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Volume 646, July 1 – July 6, 1943
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Volume 646, July 1 – July 6, 1943
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Henry Morgenthau, Jr. Papers
Diaries of Henry Morgenthau, Jr.
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DIARY
Book 646
July 1-6, 1943
Regraded Unclassified
- A -
Book Page
Africa
See Occupied Territories
Agricultural Commodity Prices - Control of
See Office of Price Administration
Appointments and Resignations
DuBois, Josiah E.: Appointed Chief Counsel of Foreign
Funds Control - 7/6/43
646
216
- B -
Ball. Theodore H.
See Foreign Funds Control: Martinique
Belgium
Deposit in Bank of England for use of any expeditionary
force discussed in Ambassador's note to HMJr - 7/2/43
97
Berries
See Office of Price Administration
Board of Economic Warfare
Meeting - 7/1/43
24
a) Discussion of
1) War trade negotiations with Sweden
2) Current developments in Spain and Portugal
3) Civilian relief policy in blockade area -
(5/20/43)
26
4) Japan's war economy - (6/3/43)
28
5) Perkins' testimony before House Appropriations
Committee
31
Business Conditions
Haas memorandum on situation, week ending July 3, 1943 -
7/5/43
167
- C -
China
Doolittle raid: Results discussed in Currie letter -
7/1/43
76
June economic report - 7/3/43
149,150
Commodities, Agricultural
See Office of Price Administration
Commodity Credit Corporation
See also Inflation
FDR's veto of bill announced; HMJr was prepared to
recommend same step - 7/1/43
15
a) O'Connell memorandum - 7/2/43
101
b) HMJr's message to the House - 7/2/43
103
c) Jones (Marvin)-HMJr conversation concerning FDR's
position - 7/6/43
192
d) Senate instructs conferees (33-32) to recede from
Tydings-Danaher amendment: See Book 647, page 154
e) FDR's message on signing of Joint Resolution No. 147 -
7/16/43: Book 649, page 133
Regraded Unclassified
- C - - (Continued)
Book Page
Compulsory Savings
See Financing. Government: War Savings Bonds
(Voluntary Savings:
Payroll Savings Plan)
Correspondence
Mrs. Forbush's mail report - 7/2/43
646
111
Cuba
See Latin America
Currants
See Office of Price Administration
Currie, Lauchlin
See China: Doolittle raid
- D -
Deferments, Military
Secret Service: Reynolds (Senator, North Carolina)-Treasury
correspondence concerning - 7/1/43
59
Dies, Martin (Congressman, Texas)
See Subversive Activities - Government Employees
D'Olier, Franklin (President, Prudential Life Insurance Co.)
See Financing, Government: War Savings Bonds
Doolittle raid
See China
DuBois, Josiah E.
See Appointments and Resignations
- E -
Ecuador
See Latin America
Ezekiel, Mordecai
See Inflation
- F -
Financing, Government
"Free Riding": Reporters' questions anticipated by HMJr in
discussion with Bell, Haas, Smith, Lindow, and Tickton -
7/1/43
2
a) Deposit required - discussion of
War Savings Bonds:
Sales since May 1, 1941, by months - 7/1/43
35
"The Job Ahead" - War Finance bulletin, Issue No. 2 - -
7/1/43
36
3rd War Loan Drive:
Federal Reserve Bank presidents polled as to types,
rate, and maturity of obligations to be included -
7/1/43
40
War Finance Division: Weekly report by Gamble -
7/3/43
130
Regraded Unclassified
- 1- - (Continued)
Book Page
Financing, Government (Continued)
War Savings Bonds (Continued):
Questionnaire to each county chairman, "What Advertising
Scheme Helped Most?" discussed in HMJr-Robbins-Odegard
memoranda - 7/3/43
646
142
Voluntary Savings:
Payroll Savings Plan:
FDR congratulates HMJr on success of - 7/4/43
155
a) Wall Street Journal: Mr. and Mrs. FDR and HMJr
only supporters of voluntary plan - 7/2/43
95
1) Fred Smith memorandum concerning
156
White House: FDR pushes plan
213
Navy attitude (Admiral King) and FDR's letter concerning -
7/6/43
214
a) Bartelt memorandum after conference with Navy
Paymaster General - 7/9/43: See Book 647,
page 221
b) King reply - - 7/12/43: Book 648, page 26
1) FDR sent copy - 7/14/43: Book 648, page 227
Life Insurance Companies: D'Olier (President, Prudential Life)
considers compulsory savings publicity damaging to all
present forms of savings - 7/6/43
253
a) George Harrison-HMJr conversation - 7/7/43:
Book 647, page 14
New York Herald-Tribune supports voluntary savings -
7/31/43: Book 652, page 245
Food
See Office of Price Administration
Foreign Funds Control
Martinique Bank: Freezing of all funds, including Laval's,
discussed by HMJr and Hull - 7/1/43
18
if
#
if
#
#
- 7/9/43: See Book 647, page 182
a) White tells HMJr of plane to date - 7/13/43: Book 648,
F
page 89
b) Ball (Theodore H.) to be assigned by Treasury - -
7/14/43: Book 648, page 268
France
Martinique Bank: See Foreign Funda Control
"Free Riding"
See Financing, Government
- G- -
Gaston, Herbert E.
See State Department
General Counsel, Office of
Monthly report of projects to be discontinued - 7/6/43
215
Gold
See Latin America: Cuba
Greece
See Post-War Planning: Currency Stabilization
Regraded Unclassified
- I -
Book Page
Iceland
Stabilization Agreement of 1942 extended - press release -
7/1/43
646
67
India
See Silver
Inflation
Purchase Order Plan "to encourage production of critical
farm products without increasing the cost of living" as
presented to FDR discussed by HMJr, Kades, Marvin Jones,
and Hutson (President, Commodity Credit Corporation) -
7/1/43
12
Ezekiel, Mordecai: Kades discusses two plans (short-term
and long-term) for increased farm production and food
price programs - 7/10/43: See Book 647, page 261
Movie: Schenck thanked for withholding - 7/1/43
56
a) Mellett informed
58
- J -
Jews
Roumania:
Evacuation plans discussed in Pehle-0'Connell memorandum -
7/1/43
68
Discussed in Paul memorandum - 7/19/43: See Book 649.
page 218
Rabbi Wise-HMJr correspondence - 7/30/43: Book 652, page 228
Jones, Marvin
See Commodity Credit Corporation
" Office of Price Administration
- L -
Latin America
Cuba: Agreement concerning sale of gold - press release -
7/1/43.
65
Ecuador: Stabilization Agreement of 1942 extended -
press release - 7/1/43
66
Laval, Pierre
See Foreign Funds Control
Lend-Lease
Report for week ending July 3, 1943 - 7/6/43
258
United Kingdom:
Federal Reserve Bank of New York statement showing dollar
disbursements, week ending June 23, 1943 - 7/1/43
69
Gold and dollar figures for June 1943 - 7/5/43
185
See also Silver
Life Insurance Companies
See Financing, Government: War Savings Bonds
Long, Breckenridge
See State Department
Regraded Unclassified
K # -
Book Page
Martinique Bank
See Foreign Funds Control
Monetary Research, Division of
Monthly reports of projects to be discontinued - 7/6/43
646
215
- N -
Navy Department
See Financing, Government: War Savings Bonds
(Payroll Savings Plan)
New York Herald-Tribune
See Financing, Government: War Savings Bonds
(Voluntary Savings)
- o -
Occupied Territories
African Program: Purchases
June 28 - July 4, 1943 - 7/5/43
186
July 5-11, 1943: See Book 648, page 43
et 12-18, 1943: Book 649, page 213
" 19-25, 1943: Book 651, page 70
" 26 - August 1. 1943: Book 653, page 69
Office of Price Administration
See also Inflation
Currants: Memoranda concerning prices - 7/5/43
159
a) Marvin Jones-HMJr conversation - 7/6/43
248
b) Christine Sadler story in Washington Post - 7/7/43:
See Book 647, page 45
Agricultural commodity prices: Tietjens' memorandum after
conference at War Food Administration - 7/7/43: Book 647,
page 57
English food distribution system - Kades-Casaday memorandum -
7/17/43: Book 649, page 168
(See also Book 651, page 52 - 7/26/43)
- P -
Post-War Planning
See also Surplus Commodities
Currency Stabilization:
Greece: Discussion between HMJr and Greek Ambassador -
7/2/43
96
International credit-currency stabilization "inseparably
linked" - White advises against 2nd committee - 7/6/43
261
a) Hull-HMJr conversation - 7/9/43: See Book 647,
page 183
b) White memorandum explaining that Hull's letter
concerning 2nd committee was left with Hull by
HMJr - 7/17/43: Book 649, page 172
Plant Conversion at End of War: HMJr's idea to start now
looking over financial set-ups discussed with Treasury group -
7/6/43
208
Regraded Unclassified
- of -
Book Page
Questionnaire
See Financing, Government: War Savings Bonds
- R -
Research and Statistics, Division of
Monthly reports of projects to be discontinued - 7/6/43
646
215
Revenue Revision
Doughton-Stam-Paul meeting suggested to HMJr by Doughton
to plan recess program - 7/6/43
241
Reynolds, Robert R. (Senator, North Carolina)
See Deferments, Military: Secret Service
Roumania
See Jews
- S -
Sadler, Christine
See Office of Price Administration
Schenck, Nicholas
See Inflation
Secret Service
See Deferments, Military
Shipping
See State Department
Silver
India: HMJr asks Stettinius to accompany him before Silver
Committee - 7/6/43
235
a) Meeting with Stettinius in Treasury - - 7/7/43:
See Book 647, page 1
b) Meeting with Committee 7/7/43: Book 647, page 5
1) Committee meeting memorandum read by FDR at
Cabinet - 7/9/43: Book 647, page 214
c) Halifax-HMJr conversation - 7/13/43: Book 648, page 78
d) Treasury letter to Senator Thomas - 7/15/43: Book 649,
page 98
State Department
Special Committee on Shipping: Long (Breckenridge)-HMJr
conversation concerning possible Treasury representation
by Gaston on new post-war planning committee - 7/1/43
78
a) Gaston appointed - - 7/6/43
263
Subversive Activities - Government Employees
HMJr-Ickes correspondence concerning committee to investigate -
7/5/43
179
Surplus Commodities
Discussion by Treasury group - 7/6/43
207
a) Sullivan to take lead
- T -
Taxation
See Revenue Revision
Regraded Unclassified
- V -
Book Page
Venereal Diseases
HMJr-Parran conversation concerning Hyman cure - 7/2/43....
646
82
- W -
Wall Street Journal
See Financing, Government: War Savings Bonds
War Food Administration
See Office of Price Administration
White, Harry D.
Memorandum for Greenbaum on conversion of plants at end of
war discussed in HMJr's memorandum to White - 7/2/43
99
White House
See Financing, Government: War Savings Bonds
(Payroll Savings Plan)
Regraded Unclassified
1
July 1, 1943
9:30 a.m.
FINANCING
Present: Mr. Bell
Mr. Haas
Mr. Smith
Mr. Lindow
Mr. Tickton
Mrs. McHugh
H.M.JR: I am going to have to face the press at
half-past-ten and explain this - these rules and regulations.
Where is Henry Murphy?
MR. HAAS: Henry is on his vacation, but he is in
town.
H.M.JR: And I wanted the explanation for myself,
how come we ever only put a two-percent cash down on this-
hundred thousand dollar allotment.
MR. BELL: It was just overlooked. It is really my =
fault.
H.M.JR: You have been with me so long that when you
say that you know I can never do anything.
MR. BELL: It was my fault; I should have looked at
that feature and I didn't. I did two hours after the
circular was out.
H.M.JR: Who wrote the circular, Dan? You didn't
write it.
MR. BELL: Mr. Kilby wrote the circular.
H.M.JR: Kilby?
Regraded Unclassified
2
- 2 -
MR. BELL: Yes, but it wasn't his fault. He doesn't
decide those things.
H.M.JR: Don't some of these boys take a look at
these things?
MR. BELL: No, these fellows - they don't see the
circular; it is done by the legal staff and Kilby, and
I go over it. I saw the two-percent, but it just didn't
register.
H.M.JR: Well, you know me too well, you know me too
well. Don't you think that--
MR. BELL: I don't know how much effect that would
have on the thing.
H.M.JR: Supposing we had made a hundred percent -
supposing all cash?
MR. BELL: That might have had some effect. I don't
know whether we would have done that. We have discussed
a good many times making it up to twenty-five, but we
have never gone above ten, I don't believe.
H.M.JR: But why shouldn't they just pay a hundred?
I mean, if a bank wants one of these things, they have the
money and they are not using it. What I thought--
MR. BELL: There is no reason why you shouldn't - where
you give allotment in full they shouldn't pay a hundred.
H.M.JR: What I thought I would say is simply this -
that is why I wanted Fred in here. It is only these little
financial writers - it is this: I will say, "You know,
gentlemen, it is very amusing to me. So many people are
talking about the New Deal, and they are 50 much worried
about the capitalistic system and the profits system; and
just because a few people made some money out of the Treasury
you are worried. I appreciate your worrying, but if that
is the worst thing that should ever happen to the Treasury,
that somebody should make some money" - that is a fact,
they are all worried because somebody made a few dollars -
Regraded Unclassified
3
- 3 -
"Isn't it terrible?" "And so what?" That is what I am
going to say.
MR. BELL: Is there a story this morning?
H.M.JR: They are all writing it up - "Isn't it
terrible." "Now, who is worrying? Who are you worried
about?" You boys didn't buy any. "Why worry because 8.
few people made some money? I believe in the profits
system. If somebody makes some money . - fine. If they are
smart, O.K. Next time it is up to us to see that they
don't abuse it." What do you think?
MR. SMITH: I don't know. Who made the money? Does
anybody a ctually know who made the money?
H.M.JR: Sure. Most likely it is anywhere - when I
used to study it - - I mean, I know a department store over
in Baltimore that used to buy 8 couple of million dollars'
worth of bonds and hold them a few times and sell them.
As a matter of fact, what is an eighth on a hundred
thousand dollars?
MR. LINDOW: Two hundred and fifty dollars.
H.M.JR: No, you are wrong. An eighth is twelve
dollars and fifty cents; I can tell you that.
MR. LINDOW: Not on a hundred thousand.
H.M.JR: No, but an eighth is twelve fifty.
MR. TICKTON: A hundred and twenty-five dollars.
H.M.JR: He said twenty--
MR. TICKTON: One percent on a hundred thousand is
a thousand. An eighth of a thousand is a hundred and
twenty-five dollars. One hundred twenty-five dollars is
the amount of money.
H.M.JR: Now, they make an eighth. They may make an
eighth or two-eighths. Will they make a quarter?
Regraded Unclassified
4
- 4 -
MR. BELL: They are selling around eight, ten.
MR. TICKTON: Three-eighths to a half in this morning's
paper. It was at a half part of the day and three-eighths
part of the day.
H.M.JR: Safe to say they may make from two fifty
to five hundred dollars?
MR. TICKTON: That is right.
H.M.JR: And I say as compared to borrowing - they are
not making it out of the Treasury; they are making it out
of the fellow they sell it to.
MR. BELL: They are making it out of somebody who
wants the security.
H.M.JR: They are not making it out of the Treasury.
I borrowed two billion and a half; I got it at a very
reasonable rate. Granted we should have taken a bigger
deposit; we didn't. Next time we will. And who are they
making it out of? They are making it out of some other
fellow that wants it a little bit worse than they do.
They make from two fifty to five hundred, and so what?
The only thing that would worry me is if these fellows
lose two fifty. Then I would feel sorry.
MR. HAAS: I wouldn't feel so sorry about them, either.
The little fellow isn't getting hurt, because he isn't in
on it. I am a little afraid of this--
MR. BELL: You would feel sorry if they lost.
MR. HAAS: Yes, because it would spoil your market.
H.M.JR: The other thing I was going to say - I am
rehearsing this, you see - is that it has always been my
program that I want my customers to make some money out of
this thing; and for that reason--
Regraded Unclassified
5
- 5 -
MR. BELL: You want your customers satisfied.
H.M.JR: Yes, I want my customers satisfied. The
only way they can be satisfied is if they can't - not to
lose money.
MR. SMITH: I think you ought to be careful not to
completely condone it the way you did first. You sound
as though you were sort of encouraging what might be
construed as a slippery operation.
H.M. JR: There is nothing slippery about it, you know.
You go in there and buy this thing, and the banks want it.
The people who are putting up the holler are the banks
because they are going to have to pay a premium to get this.
Really, this is & dress rehearsal.
MR. HAAS: One thing that bothers me is that somebody
listening outside - listening to this, Mr. Secretary - a
lot of people will read what you say in the papers. It
gets headlines, "Secretary Morgenthau--"
H.M.JR: You flatter me.
MR. HAAS: That is true; you can tell by the letters
that are coming in, and so on, that if you - and there
are 50 many people that know nothing about this. The great
masses know nothing about it; and if you bring it up and
explain it, they will know something about it.
My just off-hand suggestion - it may not be any good -
I am just throwing it out here--
H.M.JR: Not 80 much preliminary.
MR. HAAS:
would be to say that it is an interest-
ing development that when you have a seventy-billion-dollar
financing to do that the Government bond market is as
strong 8.8 it is, and you have so many people actively
interested in it, and you have some - there is some specula-
tion in the market - it can't be avoided in a strong market.
And just not to say much of anything - let it go without
going into detail.
Regraded Unclassified
6
- 6 -
H.M.JR: How many people will we have who will sub-
scribe to a hundred thousand?
MR. BELL: How many?
H.M.JR: Yes. About ten thousand?
MR. TICKTON: Thirteen thousand for your billion
three.
MR. BELL: A billion two ninety.
MR. TICKTON: Thirteen thousand.
MR. BELL: That includes your banks.
H.M.JR: We could approach it another way. The idea
was to give the small country banks a chance.
MR. HAAS: Tell them what you are trying to do.
H.M.JR: It was to distribute this thing generally
throughout the country, to get a better distribution, and
we have succeeded.
Now, in doing this thing there are some - a few
sharp-shooters.
MR. BELL: Say that there has been some abuse of it,
and we will have to take steps to put some control over it
the next time. You would rather have it this way than
have it be a flop.
MR. HAAS: And nobody interested.
MR. BELL: Rather have it this way than have to call
up some people to take some more securities.
MR. SMITH: I think that is better.
H.M.JR: It is good news that there are 80 many
people who want it.
MR. HAAS: That is right.
Regraded Unclassified
7
- 7 -
H.M.JR: I am not going to apologize for the fact
that there are 80 many people that want it.
MR. BELL: And the fact that they are selling at a
premium. You don't have to apologize for that. It shows
it was a good security.
MR. HAAS: I wouldn't apologize at all.
H.M.JR: I wasn't going to apologize.
MR. BELL: You were really going to boost it.
MR. HAAS: I wouldn't admit there was anything wrong.
Next time you may not want to sell it; the market may be
weak.
H.M.JR: Is this the first time for a hundred thousand?
MR. BELL: A hundred thousand for the banks and allot-
ment in full to everybody outside the banks, 80 that in
your February offering--
H.M.JR: How was it? Say it again.
MR. BELL: A hundred thousand in full to the banks,
and then allotment in full to everybody outside of the
banks, 80 that in your February offering of the two bil-
lion dollar certificate you had a billion four hundred
some million dollars that were allotted on those two bases,
but--
H.M.JR: How was it last time? Say it again.
MR. BELL: A hundred thousand dollars to banks to be
allotted in full; everybody outside of the banks got an
allotment - a hundred thousand dollars allotted to each
bank if they subscribed for that amount, and everybody
outside of the banking system got allotment in full. The
total of those two out of a--
H.M.JR: I don't get the difference. If you were a
bank you got your hundred thousand in full?
Regraded Unclassified
8
- 8 -
MR. BELL: Hundred thousand, yes.
H.M.JR: If you were a private individual and sub-
scribed to a hundred thousand, how much would you get?
MR. BELL: You would get it in full; or if you sub-
scribed to five hundred thousand or a million you got it
in full - no percentage allotment on anybody outside the
banking system. So those two aggregated & billion four
hundred million of the two-billion-dollar offering in
February, which left only about five hundred million dollars
to the banks over and above the hundred thousand. And of
that billion four, three hundred fifty million, as I recall,
went to the banks, on a ccount, of the hundred thousand.
About three hundred million went to dealers and brokers,
and the rest went outside of the banking system. About
seven or eight hundred million dollars went outside of the
banking system.
H.M.JR: The mistake we made was on the two percent.
MR. BELL: Well, that was a mistake, but I think we
would have hesitated in taking to - I don't believe we
would have gone to a hundred percent if we had considered
it. I doubt if we would have gone above two.
MR. LINDOW: The idea of the fractional amount goes
back to the fact that if the subscriber doesn't know he
is going to get a hundred percent of what he put in, it
is a hardship for him to put up the money and then not
get the securities. But in this case the hundred thousand,
it seems to me, changes the picture completely and we might
easily get to the hundred percent.
MR. HAAS: Just like buying the savings bonds.
H.M.JR: That is what Mrs. McHugh said - why can they
be able to put two percent when if she buys 8 twenty-five
dollar bond she has to plunk down eighteen seventy-five.
MR. LINDOW: That is right.
Regraded Unclassified
9
- 9 -
MR. BELL: In view of this I think we can go to a
hundred. I think we hesitated going to a hundred before
this offering came up.
MR. HAAS: I would be very reluctant to say that you
are going to do something the next time, because who knows
what the next situation--
H.M.JR: George, I never do that; you know that.
MR. BELL: Say that we would like to take a look at
the next situation before we have the next offering. We
may have to take some steps to control it.
H.M.JR: Now while I am here - do you want to do the
life insurance one?
MR. SMITH: No, I haven't got that completely rewritten
yet. I just got Blough's revision, and I am in the middle
of putting it back together.
H.M. Could you and Bell and I do it right after
press?
MR. SMITH: Sure.
H.M.JR: You were rushing me yesterday.
MR. SMITH: I went all over the place yesterday getting
comments on the thing.
H.M.JR: While you are at it, as long as you are going
all over the lot you might as well also show it to Gaston.
We will get it out by noon. I don't want to talk now, but
sometime I do want to talk to you men about the possibility
of getting ready for this August thing. Supposing we do
change these rates, supposing we do drop down - I mean, the
thing that the Fed doesn't want us to do.
MR. HAAS: Mr. Secretary, when that curve was put on
you said you wanted a range of rates so there is nothing
Regraded Unclassified
10
- 10 -
changed in that thing; it just happens to be up a little
bit now.
H.M.JR: Is there any reason why in this refunding
in August I can't borrow at a lower rate?
MR. HAAS: No.
H.M.JR: What would we refund the stuff into in August?
MR. HAAS: You mean those bonds or the certificate?
The certificate rate is all right at seven-eighths.
H.M.JR: That is all right?
MR. BELL: No, don't worry about that. A billion
four - I think George suggested in his report that you
refund whatever part of the billion four that is held by
individuals into the two and a half offered in the basket
and let the other be paid off in cash.
H.M.JR: Well, will you (Bell) and Fred be at my
press conference?
MR. BELL: Yes.
H.M.JR: That is all I have.
Regraded Unclassified
11
July 1, 1943
9:59 a.m.
HMJr:
Hello.
Operator:
Lord Halifax.
HMJr:
Hello.
Lord
Halifax:
Hello. Could I speak with Mr. Morgenthau?
HMJr:
You are.
H:
I am speaking with him?
HMJr:
Yes.
H:
Good morning. How are you?
HMJr:
I'm all right, thank you.
H:
Could you - could you give me five minutes today?
HMJr:
Surely.
H:
Uh - anytime that 18 not too inconvenient. I
wouldn't keep you over five minutes.
HMJr:
Well, how about - 1s four o'clock a good time?
H:
Four will do me very well, yes.
HMJr:
Four o'clock.
H:
I'll be with you at four.
HMJr:
Thank you.
H:
Do I come in the same way I generally come?
HMJr:
Yes, I'll leave word.
H:
All right. Thank you 80 much.
HMJr:
I'll look forward
H:
All right.
Regraded Unclassified
12
July 1, 1943
MEMORANDUM FOR THE DIARY OF THE SECRETARY
At a luncheon today at which were present Secretary
Morgenthau; War Food Administrator, Marvin Jones; John
B. Hutson, President of the Commodity Credit Corporation;
and Capt. C. L. Kades, the Secretary gave Judge Jones and
Mr. Hutson copies of his letter to the President suggesting
the Purchase Order Plan for encouraging production of
critical farm products without increasing the cost of
living.
Judge Jones indicated that he favored the principle
of the plan, although he thought the licensing system was
preferable in so far R$ the meat industry was concerned.
Lr. Hutson pointed out that the plan really implemented
any licensing system and that he had been thinking along
the same lines for some time. The Secretary made it
clear that his only interest was to help the President
to reconcile the divergent views on ways and means of
controlling inflation and at the same time encouraging
the production of necessary war crops, He stated that
the Treasury was vitally interested in measures which
tended to raise the cost of living, such as the Commodity
Credit Bill recently passed by Congress, because of the
interplay of wage rates and farm prices and the infla-
tionary spiral caused by increases therein.
Judge Jones stated that he understood that the Presi-
dent was sending at 1 p.m. today a veto message to the
Congress. The Secretary asked Judge Jones what the veto
message said and Judge Jones said he had not seen the veto
message or been consulted about it.
Although the Secretary indicated that Judge Jones
would be responsible for the success or failure of the
food program in view of his position 28 War Food Administra-
tor, Judge Jones indicated a decided reluctance to take any
aggressive action, apparently feeling that he was to take
Regraded Unclassified
13
- 2 -
steps only at the request or upon the direction of the
Director of Aconomic "tabilization and the Director of
the Office of war Mobilization.
When the Secretary asked Judge Jones what his next
action would be after the veto, Judge Jones said that he
didn't know because the "Board" was deciding that (whether
Judge Jones meant OWN or OES was not clear) and he wished
he could sit down with the Congressional committees to
work out a program which would enable the Secretary's
suggestion to the President to be carried out and would
give Judge Jones adequate weapons to stimulate food pro-
duction without hurting the fight against inflation.
Judge Jones thought he should ask for and could get
3 to 5 billion dollars additional borrowing nower in the
Commodity Credit Corporation subject to the following
restrictions: (1) That the proceeds would not be used
to pay subsidies in connection with the roll-back, and
(2) That the War Food Administrator would not sell com-
modities at less than present price ceilings or parity
prices. Judge Jones said that in his opinion the most
crippling aspect of the Commodity Corporation Bill was the
requirement that maximum prices could not he less than
support prices since this would hamstring any effective
commodity purchase and resale program and would inevitably
result in inflation. However, Judge Jones said he thought
if the Little Steel Formula of the war Labor Board and
failure to roll back prices would bring about injustice
or hardship to wage earners, the War Labor Board should
make the necessary adjustment either by cost-of-living
bonuses or some food stamp plan for low-income groups.
However, he considered roll-back subsidies as politically
unwise at the present time.
The Secretary said the facilities of his Economic
staffs and the Office of the General Counsel were available
to Judge Jones in case he wanted to call upon the Secretary
for help in working out a solution satisfactory to Judge
Jones and to Congress.
Judge Jones then spoke at length at what he would like
to be able to do, expressing himself very vigorously, and
Mr. Hutson remarked that this was the first time since Judge
14
- 3 -
Jones had been appointed War Food Administrator that he
had been so outspoken in his views.
It was obvious that Judge Jones felt that he was
more or less under orders not to take any definite stand
on his own although he said nothing to indicate that the
President had given him any such instructions. It was
clear, however, that Judge Jones felt that if he were
permitted to go down to Congress and talk in executive
session to the appropriate Congressional committee he
could have prevented the Commodity Corporation Bill being
passed in the form which had necessitated the President's
veto message.
O.K.
15
July 1, 1943
1 p.m.
The Secretary had approved this letter
and was ready to sign It at the same time
the ticker announced that the President
had vetoed the Commodity Credit Corporation
bill. He wanted the letter saved as a
record of the fact that he was prepared
to recommend to the President that he veto
the Bill.
16
THE SECRETARY OF THE TREASURY
WASHINGTON
My dear Mr. President:
The Treasury Department recommends that the President
veto this bill because it will aggravate the danger of
inflation and will frustrate previous efforts to fight it.
It is sheer folly to compel an increase of maximum
prices to consumers simply because it may be deemed desirable
to permit, or even encourage, an increase of minimum prices
to producers. This bill would make such an increase manda-
tory.
For example, the bill would prohibit (1) fixing maximum
prices below support prices for agricultural products, even
though these prices are higher than parity or higher than
the highest price at which the commodity sold between January
1, 1942 and September 15, 1942, or (2) paying for the purpose
of stabilizing prices any subsidy, direct or indirect, by any
governmental agency or corporation to any person engaged in
the production, marketing, distribution, or handling of any
agricultural commodity (with minor exceptions), (3) purchasing
in the future any agricultural commodities from producers by
any agency or corporation of the Government at a price higher
than the expected resale price of those commodities.
The bill would allow the completion of current price
support and purchase and sale operations, except as to the
roll-back program. Such purchase and sale operations, how-
ever, would be limited to those announced prior to July 1,
1943, and up to total losses not exceeding $150,000,000.
Moreover, the purchased commodities must be sold at prices
not less than the highest of the various ceiling price limita-
tions. Under the ambiguous language of the bill one of these
limitations may even be the 110% of parity in the original
Price Control Act which was suspended by the President pur-
suant to the Stabilization Act of October 2, 1942.
FORDEFENSE
BUY
UNITED
STATES
*WINGS
BUNDS
customs
Regraded Unclassified
17
-2-
Just as there was nothing inherently inconsistent between
an intention to increase industrial production and an intention
to control the cost of living, neither is there anything in-
herently inconsistent between an intention to increase farm pro-
duction and an intention to control the cost of living. Infla-
tion is not the only solution to the problem of producing
sufficient crops to meet food requirements.
Industrial production was expanded by (a) assuring a manu-
facturer, as a matter of procurement policy, a reasonable price
for his product, (t) furnishing him with the necessary priorities
for the machinery he needed, (c) assuming the major risks in-
volved in any conversion from a peacetime to a wartime product,
and (a) providing him with working capital if he could not get
it. through ordinary channels of finance.
A Government contract determined the terms and conditions
of the production and sale of the product, and expressed the
rights and obligations of the producer and the Government. That
legal instrument is also available and can be effectively used
without increasing the cost of living in mobilizing farmers for
war production under existing law if this bill is vetoed.
On the other hand, this bill would almost immediately in-
crease the cost of living. Not only does the bill cancel on
August 1 subsidies on roll-backs in butter and meat (which
have reduced their retail prices by 10 per cent), but it also
cancels at the end of the current crop season other subsidies
being naid to hold the line on retail food prices. In addi-
tion, the requirement that no maximum prices shall be imposed
on any agricultural commodity (in either its primary or pro-
cessed form) below the producers' support price or its equiva-
lent, would operate to raise the price of flour (and thereby
to raise the price of bread) because of a recent increase of
9 cents a bushel in the crop-loan support level on wheat.
This Administration has pledged the American people it
would do everything humanly possible to prevent inflation.
I hope the Administration will see that pledge through.
Faithfully yours,
Secretary of the Treasury.
The President
The White House
Regraded Unclassified
18
cc-Harry White and
Joe O'Connell.
July 1, 1943
4:37 p.m.
HMJr:
Hello.
Operator:
Secretary Hull is coming right on, Mr. Secretary.
HMJr:
Thank you. Hello.
Cordell
Hull:
Hello, Henry.
HMJr:
Hello, Cordell.
H:
What's going on?
HMJr:
Well, Cordell, one of the partners of J. P. Morgan
has told us that they believe that Pierre Laval's
got a lot of money in the Bank at Martinique
H:
Well, there is some down there, you know.
HMJr:
and what I thought is - uh - if and when we're
ready to go in, the Treasury would like to be able
to go in there and freeze all of those accounts and
then take a look at them.
H:
Yes, well, I'm sure there won't be any objection to
that.
HMJr:
Well, would you make a note of 1t?
2H:
Yes, I'll make a note and speak to one or two of my
fellows and then call you back.
HMJr:
So,I mean - when the time comes, we'd like to go in
and freeze them all and then turn the bank inside out.
H:
Yeah.
HMJr:
There might be some other money there.
H:
Now, here is this, Henry
HMJr:
Yeah.
H:
We are turning this over to a friendly Frenchman.
HMJr:
Yeah.
H:
Uh - and he will be in charge there, as a French
government.
Regraded Unclassified
19
- 2 -
HMJr:
Yeah.
H:
And I don't know how this - how you - whether we've
got to keep surveillance in that fashion or whether
you can go in there like you would if We were captur-
ing it, which we will not be doing.
HMJr:
No, but you know in North Africa We went into the
different banks as though
H:
Oh, We occupied that militarily - I mean this won't
be occupied militarily.
HMJr:
Well
H:
I want you to - I'm in sympathy with what you want
to do, you understand
HMJr:
Yeah.
H:
but
HMJr:
Don't you think if Laval's money - of course, it's
just rumor - I can't guarantee it
H:
Yeah.
HMJr:
that - and if he's the right kind of Frenchman,
I should think he'd be glad to have us go in.
H:
Why, of course, if he - the only question he might
raise - would say that "I represent Giraud here in
carrying on this French government
HMJr:
Yeah.
H:
and I don't want intervention here." He might
say that.
HMJr:
Well, we could work it out on some cooperative basis
with them on
H:
Yes. We're keeping watch to see that that gold down
there doesn't get away from there.
HMJr:
Well, of course, there are a lot of big transaction
they might, you know
H:
Yes, that's true.
Regraded Unclassified
20
- 3 -
HMJr:
they might transfer it out by cable to the
Argentine, or something like that.
H:
Would you like to talk yourself with Feis or any
of our fellows on that?
HMJr:
No, the people that are handling that
H:
The Navy 1s principally handling it.
HMJr:
I see.
H:
We just kept on diplomatic battering
HMJr:
Well, but we can't go in unless We got your
assistance.
H:
Well, we'd be with you, of course. Any way we can
help in that will be good.
HMJr:
Well, if you'll talk it over and - if 1t's Feis, he
could talk with Harry White.
H:
Yes. All right, I'll bring it up
HMJr:
But I'd love to lay my hands on Laval's money -
I'm sure you would, too.
H:
I'd rather lay them on Laval himself.
HMJr:
Well (Laughs), it might hurt him more though if we
layed it on his money.
H:
Well, we can try that out first.
HMJr:
(Laughs)
H:
All right, Henry.
HMJr:
Thank you.
Regraded Unclassified
21
July 1, 1943
4:42 p.m.
HMJr:
I was just talking to Mrs. Morgenthau and, God bless
her, she's still interested in war bonds.
Ted
Gamble:
Well, good for her.
HMJr:
And she heard about the wonderful exhibit down at
Bloomingdale's Department Store
G:
Yes.
HMJr:
and where they show various - what various pieces
of munitions cost
G:
Yeah.
HMJr:
and she wondered - and there was something on
the radio with war bonds - she wondered whether it
was a War Department show or our show.
G:
I feel reasonably sure that that's just retail
promotions.
HMJr:
Supposing you find out and give me a report
tomorrow morning so I can take it up with me.
G:
I'll do it yet this afternoon 'cause I'm going to
Cleveland tonight.
HMJr:
Well, I'm sorry I couldn't have lunch with you
boys, but I hadn't eaten anything since
G:
Well, I'm sorry you have
HMJr:
Wednesday morning.
G:
been feeling badly.
Regraded Unclassified
22
July 1, 1943
5:02 p.m.
HMJr:
Hello.
Operator:
The Vice President 18 on the floor of the Senate
and it will take a few minutes before he can call
you.
HMJr:
All right. Thanks.
5:04 p.m.
Operator:
Go ahead.
HMJr:
Henry.
Henry
Wallace:
Hello.
HMJr:
Hello, Henry.
W:
Yes, Henry.
HMJr:
I just want to let you know for whatever it's
worth that I'm in your corner
W:
(Laughs) I just knew that. (Laughs again).
HMJr:
and I Bee you had the old time table
W:
(Laughs) Yes, it does - (Laughs) - yes, I remember
it. (Laughs)
HMJr:
Yeah. And - of course, I don't know the right and
wrong of making it public, but anyway as between
you and Jones on this thing, I'm - if I can be of
any use, I want you to call on me because this has
been going on too long
W:
Thanks for calling, Henry, and I certainly appre-
ciate hearing from you.
HMJr:
but, I mean, it's an outrageous thing and -
of course, the President should have stopped it a
long time ago - and I just want to let you know how
I feel and where I am at.
W:
Well, that's swell.
HMJr:
Yeah.
Regraded Unclassified
23
- 2 -
W:
How is Mrs. Morgenthau?
HMJr:
The last two days, definitely better.
W:
Oh, that's good.
HMJr:
She had another relapee this last week. She got
phlebitis in her right leg. She had it in her
left, but we think that they have it under control
now.
W:
Uh-huh.
HMJr:
But she has had a terrific time. But, the last
two days she's made real progress.
W:
Oh well, she'll lick it now.
HMJr:
Ch, we think 80 - we think BO. Well, anyway, Henry,
good luck to you.
W:
Thanks.
HMJr:
Keep up the good fight.
W:
Yes, thanks.
HMJr:
'Bye.
W:
Good bye.
ri
Regraded Unclassified
24
AGENDA
FOR THE BOARD OF ECONOMIC WARFARE MEETING TO
BE HELD JULY 1,1943, AT 10:00 A.M. Room 201
SENATE OFFICE BUILDING
DISCUSSION OF:
1. War Trade Negotiations with 'Sweden.
2. Current Developments in Spain and
Portugul..
Regraded Unclassified
25
BOARD OF ECONOMIC WARFARE
OFFICE OF EXECUTIVE DIRECTOR
WASHINGTON, D.C.
June 26, 1943
The Honorable
The Secretary of the Treasury
Dear Mr. Secretary:
The minutes covering the meetings of the Board of
Economic Warfare, which were held on May 20, June 3, and
June 17 are enclosed. If there are any corrections which you
care to suggest, please let me know.
Also, in accordance with the agreement at the Board
meeting of June 17, there are enclosed copies of the letters
of June 12 and June 14 from General Strong.
Sincerely yours,
Milo Parkins
Executive Director
Enclosures
Regraded Unclassified
26
MINUTES OF THE MEETING OF THE BOARD OF ECONOMIC
SECRET
HELD MAY 20, 1943, at 10:00 a.m.
A meeting of the Board of Economic Warfare was held in Room 201, Senate
Office Building at 10:00 a.m. on May 20, 1943.
