2,055 360 17 Guatemala 3,800 490 13 Haiti 1,700 210 12 Honduras 2,500 not shown Nicaragua 1,300 not shown Panama 9,000 390 4 Pareguay 500 not shown Peru 7,000 3690 53 El Salvador 1,600 not shown Uruguay 16,000 not shown Venezuela 12,000 1949 16 1/ Argentina is a special case. Figures are not indicative since the Corporación de Fomento has been operating extra ships and its tonnage is not included. 3 Not significant - especially as the target is a minimum usually greatly exceeded. Regraded Unclassified 87 APPENDIX B RUBBER RESERVE COMPANY Washington, D.C. RUBBER PROGRAM TONNAGE REQUIREMENTS Februery through July, 1943 Listrd below are the tonnage requirements of the Amezon Rubber Program for the months February through June, 1943, broken down by categories. February March April May June July Flosting Equipment 800 2,100 1,500 500 Marine parts & 900 600 1,000 1,000 1,000 1,000 supplies Drummed petroleum 3,988 4,388 4,500 4,750 5,000 200 River Transportation Coal - River 3,000 1,500 1,500 1,500 1,500 1,500 Trensportation Construction 3,015 2,860 1,000 1,000 600 100 equipment Drummed petroleum 1,500 2,000 2,500 2,500 2,500 100 Construction equip- ment Tappers' supplies, 2,100 2,100 2,000 2,000 1,000 1,000 tc. Held over from Jenuary 1,960 Total 17,863 15,548 14,000 13,250 11,600 3,900 (4,400) # *If tankage will be ready by July, June shipments of petroleum products can be made in bulk. Regraded Unclassified Regraded Unclassified oth Dr they 257 MIT xr 3 - STREET et Pace - rich 00001 The 100 2'020 TCO 0943 - yes UTALE DEPARTMENT Fisco 000 to DEDO COD - nx eco - ROAD 3 STATE - your TOTA SC.RD pr HOOPER EOR (There will SPI A IC will 2082 D'L" DESEMAL CORBYIN VBSEXDIX = 88 The above figures have been estimated on the basis of informa- tion currently available on anticipated shipments of supplies, equipment and fuel. This information is not always complete, and any rapid changes in the priority or production situation might alter requirements for shipping space in particular months. It is expected that requirements for dry cargo space will de- crease materially after July, due principally to the fact that petroleum products will be moving in bulk after that date rather than in drums A0 at present. Dry cargo soace requirements for the Amazon rubber program are therefore expected to average less than 10,000 tone & month for the whole of 1943. The seasonality of rubber tapping, and the necessity that the basic preparatory equipment be in the Valley by May 1, in time for the opening of the 1943 tapping season, results in 8 bulking of shipments in the first half of the year. Estimates for shipments of fleating equipment, construction equipment, marine parts and supplins and miscellaneous rubber tapping supplice have been prepared after 8 review of the time at which outstanding orders for the same will be completed and ready for shipment to Brazil. Delivery dates of the rather small balances of supplies and equipment needed but still unordered have Also oren estimated and their wrights included in arriving at the tonnage requirements of the program. Under present production conditions, it 19 not possible to actermine accurately the delivery datee on SOMP orders. The dates used in preparing the above table represent the judgment of buyers familiar with the various mark te. Fuel comsumption of the coal-burning steamore which will soon be operating on the Amazon and its tributaries has been determined from cxamination of former operating records. The best information as to the dates on which they will arrive in Belemand begin operating on the River indicatos that not loss than 3,000 tons of coal must move in February, and that at least 1,500 tons must move each month thereafter. The ship- ment of 3,000 tone in February will result in the establishment of n smell reserve sufficient for approximately one month's operation. Similar calculations have been made for the many diescl and gasoline-burning vessels and items of construction equipment which are now or shortly will be in operation in the Valley. Proper Allowance has been made for the fnct that there will be some time-Ing between the Ar- rival of construction equipment in Belem, end the date on which it will require fuel, and plso for the fret that fuel must be moved to up-river pointe in anticipation of operations both of river creft and construction equipment. Examination of the nbove table will disclose that heavy ship- ments of floating equipment and construction equipment begin to taper Regraded Unclassified off in April, and that by June 7.500 tons out of an 11,000 ton total 1a represented by drummed petroleum products. Included in presently scheduled shipments are sizeable tonnages of knocked-down oil tanks and tank farms, Fuel barges have already been shipped to the Valley for use in transport- ing bulk fuel from Belem to up-river bulk storage points. Depending upon the speed with which these can be erected, delivery to Belem of gasoline, kerosene and diesel oil can be made in bulk, thus reducing requirements for dry cargo space. At the moment it appears that shipment in drume muet be mado through May. It may be possible to ship in bulk a sizeable portion of petroleum requirements in June, and cortainly after July all except lubes and greases will go in bulk. The reduction in dry cargo space thus ef- fected will undoubtedly be great enough 80 that the average monthly re- quirements of the rubber program during 1943 will not exceed 10,000 tone. It has been requested that an estimate be made of the effect of reducing the tonnage allotment for the rubber program by 3,000 to 5,000 tons a month. Three thousand tons a month, during the next four or five months, represents so large a portion of the basic preparatory equipment that ie being sent to the Amazon at the present time that its loes might completely stifle the Amazon rubber program. Unless this equipment is on hand in the Valley by May 1, in time for the opening of the 1943 tapping season, a very large share of the rubber expected to be secured in that area in 1943 can be written off B.S lost to the war effort. The importance of the Amazon rubber program as compared with other sources of crude rubber in this Hemisphere is illustrated by the fact that 78$ of all tree rubber expected to be imported from Latin America in 1943 will come from the Amazon area. It does not seem at all likely, moreover, that a diversion of effort from the Amazon to some nearer area of potential rubber development would even begin to offset the large time. tonnages which would be lost by slighting the Amazon program at this Regraded Unclassified 34 89 Roard of Economic Warfare appendix A. February 1, 1943 ogram Supply Branch SHIPPING PROGRAM Bolivia SECRET March - 1943 Long Tons Naval Stores 10 Rubber and Rubber Products 5 Textiles (except jute bags) 25 Cotton Yarn 5 Cotton Piece Goods 15 Rayon Yarn 5 Jute Bags 5 Lumber 400 Food Manufactures 5 Newsprint 120 Paper and Paper Products 200 Lubricants (oils and greases) 300 Paraffin 175 Window Glass & Glass Products 100 Refractory Brick 50 Watson Gench (Tungsten Mine) 50 "on and Steel 1,200 Civilian 200 Projects 1,000 1. Bolivian International Mining 5 2. Arramoyo de Minus 135 3. Patino Minns 700 4. Watson Geach 160 Tinplate 90 Coppor and Copper Products (Including Coins) 100 Machinery and Vehicles (Including Parts and accessories) 690 General Civilian 520 Electrical 20 Industrial 150 Agricultural 100 Automobiles and Trucks 250 Projects (all types of machinery) 170 1. Bolivian Internat'l Mining 10 2. Patino Minou 50 3. Villazon-Attachn Railroad (ona locomotive) 110 thomicals and Drugs 150 Modicinals & Pharmacouticals 5 Soda Ash 30 Other Industrial Chomicals (including copper sulphate) 45 Paints, Pigments, and Varnishos 15 Socp Dynamite and Explosives (including blasting caps) 25 10 Other Chomicals 10 Antofrgasto Railroad 250 plivian Power Company 250 Miscellaneous un Amorican Airways 150 110 TOTAL 4,500 Regraded Unclassified Regraded Unclassified BECKEL Board of Economic Warfare 90 Program Supply Branch SHIPPING PROGRAM Brazil March 1943 Long tons Naval Stores 500 Rosin 300 Turpentine (natural) 200 Wood pulp 2,000 Newsprint 3,000 Coal 50,000 Lubricants (oils and greases) 100 Artificial turpentine 250 Window glass and glass products 400 Refractory brick 200 Sulphur 1,200 Iron and steel 12,000 Civilian 5,435 Projects 6,565 1. National Steel Mill 2,000 2. Goodyear Tire and Rubber Company 45 3. Electro-Chimica of Brazil 100 4. Firestone Rubber Co. 60 5. Itabira 4,000 6. General Electric a. SP151, Plant Expansion, Rio de Janeiro 10 b. SP#237, Lamp factory, Rio de Janeiro 1.00 C. SP#307, Transformer Factory, Rio de Janeiro 50 7. Sorocabana Railroad 200 Tinplate 2,500 Copper and copper wire (Sorocabana Railroad) 40 Brass and other copper alloys 300 500 Lead Zinc in bars and rods 400 Machinery and Vehicles (including parts and accessories) 1,825 Civilian 680 Electrical 80 Industrial 100 Agricultural 200 Automobiles and Trucks 300 Projects (all machinery and vehicles) 1,145 1. Industries Klobin 250 2. National Steel Mill 400 3. Zlectro-Chimica 150 4. Sao Paulo Telephone Co. 15 5. Sorocabana Railroad 120 6. General Electric SP #142 Bela Horizonte 75 SP #151 Plant expansion, Rio de Janeiro 10 SP #237 Lamp factory, Rio de Je siro 75 SP #307 Transformer plant, Rio de Janoiro 50 Chemicals and Drugs 3,735 Coal Tar Dyes 110 Phenol 45 Medicinals and Pharmaceuticals 75 Load arsenate 75 Cellulose acetato 75 Regraded Unclassified - PHONE care as e 114 - news no FROM supply JUNET - DETAILS DE a w was RI 100 2. thip and mas w why WE 10ym - BECKEL THERE 988 Board of Economic Warfare 90 Progran Supply Branch SHIPPING PROGRAM Brasil March 1943 Long tons Naval Stores 500 Rosin Turpentine (natural) 300 200 Wood pulp 2,000 Newsprint 3,000 Coal 50,000 Lubricants (oils and greases) 100 Artificial turpentine 250 Window glass and glass products 400 Refractory brick 200 Sulphur 1,200 Iron and steel 12,000 Civilian 5,435 Projects 6,565 1. National Stoel Mill 2,000 2. Goodyear Tire and Rubber Company 45 3. Electro-Chimica of Brazil 100 4. Firestone Rubber Co. 60 5. Itabira 4,000 6. General Electric a. SP151, Plant Expansion, Rio de Janeiro 10 b. SP#237, Lamp factory, Rio de Janeiro 100 C. SP#307, Transformer Factory, Rio de Janeiro 50 7. Sorocabana Railroad 200 Tinplate 2,500 Copper and copper wire (Sorocabana Railroad) 40 Brass and other copper alloys 300 500 Lead 400 Zinc in bars and rods Machinery and Vehicles (including parts and accessories) 1,825 Civilian 680 Electrical 80 Industrial 100 Agricultural 200 Automobiles and Trucks 300 Projects (all machinery and vehicles) 1,145 1. Industries Klobin 250 2. National Steel Mill 400 3. Electro-Chimica 150 4. Sao Paulo Telephone Co. 15 5. Sorocabana Railroad 120 6. General Electric SP #142 Bela Horizonte 75 SP #151 Plant expansion, Rio de Janeiro 10 SP #237 Lamp factory, Rio de Janeiro 75 SP #307 Transformer plant, Rio de Janeiro 50 Chemicals and Drugs 3,735 Coal Tar Dyes 110 Phenol 45 Medicinals and Pharmaceuticals 75 Lead arsena 75 Cellulose acetato 75 Regraded Unclassified - 2 - Chemical specialties (other plastics mátorials) 20 60 Formaldchyde 75 Sodium sulphate Soda ash 1,000 Caustic soda 1,500 200 Zinc oxido Carbon black 75 Titanium oxido 75 Paints, pigments and varnishes 250 Superphosphato (fertilizer) - Other fortilizers 100 Miscellaneous 1654 Quartz-mich program (entire unshipped balance of program) 100 Rubber Reservo (North Brazil only) 10,000 Lend-Lease Materials 7,600 Brazilian Airplane Engino Factory 4,100 Rails 3,500 Machinory 600 Brazilian Military Commission 2,800 Brazilian Naval Commission Broziliun Aeronautical Commission 500 total 98,000 * Give preference to photographic material, scientific and professional instruments, tanning extracts, and precision instruments. Regraded Unclassified Board of Economic Warfare Program Supply Branch 91 SHIPPING PROGRAM Chile March, 1943 Long tons Textiles (except jute bags) 160 Cotton Yarn 50 Cotton Piece Goods 75 Woolen Piece Goods 10 Rayon Yarn 25 Jute Baga 50 Food Pulp 500 Newsprint 400 Paper and Paper Manufactures 200 Lubricants (oils and greases) 250 Paraffin 150 Asbestos 220 Asphilt and Tar 50 Iron and Steel (except Tinplato) 4,775 Civilian 1,000 Projects 3,775 1. Chilean State Railway * 2,155 2. Braden Copper 760 3. Andes Copper 300 4. Chilean Exploration 500 5. Bethlehem Chilo Iron Mines 60 Tinplate 500 Central Heating and Rofrigerating Equipment 25 Nonforrous Metals 250 Machinery and Vehicles (including parts and accessories) 890 Civilian 490 Electrical ) 350 Industrial ) Agricultural 50 Automobiles ) 90 Trucks ) Projucts 400 Chilean Trading Corp. 1,00 Household and Office Muchinery 25 Chemicals and Drugs 1,000 Medicinals and Pharmaccuticals 5 Calcium Carbido 100 Ammonia end Ammonia Compounds 300 Pignonts, Paints, and Varnishes 100 Other Chemicals 495 Photographic Equipment and Materials 25 X-Ray Films 5 Miscellaneous 500 n-Amorican Airways 25 ## Total 10,000 + 485 additional tons of iron and stool for the Chilean State Railways to be shipped on vessels chartered for the use of Corporacion do Fomonto do la Produccion Tonnage requirements of Corporacion do Fomunto do 1: Produccion are not included in this total because of special shipping arrangements alroady made. Regraded Unclassified Regraded Unclassified Board of Economic Warfare Program Supply Branch 92 SHIPPING PROGRAM Colombia March, 1943 Long tons Milk - powdered and condensed 30 Raw tobacco 4 15 Hope Textiles 275 Prepared cotton or fibre yarn 40 Cotton and wool thread 75 Cotton cloth 40 Cotton duck 35 Mool yarn 35 Rayon yarn 50 4 Cork Newsprint 437 30 Cigarette paper 200 Kraft paper Cardboard paper 190 Other paper manufactures 70 150 Lubricating oils and grenses 350 Paraffin 30 (hite cement 25 indow glass Glass bottles (beverage and pharmaceutical) 25 25 Sanitary and porcelain ware Refractory brick materials (fire brick, etc.) 100 30 Asbestos 25 Sulphur 2,900 Iron and Steel "Civilian 2,365 535 Projects 1. S.P. 219 Tropical Oil Co. 120 2. S.P. 286 Compania Minera Choco Pacifico 15 3. S.P. 194 & 243 Intern'l Petro. Co. 400 240 Hardward, miscellaneous 50 Perro-alloys 1,500 Timplate 90 Bonferrous metal and manufactures Machinory and Vehicles (Including parts 735 and