Those present:
The Vice President, Chairman of the Board
Mr. Dean Acheson, representing the Secretary of State
Mr. John McCloy, representing the Secretary of War
Mr. Adlai Stevenson, representing the Secretary of the Navy
The Secretary of Agriculture
The Chairman of the War Production Board
Mr. Nelson A. Rockefeller, Coordinator of Inter-American
Affairs
Mr. E. R. Stettinius, Administrator, Lend-Lease Administration
In addition, the following persons were present:
Governor Herbert H. Lehman, Office of Foreign Relief and
Rehabilitation Operations
Mr. Herbert Feis, Department of State
Mr. William Batt, War Production Board
Mr. Harold H. Neff, War Department
Mr. Warren Lee Pierson, Export-Import Bank
Mr. John Lockwood, Office of the Coordinator of Inter-
American Affairs
Mr. John McClintock, Office of the Coordinator of Inter-
American Affairs
Mr. John E. Orchard, Office of Lend-Lease Administration
Mr. Milo Perkins, Board of Economic Warfare
Mr. William Stone, Board of Economic Warfare
Mr. Hector Lazo, Board of Economic Warfare
Mr. Morris Rosenthal, Board of Economic Warfare
Policy on Civilian Relief in the Blockade Area
A statement on the policy of the United States government with respect
to shipments through or within the blockade area, dated May 3, 1943, prepared
by the staff of the Board of Economic Warfare, had been circulated.
At the request of the Vice President, Mr. Stone roviewed briefly the
policy applied by the British and American governments during recent months.
It was pointed out that both governments had beon subjected to considerable
pressure, particularly from the Allied governments-in-exile, to permit relief
shipments through the blockado to enemy or neutral countries. The joint policy
of the British and American governments was summarized as follows:
1. With two exceptions, no relief shipmonts involving the passage of
goods through the blockade for distribution in any occupied country
Regraded Unclassified
27
Name been permitted by the two governments, The only exceptions to
this policy have been (a) the relief plan approved by both governments
in August 1942 for Grooce and (b) the International Red Cross medical
boomerang". Ho said that ho had consulted with the operations people at the
aid program.
War Department, who pointod out that we are about to assumo the role of an
occupying nation, which will carry with it a heavy responsibility. Vo might
2. Rolief shipments to neutral countries for distribution solely within
faco bitter resentment in occupied areas if wo wore to divort our linited
such neutral countries have been permitted through the blockade with
supplios to areas still under Ando control, At the suggestion of &, Stat-
the approval of United Kingdom and United States blockade authorities,
tinius, Mr. Orchard of the Lond-Lease Administration outlined the Greek rolief
only when pdoquato provision had been nado for solection of those who
plan under which monthly shipments comprise 15,000 tons of whost donated by
the Conadian government, 3,000 tone of dried vegetables and 300 tons of ovup-
are to gut the relief on the basis of need alone, and only in the
absence of any strong evidence that such shipments are proving of dir-
orated milk supplied by the United Statos government via Lond-Lease, There was
ect or indirect aid to the enery.
gonoral agroement that the absence of any significant resources in Greeco, thus
rolioving the onemy of any necossity for fooding the working population, consti-
3. Purchases and shipment of relief gooda within the blockade area are
tutod a valid roason for an excoption to the established blockade principles.
permitted only with the approval of the United Kingdom and United
The Vico President and Secretary Wickard notod that weather conditions in many
States blockade authorities, and subject to conditions established by
countries had not boon favorable this spring, particularly for corn and coreal
those authorities.
crops.
The Vice President invited Governor Lehman to comment on the statement of exist-
Mr. Acheson nokod Governor Lohman whother machinery had boon sot up for
ing blockado policy in the light of the discussion of relief problems hold by
cloaring information regarding intra-blockade transactions with the various
Governor Lohmn with British officials during his recent visit to London,
agencios consurned (Treasury, BEW, Lond-Losso, etc.). Governor Lohnan indicated
that all such transaction would be cleared with the proper governmental agencios.
Governor Lehrnn read the record of meetings on the question of relief
through the blockade hold at the Ministry of Economic Warfare in London on the
There was genoral agreement that, at. the present time, it would probably
19th and 22nd of April, 1943. In the course of the mostings which covered a
be dangurous to rolax the blockado of Europo, but that it would be appropriate
wido rango, genoral agroement THE reached in the following terms:
for a committee, such as that proposed, to study the possibility of a rolief
scheno on n small and exporimental scalo in the occupied torritories. Any
(a) It might prove dosirable to initiato in the coming nuturn & relief
proposals for action resulting from this study would bo cleared with the appro-
schemò on à small and experimental scalo in the occupied territorios,
printe agencica of the British and American governments,
(b) A small Comditto consisting of representatives of the State Dupart-
mont, the British Embassy and the United States Office of Foreign
Holief and Rohabilitation should examine the possibility of such a
Export Policy for Gold Vining in Intin America - Ecundor
scheme and submit their rocommondations to the two Governments,
A report on proposed modification of the oxisting expert policy for gold
(o) Moanwhilo it was desirable that the general line of replies to be
mining in the caso of Ecundor, propared by the Board of Economic Warfare, had
given to enquiries and applications concerning a change of blockade
been circulated.-
policy in this matter should be agreed, in order that the British
and Amorican Governments should spoak with & single voice.
The Vico President observed that, when hu was in Equador rocontly, the
Prosident of that country had omphasized the critical situation cristing in
(d) The possibility of pronoting the evacuation of children from occupied
the province of El Cro, where 20,000 inhabitants are totally dopondent upon
countrios to Switscrland and Sweden should be further explored; not
one gold minb. The Vico Prosident pointed out that the province of E1 Oro
as an alternativo to any relief schemo which it might be decided to
WAB an invasim province in the rocent controversy betwoon Poru and Ecundor
propose to the United States and British Governments, but as a supplo-
and Ecundor feare renowed invasion,
montary seasure possessing advantagos of its own,
It was brought out that the question of modifying the existing ban on
Governor Lohnan called attention to certain fundamental considerations
the export of materials for the gold nines had first boon raised by the
raised by the British authorities and nado it clear that the British
Department of State on the ground that political considerations called for
ment examine had not yet expressed formal approval of the proposal that committee govern-
en exception in this caso, lt. Achoson supported the recommendation in the
which ing and answer from the British government on this point and that WAD action await-
the possibility of such a rolief scheme, He anid that he B.
Board's draft rosolution, authorizing shipment of 170 tons of matorials.
might rosult would require the formal approval of both governments. any
it, Rockefeller explained that somo 30,000 people wore now benefiting
from the CIAA rehabilitation program. Ho added that shipping Loundor
In the general discussions which followed, ltr. McCloy asked whother
had been well under the cargo tonnago and was in bad shape. He also expros-
relief scheme inaugurated at this time might not prove to be 6. "psychological any
old the hope that the already roduced tonnage for Ecundor would not be further
pohalized AS the rosult of the concession on materials for the gold mino,
Regraded Unclassified
28
SECRET
Minutes of the Meeting of the Board of Economic Warfare
Mr. McGloy raised the question as to the extent of the drain on U.S.
Hold June 3, 1943, at 10:00 8. m.
supplies, pointing out that, by making a small concession now, we might make
it canier for Ecundor to pross for a larger tonnago next year. lbr, Lazo
explained that, of the 170 tons, 107 tons were for cyanide and other heavy
A meeting of the Board of Economic Warfare was held in Room 201
chemicals, loaving loss than 62 tons of what might be called critical materials,
Senate Office Building et 10:00 a. m. on June 3, 1943.
including tools and other miscellaneous itoms. The following resolution outh-
The meeting was attended by the following mambers of the Board:
crizing 170 tono of materials to the South Anorican Development Company was
approved,
The Vice President, Chairman of the Board
Mr. Dean Acheson, representing the Secretary of State
"HEREAS special circumstances surrounding gold minining in the
Mr. Harry White, representing the Secretary of the Treasury
Province of El Oro, Ropublic of Ecundor, make it desirable that
The Attorney General
the rigid export policy with respect to gold mining abroad of February
Mr. Adlai Stevenson, representing the Secretary of the Nevy
11, 1943, be rolaxed for the balance of 1943 with respect to Ecundor;
The Secretary of Agriculture
Mr. Wayne Taylor, representing the Secretary of Commerce
"AND WHEREAS special cooperation on the part of the country and company
Mr. Nelson A. Rockefeller, Coordinator of Inter-Amorican Affairs
involved have reduced the requirements to only 170 tons of supplies from
Mr. Donald M. Nelson, Chairman, War Production Board
the United States for the balance of 1943;
Mr. Bernhard Knollenberg, roprosenting the Administrator,
Lend-Lease Administration
"NO THEREFORE BE IT RESOLVED that the Board of Economic Warfare pormit
the exportation of these 170 tons of supplies to the South Amorican
In addition, the following persons were present:
Development Company for the maintonanco of reduced operations in the
Province of El Cro, Loundor, for the balance of tho year 1943;
Mr. W. L. Clayton, Commerce Department
"AND BE IT FURTHER RESOLVED that these supplion be shippod from the
Mr. Loo Crowley, Alien Property Custodian
United States at the carliost possible mencnt, but in any case, prior
Mr. A. F. Luxford, Treasury Department
to October 1, 1943."
Mr. Hugh B. Cox, Department of Justice
Mr. John Lockwood, Office of Coordinator of Inter-Amorican Affairs
Mr. Bernard J. McKonne, Office of Coordinator of Inter-Amorican Affairs
The ncoting adjourned at 11:30 c.m.
Mr. Harold Neff, War Department
Mr. Stanloy X. Hornbock, State Department
Mr. Bornard Moltzor, State Department
Mr. H. Merrell Benninghoff, State Department
Mr. William T. Stone, Board of Economic Warfare
Mr. John Wharton, Board of Economic Warfare
Mr. Fowler Hamilton, Board of Economic Warfare
Mr. E. W. Geumits, Board of Economic Warfere
Japan's War Economy
The Vice President asked Mr. Hamilton to comment on the Japanese
reports, "Japan's Economic Potential", dated May 1943 and "Jepan's War Economy",
dated March 1943, copies of which had been sent to all members.
Mr. Hemilton stated that the efforts of the Japanese were directed
primarily toward speeding ship building and increasing iron end steel fabri-
cation, the main limiting factor being experienced workers. Rew material
supplies under Japanese control are for the most part not a limiting factor.
With rèference to shipping he stated that Japan would build about 700,000 gross
tons of merchant ships this year which would be about double of last year's
output. In addition to stéel vessels, they are attempting to increase pro-
duction of wooden vessela, and to relieve the tight shipping situation further
have been attempting to shift from odean-going to land transportation with a
probable saving of water transportation in the neighborhood of 600,000 tons
per year. It was estimated however that with the present rate of sinking, at
29
3 -
2
In Mexico the Government proposed to expropriate BODE 34 companies
the and of 1945 the Japanese shipping position will be worse than at the be-
engaged in the handling of drugs, chemicals and related lines. The proposal
ginning of the year.
to operate the companies under a single governmental corporation was apparently
For stool it is estimated that the output La at the rate of about
in conformity with the general social thinking of that Country. Bome six
7,000,000 (rolled and forged) tape por year and that the rate can be increased
sonths ago the Aserican-Cyanamid Company informed the Department of State that
approximately 10 por cent in the coming year. It appears that sufficient la-
it was discussing the possibility of & ranagement contract involving the 34
borors and electric power can be mde available to handle the 10 por cent
companies with the Mexican government. It appears that other companies may
increase.
have been discussing similar proposals with the Mexican Government at about
Ha also drew attention to the apparent tondency for dovelopment in
the seme time. Approximately a month ego the American-Cynemid Company made
the so-cellud innur zune or nearby territory and stated that such commodities
available to the Department of State e proposed contract between that Company
sa baurito, iron oro and the like wore being developed in this inner zone even
and the Mexican Government. (A brief resume of that contract is included
though botter grado oro might be socured from more productivo mines which,
in the comprandum circulated to Board members). The question was now raised
however, wore located in areas involving more transportation, Ho pointed out
as to the policy of this Government with reference to such 6. proposal. The
also that Japan 10 attempting to build stockpiles in the inner zone of commodi-
State Department hed requested the Cyanamid Company to withhold action until
tion not produced there, The most important of such stockpiles 10 probably
this government had a chance to review the entire situation.
potroloum. In this case, of an annual requirement of about 50 million barrols,
Mr. Acheson stated further that if the business of the 34 companies
only about 19,000,000 are produced in Japan. Howover, there is 6 stockpile
were placed under one State corporation, that corporation would control es
of approximately 61 million barrols.
much as 60 per cent of the total Mexican business for a number of items. If
Generally spoaking, Mr. Hamilton stated, the curront and prospective
a management contract were consumated between the Mexican Corporation and
production of war matorials in Japan wes relatively small compared to that of
the Cyanamid Company of the kind proposed, it was clear that the Cyanamid
the United States. lb. Hornbook supplomented Mr. Hamilton's summary observing
Company would be in a preferred position with reference to other United States
that the development of the so-called inner zone was no doubt a matter of
companies, both from the standpoint of the sale of supplies to the Corpora-
curoful policy,
tion and possibly also by way of the development of retail outlets. Ho indi-
In response to a quostion by Mr. White, No. Hamilton stated that
cuted that at conferences with representatives of the Department of Justice,
1n building up the larger reserve of oil Japen had boon foced with the neces-
Alien Property Custodian, Board of Economic Warfare, and the Treasury Department,
city of producing the oil and of providing ample storage capacity and trans-
there was general agreement that something more than mero disapproval of the
portation. At the present timo it appears that the shipping situation 10 such
Cyanamid contract was desirable as mere disapproval of the Cynnamid contract
odd materially to resorvos.
that Japan doos not have sufficient transportation BO that it can afford to
night result in action on the part of the Mexican Government which would have B
less desirable result than would be secured under the contract. On the one
Enemy Proporty
hand, Mexico might dispose of the properties separately, in which event foar
was expressed that the properties night be purchased by speculators who would
hold for the purpose or solling back to the original owners at a later date.
bad involved in the Musican-American Cyanamid Company proposal, which
The Vico President saked Mr. Acheson to outline the general problem
On the other hand, the Moxican Government might moroly retain the properties
mid been sunnod briefly in the report, "Memorandum on Moxican-Amorican proposal Cyana-
with the present management.
Company Nogotiations".
An alternative suggested by the Alien Property Custodian was that
this government through one or the companies controlled by the Alien Property
of for which the Mexican Cyanamic Company proposal was e part. Be stated
Mr. Acheson reviewed briofly the background of the genoral problem
Custodian would propose a contract with the Mexican Corporation, under which
magament service would be offered the Mexicans at e. lesser cost than that
the other more than a year the United Statos had been using its influence that induce
proposed in the Cyanamid Contract, and an attempt made to strengthen personnel
the program other involving control or German proporty. In prossing for such of this
American Republics to eliminate Axis influence, one phose to
training,
It was also pointed out that there was perhaps not unanimity of
offorts to republics the United States had indicated that it would action by
opinion among the Mexicans officials. Apparently there were some who perhaps
cions, rundor such assistance as it could, such as making use its best
would like to see no action taken along the lines of a management contract
of the firms romain under the control of the rospectivo might be
tod and financo, the and the 11ke, to the end that Gorman influence evailable olimina- techni-
with the thought that the properties might be sold separately, in which case
there would be the possibility of speculative gains. Certain other officials
involved and pharmecoutical fields. Ho stated property that 60 involved countries were
in the chemical Poru, and Columbia, Many of the firms and countries as
Mexico, republics had soizod Gorman property, including such nationals. Brazil, Many
probably would be unfeborable to any contract which had the effect of strength-
oning the U. 5. position in Mexico.
Mr. Acheson indicated also that in the event the Cyanamid contract
the neconsity taken control of German propertios, the countries Howover, in somo with
cason, having word intorosted in goolng local control achieved. most of the
were consumated no doubt there would be criticiam of the Department of State
and this government. However, if the Cyanamid contract was the only apparent
assistance, and of supplies. operating. this involving compotent management, woro tochnical fecod
30
4
- 5 -
method of ascertaining that German influence would be eliminated from the Merd-
subridized Mexican operation. The net result however would be the use of
can companies, then it certainly would appear wise to go forward with the Don-
governmental monopoly power to drive out private companies. Mr. Rocksfeller
tract. He also stated that B. R. Garfies was now in the United States end
stated further that he was impressed with the fact that the Mexicane Were
proposed to return to Mexico shortly so that 1t was desirable that a reply to
particularly concerned with U. 5, paternalism.
the Musican Government be prepared.
Mr. Biddle stated that one major issue was a matter of 8. Cyanamid
Discussion served to make clear that there wee reasonable agreement
Company monopoly versus a U. 5. monopoly. Mr. Taylor stated that 11 appeared
5.5 to elimination of Aris influence, and an open market for American firms.
to him that in effect the Allen Property proposal would result in giving govern-
The thought was expressed also that It would be desirable to have competitive
nent controlled firms competitive advantages over private American companies
business within Mexico. There was general agreement, however, that the develop-
of good reputation.
mont of a sonopoly within Moxico was e entter entirely for determination by
The Vice President pointed out however that there was a material
the Mexican Government. Howaver, if the Mexican Government was interested in
difference betwoen et private monopoly and a public monopoly.
the development of management, it was doubtful whether the proposed Cyanamid
Mr. White pointed out that in addition to it being possible for the
deal was such as might be expected to be fruitful, The question then arose
Alien Property Custodian to miss management services available to the Mexicans
as to whother the United States, in the interest of promoting better 5 general
at e lower cost, it would also be possible to make provision for withdrawal
relationship, protocting the interest of the United States, and also promoting
of the Alien Proporty Custodian at the request of the Mexican Government. In
the interests of the Mexican Government, night suggest that alternative meas-
other words, a long-time firm contract would not be neasssary.
ures would merit exploration. On this point there was agreement that the
Mr. Crowley stated that the President had indicated that be winhed
United States should use care to indicate that it was not attempting to diotato
the Alien Property Custodian properties to be retained by the Government at
mothods of operation to the Mexicans, It was stated that the U. S. Ambassedor
this time and also that he would like to ace them used to influence the South
to Mexico had indicated that be thought an alternative suggestion would not
Amorican situation.
be weldomed by the Mexican Government. Mr. Acheson stated however that ho
It was alao pointed out by soveral members that there was the possi-
bolloved that no offense would be takon by the Mexican Government.
bility that if proporties now under control of the Alien Proporty Custodian
There was considerable discussion of the relative desirability of
word to be returned it was quite possible that there would be little diffor-
the proposed Mexican Government Cyanamid Contract and Alion Proporty Custodian-
endo between the Oyanamid proposal and the Alion Proporty Custodian proposal.
Moxican Government contract with the consensus being that the latter would be
Aa long as the properties were under control of the Alien Property Custodian
proferable, Neither program would affect the immediate determination of the
however, clearly Government influence could be used in the social interest.
Mexican Government to place the 34 Moxican firms under single control. As to
There was some discussion also of the relationship of this problem
the development of Mexican management, it was agrood that the Alion Property
to international cartels. While IT in true that that problem was not immedi-
Custodiun proposal would have groater possibility, Mr. Crowley pointed out
atoly involved, the Vice President stated that he thought it was a problem
that it would be possible to use the incomo from the companies under his oon-
with which we should be concerned. It seems to him that the United States
the Moxican market open for sales by various firms, the Alien Property Ouato-
trol for the purpose of training Moxicon personnel. On the question of keeping
had the problem of attempting to Emptrain activities of U. 5. corporations
which sight move in the direction of controlling international trade through
dian would likowise have greater possibility since control would rest with
cartels which in some cases can operate as private governments.
the U. 8. Government and not with a private concorn. Mr. Crowley stated that
Mr. Stone pointed out that the problem was not only a matter of
ho did not think that firms under the control of the Alion Proporty Custodian
government versus private monopoly but that there were other alternatives,
ha should be allowed to uso U. S. supplies for monopoly purposes, stating that
azong them being the possibility that management could be secured under the
would favor lotting all American companies got into the Mexican business.
auspicos of a development corporation. Mr. Rocksfeller stated that develop-
It was also pointed out that if the Oyanamid contract were made,
ment corporations were not proving ontirely satisfactory, stating that it was
thore were a possibility that control of Mexican companios might rovert
likely that there would be opposition to the further extension of develop-
whether Germane, it being noted in this connection that there was somo to the to
ment corporation activities, pointing out that in Haiti there had been con-
munts with the American Oyanamid Company would be entiroly free from question cortain as agree-
sidorable resentment over the fact that development corporations involved
program firms 11 would at loast be possible for the U. 5. to use the
Corman firms after the war. Under the Alien Property Custodian
possible paternalism and particularly a dogreo of contrelization of power far
superior to that of any private companies and even of the local government.
mination to improve the situation and also it would bo possible to controlled allow the tor-
The Vice President said that he has been impressed with the advan-
of the contract at any time.
tages which were offered under the Dovelopment Company type of operation, and
Neither posal did not necessarily represent any improvement over the Cynnemid proposal. pro-
lb. Rockefeller pointed out that the Alien Property Custodian
if thore wore ovidence to the contrary, it we desirable that it be cade avail-
able.
decision proposal the United States could probably influence Property
Custodium touched the Mexican monopoly question. Through the Alien
It was decided that e conmittee should be established consisting of
representatives of State, Justice, and the Alion Proparty Custodian to draft
by making a more attractive offer, particularly If it the involved Mexican a
u. ruply to Mr. Corfice. It was agroad that the letter should indicate that
SECRET
31
- 6 -
Minutes of the Meeting of the Board of Zconomic Warfare
Held June 17, 1943 at 10:00 a.m.
it was not in any way the intention of the U. S. to attempt to dominato
Mexican policy, that the U. S, was not objocting to the Mexican Government
A meeting of the Board of Economic Warfare was held in Room 201
entering a contract with an American firm, and that it be suggested that the
Genute Office Building at 10:00 8. n. on June 17, 1943.
Mexican Government give consideration to alternatives among them & possible
The meeting was attended by the following members of the Board:
contract with the Alien Property Custodian, which might be more favorable
from the standpoint of the Mexican Government. It was suggested that the
The Vice President, Chairman of the Board
opinion of the President should be secured with reference to the proposed
Mr. Dean Acheson, representing the Secretary of State
letter.
Mr. Leslie Wheeler, representing the Secretary of Agriculture
It was proposed also that the general problem of governmental policy
Mr. John Lockwood, representing the Administrator, Lend-Lease
with reference to international cartels should be considered further by a
Administration
committee. Following Mr. Acheson's suggestion it was agreed that this larger
Mr. E. R. Stettinius, Administrator, Lend-Lease Administration
problem be handled by the post-war cartel committee now in existence and on
which there was represented State, Treasury, Board of Economic Warfare, Office
In addition, the following persons were present:
of Stretegic Services, Justice and some others, Mr. Rockefeller indicated
that his office would like to be represented also.
Mr. Bernhard Knollenberg, Lend-Lease Administration
The meeting adjourned at 11:50 5. m.
Mr. W. L. Clayton, Department of Commerce
Mr. Herold Noff, War Department
Mr. Hugh B. Cox, Department of Justice
Mr. Milo Perkins, Board of Economic Warfere
Mr. William T. Stone, Board of Economic Warfare
Mr. E. W. Gaumnitz, Board of Economic Warfare
Mr. Perkins reviewed briefly his presentation before the House
Appropriations Committee on June 1 (Introductory statement by Milo Perkins,
Executive Director of the Board of Economic Warfere, before the House Ap-
propriations Committee on June 1, 1943, copies of which had been circulated
to Board members.) He stated that the Committee had given a very complete
hearing and showed great interest in all of the activities of the Board.
While cortain of the sub-committee members inquired in detail at to personnel
policies, including promotions, salaries of top personnel, and the like, their
interest centered in the operations of the decentralization plan of exports
and relationships with other agencies, particularly with the Department of
State and Lend-Lease. Great interest was also shown in the imports work of
the Board during the House hearings.
Mr. Porkins also stated that he bad received letters from General
Strong which covered the general work of the Board in conjunction with the
military authorities, particularly in the matter of security of military
information exchanged between the Agencies. These letters had been received
after a hearing before the Byrd Committee, which Committee had asked for
information on the work done by the Board in conjunction with the military
services on highly socret mattors.
In responso to a question as to the naturé of Senator McKellar's
querios (at the Byrd Committoe), Mr. Porkins indicated that the Senator's
question wont to the trado arrangements with Spain and certain of the other
neutrals. Mr. Porkins indicated further that Senstor McKollar raisod some
other questions as to Board operations, one question apparontly being based
upon some of Mr. Jesse Jono's statoments bofore the Byrd Committee. He noted,
for examplo, that Senator McKollar indicated that all of the salaries and
expenses or employees of the Board were paid under directivos issued to R. F. C.
Obviously, the Senator had boon misinformed, according to Mr. Porkins. It was
32
a
- $
agrood that copies of the lettors from General Strong should bo sant to Board
tions under the supply agreement. Mr. Stone also indicated that there had
numbers.
been further directives from the President in effect accepting the oil pro-
posal. He indicated that at present the agreement called for 30,000 tons
American Cynnamid Question
of oil products per quarter, so that the first three-quarters oil supply
would be delivered by October 1. On October 1 the final 30,000 topo could
In response to an inquiry by the Vice President, Mr. Acheson reported
be rade available. Making available the full year's supply prior to Octo-
that there had been a conference with the President, attended by the Vice
ber 1 in one sense only meant the difference between the delivery of 30,000
President, Mr. Crowley, Mr. Wheeler, and Mr. Acheson. The President had read
tons at the end of September rather than the 30,000 tons any time after the
the memorandum to him, the proposed letter to the Ambassador to Mexico, and
first of October. Mr. Stone also stated that within the next few days he
the proposed draft of the instructions. He stated that the President indi-
would expect a complete report,
cated that he was not enthusiastic about the proposed Cyanamid contract and
Mr. Acheson stated that on June 4 the State Department had received
also discussed cortain of the specific provisions of the proposed contract.
a cable from Messrs, Canfield, Cummings and Reifler, who indicated that they
Specifically, be apparently thought that the payments by the Mexican Govern-
thought the arrangements were among the best made with any of the neutrals.
ment were excessive. Mr. Acheson stated also that the President was much
A wire had also been received from Ambassador Vinant, stating that he was
more favorable to the Alien Property Custodian proposal, seemingly thinking
impressed with the Progress Made in the negotiations and urging completion
that it was definitely preferable to the Cyanamid proposal. The President
of the negotiations.
also suggested that the note make clear that the United States would not in-
The meeting adjourned at 10:40 a. m.
pinge the Mexican Sovereignty but express the opinion that a better deal could
be made than that proposed with the Cyanamid Company.
Mr. Acheson suggested that the problem might be handled by diroct-
ing discussion to the Alien Property Custodian proposal avoiding any statement
regarding the Cyanamid deal.
Mr. Achesen also stated that the Cyanamid Company apparently did
not want to consumate the Mexican contract if there was any criticiam on the
part of the various government agencies. The Cyanamid Company apparently did
not fool the Mexicar contract of great importance to them and possibly were
inclined to withdraw from the entire matter.
Swedish Trade
The Vice President asked whether there was any further report on the
Swedish negotiations.
Mr. Stone, in reviewing the Swedish situation, indicated that no-
gotiations had been started about six wooks ago with the objective of attemp-
ting to gain the points outlined by the Board and cleared with the President.
Those objectives involved, among others; reduced Swedish exports to Germany,
the elimination of Swedish credite to Germany, and elimination of transit
traffic. On crodits the latest reports indicate that the Swodos apparently
would agree to oliminate all credits except those to Finland which would be
on a reduced basis. On the reduction of Swedish exports, negotiations had
not been successful as for as the last half of 1943 wore concerned, the Swodes
indicating that thoy had commitments covering that period. Howover, there
was a possibility or an ovor-all reduction of exports of about 13 cent in
total value, that reduction boing contingont upon German exports to per Swedon not
boing increased. With reforence to 1944 it appoared that the Ewedes would
of agree to B. reduction of 35 to 40 por cent, the reduction being stated in torms
specific itoms and with iron oro boing reduced to about seven and ono-half
million tons. Regarding transit traffic, the Swedee had proposed handling
soparatoly from e form1 agreement. The Swades proposed to take action olimin-
In ating the all of such traffic if they could got their full quota of oil by October
ovent the traffic word not stopped, the U. S. to be froo of its obliga-
33
C
WAR DEPARTMENT
o
War Department General Staff
P
Military Intelligence Division 0-2
X
Washington
12 June 1943.
Mr. Milo Perkins,
Board of Economic Warfare,
Washington, D. C.
My dear Mr. Perkins:
I should like to invite your attention to the develop-
menta of the past year in the use of reports prepared by the Board
of Economic Warfare in connection with the activities both of the
Joint Intelligence Committee and the Military Information Division
of the General Staff. The economic material, furnished by the
Board of Economic Warfare, has been most useful in connection with
estimates of Axis capabilities, both in Europe and the Par East.
The services performed by the Board of Economic Warfare, particu-
larly in regard to the oil situation, have been outstanding and
far more accurate than information received from any other source.
As Chairman of the Joint Intelligence Committee of the Joint Chiefs
of Staff, I have come to lean heavily upon your BEW representatives
on the Committee and on its Subcommittees, in determining accurate
and analytical questions which are of vital importance to sound de-
cisions bearing upon tactical and strategical plans. The reports
and analyses submitted to the Joint Intelligence Committee, through
your representatives, have been of outstanding value and B. material
contribution to the overall picture which is essential to sound in-
telligence and the basis for sound planning. In addition, your
organization has been particularly helpful in various problems arising
in the estimation of the Axis positions in regard to strategic
materials, foodstuffs, industrial capacity, and potentialities of the
German and Japanese war machines.
In the government service we are too often prone to accept
services as a matter of course and without any particular recogni-
tion. In view of the heavy burden which my organisations have un-
doubtedly placed upon yours, I desire to take this opportunity to
express to you and, through you, to the personnel of your organize-
tion my very keen appreciation and heartfelt thanks for the close
cooperation and the outstanding services performed by the personnel
of the Board of Economic Warfare.
Very sincerely yours,
/s/ Gen. Strong
GEO. V. STRONG,
Major General,
A. C. of 8., 0-2
Regraded Unclassified
In reply refer to:
c
MID 904 (6-14-43)
0
P
I
14 June 1943
Mr. Milo Perkins
Board of Economic Warfare
Washington, D. C.
My dear Mr. Perkins:
In my letter of 12 June 1 had the pleasure of expressing to you
the appreciation of this Division for the excellent and important
contribution made by the Board of Economic Warfare to military intelli-
gence. Permit me now to ask your consideration of another aspect of
this matter. I refer to its security implications. As you are aware
there is B. two-way relationship between the Board of Economic Warfare
and the Military Intelligence Division, inasmuch as we exchange informa-
tion. Much of the data which we give you is confidential or secret and
its exposure in any way might place in the hands of the enemy weapons
which would be most damaging to the cause of the United Nations. May
I therefore ask you to exercise at all times careful precaution that
classified material received from Military Intelligence Division is
properly safeguarded and used only for the prosecution of the war.
My concern in this connection is heightened by my knowledge that
the Board of Economic Warfare is playing an integrated part in the
conduct of the war and is actually conducting economic operations
directed against the enemy and coordinated with our general strategy.
It 1e thus quite possible that, should enemy agents by any means obtain
ROCOME either to the broad or to the detailed strategic programs exe-
outed by the Board of Economic Warfare, they might well be able to
diagnose our purely military plans.
While it is not my own imediate province, permit me also to
suggest to you that your tactics and techniques of conducting economic
warfare might well provide the enemy, if they were known to him with
means of combating your operations. I make this suggestion from the
realization that your effort is integrated with the military effort
in the global strategy which we are pursuing. Any defeat which you
might suffer through enery knowledge of the scope, direction and
method of your operations will be reflected eventually in the military
field.
Very sincerely,
GEO. V. STRONG,
Major General,
A. C. of 8., 0-2
Regraded Unclassified
UNITED STATES SAVINGS BONDS
Sales since MAY 1, 1941, by months
(At issue price in thousands of dollars)
:
:
:
:
Series x
:
:
:
Nonth
Series 7
:
Series G
:
Post
:
:
Total
:
:
:
Banks
Total
:
Offices
:
:
:
:
:
1941
May
$
42,836
$
57,745
$
100,581
5
37,817
$
211,420
$
349,818
June
40,788
61,729
102,517
28,375
183,134
314,527
July
50,558
94,717
145,274
27,359
169,498
342,132
Autust
40,725
76,873
117,603
20,318
127,685
265,606
September
38,117
67,123
105,241
18,099
108,967
232,327
October
41,634
81,250
122,884
22,963
124,866
270,713
November
37.997
71,478
109,475
18,978
105,035
233,487
December
103,154
237,930
341,085
33,272
154,242
528,599
1942
January
158,469
508,942
667,411
77.559
315,576
1,060,546
February
35,938
311,051
397.989
51,820
253,391
703,200
March
86,278
251,321
337.599
41,070
179,223
557,892
April
83,802
242,358
326,560
40,003
163,839
530,502
May
108,005
313,826
421,531
42,465
170,060
634,357
June
105,907
327,316
433,223
41,041
159,681
633,945
July
116,721
391,396
508,118
73,691
319,053
900,861
August
103,951
350,016
453,967
52,268
191,020
697,255
September
107,620
402,235
509,855
60,803
184,026
754.684
October
111,711
553,136
664,847
60,565
209.587
934,998
lovember
105,507
436,066
541,573
44,766
148,211
734,549
December
130,359
595,418
725,777
65,994
222,398
1,014,168
1943
January
144,495
670,433
814,928
77,066
348,450
1,240,444
February
111,146
522,425
633,572
48,328
205,295
887,195
Kerch
122,189
598,219
720,407
43,558
180,011
944,276
bril
150,041
845,745
1,006,786
109,517
353,421
1,469,724
-ey
154,591
840,643
995,234
85,893
253,857
1,334,984
June
112,147
584,066
696,213
35,149
144,128
875,491
Total
$2,505,688
$9,494,961
$12,000,549
$1,259,537
$5,186,094
$18,446,281
office of the Secretary of the Treasury,
July 1, 1941
Division of Renearch and Statistics.
Pource: All figures are deposits with the Treasurer of the United States on account of
proceeds of sales of United States savings bonds.
Note:
Figures have been rounded to nearest thousand and will not necessarily add to
totals,
Regraded Unclassified
38
WAR FINANCE BULLETIN
Office of the Secretary of the Treasury
Issue No. 2
July 1. 1943
The Job Ahead
The Treasury has raised its sights considerably on
War Bonds for the rest of the year. During the first half
of this year we sold approximately $7 billion in War Bonds
to individuals. During the second half we propose to sell
$18 billion -- or more than twice as much. To some people
the task seems impossible. They say we're shooting for the
moon. Let's see.
There is no mystery as to the sources from which these
funds might be obtained. Production in general -- and war
production in particular -- is creating the very funds we
want to tap. War production is not only turning out the
planes, tanks, and ships that will crush the enemy; it is
also generating at the very same moment incomes equal in
amount to that production. What the people of the nation
receive in the way of incomes is simply the equivalent of
what they produce in the way of goods and services. If the
Government, therefore, is spending more than it is receiv-
ing in taxes, and is thus faced with a deficit, the people
of the country are receiving more than they are spending,
and are thus possessed of a surplus. It is precisely this
surplus (or savings) that the Government is in search of.
It is important to bear in mind here that this in-
crease in surplus (or savings) represents a national total
that will be distributed among individuals in varying
amounts. Some individuals -- those living on fixed incomes,
pensions, annuities and 80 on -- may find it impossible to
Information Service for State War Finance Committees
Regraded Unclassified
37
- 2 -
increase their savings appreciably. Other individuals,
however, with larger than usual wages -- a large proportion
of our people -- are saving far in excess of the national
average. It is the great merit of the voluntary savings
program that it can separate the wheat from the chaff and
provide the mechanism for mobilizing wartime savings.
GROSS NATIONAL PRODUCT
Fiscal Year 1944
PRODUCTION
Equals
INCOME
$194 Bil
Federal
Taxes
Wor and Other
Federal Deficit-
Federal Gov't.
Purchases
Matched by
Private
Surpluses
(Savings)
Private Income
Available for
Spending
Private
Purchases
State and Local
State and Local
Gov't. Purchases
Taxes
The chart above shows that in fiscal 1944 approxi-
mately one-half of the Gross National Product -- that is,
the value of all the goods produced and of all the serv-
ices rendered by the whole nation in a year -- will be
bought by the Government for war activities, and approxi-
mately half will go for everything else. Under existing
tax legislation, however, only slightly more than one-
third of Government expenditures will be covered by taxes,
the remaining two-thirds by borrowing. The deficit will
be something like $70 billion -- and this deficit in turn
will necessarily be matched by corporate and individual
Regraded Unclassified
38
- 3 -
surplus (or savings) of an approximately equal amount.
Only minor adjustments keep the two figures from being
identical.
The fundamental task of war finance is to transfer
this excess income from private to public use; to draw
back into the Treasury out of the incomes created by our
ever-expanding national production an amount equal to what
the Government is spending. This can best be done by in-
creasing taxes and by increasing the sale of War Bonds.
Unless these measures are employed, either alone or in
combination, excess funds now accumulating are likely to
lead to an inflationary price rise, for the supply of
goods and services is severely limited, and cannot be in-
creased.
Our task in fiscal 1944 is to make our production
and financial gears mesh. To accomplish this we must
raise our sights even further on taxes and War Bonds.
Only by 80 doing can we remove inflationary pressures at
their source and preserve a reasonable measure of economic
stability
GROSS NATIONAL PRODUCT
Fiscal Years, 1940-44
sall.
175
War
Activities
ISO
Federal
Gov't.
125
Non-War
Activities
100
Private
Capital
75
Goods
Consumer's
All
50
Goods a
Other
Services
25
State a
Local Govl.
o
1940
1941
1942
1943
1944
FISCAL YEARS
Regraded Unclassified
39
The chart above shows the absolute increase in our
national production since 1940, as well as the relative
changes in the components that go to make up that produc-
tion. The country's gross production of goods and services
will have increased from $92 billion in fiscal 1940 to an
estimated $194 billion for fiscal 1944 -- an increase of
110 percent. The production of war materials and services
will have soared from $2 billion in fiscal 1940, or about
two percent of gross product, to an estimated $100 billion
for fiscal 1944, or 52 percent of gross product.
We are producing for war alone as much as was pro-
duced for all purposes as recently as 1940 -- and, in
addition, enough to feed and clothe our population and
maintain essential civilian activities. War is the prin-
cipal activity in the economic life of the nation. It
must be our job from now on to make financing the war as
important an activity to the individuals of the nation.
It is impossible at the present time to set a goal
for the sale of War Bonds for the whole of fiscal 1944.
That depends upon what Congress does about additional
taxes for next year. We have set a goal of $18 billion,
however, for the first half of this fiscal year -- that
is, through December. In a future issue of the War
Finance Bulletin we hope to discuss this goal in some
detail.
Regraded Unclassified
40
Room 278
Under Secretary
Exp. Loans A and E
July 1, 1943
To Presidents, Federal Reserve Banks:
Boston, Mass.
Chicago, Ill.
New York, N. Y.
35. Louis, Mo.
Philadelphia, Pa.
Minneapolis, Minn.
Cleveland, Ohio
Kansas City, Mo.
Richmond, Va.
Dallas, Texas
Atlanta, Ge.
San Francisco, Calif.
I would appreciate it if I could have your suggestions
A8 to types, rate and maturity of obligations that
should be included in Third War Loan Drive. If your
suggestions contain any securities that fall within
banking range of maturities I would also like to have
your suggestions as to how to keep such securities out
of the banks during and immediately following period of
drive. Also advise how you feel about the whole basket
of securities being opened for the entire period of drive
for any subscriber outside of commercial banks, whether
large investors such as insurance companies and savings
banks should be confined to last few days of drive period
or whether first part of the drive should be confined
entirely to individuals. Include any other suggestions
that you may have concerning the announcement of the basket,
which we hope to make public not later than July fifteen.
It would be very helpful if I could have your reply by
Saturday but if not convenient to you let me have it by
Tuesday of next week.
BELL
(Initialed) D. W.B.
TINE:NL
Regraded Unclassified
41
C
o
P
Y
1943 JUL 2 PM 12 07
W84G6OWASH 113 MPIS 2-1049
BELL
Reurtel first suggest you consult open market committee 8.8 to
suggestions for Third War Loan. If you wish me to discuss your
wire with local bankers shall be pleased to do so upon request
and submit their views to you.
Peyton
Regraded Unclassified
42
COPY
W81G78WASH H116STL 6-304
1943 JUL 6 PM 4 45
BELL
Reurtel suggest a 2-1/2 PC bond maturing Dec 15, 1969-64, issued in
denominations 8.8 low as $100 similar to 2-1/2's of June 15, 69-64 and with
provision that it will be redeemed at par and accrued interest by the estate
of the owner regardless of the purpose for which the proceeds of redemption
are used; also 2 PC Treasury bond with maturity March 15, 53-51 and a 1 PC
or 1-1/4 PC Treasury note with appropriate maturity be included in the
obligations offered during the Third War Loan Drive, as well as Series E F and G
Savings Bonds and Series C Tax Savings notes. Recommend slightly increasing
yield on tax savings notes ranging possibly from sixty five hundredths percent
for first six months to an average of one point twenty percent if held to
maturity. The only practical way to keep securities out of banks during and
immediately following period of the drive is to place a prohibition on their
being held by commercial banks, similar to the one in respect to 2-1/2 PC Treasury
bonds, except that the period of prohibition would be less, say three or six
months. In our opinion large investors, such as insurance companies and savings
banks should be permitted to purchase during the entire period of the drive.
It is difficult to satisfactorily prevent this being done indirectly. I approve
the early announcement on July 15, giving national quotas divided between
purchases to be made by individuals and others, with advice to the state
chairmen, as soon 8.8 possible, of their state quota after the general announcement
has been made, The foregoing represents the majority of opinion of several of
our senior officers
HITT
Regraded Unclassified
43
COPY
1943 JUL 6 PM 6 40
W28G13WASH H147 STL 6-530
BELL TREAS
Further reurtel, three local banks concur in list of securities to be
included in Third War Loan Drive as outlined in my telegram to you today.
One suggests that 7/8 percent certificates of approximately one year
maturity should be added and another suggests institutional investors
should be permitted to make purchases of any of the securities available
for them only at the end of the drive. This latter suggestion made for
two reasons: It will prevent over subscription of quotas in the early
stages of the drive and will not add to excess reserves early in the drive.
HITT
Regraded Unclassified
44
COPY
WOOWASH B62 BOS 7-1114A
1943 JUL 7 PM 12 02
BELL
TREAS DEPT
Retel 1st banks and others consulted generally feel securities Third Drive
might well follow pattern second drive with extension maturity of bonds
and retention restriction on commercial banks holding two and one-half
percents for own account. Also might have restriction for short period on
availability as collateral of two percents subscribed for and allotted
investors. Believe desirable whole basket be open for entire period for
any subscribers outside commercial banks; subscriptions such banks for
own account to be open for last few days of drive only
PADDOCK
Regraded Unclassified
45
COPY
W88G43WASH ING M22DLS 7-1027 A
1943 JUL 7 AM 11 51
BELL
Reurtel July 1. Have obtained suggestions from several bankers and regional
managers of Victory Fund Committee in this district as to types, rate, and
maturity of obligations they think should be included in Third War Loan Drive.
The consensus is that basket of securities should consist of 2 1/2 percent
long term bonds similar to those offered during last drive, Series E, F and G War
Savings Bonds, and 2 percent bonds with maturity of seven to ten years. Majority
of those contacted feel certificates of indebtedness should be eliminated,
although two or three individuals think certificates should be offered to public
during the drive. Opinion is divided 88 to advisability of including tax
savings notes in basket of securities, but those opposing their inclusion think
two or three year Treasury notes should be offered. Practically every one
feels that banks should be excluded from the drive and that whole basket of
securities should be available to all nonbank investors, including insurance
companies, for entire period of drive. My own opinion is that basket of
securities should consist of 2 1/2 percent long term bonds, war savings bonds,
2 percent eight to ten year bonds, and tax savings notes. Think certificates
of indebtedness should not be offered to public during forthcoming drive, and
that whole basket of securities should be available to all nonbank subscribers,
including insurance companies, for entire period of drive. In order to keep
2 percent bonds out of banks during and immediately following period of drive,
suggest that bonds be made ineligible for purchase by commercial banks for
period of six months. It is my opinion that such a restriction would not
materially affect the sale ability of the bonds.
GILBERT.
Regraded Unclassified
46
COPY
WO2G41WASH GX143 CGO 6-1159
1943 JUL 6 PM 1 14
BELL
We have contacted representative bankers and large investors of our district
with reference to types, rate and maturity of obligations that should be included
in Third War Loan Drive. The banks were almost unanimous in their suggestions
that a long term 2-1/2 percent bond should be included. In this connection they
thought insurance companies should be given a separate quota and that the War
Finance Committees should concentrate solely on sales to individuals and
corporations other than insurance companies and savings banks. The banks were
divided as to whether, assuming that a separate quota is given the insurance
companies and savings banks, it should be offered the last few days of the drive
or whether it should be kept open the entire drive. Insurance companies in our
district would prefer that it be open to them during the entire drive. A great
many of the banks believe that in order to interest corporations an intermediate
bond of ten years or less should be included in the basket. They also believe
that if an intermediate bond is offered it should not be eligible for banks to
hold until March 15 1944. The following suggestions have also been made:
(1) greater emphasis be made by the state committees in the sale of G bonds
(2) that the War Finance Committees concentrate solely on individuals and
corporations other than insurance companies end savings banks (3) that a $100
coupon bond 2-1/2 percent would not materially increase sales (4) that tax notes
should not be included in the quotas (5) that a short term note of less than five
years would be desirable for large corporations having large amounts of idle
cash
YOUNG
Regraded Unclassified
47
COPY
WASH L828F 6-356
1943 JUL 7 AM 745
D. W. BELL - TREASURY
Replying your telegram July 1 do not believe it possible to offer public an issue
attractive to banks without banks accumulating substantial part thereof. Further-
more best opinion is that it would be undesirable to impose ineligible provisions on
issues in banking range. As to future financing feel it desirable to make an
offering exclusively to banks 30 days in advance of drive. Such pre-drive issue
should be 5 to 8 years and allotted to highest bidder in amounts not exceeding
combined capital and surplus. On assumption that bank offering would precede
drive by not less than 30 days and no short term negotiable certificates, notes, or
bonds will be offered in basket, recommend for Third Loan Drive Series E, F, G,
Sevings Notes c, and 2 1/2 percent bond maturing 64-69 and, for insurance companies
and savings banks particularly, 2 1/4 percent maturing 56-59. Also recommend
that 2 1/2 percents be eligible for commercial banks in amounts equal to 5 percent
of savings accounts (See Clerk's letter May 4). It would have bad psychological
effect upon general public to have it known that insurance companies and savings
banks will enter closing days of drive. Likewise it would have bad effect to have
it known that subscriptions of insurance companies and savings banks have resulted
in substantial part of quota being raised early in campaign. Because of these
facts and because no particular sales effort required, believe it best to have
insurance companies and savings banks kept out of quota to be raised from public.
These are views of those whom we consulted.
DAY
Regraded Unclassified
48
C
0
P
Y
NEW YORK WFC 7-3-43
3:15 PM N.Y. Burgess
FOR IMMEDIATE DELIVERY TO MR DANIEL W BELL
AFTER CONSULTATION WITH ASSOCIATES I SUGGEST THE FOLLOWING BASKET FOR SEPTEMBER
DRIVE E F G BONDS, SERIES C SAVINGS NOTES, A NEW SERIES OF 2-1/2 PERCENT BONDS
NATURING DECEMBER 15, 1969, CALIABLE 1964, A 2 PERCENT BOND MATURING MARCH 1953
CALLABLE 1951, A 7/8 PERCENT ONE YEAR CERTIFICATE. THE 2-1/2 PERCENT BOND IS
NECESSARY TO ATTRACT INSURANCE BUYING AND CERTAIN OTHER INVESTORS. THE 2 PERCENT
BOND IS necessary AS AN ALTERNATIVE FOR INSURANCE COMPANIES WHICH ARE BOTHERED
ABOUT LARGE MATURITIES OF THE LONGER BOND. IT IS ALSO AN EXCELLENT BOND FOR
GENERAL SALE TO MANY PRIVATE INVESTORS WHO PREFER A COUPON BOND SALABLE IN THE
MARKET AND USABLE AS COLLATERAL. I RECOMMEND $100 DENOMINATION FOR THIS 2 PERCENT
BOND BUT NOT FOR THE 2-1/2 PERCENT. THE 2 PERCENT IS SHORT ENOUGH so THAT THE
RISK OF LOSS IS NOT SERIOUS AND IT WOULD ATTRACT MANY BUYERS WHO WANT THAT TYPE OF
BOND. THE CERTIFICATE IS DESIRABLE FOR CORPORATIONS MANY OF WHOM PREFER SUCH A
MARKET ISSUE TO THE C NOTES. THE BEST METHOD TO AVOID EXCESSIVE BANK BUYING OF THE 2
PERCENT BOND OR 7/8 PERCENT CERTIFICATE IN THE AFTER MARKET WOULD BE ANNOUNCED IN
ADVANCE THAT BANKS WOULD BE GIVEN AN OFFERING OF THESE ISSUES IN OCTOBER. ALSO
SUBSCRIPTIONS OF DEALERS SHOULD BE LIMITED DURING DRIVE AND SUBSCRIPTIONS OF INVEST-
MENT AND BROKERAGE HOUSES SHOULD BE SCRUTINIZED FOR EVIDENCE OF SPECULATION. BANKS
MIGHT WELL BE REQUESTED NOT TO LEND WITHOUT ADEQUATE MARGIN. REGARDING SUGGESTION
THAT LARGER BUYERS SHOULD BE HELD OFF TO THE END OF THE DRIVE THIS IS DIFFICULT TO
CARRY OUT BUT BELIEVE THE EMPHASIS ON INDIVIDUALS MAY BE BEST BROUGHT ABOUT BY
QUOTAS FOR INDIVIDUAL SUBSCRIPTIONS AND EMPHASIS ON THIS QUOTA AND ACHIEVEMENT IN
ALL PUBLICITY
BURGESS
Regraded Unclassified
49
COPY
W32G57WASH D19 CLEV 3-1021
1943 JUL 3 AM 10 41
BELL
Reurtel July 1. After meeting with area chairmen yesterday, I submit
the following 8.8 the personal views of all of us:
1. A 2-1/2 percent bond 20-25 year titled "Third War Loan" for other
than banks, dated October 1 to avoid accrued interest.
2, A 2 percent bond 8-10 years to be sold to banks on definite allot-
ment, permitting banks to subscribe for a stated percentage of their
net deposits. Considerable dissatisfaction because of cuts owing to
padding under present plan. This bond to be sold to banks after
drive is over.
3. A 7/8 percent certificate to be sold to banks at time of 2 percent
offering and under the same plan suggested for the 2 percent bonds.
4. Continuous sale of C tax notes not to be included in drive quotas.
5. Continuous sale of E, F and G bonds total of which should be included
in drive figures.
6. Announcement of offerings to be made promptly in order that War Finance
Committee organizations may organize their sales force for drives and
that banks have knowledge of what may be expected of them.
FLEMING.
Regraded Unclassified
50
COPY
1943 JULY 2 PM 5 58
W26 WASH C82
PHILA JULY 2-528 P
BELL
Replying your telegram July 1, we assume that the next September War Loan
Drive for funds will be confined to others than commercial banks accepting
demand deposits. This separation of bank drives from nonbank drives 1a
highly desirable. It may also be desirable to have a separate drive for
funds from insurance companies and savings banks, inasmuch as these sources,
like the commercial banks, are to be handled by the reserve banks under the
new organizational set-up.
The drive for funds from insurance companies and savings banks may be
handled in one of the following ways:
(a) Confine subscriptions to the last few days of the campaign although
this may be objectionable as it would result in loss of interest,
(b) Permit purchases of securities at or near the time they are dated.
(c) Permit purchases at any time during the drive, as in the last
campaign.
(d) Allow insurance companies and savings banks to buy securities on a
partial payment basis in anticipation of their needs. This suggestion
merits your consideration.
With respect to type, rate and maturity of obligations to be included in the
basket, we suggest the following:
1. 2-1/2 percent long-term bond, not eligible for commercial banks for
ten years.
Suggest that the denominations be lowered to $100. There are investors
who prefer long-term coupon securities with a collateral feature but are
unable to pay as much 88 $500 at one time,
This change would not necessarily make the bond competitive with war
savings bonds. It may, on the other hand, increase the sale of securities
that are not demand liabilities in the sense that war savings bonds are.
2. 2 per cent open market coupon bond maturing in ten years or less. To
keep this bond out of the banks during and immediately after the drive,
a definite period during which commercial banks may not buy this bond
may be defined in the official circular or in a special statement of
the Treasury.
3. Continue to intensify the drive for Series E, F and G bonds. Such 8.
basket of five bonds for nonbank investors would simplify the marketing
problem.
Regraded Unclassified
51
- 2 -
The drive for tax savings notes should be intensified but we prefer
to see this security excluded from the basket, even if the goal is to be
lowered by the estimated amount of tax notes to be sold.
It is difficult to say whether or not it would be advantageous to
announce at this time total amount to be raised from nonbank investors
during the next drive. It may be preferable to do it early in August, when
experience with tax deductions will be better known. Later date would
also be more desirable from the standpoint of publicity.
Because there is general demand for quotas, we suggest that goals be
carefully set only by states, leaving further subdivisions of quotas
to local organizations.
WILLIAMS.
Regraded Unclassified
COPY
52
W12K WASH F13 ATIA 5-1225
1943 JUL 5 PM 1 38
BELL
Re your wire July 1 Third War Loan Drive. Have taken up questions with many
bankers located in the larger cities of the district and opinions expressed
herewith are as close as possible to the consensus of the opinion of these
bankers although, of course, all parties consulted do not unanimously agree on
all points.
Suggest that following issues be included in Third War Loan Drive.
E, F & G Savings Bonds.
A 7 to 10 year Treasury bond with appropriate interest rate, priced as
close as possible to the then existing market rather than below the market.
A long term 2-1/2 percent tap issue similar to the issues now outstanding.
Suggest that above mentioned 7 to 10 year bond carry the provision that it
cannot be owned by commercial banks for a period of sixty days following
closing of subscription books which we believe would solve the problem of this
issue getting into the hands of banks immediately following the drive.
Feel that whole basket of securities should be available for the entire period
of the drive and that large investors such as insurance companies and savings
banks should be allowed to purchase available securities at any time during the
drive.
It appears to be the general opinion that an offering to commercial banks should
be entirely separate from the Third War Loan Drive and suggest that an offering
to these institutions be made after the close of the other drive. We also feel
that this offering should be for commercial banks only and that a limit should
be placed on subscriptions based on net demand deposits or capital and surplus
or some other basis.
VICTORY FUND COMMITTEE.
Regraded Unclassified
53
COPY
WASH B200 NY 3 255P
1943 JUL 3 PM 3 41
BELL
ANSWERING YOUR TELEGRAM JULY 1, OUR PRESENT VIEWS ARE AS FOLLOWS:
GENERAL 1. TREASURY SHOULD MAKE CLEAR-CUT PUBLIC ANNOUNCEMENT OF DECISION TO
SEPARATE BANK AND NON-BANK FINANCING, NON-BANK FINANCING TO BE DONE DURING DRIVES
AND THROUGH CONTINUOUS SALES OF SERIES E, F AND G BONDS AND SERIES C NOTES, WHILE
BANK FIMANCING SHOULD BE DONE WITH OFFERINGS SOLELY TO BANKS IN PERIODS BETWEEN
DRIVES. SEPARATION OF FINANCING THROUGH INSURANCE COMPANIES AND OTHER INSTITU-
TIO'AL INVESTORS FROM FINANCING THROUGH INDIVIDUALS AND CORPORATIONS MORE A
MATTER OF QUOTAS THAN OF POLICY AND SHOULD BE DEALT WITH THROUGH QUOTAS. IN
OTHER WORDS, IF INSTITUTIONAL INVESTORS ARE INCLUDED IN DRIVES, THEY SHOULD HAVE
QUOTA SEPARATE FROM QUOTA FOR INDIVIDUALS AND CORPORATIONS AND PUBLICITY AND
SALES EMPHASIS SHOULD BE ON LATTER QUOTA.
2. IN ADDITION TO EARLY ANNOUNCEMENT OF DRIVE OFFERINGS, IT WOULD BE DESIRABLE
TO HAVE AN ANNOUNCEMENT OF WHAT BANKS MAY expect IN NEXT FOUR MONTHS, INCLUDING
REFUNDING AUGUST 1 CERTIFICATES OF INDEBTEDNESS AND OCTOBER 15TH 3-1/4% BONDS,
AND YARDSTICK WHICH IS TO BE USED IN CONNECTION WITH BANK sui SCRIPTIONS. THIS WOULD
HELP SOLVE PROBLEM OF INDIRECT BANK BUYING DURING DRIVES.
SPECIFIC 1. BASKET OF SECURITIES SHOULD INCLUDE: (A) 2-1/2% BOND OF RESTRICTED
marketability OF SAME TYPE AND APPROXIMATE MATURITY AS IN PREVIOUS DRIVES WITH
$100 DENOMINATION INCLUDED. PROVISION SHOULD ALSO BE MADE FOR PARTIAL PAYMENT TO
ENABIE LARGE INSTITUTIONAL INVESTORS TO ANTICIPATE ACCUMULATION OF FUNDS BETWEEN
DRIVES AND TO ENABLE SMALLER INVESTORS TO ANTICIPATE FUTURE INCOME; (B) 2% BOND
OF REGULAR MARKET TYPE ACCOMPANIED BY TREASURY STATEMENT THAT ISSUE WILL NOT BE
ELIGIBLE FOR BANK OWNERSHIP OR AS BANK COLLATERAL DUHING PERIOD SEPTEMBER 15 -
OCTOBER 14; (THIS BOND MIGHT ALSO BE USED IN EXCHANGE OFFERING FOR CALLED 3-1/4's
FOR DELIVERY AND PAYMENT ON OCTOBER 15): (c) SERIES C NOTE WITH REAL PUBLICITY
AND SELLING PRESSURE AND WITH SOME RELAXATION OF PROVISIONS SUCH AS THIRTY-DAY
NOTICE OF REDEMPTION WHICH NOW HINDER SALABILITY; (D) SERIES E, F AND G WAR BONDS.
BECAUSE OF COMPLICATIONS WHICH THEY MAY INTRODUCE IN ANY POST-WAR ANTI-INFIATIONARY
PROGRAM, BELIEVE ATTENTION SHOULD NOW BE GIVEN TO CHANGING REDEMPTION FEATURE OF
BONDS so THAT REDEMPTIONS MAY BE DEFINITELY STAGGERED OVER A PERIOD OF TIME.
2. IMPOSSIBLE TO KEEP FULLY MARKETABLE BANK-TRANGE SECURITIES OFFERED TO NON-BANK
INVESTORS DURING DRIVES FROM BOING INTO BANKS SUBSEQUENTLY. MAIN RELIANCE MUST
BE PLACED ON GETTING BANK EXCESS RESERVES DOWN AND ON MAKING OFFERINGS BETWEEN
DRIVES SOLELY FOR BANKS.
3. WOULD OFFER WHOLE BASKET OF SECURITIES FOR WHOLE PERIOD OF DRIVE TO ALL NON-
BANK INVESTORS BUT CONCENTRATE PUBLICITY AND SELLING PRESSURE ON QUOTAS FOR
INDIVIDUALS AND CORPORATIONS OTHER THAN LARGE INSTITUTIONAL INVESTORS.
OTHER suggestions. HIGH GOALS RATHER THAN IOW GOALS SHOULD BE SET FOR DRIVE.
THAT MEANS DIFFICULT BUT NOT IMPOSSIBLE GOALS. THE EFFECT OF SUCH GOALS ON MORALE
OF PUBLIC AND ON OBJECTIVE OF REACHING MAXIMUM NUMBER OF AND SELLING MAXIMUM AMOUNT
TO NON-BANK INVESTORS WOULD BE BETTER THAN IF LOW GOALS ARE FIXED WHICH ARE EASILY
EXCEEDED BY LARGE AMOUNTS.
SPROUL
Regraded Unclassified
54
C
0
P
1943 JUL 3 PM 12 35
Y
W84 WASH RH 46 RICH 3-1220
BELL TREASURY
In accordance with your telegraphic request I am submitting below 8. summary
of views of selected bankers and officers of other large institutions in fifth
district on questions you asked.
Basket should include series E, F and G Savings Bonds, series C Treasury Savings
Notes, a 2% bond, and a 2-1/2% bond. Opinion is practically unanimous that
for obvious reasons no certificate should be included, but some think a note
would prove attractive to corporations. As to keeping the 2% bond out of banks
during and immediately following period of drive, practically everyone is opposed
to any restrictions as to registration, delayed delivery, ineligibility for
banks, etc. Nobody seemed to have a practical answer other than the suggestion
made by ouite a number that a 2% issue of stated amount be offered to banks
exclusively sometime before the start of the drive. As to whether whole
basket should be left open for entire period of drive for any subscriber
outside of commercial banks, opinion is divided. Some, particularly those
located in Baltimore, say yes in the belief that large figures and sales of
sizeable amounts to large investors induce others to buy and is good campaign
technique. Others favor leaving insurance companies and mutual savings banks
to last part of period, assuming there is to be one quota for all, because the
greatest handicap we had in this district during the period of the second drive
WELS the big figures and success stories emanating from New York and Washington
during the first part of the drive. It was difficult to keep salesmen working
enthusiastically on small individuals after it became evident that the goal
was in sight. I personally feel quite strongly that no certificate should be
included in the basket.
IEACH
Regraded Unclassified
55
COPY
1943 JUL 7 PM 5 08
W95G72K Wash J105 KC 7 350
BELL
UNDER SECRETARY OF TREASURY
In response your wire relating securities to be included in Third
War Loan Drive the following suggestions of character you mentioned
are submitted:
(1) Offerings to consist of E, F and G Bonds, a 2-1/2 percent Bond,
a 2 percent Bond and Series C Tax note;
(2) In order the keep the 2 percent bonds out of the banks during and
immediately following period of the drive it is recommended that this
issue be made ineligible for purchase by banks for a term of not
less than three months, or perhaps even six months;
(3) Permit insurance companies and savings banks to enter subscriptions
only during the last for days of the drive.
LEEDY.
Regraded Unclassified
5'6
July 1, 1943
My dear Mr. Dietz:
Thanks very much for your telegram of
June 30th. I wish you would inform Mr.
Nicholas Schenck that I appreciate his 00-
operation in withholding the release of the
film, "Inflation".
I hope I have not caused you too much in-
convenience, but you can see by the papers
that the fight against inflation is not going
too well, and I was fearful that this picture
might have a harmful effect just at this time.
With kind regards, I remain
Yours sincerely,
(Signed) H Morgenthau, Jr.
Mr. Howard Dietz,
Metro-Goldwyn-Mayer,
1540 Broadway,
New York, New York.
Complete file
in Diary.
Regraded Unclassified
470
57
WU71 66
WUX NEWYORK NY JUN 30 1943 510P
HENRY MORGENTHAU JR
SECRETARY OF THE TREASURY
1943 JUN 30 PM 6 On
MR NICHOLAS M SCHENCK PRESIDENT OF THE COMPANY SENDS HIS
C
BEST WISHES AND WANTS YOU TO KNOW THAT THE "INFALTION" FILM
IN ACCORDANCE WITH YOUR REQUEST WILL NOT BE DISTRIBUTED STOP
HE IS SURE YOU REALIZE THAT THIS FILM WAS MADE AS THE REQUEST
T E R A G P R T L E E
AND WITH THE SCRIPT APPROVAL OF THE OWI STOP WE HAVE INFORMED
THE OWI THAT THIS PICTURE WILL NOT BE RELEASED. SINCERELY
HOWARD DIETZ.
602P.
Regraded Unclassified
58
July 1, 1943
Dear Lowell:
I thought you would be inter-
ested in the inclosed correspondence.
Sincerely yours,
(Signed) Henry
Mr. Lowell Mellett,
Chief,
Bureau of Motion Pictures,
Office of War Information,
1400 Pennsylvania Avenue, N.W.,
Washington, D.C.
Eme: copy of 6/30 teleg. from Dectz
₹
of Secy's reply to Deetz dt 7/1/43
Copy in Diary.
Regraded Unclassified
59
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE July 1, 1943
TO
Secretary Morgenthau
FROM Mr. Gaston
After I had written the attached memorandum to you on
the subject of the letter from Senator Reynolds I received
a call from his office stating that the Senator had changed
his mind and now wanted a letter telling him what I had told
him over the telephone. I wrote such a letter on Tuesday
of this week, June 29, and mailed it after it had been ap-
proved by Chief Wilson and Norman Thompson. I am attaching
a copy.
I am going to Cleveland tonight with Ted Gamble, will
return Saturday morning, and will probably leave Sunday or
Monday for Atlanta, according to present plans.
wir
Attachments
Regraded Unclassified
60
June 25, 1943.
MEMORANDUM
TO:
Secretary Morgenthau
FROM: Mr. Gaston
I attach copy of a letter from Senator Reynolds,
Chairman of the Military Affairs Committee, to Chief
Wilson, on the subject of White House police and
special detail exemptions from military service. Chief
Wilson made an interim reply to this in my absence.
Today I called Senator Reynolds and explained
to him just exactly what we had done and the necessity
for it. I told him that the White House detail were
the select men of the Presidential guard and the cream
of the Secret Service, that we didn't think ordinary
deferment would be satisfactory in their case since
the cases would be coming up again repeatedly and we
didn't want to take any chance of losing these key men.
Consequently, I told him, an arrangement had been made
whereby they were all being inducted into military ser-
vice (20 out of the 25 have now been inducted and the
induction of the remainder is being delayed for the
receipt of reports from distant draft boards). I said
that as to the White House uniformed force we did not
think it necessary at this time to ask for the defer-
ment of any of them and that as & matter of fact there
were at the present time no deferments and no requests
for deferment outstanding of any of the Secret Service
although we had lost a considerable number of men.
The Senator professed himself satisfied with
this explanation and when I asked him if it would be
necessary for me to write 8 letter on the subject,
he said it would not be. I have no doubt that some
of the White House uniformed force have gone to him
with their story claiming discrimination against them.
vrs.
Regraded Unclassified
61
COPY
UNITED STATES SENATE
Committee on Military Affairs
June 17, 1943.
Mr. Frank J. Wilson, Chief,
Secret Service,
The White House,
Washington, D.C.
My dear Chief Wilson:
Some very serious charges have been brought to
the attention of my Committee concerning the military
Induction of certain secret service operatives de-
tailed to the White House and their subsequent return
to their duties at the White House.
From information I have before me it appears that
no deferments are being given to the uniformed police
guard at the White House, while on the other hand, some
form of deferment apparently is being extended to the
secret service operatives.
I would appreciate your writing me in detail as
to the policy of your office relative to the inducting
into the military service and the request for defer-
ments on the part of your office for your plain clothes
operatives. I trust that you will write me fully and
in detail concerning this, as my Committee is desirous
of having this information before taking the matter up
with officials of the Selective Service.
Sincerely yours,
(Signed) Robert R. Reynolds
Robert R. Reynolds, Chairman
Senate Military Affairs
Committee.
rrr/dss
Regraded Unclassified
62
June 29, 1943
My dear Senator Reynolds:
I an writing in further reference to your letter of
June 17, 1943, addressed to Chief Wilson of the Secret Ser-
vice, and supplementing my telephone conversation with you
on Friday of last week.
You have been correctly informed that the Treasury
Department is not at this time asking for Selective Service
deferment for any of the uniformed police guard at the
White House. In fact, at the present time, we have no out-
standing deferments at all for officers of the Secret Service
or of the Secret Service uniformed force, nor are any ap-
plications for deferment pending. While both the uniformed
force and the regular operating force of the Secret Service
have been substantially reduced by entry of men into
military service, we are endeavoring to the best of our
ability to maintain efficiency of the service without ask-
ing for deferments. How long it will be possible to con-
tinue that policy, I an not able to state.
with respect to the twenty-five mon who constitute
the White House detail of the Secret Service there is a
different situation. These are the men who have the re-
sponsibility of guarding the President. They are a highly
select force, chosen on the basis of physical and mental
characteristics, as well as experience, for the particular
tasks they have to perform. Their duties, as of course you
are sware, require vigilance, physical alertness, good
judgement, tact and courage. It is extremely difficult to
replace non of their special qualifications. Since Pearl
Harbor, however, W have had to replace fifteen of them who
entered the military services. To had arrived at a point
where, in our opinion, the responsibilities with which they
are charged would be gravely menaced if we permitted further
depletions in the force.
The process of asking repeated deferments would
create uncertainties unfair to the men themselves and ac-
cordingly a special arrangement was made through the Secre-
tary of War by which these twenty-five men are being
Regraded Unclassified
63
- 2 -
inducted into military service and released on special
furlough only for the purpose of discharging their mission
of guarding the President. Of the twenty-five, twenty al-
ready have been so inducted, the induction of the remaining
five having been delayed for receipt of papers from draft
boards in remote parts of the country.
Sincerely yours,
(Signed) Herbert K. Gaston
Herbert E. Gaston
Assistant Secretary of the Treasury
The Honorable Robert R. Reynolds
Chairman, Senate Military Affairs Committee
United States Senate
Washington, D. C.
HEG
of
Regraded Unclassified
64
July 1, 1943
Harry White
Secretary Morgenthau
Is this a man I can, or should, make use of?
Franched
Clipping from TIME (Business & Finance Section) re
Economist Henry Calvert Simone, associate professor
of economics at Chicago Univ.
Regraded Unclassified
65
TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
Press Service
Thursday, July 1, 1943.
No. 37-32
The Secretary of the Treasury, Henry Morgenthau, Jr.,
and the Charge d'Affaires of Cuba, Dr. Jose T. Baron, to-
day extended for two years beyond June 30, 1943, the agree-
ment under which the Government of the United States under-
takes to sell gold to the Government of the Republic of
Cuba. The agreement provides that payment may be made
within one hundred and twenty days after delivery of the
gold, provided that the unpaid-for amount of gold shall
not at any time exceed $5,000,000.
The agreement which was extended today evidences the
close cooperation that exists between the Treasuries of
the Republic of Cuba and the United States, and will en-
able the Cuban Treasury to carry out operations designed
to stabilize the Cuban peso-United States dollar rate of
exchange.
The agreement has been in operation since July, 1942,
and has proved tc be very effective.
-000-
Regraded Unclassified
66
TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
Press Service
Thursday, July 1, 1943.
No. 37-33
The following joint statement is made by Secretary
Morgenthau and by C. E. Alfaro, Ambassador of the Repub-
lic of Ecuador:
The Stabilization Agreement of 1942 between
the United States and Equador, under which the
United States Stabilization Fund undertakes to
purchase Ecuadoran sucres to the amount of $5
million for the purpose of stabilizing the United
States dollar-Ecuadoran sucre rate, has been ex-
tended today for & period of one year beyond
June 30, 1943. The Agreement also provides for
periodic conforences among representatives of
the two Treasuries.
The extension of the 1942 Agreement is in
accord with the policy of the Ecuadoran and the
United States Treasuries of maintaining the eta-
bility of the rate of exchange between the cur-
rencies of the two countries. In so doing, the
foundation for stable economic and financial
relations between Ecuador and the United States
#
maintained,
The extension of this Agreement was signed
for Ecuador by Mr. C. E, Alfaro, Ambassador of
the Republic of Ecuador.
-000-
Regraded Unclassified
67
TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
Press Service
Thursday, July 1, 1943.
No. 37-34
The following joint statement 18 made by Secretary
Morgenthau and by Thor Thore, Minister of Iceland:
The Stabilization Agreement of 1942 be-
tween the United States and Iceland, under
which the United States Stabilization Fund
undertakes to purchase Icelandic krona to the
amount of $2 million, for the purpose of
stabilizing the United States dollar-Icelandic
krona rate of exchange, has been extended to-
day for of period of one year beyond June 30,
1943. The Agreement also provides for per-
iodic conferences among representatives of the
two countries.
The extension of the 1942 Agreement is in
accord with the policy of the Icelsndic Ministry
of Finance and the United States Treasury of
maintaining the stability of the rate of ex-
change between the currencies of the two coun-
tries. In 80 doing, the foundation for stable
economic and financi relations between
Iceland and the United States 18 maintained.
The extension of this Agreement was signed
for Iceland by Mr. Thor Thors, Minister of
Iceland.
-000-
Regraded Unclassified
68
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE
Secretary Morgenthau
JUL 1 1943
TO
FROM
J. J. O'Connell and J. W. Pehle
Dr. Mahun Goldman and Mr. James Wise of the American Jewish
Congress called to discuss in a preliminary way a comprehensive
plan involving primarily the evacuation of Jews from Rumania.
There are some indications that certain government officials
in Rumania can be bribed, at & cost of approximately $170,000,
to permit the evacuation of almost 70,000 Jews from Rumania.
These funds would be paid to the Rumanian officials in local cur-
rency by well-to-do Rumanian Jewish merchants who have been able
to conceal their resources, who would be reimbursed either in
dollars or Swiss francs to be held in trust for them until after
the war. The entire operation would be directed from Switzerland
by an agent of the World Jewish Congress who in turn would work
through underground channels with prominent members of Jewish
communities in Rumania.
The American Jewish Congress has already discussed the
proposal in general terms with representatives of the State De-
partment. The program involves extremely difficult implications
which will need to be canvassed very carefully within the Treas-
ury, and with other interested Government departments, particular-
ly State. Reduced to concrete Treasury considerations, the pro-
gram presents the basic question of whether we shall permit
American funds to be used for the purpose of purchasing Rumanian
currency from wealthy Rumanian merchants in order to facilitate
the evacuation, even though the dollars would be blocked. The
financial arrangements involved, particularly the ransom aspect,
are very troublesome. Similarly, the extensive communication
with enemy territory necessary to carry out the program is
contrary to all existing policies in these matters.
The proposal is being studied and further information obtained
and we will keep you advised of further developments.
Mor
Regraded Unclassified
69
TREASURY DEPARTMENT
OFFICE OF THE SECRETARY
July 1, 1943
IONFIDENTIAL
Received this date from the Federal Reserve
lank of New York, for the confidential informa-
ion of the Secretary of the Treasury, compila-
ion for the week ended June 23, 1943. showing
lollar disbursements out of the British Empire
and French accounts at the Federal Reserve Bank
f New York and the means by which these expendi-
ures were financed.
Inet.
& mB
Regraded Unclassified
70
C
0
P
Y
FEDERAL RESERVE BANK
OF NEW YORK
June 30, 1943
CONFIDENTIAL
Dear Mr. Secretary: Attention: Mr. H. D. White
I am enclosing our compilation for the week
ended June 23, 1943, showing dollar disbursements out
of the British Empire and French accounts at this bank
and the means by which these expenditures were financed.
Faithfully yours,
/s/ L. W. Knoke
L. W. Knoke,
Vice President.
The Honorable Henry Morgenthau, Jr.,
Secretary of the Treasury,
Washington, D. C.
Enclosure
Regraded Unclassified
ALYSIS or CANADITAN AND AUSTRALIAN ACCOUNTS
(Dr liens of Dollars)
BANK
OF
CANADA (and Canadian Government)
COMMER The BARK OF
DEBITS
CREDITS
DEBITS
CREDITS
Transfers
Transfers from Official
Transfers
to
Proceeds
British A/C
Net Incr.
to
Proceeds
Net Incr.
Official
of
(+) or
Official
of
(+) or
PERIOD
Total
British
Others
Total
Gold
For Own
For French
Other
Decr.(-)
Total
British
Other
Total
Gold
Other
Dec. (-)
Debite
A/C
Debits
Credits
Sales
A/C
A/C
Credits
in $ Punds(d)
Debits
A/C
Debita
Credits
Sales
Credits
in $ Funds(d)
First year of war (a)
323.0
16.6
306.4
504.7
412.7
20,9
38.7
32.4
+ 181.7
31.2
3,9
27.3
36,1
30.0
6.1
+ 4.9
War period through
December, 1940
477.2
16.6
460.6
707.4
534.8
20.9
110,7
41,0
+ 230,2
57.9
14,5
43.4
62,4
50.1
12.3
+ 4.5
Second year of war(b)
460.4
-
460.4
462.0
246.2
3.4
123.9
88.5
+ 1.6
72.2
16.7
55.5
61.2
62.9
18,3
+ 9.0
Third year of war (c)
525.8
0,3
525.5
566.3
198,6
7.7
-
360.0
+ 40.5
107.2
57.4
49.8
112.2
17.2
95.0
-
1942
Sept. 3- Sept. 30
46.3
-
46.3
53.6
13,2)
-
-
40.4
+ 7.3
28,0
20,5
7.5
18.1
-
18,1
- 9.9
Oct. 1- Oct, 28
44.9
-
44.9
51.5
16.6
71
-
-
34.9
+ 6.6
14.3
12.0
2.3
14.6
-
14.6
+ 0.3
Oct. 29 Dec. 2
56.5
-
56.5
80.8
14.4
-
-
66.4
+ 24.3
10.2
5,5
4.7
9.4
-
9.4
- 0.8
Dec. 3- Dec. 30
48.2
-
48,2
43.9
2,9
-
-
41.0
- 43
14.1
B.O
6.1
11.7
-
11,7
- 2.4
1943
Dec. 31 - Feb. 3
52.5
-
52.5
217.1
-
125.0
-
92.1
+ 164.6
16.2
8.0
8.2
17.3
-
17.3
- 1.1
Feb. 4- Mar. 3
35.1
-
35.1
101.2
-
37.7
-
63.5
+ 66.1
15.9
15.0
0.9
16.0
-
16,0
+ 0.1
Mar, 6- Mar. 31
36.2
-
36.2
51.6
-
-
e
51.6
+ 15.4
7.1
5.0
2.1
6.7
-
6.7
- 0.6
Apr. 1 - Apr. 26
29.0
-
29.0
39.6
-
-
-
39.6
+ 10.6
16.4
15.1
1.3
19.3
-
19.3
+ 2.9
Apr. 28 June
2
79.9
-
79.9
95.8
-
-
-
95.8
+ 15.9
21.8
19.0
2.8
,20.1
-
20.1
- 1.7
WEEK ENTED:
June 2
7.8
-
7.8
16.6
.