accessories) 600 Civilian Electrical 75 Industrial 250 200 Agricultural Automobiles and Trucks 75 135 Projects (all types of machinery) 1. S.P. 114 Colombin Sugar Co. 50 2. S.P. 219 Tropical Oil Co. 30 3. S.P. 286 Choco Pacifico 5 4. S.P. 194 & 2/3 Inter.Petro.Co. 50 1,130 Chemicals and Drugs Coal tar dyes 30 Modicinals & pharmacouticals 150 Copper sulphate 50 Plastic materials 10 Regraded Unclassified 93 2 Roard of Economic "arfare ogras Supply Branch February 1, 1943 Sulphuric acid 50 Aluminum sulphate 25) Water purification Chlorine 30) only Calcium carbide 20 SHIPPING PROGRAM Caustic soda 200 Soda ash 100 Costa Rica Paints, pigments, and varnishes 100 Aumonium sulphate 50 March - 1943 Potash salts 75 Explosives 100 Long tons Sonp 50 Other chemicals 90 Foodstuffs 555 Miscelluneous**** 450 20 Lard Pan American Airways 65 Evaporated milk 5 Total 9,200 theat flour 475 40 Sepolina 5 Yeast * Give preference to railway materials, to orders of Caja de Credito Agrario and Soybean oil 10 to Forrocarril do Pacifico for material for improvenent of part of 5 Naval Stores Textiles (cotton textiles) 20 $Hr Give preference to extracts, alkaloids, serums, vaccines, vitamins, quinine, 95 Newsprint 20 medicines, apo-therapeutics. Prapping paper 45 Other paper products 50 #**Give preference to office supplies, photographic supplies, transmission belting, Casoline and fuel oil 65 rubber articles, and brushes, tires and tubes. ubricating oils 550 Cosent 425 Irco and Steel Agricultural lind tools 25 215 Other civilian 185 Projects 1. S.P. 86 Cia National (le Pureza 25 y Lus 2. S.P. 137 United Fruit Co. 160 (Abaca) 15 Nonferrous netals and alloys and ferra-alloys Machinery and Vehicles (including parts and accessories) 255 125 Civilian Electrical 25 Industrial 25 Agricultural (no tractors) 50 Automobile and truck parts and accessories 25 130 Projects (all types of anchinery) 1. S.P. 86 Cia Nacional de 20 Foreza y Luz 2. S.P. 137 United Fruit Co. 110 (Abaca) 150 Chemicals and Drugs 2 Medicinals and pharmacouticals 100 Copper sulphate 1 Industrial acida 20 Paints, pigmonto and varnishos 20 Fortilizers 7 Other chemicals 120 iscellaneous 30 an American Airways TOTAL 2,400 AME new Now INC VISIT the can TO TAX THE expire Amy 00 hereby Type the THE use - loing <04 DATE 170ml PATS Moz - VENTS - Board of Economic Warfare Program Supply Branch February 1, 1943 94 SHIPPING PROGRAM Cuba March - 1943 Long tons Foodstuffs 22,000 Lard 2,000 Rice 10,000 Flour 6,000 Other 4,000 Navel Stores 200 Rubber and Rubber products 50 Seed potatoes 200 Textiles (except jute bags) 350 Juto bags 1,400 Lusber 1,600 Cratos and cooporato 200 Other wood products 100 Flood pulp 500 Newsprint 700 Trapping paper 200 Paper board and cardboard 500 Other paper products 200 Cocl and coko 20,000 Petroleum products 690 Lubricating oil 400 Voselino 200 Poraffin 80 Other 10 Coment (Thite) 100 50 Tindow glass Glass bottles 350 100 Refructory brick Sodium chlorido (ordinary snit) 400 Iron and Steol (except tin plate) 4,000 700 Tin plate Alloys, forrous and nonferrous 75 Machinery and Vehicles (incl. parts & nocossories) 525 Electrical 75 Industrial 300 Agricultural 75 Automobilos & Trucks 75 Chemicals and drugs 2,200 80 Medicinals and pharmscouticals Disinfoctants and insecticidos 70 Hydrochloric acid 80 Soda Ash 200 Caustic noda 400 Colcium carbide 150 Chomical salts 300 Fortilizers 800 (a) Ammonium sulphate 200 (b) Superphosphate 400 (c) Potussium chlorate 200 Other chemicals and drugs 120 #Miscellaneous 1,500 Pan American Airways 1,960 ** Total 60,000 Ship according to ratings Excludes Nicaro Nickol because of spocial shipping arrangements. Should additional tonnage become available, proference should be given to sugar bags (juto or cotton) and to foodstuffs. Regraded Unclassified Who to - VP MOTOR - - MADE THE NOT e STATE vit 1. 4: move on in Ste M HAS / M il it in was DATE Extedo - then We to May A A 1170 & CAJ (4) - 401 THE NONE VOID M 0.004 one - 100 of nee business provider with s L - 166 antime OUT 95 Board of Economic Verfare Program Supply Branch SHIPPING PROGRAM Dominican Revublic March, 1943 Canned Milk 10 Tallow 50 Flour 100 Rubber products 10 Seeds 15 Textiles 25 Bagsing (jute and cotton) 25 Newsprint 35 Trapping paper 50 Paper bags 5 Cardboard 15 (ther paper 20 Lubricating oils and greases 15 Kerosene 50 (ther petroleum products 10 Camont' 300 Window #1ABS and glass products 50 Asphalt 50 Iron and steal 450 Civilien (including hardware) 250 Projects 2n S.P.R. Sugar Co. 75 Porcella, Vincini Co. 55 Cuban-Dominicon Sales Corp. 50 Junes Brown 20 Tinplate 20 Nonferrous ores, metals, and alloys 15 Machinery And vehicles (including parts and accessories) 165 Civilian 75 Electrical 15 Industrial 25 Agricultural 15 Trucks end parts 20 Projects (all types of machinery) 90 Porcelln, Vincini Co. 20 Cuban, Dominican Sales Corp. $ James Brown 10 Chemical and Drugs 185 Civilien 160 Sulphuric Acid 20 Soda Ash 10 Caustic soda 40 Paints, pigments, and vornishes 30 Soap 25 All others 35 Projects (All chemicals and drugs) 25 Cuban Dominican Sales Corp. 25 Miscelleneous 160 Civilian 95 Projects 65 S.P.R. Sugar Co. 25 Cuban Dominican Sales Corp. 30 James Brown 10 Pon American Airrays Total 2,000 Should additional tonnage be available, goods may be londed freely without reference to the Above breakdown. Regraded Unclassified Regraded Unclassifie paper STYLE State EXT) you mm 007 24F X a BOX 2 enjoyment von as 1.97: ILVIA 2000 grouper - ADDITION (11) - - THE 70 10 KRE AMOUNT 04001 NO. YEAR 2 Y payment 00 95'8' Co 4 Y servey 1204 THE DD State LTD company we person orga TX hypen perce 40505 5 a yours (9068 was capity 1. Vont No WATTON EUX su 7889 STATE new ambrin 0% Economic C Board of Economic Warfare 96 Program Supply Branch SHIPPING PROGRAM Ecuador March, 1943 Long tons Foodstuffs (exclude flour) 70 Cereal grains products 35 (ther food products 35 Naval Stores 120 Textiles and Textile manufactures 25 Newsprint 130 Paper and paper manufactures 25 Lubricants (oils and greases) 35 Paraffin 100 Window glass and glass products 25 Refractory brick (for La Cemento Nacional) 10 Asphalt and roofing 10 Iron and steel 860 Civilian (includes agricultural hand implements) 550 Projects 310 1. Cotopaxi Exploration Co. 150 2, Intern'l Petroleum 160 Bathroom fixtures 35 Copper and Aluminum products 10 Machinery and Vehicles (including parts and accessories) 285 Civilian 255 Electrical 15 Industrial 100 Agricultural 25 Automobiles & Trucks 115 Projects 30 Cotopaxi Exploration Co. 10 Intern'l Petroloum 20 Chemicals and drugs 200 Medicinals and Pharmaceuticals 10 Insecticides and Fungicides 10 Caustic Soda 20 Soda Ash 15 Other Industrial Chemicals 40 Pigments, paints and varnishes 75 Explosives 20 Other Chemicals (including soap) 10 Hiscellaneous 105 Pen American 10 2,055 Regraded Unclassified Regraded Unclassified guardian = sus 70 payments SD 006 CAPS* OPENTION good you 300°F DOG M as 1 - in 9P Lurge, TAX The 11 in 07182 sug - DWS 00 76% DUE To - : s' papering ORT 40 NW 17.01 TOO 0000 SEX YAMPATE PRJ = PAIGA 20 and HW = Tud (OFIA WALL our DU 223 168 THE и W Carez 2004 02 ALDICATE 02 WRETT T302 gowle of 97 Board of Economic Warfare Program Supply Branch SHIPPING PROGRAM Guatemala March, 1943 Long tons Foodstuffs 775 Wheat Flour 650 (ther 125 Rubber products (truck tires, etc.) 5 Hops and malt 35 Textiles 119 Cotton yarn 16 Wool yarn 1 Rayon yarn 2 All other 100 Jute Bags and bagging 85 Newsprint 120 Paper manufacturers 42 Coal and coke 10 Lubricents (oils and grease) 140 Paraffin 35 Lime 290 Glass and glass products 65 Iron and Steel 705 Civilian (Incl. 25 tons of hand tools) 445 Inter R.R. of Central America 260 Copper, brass, bronze, items 3 Machinery and Vehicles (Incl.parts and accessories) 171 Electrical 16 Industrial 120 R.R. equipment 100 Agricultural 25 Auto & trucks 10 (parts and accessories only) Chemicals and Drugs 770 Medicinals & phPTmaceuticals 10 Copper sulphate 700 Soda ash or caustic Soda 30 Paints, pigments, varnishes 10 Other chemicals 20 Matches 10 Pan-American 230 Miscellaneous 190 Total 3,800 Regraded Unclassified 98 Board of Economic Warfare February 1, 1943 ogram Supply Branch SHIPPING PROGRAM Haiti March - 1943 Long Tons Foodstuffs (excluding flour) 100 Flour 400 Cotton piece goods 130 Other Textiles 20 Jute bags 47 Rewsprint 10 Wrapping paper 10 Other paper 10 Petroleum products (in packages) 40 Fuel oils 25 Lubricating oils 10 Other 5 Cement 450 Government 250 Civilian 100 Projects 100 Shada 90 La Plant acion Dauphin 10 Clay Products 5 Glass and glass products 15 Iron and teel 145 Civilian 85 Projects 60 Shada 30 La Plant acion Dauphin 30 Machinery and Vehicles (including parts and accessories) 45 - Civilian 30 Industrial 10 Flectrical 5 Agricultural 5 Trucks and parts 10 Projects (all types of machinery) 15 Chemicals and Drugs 168 Shada 15 Civilian 153 Copper Sulphate 23 Paints and Pigments 10 Fertilizers 8 Ammonia sulphate 7 Potash salts 1 Soap 100 Other chemicals and drugs 12 Miscellaneous 85 Pan-American Airways 20 TOTAL 1,700 *SHADA - Haitian American Development Corporation 99 Board of Economic Warfere February 1, 1943 Program Supply Branch SHIPPING PROGRAM Honduras March - 1943 Long Tons Foodstuffs 500 Flour 100 Wheat 200 Other Foods 200 Rubber and rubber products (tires, etc.) 10 Textiles 80 Bags 20 Lumber, includ. railroad tires 100 Newsprint 10 Paper products 80 Motor Fuels 50 Lubricants (oils and greases) 25 Paraffin 15 Cement 200 Lime 170 Glass and glass products 25 Iron and Steel 300 Tele Reilroad 200 Civilian 100 Machinery, Vehicles (incl. parts end accessories) 55 Electrical 8 Industrial 25 Agricultural 12 Auto and trucks 10 Chemicals and Drugs 725 Medicinals and pharmaceuticals 10 Copper sulphate 600 Calcium Carbide 4 Pigments, paints, etc 10 Superphosphate 50 Dynamite and explosives 25 Other Chemicals 26 Matches 5 Pan American 5 Miscellaneous 100 TOTAL 2,500 100 Board of Economic Warfare Program Supply Branch February 1,1943 SHIPPING PROGRAM Nicaragua March - 1943 Long Tons Flour 350 Leather 3 Rubber products 5 Tobacco 10 Textiles 100 Bagging (cotton or jute) 10 Newsprint 40 Paper manufactures 30 Gasoline and fuel oil 50 Lubricents 25 Glass ware and china ware 15 Iron and Steel 225 Ferro-alloys and nonferrous metals and alloys 20 Machinery and Vehicles (including parts and accessories) 150 Electrical 20 Industrial 70 Agricultural 40 Automobiles and trucks 20 Chemicals and Drugs 177 Medicinals and pharmaceuticals 12 Calcium carbide 50 Cyanide 25 Soda ash or caustic soda 30 Paints, pigments and varnishes 10 Dynamite 25 Soan 10 Other chemicals 15 Miscellaneous 65 Pan American Airways 25 TOTAL 1,300 Board of Economic Warfere February 2, 1943 Program Supply Branch 101 SHIPPING PROGRAM Ponama March - 1943 Long Tons Foodstuffs 3,200 Preserved mests (ham and bacon, etc.) 60 Lard 100 Evaporated milk 180 Other dairy product (margarine, butter, powdered milk, cheese, 0.00, etc.) 200 Polled Online 130 Theat flour 1,000 Dried vegetables 150 Onions 130 Potatoes 250 Canned soups, tomato sauce, crackers fruit juices 570 Others (apples, jame, spicos, vegetables oils, fresh vegetables) 260 l'alt 150 Leather manufactures 30 Rubber products 20 Tobacco menufactures 90 Textiles 175 Cotton textiles 95 Other textile materials 80 Lumber 600 lood product 50 Yewsprint 245 Fraft paper 90 Puper manufactures 500 Other papers 170 Lubricating oils 300 Cenent 1,000 Lime 200 Glass bottles 300 Other glass products 90 Iron and steel 000 Civilien 380 United Fruit Co. Abaca Project 220 Lachinery and vehicles (including parts and occencories) 290 Civilian 140 Flectricol 20 Industrial 10 Agriculturel 70 Trucks and automobiles 40 Projects (all types of machinery) 150 Abaca Project 150 Chemicals and Drugs 620 Medicinals and pharmacouticals 10 Copper sulphate 150 Sode Ash 10 Coustic soda 20 Points, pigments and vernishes 45 Ammonium sulphate 60 Mixed fertilizers 140 Soap 30 Other chemicals 155 Other rew materials 160 l'iscellaneous 250 Pen American Airways 20 TOTAL 9,000 No whiskey to be shi-ped. On additional tonnage, give preference to foodstuffs. Regraded Unclassified 102 Board of conomic Marfare February 1, 1943 Program Supply Branch SHIPPING PROGRAM Paraguay Larch - 1943 Long Tons Textiles 10 Cotton manufactures 5 Vegetable fibers and manufactures 5 Newsprint 12 Paper manufacturer 30 Tobacco manufactures 5 Lubricating oils and greases 15 Paraffin 5 Glass and glass products 15 Non-metallic minerals 10 Iron and steel (exclusive of tinplate) 133 Timplate 175 Machinery and vehicles (parts and 25 accessories Flectrical 5 Industrial 5 Agricultural 10 Auto and trucks 5 Chemicals 40 Viscelleneous 25 TOTAL 500 103 Board of Economic Marfare regram Supply Branch SHIPPING PROGRAM Peru March, 1943 Long tons Fats and oils (lard, margarinë cooking oils, etc.) 30 Other food stuffs (excluding rice and flour) 100 Rubber and rubber products 40 40 Textiles Cotton duck 5 Cotton piece goods 5 2 Wool manufactures 28 Rayon and rayon yarn 1400 Lumber 200 Civilian 900 Cerro de Pasco Other mines 300 25# Food Pulp 400 ewsprint 125 Paper and paper manufactures Lubricants (oils and greases) 40 10 Paraffin 50 Eindow glass and other glass products 75 Refractory brick and materials 1800 Iron and Steel 400 Civilian 1400 Projects 1. A. F. Wiese 10 2. Cerro de Pasco 500 3. American Smelting 100 4. International Petroleum 450 5. Vanadium Corp. 150 6. Comp. Minera Pacaurco 40 7. Central Railrond of Peru 150 25 Bathroom fixtures 200 Timplate 50 Copper, cluminum, and other nonferrous motals Machinery and vehicles (including parts and accessories) 1540 600 Civilian Electrical 50 Industrial 100 Agricultural 150 Automobile (parts only) 100 Trucks 200 Projects (all machinery, vehicles & parts) 940 1. Goodyear 250 2. Vonadium Corp. 50 3. Com. Minera Pr.caurco 10 4. Corro de Pasco 120 5. Other minos 110 6. Control Railrond 200 7. Internation Potro. 