.
-
16.6
+ 8.8
3.8
3.0
0.8
0,4
-
0,4
-
9
7.6
-
7.6
35.8
1
-
-
35.8
+ 28.2
15.0
15.0
-
18.3
-
18.3
+
16
17-3
17.3
14.6
-
-
-
-
14.6
- 2.7
4.0
4.0
-
0.1
-
0,1
- 3.9
23
9.0(+)
-
9.0
10.3(e)
-
-
-
10.3(f
1.3
-
-
-
0.3
-
0.3
+ 0.3
Average Neckly Expenditures
First year of war
6,2 million.
(a) For monthly breakdown see tabulations prior to April 23, 1941.
Second year of war
8.9 million.
(b) For monthly breakdown see tabulations prior to October 8, 1941.
Third year of war
10.1 million.
(c) For monthly breakdown 500 tabulations prior to October 14, 1942.
Fourth year of war (through Juna 26, 1943)
8.8 million.
(d) Reflects changes in all dollar holdings payable on demand or maturing in one year.
(e) Does not reflect transactions in short term U. 5. securities.
(f) Includes $ 8.8 million deposited by War Supplies, Ltd. é $1.3 million
received from N. Y. accounts of Canadian chartered Bk.
Regraded Unclassified
ANALYSIS OF BRITISH AND FRENCH ACCOUNTS
(In Millions of Dollars)
Week Ended June
BANK OF ENGLAND (BRITISH GOVERNMENT)
BANK OF FRANCE
DEBITS
CREDITS
Gov't
Transfers to
Proceeds of
Transfers
Net Incr &
Net Incr. (+)
PERIOD
Expendi-
Official
Sales of
from offi-
Other
or Decr.(-)
Total
Total
or Decr. (-)
Total
tures
Canadian
Other
Total
Securities
rial Aus-
tralian
Credits
in $ Funds
Debits
Credits
in $ Funds
(Official)
Debits
(a)
Account
Debits
Credits
Gold
(b)
Account
(c)
(d)
(e)
(e)
(d)
First year of war (g)
1,793.2
605.6
20.9
1,166.7
1,828.2
1,356.1
52.0
3.9
416.2
+ 35.0
866.3(f)
1,095.3(f)
+299.0
War period through
1,425.6
1,335.8
2,793.1
2,109.5
108.0
14.5
561.1
+ 10.8
878.3
1,098.4
+220.1
December, 1940
2,782.3
20.9
Second year of war (h)
2,203.0
1,792.2
3.4
407.4
2,189.8
1,193.7
274.0
16.7
705.4
- 13.2
38.9
8,8
- 30.1
Third year of war (i)
1,235.6
904.8
7.7
223,1
1,361,5
21,8
5.5
57.4
1,276.8
+125.9
18.5
4.4
- 14.1
1942
Sept. 3 - Sept. 30
56.1
37.1
-
19,0
81.6
-
0.5
20.5
60.6
+ 25.5
10,1
0,4
- 9.7
Oct, 1 - Oct, 28
46.7
27.4
-
19.3
57.5
-
.
12.0
45.5
+ 10.8
-
0.3
+ 0.3
Oct. 29.- Dec. 2
96.6
35.5
-
61,1
83,7
-
-
5.5
78,2
- 12,9
0,2
0,3
+ 0,1
Dec. 1963 3 - Dec, 30
30.4
13.3
-
17.1
51.9
-
8,0
43.9
+ 21.5
-
-
-
-
Dec. II- Feb. 3
168.6
20.4
125.0
22.7
58.9
-
-
8,0
50.9
-109.7
-
-
-
3
87.2
17.8
37.7
31.7
120.8
15.0
105.8
+ 33.6
-
-
-
Feb. 4- Mar.
-
-
Car. 4- Har. 31
35.3
12,9
-
22.4
64.4
-
-
5.0
59.4
+ 29.1
-
-
-
Apr. 1- Apr. 25
37.0
16.3
-
20.7
87.4
-
-
15.1
72.3
+ 50.4
-
-
-
74.3
16.1
103.4
19.0
84.4
+ 1300
-
-
-
Apr. 29 June 2
90.4
-
-
-
WEEK KNDED:
June 2
-
3.0
9.3
+ 7.3
-
-
-
5.0
2.4
-
2.6
12.3
-
12.4
3.0
-
9.4
41.2
-
-
15.0
26.2
+ 28,8
-
-
-
9
6.7
3.2
3.5
32.0
-
-
4.0
28.0
+25.3
-
-
-
16
-
1.9
-
4.0
38-36JD
.
-
-
38.3(J)+ 32.4
-
-
-
23
5.9
Average Weekly Expenditures Since Outbreak of War
See attached sheet for footnotes.
France (through June 19, 1940) $19.6 million
England (through June 19, 1940) $27.6 million
England (June 20, 1940 to March 12, 1941) $54.9 million
England (since March 12, 1941)
$22.3 million
Regraded Unclassified
(a) Includes payments for account of British Ministry of Supply Mission, British Supply Board, Ministry of Supply Timber
Control, and Ministry of Shipping.
(b) Estimated figures based on transfers from the New York Agency of the Bank of Nontreal, which apparently represent the
proceeds of official British sales of American securities, including those effected through direct negotiation. In addition
to the official selling, substantial liquidation of securities for private British account occurred, particularly during the
early months of the war, although the receipt of the proceeds at this Bank cannot be identified with any accuracy. According
to data supplied by the British Treasury and released by Secretary Morgenthau, total official and private British liquidation
of our securities through December, 1940 amounted to $334 million.
(c) Includes about $85 million received during October, 1939 from the accounts of British authorized banks with New York banks,
presumably reflecting the requisitioning of private dollar balances. Other large transfers from such accounts since October,
1939 apparently represent current acquisitions of proceeds of exports from the sterling area and other accruing dollar
receipts.
(d) Reflects net change in all dollar holdings payable on demand or maturing in one year.
(e) For breakdown by types of debits and credits see tabulations prior to March 10, 1943.
(f) Adjusted to eliminate the effect of $20 million paid out on June 26, 1940 and returned the following day.
(g) For monthly breakdown see tabulations prior to April 23, 1941.
(h) For monthly breakdown see tabulations prior to October 8, 1941.
(1) For monthly breakdown see tabulations prior to October 14, 1942.
(j) Includes: 215.4 million apparently representing current : accumulated dollar proceeds of sterling area services 4 merchantise asporte
43.0 =illion transferred from Reserve Bank of liow Zealand account at this bunk
Regraded Unclassified
74
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE
TO
Secretary Morgenthau
July 1, 1943
FROM Frances McCathran
TROVERSIAL ISSUES BEFORE CONGRESS
Controversial Issues before Congress today is still
story of appropriation bills, several of which managed to get
in under the fiscal year deadline last night. The majority,
bowever, are now tied un in conference SQ tightly that chances
for A Congressional recess this Saturday are rapidly fading.
Ivo bills which managed to jump the Congressional hurdles are:
1. Commodity Credit Corporation Extension Bill - Although
passed overwhelmingly by both houses of Congress, a
Presidential veto is predicted for this measure because
of its stringent anti-subsidy rider upsetting the Adminis-
tration's whole price rollback program.
2. War Department Appropriation Bill - Despite charges of
extravagance and weste from various Senators, small
differences in this bill were easily ironed out by joint
conferees and the measure headed for the White House where
it is expected to receive early approval.
nost of the major acoropriation bills before Congress, however,
OIR sent to conference with differences between the two houses
seemingly irreconcilable. Among these stalemated measures are:
1. War Agencies Bill - House conferees are not expected to
accent Senate changes made in this measure yesterday,
granting the full amount requested for OPA, and funds for
a modified domestic orogram for OWI, although regional
offices were sharply cut. Another highly controversial
amendment soonsored by Senator McKellar would exclude
Dayment of salaries to any employee of the 16. Federal
agencies included in the bill, earning more than $4,500
and not appointed by the President and amoroved by the
Senate. This is similar, of course, to the McKellar
Bill previously passed by the Senate and sent to the
House, spplying the same regulations to all Federal em-
ployees.
Regraded Unclassified
75
2. Urgent Deficiency Bill - The President's Emergency Funds
and overtime pay for most Federal employees are being
held up in this bill because the Senate refuses to bow
to an equally determined House on the House amendment
banning use of the bill's funds for payment of the salaries
of Goodwin B. Watson and William E. Dodd of the FCC and
of Robert Mores Lovett of the Interior Department, all
three accused of subversive activities by the House Kerr
Committee, frequently charged with prejudice.
3. Agriculture Aopropriation Bill - This measure headed back
to the conference room yesterday with House refusal to
recede from a provision abolishing the Federal Crop
Insurance Program. The House did accept, however, a con-
ference compromise permitting incentive payments for
1944 but barring further commitments.
Labor-Federal Security Bill - Only major difference in
this measure is House insistence on the liquidation of
the NYA, which the Senate voted some 48 million dollars.
House conferees, however, agreed last night to take the
measure back to their chamber for a record vote which
Senate observers predict will accede to their provisions,
Regraded Unclassified
76
THE WHITE HOUSE
WASHINGTON
July 1, 1943.
Dear Mr. 3ecretary:
Some time back you made 4 speech in San Francisco in
which you read A telegram you had received from Chiang Khi-shek
which tended to attribute certain Japanese atrocities to
retaliation for the Doolittle raid. I had not heard of this
angle, so I checked with G-2. They in turn checked with their
people in Chine, who replied that, so far as they knew, the
atrocities were the usual concomitants of Japanese raids and
yers not linked in any particular way with Doolittle.
A few days later the Associated Press carried a story
quoting e Father Yager to the effect that the Japanese had
retuliate! for the Doolittle raid by slaughtering thousands
of Chinese. G-2 has just interviewed Father Yager and informs
me as follows:
1. In answer to specific questions Father Yager
statei that there is no specific evidence to connect the
destruction and massacre in these towns with the fact that some
of DoolIttle's men were sheltered there, except that the
Jajenese did inquire of everyone in an attempt to get information
regarding the American fliers.
2. Father Yager state! that his article as originally
written did not indicate that the raid WELD carried out in an
attempt to punish individuals for assisting the American fliers.
He stated that he was sorry that the newspapers had exaggerated
and misinterpreted his statements.
None of this is very important, but I thought you might
like to be reassured that our raid did not cause the death or
torture of thousands of innocent Chinose.
Sincerely yours,
Land Come Lauchlin Currie
Honorable Henry Morgenthau, Jr.,
Secretary of the Treasury,
Washington, D. C.
Regraded Unclassified
77
NOT TO BE RE-TRANSMITTER
COPY NO. 13
BRITISH MOST SECRET
U.S. SECRET
213
SECRETARY 1. OF OFFICE TREASURY
Information received up to 7 Ash,, 1st July, 1943.
AM
AIR OPERATIONS
July
ASURY PARTMENT
WESTERN FRONT. 30th. Fighters damaged 22 locomotives in
Nor thern FRANCE and BELGIUM.
ITALY. 28th/29th. Heavy bombers dropped 16 tons on
REGGIO.
SICILY. 27th/28th, and the following night, Wellingtons
dropped a total of 121 tons on MESSINA. On 29th, 31 escorted Spitfires
bo bed COMISO airfield.
BURMA. 28th. Our medium bombers dropped 9 tons on objectives
at SAGAING near MANDALAY and 9 tons on railway yards at PYINMANA, 200 miles
North of RANGOON.
29th. 12 bombers successfully attacked Japanese water
transport in the AKYAB and RAI.REE areas.
RUSSIA. 28th/29th. Rustrian bombers effectively attacked
railway junctions at OREL and KARACHEV.
OPTEL NO. 210.
SUBMARINE WARFARE. Corrupt Section.
"without loss. Week ending 23rd in all theatres, 29
attacks on U-boats of which 19 by aircraft. Of four promising attacks
one was by H.L. Submarines, 2 by U.S. Aircraft and one by R.A.F. Aircraft.
Coastal Command flew 256 Sorties on Anti-submarine operations, made 27
sightings and 10 attacks. One of H.L. Sloops and ships of 2nd Support
Group sank 2 Submarines on 24th in BAY OF BISCAY. 15 survivors seen in
the sea
If
Regraded Unclassified
78
78
July 2, 1943
9:27 a.m.
Breckin-
ridge Long: Henry?
HMJr:
Yes, Breck.
=
How are you?
HMJr:
I'm all right.
L:
Henry, Mr. Hull 1e writing you a letter and it was
thought that I might call you up and tell you -
and talk to you a minute about it.
HMJr:
Yeah.
L:
It - under the President's general orders we're
organizing several committees over here for post-war
study
HMJr:
Yeah.
L:
and some of them will affect the Treasury Depart-
ment. In this particular one - the shipping - post-war
study on shipping
HMJr:
Yeah.
L:
does affect it and I - we've - it's under the
jurisdiction of Gaston
HMJr:
Yeah.
L:
and concerns the customs and one thing and
another, and various other angles of the Treasury's
interest
HMJr:
Yeah.
L:
and the suggestion 1s being made that you would
designate Gaston to serve on that Committee to
represent your interests.
HMJr:
I see.
L:
Would that be all right with you?
HMJr:
I don't know. I'd have to find out more about it.
Regraded Unclassified
79
- 2 -
L:
Well - uh -
HMJr:
I mean, I think that I ought to be allowed to pick
my own people if I'm going to be represented.
L:
Why, of course. The only thing is that they made
me chairman of this committee and I've been asso-
ciated with Gaston
HMJr:
Yeah.
L:
on some other work, see, for several - some years
now, as you know
HMJr:
Yeah.
L:
and the thought just occurred that he was - of
course anybody you want to name, of course, it's
only a
HMJr:
Well, it may be all right, but I'd like to look at
it and talk to some of my people
L:
Yeah.
HMJr:
and find out and talk with Gaston.
L:
Yeah. Would you prefer that Gaston's name be not
mentioned in the letter?
HMJr:
oh, I don't care.
L:
Because we can easily do it that way if you prefer.
HMJr:
Well, I think it's Just - uh - it would be courteous
to let me pick my own person.
L:
Why, of course. Well, all right, we'll
....
HyJr:
But it may end up by being Gaston
L:
All right.
HMJr:
but you people do your things your own way over
there - but - uh - let - I don't know what it's all
about. Let me read the letter and let me make some
inquiries.
L:
Yeah. All right. We'll - I just - we won't mention
Gaston then - - we'll just - - I chatted with Gaston the
other day about it - uh - as to whether or not it
would be possible for the Treasury - for him to ser- to
Regraded Unclassified
80
- 3 -
HMJr:
The chances are it may be but it would be easier for
me if 8. letter came over and I talked with Bell and
some of the other people and had a look at it.
L:
Yeah. All right we'll do it that way then.
HMJr:
Thank you.
L:
I'll out him out.
HMJr:
Thank you.
L:
Thank you.
Regraded Unclassified
81
July 2, 1943
9:38 a.m.
HMJr:
Hello.
Robert
Lovett:
Good morning, Mr. Secretary. This 18 Bob Lovett.
HMJr:
How are you?
I:
I'm fine, sir. Thank you. How are you?
HMr:
I'm all right. Look. Two things. I know you've
made a trip and I'd love to hear about it
1:
Yes, sir.
HMJr:
as much 38 you feel that you can tell me. And,
also, I'd like to have the - your air people show
me again what I saw a couple of months ago.
L:
Yes, sir.
HMJr:
Do you remember?
1:
Yes.
HMJr:
Now, how can I do the two things - see you and come
over there in your - I think you call it your "air
room" or - I don't know what you call it
L:
Yes, the "air room". Well, perhape We could combine
the two if you would come to lunch - we could have
this put on right after.
HMJr:
Uh - that's like inviting myself to lunch, but - well,
what could be better?
L:
Oh, no, that's fine. You come along, sir. Now I'll
have to check and find out whether there's any
scheduled meeting in the "air room"
HMJr:
oh, I couldn't do it today.
L:
Well, I mean, let's say the start of next week
HMJr:
Well, could - - - - Hello?
(Remainder of conversation not recorded.)
Regraded Unclassified
July 2, 1943.
82
9:52 a.m.
Thomas
Parran:
Hello, Mr. Secretary. How are you?
HMJr:
Fine. How are you, Tom?
P:
Fine, Henry.
HMJr:
Are you so situated that you can talk a minute or
two?
P:
Yes, indeed.
HMJr:
I was visiting with Mr. Stimson last night and I
brought up the question of the five-day drip cure
for syphilis
P:
Yes.
HMJr:
and I was telling him that Dr. Hyman was our
family doctor and that I was interested in it, and
he said that you had been to see him a couple of
days ago and he had sort of given you a carte blanche
to go ahead.
P:
Yes.
HMJr:
Now, what I was interested in 1s - could - I know
about the Research Council having approved this
within the last two weeks, but how much - to whom
are they going to give this treatment? I mean, if
you could just tell me - how far they've gone.
P:
Well, first, they will give it to the selectees -
uh - just being inducted, who have syphilis.
HMJr:
on, is that right?
P:
Yes. Well, that 18 the group to whom it would be
most appropriate that they give the treatment.
HMJr:
Well
P:
At the present time, they are giving a longer treat
ment. Following my talk with Stimson
HMJr:
Yes.
P:
we agreed that Kirk and I would get together
HMJr:
Yeah.
Regraded Unclassified
83
- 2 -
P:
and work out a program
HMJr:
I see.
P:
and our people are working together right now
HMJr:
Yes.
P:
meeting today
HMJr:
Yes.
P:
people from the Army and Public Health
HMJr:
Yes.
P:
to begin to draw up a program
HMJr:
I see.
el
which will have for its objective first, to
catch up with this back-log of selectees with
syphilis - back-log accumulated in the year and 8.
half or go before the Army would take any of them.
HMJr:
Yes.
P:
And the objective is to try to speed up the induction
of the syphilitics and also to speed up our work
with those not - who are, otherwise, not eligible
for Army service.
HMJr:
Uh - and that will be the five-day drip?
P:
We haven't gone far enough to know which of these
several rapid methode of treatment may be the best.
HMJr:
I see.
P:
Even the one-day combination of heat and arsenic
seems to be very promising.
HMJr:
I see.
P:
And there's another ten-day multiple injection that
also looks promising.
HMJr:
I see.
in
Then, finally, a six weeks' period. We're running
tests on each of them. It will be a few months
Regraded Unclassified
84
- 3 -
P:
(Cont'd)
before we will know the relative danger and the
relative efficacy of them.
HMJr:
Well, Stimson said if I'd call him today to remind
him, he'd send for his Surgeon General, General what's-
his-name?
P:
Kirk.
HMJr:
Kirk?
P:
Right.
HMJr:
And to find out just what progress they were making
P:
I think that's a very good idea.
HMJr:
and he said if I'd call him up to remind him, he'd
do it.
P:
Very good.
HMJr:
Now, would it be asking too much, after you've got
a program-what you're going to do - would - to drop
over and maybe have lunch and we'd go over it together?
P:
I'd be delighted to do that, Henry.
HMJr:
Because, I'm quite interested in it.
P:
I shall be delighted to do it
HMJr:
Well, would
P:
a week or ten days before we get our plans
worked out.
HMJr:
Well, when you're ready, would you give me a ring?
P:
I certainly shall.
HMJr:
And, I'm going to call Stimson now to remind him to
send for Kirk on this subject.
P:
All right.
HMJr:
Evidently something has happened and Stimson seems
interested now.
e:
The President was much interested when I talked with
him about two weeks ago
Regraded Unclassified
85
- 4 -
HMJr:
He was?
P:
And he asked me to see Stimson.
HMJr:
I 800.
P:
He really initiated it.
HMJr:
Well, it came up in Cabinet..
P:
Yes.
HMJr:
and that's - and nobody really seemed to know
much about it - I think that they ought to be
educated.
P:
Very good.
HMJr:
Well
P:
We can count on you to help do that.
HMJr:
I'd be glad to.
P:
All right, Henry.
HMJr:
Then I'll hear from you in a week or ten days?
P:
You certainly will.
HMJr:
Thank you.
P:
Thanks, very much.
Regraded Unclassified
86
July 2, 1943
10:04 a.m.
Lt.Col.
Wright:
Hello.
HMJr:
Colonel Wright?
W:
Yes, sir.
HMJr:
This is Mr. Morgenthau.
W:
Yes, sir.
HMJr:
Last night I was visiting with Mr. Stimson
W:
Yes, sir.
HMJr:
and I said I'd cell up to remind him to send
for Surgeon General Kirk
W:
Yes, sir.
HMJr:
to talk to him and find out what progress he
made in his talks with Dr. Parran
W:
Yes, sir.
HMJr:
on these various methods for treatment of
syphilis.
W:
Yes, sir. Well, I think the Secretary is seeing
the - General Kirk now because he's in his office.
HMJr:
Well, then
W:
I'll remind him to take up the Parran syphilis
thing.
HMJr:
That's - he may have remembered it himself, but he
asked me to remind - maybe he's - but that's what
he wanted
W:
I see.
HMJr:
Kirk and Parran have been together and they are
working out a program
W:
Yes, sir.
HMJr:
and Mr. Stimson said he would
W:
Well, thank you very much for calling, Mr. Secretary,
and I'll remind Mr. Stimson of it right away.
Regraded Unclassified
87
- 2 -
HMJr:
They're in there now?
W:
Yes, sir, they are.
HMJr:
You go in.
W:
Yes, sir, I shall.
HMJr:
Thank you.
W:
All right, sir.
HMJr:
'Bye.
W:
'Bye.
Regraded Unclassified
88
July 2, 1943
10:29 a.m.
Operator:
Go shead.
MMJr:
Hello.
San
Rayburn:
Henry?
HMJr:
Yes, Sam.
R:
Uh - there is an order that's come out
HMJr:
Yeah.
R:
uh - it has to do with this T.F.R. 500
HMJr:
Yesh.
R:
that's with reference to - I'm sure you remember
HMJr:
I know - foreign investments.
Yeah. Now, I don't hear any kick about it especially,
but we're trying to get away from here
HMJr:
Yeah.
R:
until about the thirteenth of September
4MJr:
Yeah.
R:
and I see the dead line on this thing is August
the thirty-first.
HMJr:
Yeah.
R:
Well, now if we get away from here, our constituents
will be clawing us to pieces, uh - while we're away and
writing in here and we'll be lost 'n everything like
that. Some of the boys suggested that - that it would
be much better
HMJr:
Yeah.
R:
for them if that dead line was moved forward 8.
little.
4MJr:
How much?
R:
Well, (Talks aside: "Charlie, what would you think
?)
Regraded Unclassified
89
- 2 -
R:
(cont'd)
Well, November the first or thirtieth - something
like that - give the fellows a couple of months to
come back here and work at 1t.
HMJr:
Well, what would you like - November first?
R:
I think November first would be all right. Uh -
that's about six weeks after we get back here.
HMJr:
Sold to American Tobacco!
R:
(Laughs) Henry, thank you.
HMJr:
How's that?
R:
That's fine.
HMJr:
Ig that quick enough?
R:
You bet.
HMJr:
Is that all right?
R:
Yeah.
HMJr:
What?
R:
That's quick enough.
HMJr:
Look. It's postponed until November first.
R:
All right. Fine.
HMJr:
Anything else?
R:
That's all, Henry.
HMJr:
Wonderful.
R:
Thanks.
Regraded Unclassified
July 2, 1943
90
2:02 p.m.
HMJr:
Roy.
Roy
Blough:
Yes, Mr. Secretary.
HMJr:
Two things. I may went you to come up to New York
Monday and sort of be in - around when I have a
chance - when I can't see Mrs. Morgenthau - to talk
with me, you see?
B:
All right.
HMJr:
Would that interfere with your plans?
B:
No, not at all.
HMJr:
Well, then I'll tell you - supposing you're available
at the hospital there - Doctors Hospital - Mrs.
McHugh can tell you how to get there. She's en expert.
B:
All right.
HMJr:
And
B:
Monday morning?
HMJr:
About ten o'clock.
3:
Ten o'clock, Monday morning.
HMJr:
Come armed with the stuff, will you?
by
All right, I'll have everything.
HMJr:
Now, here's the thing that I got which is maybe
absolutely cock-eyed but I want you to think about it.
B:
All right.
HMJr:
These plants- after the war - the very earliest any of
them could get to working would be six months.
B:
A lot of them - that's true.
HMJr:
What?
B:
That's true for those doing war materials.
HMJr:
I want to go back to the idea of the dismissal wage -
and - but with a new wrinkle - you know we worked on
that once before.
Regraded Unclassified
91
a I I
in
Yes.
HMJr:
The wrinkle being - oh, maybe - let's take 25% of the
increased wages that a man or woman has gotten - uh -
over some base period
3:
Uh huh.
HMJr:
and put that 1: - a dismissal wage until they
have accumulated - uh - well, let's say twelve months
at whatever would be a reasonable price. See?
B:
Uh huh.
HMJr:
And give them non-interest bearing certificates for it.
B:
Yes.
HMJr:
You know I've been after you fellows and you've never
come through with a plan to tax the man who gets the
increased wages. You see, you all say it can't be
done.
B:
Well, we have some plans
HMJr:
What?
Bi
We have some plans
HMJr:
Well, by God, you haven't shown them to me. All you
fellows can think of 1s compulsory savings.
B:
(Laughe)
HMJr:
You've just got one-track minds.
B:
(Continues to laugh)
HMJr:
That little squib in the Wall Street Journal-1t said
there are only three people in Washington who were
still for the volunteer plan: Mr. Roosevelt, Mrs.
Roosevelt and Mr. Morgenthau - everybody else in
Washington 18 for the compulsory.
B:
Well, I don't believe that.
HMJr:
Well, anyway. I am thinking of the dismissel wage to
these fellows enough to give them - say - twelve
months
B:
Yeah.
Regraded Unclassified
92
- 3 -
HMJr:
at - oh, some reasonable figure per week
B:
Uh huh.
4MJr:
with non-interest bearing certificates, taking
all the increase - the top - if you started with just
the overtime
B:
Yes.
HMJr:
if you started with just taking the overtime to
put in the dismissal wage
ai
Uh - did you see - uh - there's an article in the New
Republic
HMJr:
Yeah.
B:
this last week on that.
HMJ:
No, I didn't see the New Republic.
B:
It's a - it's a growing idea and I think you really
have something, Mr. Secretary.
HMJr:
Well, it's entirely original with me - uh - and it
comes to me that - thinking about - I'm beginning to
realize how many people will be out of work the day
we sign the Armistice.
9:
Right.
HMJr:
Now, we'll have chaos - now - if we could think up
some good dismissal wage - maybe start with the
overtime
B:
Yes.
HMJr:
and establish that - then, maybe, E° P little bit
further Now that would bank an awful lot on savings.
B:
A great deal - it certainly would.
HMJr:
And it sounds a great deal better to me.
B:
Let ne have something for you on that by Monday - if
you'll give me that much time.
HMJr:
Yesh. I - I won't talk to you before Monday.
Regraded Unclassified
93
- 4 -
B:
All right.
HMJr:
And, as I say, Mrs. McHugh can tell you where the
hospital is and you show up there about ten o'clock
and just wait for me.
B:
I'll be there at ten o'clock Monday morning.
HMJr:
Do you like this idea?
B:
I do. We've been giving some thought to dismissal
compensation. I think this has excellent possibil-
ities.
HMJr:
Well, I'm glad that you think - now, I got it last
night walking home with Kades and I was trying to
explain to him what I want him to do and I thought
of this.
B:
Yes.
HMJr:
He doesn't get credit for this idea. I do. He's
eitting here.
B:
(Laughs)
HMJr:
You're not on the loud speaker though.
B:
(Continues to laugh.)
HMJr:
You're not on the loud speaker.
B:
All right.
HMJr:
All right. He's getting - he had lunch with Marvin
Jones and Marvin Jones told him he was a great guy
and I'm afraid he's going to outgrow his uniform.
B:
(Laughs)
HMJr:
All right.
B:
Thank you, Mr. Secretary. I'll have the stuff.
Regraded Unclassified
94
July 2, 1943
My dear Mr. President:
I thought this little squib
from the Wall Street Journal would
amuse you. I love the company they
put me in.
Sincerely yours,
(Signed) Henry
The President,
The White House.
File in Diary.
Sent
agent
Regraded Unclassified
95
THE WALL STREET JOURNAL
JUL 22 1943
Washington Wire
WHAT IS RECRET! British and U, R
officialdom don't agree on terminology. A
Washington report marked "secret" Le the
equivalent of a London stamp "most secret.'
A Special Weekly Report from
The British label a document "secret" when
The Wall Street Journal's
Americans call the same one "conddential."
But U. B. "restricted" equals U. K. "con-
Capital Bureau
fidential." For reports interchanged by the
two governments, both U. S.-British terms
are used.
DRAFT UNCERTAINTY-Which in com-
National Press Building
Washington, D. c.
mon" enough-was increased recently by
stories saying fathers might not be called
PEACE PRODUCTION report on taper-
at. all. Officials say that's wrong. We've
Ing off munitions-making has litt Nelson's
been told again the armed forces have not
desk.
lowered their manpower goal (10.5 million)
Induction of fathers is being delayed se long
Fat (40-odd pages) and limited in circu-
as possible. But they shouldn't think Uncle
lation (100 copies), It forefells W.P.B.'s rold
Sam has forgotten them.
on "D" (demobilization) Day. Bignificance:
FORCED SAVINGS have only three im-
W.P.B. will become P.P.B., outlest the war.
portant foes: Mr. Roosevelt, Mrs. Roosevelt
Author is Ernest Kanzler, a Nelson confi-
and Mr. Morgenthau. Most everyone else in
dant. He figures the switch from all-out
Washington is ready to toes overboard the
war production will be in two stages: The
voluntary war bond drive and put savings on
first beginning when Hitler's whipped; the
a compulsory basis. If the Administration
gave the nod, & forced savings bill would
aecond, when the Pacific war ends,
whis through Congress.
Army-Navy chiefs warn It's too soon to
think of slackening war production. But
W.P.B. WHIMSY-A maker of turkey liver
both services are starting post-war studies
sandwich spread asked W.P.B. for materials,
of their own. S.E.C. also is horning in with
prajeed it for its kind treatment. Nelson sent
a study of post-war industry reserves.
his "thank you" note to all subordinates. A
rubber company received a peevish letter from
ROOSEVELT'S TROUBLES on the home
the W.P.B. complaining about the small out-
front are bigger than he seems to think.
put of aqueegees (rubber-edged window
He still pays scant attention to domestic
cleaners), replied tartly, "we too look forward
matters, exasperating his advisers and close
to the day when we can produce more and
associates. He has blown hot and cold on
better squeegeea."
the forced savings issue. He showed in-
RAILROADS THREATEN to bypass
terest in partitioning O.P.A., then promptly
O.D.T. and W.P.B. on requests for new roll-
forgot it. He knew Wallace was going to
blast Jesse Jones, but made no effort to
ing stock. Their plan: Tell the Army-Navy
what they need, let them Include rail require-
stop it.
ments in their munitions programs.
There's some suspicion he keeps his hands
off issues at home, with '44 elections in mind.
WAR STRATEGY has Congressmen con-
If his war record La good, he can rest on
fused. One ,military committeeman feels sure
those laurels, and let the blame for home
the European war will end this November.
front fumbling fall on Byrnes & Co.
Another pooh-poohs at major offensive against
The President looks as well as ever. But
Hitler this year. All admit they have lost
he's des a testy mood, his callera in recent
touch with generals and admirals. But all
weeks report.
through Washington suspicions grow that
ANOTHER SLASH for civillan food will
the second front is not due until next year.
usher In 1944.
A MERRIER XMAS for civilians soon will
Estimates for the first half of the year
be promised.
are about to be announced. They'll show
Two weeks age we said the crimp in gen-
a smaller civilian share on several foods,
eral living standards would be pretty deep
chiefly those to be shipped abroad: Canned
by Christmas. Now we learn the Office of
goods, mest. dairy products.
Civilian Requirements plans a relief program
Blame the drop on: (1) The gloomy June 1
-due for unveiling in a fortnight.
crop report, (2) a hike in Government needs.
Getting steel and other critical materials
Feeding Europe will dip into U. S. larder,
will be tough. There's no hope of breaking
European needs are called "unlimited," but
into third quarter materials schedules. Bo
officials will draw the line, gradually, stretch
O.C.R. sets Its sights for the final 1943 quar-
it. Invesion troops will take 50% more than
ter.
they need on home soll,
Expect some surprises on the list of goods
to be made. Some "Important" household
equipment, also some "Irritating" Items, like
hair pins.
Regraded Unclassified
96
Memorandum of a Meeting
in Secretary Morgenthau's Office
July 2, 1943
Present: Secretary Morgenthau
Mr. White
Greek Ambassador
Mr. Varvaressos
Mr. Varvaressos called on the Secretary with the Greek Ambassador
at the Ambassador's request. The Greek Ambassador thanked the
Secretary for all that he had done in helping Greece get dollar assis-
tance for relief which they were now obtaining. Mr. Varvaressos said
that he was here to discuss the International Stabilization Fund pro-
posal which he found extremely interesting, and that he felt that some
proposal of that character was much needed during the post-war period.
Mr. Varvaressos said that he was submitting a memorandum in response
to Secretary Morgenthau's letter on the monetary and price situation
in Greece.
The Ambassador stated that he did not want to take up much of the
Secretary's time but that he wanted him to meet Mr. Varvaressos and
wanted him to know how much his government appreciated the assistance
which the Secretary had granted.
Regraded Unclassified
97
JUL 2. 1943
Excellency:
This is to thank you for your letter of June 18,
1943, referring to Belgian franca notes which have
been deposited with the Bank of England.
I shall be glad to receive from you the
memorandum embodying the ideas of your Government
on the question of rates of exchange on Belgian our-
reney, which you state you will send to as from
London.
Very truly yours,
(Signed) H. Mergenthan, Jr.
Secretary of the Treasury.
Ris Excellency, Camille Outt,
The Minister of Finance,
Kingdom of Belgium,
c/o Bolgian Embasay,
London, England.
Orig. incoming ret. to
Dr. White. Photo of incoming
and copy in Diary.
Sent to the Belgian Smb.,
Wash. D.C., for transmittal
vie Diplo. pouch.
By Messenger Sturgis 4:30p.m.
7/2/43
RDW :dmh
7/1/43.
Regraded Unclassified
E DE BELGIQUE
Washington, June 18, 1943
Dear Mr. Secretary:
I am very sorry to have to leave the United States without
having had the pleasure of meeting you and discussing with you
in person various problems of mutual interest.
I fully realize how difficult and complicated life can be
particularly when personal preoccupations place additional
strain on the official burden of responsibilities already on your
shoulders.
I had the opportunity to discuss certain matters with Mr.
Bell and Mr. Harry White, and shall forward to you shortly from
London a memorandum embodying the ideas of my government on the
question of fixing the rate of exchange of Belgian currency.
Confirming my conversations with Mr. Bell, I wish to advise
you of the fact that my government has deposited with the Bank
of England, in agreement with the British Treasury, for use in
Belgium by any expeditionary force (British or American), an
amount of 750 million Belgian francs in notes. The object of
this is to make available to the military authorities upon land-
ing the amount of Belgian currency required for their expenses.
I plan to return to Washington in August to participate in
the work of the conference which will be held to examine the
Relief and Rehabilitation Draft Proposal that has been submitted
by the State Department to the various governments. I hope at
that time to have the pleasure of seeing you.
Believe me, dear Mr. Secretary,
Yours very sincerely,
The Belgian Minister of Finance:
The Honorable
Henry Morgenthau
3-3
scretary of the Treasury
Washington, D. C.
Regraded
99
July 2, 1943
Harry White
Secretary Morgenthau
I was amazed to learn last night from General Greenbaum
that you had furnished him with a memorandum on conversion
of plants at the end of the war. I have been working on this
myself for some couple of weeks and through Haas' shop, also
with Donald Nelson. Please speak to me about this today,
and let me know how come.
White spake to Hip 9/8/43-
Regraded Unclassified
100
July 2, 1943
Mr. Paul
Secretary Morgenthau
I wonder whether there is some way of your
indicating which memos you send me come directly from
you and which are from Kades. Perhaps you could have
Kades write the memos to you and then you could forward
them with a little covering memorandum to me.
Will do. Ber Banto Has 7/8/43-
Regraded Unclassified
101
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE
July 2, 1943.
TO
Secretary Morgenthau
FROM
Mr. O'Connell
Even though the authority of the Commodity Credit
Corporation as an agency of the United States should
terminate as of June 30, 1943, the purchase and sale
operations and price support measures of the character
carried out by that Corporation could continue to be
carried out with substantially the same effect by
RFC's Defense Supplies Corporation operating under
the direction of the Economic Stabilization Director.
Section 2(e) of the Emergency Price Control Act
of 1942, approved January 30, 1942 (Public Law No. 421,
77th Congress), authorizes the Secretary of Commerce,
with the approval of the President with respect to com-
modities defined as strategic and critical materials by
the President, to buy, sell, store or use such commodities,
and to make subsidy payments to domestic producers thereof,
when it is determined to be necessary to do so in order to
obtain the maximum necessary production. Sales of agricul-
tural commodities under this authority would have to be
made within the limitations of price ceilings imposed by
the Act, as amended, i.e., at not less than parity price
or the highest price between January 1, 1942--September 15,
1942, whichever is higher. Section 2(f) of the Emergency
Price Control Act of 1942, as amended by the Act of
October 2, 1942 (Public Law No. 729, 77th Congress.).
Defense Supplies Corporation has authority to carry
on such operations under section 5(a) of the Reconstruction
Finance Corporation Act, which confers authority upon such
corporation "to produce, acquire, carry, sell, or otherwise
deal in strategic and critical materials as defined by the
President". See Opinion of the Attorney General dated
October 27, 1942, to the Secretary of Commerce.