200 550 Chemicals and Drugs 10 Medicinals and pharmacouticals 50 Insecticidos (for agriculture) 30 Dyes 125 Soda Ash. 90 Caustic Sodn 40 Paints, pigmonts, and varnishos Regraded Unclassified Board of Economic Warfare 104 Program Supply Branch SHIPPING PROGRAM El Salvador March, 1943 Long tons Foodstuffs Dairy products 740 Wheat 1 Flour 540 Malt & other grains 170 Baby foods 21 Yeart 3 Spices 3 Hides, skins, and leather 2 Stearins 5 Linseed Oil 6 Rubber manufactures, tires, etc. 3 Seeds 7 Textiles 1 Cotton piece goods 88 125 Sewing threada 10 Bagging 12 Other textiles 15 Newsprint : 100 Cigarette paper 2 Other paper products 20 Coal and coke 50 Lubricants 5 Paraffin 25 Cement 36 Lime 10 Porcelain sanitary supplies 5 Sulphur 6 Iron & steel 200 3 Nonferrous metals, alloys and ores Machinery and Vehicles (including parts and accessories) 65 Electrical 10 Industrial 25 Textile 4 Railway 17 Coffee Mill 2 Domestic sewing machines 2 Agricultural 20 Automobiles and trucks 10 93 Chemicals and Aruga Analine dyes 2 Medicinals and pharmaceuticals 5 Bicarbonate of soda 1 1 Sulphuric acid 1 Calcium carbide 20 Sodium cyanide 20 Caustic soda Fertilizer Superphospate 40 5 Other chemicals 8 Matches 80 Miscellaneous 5 Pan American Airways Total 1,600 Regraded Unclassified loard of Economic Warfare February 2, 1943 105 Program Supply Branch SHIPPING PROGRAM Uruguay March - 1943 Long Tons lucose 25 lotato starch 10 laval Stores 220 Rosin 200 Turpentine 20 Tanning Materials 25 ?scking and gaskets 2 Seeds (vegetables) 20 Tobacco 10 [extiles 107 Cotton yarn 26 Cotton cards and camelback for times 50 Rayon 30 Vegetoble fibers for bruebes 2 Wood pulp 350 Wood manufactures (wood in-steps for shoes 2 Sewsprint 800 Coal 9 8,000 Lubricant (oils and grenses) 300 Peraffin 20 Vaseline 20 Refractory miterials 25 Abrosives 10 Carbon and gruphite electrodes 5 3 Graphite 5 iron Fluorospar and steel (excluding timplate but including 25 tons of hand tools) 1,800 Timplate 2,000 50 Ferro-alloys 100 Copper, in all forms 10 Bruss and bronze manufactures 2 Land solder 5 Lend manufectures 30 Tin (sheets or ingots) 50 Zine 1 Babbitt metal 3 Machinery Antimony and Vehicles (including parts and necessories) 475 75 Electrical Storage batterios and accessories 20 Other 55 150 Industrial 200 Agricultural 50 Automobiles and Trucks 590 Chemiculs and Drugs 2 Naphthalene 20 Coal tar dyes 50 Medicinals and pharmiceuticnls 5 Insecticides 5 Load nrsenate 150 Arsenic - 2 - Long tons Lone This Cresylic acid 50 Boiler compound 3 Acetic acid 15 Citric acid 2 Formic acid 7 Tetrachloroethylene & Trichloroethylene 5 Acetone 3 Formaldehyde 3 Carbon Tetrachloride 20 Synthetic resins (plastics) 5 Calcium chloride 50 Calcium sulphide 5 Bichromates 15 Caustic potash 5 Sodium sulphide 30 Sodium sulphite 3 Sodium bisulphite 5 Sodium hydrosulphite 8 Rare gases (greon, orgon) 5 Barium peroxide 2 Pigments, paints & varnishes 50 Lithopone 30 Paint thinners & solvents 5 Paints & varnishes for leather 2 Zinc oxide 10 Sodium chlorate or potassium chlorate 10 Dynamite 5 Dental materials 2 Manganese dioxide 2 Essences in general 1 Ink (printing) 20 Asphalt, felt (roofing) 25 Miscellaneous 430 Materials for packing houses 250 Paper Spices Chemicals Machinery TOTAL 16,000 Regraded Unclassifie 106 Board of Economic Warfare Program Supply Branch SHIPPING PROGRAM Venezuela March, 1943 Long Tons Milk, powdered, evaporated, condensed 300 Crushed oats 30 Flour 1,350 Malt 200 Tunned leather 40 Rubber and rubber products 20 Naval stores 115 Seeds, seed potatoes, and other seeds 150 Textiles 262 Sewing thread 20 Shoemakers' thread 2 Cotton duck 70 Cotton fabrics 140 Rayon yern 30 Wood pulp 330 Newsprint 250 Cordboard in pulp 137 Materproof paper 7 Paper cartons 33 Toilet paper 10 Other paper products 150 Coke (carbon coke) 40 Lubricants (oils and greases) 100 Paraffin- 190 Portland cement 1,000 White cement 100 Glass and glass manufactures 50 Refractory brick end materials 140 Abrasives 5 Graphite electrodes 30 Iron and steel 2,500 Civilian 1,320 Projects 1,180 1. SP 288 Int. Gen. Electric, La Guaria Power plant 30 2. SP 158 Texas Petro. Co. 50 3. SP 172 Amiatic Petro. Co. -Caribbean Petro. 90 SP 173 " " = -Venez.Oil Concess. Ltd. 280 SP 174 " " " -Colon Devel. Co. 20 SP 175 " " " -Petro. Utensiles Co. 10 4. SP 240 Socony 700 Small Tools 20 Tinplate 200 Copper manufactures 120 Copper alloys 4 Lead and manufactures 45 Machinery and Vehicles (including parts and accessories) 1,944 Civilian 1,245 Electrical 100 Industrial 310 Textile 50 Transmission belting 10 Mining equipment 58 Telephone and telegraph 42 Railways 50 Water filters 15 General Industrial 85 Regraded Unclassified -2- Agricultural 535 Automobile (ports only) 100 Trucks 200 Projects 699 1. 7105 Alfredo Sevard & Co. Coustic god end Chlorine plent 32 2. #276 Industria Lactia 72 Powdor milk plant 3. #268 Int. Con. loc. 120 Power plant expansion 4. 158 Texas Potro Co. 75 5. 172 Asictic Petro-Coribboan Pot. 20 173 " " -Vonez. Oil Commissions Ltd. 65 174 Asintic Potro. -Colon Dev. Co. 10 4175 " n -Potro. Utensilos Co. 5 240 Socony 300 Printing Apparatus and l'atorial 30 Chomicals and Drugs 1,180 Medicinals and phormoceuticals, (Including absorbent cotton) 30 Disinfectants 15 Copper sulphate 12 Acetic cid 10 Murictic acid 10 Sulphuric coid 110 Cr.lcium carbide 50 Sodium salts 220 Sodn nsh 235 Caustic soda 150 Anhydrous Ammonic 12 Chlorine 10 Prints, pigments, and vernishes 100 Ammonium sulphate 30 Potassium sclts 13 Dynamite, cans, and fuses 50 Tooth proto 4 Other chemicals 100 Instruments for arts and trades 40 Clinical and luboratory apparatus 40 Crown caps 26 Nutchos 107 Miscellaneous 630 Pon-Amorican Airways 70 TOTAL 12,000 Alloonto additional shipping to foodstuffs and project matorial. Regraded Unclassified Royal Norwegian Embassy February 25. -43. WASHINGTON. D.C. Hon. Henry Morgenthau, Jr. Secretary of the Treasury Washington, D.C. Dear Kr. Morgenthau: "ay I in this way thank you for the statement you have made in regard to the 3rd Anniversary of the invasion of Norway. AB soon AB the special publi- cation 1s off the press I shall be delighted to send you some copies of it. Faithfully yours Hun, Olar Hans Olav Counselor of Embasey. HO/ba Regraded Unclassified 108 February 22, 1943. Dear Mr. Olav: I refer to your letter of February 16 in which you suggested that I send you a brief state- ment on the subject of Norwegian participation in the cause of the United Nations which might be incorporated in a booklet for distribution by the Royal Norwegian Information Service. Such a statement is enclosed and I am happy indeed to be offered the opportunity of making it. Sincerely, (Signed) H. Morgenthau, Jr. Secretary of the Treasury. Mr. Hans Olav, Counsellor, Royal Norwegian Embassy, Washington, D. C. File to Thompson Photo file in Diary Regraded Unclassified 109 Statement of Henry Morgenthau, Jr., Secretary of the Treasury, for the use of the Royal Norwegien Information Service. The saga of Norwegian courage under the Nasi yoke during the past three years has been a source of inspiration for all of us engaged in the global struggle against the Axis. Facing tremendous odds, the people of Norway have shown by their organized resistance how dearly they cherish the freedom that temporarily has been taken from them. The people of the United States are proud to have as allies, too, the brave young men of Norway who have escaped from their imprisoned homeland in order to carry on the fight for deliverance from the outside. The gallant manner in which they are shouldering their full share of the burden in their own Merchant Marine, Navy and Air Force stirs us to do everything humanly possible to hasten the day of that de- liverance. Regraded Unclassified Royal Norwegian Embassy WASHINGTON. D. C. February 16, 1943 Hosse Henry Lorgenthau, Jr. ashington, D. C. Dear "r. Margenthaw: On April 9th, 1943, it will be three years ninco the Germans Inunched their =urprize attack on Norway, end in this connection the Royal Norwegian Information Service plane to 188410 e booklet containing statements by A number of representative Americans ro- garding the Norwegian war effort. Ever since the invasion the Norwegians have been fighting the enomy on two fronts -- within the country end from abroad. Among Dorwegions thona have como to be known AS the "hor" front" and the "outer" or "external front." King Haakon and the Royal Norweginn Government, now situated in London, have been direct- ing the fight from abroad under an express mandate given them by the last free Norwagier parliament. Fighting today on Norway's external front, and side-by-cide with American, British and other Allies, are the Norwegian Merchant marine, the Royal Norwegian Navy and the Royal Norwegian Air Force. At stations in England and Scotland the Royal Nor- agien Army is ready for the call to action. Both the Navy, Air Forõe and Army have been completely reorganized, re-equipped and retrained during these three years, and to a large extent the recruits for these services have been drawn from the young men who mainly through their own resourcefulness have succeeded in escaping from occupied Norway On the home front more than 98% of the people have consistently stood firm in their op- position to the Germens and to Quisling, despite privation and terror. Both as indivi- duale and 0,0 members of groups or organizations the Norwegiens have remained loyal to the ideals of democracy and freedom. You have doubtlessly read of the courageous fights that have been and are being made against the Nazia by the Church of Norway, by organized labor, by athletic organizations, by the school teachers, doctors, lawyers, publishors and virtually all other professions, end even by the children. To should greatly appreciate receiving from you 0 brief, preferably informal statement of about 100-200 words regarding Norway's fight (or any phase of it that has been of particular interest to you) for inclusion in our projected booklet. Bouldes being made available for general distribution, this publication will be apread among members of the Norwegian fighting forces and of the merchant marine. An effort will also be mode to send some copies into occupied Norway. The United States Office of War Information has expressed interest in this plan and has requested use of the statements received for radio broadonatu to occupied Norway, Hould you kindly lot mo know whether it will be possible for you to cooperate in in project? If so, it will be necessary that your statement reachec un not lator than March lat. Thank you for your kind attention. Yours very truly, Haus Olar Hans Olav, Counsellor Regraded Unclassified 111 NOT TO BE RE-TRANSMITTED BRITISH MOST SECRET U.S. SECRET TREATMENT TREASURY COPY 0, & FEB" 13 EYES OPTEL No. 64 Information received up to 7 A.M., 25th February, 19/9. 1. NAVAL Russian varships have sunk an enemy 8,000 ton transport in the BARENTS Area. 2. MILITARY TUNISIA. No further report yet received. RUSSIA. Russian thrusts towards OREL from the South have been supple mented by pressure from the North. Along the Northern flank of the salient in the DONETS Bend German counterattacks combined possibly with thaw conditions appear to have checked Russian progress. Russian attacks along the River MIUS Front north of TAGANROG are meeting strong German resistance. 3. AIR OPERATIONS WESTERN FRONT. 24th/25th. 119 aircraft were sent out - WILHELMSHAVEN 115 (1 crashed), RUHR Area 4. The attack on WILHELMSHAVEN was made through thick cloud. TUNISIA. 22nd/23rd. Wellingtons bombed BIZERTA, one is missing. 23rd 166 Bomber and over 400 Fighter sorties were flown in support of ground forces in the KASSERINE Pass area. During anti-shipping operations 5 barges carrying lorries were sunk and others damaged. Enemy casualties 4, 2, 3. Allied 8, nil, 5. SICILY. 22nd/23rd. 27 bombers attacked PALERMO and shipping in the Herbour. 23rd. About 25 tons of bombs were dropped at MESSINA. The train ferry terminus was hit and elsewhere considerable damage was claimed. MEDITERRENEAN. 22nd. Escorted U.S. Mitchells sank & large ship between SICILY and TUNISIA. 24th/25th. A large ship in en escorted convoy is reported to have been torpedoed and sunk off SICILY by a Wellington. LATE NEWS. TUNISIA. 23rd. Centre. Enemy withdrawing KASSERINE GAP. At 6 p.m. Valley two miles northwest of Pass reported clear, 300 Italians captured. North. Light enemy attack in West OUSSELTIA Valley successfully held. Regraded Unclassified 112 NOT TO BE RE-TRANSMITTED 13 COPY NO. BRITISH MOST SECRET U.S. SECRET OPT&L No. 70 Following is supplementary resume of operational events covering the period 18th - 25th February, 1943, 1. NAVAL One of H.M. Cruisers on passage to ICELAND (c) sustained considerable damage from weather on 19th. Photographic reconnaissance confirms the presence of most of the German heavy ships in BALTIC or German North See ports. GREISENAU at GYDNIA and the uncompleted 8" cruiser SEYDLITZ at BREMEN seen to have been dia- mantled. Photographs of building yards suggest that the rate of U-boat building remains fairly constant. MEDITERR/NEAN, Convoys of 9 and 6 ships have arrived at TRIPOLI (L) and MALTA respectively during the week. Reports received during week of 9 enemy ships torpedoed by H.B. Submarines. By end of January 110 ships in all hed been transferred to Italian ports from South of France since enemy occupation. Some have alrendy been identified in service to TUNISIA. SUBMARINE WARFARE. Wook saving 24th. Two attacks on convoys took place in Mid-Atlantic, 27 attacks on U-Boato by surface and 4 by aircraft during same period of which 6 by surface craft and 5 by gircraft are considered promising. SHIPPING CASUALTIES. During the week 20th-26th inclusive 19 shipe ware reported to have been torpedoed. Four British (1 A tanker), 4 Norwegien (Two tenkers) 3 U.S. ships, and one Penamanian tanker WORE torpedood in attacks on en outward bound convoy in the NORTH ATLANTIC. One U.S. ship and a Panamenian tanker (still aflost) also in convoy, were torpedoed in N.F. Approaches, n. British ship was torpedoed N.F. of the Asores, A British tanker S. of Madeira, B. Brazilian ship N.A. of BRAZIL, A British ship E. of CAPE AGHULAS and a U.S. ship, which WCU towed into port. In the MEDIT.RU BAN, in addition, es British ship was damaged by aircraft in ALGIARS Harbour. TRADE. Imports in convoy into UNITED KINGDOM week ending 20th 431,000 tone, of which 163,000 oil. or 300 ships totalling about 900,000 tona in FRENCH MEDITER ANEAN ports on German occupation reported that only about 50,000 tona will remain under French control exclusively for Corsican trade. Except for ships required by Germans for Spanish trado, all others are boing sent to Italian ports where they will be divided between Germans and Italians. 