Regraded Unclassified
102
- 2 -
The term "strategic and critical materials" may
include agricultural commodities. Meat and butter were
thus defined for the purpose of carrying out the price
roll-back program, under which subsidy payments are now
made by the Reconstruction Finance Corporation pursuant
to the authority described above.
Executive Order 9250 of October 3, 1942, authorizes
the Economic Stabilization Director to direct that the
Reconstruction Finance Corporation use its authority to
purchase, sell or subsidize commodities. See section 2
of title V.
Under existing law Commodity Credit Corporation is
required to support prices of agricultural commodities
at 90 per cent of parity price. As to basic commodities,
it is required to make available nonrecourse loans at the
prescribed rates; and it is required to support the price
of nonbasic agricultural commodities at the prescribed
level by loan, purchase or other operation whenever the
Secretary of Agriculture finds it necessary to encourage
the expansion of production. It is doubtful that the
method of nonrecourse loans could be utilized by
Reconstruction Finance Corporation. It should be pos-
sible, however, to realize the same practical effect by
purchase commitments at prescribed price levels or by
subsidy payments.
Regraded Unclassified
103
FOR VELEASE
HOLD FOR RELEASE
HOLD FOR RELEASE
July 2, 1943
CONFIDENTIAL: To be held in STRICT CONFIDENCE and no
portion, synopsis or intimation to be published or
given out until the READING of the President's Mensage
has begun in the House of Representatives, Extreme
care must therefore be exercised to avoid premature
publication.
STEPHEN EARLY
Secretary to the President
TO THE HOUSE OF representatives:
31. R. 2869, to continue the Commodity Credit Corporation as on
agency of the United States, is before me. This measure will become law
only over my strenuous objection and protest.
The Congress is aware of my deep interest in the Commodity Credit
Corporation. It was created by ne under Executive Order issued October 16,
1933 to meet or grave and critical mergancy. It hes proved to be useful
not only in an emergency, but under other conditions. It has an essential
function to perform in our war food production program. It should and
must be continued.
But this is not a bill to continue the Commodity Credit Corpora-
tion. It in a bill to hanstring the Commodity Credit Corporation. It
places now and unwarranted restrictions on the use of its funds and on the
powers heretofore given to the Administration to stabilize the cost of living
These restrictions would prevent our giving to farmors the assistance
they need In carrying out our new food production programs, so essential
to feed our citizens and our soldiers. They would make it impossible for
un to stop the rising cost of living.
As the measure now stands, this is an inflation bill, a high-
cest-of-living bill, a food shortage bill.
There is, for instance, a provision in section 6(a) which prohibits
the establishment of a maximum price for any raw or processed agricultural
commodity which will reflect to the producers thereof a price less than
the support price heretofore or hereafter announced by the War Food
Administrator, or less than the higher of the maximum prices provided in
section 3 of the Act of October 2, 1942,
I have tried to analyse this section and to translate it into
compon senso English. Frankly I do not know what it means.
If the provision morely means that If the support price is higher
than the naximum price established under the Act of October 2, 1942, the
commodity must be purchased from the producer at the support price or the
farmer must be paid the difference between the support price and the maximum
price, the provision would serve no purpose. That is now, as I understand
it, the law.
If on the other hand, despit language which looks the other way,
the provision were construed to mcan that the maximum price must be fixed
so as to yield to the producer the support price without the payment of
any subsidy, the provision would require the immidiate upward adjustments
in the ceiling prices for many basic food products. Prices for dry odible
boans, cheese, canned vegotables, sugar, and, in some markets, fluid milk
would immediately go up because the support prices for these products are
higher than their present ceiling prices.
If the provision were so construed, it would not only immediately
increase the cost of living but it would nake It impossible for us to adopt
support programs needed to increase production without causing a still
further rise in the cost of living. Undoubtedly if MG must in each case
weigh the advantages of a support program against the disadvantages of an
increase in the cost of living, sany support programs which might otherwise
be adopted will be rejected, and other support programs, although finally
adopted, will inevitably be delayed.
Regraded Unclassified
104
- 2 -
Section 6(b) of the bill prohibits, with specified exceptions,
the naking of any subsidy or other payment other than those which have
accrued prior to August 1, 1043, if such a payment is designed either (+)
to reduce or roll back aximum and support prices or (:) as a substitute
for increasing maximum prices or support prices, unless such payments are
specifically authorized by the Congress. The specified exceptions are
rigidly limited. Subsidies or other payments can be nade until the end of
the current crog year on any agricultural commodity other than milk or
livestock if, prior to June 15, 1943, the government was committed to make
then. Wheat can be cold for fooding purposes at not loss than the parity
price for corn. Maximum and support prices on donostic fato and oils and
oil needs can b. adjusted as necessary to assure adequate production.
Section 7 seeks to subject to the War Food Administration's
control all the powers given under section 2(0) of the Emergency Price
Control Act in respect to the Durchase, sale, storage and upo of foods.
nm sure that the Mar Food d'inistration 10 amply capable of handling
such B task. But even its hands are chackled by the imposition of rigid
restrictions which were included noither in the original Price Control
Act nor in the Act of October g, 1948,
Section 7 provides that purchases can be nade only at prices
which reflect to the farmer not less than the naximum price provided in the
Act of October 2, 1942, or the announced support price, whichever 15 the
higher. No purchases can be made for the purpose of reducing any maximum
price. to purchased can be made for the purpose of resale at a 1008 unless
nade under a program annomeed prior to July 1, 1943. Even under pre-
existing consitments, the government in not authorized to make purchases
which will involve losses in excess of $150,000,000. It apparently prohibits
any purchase and sale program involving any loss for the 1944 crop. Commoditive
purchased are not to be sold for Less than the maximm price limitations
provided in the Act of October B, 1948 or contrary to section 2(f) of the
Price Control Act. It IN far from clear that this last restriction does
not nullify the exception in section 6 permitting wheat to be sold for feed
at the corn parity price.
It is not clear whether the restrictions In Dections 6 and 7 are
cumulative or whether the Congress wished to draw a distinction between
direct subsidies and trading looses resulting from the purchase and resule
or foods.
Reputable lawyers could, I an advised, argue time section 6
completely nullifies section 7. If I should agree, thon the bill would be
even more inflationary. If I should take the contrary vide, I say be
sure that I will be accused of misconstruing the law.
"any other serious complications and difficultion in administering
and construing the bill have been brought to my attention. But if I sttempted
to deal with all of then here my message would bocome as complicated and confuse
as the Language of the bill itself.
When farm prices wore low, in time of peace, no one in either
should be forbidden to take losses in its operations. Nov, in the critical
branch of government ever suggested that the Commodity Credit Corporation
emergency of war, it is progosed to tie the Corporation's hands in ways
undreamed of in less strenuous days.
devestating effect upon our economy and our war effort about which I believe
No matter how this neasure is interproted, it will have a
the Congress and the American people ought clearly to be warned,
1. This bill blacks out the program to reduce the cost of living. of
In other words, it completely outlaws the recont reductions in the of price
meat and butter which we instituted in order to help pit the cost
living back down from the beight to which it has rioun in recent months.
By this measure, the Congress will compul every housewife to pay
5d 5. pound more for every pioce of butter that good on her table, and slico to
pay higher pricos for every pork chop, every ouneo of beef, every
of ham or bacon which gous to feed her family.
any additional 2. measures to reduce the cost of living or oven to hold
This mensure will make it virtually impossible to institute the
line.
Regraded Unclassified
105
- 3 -
3. The bill denies to the executive any power to purchase farm
products for resale at a loss or to make incentive payments to obtain
Increased production of foodstuffs without the approval of the Congress.
: do not balleve that the Congress has had an opportunity to know or to
consider how seriously it may cripple our entire food program.
It is proper for the Congress to set the limits within which
our food programs must operate and the principles to which they must con-
form. But there is not time to submit each specific food program for
Congressional approval. Crops will not wait for Congrossional debate.
To require specific approval of each specific program is in effect a
prohibition.
In order to obtain a greater production of important war foods
L' may be usessary to establish spocial incentives for our farmers. We
are asking our agricultural producers to change their farming methods and
to grow new crops to which they are unaccustomed and with WC need greatly
in -lace of the old crops to which they are necustomed and which Well my not
need so greatly. It may often be difficult for the War Food Administrator
to decide just how great an incentive is required for this purpose. This
bill doos not prevent the continued use of generous incentive payments to
detain strategic war mterials other than food. Yet food is ns important
R2 any other strategic war material.
This mennire, however, would moun that every additional dollar
paid to the farmor to the extm yar crops no need to feed our soldiers
shrond mould reduce th purchasing power of the limited allowances of their
wives and children at home.
Such a restrictive measure would serve only to art the soldier,
in nurker, and the unorganized consumer at mar with the former.
The ortginal price control act gave the government certain powers
to regulato prioce. In the summer of last year 1 informed the Congress
that the Administration could not control the cost of living and prevent
inflation unless it WSS given more adoquate power to stabilise wagus and
food prices. Thereafter the Congress passed the Act of October 2, 1942,
which authorized no to stabilize prices, wages and salaries affecting the
cont of living so far as practicable on the basis of the levels which
adsted on September 15, 1942.
The messure non before ne virtunily nullifies the Act of October
2, 1942. This government camot effectively stabilize the cost of living
If it cannot stabilize the cost of necessary foods. As a matter of fact
this neasure even takes from the government powers which it was given under
the first Price Control Act.
As the dangor of inflation grows, the Congress would by this till
put new shackles on those whose duty it in to fight inflation. The fight
against inflation cannot be won that way,
To get our ¿conomy to work I roalize that we cannot rigidly freeze
all prices or all wages. In some cases No must pay higher prices to pro-
ducors to get the extra war production which we noed because that extm
production costs more to produce. Tio must likewise put more money in the
worker's pay envelope vion ho works longor hours or when be does more
skilled or efficient work, or then his pay is insuffici nt to keep him on
1. docent subsistunce lowl. But with a well-balanced combination of measures
The cust keep mage rates and consumers' food prices from rising if we wish to
hold down living costs.
Our nago stabilization program is and must he dependent on the
stabilization of the cost of living. This is expressly recognized in the
Act of October 2, 1942, The Little Steel formula was based on the fact
that there had boon a rise of approximately 15 percent in the cost of living
between January, 1941 and May, 1942, for which rise workers could be com-
pensated by wage increases.
Regraded Unclassified
105
- 4 -
The cont of living is now about 8 porcent above the lovel of
May, 1942, and about 6 percent above last September. There has been an
incruase in the averago worker's Wookly pay check since September. This
increase has come primarily through longer hours and through the shift of
work/ra into war industries from lower-paid civilian occupations, although
incrunsemin more raton to correct inequition have played a part. But there
(2) may workors who have enjoyed no increaso in carnings.
It 12 too unay to act on the assuration that all consumers have
purplus purchasing power; and that the high unrained of none workers in
munitions plants are onjoyed by every worker's family. This cosy assumption
overlooks the 4,000,000 wage workurs still earning Idaa than 40₫ por hour,
and millions of others whose incomes are almost as low. It ignores the
shot that more than 4 million funiliva have not had nn increase of mre than
6 porcent in their income during the last eighteen months. It further
imoros the millions of white-collar workers -- the school teachers,
the clorgymen, the state, county and city officials, the policemen, the firo-
non, the clerks -- whose chleries have rumained low, but hose living
stundards are boing cruelly and inequitably slocked by higher food pricus.
Il equally Ignores others on fixed incomes -- the dependent mother of the
midior bay with her sount $37 por month, the widow living off the proceeds
of his husband's insurance policy, and the old ago pensioner.
Those millions are untitled to be protectod against skyrocketing
food costs. It in my duty to guard them aminet the ravages of inflation --
ano I shall guird thus unluss the Congress shackles my hand.
Thise unorganized millions must not búcomo the forgotten non end
remun of our m.r sconomy,
The plan his been urged on boholf or industrial workers that If
the cost of living is not cut to Suptember, or even to May, 1942, lovels,
ratus should be rained to compensate. But to rniso mges because
living conta have rison will by at bost only e temporary solution. Raising
wage ratual incrunses the cost of production, both or war goods and of the
roods whose prices mike up the cont of living. It also incrunsos consumers'
spunding power. The combined offuct of increased sponding power and in-
production cost is inevitably = further riso in the cost of living;
and it the PO tinu the money cont or the war increases. In short, to give
prople more money because pricess are rising dous not curo the evil, but
makes it NOTDO. This is procissly what 10 monnt by the "inflationary spirol."
To provant this spiral of rising losts nad prices 1/0 must hold
firm to the stabilis.tion of von rutes. out to do this, 170 must assure
workers that they can di foir share of available on logitimate
carkuts, and at pricon "wo far ns practicable on the bawis of the Levale
which existed on 15", au proscribed by the Act of October 2.
Whatever theoretical choiced n.y conceivably be open to us,
practically WJ will have only two. NO must keep the cost or living more
numrly in lino with the lovel proscribed in the 10W or you vill not by able
to hold the vago line or protuct the millions of mon and worton living /A
low salaries and smell fixed incomes. If wages rice, the cost of living
not stand where It is; it will (TO up and the inflationary will
rain strength.
increased to the not Suptember lovel 1s practicable. Me All must bu propared of
I lo think that "I reduction of all living osts or white
in total to accept n. substantial out in our occuptaned stundards
living. var But we must definitely stop the rising trond of living Inmily and push
book the prior In non-mause of important key pommunition in the
market banket.
Thin I talk of import int key commodities I do not must fur conts, 11ke
thilored nuits or caviar. I HERD the nocossitive of 1111, things foolls,
or brond, milk, butter, sugar, coffee, ordinary main, Date and nanned the price
things that plain working folk must have. du must not only koop the supply
nocossities down, but i/e must increase, whis V/c can, the
which of thoma helps relieve the prossures for higher priood and help roduce
or the black markets. With the improvement in the your against Intor
temptations the submarine We may even by Able soon to removo sugar and possibly total war
coffee from the mtion list. But we cunnot hope in 3 ported of
to incruaso the supply of all necomuities sufficiently to Polieve the price
situation.
Regraded Unclassified
107
5 -
% reduce the price of key necessities or even to hold some of
them at present levels, we either will have to reduce producers' prices and
clatributors' margins or we will have to use subsidies.
Timt does not nean that we can achieve stabilization by subsidies
alone, wishout firm price and wage policies, adequate fiscal measures, and
positive programs to assure that adequate supplies of essentials at legitimet
prices will be available in the legitimate markets.
But the experience of other countries like Canada and England
joes domonstrate that limited subsidies can and must be effectively used
ins n Ibuy weapon to control inflation.
The alternative to such action would be more costly to the Treasury
and to the people. If we do not take the course of action I have suggested,
TO shall be charged with having failed to stabilize the cost of living, as
the Act of October 2, 1942, directed us to do, and there will be increasing
from the markers of the nation for a drastic modification of the
used Stick formule.
If a 10 purcent overall increase in wages should occur as a con-
negionee of our failure to stabiliso living costs, that added cost of labor
slow would cause on increase of not Loss than 43 percent Ln the goneral
level of prices. That would increase our annual mr costs approximately
1.2 billion dollars. For 170 are spending 100 billions per annum for mar
and every rise of ono percent in Use prices the government pays, adds
approximately one billion to the government's war expenditures. I say
approximately because some of the expenditures would not automatically be
increased. A 10 percent wage incrunse would, moreover, increase the cost
of living by nt least 41 percent and would cost consumers at least la billion
dollars a year.
And, what is more, if we should have to abandon the hold-the-line
rdor and to allow rigus to rise we would have no assurance that we would
be able to hold living costs stable even nt " higher level. Rising costs
would continue to press against the price and wage lovels and these would
be forced higher still, Rising wages would add to the excess purchasing
noner, and on enlarg inflationary gap would make the fiscal task of
insorbing EXCUSS purchasing power by higher taxes and enforced savings
unsinageable. Those with magre wages and small fixed incomes would be
ground below the margin of fair subsistence.
I nucd not tell the Congress the dovastation mico will be wrought,
for and wide, on th farmer, the work r, and the business man, if the fires
of Inflation svor got out of control. The farmers will never forget the
deflation following the last mr and the sufferings they then endured.
To protect the famor it is not necessary to oppréss the consumer.
The way to protect the former is to authorise the Comodity Credit Corpora-
tien to pay the farmer what he should get for his products and to scll those
products at a loss 1f need be to iccup the cost of living down. That my
be 1 subsidy, but that is the only way to avoid inflation which will be
rainous to farmer and consumer alike. If no prohibit subsidies and allow
the cost of living to rise, as this bill docd, whatever support prices we
make to the farmer will be nullified by the inflation of -11 prices and
all costs.
I have just been informed that the preliminary figures indicate
that between May 1, and June 15 there ms a decrease of 1 percent in food
prices. This is the first decline in the food price index in more than a
year. This bill would wipo out that declino and start anew a rise in the
cost of living. I camot by signing it share the responsibility for that
class and its disastrous consequences.
Those in command of our war economy like those in command of our
armics must bu endowed with adequate authority to most emergency situations
as-thoy arisc.
Regraded Unclassified
108
- 6 -
Subsidies to help holl down living costs and at the
same time protect the farmer should be applied only in strictly
limited and clearly defined circumstances. Such subsidies
should be confined to goods essential to the maintenance of a
reasonable wartine standard of living for the people. Wherever
the grant of subsidies at flat rates would involve gross windfall
profits for low-cost producers, processors or distributors, they
should be granted on a. differential basis to cover the special
burdens of small business and high-cost producers.
I do not intend to permit farm prices and farm incomes
to be depressed. Today the aggregate net income of farmers like
that of the workers is larger than ever before. As a result of
my recommendation of September 7, 1942, that a floor be estab-
lished for farm prices, Congress by the Act of October 2, 1942,
guaranteed to farmers 90 percent of parity on most farm products
during the war and for at least two crop years thereafter -- a
guaranty given to no other group. If further payments to far-
mers are necessary to enable them to make the added outlays re-
quired to increase the production of war crops, those payments
should and will be made.
But unless the Congress leaves with the Executive branch
the means of seeing to it that further increases in producers'
prices do not increase the cost of living, the Executive branch
cannot accept responsibility for holding the wage line or for
stopping the inflationary spiral.
If I am to hold the line, my hands must be left reason-
ably free to hold it even-handedly.
In this task of saving our free economy, Congress and
the Executive must work together, as a team. H. R. 2869 marks
a definite retreat from economic stability toward uncontrolled
inflation. That retreat cannot be made with my approval.
I sincerely hope that if the Congress cannot agree before
its recess on logislation which will remove the serious defects in
this bill, it will pass a joint resolution continuing the life of
the Commodity Credit Corporation and providing the increase in
borrowing power until the Congress has time to agree upon an appro-
priate measure. The officials of the Executive departments will
Welcome an opportunity to furnish information and be of assistance.
I return the Hill without my signature.
BRANKLIN D. ROOSEVELT
THE :NITTE HOUSE,
July 2, 1943.
Regraded Unclassified
109
JUL 2- 1943
Dear Mr. LaRoche:
I vant you to know that I wish you all
success in your new drive to get "n was 201-
sage in every ad.
Ye at the Treasury Department have seen
at first band what advertising can do. The
cooperation of advertisers, advertising non
and all branches of media have contributed
greatly to the success of our two War Loan
Drives, and we are counting upon it heavily in
our Third War Loan Drive starting September 9.
The advertisers who have helped us and
who will continue to help us have served their
country well. If still more of them would make
it a point to devote at least part of every ad
to a var mestage, they will be performing a
public service of first importance. I know
that your Advertising Council will be able to
convince them of this.
I vant you to know how such VO appreciate
the unselfish var work of the Var Advertising
Couneil.
Sincerely yours.
(Signed) H. Mergenthau, Jr.
Mr. Chester J. LaRochs, Chairman,
The Var Advertising Council,
16 East 42nd Street,
New York, New York.
7-1-43 JJL:MFS:gr ts
Regraded Unclassified
110
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE July 1, 1943
TO Secretary Morgenthau
FROM Mr. Smith to
The OWI asked John Louis for a letter like the attached, to be
addressed to Chet LaRoche. OWI says that similar letters are being
secured from all the heads of Government Agencies who have used the
Council.
In their draft of a letter, I inserted "we are counting upon it
(cooperation of advertising, etc.) heavily in our Third War Loan Drive
starting September 9," so that no one could construe this letter as
being permission from you to use space that belongs to the Treasury,
for a lot of other Government purposes.
Regraded Unclassified
111
MEMORANDUM FOR THE SECRETARY.
July 2, 1943.
Mail Report
Mail receipts during the past week took a decided
upward turn, and taxes figured prominently in the
correspondence. There still were many straight in-
quiries, not to be classified either as favorable or
unfavorable. There were many which reflected upon
Bonds by reason of the statement that the withholding
tax would affect Bond purchases. Wastefulness of
Government spending also was mentioned in many letters
complaining of high taxes, and the necessity of pur-
chasing the car use tax stamp brought forth many
indignant protests.
Bonds sent the Secretary for cashing fell off,
however, exactly 50 being received in this way.
Bond mail is at rather 8. standstill, but should
increase with the launching of the next campaign. The
Drew Pearson column elicited 4 letters, all in favor
of the Treasury stand. Every day brings in one or two
requests for small Bonds of about $10.00 denomination.
Comments on the statement in regard to 8. 25% investment
in Bonds fell off noticeably. In the letters which
were received, 8. variety of reasons for the impossibility
of such purchase were given -- OPA regulations, the
lack of salary raises, inflation (particularly in food
prices), insufficient help in offices and factories so
that workers cannot be canvassed or records kept, and,
of course, increased taxation. There were 3 complaints
on what amounted to coercion in regard to Bond purchases.
There were 4 complaints of extravagance in sending out
citations and other Bond matter. The ratio of com-
plaints was 43 for the War Department, 10 from other
sources. This would indicate a slight falling off in
the actual number of complaints, but the same compara-
tive ratio for the worst offender.
Regraded Unclassified
112
- 2 -
Memorandum for the Secretary.
July 2, 1943.
The general mail contained questions a." to the
legality of the withholding tax, strenuous objections
to the new pennies, and complaints of difficulties in
cashing Government checks.
White House mail reached an all-time high for
June, with the receipt of 1,138 pieces of mail referred
to the Treasury. Two-thirds of this mail dealt with
the question of taxes. In all, 771 letters, telegrams
and postal cards urged a Presidential veto of the
Congressional tax plan. Of these, 383 contained no
comments or questions and were simply filed, The re-
mainder required some type of acknowledgment. In
previous years the low figure for June came in 1937
with 483. The previous high was last year with 775.
you Tobush
113
- 1 -
General Comments
W. S. Sanford, President, Sanford-Brown Business
College, St. Louis, Mo. Please use your influence
in defeating the measure now sponsored by Senator
Truman for the revision of the N.Y.A. This is 8.
useless expenditure of our taxpayers' money. You,
Gentlemen, should be complimented for taking the
stand against such a measure. Certainly our boys
who are fighting our battles, need attention, and
the N.Y.A. has aided and assisted young men and
women to become apathetic. It is a shame that this
bill ever passed the Senate in the first place. It
teaches young men and women to expect Government aid
the rest of their lives, in many cases.
John W. Green, President, Wauneta Falls Bank, Wauneta,
Neb. We are today in receipt of R.O. Memo No. 103,
dated June 24, 1943, by Regional Office Commodity
Credit Corp., Kansas City, Mo., advising us of the
increase of income to the corporation, and the reduc-
tion of income to the banks and those actually handling
the commodity loans. It occurs to us in all fairness
if the Administration wishes to actively liquidate
country banks, they should say so. We have some little
ability and could be using it in some other field, if
no return is to be allowed country banks. Country
banks may not be needed, but if they are not, the
Administration should say SO. Perhaps subsidized
organizations can take care of sales of Bonds and
assistance in handling tax returns for the Government
better than men trained for years; if so, let the banks
know and they can pay off and quit, cease to be tax-
payers and become taxeaters. I do not have any idea
this will get farther than the outer office and may not
even make that.
Regraded Unclassified
114
- 2 -
Favorable Comments on Bonds
A. F. Whitney, President, Grand Lodge, Brotherhood
of Railroad Trainmen, Cleveland, Ohio. I refer to
8. statement made by Mr. Drew Pearson in his syndicated
column in which he states you have been opposing high-
pressured efforts by banks and other institutions to
make War Bonds negotiable and subject to trading by
banks and on the Stock Exchange. Please know that we
shall vigorously support your position. I think it
would be a national calamity to subject the people's
War Savings Bonds to stock market manipulators and
gamblers. ***
E. R. B. Harris, St. Petersburg, Fla. You are 8.
friend of the people so I am addressing you as a
friend. In our fine, broad-minded St. Petersburg
Daily Times of June 13, I read, "Morgenthau protects
War Bonds by keeping them off market". The people
understand something of your fight with big interests.
What we wish to know is -- who won? The people have
not forgotten what happened after the last war. Not
knowing who has control of the Victory, or defense
groups, workers and individuals are refusing to buy
Bonds. ***
Regraded Unclassified
115
- 3 -
Unfavorable Comments on Bonds
F. Reed Dallye, Pittsburgh, Pa. During the recent
Second War Loan Drive my wife very gladly assisted
in a minor way. A week or two after it closed, she
received 8. short letter of appreciation from those
in charge locally. A week or so ago she received a
rather fancy certificate in colors covering the same
territory. It seems to me that expense of preparing
and mailing the latter is not necessary nor justified
and that money could be used for bombers or bullets
to more effect. We are all willing to help, but not
for public waste. And while on this subject, has it
occurred to you that there are a lot of people who
still think for themselves, and who are not continuing
to buy Bonds to support the 31 million bureaucratic
employees now in existence? Bungling management can
last just so long.
Mrs. E. D. Moses, Bluffton, South Carolina. This
morning I heard another of your Treasury Star Parade
transcriptions, presumably designed to sell War Bonds.
It not only was no inducement to buy Bonds, as far as
I or any other reasonably intelligent person is con-
cerned, but it made me sort of sick and ashamed. It
was, actually, cheap, shoddy soap opera, with a Russian
twist. It also makes me sick to think any of my tax
money goes to perpetrate such tripe. The young men
and women writing and producing this shoddy stuff
could serve the country far better in uniform or on
an assembly line, or behind a plow. And this comes
from one whose husband is in uniform. Our men are
gone -- we are working to produce food without any
labor, even in our kitchens, thanks to northern trouble
makers -- and we could do this with better heart if our
Government did not consider this war just another
quickie soap flake to be sold to us by the same soap
flake selling technique.
We want no money spared
Regraded Unclassified
116
- 4 -
so far as our services and the war effort are con-
cerned. What makes us see red are the millions poured
down propaganda rat holes; the millions used to pay
draft age Washington workers who should be in there
fighting beside our men.
Pvt. Everett D. Hinkle, Hammerfield, Fresno, Calif.
While this letter might be quite irregular, this is
my last effort to endeavor to get my Bonds which have
been deducted from my salary earned in the U. S. Army.
Was inducted August, 1942, and at that time I authorized
8. $6.25 deduction each month from my salary. This is
June, 1943, and I have not been able to get even the
first Bond which I paid for. Yes, I've tried and
tried at every field where I've been stationed, and
always it's the same story -- they will be mailed to
you, or go see so-and-so, or they will be mailed to
your next address. I have made numerous trips at
various times to try to get some information about
these Bonds. After 11 months of failure, I'm taking
this means of trying to get them. Will you please for-
ward this letter to the proper office so that they may
issue my Bonds? # Anything you can do toward this
will surely be appreciated. And, again, I'd like to
say that I would not have taken this means if any one
at any office at any Camp where I've been stationed
would have known anything about these.
Irving Edison, Vice President, Edison Brothers Stores,
Inc., St. Louis, Mo.
#
Our drive for the sale of
War Bonds and Stamps in our 169 stores has been cur-
tailed because the Regional War Labor Board here has
refused to give us permission to pay our contest
editor $15.00 per week for the work that is done in
supervising this contest on extra and spare time. Our
former contest editor received $90.00 per week and
resigned. We explained to the local Board another
employee agreed to carry on, partially for patriotic
reasons, on personal time for just $15.00 per week.
The request was denied, in spite of the hours of time
Regraded Unclassified
117
- 5 -
that we spent explaining the circumstances to the
officials here. # # I am personally paying this
party out of my pocket for the past weeks that she
has been doing this work, and I have been forced to
temporarily abandon our entire Bond and Stamp selling
campaign in 169 stores all over the United States.
I shall be pleased to give your investigator more
complete details in this matter.
Senator Langer (North Dakota) sends letter he has
received from Allen J. Rishel, Enderlin, N. Dak.
Some time ago I bought one of the U. S. Victory Bonds
for $500, with the coupons on. This morning when
I went to cash the coupon, which was $2.06, they
charged me 40¢ to cash it at the bank. They claim
that they must register the coupon in, which costs
15¢, and then the Bank in Minneapolis charges them
25¢. I think that this is entirely too much to cash
a coupon. # We want to help Uncle Sam, and we be-
lieve that he wants to help us. I have heard quite
some complaints regarding this charging business on
these coupons, and it looks like some one is taking
an advantage of the matter and think that the Post
Offices should cash and handle these coupons without
any charge. *** 2
E. A. Terrell, President, The Terrell Machines Company,
Charlotte, N.C. We send you copy of attached letter
to Mecklenburg County War Savings Committee because of
the recent handicaps and limitations that have been
placed on wage and salary increases to employees who
deserve them because of greater skill, for increased
production, for length of service, and for heavy addi-
tional responsibilities placed upon our office and
administrative forces. These limitations are of such
a nature that we believe they will seriously affect
the war effort throughout the country. The amount of
paper work required to secure deserved increases is
such that we have not been able to handle it up till
now, and we anticipate that we will have considerable
difficulty in securing approval of such deserved
Regraded Unclassified
118
- 6 -
increases even after presentation of the facts. #
When we consider the amount of money which is being
squandered by the Federal Government through waste
and inefficiency and contrast that vast sum with the
amount which will be necessary to provide proper
salaries and wages for deserving employees, we are
forced to conclude that the present policies of the
Government on wages and salaries are not conducive
to efficiency or a quick victory. (The following
comments are quoted from the letter addressed to the
Meckelenburg County War Savings Committee by Mr.
Terrell.) In response to your letter of June 15,
1943, and telegram of June 23, 1943, requesting the
appointment of a Treasury representative for this
company to increase the purchase of War Bonds, we
regret to have to inform you that we do not have
sufficient personnel to handle this matter in the
way suggested in your letter. No one person in our
organization has enough time to contact all of our
employees. # We anticipate considerable diffi-
culty in increasing subscriptions to Bond purchases
at this time because of two factors: One, the de-
duction of withholding taxes, which becomes effective
July 1, 1943. Two, the fact that the War Labor Board
and the Treasury Department apparently will not permit
us to grant earned increases for merit, extra duties,
and the assumption of greater responsibility, incident
to the war work which we are doing. We are working on
this, however, and if these handicaps in the way of
additional earned income can be removed, we feel that
there will be 8. greater possibility of securing an in-
creased percentage of War Bond purchases.
S. A. Horvitz, Publisher, Mansfield Journal Company,
Cleveland, Ohio. We, like a great many other news-
papers, are handling War Savings Stamps for sale by
our news carriers. This week there was stolen from
our office approximately $500 worth of War Savings
Stamps that we had on hand to furnish to the newsboys
to make sales. The local Police Department is investi-
gating the matter. In view of the fact that we are
Regraded Unclassified
119
- 7 -
really acting as agents for the Treasury Department we
feel that some Federal Agency would be interested in
investigating this theft. We called Mr. Lee Boardman,
of this city, who is in charge of Federal Bureau of
Investigation, and also talked with Mr. Frank R.
Holliday, who is in charge of the Secret Service
Department here. They both informed us that they had
no jurisdiction in this matter. As you know, all news-
papers are going to considerable trouble and expense
in handling the sale of these Stamps, and we certainly
have no objection to doing so, but we do feel that when
there is a theft, some Federal Agency should take an
interest in the matter. # # # A great many small news-
papers feel that the fact that they are handling
matters for the Federal Government assures them a
certain amount of protection. # Please advise if
your Department would be interested in investigating
this loss.
H. K. Humphrey, Chairman of the Board, Winnetka Trust
and Savings Bank, Winnetka, Ill. A mimeographed com-
munication purporting to give excerpts from an address
by Mr. W. L. Hemingway, provides an opportunity to make
some comments which have been in my mind. # # * The
heading compelled immediate attention: "W. L. Heming-
way Praises Secretary Morgenthau's Reorganization Plan
for the Sale of War Bonds". Since I haven't wanted to
praise the proposed reorganization, I read very care-
fully, but could find nothing in the excerpts to
justify such a heading, and therefore consider it mis-
leading. Certainly it is wise to foresee difficulties
which threaten any machine, or organization even while
it is apparently functioning smoothly. Nevertheless,
unless the danger is imminent and can be made obvious
to those who are running the machine, it seems unwise
to make changes, especially when these have the
appearance of giving a kick in the pants to those who
have done a good job. # + # Perhaps to those nearer
the center of things, the reasons for the proposed
change are clear and sufficient. I have only the
statement quoted from Mr. Hemingway's speech: "For
Regraded Unclassified
120
- 8 -
reasons which seemed compelling to him, Mr. Morgenthau
decided to create the new organization along state
lines. " The first seven words of this quotation
seem to be a round-about way of saying, "Arbitrarily";
the word could have been expanded just 8.8 well into:
"For reasons which he does not care, or dare, to make
public. # The thought is inescapable that maybe
the reason for the change is really jealousy of a
Department which is not wholly under his control and
which, in spite of that and mirabile dictu, really did
a good job and is getting some credit for it. I can't
help feeling that the Federal Reserve Districts are
the natural and mst workable divisions for such an
organization, that it is unwise to make changes as
radical as those proposed in 8. machine which functioned
so well. Unless a more frank and convincing explanation
is forthcoming, I am afraid that it will be more diffi-
cult to give my wee drop of aid wholeheartedly to the
new committee than it would have to the old familiar
one, #
C. R. Ballard, Managing Editor, Sarra, Inc., Chicago.
A man by the name of Ray Sandmeyer, representing him-
self as an agent of the Treasury Department, has called
on this company two or three times within the past
several weeks ostensibly to present the 10% payroll
deduction plan. ### This man Sandmeyer has been ex-
tremely abusive, and to my way of thinking, is much
more typical of the Gestapo than he is of the Treasury
of the United States. Miss Wells, our accountant, to
whom he talked, reports to me that the man made 8. number
of threats, called the President of the company unprint-
able names, cast aspersions on our patriotism and said
that the investigation of the company would be turned
over to the FBI. This last procedure is one, incidentally,
which we would welcome. As an American citizen and
soldier in the last war, I want to protest strenuously
against visitations of this type. I can state with
positive assurance that every member of this organization
is 8. loyal American citizen. Every one I have questioned
121
- 9 -
so far is doing all that he can to aid in the war
effort and every member of our organization resents
the methods of intimidation that this man Sandmeyer
has attempted to use. Incidentally, he refused to
give his name but we learned what it was when we
called the local office of the United States Treasury
and talked to his superior. ***
122
- 10 -
Unfavorable Comments on Taxation
Paul R. Reynolds, NYC. Under the compulsion of the
notice of levy served on us by your representative on
June 16, 1943, for alleged unpaid income tax of P. G.
Wodehouse in the amount of $38,711.81 for the year
1937, we have sent to the Collector of Internal Revenue
our check for $23,624.48, representing the entire amount
now owing by us to Mr. Wodehouse. As Mr. Wodehouse's
literary agents in the United States for more than
twenty years, we protest against this levy and the
manner in which the Treasury Department has proceeded.
Mr. Wodehouse's 1937 Federal income tax return was
filed June 3, 1938. The 1937 Federal income tax return
of Siva, S.A., a Swiss corporation to which Mr. Wode-
house had assigned certain of his copyrights, was
filed May 28, 1938. A tax of $4,526.40 was paid on
Mr. Wodehouse's account, and 8. tax of $8,514.12 was
paid on Siva's account, on or before those dates.
Subsequently, in December, 1940, after examinations by
at least two different income tax auditors, the Treasury
Department ruled that Mr. Wodehouse had paid $723.89
too much, and refunded this amount to him. At the same
time, the Treasury Department ruled that Siva had paid
$395.90 too much, and issued 8. check in refund of this
overpayment. % # # Normally, the Treasury Department
is prohibited by law from attempting to collect addi-
tional taxes more than three years after the due date
of the income tax returns, which in this case would
have been June 15, 1941. Nevertheless, the Treasury
Department in the past year again audited Mr. Wode-
house's 1937 returns, and as I am advised by Mr.
Wodehouse's attorney, have gone so far as to demand
inspection of his correspondence with Mr. Wodehouse.
# ** Notwithstanding these repeated and exhaustive
investigations over a period of five years, after what
was intended to be a final settlement two and 8. half
years ago, involving great loss of time to both
Treasury employees and Mr. Wodehouse's representatives
in this country, it appears that the Treasury was still
unable to make up its mind as to Mr. Wodehouse's 1937
tax liability, for his attorney informs me that he was
Regraded Unclassified
123
- 11 -
asked on June 14, 1943 (for the first time) to sign a
waiver of the statute of limitations, which under
ordinary circumstances would have finally run two
years before. When he declined, the Treasury made a
jeopardy" assessment on June 15, 1943, instead of
adopting the usual procedure of mailing a letter of
proposed deficiency, permitting the question of lia-
bility to be determined by the Board of Tax Appeals
in an orderly way, and any additional tax found due
to be collected thereafter. The intent of Congress
in authorizing the drastic remedy of jeopardy assess-
ment was to limit its use to cases in which the
Commissioner of Internal Revenue believed that the
collection of the proposed deficiency would be jeopard-
ized by delay in seizing the taxpayer's property.
Such belief in this case is difficult to justify,
since the Treasury Department has known for three
years that all Mr. Wodehouse's property in the United
States has been frozen under its control. The jeopardy
assessment was followed by the filing of a lien with
the District Court here, which gave rise to publicity,
with the unfavorable implication that Mr. Wodehouse
was delinquent in meeting his taxes, without giving
him or his representatives a chance to be heard in
his defense.
B. T. Clifford, B. T. Clifford & Company, Merchandise
Brokers, St. Louis, Mo. I have just purchased a Federal
Use Tax Stamp. To read it I would have to get a
magnifying glass. The color is nondescript, might be
orange, or might be 8. sickly yellow. This is the most
miserable piece of work I have ever seen the Government
turn out.