2. MILITARY TUNISIA. 8th Army. The general line of Zighth Army in non within 6 miles of MARETH. Maintenance of our forward forces through TRIPOLI port ia sufficient for present scale of operations and numbers troops involved, The 8th Army came under command of General Alexander in TONISIA on 20th. General Filson succeeded Gener/ Alexander as Commander in Chief Middle Bast on 16th. First Army. One of reasons for withdrewal by enemy forces KASSERINE area is thront to MARETH positions by 8th Army. French Forces in Central Sector are tired and their maintenance 10 very stretched but remain in good heart. U.S. and British forces engaged in fighting last week have been mixed and intention 1a to reorganize under normal separate national and formation commanda as soon as possible. Lerge part of lossos during U.S. withdrawel. made good. FAR EAST. BURMA. North of DOWBAIK Japanese counter-attock supported by mortar fire has forced our troops to withdraw alightly. RATHEDAUNG front no change. Small enemy forces have boon activo in KALADAN VALLEY. FRANCE. Four moro divisions (S.S. Totenkopf, 327, 333, and 319 Infantry Divisions have lift, reducing Gurman divisions FRANCE and Lev Countries to 30, First 3 alrendy identifico RUSSIA, 4th my bo in CERTAITY on route Wheter. there Regraded Unclassified 11311 -2- 3. AIR OP&RATIONS. WESTERN FRONT. DAY. Chief events U.S. Fortress attack WILHELMSHAVEN and R.A.F. Ventura attack DUNKIRK docks with primary objective German armed raider. NIGHT, Out of 1160 Sorties, 20 aircraft los. Fotur main attacks BREMEN, WILHELMSHAVEN, NUREMBURG and COLOGNE. 222 sea mines use, 3 aircraft missing. Coastal Command aircraft attacked 2 convoys off DUTCH COAST, 3 ships totalling about 3,500 tons hit. NORTH AFRICA. Air operations chiefly in support of our troops during operations in KASSERINE PASS area. Bombing attacks wore mede on MARETH line combined with heavy bombing of GABES area. MEDITERRANEAD. Particularly successful weak against unomy shipping by R.A.F. and F.A.A. aircraft from MALTA and R.A.F. and U.S. medium bombers from NORTH AFRICA, 14 ships either sunk or seriously damaged, including one cruiser damaged, two escort vessels probably sunk and one 10,000 ton tanker sunk. Numerous attacks by day and night on industry, docks, airfields and railways in SICILY and on mainland. RUSSIA. Air operations over whole front suem to have been restricted by weather but considerable activity meintained in Caucasus whore Russians probably have air superiority over TAMAN bridgehend and have repeatedly attacked coastal towns. Germans making considerable use transport aircraft this area for evacuation superfluous personnel and wounded. 4. EXTR:CTS FROM PHOTOGRAPHIC AND INTELLIGENCE REPORTS ON RESULTS OF AIR ATTACKS ON ENEMY TERRITORY IN EUROPE. MILAN. 14th/15th February. Extensive materi. 1 damage to centre of torn and factories. Heavy casualties increased by panic. One station hit causing interruption railway services, goods station also hit. Two hotels near main station, one with light A/A battery on roof, completely demolished. ISOTTA, BIANCHI, CAPRONI and BROWN BOVERI factories reported damaged. SPEZIA. Photographs confirm damage to buildings on quay and in anti-submarine base. TOURS. Photographs confirm damage to engine shada and adjacent building, rolling stock and railway workshops. 5. HOME SECURITY. Estimated civilian casualties week onding 24th - Killed 13, seriously wounded 14. Regraded Unclassified 114 February 26, 1943 9:48 a.m. HMJr: Hello. Clarence Francis: Mr. Secretary. Good morning. HMJr: Hello, Mr. Francis. F: Say, we had a - I had a talk with Bill last night and gave him the green light. HMJr: Wonderful. F: Now the - the thing that I just wanted to clear 18 - in your mind - I'm sure you understand it, and that is that we never tell anybody to do a thing. HMJr: I understand. F: We leave it entirely for his own final decision. HMJr: I understand. F: But 80 far as we're concerned, he's got the green light for 1943 on the basis that you and I talked. HMJr: Well, did you get the impression this is some- thing he wants to do? F: Oh, yes, yes. He is - he's quite - well, apparently since your talk with him the other night. HMJr: Yes. F: his mind has been turning on organization HMJr: Yes. F: ....size of - of the task, the kind and type of men.... HMJr: Right. F: the availability of the men HMJr: Yes. Regraded Unclassified 115 - 2 - F: can he get the men HMJr: Yes. F: what will be the attitude of the public and others on having a man not skilled in finance HMJr: Yes. F: heading it HMJr: Yes. F: and he's got many thinge of those, all of which seem very sound questions and which have to be met HMJr: Yes. F: which can be met. HMJr: Yes. F: But I thought his approach to it was very sound, and I suppose we talked for a half an hour and - and developed different points. HMJr: Good. F: So my guess is -- and I don't want to anticipate him any HMJr: No. F: is that he will want to talk with you. I think it would be advisable to - to talk with him, and that he just wants to settle and come back and have us sit down over the different problems of organization to see whether he can enlist help of various people, not just ourselves, in getting the right kind of people HMJr: Fine. F: for it, and that's what I think he's going to want, and I think he's going to - I think without any question he will indicate to you very definite interest, but he was most sincere in your - for your welfare, the Government's welfare, to be very sure that every point has been looked at and - before any announcement 18 made or anything really done. 116 - 3 - HMJr: Have you any doubt in your mind he can do the job? F: No, sir. HMJr: No. F: No, as I visualize the job, it's - 1t's the set- ting of a national organization right down to the grass roots. HMJr: That's right. F: And we've all done that. He's come right up through it. HMJr: And he can have your help and advice. F: Oh, definitely. You see, when Bill - when Bill came out of college some eighteen or nineteen years ago, he came right with me in the sales company. HMJr: I see. F: And he's come right on up through. HMJr: Fine. F: And today he is president of our sales company and he does roll it HMJr: I see. F: right along. I'm plugging for him here while he's away. We've all got to take.... HMJr: I see. F: extra things while he's down there. But he knows it. HMJr: Well, I - - I appreciate it, and I'm going to ask him to come right over. F: Fine. If we can be of any help, let us know. HMJr: Well, you - you can, and I'm going to - I'm going to take you up on that. Dogradoed 117 - 4 - F: All right. HMJr: Thank you. F: Thank you. 118 February 26, 1943 10:33 a.m. HMJr: Marriner? Marriner Eccles: Yes, Henry. HMJr: Good morning. E: How are you this morning? HMJr: I'm fine. Marriner, how would you and your twelve presidents like to come over and have lunch with me Monday? is Well, that would be fine. Let's see - we were going to come over anyway and meet with Dan at two 80 we might just as well come at one. HMJr: Come at one and have lunch with us, and then we can.... E: That'll be - I think that would be fine. HMJr: ....meet after - now will there be twelve? E: No, there'll be eleven. B111 Day isn't coming. HMJr: There'll be eleven, and.... E: And unless he's sending an alternate and I haven't heard yet, so that HMJr: Oh. E: there're - I think you can just count on eleven. HMJr: And should there be anybody besides yourself from the Fed.? E: Well, I - that - that, of course, is entirely up to you, but what we've been doing HMJr: Yes. E: ....in connection with this drive is - I mean in connection with the - with this Victory Fund organization, of course, we've considered that that was really - I was the liaison between the Board and the - and the banks. Regraded Unclassified 119 - 2 - HMJr: Well, that suits me. E: So that I - - I don't think it's necessary. We - in the meetings before over there, the Board have felt satisfied to have me represent them. HMJr: Well, then let's - see, because we don't have as good accommodations as you do, see what I mean? E: Well HMJr: I mean for feeding. E: Well, why don't you come over here then? HMJr: No, no, no.... E: (Laughs) HMJr: I meant if I had to have the whole Board, I meant. E: Yes. No, well, I don't think that's necessary. HMJr: Well.... E: They didn't expect to meet at - in the afternoon 80 HMJr: I mean I - I don't want to be rude to anybody. E: No, no, well, I'm - I'm sure they'll understand. It'll be perfectly... HMJr: Well, then I'll look forward to you and the eleven, and - and there'll be Bell and - and I - I think that's enough, isn't it? E: Well, that's quite a crowd. HMJr: Oh, no, no, we can take care of that nicely. E: Can you? HMJr: Oh, very nicely. E: Well, that - that'll suit us fine. I'm - I'm sure that - then we'll stay right on there with - with - I understood you had an appointment at two. Regraded Unclassified 120 - 3 - HMJr: Yeah, well, I'll work that out with Bell. You had an appointment with Bell at two? E: Well, what we were going to do, we figured that we would - you see, we're going to meet you at three, and I had suggested to Dan that that - that that might not give us too much time to discuss the subject of this sort HMJr: Well.... E: with twelve people in,and 60 he said, "Well, why don't you come over at two and meet with me, and then whenever the Secretary 1s through..." HMJr: Yeah. E: "....why, then we can meet with him." HMJr: Okay. Well, I'll.... E: So that was the way the thing was arranged. HMJr: Well, let's leave it that way. E: So we'll come over at one, and then we'll - the whole afternoon is - will be available. I've told the presidents to plan on spending the afternoon in connection with this work. HMJr: Good. E: So they're planning on it. HMJr: Fine. E: So we'll see you at one o'clock then. HMJr: Thank you. E: All right. 121 February 26, 1943 3:25 p.a. Donald Davis: Don Davis talking, Mr. Secretary. HMJr: Hello, Mr. Davis. D: Yes, sir. HMJr: Mr. Davis, Mr. Nelson seemed to want you 80 much and you've seemed 80 reluctant that - well, on - I didn't think it would be wise to push it, you know? D: I see. Well, I tried to spell it out to you in terms that if I was asked to do that, I would not consider any service under duress, but on the other hand, my personal preference right now is here. HMJr: Well, I thought I would take cognizance of that, and I wasn't going to make an issue out of it. D: Yes. HMJr: Well, I just thought I'd tell you. D: Again say I express my appreciation for the con- sideration of no. HMJr: Right. (Laughs) D: And the manner in which you've handled it has been very helpful to no. HMJr: Well, anyway I hope to see you again sometime. D: Thank you very such, sir. HMJr: Goodbye. D: Goodbye. Regraded Unclassified 122 THE SECRETARY OF THE NAVY WASHINGTON February 26, 1943 My dear Henry: Confirming my verbal statement to you on Wednesday, I am glad to advise you that the Navy will provide the Coast Guard for your use a brand new replacement Lodestar sometime prior to March 1. Under my instructions, this plane will be fitted up with an interior arrangement similar to the one you are now using. Sincerely yours, Frankdnox Honorable Henry Morgenthau, Jr. The Secretary of the Treasury Washington, D. C. Regraded Unclassified 123 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE TO Secretary Morgenthau February 26, 1943 FROM Joseph J. O'Connell, Jr. You have asked whether there is legal objection to employing someone in the Treasury Department who is at the same time on & leave-with-pay status from private employment. The statutory hurdle most directly in point is section 66 of Title 5 of the U. S. Code. This statute provides that no Government employee "shall receive any salary in connection with his services 8.8 such an official or employee from any source other than the Government of the United States and no person shall make any contribution to, or in any way supplement the salary of, any Government official or employee for the services performed by him for the Government of the United States." The Attorney General has rendered opinions on this sort of situation on several occasions, and in each he has, in substance, stated that the prohibition is against the payment by anyone other than the Government of the employee's salary in connection with his services as such public official, and that the mere fact of compensation from a private employer does not, without more, preclude employment by the Government. Thus he held that the Chancellor of the University of Puerto Rico could, while on leave of absence with pay, be employed as Regional Administrator of the Puerto Rican Admin- istration (See 38 Op. A. G. 294 (1935)). Likewise, he held that a professor at M. I. T. could be granted leave of absence with pay in order to accept employment as a consultant in the service of the United States. The most recent pronouncement of the Attorney General on the subject is in an opinion addressed to the President dated April 27, 1942. In this opinion the Attorney General states the general principles applicable to this type of situation, and in so doing cites with approval the rulings in the cases to which I have already referred. Regraded Unclassified 124 Secretary Morgenthau, 2. Under the circumstances, it is quite clear that there is no legal objection to our employing a man who is on leave of absence with pay from private employment unless it appears that compensa- tion is being paid to him by his private employer "in connection with" his services for the Government. This, I take it, is clearly not the situation in the case you have put to me and hence there can be no doubt but that it can legally be done. 125 MEMORANDUM FOR THE SECRETARY. February 26, 1943. Mail Report The lead gained last week by opponents of the Ruml Plan was increased this week. There were only 25 who wanted adoption of the plan without any amend- ment. Forty-three letters, however, stated flatly there must be no forgiveness of taxes. However, the general point of view might be summed up as, "Don't forgive taxes, but get on the pay-as-you- go basis". There is very definite approval of some sort of pay-as-you-go method of taxation, the total number of letters endorsing the idea in general having passed the 100 mark, while 60 letters contained sug- gestions, many of which implied this approach to income tax collection. There were 44 letters of inquiry, and scattered suggestions for discounts to award complete payment by March 15, and similar ideas. The Victory Tax is still unpopular, though mail mentioning it has greatly fallen off. The ratio is 9 unfavorable to 2 favorable. A number have suggested that refunds on the Victory Tax be applied to 1942 obligations, or to payment for Bonds. A number of businessmen stated that the concurrent payment of 1942 and 1943 taxes would wreck them, while 7 individuals protested any discussion of higher taxes. Four CIO Unions requested the raising of present exemptions, and the. repeal of the Victory Tax. Strong opposition to taxation of men in the service was ex- pressed in several letters. There were 35 Bonds sent the Secretary for redemp- tion, and of the 8 received Friday morning, 7 were from either North or South Carolina. Complaints continued to specify delay in receiving Bonds, particularly families of men in the service, or employees in some connection for the War Department. There were 36 such complaints, out of a total of 43. Regraded Unclassified 126 - 2 - Memorandum for the Secretary. February 26, 1943. There were only 3 complaints of the use of the mailing tube which is said to be too expensive and elaborate for the purpose. There were 8 unfavorable letters regarding the notice that 3-3/8% Treasury Bonds, 1943-47, are to he called. Three letters enclosing clippings about the stock market pointed out the danger of B. rising market so far as Bonds are concerned. There are increasing reports of cashing Bonds to pay income taxes, or for no specified reasons, and many threats that the Bonds already bought must be cashed, or payroll deductions changed, because of tax demands during the current year. Among many suggestions, the following are out- standing: Revoke redemption privileges; provide more sales facilities, especially at points where prospec- tive purchasers have cash in hand; employ insurance salesmen to promote Bond sales; allow Bonds to be used 8.5 collateral for tax loans to prevent cashing in. In the miscellaneous mail there was strong approval of the Treasury's statement in regard to agricultural credit agencies. Eleven banks commented favorably. There were 2 or 3 scattered expressions of disapproval, one of the best of which is contained in the abstract. Continuation of the salary ceiling of $25,000 was favored by 30 opposed by none. Congressional mail, including Bills submitted for consideration, was unusually heavy. Many of the letters, as referred, followed the usual pattern of Treasury mail, being inquiries on income tax matters, suggestions, Bond comments, etc. GaForbresh Regraded Unclassified 127 General Comments M. W. Thatcher, Vice Chairman, National Executive Council, Farmers Educational & Cooperative Union of America, St. Paul, Minn. As one of your friends and strong public supporters, I feel perfectly free to criticize your attitude toward the new type of credit being offered by R.A.C.C., to induce farmers to increase production of certain designated war crops. Let us take flaxseed to illustrate our point. It is & hazard- ous crop to raise, but a large domestic production is essential to meet wartime requirements. If the farmer gives up the production of less hazardous crops - which have been part of his normal production schedule and are more certain of maturing - and, instead, plants flaxseed to support the war effort, he should be given some protection by the Federal Government on this risk crop. In substance, the Federal Government says to the farmer: "You furnish the work and the land, and we will loan you the money you need for seed, gasoline, oil, etc. If the flax crop fails to mature, we will, on proper proof of loss, cancel the note which you have given to R.A.C.C. Now compare the limited risk the Government assumes in this kind of an agreement with the farmer, to the full risk it assumes when private industry converts its plant from peacetime production to wartime production. I believe that the position which you have taken on this matter -- that a loan to a producer of flaxseed, for example, under conditions which I have outlined, is to be regarded as "loose credit" -- is most untenable. It is a danger- ous position for you to take, when the lack of induce- ment to put in risk crops could easily result in our having 8. much smaller supply of these crops than is needed. ... I am enclosing the newspaper article which states your position and quotes some of your remarks. I believe it must rank, if it is true, as one of the most demoralizing news stories which has come out of Washington in recent years. I am afraid that the farmers will feel most resentful of the position which Regraded Unclassified 128 - 2 - the Associated Press states you have taken, and un- fortunately, I believe they have a right to feel this way. In most parts of the country the banks are still charging 7% interest on production loans. I have heard of no banker who is willing to share any of the financial risks in connection with farm production -- even on risk crops which the Federal Government de- clares are 80 essential to the war effort. Congressman Reid F. Murray forwards letter he has re- ceived from Frank D. Chapman, President, Berlin Chapman Company (Canning Machinery), Berlin, Wis., which reads as follows: As a small manufacturer employing between four and five hundred men, I an trying to write some- thing constructive. We are not in the class that couldn't get work because we are able to get all the work we can do. We also have 8. surplus labor supply. *** We are also able to get material on a reasonable basis. Our factory at present is engaged in making rubber condensers, 100 Octane gas, Ships' Condensers for Escort Vessels and Merchant Ships. To properly turn out the required amount of production, it has been necessary for us to expand our plant facilities enormously. Our big question is just one thing, this is 8. Necessity Certificate. As you know, 8. Necessity Certificate is a directive by the Treasury Department allowing us to depreciate our new facilities 20% a year for the duration of the war, in case the war is finished in less than five years. So far, we have been successful in getting Necessity Certificates, but the time element has given me gray hair and the creeps. It takes too long to get a Necessity Certificate through the Treasury Department so the manufacturer can feel safe in expanding his facilities. *** It takes from six months to & year to get these. During this time we are forced to buy, or deem it our patriotic duty to buy, more machinery to get out equipment on time, but the financial end of it is that if these Necessity Certificates are finally not granted, this company is sunk. I am just wondering, although I do not wish to make a. complaint, if some attention couldn't be called to the Treasury on the slowness in getting out these Certificates. *** Regraded Unclassified 129 - 3 - W. Wilkinson, President, The Bank of LaCrosse, LaCrosse, Va. I see your statement in the press this morning regarding the competition of Production Credit Associations with our local banks. Glad that some Government Agencies realize the unfair competition non-Government enterprises have to contend with. Look at this advertisement for business (loosl Produc- tion Credit Association). They neither pay taxes nor income, yet they are protected by taxpayers' money against loss. This one has 8. surplus of $27,000.00, yet they have never paid any tax nor income. I hope your suggestions will be put into effect at once. J. M. Burkholder, Secretary, James Mercantile Co., Encinal, Tex. I am also in favor of rural banks handling seed and production loans and do not favor Government Agency competition. In our section of the country, the rural banks exact from B to 10% interest on small loans and are reluctant to renew loans from season to season, in cases where it is necessary, and when conditions get bad, they all want 8. borrower to pay up. The Federal lending agency will lend money for 41% and don't re- quire such rigid repayments; it is for these reasons that many are changing from the rural bank to the Fed- eral Lending Agency. Personally, I think if banks could charge no more than 6% on small seasonal farm and crop production loans, and 5% on livestock and farm machinery loans of longer terms, that the rural banks would soon regain most of the lost business, and the Government would be relieved of the burden that should be borne by the private banking system. *** K. A. Riner, Vice President, Farmers State Bank, Mentone, Ind. Referring to your press conference wherein you stated that you hoped that rural banks would get first crack at farm war production loans", and that represen- tatives of 6,000 to 7,000 banks had complained of Government competition in loans to farmers for war production, by the Regional Agricultural Credit Corpora- tion, and further you believed that rural banks would be in a botter condition to cooperate with the new Victory Loan drive in April if they were "in a happier Regraded Unclassified 130 frame of mind", we are wondering if you appreciate the seriousness of the situation with respect to country banks in their effort to survive the onslaught of, not only the recently revived Regional Agricultural Credit Corporation, but the Production Credit Associations, and other subsidized Federal Lending Agencies. Country bankers, although eager and willing to continue to cooperate with the Treasury Department in its War Bond selling campaign, are rapidly approaching the position where they will have little, if any, time to devote to any activity other than that of endeavoring to protect their institutions against the co-ordinated activities of the Regional Agricultural Credit Corpora- tion, The Production Credit Associations, and the Agricultural Adjustment Administration. M. A. Perry, Cashier, New Harmony National Bank, New Harmony, Ind. It is a great satisfaction to the country banks of this country to see you take B. stand in their behalf. It seems to me that this Administration has taken the attitude that a bank is of no importance in their community, and that they should be put out of business, not by direct legislation, but by setting up agencies to compete with them. We have in this bank more than a million dollars of deposits with less than one hundred fifty thousand dollars in loans. The yield of the Government securities is 80 meager that we must have local loans to overbalance this low income. When our country wants to do their financ- ing, they call upon the banks. They have never failed to do their duty. They do it without one single penny of compensation. Then when they follow up with some damn fool law which robs us of our just income, we feel that we have & just complaint. This bank is making very meager profits. We have five employees, three who are being paid less than $1,000 per year. We are within twenty miles of a. defense plant where the employees are being paid from $50 to $100 per week. How do we keep our help? They are just loyal, knowing we cannot pay more. It they were Union help, we would be compelled to fold up and close. I hope you will 131 - 5 - use your influence to see that these Government Agencies cease to operate, that we may be able to regain our earning power in order, if for no other reason, that we can pay our help what they earn, and what they justly deserve. We would also like for you to do all you can to have us placed in the class where we play an im- portant place in the winning of this war. A helper in a bank is of little use for at least the first year. He is of little use until he has that training. We must have this help when you ask us to put over your financing. *** Everett L. Williams, Sparta, Wis. Congratulations on your radio talk. It was sincere and honest, and given in the kind of way folks like to hear. *** 132 - 6 - Favorable Comments on Bonds R. Lal Singh, Editor, India News, Los Angeles, Calif. We Indians of Los Angeles were very proud and happy when we received your warm congratulatory telegram on January 26, 1943. INDIA NEWS was very happy to have initiated and carried through the project of selling a huge amount of U. S. War Bonds on the day tradition- ally observed by Indians throughout the world as Indian Independence Day. We appreciate too the full difficulties faced by the Administration in its treat- ment of a subject 80 delicate as the subject of India. Because we appreciate this difficulty, we all the more appreciate your kind words to us, and were very glad to show by our actions that the Indians of Southern California are heartily in support of the United Nations, and wish the American and British and all United Nations forces every possible success in de- feating the Axis. L. B. Slaughter, (Whole Distributor of Humble Oils), Electra, Texas, in reporting excess Series E Bond purchases, says: Living in 8. small town, doing a very small business with some farming and stock- raising on the side, should we close up shop and rush to some defense work, or should we redouble our efforts here and contribute our all to the job in hand? Not having the physical stamina nor youth we once had, we decided on the latter and went all-out at once, re- ducing our help for farm and ranch work to one man, and one man for the gasoline business. Our former employees went to defense work immediately. We also streamlined our domestic and social affairs, the extra money that ordinarily was paid out each week for maid service, gardener, wave sets, manicures, and even shoe- shines (it is surprising what an application of paste polish applied at home will do for an old pair of shoes), was banned. This all went into a Defense Stamp fund. We found that by 80 doing, we were able each month to Regraded Unclassified 133 - 7 - buy an additional $25 Bond. We also found that 8. college football game, or a big league baseball game could be almost as exciting heard over the radio, as sitting in the reserved section. * Dollars thus saved were added to our Stamp fund. By this careful planning, we have been able to give not 10%, not 50%, but every penny above our actual necessary expenses, to the purchase of Bonds. Of course, we have not been restricted to forty-hour weeks. Our weeks in- clude Sundays, and they are from dawn to dark, but we are not complaining, and do not feel that we have sacrificed anything. In fact, when we hear our leaders mention the rationing of gasoline and food as an addi- tional sacrifice, we are a little ashamed, as we feel that the only people, thus far, who have sacrificed are those who have given their loved ones in line of duty. We have, perhaps, been inconvenienced a bit, but if there is any of the pioneer fiber left in our souls, we will be stronger by having these experiences. We are eagerly awaiting your reply, and trust that you will understand that our Bond buying was for no sel- fish purpose, but was the only way we knew to prove our allegiance to the Government that has made it possible for us to save and to share in its securities. Regraded Unclassified 134 - 8 - Unfavorable Comments on Bonds A Number of Employees, (Five names given), Philadelphia, Pa. (Letter referred by the White House.) We are en- ployed at the Quartermaster Depot and most of us have pledged 10% of our wages every week since last May. Às yet, we have not received any Bonds, and if anyone dares to inquire about them, we are either laughed at or reprimanded and told there is a war going on.