124
- 12 -
S. J. Steers, N.Y.C. If I sold the U. S. Government
the right to cut lumber on my property and then
placed guards around it to keep your men off, you
would arrest me for swindling! Well, you are doing
exactly that same thing when you charge me $5.00 for
a license "For Use" of my auto and then deny me the
use of it. I wrote your Department last January
asking for a pro-rata refund. I still feel that I am
entitled to 8. refund, and I think it is your duty to
protect the good name of our Government to request
Congress to pass a law that will enable you to make
amends to the millions of citizens that, up to now,
have been rooked. ***
Dr. S. A. Alexander, 1830 Eye Street, N.W., Washington,
D. C. I wish to call your attention to the enclosed
notification of the Collector of Internal Revenue,
Baltimore, Maryland. (Notice requires certification,
sworn before Notary Public, etc., on $1.00 check --
narcotics registration tax.) In view of the fact that
all checks for income taxes and all other payments
I make are accepted without certification, I feel that
in the present emergency, this ruling should be changed,
because of the waste of manpower it takes to have 8.
check certified, or to get a Money Order. I make this
statement assuming that this regulation applies to over
8. hundred thousand physicians, with 8. manpower loss of
over fifty thousand hours a year. ***
Regraded Unclassified
125
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE
TO
Secretary Morgenthau
July 2, 1943
FROM
Mr. O'Connell
In accordance with a request made by Harry
White, which I understand was relayed from you, I
have tentatively arranged for you to meet with the
"Silver Committee" next Wednesday morning at 10:30 in
the Indian Affairs Committee room.
Senator McCarran, with whom I talked, said
there was some talk about recessing tomorrow and
indicated that should that take place the meeting
would be off.
goen
Regraded Unclassified
126-
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE
TO
Secretary Morgenthau
July 2, 1943
FROM
Mr. O'Connell
It may be only a follow up of yesterday's
newspaper story about Martinique, but this morning's
ticker carries the following statement:
"American naval forces appeared today to
have won a bloodless victory at Martinique
with the collapse of an administration faith-
ful to Vichy.
"Paris radio last night confirmed that
Admiral Georges Robert, Vichy-appointed Governor,
had been 'forced to ask for terms' because of
a famine.
"It was believed that the terms to be
exacted of Robert would include transfer of
French warships at Martinique to the control of
French elements friendly to the United Nations,
and employment of merchant shipping there in the
service of the Allies.
"A dozen tankers and merchant ships are
expected to be freed for use in Inter-American
trade."
It is not clear from the statement whether there
has been a physical occupation. Probably not, although
the phrase about "American naval forces" would tend to
create that impression at first blush.
JOCa
Regraded Unclassified
127
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE
Secretary Morgenthau
July 2, 1943
TO
FROM
Frances McCathran
CONTROVERSIAL ISSUES BEFORE CONGRESS
Little progress was made yesterday in the Congres-
sional stalemate over appropriation bills. Although House and
Senate conferees managed yesterday to compromise their dif-
ferences over funds for OPA and OWI in the mamouth War Agencies
Bill, House conferees refused to agree to Senator McKellar's
amendment requiring Presidential appointment and Senate con-
firmation for all employees of the 16 war agencies included
in the bill, earning $4,500 or more a year. However, the Senate
does not hold a premium for insisting on what have been called
prejudiced amendments. In a conference on the Urgent Deficiency
Bill, House representatives continue to stalemate the Presi-
dent's use of his Emergency Funds and pay for many Federal
employees in their dogged insistence on their Kerr Committee's
amendment banning use of any of the bill's monies for payment
of the salaries of three Federal employees accused by that
committee of un-American activities. Meanwhile, the Labor-
Federal Security Bill is hogtied by House demands for the
liquidation of the NYA, which the Senate voted 48 million dollars,
and by House reaffirmation of its ban against permitting the
National Labor Relations Board to enter labor-management dis-
putes in plants where contracts have been in existence for
three months without complaint. Both the Interior Department
bill, because of Senate demands for 22 millions for western
irrigation projects, and the Agriculture Appropriation, be-
cause of House insistence on the liquidation of the crop insur-
ance orogram, were also becalmed in conference eddies.
While conferees were having it hot and heavy over
appropriation bills yesterday, Senator Bridges on the floor of
the Senate introduced a resolution providing for an investi-
gation of the Wallace-Jones feud by the Military Affairs Com-
mittee; but, on objections by Senator Barkley, the matter was
referred instead to the Banking and Currency Committee, where
it is rumored it will not receive as prompt consideration.
Regraded Unclassified
0
128
0
?
I
PARAPHRASE OF TELEGRAM RECEIVED
FROM: AMEMIASST, Chungicing
TO:
Secretary of State, Washington
DATED: July 2, 1943, 11 a.m.
NUMBER: 1069
FOWLER SENDS THE FOLLOWING FOR STONE OF - in
reference to his no. 2 and the Department's message of
June 23, no. 798.
Answering your questions, in the order asked, HO
states as follows:
1. Generally speaking all those industries which
are still allowed to contimue operation are at least
Japanese sponsored, but HO unable to name the specific
industries. Registration with the puppet government
in Wanking prior to operation is a Japanese-dictated pro-
cedure for all industrial concerns.
2. Details are not given, beyond the fact that a
large part of the cargo there is rumored to be scrap iron.
3. There is no limitation to private consumption.
Restrictions are placed on industrial concerns but it is
impossible to say to what extent. Most of the coal- for
power plants is supplied by North China, probably Kailwa
(Kalgan 1); in the interest of conservation of power,
electric advertising has been banned.
4. no doubts that any shipments from Shanghai are
being made. If they are being made he is unsware of them.
5. In spite of the fact that there are on the market
Japanese goods manufactured in Shanghai or occupied China,
especially piece goods, he is not aware of any.
ATCHESON
S:WIM
FS:MLM
7/4/43
Copy:bj:7-8-43
Regraded Unclassified
129
NOT TO BE RE-TRANSMITTED
COPY NO. 13
BRITISH MOST SECRET
U.S. SECRET
OPTEL NO. 214
Information received up to 7 a.m., 2nd July, 1943.
1. NAVAL
1st, A.Royal Fleet Auxiliary Tanker was torpedoed West of DERNA
but is proceeding to Port.
2. AIR OPERATIONS
WESTERN FRONT. 1st. Escorted Typhoons damaged one 6,000 ton
ship, two 3,000 ton ships and four minesweepers off HOOK OF HOLLAND. In FRANCE
three locomotives damaged. Casualties in these operations and on Fighter sweeps:
Enemy - 8, 2, 9. Allied - 6, 0, 0. 1st/2nd. Aircraft despatched: Seamining - 12,
Leaflets - 25, Intruders - 5.
SICILY. 29th/30th. 64 Wellingtons dropped 100 tons at MESSINA.
30th. 72 Escorted Litchells (B.25) attacked SCIACCA Airfield and 21 escorted
Fortresses (B.17) bombed airfields in PALERMO Area. 1st. Escorted Spitfires
bombed BISCARI Airfield.
SARDINIA. 28th, Escorted Marauders (B.26) attacked DECIL.OLANNU
Airfield, Enemy casualties: 4, 1, 5.
WESTERN MEDITERRANEAN. 28th. 20 enemy aircraft attacked
PANTELLERIA Airfield, damaging 6 Warhawks P40 F on ground. Enemy casualties by
A/A 2, 0, O. 29th/30th. 48 enemy aircraft attacked BONE. 2 shot down by
Beaufighters and 1 by A/A.
Regraded Unclassified
130
July 3, 1943
TO:
TED R. GAMBLE
SUBJECT: WEEKLY PROGRESS REPORT FROM WAR FINANCE DIVISION
FIELD
Retail Section
Attached is a full page from the Detroit
News on "Eight Reasons Why You Should Increase Your Bond
Pledges", which was put out by the Retail Merchants of
Detroit. (Attachment No. 1)
A glossy print of the Jordan Marsh Company
store, Boston, Massachusetts, containing their advertising
on the promotion of War Bonds is attached. (Attachment
No. 2)
Pittsburgh Department Stores and other retailers
okuse
of the community will join in a nationwide "Retailers For
Victory" month in July to promote the sale of War Stamps.
Merchants will devote all advertising space to the sale of
War Stamps July 8 and 9; there will be special radio programs;
Regraded Unclassified
131
- 2 -
FIELD
Retail Section (Continued)
sidewalk flags, booths and other facilities will be used
throughout the month.
Attached is a sample of the promotion from
the National Dry Goods Association and Kaufmann's Depart-
ment Store, Pittsburgh. (Attachment No. 3)
The attached clipping from the Women's Wear
Daily of June 28 shows Los Angeles stores' plans for a
$40,000,000 Bond drive. (Attachment No. 4)
Agricultural Section
Georgia 4-H Club members have bought and
sold $5 million worth of War Bonds and Stamps, more than
enough to pay for two Liberty Ships. The original goal
was $2 million.
The New Jersey Grange organization is putting
on a million dollar drive. Already some local New Jersey
Granges have made sales of more than $10,000 in War Bonds.
Greater food production and increased pur-
chases of War Bonds and Stamps in the amount of a quarter
of a million dollars are set up as major goals of 165 Negro
Victory Clubs operating in 10 Louisiana parishes.
Motion Pictures and Special Events Section
Rapides Parish, Louisiana, January through
May "Sponsor a Fighting Ship" campaign resulted in the
sale of $9,799,880 in War Bonds.
Regraded Unclassified
132
- 3 -
FIELD
Motion Pictures and Special Events Section (Continued)
During the past week the Two-Man Jap Sub
visited St. Albans and Huntington, West Virginia; Portsmouth,
Chillicothe, Columbus, Springfield, Cincinnati, Middletown,
Dayton, Troy and Piqua, Ohio.
The Newsreel Division of the War Activities
Committee is filming on the West Coast a batch of clips
enlisting the services of a group of Hollywood's top-flight
stars in the Shangri-La campaign. The first star announced
is Hedy Lamarr.
The Women's International Bowling Congress
held last month in Chicago at an impromptu War Bond rally
sold $38,675.
Payroll Savings Section
The attached list of companies have been re-
ported as having achieved the goal of 10% during the past
week. (Attachment No. 5)
Women's Section
An article has been prepared for the Ladies'
Auxiliary to the Veterans of Foreign Wars.
"A Summary Review of Publications for Use by
Women" was prepared primarily for the six Regional Con-
ferences to be held during July.
Education Section
The fourth issue of the Schools-at-War
Regraded Unclassified
133
- 4 -
FIELD
Education Section Continued)
Bulletin, which will go to every teacher, includes basic
information on all phases of the school program. Following
the practice of the second and third issues, this fourth
issue, to be distributed in September, will be accompanied
by poster material designed particularly for schools.
The opening of the Third War Loan Drive will
coincide with the opening of most schools, the students of
which will be urged to play their part through partici-
pation in special campaigns and through a "Letter Home"
campaign to explain to every family the importance of the
Drive and how each family must "Figure It Out" as to how
much they can possibly put into War Bonds.
Field Memoranda
Recent memoranda sent to the Field include
numbers 644, 645, 646, 647, 648 and 649. (Attachment No.
6)
Special Activities Section
The first State to announce its completed
State War Finance Committee is New York with 50 rep-
resentatives from business, professional, social and
religious groups. A list of leading members of the com-
mittee is attached. (Attachment No. 7)
New England's French-American Liberty Ship
campaign started June 24 with a goal of $6,000,000 in War
Regraded Unclassified
- 5 -
134
FIELD
Special Activities Section (Continued)
Bonds to purchase three Liberty Ships.
Kingston and Beacon, New York have been
awarded the Treasury Payroll Savings Flag, signalizing that
more than 90% of their industries and business houses are
enrolled in the Payroll Savings Plan.
NATIONAL ORGANIZATIONS
Labor Section
Through the cooperation of the Illinois State
Federation of Labor, special communications on the with-
holding tax and War Bonds have been sent to over 3,000 local
unions in Illinois.
The Milk Wagon Drivers Union in Chicago, through
its secretary, Mr. Thomas Haggerty, and our mid-western rep-
resentative, has made arrangements to have War Bond booths
permanently maintained in the Victory Plaza.
Private Charles F. West, Jr., U. S. Army, mem-
ber of the Labor Section, was able to secure army furlough
in order to attend the meeting of the Oregon State Federation
of Labor at Eugene, Oregon. He took part with State Adminis-
trator Ecoles in a discussion of the Payroll Savings Plan,
which was enthusiastically received by the convention.
A 2,000-mile tour of the Chicago Great Western
Railroad has just been completed by representatives of rail-
road Labor and Management, the Treasury Department, and local
Regraded Unclassified
- 6 -
135
NATIONAL ORGANIZATIONS
Labor Section (Continued)
War Bond Committees. Addresses were delivered at 24
meetings.
The Kansas City Southern Railroad will sponsor
a similar War Bond tour in the near future.
Business and Trade Association Section
The chief of this section met with officials
of the American Institute of Accountants and the National
Association of Cost Accountants in New York on June 27, for
the purpose of planning a War Bond Program for the accounting
profession, with special emphasis placed on accountants'
aid in expediting the delivery of War Bonds.
The National Council of American Shipbuilders
will inaugurate a campaign to increase employee participation
in Payroll Savings.
Foreign Origin Section
Dr. C. B. Johannides, Executive Secretary of
the Order of Ahepa, Greek fraternal organization which has
sold $45,500,000 worth of War Bonds, has discussed with
this section the lack of Treasury recognition of individual
and collective War Bond efforts for members or organizations
which do not come under Payroll Savings Plans. Members of
this section are developing methods of stimulating interest
through awards.
Regraded Unclassified
136
- 7 -
NATIONAL ORGANIZATIONS
Fraternal and Service Section
The Grotto of North America, with more than
90 lodge headquarters, has voted to invest all of its sur-
plus funds in War Bonds.
The 10,000 young Jewish men under 21 years
of age who are members of the A.Z.A., are sponsoring a
nation-wide War Bond drive from August 1 to October 13,
with a tentativie goal of $1,000,000.
During the High Holideys, every Jewish
Synagogue in the United States will sponsor a nation-wide
War Bond drive.
Inter-Racial Section
The Afro-American Newspaper has completed
its plans for a bomber campaign. The bomber will be
named Sidat Singh for the Negro aviator who recently lost
his life in Lake Michigan.
Attached is a list of contacts made by this
section during the past week. (Attachment No. 8)
PRESS, RADIO AND ADVERTISING
Radio Section
Six one-minute dramatic announcements have
been transcribed and will be broadcast by all 868 of the
nation's radio stations 18,228 times during the week of
June 28, and six others for similar broadcasting the week
of July 5.
Regraded Unclassified
137
- 8 -
PRESS, RADIO AND ADVERTISING
Radio Section (Continued)
Four "live" one-minute announcements were sent
to the nation's 868 radio stations for broadcasting during
the weeks of June 28 and July 5.
The Office of War Information Fact Sheet has
been sent to the entire radio industry as the basis for
announcements and complete scripts on the pay-as-you-go
income tax plan. During the weeks of June 28 and July 5,
86 of the leading sponsored and sustaining programs will
carry this material on all four networks.
Six Treasury Star Parade programs have been
released for use during the first half of July. They carry
announcements on the pay-as-you-go plan.
WGR-WKBW, Buffalo, New York, is sponsoring
the Commando Court of Honor Corps, an organization of nine
to fifteen year old boys and girls committed to the sale
of War Bonds and Stamps. A weekly half-hour broadcast
furthers the promotion. Sales of ten dollars are required
for membership. Advancement in rank is according to the
amount of a member's sales. On December 31st, 1942, sales
amounted to $390,799.26.
A program broadcast from t he Hollywood Bowl
over the NBC network, June 30th, opened the Los Angeles
"Buy A Cruiser" campaign. Stars appearing on the program
were Edward Arnold, Cecil B. DeMille, Rudy Vallee, Bing
Crosby and Dinah Shore with Irving Berlin directing the
Regraded Unclassified
138
- 9 -
PRESS, RADIO AND ADVERTISING
Radio Section (Continued)
"This Is The Army" chorus.
The entire script of "Mr. District Attorney,"
broadcast June 30th over the NBC network 9:30-10:00 P.M.,
was written around a War Bond plot, entitled "The Case of
the War Bond Swindlers".
Basil Rathbone, who plays the title role in
the "Sherlock Holmes" series over the Mutual network, is
on a War Bond tour.
The Scioto County Girl Scouts of Portamouth,
Ohio, whose War Bond and Stamps sales for the past year
totaled $31,835, will be awarded a Certificate of Merit
on Columbia network's "Youth on Parade" broadcast Saturday,
July 3, 10:00-10:30 A.M.
Advertising Section
At a meeting with the Advertising Council, it
was decided to gear the Third War Loan to the invasion
theme and the necessity for sacrifice. The slogan tentatively
adopted was "The More Bonds and Sweat -- The Less Blood and
Tears!"
Arrangements have been made with the Adver-
tising Council to analyze the market trading areas for
(1) sales, (2) effective buying income according to Sales
Management figures, and (3) newspaper advertising lineage
Regraded Unclassified
139
- 10 -
PRESS, RADIO AND ADVERTISING
Advertising Section (Continued)
during the Third War Loan. As a result of this analysis,
it can be determined how effective our campaign advertising
is.
Attached are proofs of our current newspaper
advertisments, "Three Words Worth 50% of His Salary", "A Mes-
sage From the President", and "A Message For You From 1953".
(Attachment No. 9)
The recent additions to our General Magazine
Campaign make a grand total, as of this date, of 105 pub-
lications with a circulation of 34,000,000 having scheduled
this campaign.
During the week of June 21 we received 90
War Bond mentions and 4 complete ads, giving a total of
94 in the seven major weekly magazines. Attached is &
list of the sponsoring companies and magazines in which
the advertisements appeared. (Attachment No. 10)
Through June 16, 340 business publications
with a total circulation of 3,500,000 have carried the
advertisement "To Hit 'Em Harder."
Attached is a proof of the business publica-
tion advertisement now being released, "The Executive Who
Stops to Think...Knows That 10% for War Bonds Isn't Enough
These Days." (Attachment No. 11)
Regraded Unclassified
140
- 11 -
PRESS, RADIO AND ADVERTISING
Advertising Section (Continued)
A meeting has been scheduled for July 14
with the representatives of the Drug Cosmetic and Allied
Industries at which time progress reports will be made
and future cooperation outlined.
Attached are advance proofs of pages to
appear in the catalogue of Sears Roebuck and Company,
Chicago, Illinois. Seven million copies of this new fall
catalogue will be issued, the usual readership of which is
approximately 18,000,000. (Attachment No. 12)
Attached is a mailing prepared by the Sunset
Outdoor Advertising Company of Seattle, Washington in which
extensive cooperation of Seattle business and advertising
leaders is urged. (Attachment No. 13)
Press Section
Attached is a proof of the latest series
of "American Heroes", released to all dailies and mat-
using weeklies. (Attachment No. 14)
Attached are flag covers from approximately
50 magazines. These are typical of the treatment given
this promotion by practically every magazine in the country.
(Attachment No. 15)
Attached are six book jackets containing War
Bond messages. (Attachment No. 16)
Regraded Unclassified
141
- 12 -
PRESS, RADIO AND ADVERTISING
Press Section (Continued)
Attached are seven tear sheets from
MADEMOISELLE containing War Bond plugs. The Mother's Day
War Stamp corsage is also given a half column filler.
(Attachment No. 17)
Attached are three late issues of Liberty,
and the June issues of HARPER'S BAZAAR, and LADIES HOME
JOURNAL, all of which contain War Bond mentions or plugs.
(Attachment No. 18)
Attached is a copy of "The Spirit", comic
book section of the Sunday Star, which carries a War Bond
mention. (Attachment No. 19) This is syndicated.
The SATURDAY EVENING POST of June 26 contains
a short editorial box entitled "The Manpower Kids" with a
War Bond ending. (Attachment No. 20)
Attached is the new set of under-bars for
Sunday color supplements, carried weekly in papers with
a combined circulation of approximately 18 million. (Attach-
ment No. 21)
OFFICE OF EXECUTIVE DIRECTOR
Promotional Research Section
Attached is the analysis of Newspaper Carrier
Sales as of July 1, 1943. (Attachment No. 22)
Attached is the analysis of sales for Series
E War Savings Bonds during April and May, 1943. (Attachment
No. 23)
Regraded Unclassified
142
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE July 3, 1943
TO
Mr D. W. Bell Miss Chamcey
FROM
Mr. Odegard
swB
I am afraid that the many delays undergone by the attached
questionnaire have pretty well killed any possibilities it may
have had to produce the kind of information the Secretary W anted.
Dr. Likert is of the opinion that a questionnaire of this type
would not have been very effective even if distributed immediately
after the Second War Loan had ended, and that it could not pos-
sibly elicit any accurate replies at this late date. Don't you
think too that the Likert survey on the April Drive has already
answered in a general way most of the questions we all had in mind?
Regraded Unclassified
143
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION JUN 1 4 1943
DATE
May 18, 1943
Mr. D. W. Bell
TO FROM Mr. Stuart Peabody S.P.
As discussed today, while I am not a technical research man,
I feel quite certain that the attached questionnaire as written and
amended would not only be extremely difficult to answer, but almost
impossible to tabulate.
I cannot suggest ways in which these weaknesses could be remedied
but I would think that the principle used in other forms of research
involving the use of a sample might very well work in this case.
I would also question whether we can get really accurate information
as to the effect of our various appeals by going to the people who
are responsible for selling them. In other words, I an wondering
whether these questions will not be answered adequately by the
research being made by Dr. Likert.
Finally, I would recommend that the matter be referred to
Dr. Likert and that he be asked whether the present questionnaire
is suitable, and if not, how it can be made 80.
Attachment.
Regraded Unclassified
144
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE May 15,
1943
TO
Mr. D. W. Bell
FROM Mr. Odegard
Mr. Robbins asked me to prepare a questionnaire to go to
county chairmen to discover the most effective promotional
methods used during the April drive. The attached is a
suggestion along this plan. You might want to have George
Haas look at it before you send it out.
MAY 1 4 1943 145
Questionnaire to County Chairmen
The following questions are listed to indicate the type of information
which is desired. Please feel free to discuss these topics as fully
as you like. It will be particularly helpful if you will give spe-
cific illustrations wherever possible. In case your experience dif-
fered for the various types of bonds that were offered, please indi-
cate to which type of bonds your answers apply.
dumin 9th Second wa Lorn Drive
1. What has been done in your county that, seems to you to have been
most effective in selling bends?
a. What was most effective in the line of publicity and adver-
tising? (We refer to such things as locally sponsored pos-
ters, displays, newspaper ads, radio programs, etc.)
Did you notice any difference in the
effects n various of picker and
advantising m the sales of 2½ 2.
27. sand ? E
b. What do you feel was especially effective in the line of
special promotion (such as rallies, parades, special days,
etc.)?
Do you notice any difference in
the sales 7 2½70 bus ? 2%
the effects 7 mini type 9 promotion ima? -
{ ins?
Regraded Unclassified
146
- 2 -
2. Of the things that were not up on a national or regional basis,
what seems to you to have been most effective in helping you to
sell bonds?
a. What do you feel was most helpful in the national publicity
and advertising? Did you notice what jostibuar
4.00 n advertising was most helpque
in alling 2½% me?
22, bate?
E ins?
b. What was most helpful in the line of national special promo-
tiont Ehings? toward selling 2-271 bonk ?
270 low?
3. What organizations (local or national) have been of the greatest
help to you in selling bonds? What did they do? which
specific sogarsizations when nevel useful
in the sale -1 2/27. lond?
2% has?
[ ims ?
147
- 3 -
4. In your opinion, what appeals or reasons did your solicitors find
most effective in getting people to buy bondel 2-27, lower?
39. bons ?
E - bus?
5. Were there any particular difficulties that you encountered in
selling bonds?- What sorts of things were they?
225. lnst 2 270 louid? E hours?
6. In all of the publicity and special promotion what things now
appear to you as having been the least effective?
which were least helpful in the
sale 7 2 1/2% breas ? 2% bad 1.
E- londs
148
TREASURY DEPARTMENT 47296
INTER OFFICE COMMUNICATION
DATE May 13, 1943
D. W. Bell
TO
FROM The Secretary
Would you please give instructions that I would like
to send out a questionnaire to each County Chairman of
War Finance asking them what scheme helped sell the most
(1) 21% Bonds, (2) 2% Bonds and (3) E Bonds.
Please have the answers come in as rapidly as possible
and let George Haas analyze them for me.
D3V1303R
/
plan
Regraded Unclassified
C
149
0
P
Y
PARAPHRASE OF TELEGRAM RECEIVED
FROM: AMEMBASST, Chunghing
TO:
Secretary of State, Washington
DATED: July 3, 1943
NUMBER: 1080
STRICTLY CONFIDENTIAL
With reference to the Embassy's wire of June 9, 1943,
no. 883, the following is submitted from Kunming's summary
for the month of June.
No improvement was manifested in the local inflationary
situation and a steady rise in prices continued to be shown.
For several days late in June open trading in foreign currency
bank notes by local exchange shope was suspended. At the end
of the month, however, it was resumed. It appears that local
exchange dealers fear the imminence of central Government
pressure on provincial authorities to halt exchange transactions
of & black market character. However, backdoor accomodations
were offered to known customers during the short period of
the suspended trading.
After a considerable period of almost equal value, as
compared to the Indian rupee, American dollar bank notes during
June showed a "black market" value in excess of the Indian
currency.
ATCHESON
Copy:bj:7-8-43
Regraded Unclassified
150
PARAPHRASE OF EXCERPT FROM TELEGRAM
NO.1080, DATED JULY 3. 1943, FROM AMERICAN EMBASSY, CHUNGKING
There was no evidence of an improved inflationary
position in this locality and prices continued to mount
steadily. For several days during the latter part of
June, open trading in foreign currency bank notes by
exchange shops in this vicinity was stopped. Although
backdoor facilities were afforded regular customers
during the several days when trading was suspended,
exchange dealers in the vicinity seem to be afraid
that central Government pressure on authorities to stop
"black market" exchange transactions is imminent.
For the month of June American dollar bank notes
disclosed "black market" value over and above Indian
rupees. For a considerable period of time the value
of these has been about equal.
Regraded Unclassified
151
13
COPY NO.
NOT TO BE TRANSMITTED
26
SECRETARY OF OFFICE SURY TREASURY
BRITISH MOST SECRET
U.S. SECRET
PM
OPTEL No. 215
1013 JUL
REASUR DEPART
Information received up to seven A.M. 3rá July, 1943.
1.
Naval.
Mediterranean. 20th/30th. MARINA D'AVOLA on
East Coast Sicily shelled by Coastal Craft,
2.
Air Operations, Western Front.
Second. Light bombers and fighters attacked
railway and other targets TFC N. France and Low Countries.
Oil storage cistern destroyed and 4 locomotives damaged.
2nd/3rd. Aircraft despatched-sea-mining 32, Cologne 3,
Duisburg 2, Intruders 3. Sardinia. 30th. 107 tons dropped
on Palermo by Fortresses (B.17) and 66 tons on Aorizzo and
Trapani Airfields by Medium Bombers.
Sicily. 30th/1st. 67 tons dropped on Cagliari by Wellingtons.
Mediterranean 30th. Enemy schooner sunk off Leghorn and
another left sinking off Capri Pacifia. 30th. 23
Medium Bombers attacked enemy targets in Salamoa Area and
28 Allied Light Bombers (6 missing) attacked Vila Airfield.
Regraded Unclassified
152
NOT TO BE RE-TRANSMITTED
COPY NO. 13
OFFICE
BRITISH MOST SECRET
SECRETARY OF TREASURY
0.5. SECRET
913 JUL 7 AM II 40
OPTEL No. 218
Following is supplementary esume of operational events covering the
period 26th June to 3rd July, 1943.
EASURY DEPARTMENT
1. NAVAL
HOME WATERS. During night 28th/29th our Coastal batteries fired 52
rounds at an enemy convoy off GRAVELINES. Results are unknown but convoy was dis-
organised. Enemy shore batteries replied causing some damage to shops and utilities
in KENT Coast towns, but few casualties.
NORTHERN WATERS. GRAF ZEPPELIN was located in a creek two miles east
of STETTIN on 23rd and it is possible that work on her has been abandoned. ADMIRAL
SCHEER was seen exercising off BORNHOLM on 26th June.
SUBMARINE WARFARE. During week ending 30th, 90 U-boats were at sea
in ATLANTIC and INDIAN OCEANS, nearly half probably in area southwest of AZORES and
only about six in ATLANTIC north of 50° N. In latter area no sinkings have occurred
aircraft. Of 7 promising attacks, two were by H.M. sloops, two by U.S. destroyers,
in past 6 weeks. In all theatres 29 attacks reported on U-boats of which 14
one by H.M. distroyer and two by R.A.F. Coastal Command flew 300 sorties on anti-
submarine operations. Made 27 sightings and 12 attacks.
SHIPPING CASUALTIES. From 26th to 2nd inclusive 5 merchantmen were
reported torpedoed. One U.S. tanker was torpedoed off RIO DE JANEIRO but reached
Harbour, a British tanker was torpedoed and shelled in the INDIAN OCEAN and a Grook
port safely, a. British tanker was sunk in GULF OF OMAN, A Norwegian ship in MUSCAT
ship WEB sunk off the Indian Coast. A British trawler was sunk by mine off SCAR-
BOROUGH.
TRADE. During week ended 27th, 7 ocean convoys arrived without loss,
Imports to U.K. totalled 873,000 tons of which 147,000 tons were oil.
2. MILITARY
GREECE. Between 20th and 22nd guerillas carried out extensive demoli
ATHENS on will be out of action for at least two months. The Italians have carried
tion ATHENS-SALONIKA railway and road. It is probable railway between LAMIA an
out two drives against guerillas during the past month suffering over 1200 casualt
at negligible cost to the guerillas.
BURMA. In Chin Hills the monsoon has caused difficulties in communi-
cations but active patrolling has continued.
3. AIR OPERATIONS
Three aircraft WESTERN were destroyed. The only heavy attack was on COLOGNE WUPPERTAL where TO
EUROPE. Night. 846 aircraft operated of which we lost
sults enemy believed successful but no details yet available. The raid on B
reported are in OPTEL 207 in believed to have caused notable destruction. enemy B.
craft crossed our coast at night.
The attack by U.S. Fortresses on ST. NAZAIRE was successful,
but the résults Day. against LE MANS are doubtful. Many other attacks on shipping casualties and
railways. In all day operations Allies lost 29 aircraft against enemy
of 44, 18, 23.
MEDITERRANEAN. ITALY. A heavy attack on LEGHORN and also attacks
on BINI, NAPLES, SAN GIOVANNI and REGGIO.
SARDINIA. Attacks mainly directed against airfields.
SICILY. 3 heavy attacks on MESSINA, and one on PALERMO. Other ob-
jectives wore activo covering all areas of the MEDITERRANEAN.
mainly airfields. Enemy attacked PANTELLERIA and BONE. Enemy In reuc"
MEDITERRANEAN nuissance aircraft operations were WD lost 12 aircraft against enomy casualties of 56, 19, 20
Regraded Unclassified
153
- 2 -
FAR EAST. BURMA. Although generally operations were affected by
the monsoon, Allied attacks were maintained on rail and river communications.
In addition to other attacks, a long stretch of railway track was destroyed 60
miles northwest of MANDALAY, cotton mills 70 miles southwest of MANDALAY were
demolished and 60 sampans and barges were sunk mainly on the IRRAWADDY.
RUSSIA. The Russians successfully attacked railway junctions and
enemy sirfields.
4. EXTRACTS FROM PHOTOGRAPHIC AND INTELLIGENCE REPORTS OF ALLIED AIR ATTACKS
KREFIELD. Photographs on 24th after attack 21st/22nd show that
damago is extremely heavy. Out of 1100 acres of fully built up town area it is
estimated that about 900 acres have been devastated.
BREMEN. Photographs taken after U.S.A.A.F. attack on 13th show
serious damage to Atlas Works Ship Yards and to docks immediately to the northeas)
ESSEN. Undamaged machinery has been sent from Krupps to LUXEMBURG
and MULHOUSE. A director is said to have reported personally to Hitler that it'
was useless to attempt to carry on at ESSEN because of morale of population of
whom over 100,000 had no roof over their heads.
LEGHORN. Photographs after attack of 28th May on LEGHORN Oil Ro-
finery show that almost entire weight of attack was concentrated in target area
and that the entire plant may have been put out of action.
CAGLIARI. Photographs show that attacks on 13th and 13th/14th May
caused very severe damage in almost every part of the town, docks and railway yard
Refractory Plant, Gas Works and many shops and warehouses wore damaged, as well
as public buildings.
5. HOME SECURITY
Estimated civilian casualties for week ending 30th were 30 killed
and 27 injured.
154
NOT TO BE RE-TRANSLITTED
COPY NO. 13
BRITISH LOST SECRET
U.S. SECRET
OPTEL NO. 216
Information received up to 7 a.m., 4th July, 1943.
1. AIR OPERATIONS
WESTERN FRONT. 3rd. Light Bombers attacked the power
station at PONT A VENDIN and fighters set fire to three oil cisterns near
ALSTERDAM and damaged 9 locomotives.
3rd/4th. Aircraft despatched: COLOGNE - 653 (30 missing),
HAMBURG - 4, DUISBURG - 4, Sea-mining - 14 (2 missing), Intruders - 24. At
COLOGNE, weather conditions were favourable and attackwas considered successful.
SARDINIA. 30th/lst and lst/2nd. Wellingtons dropped
82 tons on CAGLIARI.
SICILY. lst/2nd. Wellingtons dropped 54 tons on PALERMO.
ITALY. 2nd. Liberators (B 24) dropped 120 tons on LECCE
Airfield and 46 tons on GROTTAGLIE Airfield, both in Southeast ITALY. Combat
casualties: Enemy - 11, 0, 2. Allied - 4, o, O.
CORRECTION TO OPTEL NO. 214
2. AIR OPERATIONS.
WESTERN MEDITTRRANEAN, line 2 and 3.
For "Enemy casualties by A/A 2, o, 0."
Read: "Enemy casualties by A/A 2, 0, 2."
NEASURY DEPARTMENT
266 E Wd S TNC Eta
SECRETARY OF TREASURY
OFFEICE
Regraded Unclassified
155
STAY. JULY 4. 1945
POUGHKEEPSIE SUNDAY NEW YORKER
PAGE FIVE
A MESSAGE TO EVERY AMERICAN
FROM THE PRESIDENT
THE WHITE HOUSE
WASHINGTON
June 24, 1943
My dear Mr. Secretary:
Through you, as Secretary of the Treasury, I want to congratulate
the American people on the way in which they have supported the volun-
tary payroll savings plan.
I am proud of the fact that 27,000,000 patriotic Americans are
regularly investing more than $420,000,000 a month to help pay the
cost of the war. And since all of this money comes from wages and
salaries - nearly 90 percent from people earning less than $5,000,
and the bulk of it from those working in war plants - I do not hesi-
tate to say that the payroll savings plan is the greatest single
factor we now have in protecting ourselves against inflationary
spending.
This is a great record, both from the standpoint of curbing
inflation and from the standpoint of financing the war. However,
I heartily endorse your present drive to improve that record, and
I agree it must be improved if we are to keep pace with the
increasing demands of the war.
I therefore join you in calling upon the American people --
and upon labor and management particularly - to do still more. Addi-
tional people should be convinced of the necessity of participating.
Everyone now on the payroll savings plan should materially increase
the amount of bonds he is buying. Tie originally asked for 10 percent,
but, now we need considerably more.
I hope every American on a payroll will figure out for himself
the extent to which he can curtail his spending, and will put every
dollar of additional saving thus made into the payroll savings plan.
Sincerely yours,
The Monorable,
The Secretary of the Treasury
These Firms and Individuals Are Cooperating With the U.S. Treasury Department in Bringing This Message To You
Lass L Juminar
Haury A. Olam, las
Peani I le
Allen's Speramer
Disse Sportsmer a
Joseph 5. Kanting, - as
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Regraded Unclassified
156
TREASURY DEPARTMENT
TO
FROM Fred Smith IS
INTER OFFICE COMMUNICATION ¥
DATE July 5, 1943
Secretary Morgenthau
Attached is the letter on the Wall Street Journal story. Mr. Mager
did not believe it was of sufficient scope or importance to make the usual
War Finance Bulletin, with the usual format. We both felt that it would
be & mistake to send it out on 8 plain sheet of paper because it would look
like 8. piece of under-cover propaganda. On the other hand, if we simply
signed it "Office of the Secretary", it would make it look as if it were
tied to you more closely than this particular memorandum should be. Hence,
ve wound up making it a letter from Mr. Mager to the State chairmen. I
didn't see any particular objection to this since it was only sent to the
State chairmen and a handful of key people in the Treasury, who should be
kept abreast of everything.
This is one of the rare occasions where having a name to sign may be
an asset.
The rebuttal on the Gallup Poll will be a regulation War Finance
Bulletin, unsigned. We have some new material from the OWI, and I have
asked Mr. Mager to check on some things which I think are weaknesses in
the Gallup Poll. For example, it is based on a 5-month period. This falls
just short of the 6-month period at which time thousends of small partner-
ships declare dividends, which might normally fall into individual purchases
of War Bonds. It specifically lists farmers' purchases since the first of
the year, and it 1s my recollection that our farm program is based on the fact
Regraded Unclassified
157
- 2 -
that farmers don't buy bonds until late in the year. Such things as this
may well account for the fact that 81 percent of the people, according to
the Gallup Poll, have bought bonds, but only 60 percent have bought them
this year. The remaining 20 percent may be made of farmers, small business-
men, and others. I have asked Mr. Mager to check into this with the director
of our farm program, with Mr. Linkert, and others.
When we have this basic material, I will have some facts to throw at
George Gallup to prove that he is editorializing on the basis of insufficient
facts, which is supposed to be the most heinous crime that can be committed
at Young and Rubicam.
Regraded Unclassified
158
TREASURY DEPARTMENT
WASHINGTON
July 2, 1943
Information-Letter
The Wall Street Journal's Washington Wire for
July 2 carried a very erronsous and uninformed report
that "most everyone in Washington is ready to toss
overboard the voluntary war bond drive and put savings
on 8. compulsory basis." The report also said that
"forced savings have only three important foes:
Mr. Roosevelt, Mrs. Roosevelt, and Mr. Morgenthau."
In this statement, only the "only" is inaccurate.
If the writer of the Washington Wire were really
up on his arithmetic, he might also have counted in a
host of Senators and Congressmen who feel precisely
the same about compulsory savings as the influential
trio mentioned above. And last but not least he
should have counted the American people who, in &
recent poll, came out 90 percent against the compulsory
method.
Sincerely yours,
Harrel Technical Assistant mager
Office of the Secretary
FORYICTORY
BUY
UNITED
STATES
DONDS
AND
STAMPS
Regraded Unclassified
159
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE July 5, 1943
Secretary Morgenthau
ROM
Mr. Tietjens
On July 2, 1943, George Hildebrand of Milton, New York, wired
you asking your help in obtaining information from OPA on currant
prices.
War Food Administration released grower prices for berries
Saturday afternoon and the OPA has reported that its regulation
covering processors' ceilings was issued and made effective
Monday afternoon, July 5th.
The effect of these regulations is to permit processors to
pay currant growers 3 cents more per pound than was paid under the
regulations covering the 1942 pack. I gave this information to
Mr. Hildebrand at your request by 'phone Saturday afternoon.
Messrs. Dickerson and Waterman of the OPA also called him on
Monday afternoon, July 5th, to give further information.
You will recall that on Saturday I called various people at
both the War Food Administration and the Office of Price Adminis-
tration and found that Mr. Hildebrand's inquiry could not be answer-
ed because no definite information was available. I was told his
answer would have to wait until the War Food Administration released
grower prices for berries and until the Office of Price Adminis-
tration followed that up with a price regulation for processors.
When I began making my calls, I was informed that the WFA might
get its release out by Monday, but that there was no possibility
that the OPA could follow up with its release before Tuesday.
Though no one said so flatly in their conversations with me
on Saturday, I gathered that part of the delay in issuing these
regulations was the result of divided authority between the OPA
and WFA.
There is attached 8. more detailed account of the calls which
I made on July 3rd and July 5th on this matter.
Attachments
nor
Regraded Unclassified
160
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE July 5, 1943
TO
Secretary Morgenthau
FROM
Mr. Tietjens
Re: Inquiry from Mr. George Hildebrand regarding
OPA currant prices.
July 3, 1943
On July 2, 1943, you received a wire from George Hildebrand,
Milton, New York, stating that he had asked K. E. Stauffer, Chief
Processed Foods Branch, OPA, for information concerning ration-
ing and ceiling prices on red currants but 80 far had received no
reply. Hildebrand asked your help in getting this information
since currants would have to be picked next week.
In an attempt to get the information, I called Stauffer's
office and, after several references, ended up talking to B.
Mr. O'Brien who advised that while B. release covering prices on
strawberries, peas and spinach had been put out some time ago,
they were at present working on & release covering berry prices
in general and also frozen berry prices. He gave me the impres-
sion that the general berry price release was at Agriculture and
suggested that I call someone there, but he didn't think that
either release would come out before Tuesday, July 6th. O'Brien
told me further that a Mr. Waterman in the Price Section at OPA
had Mr. Hildebrand's inquiry but that they were unable to reply
to it immediately because no information was then available.
Waterman was not in his office but O'Brien said he would have him
call me as soon as possible. O'Brien explained that these price
regulations generally took a lot of time because they not only
had to be cleared in OPA but with Agriculture (War Food Adminis-
tration) and also, he thought, someone in Judge Vinson's office.
That was the only information I could give you when I talk-
ed with you at 12:30. You commented on the urgency of the
situation since the inquiry had come from the President's own
Regraded Unclassified
161
- 2 -
district, and that it was too bad OPA couldn't take care of &
little matter like this before it became so pressing. You
asked me to call Secretary Wickard's office and see if we
couldn't get something started which would get the releases
out later in the day instead of Monday or Tuesday. You also
suggested I call Prichard in Judge Vinson's office.
Just after I finished talking with you, Waterman of OPA
called. I explained to him how urgent you considered this
matter and that it was hard to understand why OPA couldn't
clear up the berry price situation by Monday at the latest.
He advised that the War Food Administration might release the
general berry prices some time during the afternoon but that
he considered it impossible to get out another release cover-
ing processed berry prices before Tuesday, this because it would
have to clear not only OPA but WFA and OES. He indicated there
was some bickering between OPA and WFA over these questions and
that the controversy in Congress over subsidies had also had 8.
disorganizing influence. He assured me he would do the best he
could.
I called Secretary Wickard's office and explained the
situation to Mr. Jacobs, the Secretary being at Beltsville.
Jacobs appreciated the circumstances, but, since it was & War
Food Administration matter, thought more could be accomplished
by getting in touch with them direct rather than going through
Agriculture. He offered to call but I said I would talk, 60
he referred me to a Mr. Meal. Meal's office said he had been
out ill for several weeks and turned me over to John Dodds.
I told Dodds how urgent the matter was and repeated your
conversation with me. Dodds stated that they were working on
B. release covering berry prices which he thought could be got
out that afternoon although he was not sure. He thought the
release would cover currants by allowing a 3 cent increase over
last year's prices.
Prichard was next on the list. He didn't profess to know
much about currant prices, but said he would look into it.
Regraded Unclassified
162
- 3 -
About 3 p.m. Dodds, WFA, called back to say that a release
on berries would be issued that afternoon for the Monday,
July 5th, papers. This release would set prices for all major
berries and, in effect, would provide a 3 cent increase on
berries not listed. Currants were not to be listed. He also
said that the release would have the effect of providing a
price ceiling on processed currants which would permit processors
to pay growers an increase of 3 cents over last year's price.
Currant sales on the open market would be uncontrolled. He
thought that "buttoned up" the currant situation.
On receiving this information I called Waterman back and
told him that our problems were apparently solved. He said he
didn't understand it that way and said it would be necessary for
OPA to get out & further regulation covering, among other things,
ceilings on processed currants. I told Waterman if it was
necessary for OPA to work up a further release there was no
reason why it shouldn't be out by Monday, July 5th. Waterman
didn't think it could be done; it took 8. lot of time to get the
proper information and history on minor berries such as currants,
blue berries, etc. He had wanted to cover currants in the general
berry price regulation which was at WFA but had been overruled
somewhere along the line.
After talking with Waterman, I felt that a prod from the
lawyers might help. I called Mr. George Burke, General Counsel
of OPA, and explained the matter to him. He said he would look
right into it and call me back. On his return call a quarter of
an hour later, he thought that the best we could expect was a
report by 10 o'clock Monday morning, July 5th. He did say that
he had given his boys hell for not moving faster on it.
When you called me at 4:45 p.m. I was able to tell you that
a general berry price release had been issued Saturday afternoon
and that Burke had his people working on the processed prices
which probably could not be gotten out much before Tuesday. You
then told me that you had had lunch with the President, that he
just didn't see any reason why 8. release could not be gotten out
by Monday.
Regraded Unclassified
163
- 4 -
The substance of your conversation was passed on to Mr. Burke
who promised that his staff would work all day Sunday, if
necessary, to try and carry out the President's wish.
At about 5 p.m. I called Mr. Hildebrand for you and told
him that releases were in the course of preparation which would
permit him to pay 3 cents more for currants to growers than paid
last year and that these releases should be in the papers Sunday
or Monday. Mr. Hildebrand was very appreciative of the information.
Later in the evening Mr. Reed Dickerson, an OPA attorney, got
in touch with me at Mr. Burke's suggestion to iron out further
details. He promised they would do everything possible to get the
additional release out Monday, July 5th, and that they would call
Hildebrand early Monday morning to give him the information he
had requested.
July 5, 1943
George Burke called at 9:40 a.m. to say that the regulation
we were concerned about would become effective today. He asked
me to confirm this by calling Dickerson. Dickerson repeated
that the regulation would be effective today and would be announced
to the press later in the day. It might not reach the papers until
morning.
The effect of the regulation will be to permit processors to
add to last year's prices to growers increased costs but not to
exceed 3 cents. Dickerson said he would give Mr. Hildebrand this
information by 'phone.
At 3:30 p.m. both Dickerson and Waterman of OPA called to
announce that the required regulation had been issued and made
effective, and that they had talked with Mr. Hildebrand by 'phone
and given him a full explanation.
nor
Regraded Unclassified
Perdue - As. 5606
164
OFFICE OF WAR INFORMATION
Department of Agriculture
For Impediate Release
AG-588
geturday, July 3, 1943
X-17618
Growers Prices for Berries
The War Food Administration today announced grower prices for seven types of
berries which will 6° into the 1943 packs of canned and frozen berries.
Enximum prices for these packs will be established shortly by the Office of
Price Administration at levels which reflect increases announced by NFA. This is
mandatory under the amended Emergency Price Control Act, which provides that maximum
prices set on agricultural commodities must reflect the higher of either parity or
the highest price paid to the farmer between January 1 and September 15, 1942.
The ceiling prices to be established for canned and frozen berries will permit
processors to pay berry growers the following prices:
Cents per pound
Cents per pound
Red Raspberries
15
Loganberrics
12
Black Raspberries
13
Blackberries
12
Youngberries
12
Gooseberries
8
Boysenberries
12
In the case of all other berries except strawberries, ceiling prices for the
1943 pack will permit each processor to pay 3 conts per pound more than the weighted
average price which he reported as his raw product cost under the provision of OPA
price regulations covering the 1942 pack.
Ceiling prices for frozen strawberries have been established, under MPR 409, on
the basis of a grower price of 12 cents EL pound for stemmed berries.
In the Pacific Northwest, the chiuf area in which berrios are processed, these
prices will reflect an average increase of approximately 5 cents pur pound for young-
borries, 4g cents for boysenberries, 4 cents for clack raspberries and strawberries,
31 cents for loganberries, 3 cents for blackberries and red raspborries, and 2% centre
for gooseberries. Grower prices at those levels are necessary to meet the increased
noot of producing and harvesting.
Since processed berrius represent a minor element in the cost of living, the
increases 7016 will have no oppreciable effect upon the cost of the average diet. 10-44
Regraded Unclassified
165
THE NEW YORK TIMES, SUNDAY, JULY 4, 1943.
BERRY GROWERS GET MORE
li sion revented our smaldong
Their Levela for Seven TXPS
Are by the WFA
10 JM nots fliw aguado #
Special to THE New THE THE
WASHINGTON, July Higher
grower for
berrier
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broma
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were
announced
today
the
War
Food
VII
The Office of Price Administra-
tion soon will flà cellings for these
pecks which mill reflect
ducer
announced
the
wws. adtion
undeo ather
Emergency.
Prine
Pain
trol Act providing that
prices on agricultural commodities
must reflect either parity or the
highest price paid to the Autstion
between Jan. 1 and Bept. 15, 1942,
whichever - higher.
Regraded Unclassified
470
166
R
WU47 LG
MILTON NY JUL 2 1150A
M 2
HON HENRY MORGANTHAU JR
PESONAL SECY OF TREASURY
WE HAVE ASKED K E STAUFFER CHIEF PROCESSED FOODS BRANCH OPA
FOR INFORMATION CONCERNING RATIONING AND CEILING PRICES RED
CURRANTS PURCHASED FROM OUR FARMES FARMERS STOP HAVE HAD NO
REPLY AND CURRANTS READY TO PICK NEXT WEEK CURRANTS SHORT
CROP THIS YEAR AND FARMERS WILL HAVE TO PAY FIFTY DOLLARS TON
MORE THAN LAST YEAR FOR PICKING PLUS ADDITIONAL GROWING
LABOR AMOUNTING TO ANOTHER TEN DOLLARS PER TON THIS ADDS UP
TO AT LEAST SIXTY DOLLARS PER TON OVER LAST YEARS FARMER
PRICE STOP CURRANTS GROWN IN ONLY FEW SPOTS THROUGHOUT
COUNTRY AND THERE SHOULD BE NO REGULATION ON THIS SMALL ITEM
STOP WOULD IT BE POSSIBLE FOR YOU TO CALL STAUFFER OPA ASKING
THAT THEY GIVE US THE INFORMATION IMMEDIATELY
HUDSON RIVER FRUIT EXCHANGE INC HILDEBRAND.
1247P
geo.
Regraded Unclassified
167
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
CONFIDENTIAL
DATE July 5, 1943
TO
Secretary Forgenthau
FROM
Mar. Have
subject:
The Business Situation,
Week ending July 3, 1943.
Summary
Complodity prices: Heavy demand for grains, combined with
logislative developments, pushed commodity futures prices
W to new high levels last week. However, the veto of the
anti-subsidy bill caused prices to ense at the end of the
neriod. In contrast to recent firmness in basic commodity
nices, the BLS all-commodity index in the week ended June
26 again declined, due principally to the rollback in mest
wices. The index now stands nearly 1 percent below the
Key penk.
Stock prices: Industrial and utility stock averages advanced
to new highs for the year last week, althou the net advance
for the market B.S. E. whole was not large. Trading activity
has not expanded significantly on the recent rise. Stock
transactions on the New York Exchange in June declined
36 percent below the previous month.
Form parity: The index of prices received by farmers rose
1,6 percent in June to 190, which is almost 26 percent
above last year's June level and the highest since
September 1920. Since the prices paid by farmers rose
only 0.6 percent, farm prices averaged 116 percent of
parity LG compared with 115 percent a month earlier.
National income: Payments rose to B. new high annual rate of
141.0 billions in May. This compares with 3139.7 billions
in the previous month and only 3111 billions in the
corresponding month last year. Since May 1940, when the
defense program W&B Just retting under way, national income
payments have risen 57 percent.
Coal strike: Near the end of last week 95,000 coal miners
were reported to be still on strike, and 8 blast furnaces
in the Pittsburgh area as well as several in Alabema were of
still closed down. Coal production in the first helf
1943 dropped 1,700,000 tons below last year's level,
dospite an increase in demand of 25,000,000 tone for the
year as estimated by Secretary Ickes.
Regraded Unclassified
168
- 2 -
Commodity futures and stock prices rise
Featured by a. heavy demand for grains and stimulated by
congressional approval of anti-subsidy legislation, commodity
futures moved higher last week until near the end of the
period, when prices reacted as & result of the President's
veto of the anti-subsidy measure. Before the rise was halted,
Rowever, prices for rye and oats had reached the highest levels
in many years, and the Dow-Jones futures index had moved up to
A new neak since compilation of the index was begun in 1933.
Moody'e index of spot commodity prices also rose in the latter
art of the week and reached the highest level since the early
onrt of last month. (See Chart 1.)
Buoyant commodity prices undoubtedly lent some additional
stimulus to the gradual further rise in stock prices which
has been under way recently. Although the net advance for
the stock market as a whole last week was relatively small,
both the industrial and utility stock averages made new highs
for the year. (See Chart 2.) The rise in utility stocks WAS
featured by sharp joins in the preferred stocks of various
holding companies, apparently on the theory that recent
political developments may foreshadow more lenient public
policies toward these enterprises. Despite record traffic,
railroad shares continue to 185 and have been unable to
benetrate their previous high for the year touched in May.
In addition to widespread wariness over the post-war outlook
for the railroads, the near term outlook has been confused by
the unsettled status of pending wage demands of both operating
and non-operating employees.
Recent rains in stock prices have not been accompanied
by any notable expansion in trading activity. In this
connection it is of interest that daily average stock trading
on the New York Exchange in June fell 36 percent below the
off in trading in low priced stocks, in contrast to the heavy some
January. An important factor in the decline has been a falling
previous month, and reached the lowest level since last
expansion in brokers' loans for purchasing and carrying
trading in these issues earlier in the year. Although
securities other than Government obligations has occurred
in recent months, such loans by New York member banks on
June 23 were still only $458 millions. In comparison,
the corresponding total on Harch 31, 1943, when such figures
were first reported, was 303 millions.
Regraded Unclassified
169
- 3 -
Basic commodity price index slightly higher
The BLS index of 28 basic commodities rose 0.3 percent
lest week, largely a.B e. result of an increase in grain prices.
(See Chart 3.) Wheat prices were up sharply, approaching the
war-time beak of early March. An upward revision in the loan
rate of 1 cent in line with the higher June parity price, and
D strong demand from distillers, helped to raise wheat prices.
The 000 abandoned last week its program to subsidize wheat for
conversion into industrial alcohol because Congress withdrew
its authority in the pending Agriculture appropriation bill.
This action forced distillers to enter the open market to
obtain their wheat requirements. Barley prices rose 3.7 per-
cent to a new high. While prices of hogs were up somewhat
nt the end of the week, steer prices declined noticeably due
to uncertainties concerning the subsidy controversy.
Although the basic commodity index continues to fluctuate
around the levels of early April when the President issued
his hold-the-line order, the all-commodity index in the week
ending June 26 registered the second consecutive decline,
vhich carried it back to March levels. This index now stands
nearly 1 percent below the peak reached late last month,
although 37.5 percent above the pre-wer level of August 1939.
The rollback in meat prices was the most important factor in
the decline in the index, but seasonally lower prices for
fresh fruits and vegetables and a decline in grain prices
during that week were also factors.
Farm prices continue rise
Ferm prices rose to a new high in June with the index
of prices received by farmers attaining the highest level
since September 1920. The index has risen almost 26 percent
during the past year.
The most important factor in the latest rise was the
which raised the fruit index 10.4 percent to the highest level
continued sharp (larger than seasonal) advance in fruit prices,
and chickens and eggs rose moderately. (See Chart 4.)
for the month during 34 years of record. Prices of grains
Although most truck crop prices were somewhat lower in June,
the declines were very much less than the normal seasonal
downturns. Cotton end dairy product prices were slightly
lower, and the index of meat animal prices declined 1.4 per-
cent.
Regraded Unclassified
170
11.
While the index of prices received by farmers rose
1.0 percent from mid-May to mid-June, the index of prices
0216 by farmers (including interest and taxes) advanced
only 0.0 percent. Consequently, farm prices averaged
116 percent of parity as compared with 115 percent a month
earlier and 99 percent a year earlier.
Price control developments
The sustaining of the President's veto of the CCC bill
last week, together with the House passage of a resolution
continuing the life of the 000 until December 31, 1943,
indicate that the Government's hands will be freed to some
extent in the development of a food production and price
control program. However, the conference report on the
hending OPA appropriation bill contains provisions which
would severely handicap OPA in the enforcement of price
controls. The bill would out 22 millions from the
appropriation requested, would ban standardization of
certain commodities, and would require price officials to
have had previous business experience in each commodity they
administer. Price Administrator Brown warned that price
control cannot be continued if Congress adopts the conference
rebort.
The urgent necessity for the Government to develop a
coordinated agricultural production and price control program
is clearly indicated by the increasing shortages, maldistributions
And dislocations in agricultural markets in recent months.
Cattlemen are reported to be withholding their steers from
the market because of price uncertainties resulting from the
subsidy controversy. Farmers in the Middle West are not
marketing their corn because of the greater profitability of
feeding it to hogs, thus resulting in shortages of corn for
industrial purposes and for feed in deficit areas. A
prospective fall pig crop too large for our feed resources
Vas indicated by the June pig survey of the Department of
A riculture. Canners are reported to be confused by the
present price and subsidy situation. The Hungerford Packing
last week that none of the orders for the 1943 pack would be
Company, a large Pennsylvania canner, notified its brokers
hipped until such time as the picture clears.
Annual rate of income payments still rising
Due to seasonal drop in interest and dividends, total
national income a payments showed another moderate recession
Regraded Unclassified
171
- 5 -
in May but the annual rate of payments rose to a new record
high of 141.0 billions. This compares with $139.7 billions
in the previous month and $111 billions in the corresponding
month last year. As a result of the tremendous expansion of
the past three years, income payments in May were running
about 57 percent higher than in May 1940, when the national
lefense program was just getting under way.
Reference to Chart 5 will disclose that in May all major
Touns except "other income payments" (including Work relief,
Eirect relief, etc.) showed gains over year-earlier levels,
olthough the rise in interest and dividend payments was only
2 percent. In marked contrast, payments to individuals from
Government sources were 83 percent higher 28 a result of the
great increase in military and civilian personnel. Cash farm
income (included in "withdrawals from noncorporate enterprises")
WEB 39 percent higher than in May 1942, while payments of
solaries and wages to workers in the commodity-producing
industries were 27 percent higher.
Steel operations still retarded by coal strike
Although the U. S. Steel Corporation was able to resume
operations at 6 blast furnaces last week, 8 furnaces in the
Pittsburgh area were still closed down near the end of the
period as an aftermath of the recent coal strike. In addition,
several blast furnaces in Alabama were also reported still
closed down. At last week's sharply reduced operating rate of
only 90.3 percent of capacity, the loss in steel tonnage B.8
compared with the previous week would be 126, 000 net tons, and
the total loss in output before the full effects of the coal
strike are finally overcome is expected to run well in excess
of that figure. (See Chart 6.)
Due to the slowness of the miners in returning to work
after the most recent strike was called off, the steel
And coke, and the Iron Age expressed fear that stockpiles could of
industry last week was still reported dangerously low in coal
not be rebuilt to EL point of safety again for the duration
the war. In this connection it was pointed out that even prior
equivalent to only 5.4 days' supply, in contrast to E: 25 in days'
to the series of strikes, stocks at by-product coke ovens were
supply in July 1939, shortly before the outbreak of yer
Surope.
Since the steel industry in the first half of 1943 was
able to increase production over year-earlier levels by only
Regraded Unclassified
172
- 6 -
2 percent, the additional difficulties caused by the recent
coal strikes makes prospects for attaining the additional
steel supplies desired by WPB in the second half of the year
correspondingly less hopeful.
Coal production dropped in first half of 1943
Although a substantial improvement in coal production
undoubtedly occurred last week, near the end of the period
around 95,000 miners were said to be still out on strike.
Press reports indicate that many of these vill return to
work early this week. As a result of the recent loss in
production, the Solid Fuels Administrator revealed last
week that coal production in the first half of 1943 dropped
1,700,000 tons below the corresponding period of last year.
In contrast, Secretary Ickes estimates that 25,000,000 more
tons of coal will be needed this year than last, thus
emphasizing the necessity of a speedy return to maximum
production.
Regraded Unclassified
173
COMMODITY PRICE INDEXES IN U.S.
Daily
1942
OCTOBER
NOVEMBER
DECEMBER
1943
JAIRARY
10
17
24
31
7
14
21
5
26
FERRUARY
29
12
19
2
9
16
MARCH
23
30
6
13
20
27
é
APRIL
13
20
MAY
27
3
ARE
JULY
Chart 1
10
17
24
I
e
15
22
FEE
29
5
12
19
26
3
10
17
24
GENT
TTTP
PER
-
SENT
DOB-JONES
264
94
261
93
258
92
255
91
Comodi ty Futures
(Dow-Jones)
252
8
20
8
246
88
243
87
240
Moody Index
in U.S.
B6
237
E
234
84
231
a
228
62
225
61
222
80
219
79
216
78
213
77
210
76
zur
3
10
17
24
75
31
7
14
21
2
10
17
24
,
8
15
22
29
5
12
19
OCTOBER
5
12
19
26
2
9
16
23
19
6
13
20
27
6
13
20
n
,
26
3
10
17
24
31
BOVENBER
JANUARY
FEBRUARY
MARCH
APRIL
MAY
AND
JULY
1942
1943
- of the have of the Treasury
- w - - -
P-148-J
174
STOCK PRICES, DOW-JONES AVERAGES
Pankly hange
Daily
Club n
1942
1943
(34)
-
-
JAY
MPT.
-
-
1
-
MPI,
-
APRIL
TRAI
-
-
-
-
BILLARS
18
or
AMP
subject
BILLAN
SEPTEMBER
n
a
-
5
18
a
11.
u
y
If
-
30 Industrial Btocks
160
154
198
130
30 Industrial Stocks
180
14)
1%
130
145
(4d
1.20
-
10,000,
#
110
IM
100
148
A
so
134
(a)
.
a
us
la
No
50
5
-
45
20 Refiroada
20 Mailroads
jai
-
40
-
-
a
x
34
I
a
2
y
A
-
a
15
-
a
R
is Utilities
n
-
A
is Utilities
a
w
&
-
1%
A
140
is
"
.
were
-
-
Volume of Trading
WILLIONS
-
volume of Trading
- -
Milt)
2
/
18
.
11
:
19
.
is
"
so
.
13
4
a
.
=
.
a
1
.
=
42
4
1
14
.
-
AND
-
-
1941
MOVEMENT OF BASIC COMMODITY PRICES
1942
1943
1944
PERCENT
PERCENT
AUGUST 1939-100
220
220
210
210
200
200
9 Uncontrolled Commodities
190
190
180
180
28 Commodities
170
170
19 Controlled Commodities
160
160
OCT
DEC.
FEB
APR.
JUNE
AUG.
OCT.
DEC.
FEB.
1942
1943
1944
PERCENTAGE CHANGE DEC. 6. 1941 TO JUNE 25, AND JULY 2, 1943
PERCENT
PERCENT
19 Controlled
9 Uncontrolled
Flasseed 6462
Commodities
Commodities
+60
+60
+50
+50
Berley 448%
Cam 44.6%
+40
+40
44 Mage 400X
+30
Lard 28.8%
+30
12
1
Wheet 2592
Amain 251X
Shelloc 12.3%
Steere 2352
175
Lead IIIX
Cotten 2142
+20
Print Cloth 7.8%
.20
Butter /sex
Sugar 6.9%
Wool Tope 6.2 I
Cottonseed Oil 5.9%
Zine .3 %
+10
03 Change
+10
Nicles. sall,
Tin, Rubber,
Coffee, Copper,
&
o
o
St.Screp.esp
(Cocoo -8%
Tellow -4./2
Burlop 4.3 I
-
10
-10
Dec. 6
lone 25
July 2.
Dec. 6
June 25
July E
1941
1943
1943
1941
1943
1943
*20 Controlled a Uncontralled previous to June 26, 1942
Office of the Secretary of the Treasury
- of Reserved and Signature
P-244-A
Chart 3
Regraded Uncla
AVERAGE PRICES RECEIVED BY FARMERS
Indexes. August 1909 - July 1914=100
PERCENT
PERCENT
PERCENT
All Farm Products
Grain
Cotton and Cottonseed
180
160
160
1943
1943
1942
160
140
140
1943
1942
140
120
120
1942
100
100
120
1941
1941
1941
100
80
80
60
60
80
J F M A M J J A S o N D
J F M A M J J A 5 o N D
J F M A M J J A S o N D
200
200
240
Meat Animals
Dairy Products
Chickens and Eggs
220
180
180
1943
1943
1943
200
160
160
180
140
140
1942
1942
1942
160
120
120
1941
140
100
100
1941
1941
120
80
80
J F M A M J J A $ o N D
J F M A M J J A 5 o N D
J F M A M J J A 5 o N 0
Office of the Secretary the Treasury
- of - - Services
P-257
Chart 4 17
Regraded Unclassifie
Chart 5
177
NATIONAL INCOME PAYMENTS AND COMPONENTS
1939
1940
1941
1942
1943
DOLLARS
DOLLARS
-
Billiams
Annual Rate, by months
140
140
130
130
120
120
110
110
100
100
90
90
80
80
70
70
a
$
D
1939
1940
1941
1942
1943
Dollar Totals for Selected Components. May 1942 and May 1943
DOLLARS
DOLLARS
Billions
Billions
3.5
3.5
May 1942
May 1943
3.0
3.0
2.5
2.5
2.0
2.0
1.5
1.5
1.0
1.0
.5
is
0
o
DISTRIBUTIVE
DIVIDENDS AND
GOVERNMENT
OTHER INCOME
COMMODITY BY FNO-
THERAWALS FROM
INCLUDING
PAYMENTS-
AND SERVICE
DUCTION INDUSTRIES
NONDORPORATE
INTEREST.
MILITARY
INDUSTRIES,
(CHICFLY arai,
ENTERPRISES.
(INCLUDES FARMS)
SALARIES AND MAGES
Source: Department of Commerce
Office of the Secretary of Be Treasury
C485-1
- of - - -
Regraded Unclassified
Chart 6
178
STEEL INGOT PRODUCTION
PER
CENT
Per Cent of Capacity
43
'41
100
42
90
40
80
70
Amer / and.
60
JAN
MAY
JULY
SEPT.
NOV
MAR
Office of the Secretary of the Treasury
C-419
Divaior of Research and Statatics
Regraded Unclassified
179
July 5, 1943.
Dear Harold:
I have given careful consideration to your
letter of June 30, in which you ask my opinion as
to your suggestion to the President that he create
a committee on subversive charges to be composed of
five eminent and responsible persons, presumably
not now employed in the Government. I think it a
good idea for the reasons you outline and you may
state that it has my support.
Before reaching a decision I discussed the
matter with Assistant Secretary Gaston, who is the
Chairman of the present Interdepartmental Committee
on Employee Investigations, which would be superseded
by the new committee. He agrees that your proposal
would be an improvement over the present situation.
He tells me that he has devoted a great deal of time
and energy, as I know to be the fact, both to the work
of the present committee and to that of the prede-
cessor committee set up in the Department of Justice.
He thinks that the predecessor committee contributed
very little, if anything, to the orderly and just
consideration of charges of subversive activity on
the part of Federal employees and that he is very
skeptical as to the possibility of effective service
being rendered by the present committee. This is in
part because all of the members of the existing com-
mittee are quite fully occupied in the affairs of
their own departments and agencies and none of them
is especially qualified by judicial or other training
to deal adequately with the basic questions of civil
liberty raised in these employee investigations.
File to Thompson.
By Photo Messonger of incoming Schey 10:15 and 7/7/43
enclosure and copy of
reply in Diary.
Regraded Unclassified
180
- 2 -
I note that the proposed Executive Order would
leave the President entirely free as to the selection
of the personnel of the new committee. I would
question the advisability of limiting membership to
Republicans.
Sincerely yours,
(Signed) Henry Morgenthau, Jr.
Secretary of the Treasury.
The Honorable Harold L. Ickes
Secretary of the Interior
Washington, D.C.
Regraded Unclassified
THE SECRETARY OF THE INTERIOR
WASHINGTON
JUN a 0 1943
My dest Secretary:
The President has suggested that I obtain your resction to a proposal which
I made to him last month with respect to the charges by Congressman Dies that
there are many "subversive" employees in the Executive branch of the Government.
The present situation is, I think that all will agree, entirely unsatisfactory.
After Congressman Dies' most recent charges, the House created a subcommittee of
the Committee on Appropriations to give the employees a "hearing." Congressman
John H. Kerr 10 chairman. The subcommittee has adopted deplorable procedures and
has produced ridiculous decisions. Neither the employee nor the Department may have
& representative present in the secret hearings. The transcripts are not made avail-
able and the reports of the Kerr subcommittee do not even purport to give the
employee's side of the case. The subcommittee convicts employees on the basis that
they once have belonged to organizations loosely described by Congressman Dies as
"front" organizations, and most members of Congress as well as the public there-
after take it for granted that the employees are communists. The procedure, in
addition to being unfair, is unconstitutional, since the removal of Executive
employees is a power committed to the President and not to the Congress.
Whether so intended or not, this smear campaign of Dies and his friends fits
into the general fascist propaganda pattern of creating disunity and distrust of
the Government. It should be stopped, and I think that it can be.
I do not believe that Dies can successfully be refuted by our ignoring him,
or by a continued but inactive assumption by the Administration that Dies 1a
irresponsible and the Kerr subcommittee is gullible. Even if the Senate should
prevail upon the legality and the propriety of the attainder rider which has been
attached to the urgent deficiencies bill as a result of the Kerr subcommittee find-
ing, (Ton if it were determined by the President to disregard this unconstitu-
tions rider, and others like it, the Congress and the public generally would still
be
Roed that Dies' charges are true and that the Administration is protecting
DOB
to from discharge. I believe, in other words, that it is 8 matter of
com
indifference to Dies whether the unhappy victims of his irresponsible denun-
ei
are actually discharged. His objective is not a disinterested desire to
pur
ranks of Government employees but to smear the President and his Admin-
1st
and to discredit liberal or anti-fascist activities.
be refuted, in my opinion, only if the employees are cleared by a body
whil
oualy will be free of any suspicion of a desire to whitewach the Admin-
in
10, therefore, proposed that a committee of fair-minded and outstanding
be created to make general recommendations to the President on the whole
Regraded Unclassified
proble
employees denounced as "subversive," and also empowered to hear
india
caseo. I am convinced that few, if any, of the employees accused
by seam Dies would in truth be found to have any "subversive" tendencies
by eff) tribunal which made 5 conscientious effort to understand what it was
doing I attach a draft of a proposed Executive order along these lines.
The Attorney General has been doubtful of the value of such a committee.
His disagreement with my proposal is based upon the following considerations:
The committee would have only a recommendatory power and its creation would be
an admission that something was wrong with the Administration if it were found
necessary to set up such an important committee. The individual department
heads, if they chose, could set up their own committees of outstanding and dis-
interested persons but it would seen to be a mistake for the President to do so
because it would indicate that he did not have complete faith in his department
heads. If there should be an adverse recommendation by the committee which
should not be followed by a department head, the matter would become even more
involved than it is now.
I wonder if you would be good enough to consider this problem and to give me
your judgment on it, so that I may report your views to the President. I would
appreciate a prompt reply, since if there is ever to be such a committee it should
be created in the very near future. This is because its announcement would be of
imense value in breaking the present deadlock in the Congress on the urgent
deficiencies appropriation bill.
Sincerely yours,
Secretary of the Interior.
Hon, Henry Morgenthau, Jr.,
Secretary of the Treasury.
Enclosure 2927931.
2
Regraded Unclassified
EXECUTIVE ORDER
HING THE COMMITTEE ON SUBVERSIVE CHARGES
*
virtue of the authority vested in me by section 1753 of
Iwrised Statutes of the United States, Title I of the First War
Twors Act, 1941 (Public Law 354-77th Congress), and as President
of the United States, it is hereby ordered as follows:
1. There is hereby established in the Executive Office of the
President a. Committee on Subversive Charges, to consist of a chair-
BAD and four other members to be appointed by the President. The
Committee shall select an Executive Secretary.
2. The Committee shall study the general issues raised by
official and unofficial charges of subversive activities or sympathies
on the part of officers or employees of the Executive branch of the
Federal Government, and shall make recommendations for the orderly con-
sideration and disposition of these charges. The recommended procedures
are to be based upon a thorough consideration of the requirements of
the Constitution, of fairness to the accused individual, and of prompt
end efficacious protection of the interests of the Government.
3. The Committee shall have power in its discretion to hear any
case referred to it by the head of any department or agency in the
Asecutive branch of the Federal Government and shall hear any case
referred to it by the President. It shall from time to time prescribe
rules of practice and procedure to govern the hearing of such cases.
Its report or decision in each case shall be made public.
4. Nothing contained in this order shall be construed to limit
the authority of any department, independent establishment, or agency
to suspend any employee as provided by law, to bar an immediate arrest
and the transfer to court jurisdiction of my case in which the Depart-
and of Justice finds that such action is warranted, or to restrict the
Regraded Unclassified
and responsibilities of the Civil Service Commission in connec-
th its review of disciplinary or administrative action against
playee.
5. The Department of Justice is hereby directed to furnish such
clerical, stenographic, and other assistance and supplies as may be
necessary to the operation of the Committee. Members of the Committee
and the Executive Secretary (unless he should be an officer or employee
of the Federal Government) shall receive an expense allowance of $25
per diem while engaged in their duties under this Order.
6. Executive Order No. 9300 is hereby rescinded and the Attorney
General is directed to discharge the functions specified in paragraphe
3, 4, 6 and 7 of that order through such officers or agencies of the
Department of Justice as he shall direct.
THE WHITE HOUSE
Regraded Unclassified
BRITISH SUPPLY COUNCIL IN NORTH AMERICA
Box 680
EUREPUBLIC 7860
BENJAMIN FRANKLIN STATION
WASHINGTON, D, C.
July 5th, 1943.
CRET
Dear Dr. White:
The gold and dollar figures for June 1943
are as follows:
Jun. 4
Jun.11
Jun.18
Jun.25
Total Gold
951
950
954
967
Official Dollar Balance
263
309
320
349
Total Gold and Dollars
1214
1259
1274
1316
Scattered Gold
181
181
180
183
Gold Reserve against
immediate liabilities
10
10
10
10
AVAILABLE GOLD AND DOLLARS
1023
1068
1084
1123
Yours sincerely,
A.T.KG
A.T.K. Grant.
H.D. White,
Assistant to the Secretary,
United States Treasury,
Washington, D. C.
Regraded Unclassified
186/-
TREASURY DEPARTMENT
PROCUREMENT DIVISION
PFICE of THE DIRECTOR
WASHINGTON
July 5, 1943
TO THE SECRETARY:
Supplementing report to you of June 28, 1943,
the purchases against the African Frogram from
June 28, 1943, to July 4, 1943, totaled $390,976.30
or a total of purchases for the program thus far of
$46,087,560.14.
Attached is report giving status of shipping
against these purchases.
Clif 100mg 5. Tack
Director of Procurement
FORVICTORY
BUY
UNITED
STATES
parants
BONDS
ARB
STAMPS
(37861)
Regraded Unclassified
187
SHIPPING REFORT AS OF JULY 3, 1943
Tonnage
Tonnage
Tonnage
Tonnage
Shipped to Date
Under Load
On liand at Fort
En Route
Commodity
From U. S. A.
At Fort
Waiting Vessels
To Port
Aluminum sulphate
14.5
Asbestos sheet packing
2
Bearings, ball, roller
1
.17
5.12
Blasting caps
1.4
Belts
5.5
Boiler tubes
19
Bone glue
47
10.5
Books & booklets
2
Brass rods and sheets
161.74
14.82
36.5
Rabbitt metal
53.85
Brick
169
Cable insulation winding mach.
4.5
Calcium carbide
2105.89
191
1087.39
47
Cement
10.77
21.5
Cement, rubber
90.7
Chemicals
2640.18
8.4
2063.29
Coal cutters
12
Copper, tubing, sheets, rods,
191.03
80.35
71.6
cable, and wire
Corrugated boards
106
19.4
22
2472.58
20.68
251
43.9
Clothing
Copper sulphate
5697.7
47.5
Cotton thread
75.65
23.6
Cordage g. twine
241.55
22.95
32
Drugs
40.08
1.5
lectric motors
4.1
4.5
.lectroûes
10.41
5.4
8.78
invelopes
18.04
2.56
12.68
files, steel
15
15
.4
allers evrt
72
1
1
2
Regraded Unclassified
-2-
188
Tonnage
Tonnage
Tonnage
Tonnage
Shipped to Date
Under Load
On Hand at Fort
n houte
Commodity
From U. S. A.
At Fort
aiting Vessels
To Port
Class, window
99.6
21
217.76
Glass, lamp chimneys
17
Glycerine
12.75
Crass hooks
1.27
Hooks, eyes, buttons, needles
17
6.5
Horse shoes & nails
197.31
29.91
30.06
10.72
Hosiery
31.56
22.6
Jute bags
751.19
33.55
555
Lamps
5.18
Light bulbs & sockets
11.63
18.7
13.8
Lithopone
10.2
Lumnite
30
Mach. finished book paper
2
Matches
394.38
16.9
62.35
Newsprint
1529.13
66
100
Nipples, bottles, eye cups
as
Oil, insulating
9.5
Padlocks
2.5
Paper products
889..58
247.52
317.24
Paper bags
95.32
190.6
Paint pigments
28
33.5
13.2
1
Piece goods, textiles
11,999.22
21.5
1421.8
1747.45
Fig iron
65
490
121
Pig tin
64
Powdered milk
119
Printers ink supplies
11.5
ev surer
1545
Refined sugar
4186.5
Shoe tools
18.54
E
Spane arts for autos,
tractors harvesters
1.2.70
580.66
127.42
Regraded Unclassified
-3-
189
Tonnage
Tonnage
Tonnage
Tonnage
Shipped to Date
Ender Load
On Hand at Fort
in Route
Commodity
From E. S. A.