* Why aren't we getting these Bonds, and why doesn't some one look into this matter as they tell us Washing- ton is to blame. We have noticed that whenever anyone wrote to Washington, they were called down severely about it in the office. As we do not wish to risk our jobs, or be put on work where the remineration is small, we will sign a few names of the people who are also interested in receiving their Bonds. Please in- vestigate the manner in which this place is conducted. Ernest F. Farley, Esmond, R. I. I represent the workers of the Union (Esmond Mills) 85 an executive member. I am a member of the big labor management committee, to help solve the problems of the Mill. I am a member of the small labor management committee, whose job it is to take care of the sale of U. S. War Bonds and United War Fund. We were deducting from the pay of the workers about 30% in November. This we felt was not enough so we held an outdoor rally, and we increased our payroll deductions to 92%. We re- ceived 8 Minute Man Flag to fly over our mill. But since then, through the lack of receiving our Bonds, I mean the workers, of course, our payroll deductions have dropped to 66%. The main reason for people stop- ping the Bonds is the fact that it takes two to three months to receive them after they are paid for. We have asked some of the payroll workers why we are not receiving our Bonds faster, and they tell us the bank can't send them out any faster because of lack of help. So we suggested to management to become an issuing agent. *** Management does not feel as though they Regraded Unclassified 135 - 9 - would care to stand this responsibility because they have to buy the Bonds, and if any were lost, they would have to pay for them. # # # They were told by the Providence office that they need not buy the blank Bonds. They would send them to the Mill in case management wanted them, and when they were paid for ($18.75) by a worker, type their name on the Bond and a serial number along with the official stamp, give the Bond to the worker and forward the money to the barr. Then management inquired further and the Federal Reserve Bank tells them this cannot be done, or at least, it implied as much, but we did not see the letter, and management maintains they must buy the blank Bonds, and don't feel as though they care to take this responsibility. In the meantime, our quota is going down all the time. Somewhere along the line, someone, somewhere, is holding up these Bonds, and our soldiers are not getting bullets for their guns. # # I hope you will answer my letter and tell me just what is what, because every time I go through the Mill, workers say, where is my Bond? When an I going to get it? I'm going to stop my Bond deductions, and they stop their deductions, and this does not help the War effort. George S. Stevenson, New Haven, Conn. I address this letter to you directly because I regard the matter as of real importance, and because I believe that my feel- ings are shared by large numbers of those who are en- listed under your good leadership for the Victory Fund campaign in April. # # # You can depend upon the last ounce of energy of every last one of us. In the New Haven area our chairman already has his plans skil- fully and firmly drawn in the determination to make April surpass December, and it will be no easy task. On the eve of that supreme effort is it fair that we be confronted with that dismaying statement about "coupon clippers"? I te with especial feeling be- cause my particular job appens to be the lining up of prospects for substantial purchases, and during the past for days I have heard some bitter comments on that 136 - 10 - stigma cast upon bond-holders. For example, I have been asked, "If my savings of the past are branded 8.8 wrong, how about my savings of the present and future? Now I beg you to take precaution that will prevent the recurrence of such an unfortunate episode as the "coupon clipper" statement. Please believe me that I write this letter soberly and earnestly, after several days of deliberation as to where my duty lay. Miss Catherine J. Towner, Detroit, Mich. Last week while buying a War Bond, I was especially taken with the number of people in line who were cashing in their older Bonds. The man who wrote out my Bond mentioned that he cashes in twice as many Bonds a day as he writes out. *** E. H. Benner, (Real Estate), Omaha, Neb. The Bond issues which have been put out by your Department do not seem to meet the needs of current business. As you know, every business has to maintain itself in liquid form, and if 8. Bond could be sold to the public which Was immediately redeemable at face value, with 8. 2% earning power, a lot of the money which is kept in banks to meet any sudden demand or exigency of business would be invested in these Bonds. There possibly would be considerable traffic in such Bonds, but many businesses would not need to draw upon this reserve and the funds would remain until some nec- essity arose. Businesses like ours have money on account belonging to our clients and we cannot jeop- ardize that money because it is on demand, The demand does not seam to come, but it is still there. *** Honestly, I wish that the men in authority in Washington would come to realize that the control of the businesses of this country is not in the hands of people who have a seven-year old mentality. A. W. Lamm, Treasurer, Clay-Adams Company, Inc., N.Y.C. We consider the attached letter received by us Feb. 5 from your New York Office, uncalled for, unjustified 137 - 11 - and offensive. Inasmuch as we appear to have reached no satisfactory agreement with our employees regard- ing the 10% payroll deduction plan for the purchase of War Bonds, a number of questions are asked which are in the same category as the classic, "Have you stopped beating your wife yet?" In the first place, we felt that we had reached a satisfactory agreement with our employees regarding the 10% payroll deduction plan for the purchase of War Bonds and Stamps, inasmuch as every one of our employees, with no exception, is enrolled in the payroll deduction plan, and has been since March, 1942. When we have been asked to submit detailed reports by your office, either in Washington or New York, we have been glad to do 50. Some of our employees' deductions are for extremely small amounts, whereas others run into much more substantial amounts, far in excess of the 10% minimum, and these varying deductions are governed, of course, by the earnings of each employee in proportion to his obliga- tions. # In answer to the last paragraph in the letter, we enclose copy of letter we are writing to Nevil Ford, State Administrator, returning the card and the self-addrossed envelope, which is the informa- tion they want 80 they will be in a position to know whether or not to try to service us. All we can say is that if their letter is a sample of their service, we think it is better if they don't. We consider that the type of letter we received actually defeats the purpose for which it is sent. You refer to employers' efforts to inspire their employees. Do you consider that the attached letter is inspired or inspiring, regardless of the facts in the case? J. R. Weiler, Cashier, Harlan National Bank, Harlan, Ky. I an writing to enter & one-man protest against the arrangement of "Request for Payment", on the back of U. S. Savings Series E Bonds. The first blank line is very confusing, and as I understand it, has no meaning or value on the $25 Bonds because a partial distri- bution of a. $25 Bond cannot be made. Many owners sign on the first line, and then if we have them re-sign on the second line, the Federal Reserve Bank at Cincinnati Regraded Unclassified 138 - 12 - will not accept the Bonds, and we are required to fill out Form PD 1522. In most cases, a bank clerk must stand with his finger held on line 2, in order to get the applicant for redemption to sign on that line. This is a wastage of bank time. Blank line 1 should be abolished. If this cannot be done, then lines 1 and 2 should be indicated by figures 1 and 2 set to their left so that a bank clerk can hand the Bond back to a customer and tell him to sign.on line 2. Any kind of re-arrangement will be an improvement to the present one. I hope you may see your way clear to readjust it on future printings. 139 - 13 - Favorable Comments on Taxation Hansan Wu, Hansan Trading Co., N.Y.C. May I respect- fully express my approval of your steadfast insistence upon collection of the 1942 income tax and of your resistance to the clamor of the proponents of the Ruml and other tax cancellation plans. With the United States engaged in a costly world war, taxes must be paid by all of the people in extremely heavy degree, not only to provide the sinews of war, but to reduce Governmental borrowing and thereby retard the rate of increase in our national debt which, if uncontrolled, would threaten the very foundations of the America we are fighting for. Under such conditions, isn't it mere folly to scratch off taxes now due and about to be paid into the Treasury on the ground that such & plan will make it easier to collect future taxes? Has the old American adage, "One bird in the hand is worth two in the bush", become outmoded? # Many of my Chinese relatives and friends are impatiently waiting to pay their 1942 income taxes and my remarks express the sentiments of several of them. A few of them have asked me to ascertain the answer to & technical question. Are they entitled to exemption for wives and minor children whom they support, residing in China? I have been ad- vised by a young lady clerk in the Internal Revenue Department that the dependency of children under 18 years is allowed, but there is no provision made for the wife of the taxpayer. Is this correct? R. J. Simpson, Los Angeles, Calif. As 8. business analyst and efficiency expert of twenty-five years' standing, I wish to heartily endorse the opinion of your legal adviser, Randolph Paul, as broadcast from Washington to wit: To amortize 1942 income taxes over a period of six years and by no means to waive any portion thereof. The pay-as-you-go plan for the pay- ment of current 1943 taxes is quite commendable, but to waive a matter of billions in taxes, 1942, is far beyond my understanding of business procedure. We, in Regraded classified 140 - 14 - California, suspect that there is a very powerful lobby at work in Washington endeavoring to influence prospective legislation to cancel 1942 taxes, and we do hope that our President may lend his efforts towards defeating any legislation favoring cancellation of the said 1942 income tax. The U. S. Treasury cannot afford such a loss as you may well know. William W. Allen, Brookline, Mass. Keep up your objection to the Ruml Plan. It is my hope that the 1942 taxes, as the tax law now stands, and part of 1943 taxes are collected in 1943. A. Griffen Ojena, Los Angeles, Calif. *** If your Dad were Secretary of the U. S. Treasury, he would make every effort to prevent the $200,000 and over income taxpayers from sabotaging the Treasury in regard to 1942 income taxes. The Treasury's weakness in fore- stalling capital "appeasement" will lead to insistent and effective demand by the "big shots" through the use of the small income taxpayers to an ultimate can- cellation of the 1942 Income tax. The whole thing seems unpatriotic, un-American, indecent, and an addi- tionally criminal act against generations yet unborn. V. E. Adams, Atlanta, Ga. The Treasurer of the U. S. is 100% correct in opposing the Ruml Plan, or any other plan to forgive 1942 income taxes due the Federal Government. Last year was undoubtedly thep eak year for war profits. *** Regraded Unclassified 141 - 15 - Unfavorable Comments on Taxation Louis F. Lee, Lawyer, N.Y.C. I an inform that under the present tax law members of the Armed Services are subject to tax even on their pay for such services, and that the only extra deduction that is permitted is the sum of $300 for a. married non-commissioned officer, and $250 for an unmarried non-commissioned officer. Commissioned officers are permitted no de- duction. I have talked with many persons concerning this, and every one seems to be outraged at the fact that anything received by any one in the Armed Services, commissioned or non-commissioned, should be in any wise taxed. Surely every one will agree that they are giving their all for their country. Harry R. Allard, Los Angeles, Calif. There is a lot of comment on the fact that income tax is slow in coming in. May I state that up to yesterday, the company for which I work has not notified the employees as to their earnings for the last year? I have been ready and will- ing to pay my tax in whole, or in part, but cannot do 80 without the notification by the company. It has been the policy of this company for several years to be months late with our notifications. While not all of the employees would pay up, many would pay far sooner than they have done if they knew their exact income. *** Mrs. F. B. Jalu, Chillecothe, Mo. (Encloses clipping on "abating tax liabilities".) I supposed the tax question was settled for this year, so I filed my return at the Federal Office here January 8, 1943, with Geo. Dameron, and gave him my check for the year - $250.37. It was sent to Kansas City and cashed. Now I want my money back, except the first quarter - $62.59. And in the future will be careful how I pay, but am always prompt in paying taxes. Thank you, and tell me how to get my money. 141 - 15 - Unfavorable Comments on Taxation Louis F. Lee, Lawyer, N.Y.C. I am informed that under the present tax law members of the Armed Services are subject to tax even on their pay for such services, and that the only extra deduction that is permitted is the sum of $300 for B. married non-commissioned officer, and $250 for an unmarried non-commissioned officer. Commissioned officers are permitted no de- duction. I have talked with many persons concerning this, and every one seems to be outraged at the fact that anything received by any one in the Armed Services, commissioned or non-commissioned, should be in any wise taxed. Surely every one will agree that they are giving their all for their country. *** Harry R. Allard, Los Angeles, Calif. There is a lot of comment on the fact that income tax is slow in coming in. May I state that up to yesterday, the company for which I work has not notified the employees as to their earnings for the last year? I have been ready and will- ing to pay my tax in whole, or in part, but cannot do 80 without the notification by the company. It has been the policy of this company for several years to be months late with our notifications. While not all of the employees would pay up, many would pay far sooner than they have done if they knew their exact income. *** Mrs. F. B. Jalu, Chillecothe, Mo. (Encloses clipping on "abating tax liabilities".) I supposed the tax question was settled for this year, 50 I filed my return at the Federal Office here January 8, 1943, with Geo. Dameron, and gave him my check for the year - $250.37. It was sent to Kansas City and cashed. Now I want my money back, except the first quarter - $62.59. And in the future will be careful how I pay, but am always prompt in paying taxes. Thank you, and tell me how to get my money. Regraded Unclassified 142 - 16 - Omar Holliday, St. Louis, Mo. I am 78 and retired. My wife and I have a joint income of about ten thousand dollars -- all from dividends. We own stocks that we could sell today and which would yield about $7,200 profit. All are long-term. As I understand it, under the law of 1942, the tax on this profit is $1,800. If I could clear this transaction NOW, it would give great pleasure to pay this $1,800 into the Treasury at once, or as soon as the transactions are cleared. In other words, if the law permitted, I could turn over to the Treasury $1,800 almost at once. Since I cannot know what I may have to pay under the law now under consideration, I am afraid to sell. It seems to me that a change in the law to permit payments or clear- ances as soon as the transactions are closed, might bring a lot of money into the Treasury, which never finds its way there under the present laws. *** Miss Ernestine Conrad, St. Louis, Mo. I've got the "Income Tax Blues" and here is why -- I am a salesgirl and average $82.50 per month. Same salary this year 8.8 in 1942. Now, you figure out how I and other white-collar workers in this low income group are going to live and pay taxes too. (Gives weekly budget.) *** Out of $3.00 per week that is left, must come necessary personal toilet replacements, necessary clothing and underwear replacements. Then, on top of this, must come the income tax. In the meantime, there has also been 8. compulsory Red Cross and Com- munity Chest contribution. So, Mr. Morgenthau, you'll just have to put me in jail because I don't see how I can pay the income tax the way you Washington officials have it figured out. The Treasury Department seems to think that people are not paying their first income tax installment because they feel the Ruml Plan, or 8. similar one, will go into effect. The plain truth is that we in the lower brackets just cannot afford income tax really, and at the same time main- tain 8. half-way decent living standard and our health -- Regraded Unclassified 143 - 17 - which surely in times like these must come first. I can tell you many of us are praying for the day when the Republicans get in again. We all feel like it can't be worse under them, and it might be 80 much better! It was with a feeling of positive revulsion that I read Mrs. Perkins' proposal to increase the Social Security rate. How are you going to squeeze anything more out of us? Mr. Morgenthau, they say you do not read mail like this, but I hope and pray that your secretary will pass my letter on to you for your personal consideration. If not, then I and thousands of others like me, are sunk! We've got to get someone to speak for us. Farmers have their lobbyists, factory workers theirs through their Unions. Even the movie stars organized against the salary ceiling limit. But, who is there to speak for the low income, white-collar worker -- he or she, salesgirl, clerk, or stenographer? And I include those making up to $100 per month in this. What has this Administration, which always has made & talking point of being on the side of the "little fellow really done for us? *** "A Worker", Philadelphia, Pa. I am a worker at the Philadelphia Mint and have taken it upon myself to ex- press the idea of the men in general about their finan- cial statement for salary earned in 1942, etc. We have been trying since February 1 to get this report so we can file our returns, but the office contends that Washington is responsible for the delay. In the mean- time, March 15 is drawing near and we still do not have the statement. We don't know who is responsible for this, but please do something for us if you possibly can. Walter V. Bennett, Overbrook, Pa. It is certainly going against the grain for me to have to vote the Republican ticket next year, but I am afraid it's going to be nec- essary, despite my great admiration (and affection) for President Roosevelt. *** I have come to believe that the present Administration is concerned only with the people making $2,500 or less, and is not at all concerned Regraded Unclassified 144 - 18 - about the middle-class. The idea of pay-as-you-go taxation is 8. good one. We know that about 75% of the forty billion dollar increase in the national income for 1943 (estimated) over the national income for 1931 will go to labor. And every last one of us knows that the average mechanic will change from plant to plant merely 80 that no one can trace his income, and he will therefore pay no taxes. Under the pay-as-you-go plan, it would come out of his pay envelope, and he couldn't dodge it. ** But, take the middle lass man like myself, paying 8. tax of, we'll say, around $2,000 a year. You know darn well he won't have that $2,000 laid away, and will count on paying the amount quarterly. ** # If you start to bite 20% at 25% out of that 1943 salary on the pay-as-you-go plan, the poor but honest guy has no chance whatever of paying both taxes, and will be forced to sell Bonds he owns, close out his life insurance, and in many cases, give up his home. When you do 8. thing like that to a person, Mr. Secretary, war or no war, you produce a hater of the Administration. My advice to you would be to watch your step very care- fully because it's full of dynamite, and believe me, I am just 8.8 anxious as you are to see that our soldiers get good food and good equipment, because I have an only son in the war and I want him to return safe and sound. Robert I. Minson, San Diego, Calif. Please inform me why you object to the Ruml Plan. None of the published objections that I have yet seen appear valid. The fact that some rich men might secure an advantage means little or nothing. The rank and filers, like the writer, are the birds whose tax money sustains the nation. It seems that whenever there are two ways to do a thing, the Government never fails -- it always does it the hard way. Isn't it about time that you upset this cus- tom and apply a little common sense and simple honesty to the tax problem? Mrs. leyne Macdonough, N.Y.C. Here WA are, almost one hundred and thirty million people milling patiently for Congress to decide on the tax alturtion. We have Regraded Unclassified 145 - 19 - been patient so far, but now the time is growing shorter, and no longer will we tolerate this fumbling and "dilly-dallying" that is going on in Washington. This jealousy between the backers of the Ruml Plan and the Treasury Department is positively disgusting to all of us. We, the people, who must pay the taxes, want the Ruml Plan passed, and it is up to you to remove this situation and friction. We will gladly pay our taxes, but we want 8. fair deal. It won't cost the Treasury a single cent by making this easy for us, in- stead of antagonizing the whole country. Howard W. Niven, Rochester, N.Y. *** I have been on the point of writing to you averal times to urge you to approve a pay-as-you-go plan for taxes. This article from "Newsweek", however, put it so clearly and concisely that anything I might say would probably be superfluous. May I suggest that you step out into the meadow and take 8. look at the forest 8.8 a. whole, and realize that the mass of us would think considerably more of you if you would concur with our wishes? F. E. Rownd, Kansas City, Mo., sends Secretary Morgen- thau copy of letter he has addressed to Senator Bennett Champ Clark, which reads in part as follows: *** Press reports indicate that you are familiar with the public thought on this subject of income tax payments. It is not the amount of tax, but the manner of paying, that the public objects to, in the present law. On the other hand, it appears that the Secretary of the Treas- ury is not close enough to the public thought. Up to now, he has added to the efforts of thousands of others in the Administration, to bring about the defeat of the New Deal in 1944. Roman V. Kirchner, Lancaster, Pa. ... Why will the Collector of Revenue not accept currency issued by the U. S. Government in payment for income taxes imposed Regraded Unclassi 146 - 20 - by the same Government? Any person unfortunate enough not to have a checking account in a bank must pay his taxes with a Money Order. Understand me, I am not complaining about paying the tax, but the additional fee necessary in obtaining the Money Order. I cannot feel satisfied that this is a just condition, and I am asking you for some explanation. *** Anonymous -- N.Y.C. *** I am & Public Accountant since over 15 years, and during this time tried to at- tend to tax matters in a way that should do justice both to the Tax Department and the taxpayers. *** I am alarmed by the unfriendly attitude these Bureaus (Internal Revenue) seem to take lately when they find out that the questioning is coming from an Accountant, and openly state that the information is only available for taxpayers. I have no desire to criticize these Bureaus but desirous to call your attention to the fact that such attitude is against the interest of the Treasury Department. *** It is a mistaken belief that the tax experts are working against the Treasury Depart- ment; on the contrary, as it is their own interest that the report should be acceptable and not subject to further questioning. *** Regraded Unclassified 147 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE TO Secretary Morgenthau February 26, 1943 FROM Frances McCathran CONTROVERSIAL ISSUES BEFORE CONGRESS 1. Tax: Ruml Plan - As Republicar Congressmen appeared to be lining up in support of the Ruml plan, Representative Reed, a member of the Ways and Means Subcommittee drafting pay-as-you-go legislation, declared it to be the only one which would make taxpayers fully current in 1943, since all other proposals would take several years. No loss of revenue would result from the Ruml plan, he claimed, but instead "revenue would continue to flow into the Treasury as usual, the only difference being that 1943 taxes would be geared to the higher level of 1943 income which will actually result in a collection this year of $13,000,000.000 in per- sonal income taxes a.s against $10,000,000,000 if 1943 taxes are based on 1942 incomes". He also asserted servicemen would be benefited because those who had high civilian incomes in 1942 wouldn't have to pay taxes on them out of army pay, 2. Salary Limitation - In a report written by Representative Disney reviewing the salary limitation issue, the House Ways and Means Committee urged the House to pass the Debt Limit Bill containing the Disney salary rider, which would nullify the President's order on salary ceilings and impose the same limitations, retroactive to Pearl Harbor only, by Congressional process. The bill also contained a provision permitting banks and trust companies to serve as redemption agents for War Savings Bonds, In his report, Disney stated that while Congress disapproves the "amassing of large fortunes as a result of the war" a "crop of war millionaires" would be prevented by present taxes and regulations, such as: (1) the high excess profit tax rate: (2) the power of the Treasury and the war agencies to renegotiate war contracts which "if they chose to be tyrannical" could bankrupt a. con- tractor: and (3) the Treasury's authority to disallow unreasonable salary increases for tax deduction ourposes. In his report, Disney declared that Congress had never given 148 the President authority to limit salaries under the October Anti-Inflation Bill and reiterated his already often-repeated statement that his amendment was an attack on "government by directive". There were indications, however, that the question of the propriety of tacking a political rider on to a war finance bill might be raised on the floor of the House. 3. Farm Parity - With even staunch Administration supporters like Senators Barkley, Wagner and Mead voting for it, the Bankhead Bill to exclude subsidies or incentive payments in the computation of the parity formula passed the Senate yesterday with a vote of 78 to 2. Senator Barkley, however, supported it "with some trepidation" and hoped it would not lead to "runaway inflation". Passage of the measure led to speculation on the fate of the Pace Bill in the House to include farm labor costs in computing price ceilings. Some quarters predicted that a compromise between the Ad- ministration and the farm bloc was in the offing, with the bloc dropping the Pace Bill which would raise prices about 10 or 15% and ceasing objections to subsidies in return for Administration acceptance of the Bankhead Bill. Repre- sentative Pace remained confident of his bill's acceptance, however, and other sources chalked the Bankhead Bill up as an outright victory for the farm bloc and a slap at the Administration's Stabilization Program. Bankhead claimed that Congress never intended to give the President authority under the Stabilization Act to exclude government payments in fixing price ceilings but Senator Barkley said Congress should have made itself clear and that the President conse- quently had a right to his own interpretation. The Senate also almost considered along with the Bankhead Bill a proposal submitted by Senator Danaher to repeal the President's Salary Order but finally decided to let the House act first on the Disney amendment. Regraded Unclassified 149 m Thete discussed onally with Sery 2/27/43 150 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE Feb. 26, 1943 TO Secretary Morgenthau FROM Mr. White Subject: Developments in North African Program 1. Currency for new invasion areas. An agenda has been prepared for & conference Monday morning with the British Government on the type of currency to be used in an invasion of the European continent. The British have questioned the desirability of the continued use of the yellow seal currency in invasion areas in preference to military notes, and the various refugee governments have made representations for the use of their local currency as against any special currency issued by the Allied governments. 2. Pay of Officers and Crews of French Men-of-War, In accordance with the President's instruction to the Secre- tary of State, steps have been taken to provide dollar funds for the pay of officers and crews of the French men-of-war undergoing repair in the United States. A provisional arrangement to meet the immediate needs of the French was agreed upon between representatives of State, Treasury, War, and Navy and representatives of the French military and naval missions in the United States whereby French authorities have drawn a sight draft on the French Treasury in North Africa in the sum of 31,250,000 francs in favor of the Secretary of the Treasury. The proceeds of this draft will provide adequate funds to meet the immediate needs of the French for salary payments. This provisional arrangement was made in preference to using blocked funds of the former French Government in view of the broad questions of policy involved in the use of these funds. A cable has been dispatched to Mr. Murphy by State, Treasury, War, and Navy advising him of this provisional arrangement and instructing him to undertake discussions with General Giraud to provide arrangements to cover similar expenses that may arise here- after. 3. Sterling arrangements with North Africa proposed by British. The British have indicated that they plan to make an arrange- ment, in agreement with the French, to handle payments between the Regraded Unclassified 151 Division of Monetary - 2 - Research Sterling Area and French Africa through special exchange accounts in the Bank of England and the North African Treasury. These institutions are to be the sole holders of sterling and North African france. The sterling accruing to the French can only be used in the Sterling Area. The advisability of this regularized procedure will be discussed orally with the British on Monday, March 1, 1943. 4. Allocations of local costs in North Africa. American representatives in Africa have indicated that the questions involving the policy to be followed in handling Allied payments to the French are pressing. Especially urgent are the questions of Allied payments to the French for civilian defense measures and for the Allied use of port facilities and the Algerian railway. The British Government has indicated that they are not liable for any part. of the cost of the military or civil expenditures of the French other than for services and supplies actually furnished to them. For these services and supplies they will pay cash and in turn will ask payment in cash for any services or supplies furnished by them to the French. If the French are unable to meet the whole cost of their budget, the deficit will have to be covered by arrange- ments between the United States and the French administration, A discussion of this matter is being undertaken with the British, To provide for the immediate problem, e cable has been dis- patched to General Eisenhower by State, War, Treasury, Lend-Lease, and Board of Economic Warfare advising him that for the time being he should continue to incur any expenditures for the account of the United States Army which he is satisfied are needed by reason of the military situation. If any situation arises where there is E disagreement as to what constitutes the respective shares of Brit- ish, French, and Americans, the British and the French should pay what they believe to be their share and the United States Army should pay the balance of the bill. It is emphasized that this arrangement 1s provisional pending subsequent over-all financial arrangements to be made with the British and the French. 5. Budgetary Assistance to the French. The French have alra y stated that they expect considerable financial aid from the Allied nations. The High Commissariat in North Africa has indicated that a deficit of approximately 27,000 million francs is expected is the military and civil budget. The budgetary problem 1a not one of a shortage of dollars, but & shortage of franc receipts. In this connection the Franch North Regraded Unclassified 152 Division of Monetary - 3 - Research African authorities have available to them over $40,000,000 held in the names of the central banks of Algeria and Morocco for the account of the French Treasury in Africa. It 1a reported that an additional $40,000,000 in United States yellow-seal currency is held by the banks in North Africa. 6. Currency holdings of returning Army personnel. Arrangements have been provided through the customs authoritie to remove 8.8 far as 1a practicable any difficulties that may be ex- perienced by the United States military personnel in bringing their holdings of United States currency into this country when returning from North Africa. 7. Local currency for French North and West Africa. Arrangements for the manufacturing of local bank notes in the United States for the Bank of Morocco and the Bank of West Africa and for the supplying of the Bank of Algeria with materials for the printing of its own notes are proceeding satisfactorily. As soon as adequate supplies of local currency are available the special United States yellow-seal currency will be withdrawn from circula- tion. 8. Internal financial controls in North Africa. American representatives in Algiers have cabled the Treasury that the French have finally agreed in principle with a program for economic warfare embodying broad and flexible powers granted to a central admimistration for financial and commercial controls, uniform administr: for all of French North Africa, and a selective method for the sequestration of economic property. Additional information as to the French position towards this matter has been requested. 9. General License for certain North African banks. The Treasury has generally-licensed, with a procedure for prior notification, the accounts of the Bank of Algeria, the Bank of Morocco, and the Bank of West Africa. The blocked accounts of com- mercial banks in French North and West Africa may be transferred to the generally-licensed accounts of the three State banks upon request. The American rep resentatives in Africa have indicated their approval of this procedure. As soon as these arrangements are in effective operation remittances from and to North Africa may be satisfactorily handled. No public announcement will be made here. Regraded Unclassified 153 Division of Monetary - 4 - Research 10. Inflationary problems in North Africa. Inflation remains & problem of importance in French North and West Africa. Discussions with French authorities indicates that they have little awareness of the necessity for strong inflation controls and that they are relying upon the United Nations to ship consumer goods and products in quantities large enough to offset the increased buying power of the population. Any Treasury action that may be taken towards providing adequate controls is now being discussed. 11. Arrangements for franc notes of French sailors. Arrangements have been made to allow sailors from the French warships visiting American waters to dispose of their African currency for dollars at approximately the official rate of exchange. 154 NOT TO BE RE-TRANSMITTED COPY NO. 13 BRITISH MOST SECRET U.S. SECRET OPTEL No. 65 Information received up to 7 A.M., 26th February, 1943. SECRET 1. NAVAL OF 0, One of H.M. Submarines is overdue from exercises off the West coast of SCOTLAND. Another of H.M. Submarines in the GULF OF GENOA sant N tugs on the 12th, possibly torpedoed & large east bound tanker on the 15th and shelled a schooner building yard at CERVO damaging 2 schooners on the 19th. Another of H.M. Subsarines on the 18th off the north coast of SICILY shelled two schooners which were left derelict. 2. MILITARY TUNISIA. Eighth Army. Active patrolling continued by our right armoured forces east of MARETH LINE. On 24th road from MEDENINE to within 1,0 miles of MARETH LINE reported clear of enemy. First Army- On the 24th, the enemy's withdrawal through lev MASSERINE Pass continued with our forward units in contact throughout the day, BURMA. ARAKAN. 22nd/23rd. In a small raid by our patrols on MYEBON Southeast of AKYAR one river steamer and two launches were sunk and the jotty destroyed before our forces withdrew. 3. AIR OPERATIONS WESTERN FRONT. 24th/25th. WILHELMSHAVEN. Over 90% of aircraft despatched of which 98 were R.C.A.F. attacked the objective dropping 182 tons of bombs. Main force bombed on flares placed by Pathfinders and completed attack in 20 minutes. Glow presumably from fires seen reflected on clouds. No aircraft missing. 25th/26th. 417 aircraft sent out - NUREMBURG 337 (9 missing, 1 crashed). 108 mining 54, RUHR 6, leaflets 20. At NUREMBURG there was B certain amount. ground haze. TUNISIA. 29rd. 53 U.S. heavy ght and modium attented memy com intions and positions in the KAB RINE Many voldetes were des- royed or damaged. At night Wellingtons and faxes of Western Desert Mr. Fol dropped 51 tons of bombe on GABES town and Impres grow a Allied medi light bombers dropped 38 tons on enemy positions in the MARETH area. the 28 es- corted U.S. bombers attacked EL AGUINA airfield and roads and railways in the SBEITLA and FERIANA areas. SICILY. 25th. 31 escorted bombors attacked COMISO airfield and a factory near PACKINO. D LA. 25th, 18 y which ineffectively attacked the DINJAN area ASSA were intero ted U.S. Kittyhawks. Enemy casualties 6, 12, nil. Allied nil Regraded Unclassified 154 NOT TO BE RE-TRANSMITTED COPY NO. 13 BRITISH MOST SECRET U.S. SECRET OPTEL No. 65 Information received up to 7 A.M., 26th February, 1943. at " DUE 1. NAVAL 10 One of H.M. Submarines is overdue from exercises (the Weat coast of SCOTLAND. Another of H.M. Submarines In the GULF OF GENOA Bank and 2 tugs on the 12th, possibly torpedoed B. large east bound tanker on the 15th and shelled et schooner building yard at CERVO damaging 2 schooners on the 19th. Another of H.M. Submarines on the 18th off the north coast of SICILY shelled two schooners which were left derelict. 2. MILITARY TUNISIA. Eighth Army. Active patrolling continued by our 11ght ermoured forces east of MARETH LINE. Ort 24th road from MEDENINE to within 10 miles of MARETH LINE reported clear of enemy. First Army. On the 24th, the enemy's withdrawal through the KASSERINE Pass continued with our forward units in contact throughout the day. BURMA. ARAKAN. 22nd/23rd. In e small raid by our patrola on MYEBON Southeast of AKYAB one river steamer and two Launches were sunk and the jetty destroyed before our forces withdrew. 3. AIR OPERATIONS WESTERN PRONT. 24th/25th. WILHELMSHAVEN. Over 90% of aircraft despatched of which 98 were R.C.A.F. attacked the objective dropping 182 tone of bombs. Main force bombed on Clares placed by Pathfinders and completed attack in 20 minutes. Glow presumably from fires seen reflected on clouds. No aircraft missing. 25th/26th. 417 aircraft sent out - NUREMBURG 337 (9 missing, 1 crashed) ica mining 54, RUHR 6, leaflets D. At NUREMBURG there W&B a certain amount of wound have UNISIA. 23rd. U.S. heavy, light and modium bombers attacked nomy communications and positi in the KASSERI res. Many vehicles were des- royed or damaged. At night Wall ngtons and Halifaxes of Westorn Desort Air Force dropped 51 tone of bombs GABES town and landing ground and Allied medium and Light bombers dropped 38 Lons on enemy tions in Sao MARETH area. 24th. 28 ea- corted U.S. bombers attach EL AOUINE airfield and oads and railways in the SBEITLA and FERIANA areas. SICILY. 35th. 31 escorted fighter bombers attacked COMISO airfield and 8 factory near PACHT O. INDIA. 18 enemy bombors which ineffectively attacked the DINJAN area ASSAM were ercepted by 32 U.S. KSheyhawks. Enemy casualties 6, 12, nil. Allied nil. Regraded Unclassified