At Fort
Waiting Vessels
To Fort
Spark plugs
4.5
5
.2
Spiegeleisen
161
Storage batteries & flashlights
69.27
64.54
Steel, pipe, bars, angles, wire
3860.66
65
4118.72
1109.63
Shoes, boots & soling
338.06
75.75
285.88
132
Sulphur commercial flour
184
2179
785.2
3362.5
Tin plate
845
Tires, tubes & tape
274.64
85
177.8
343.56
Tools
306.07
27.9
417.23
657
Tooth brushes
.75
Tea
171.75
Trucks
229.8
150
105.5
22.46
Typewriter ribbons
.5
Wire cloth
3.45
3.5
Wire nails
100.5
Wire rope
88.5
17
7
X-Ray film
1
18
Brake fluid
.2
2.07
Zinc rolled sheets
27.5
Grain drills
22.46
Pump installations
12.85
Welding rods
.31
1.18
13.62
Sodium silicate glass
28
Totals
43,018.75
3,705.72
11,337.5
9,996.66
Regraded Unclassified
190
NOT TO BE RE-TRANSLITTED
COPY NO. 13
BRITISH LOST SECRET
U.S. SECR T
OPTEL NO, 217
Information received up to 7 a.m., 5th July, 1943.
1. AIR OPERATIONS
WESTERN FRONT. 3rd/4th. 1,808 tons dropped on COLOGNE.
4th. Fortresses (B 17) operated in excellent visibility against
LA PALLICE U-boat installations. 127 tons with fair to good results; LE HANS
(Aero Engine Works) 230 tons with good results; NANTES (Aircraft Assembly
Works) - 130 tons with good results. Escorted Litchells (B 25) bombed targets
at ALIENS. Mustangs (P 51) damaged escort vessel and coastal ship off FRISIAN
ISLANDS. Escorted Beaufighters set fire to 4,000 ton ship off NORLEGIAN Coast.
Casualties in day operations: Allied - 3 Bombers, 5 Fighters. Enemy - by
Fighters - 4, 0, 3.
4th/5th. Aircraft despatched: Sea-mining - 13, DUISBURG - 3,
Leaflets - 4, Intruders - 6, Anti-shipping - 1.
ITALY. 2nd. Liberators (B 24) dropped 60 tons bombs at
SAN PANCRAZIO Airfield, Southeast ITALY.
SICILY. 3rd. Escorted Spitfires bombed BISCARI Airfield.
THEASURY DEPARTMENT
05 II WV 9 INC EW
SECRETARY OF TREASURY
OFFECE
Regraded Unclassified
191
TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
Press Service
Tuesday, July 6, 1943.
No. 37-42
Secretary of the Treasury Morgenthau today announced
the subscription figures and the basis of allotment for the
cash offering of 1-1/2 percent Treasury Notes of Series
A-1947.
Reports received from the Federal Reserve Banks show
that subscriptions aggregate $19,544,000,000. Subscriptions
in amounts up to and including $100,000, totaling about
$1,347,000,000, were allotted in full. Subscriptions in
amounts over $100,000 were allotted 7 percent, on a straight
percentage basis, but not less than $100,000 on any one sub-
scription, with adjustments, where necessary, to the $1,000
denomination.
Details as to subscriptions and allotments will be
announced when final reports are received from the Federal
Reserve Banks.
-000-
Regraded Unclassified
192-
July 6, 1943.
9:21 a.m.
HMJr:
Hello.
Operator: Mr. Jones.
HMJr:
Hello.
Marvin
Jones:
Hello, how are you?
HMJr:
I'm all right, Marvin. How are you?
J:
Oh, I'm going around and around I guess. I'm just
waiting until they can get some of this stuff - uh -
cleared up there on what they're going to do tempor-
arily.
HMJr:
Do you think it will
J:
Well, you can't - you can't go un there - they won't -
uh - they're - they've got this fight on, you know
HMJr:
Yeah.
J:
and the President wanted that - spoarently
wanted that - that particular roll-back to stick.
HMJr:
Yeah.
12
J:
I can't go up there without complicating that until
this thing 1s over.
HMJr:
I had lunch with him Saturday
J:
Uh huh.
HMJr:
and told him all about our conversation on
Friday
J:
Uh huh.
HMJr:
and he was very much pleased.
J:
Uh huh.
HMJr:
He said he was going to talk to you. I don't know
J:
Well, he did talk to me, but he - he wanted just to
take this price thing, you know, straight
HMJr:
Yeah.
Regraded Unclassified
- 2 -
163
J:
Well, I - here's where I'm handicapped
HMJr:
Did he call you Saturday night?
J:
Yeah, Saturday afternoon.
MJr:
He promised me ne would.
J:
Yeah, he did and I talked to him about ten minutes.
HMJr:
Well, then he was a good boy.
J:
Yeah, he's fine and I appreciated it. The only
thing about it 1s this, and I didn't - 1s he still
up there?
HMJr:
Uh - yeah.
J:
Well, now here's the thing about it - that whole
thing, Henry
HMJr:
Yeah.
J:
Uh - he's had this veto message and he's on the
spot on that. He's - that line's got to be held on
that - on that roll-back thing.
HMJr:
Yeah.
J:
This other, you know - if I went up there - until that's
settled - that 18, until they get this resolution
through
HMJr:
I see.
J:
There isn't much, you know - to 8° un - that I - that
I can do without complicating that thing.
HMJr:
Uh huh. But you found him about the way I said you
would?
J:
Yes, I was - I was amazed - I dion't - I didn't
mention this particular thing I'm talking to you
about now
HMJr:
No.
J:
because we talked about the general program for
the teacher, you see
HMJr:
Yeah.
Regraded Unclassified
1S4
- 3 -
J:
but
HMJr:
But, you didn't find him wedded to roll-back forever?
J:
Why, I - I - there wasn't much said about that, except
that I didn't - I didn't get the impression - I didn't
want to talk over the 'phone.
HMJr:
Yeah.
J:
because you never know who's listening. I didn't
want to
HMJr:
Well, they have a control un there. They have a
scramble and unscramble - they - nobody can listen
in - that's a controlled phone.
J:
Well, if I nad known that, I would have - I would
have talked more freely
HMJr:
No, you can talk - you can talk freely on that
'phone.
J:
Well, what I - what I was - what bothered me - you
can see - you see that he has vetoed this thing
HMJr:
Yeah.
J:
on this roll-back that had actually been
HMJr:
Yeah.
J:
passed
HMJr:
Yeah.
J:
Uh - now I'm going to, as I told Justice Byrnes
and all of them - I said, "Now, I'm opposed to any
further roll-backs."
HMJr:
Yeah.
J:
"And at the proper time, unless somebody throws a
halter around me and chokes me, I'm going to aay so."
HMJr:
Good.
J:
I'm for holding the line
HMJr:
Good.
Regraded Unclassified
- 4 -
195
J:
on prices.
HMJr:
Wonderful. Now let me ask you a question. Let's
eay that this thing goes through the way I read
about it in the papers, you get seven hundred odd
million dollars
J:
Yes.
HMJr:
uh - could you, for instance, if you wanted to,
buy one of the essential foode outright if you wanted
to?
J:
Oh, yes, I could do that. I've got the authority to
do that
HMJr:
You could?
J:
under that AAA - no - under that Commodity
Credit thing. I say, if it goes through, you know,
you never can tell what that bunch 1s going to tack
on before they get through.
HMJr:
But the way it 18 now, you could do something?
J:
Yeah, the way - the way I understand it 18 now - the
way - the way the Commodity Credit is set up now, I
could. Now, if they don't handicap it by this resolu-
tion some way
HMJr:
Now, ien't beef about the worst?
J:
Well, beef's about the worst. That's true.
HMJr:
Yeah.
J:
Uh - I don't know - I doubt whether we'd have - uh -
money enough
HMJr:
Yeah.
J:
in this thing to do that on the beef. I think
though - I'll tell you - we're going to do something out.
about hogs, and I think we're going to work
something on beef that will - uh - get this thing
choice but to go in there and take charge of it. And
to flowing. If we don't, why there ien't any other
that's what
HMJr:
Yeah. Well
Regraded Unclassified
186
- 5 -
J:
It's such a tremendous proposition
HMJr:
Well, you
if you don't mind
J:
never do it if we can find some other way to
do it.
HMJr:
Do you mind if occasionally I CAll you up?
J:
No, sir. You shoot the works at me anytime.
HMJr:
Now, one other thing - uh - I'm preparing a little
memorandum on the personal experience I had
J:
Uh huh.
HMJr:
where a co-operative in our valley was trying
to get some prices on some fruit
J:
Uh huh.
HMJr:
and what those people had to go through here in
Washington to get somebody to tell them what the
price it's just damned nonsense
J:
Uh huh.
HMJr:
and I'm going to have this little memo fixed up
and I want to send it to you.
J:
Yeah. Well, I want - I want this whole thing - if I
canget O.P.A. to go along - to be simplified. Damn it!
HMJr:
Well, look
J:
And a lot of it left to local committees and community
committees.
HMJr:
Well, that's what the President wants
Doerator: Operator.
HMJr:
Hello.
J:
All right.
HMJr:
That's what he's keen for.
J:
Yeah.
HMJr:
He wants 88 much local economy as possible.
Regraded Unclassified
- 6 -
187
J:
Well, that's what I want end I'm going to - I'm going
to try to break down this organization into a lot of
State and local control. Now, I my get shot at sunrise
but they're not going to - as long 8.8 I'm in here I'm go-
ing to (Laughs) have something to say about it.
HMJr:
Well, if you'll let me help, I'd like to - in the back-
ground, I mean - nobody will ever read about me in the
newspapers
J:
All right, and I may want you to help me contact - now,
I want
HMJr:
You'll never hear about me in the columns of the
newspapers.
J:
All right. Fine. That's - I know that's true and
H/Jr:
You mean, you'll never
J:
I know you'll be helpful and I know I can trust you
HMJr:
All I want 18 to
J:
now let me ask you, Henry
HMJr:
Anything you want.
J:
Let me ask you, Henry - about this - the President dion't
- he wasn't - it wasn't his notion that I should just come
over here and take ordere from the other bunch, was it?
HMJr:
Well, now, that I - I didn't get on that yet.
J:
You didn't?
HMJr:
No, Marvin.
J:
I don't mean - I don't mean that I'm going to give them
a circus and all that, but if he wants this job done
HMJr:
Well, Marvin, could you - could I out the thing to you
on a different basis - the way you out it to me
J:
All right.
HMJr:
What?
J:
Yesh.
HMJr:
May I put it a little differently?
J:
Yeah.
Regraded Unclassified
- 7 -
138
HMJr:
If I was gitting in your shoes, and had your res-
ponsibility - see?
J:
Un huh.
HMJr:
I'd cut all corners to get them.
J:
Yes, sir.
HMJr:
Does that answer
J:
Yes, that's - that's all I want to know. (Laughs)
HMJr:
What?
J:
That's all I want to know. of course, I don't mean -
of course, I - I - - I - I'm going to try to do the
thing the practical way
HMJr:
Yeah.
J:
I'm going to try to get along every way that I
can.
HMJr:
Sure, but you can Keep Byrnes and Vinson informed -
but if I was sitting there in that not seat
J:
Uh huh.
HMJr:
God, I'd get to the Biss and find out - uh -
what he wanted
J:
Yeah.
HMJr:
and I'd be 86 courteous as oossible but I ser-
tainly wouldn't sit back and - I mean - I can only
tell you what I would do, see?
J:
Uh huh.
HMJr:
But I didn't discuss that end of it with him.
J:
Well, let me ask you this
HMJr:
You can ask me anything you want.
J:
He - he has some little confidence in my judgment
about
HMJr:
Definitely.
Regraded Unclassified
- 8 -
139
J:
I - what I
HMJr:
Well, now
J:
if he just wants me to be
HMJr:
No - well, the answer was, Marvin, I took - I stuck
my neck way out
J:
Uh huh.
HMJr:
and he had a lot of people around there and I
sent word that I wanted to see him, and he had
social people and he asked them to go away and he
gave me three-quarters of an hour, and I told him -
I didn't turn my sails one bit - see?
J:
Uh huh. All right.
HMJr:
And instead of - I told him the facts - I told - I
went so far as to say that you hadn't even seen the
veto message. (Pause) Hello?
J:
Hello. I hadn't seen the veto message.
HMJr:
You had?
J:
No.
HMJr:
Well, I
J:
Now, there was - they had told me - of course, I WAS
busy and
HMJr:
Well, I understood you hadn't.
J:
and I hadn't seen it. No.
HMJr:
You had not?
J:
No. I had not seen it.
HMJr:
Well, I don't understand - did you or didn't you see
it?
J:
I did not.
HMJr:
Well, I told him that.
J:
I - I didn't make any particular effort to see it.
Regraded Unclassified
- 9 -
200
HMJr:
No.
J:
But I - - it wasn't shown to me.
HMJr:
No, but then
J:
I - I - I don't want to make an issue of that. I
guess I could have seen it
HMJr:
Look, Marvin, what I'm telling you - just between
you and me - the point made - when I went up there
on something that he could have very well told me
that it was none of my damned business
J:
Yeah, I understand.
HMJr:
and he could have had - - he broke up - the middle
of a social party to listen to me give him e hard
luck story - see?
J:
(Laughs) Yeah.
HMJr:
And he was never nicer than he's been in years to
me.
J:
Uh huh.
HMJr:
Now, that ought to give you an idea.
J:
Yeah. Well, I thank you.
HMJr:
What?
J:
It does. All right. Well, I thank you very much.
It always 18
HMJr:
He never was nicer and I urged him and then I
followed up with a little reminder - uh - about
calling you and evidently he did it and
J:
Yeah. He did it. He talked to me ten minutes, I
guess.
HMJr:
Well, the man's - the man's - the man's harried, he's
overworked. He wants results
J:
Yeah. All right.
HMJr:
He wants people who will take responsibility and give
him results.
Regraded Unclassified
201
- 10 -
J:
Uh huh. All right.
HMJr:
Is that enough?
J:
That's enough. Thank you very much.
HMJr:
Good bye.
Regraded Unclassified
202
July 6, 1943
9:30 a.m.
GROUP
Present: Mr. Bell
Mr. Sullivan
Mr. Thompson
Mr. Gamble
Mr. O'Connell
Mr. Gaston
Mr. Blough
Mr. Smith
Mr. Haas
Mr. White
Captain Kades
Miss Chauncey
Mrs. McHugh
H.M.JR: I just thought we might kind of get acquainted
again. I have been seeing you all at odd moments. I would
like to tell you about a couple of things I am doing.
In the first place you are all interested - Mrs.
Morgenthau's temperature has been normal now two days.
She is terribly weak. It will be 8. long pull back, but it
looks 8.8 though she were over it.
Blough came up to see me yesterday, and I think he
and I together worked out a pretty good, all-around
inflation program. It is particularly interesting, and I
think we have a little wrinkle on the white-collar people.
I thought it would help me - he said, "As long as we get
up in the higher salary, no." He is a tough guy; but I
think we have something.
What we are shooting for - I want to hold all Friday
morning free beginning at nine o'clock. I know I am going
to go to school, and I invite the rest of you.
Regraded Unclassified
203
- 2 -
Now, this is concentration on the personal income
tax. We are not going to take up the corporate tax at
this time. Is that right, Roy?
MR. BLOUGH: That is right.
H.M.JR: You might tell Mr. Paul what we are doing.
If he wants to come in on a postman's holiday, he can; but
we are aiming - then Roy goes away for a week. I think we
have something, and we are including the whole waterfront.
In other words, what I want is a complete program
which I would like to present to the President which I
think will do the job for '44, and criticism - friendly,
constructive criticism will be invited. (Laughter)
May I repeat, friendly, constructive criticism. Please
leave your tomatoes at home. (Laughter)
MR. SULLIVAN: At least, take them out of the can.
H.M.JR: And your eggs. (Laughter)
But I think we have something. We certainly have
something new, and I am going to be working on it most of
this week. And don't hesitate, Roy, and Haas, and the
rest of you people. Now, we won't do the corporate side
this week; we can't hit the corporate side. If we can do
the individual, I think we are going somewhere. You
ought to begin to have something for me tomorrow, Roy.
MR. BLOUGH: All right.
H.M.JR: Now these fellows Smith and Lindow, these
chartists, you see - they have been fussing around here
for a couple of weeks. They ought to be able to show
something by now.
MR. SMITH: They are coming. They expect to have
them done the end of this week.
H.M.JR: They have got to move 8 little faster.
George, you see what they are doing.
Regraded Unclassified
204
- 3 -
MR. HAAS: I am putting on all the pressure I can.
H.M.JR: I think after this meeting if you and Roy
and White would just get together - are you busy, Harry,
at ten or ten-fifteen?
MR. WHITE: I am supposed to be here. That can be
changed. (Laughter)
H.M.JR: What are you doing here? Oh, well, that is
not important. (Laughter) I tell you what I will do with
you - what are you doing around eleven-thirty?
MR. WHITE: I have called a meeting on that - from
eleven-thirty to twelve would be all right.
H.M.JR: Would it?
MR. WHITE: Yes.
H.M.JR: Will you swap?
MR. WHITE: Yes, eleven-thirty to twelve would be
all right.
H.M.JR: All right, let's swap.
Now while we are doing the individual we have to do
the corporate thing, too. And now that Kades has solved
the problem of Commodity Credit - and in this room -
particularly in this room, I was very much pleased.
I had lunch with the President Saturday. I sent word
to him that I wanted to see him, and I had given a lot of
thought - I just went to town - this is very much in the
room. I told him that I had lunch with Marvin Jones and
Hutson Friday, and here this veto message had gone up on
the Hill and Marvin Jones never even saw it.
Marvin Jones thought the President was for the roll-
much pleased with Marvin Jones' attitude. He was good in
back, which I knew the President wasn't, and I was very
'32, and he is 8 great deal better now. He is a very broad-
gauged fellow, and he agrees with me. (Laughter)
Regraded Unclassified
205
- 4 -
I mean, I had unpleasent things to tell the President.
He received it extremely well and was nicer to me than he
has been in a long time. And I have just checked now with
Marvin Jones. He called Marvin Jones two hours after I
left. But Marvin Jones - in just a short time he had been
blocked off by Byrnes and Vinson and just couldn't get to
the President. And I urged him to go direct. He knows -
he has got enough money now to hold this thing, and just
as soon 8.8 legislation is passed - I mean, he is very much
in favor of the Kades-Morgenthau plan wherever necessary,
of buying entire steers, take your loss at that point, and
then let them go down the line - the processors - on the
control - on the licenses. If anybody goes in the black
market, you don't have to go into court. His license is
revoked at the time. Instead of doing it from the butcher
back, do it right at the place where you buy the whole
crop.
If anybody is interested, Kades gave the President
via me - and then we gave it to Jones and Hutson - 8.
memorandum - 8 two-page memorandum, which Hutson said was
by far the best thing he had ever seen, much better than
anything in his own shop, and O'Connell and five of his
people have been assisting Kades.
We are again on the level where I like to be, where
we are giving stuff to the President. I haven't been able
to do this in months - able to give him stuff and be just
8 little bit ahead of the crowd; and it puts me back again.
I have the ideas, but I have been in the unfortunate posi-
tion - I have had nobody to carry them out. And it has
hurt my position with the White House, because I haven't
been able to give the President stuff.
With the help of the boys in the General Counsel's
office, if you don't mind my saying so, Joe, under leader- two
weeks which has enabled me to render 8. service to
ship of Kades, I have been able to get stuff the last the
President - what I always used to do and what I haven't
been able to do. I have the ideas, but nobody to carry
them out.
Regraded Unclassified
205
- 4 -
I mean, I had unpleasent things to tell the President.
He received it extremely well and was nicer to me than he
has been in a long time. And I have just checked now with
Marvin Jones. He called Marvin Jones two hours after I
left. But Marvin Jones - in just a short time he had been
blocked off by Byrnes and Vinson and just couldn't get to
the President. And I urged him to go direct. He knows -
he has got enough money now to hold this thing, and just
as soon 8.8 legislation is passed - I mean, he is very much
in favor of the Kades-Morgenthau plan wherever necessary,
of buying entire steers, take your loss at that point, and
then let them go down the line - the processors - on the
control - on the licenses. If anybody goes in the black
market, you don't have to go into court. His license is
revoked at the time. Instead of doing it from the butcher
back, do it right at the place where you buy the whole
crop.
If anybody is interested, Kades gave the President
via me - and then we gave it to Jones and Hutson - a
memorandum - 8 two-page memorandum, which Hutson seid was
by far the best thing he had ever seen, much better than
anything in his own shop, and O'Connell and five of his
people have been assisting Kades.
We are again on the level where I like to be, where
we are giving stuff to the President. I haven't been able
to do this in months - able to give him stuff and be just
a little bit ahead of the crowd; and it puts me back again.
I have the ideas, but I have been in the unfortunate posi-
tion - I have had nobody to carry them out. And it has
hurt my position with the White House, because I haven't
been able to give the President stuff.
With the help of the boys in the General Counsel's
office, if you don't mind my saying so, Joe, under leader-
weeks which has enabled me to render a service to the
ship of Kades, I have been able to get stuff the last two
President - what I always used to do and what I haven't
been able to do. I have the ideas, but nobody to carry
them out.
Regraded Unclassified
206
- 5 -
The President was pleased. I don't know whether
Mr. Byrnes is pleased, but I don't give a damn. But
anyway, Mr. Jones is, and I just had a very satisfactory
talk, and I think we had a little something to do with it.
As the President said, if they hadn't sustained his veto -
that was the last straw. He said that that was his last
line of defense. he said, "I would have been cleaned up,
finished on the inflation front.
Now, what I have asked Kades to do - and I find that
different people around - and I am going to try to get -
if you find out who this businessman was in Brooklyn--
MR. O'CONNELL: I am just having his name checked.
I think it is Murray. I thought Miss Chauncey might know.
H.M.JR: We asked CIO to recommend a number of people,
amongst them Wilson of General Electric and a man who had
been in charge of the reorganization of the IRT or BRT of
Brooklyn. Do you remember, Harry?
MR. WHITE: I remember the man, and I can get his name.
I remember him very definitely.
H.M.JR: Would you take that, Harry?
MR. WHITE: Yes.
H.M.JR: I mean that assignment.
MR. WHITE: Yes, the man you once considered in the
past - about a year ago.
H.M.JR: I thought I would look him up again; he
might be helpful.
here on one - both phases. One, he wants the Treasury to
Anyway, there are two phases here. Nelson was over
get aggressive on getting the power to dispose of surplus
after the war, and he says that we are just & bunch of
sissies around here, we don't fight.
MR. SULLIVAN: I disagree with him. As a matter of
fact, I had a talk--
Regraded Unclassified
207
- 6 -
H.M.JR: Well then--
MR. SULLIVAN:
...
before you talked with him.
H.M.JR: Well anyway, let's say that I am 8 sissy.
MR. SULLIVAN: The fact of the matter is that there
is now pending in the Congress a bill that has passed the
House which probably will not be taken up by the Senate
until after the recess. That confers by statute upon us
the power to dispose of surplus commodities just 8.5 we
are now doing under executive order.
I think that there are two things for us to do, to
do a good job on that work and also do the necessary plan-
ning for the other; and if we do both those things well,
it will have to come to us.
H.M.JR: Well, you may or may not know this, Nelson
tells me that Forrestal has set up 8. complete organization
in the Navy ready to go, to do this job. Did you know that?
MR. SULLIVAN: I knew that they were planning on
something of that kind.
H.M.JR: The Army wants to do the same. He has a
complete organization. He says that his own people do,
and the Maritime Commission, and he doesn't want any of
them; he wants it here. Now on that front I am not asking
Kades to do anything, because, frankly, I am not awfully
excited about it, see.
MR. SULLIVAN: I think it is one of the most important
jobs that is to be done.
H.M.JR: Will you carry that?
MR. SULLIVAN: Yes, sir.
H.M.JR: And will you talk with Donald Nelson a bout it?
MR. SULLIVAN: I have already arranged it.
H.M.JR: I am not terribly excited about it - about
being the Government's junk man. That is what it amounts to.
Regraded Unclassified
208
- 7 -
MR. SULLIVAN: There is more to it than that.
H.M.JR: All right. I am more than willing to back
you up if you will take the leadership, but fight.
MR. SULLIVAN: If we could find a half a billion
dollars' worth of things that are virtually surplus to the
Army and Navy today that the civilian economy needed and
could shake them loose and get them distributed, it would
be doing just 85 much in your fight against inflation as
selling an extra half a billion dollars' worth of bonds.
H.M.JR: All right, will you accept that?
MR. SULLIVAN: Then I think you would get excited.
H.M.JR: I didn't give you that?
CAPT. KADES: No.
H.M.JR: The one I am giving you, Chuck - he says he
didn't know anything about it. (Laughter) That is why I
selected him. He isn't prejudiced. The other one is we are
going to start with Guy Vaughan's Curtiss Wright, which I
haven't had time to look at, George, see. And we are going
to begin to look at these - the financial setups of these
companies. And that is why I want a businessman here who
has no business connections, to advise us and take people
like Curtiss Wright - take people like some stove company
that is making machine guns and examine their financial
status - what can we do to reassure these people who are
beginning to get worried and beginning to take their mind
off the war production as to how they can convert back to
peacetime. Now, that is important on the tax front.
Blough said he has made some studies; White has made
some studies. I am sorry to say that I couldn't read them
over the week end, but I would like you to furnish them to
Chuck, Harry.
MR. WHITE: I don't know if they were right on that
problem, but they are related, certainly.
Regraded Unclassified
209
- 8 -
H.M.JR: I haven't read yours so I don't know, but
what I want to do is to take 8. half a dozen or a dozen
typical companies and examine their financial status today,
and what do they have to do to get themselves out of produc-
ing war goods and back to peacetimes.
As Donald Nelson said - he frankly said he has got
nobody in his shop that is doing it. He said he had Kanzler,
Henry Ford's brother-in-law, and he has gone back to look
after Edsel Ford's estate, 80 he has got nobody.
Mr. Baruch was over here the other day for two hours
with John Hancock. They said that it has to be done. No-
body is doing it. They are interested. I am interested.
I spoke. to the President about it and the President
said that it is all right for me to go ahead with it but
to be careful because he said he had been approached, and
he said he doesn't want to get the people's minds off pro-
ducing for war.
But the way I feel is, if we don't do something they
will get their minds off production because they will be
worrying about what is going to happen to them, but if they had
a plan and knew that there was a plan - and again quoting
Nelson, he said it was criminal that this Government had
not had a plan to convert industry to the war. He said we
didn't get shot, but he said that if we don't have a plan to
convert back to peacetimes, it is inexcusable, because we
have plenty of time.
MR. SULLIVAN: I think, Mr. Secretary, that everybody
who is working on that should be very hush-hush, because
there is a great deal of pressure on Congress to allow all
kinds of tax credits for reconversion, and if they find out
that we are disturbed about this thing, they are certainly
going to go to town.
H.M.JR: Listen, if I can't work - - nobody I doubt
whether most of the people in this room knew that I was doing
a lot of work on Commodity Credit. Did you know?
Regraded Unclassified
210
- 9 -
MR. SULLIVAN: Yes.
H.M.JR: But I mean, it isn't going to get out, and it
is the same way--
MR. SULLIVAN: I merely mention that.
H.M.JR: Kades has been loaned to me by the National
Association of Manufacturers. (Laughter) We will do this
thing in a very quiet way and let nobody know about it but
the National Association of Manufacturers. (Laughter)
MR. SULLIVAN: The reason I mentioned that is if we bring
in a lot of outside agencies--
H.M.JR: Now, listen; don't worry - don't worry. Just
the fact that it is a hot potato - nobody has done it - this
is the kind of thing that I used to do and I am going to
begin to do now that I have got some new fingers to my hand.
MR. WHITE: There is 8. big organization which you may
know about. It has given itself 8. lot of publicity under the
aspices of the Department of Commerce - a Mr. Hoffman is
chairman - they have committees all over the country. They
have done a great deal of work. How good it is, I haven't
the slightest way of knowing. They conducted an awful lot
of meetings. It is a very large organization whose primary
purpose and function is--
H.M.JR: I don't--
MR. WHITE: I want you to know about it.
H.M.JR: I don't say nothing is being done; I say nobody
seems to be on top of it in the Government.
MR. WHITE: That is under Government auspices. I don't
know how good their work is, or anything.
H.M.JR: Is Mr. Jones still in the Government? (Laughter)
Regraded Unclassified
211
- 10 -
MR. WHITE: Yes, but he is not - he was last night--
(Laughter)
H.M.JR: Well, anyway, anybody - Kades has gotten 80
good he can tell you how much an ounce of corn will produce
in the way of pork and what the squeal weighs. (Laughter)
I mean, he has gotten to be 8. real expert.
MR. WHITE: On pork. (Laughter)
CAPT. KADES: Bourbon, too. (Laughter)
H.M.JR: With the help of Haas' people, and the General
Counsel people - I am giving him this job, so if anybody has
any ideas, talk to him, and he sees me a couple of times
& day.
And the other thing that you people may or may not know -
if not, I wish Haas would show it to you, from Tickton -
is the tremendous gain of shipping which we have made the
last couple of months. I don't know whether everybody is
conscious of it, but Tickton showed it to me. Another
month at the same rate and we will make up the deficit in
shipping which I think we have lost during the war. It is
perfectly amazing, and the President is very, very elated
over it. I mean, he says it has made all the difference in
the world. We are gaining at the rate - all this is in the
room - maybe everybody knows this, but I didn't - a million
tons & month net gain. It is making B. tremendous difference,
and Tickton has a nice little chart.
MR. WHITE: There may be somebody following it, possibly,
this question of additional shipping helping the inflation
problem. There is a lot of foodstuffs and whatnot which
hadn't been important enough to get any priorities from
Central and South America. And I don't know to what extent
this new shipping will make available ships, or who is
following it - I suppose somebody is. But exclusively
on the inflation basis, you might have George look into it
related to the question of increasing the supply of food
to see where there is any - whether full utilization of these
new ships is being used for that purpose.
Regraded Unclassified
212
- 11 -
H.M.JR: I was amazed. Next to the hospital in New
York there was 8. store - I went across there - and Mr.
Smith was able to buy six bananas for a quarter.
MR. SMITH: Six for a quarter.
H.M.JR: Six perfectly good bananas for a quarter.
MIL. WHITE: There haven't been any bananas around
here, much.
H.M.JR: He bought them, incidentally, for his baby, and
by the time he got home there was one banana left! (Laughter)
MR. SMITH: He didn't like bananas, anyway. (Laughter)
MR. SULLIVAN: Jeff Coolidge looking after the common
people.
H.M.JR: He went in that store - thirty-five cents
for cantaloupe and five cents for bananas.
MR. SULLIVAN: That is the policy of United Fruit.
They are afraid if they run the price of bananas up that
people will get out of the habit of eating them.
H.M.JR: You couldn't get them before.
MR. SULLIVAN: On those that do come in they are
keeping the price down as a matter of company policy.
H.M.JR: You could buy all the bananas you wanted -
I don't think you could a month ago. George, have 8. look at
it. If there is something there, we will pass it on to
Marvin Jones. I don't know where this food is.
MR. WHITE: Bananas, coffee, sugar, and fruits from
Cuba, and so on. Now, it may be that that is somebody's
bailiwick, but I don't know.
MR. HAAS: How about the Argentine beef?
Regraded Unclassified
213
- 12 -
MR. WHITE: Beef, I think, is taken care of. It is
important enough so that somebody is watching it.
H.M.JR: But coffee is in such good shape now that they
are talking about lifting the rationing entirely; there is
also a chance of lifting the rationing on sugar. So the thing
is moving, Harry.
MR. GASTON: We hope they won't lift the ration on sugar.
If they liberalize, it is going to make a very difficult en-
forcement problem in Alcohol Tax - if they take it off
entirely.
H.M.JR: Anyway, I think you will find it is moving, but
maybe not.
Norman?
MR. THOMPSON: I have a vacation schedule made up that
you wanted.
H.M.JR: Is mine on there? (Laughter)
MR. THOMPSON: A big space at the bottom for you.
H.M.JR: Incidentally, tell Eddy Bartelt the President
has evidently taken that list of people in the White House and
has gotten everybody on the carpet. He is sending it over to
us - who have bought on what he calls the "Morgenthau plan",
or have bought outside, and he has evidently gone to town on
it.
MR. SULLIVAN: Hurray!
MR. BELL: Get them on the - he didn't get them on the
pay-roll deduction?
H.M.JR: I don't know.
(The Secretary held & telephone conversation with
Justice Frankfurter.)
Regraded Unclassified
214
- 13 -
H.M.JR: I am doing military this week. I am lunch-
ing with Forrestal today, Marshall tomorrow, and I hope
King Thursday.
MR. SULLIVAN: Are you aware of King's position on trying
to keep the pay-roll allotment out of the fleet?
H.M.JR: That was taken care of.
MR. SULLIVAN: I beg your pardon.
H.M.JR: They told me about it. I told the President
about it. I took B. letter written here to Knox which the
President signed. I said, "King is opposed to this," and
the President went ahead and signed it.
MR. SULLIVAN: I know, but since then he sent out a wire
to the four fleet commanders which was very trickily worded.
MR. BELL: I think the wire was aiready in the mill -
the directive was already in the mill - before the letter
was signed by the President. As a matter of fact, that is why
we rushed the letter in. This directive was in the mittle
H.M.JR: If Eddy Bartelt can get something else--
MR. BELL: Captain Eubank is keeping us pretty well
advised.
MR. SULLIVAN: I think he ought to give the Secretary
a memorandum before that luncheon, Dan. Did you talk with
him?
MR. BELL: Yes.
H.M.JR: This is all right except Morgenthau is not on
here. (Indicating vacation schedule) (Laughter)
MR. THOMPSON: I would like to raise the question again on
the monthly reports White, Blough, Paul, and Haas prepared.
Due to the shortage of help, pressure of other matters, they
Regraded Unclassified
215
- 14 -
have got pretty far behind on them. I was wondering if you
would be willing to let them discontinue them, or at least
discontinue those that they are behind on, and start
currently.
H.M.JR: I will be terribly honest - I don't read them.
MR. THOMPSON: That is what I understood. You do have
files--
H.M.JR: You could - you understood?
MR. THOMPSON: Miss Chauncey keeps me informed. (Laughter)
MR. WHITE: You could make them an annual report. (Laughter)
MR. BELL: Then you won't be so far behind. (Laughter)
MR. SULLIVAN: Only one report behind. (Laughter)
H.M.JR: Why not make them a postwar report, then I
can read them in the orchard. (Laughter) It is all right
with me to discontinue. I don't read them, anyway.
MR. THOMPSON: That will be very helpful. I know
Mr. Haas is only up to last September.
H.M.JR: Who is?
MR. THOMPSON: Mr. Haas.
H.M.JR: He is only up to last September?
MR. HAAS: I was asking for at least 8. cancellation
so we could catch up. The shortage of help is terrific.
H.M.JR: I want to say this - I have got something
to say on the shortage of help. DuBois - who is DuBois?
MR. THOMPSON: There is a vacancy as Chief Counsel of
Foreign Funds.
Regraded Unclassified
216
- 15 -
H.M.JR: Good man, is he?
MR. O'CONNELL: Very good man.
H.M.JR: Do you think 80, Bell? Do you know him?
MR. BELL: Slightly.
H.M.JR: Do you (White) know him?
MR. WHITE: Joe DuBois - I think he is very good.
What are you doing with him?
MR. O'CONNELL: Making him Chief Counsel of Foreign
Funds.
MR. THOMPSON: Mr. Paul has been anxious to do that for
quite some time.
(Letter dated June 24, 1943, addressed to Mr. Josiah E.
DuBois, Jr., signed by the Secretary.)
H.M.JR: He is a good man - Pehle. (Letter dated June
24, 1943, addressed to Mr. John W. Pehie, signed by the
Secretary.)
Now, while we are on that, as long as we are increasing
them let's move them out of the Washington Building, too, and
put War Bonds in there.
MR. THOMPSON: I have been studying that for the last
two months and it is just a question of where can you put
them. There isn't any space in the city.
H.M.JR: They have no sex appeal anyway, right now, so
there are three buildings anyway - why shouldn't they go to
New York? There is lots of unemployment - lots of help in
New York.
MR. WHITE: They don't need help; they are contracting.
MR. THOMPSON: Yes, they are contracting, giving up the
District Building - most of it.
Regraded Unclassified
217
- 16 -
MR. WHITE: There are certain parts of Foreign Funds
that are constantly in touch with both the legal division
here and our division, and meet almost every day. Now, that
doesn't go very far down the line, but it certainly gets at
least half a dozen of the men.
MR. THOMPSON: I think we have made a division. They
have fifty percent of their personnel in New York, and I
think what they have left here is essential to be in Washing-
ton. We went into that very thoroughly.
H.M.JR: NYA must be contracting; OWI is contracting.
MR. BELL: How about the Bituminous Coal Building up
here on--
MR. THOMPSON: I have men out now going around trying
to find space.
H.M.JR: I would like very much to have War Bonds to-
gether in one building and have them close by to me.
MR. THOMPSON: That is what I have been thinking and
trying to work out. I will be working on it.
H.M.JR: Don't take too long, Norman.
MR. THOMPSON: I knew that would be your idea. I think
it is & very good arrangement.
H.M.JR: If the girls remind me, I will make Norman's
life miserable for a couple of days. (Laughter) I think
it is a good plan that you thought of. (Laughter)
MR. THOMPSON: I probably wasn't the original thinker
on it.
MR. SULLIVAN: If he did, he was sorry. (Laughter)
Regraded Unclassified
218
- 17 -
MR. THOMPSON: Two months ago I took it up with
Reynolds of the Public Buildings Administration and
asked him to find a building for us for Pehle.
H.M.JR: Find a building for Pehle, but I would
like War Bonds across the street.
MR. THOMPSON: There would be enough space to take
care of the whole War Finance Division. It would be
ideal.
H.M.JR: Talk to Gamble. I think you might be
able to get him to agree to it. He will be a little
hesitant. (Laughter)
MR. THOMPSON: He will keep firecrackers right on
my heels. (Laughter)
H.M.JR: All right, Norman?
MR. THOMPSON: Fine.
H.M.JR: Mr. Bell, did you read George Wanders
today?
MR. BELL: Yes. It wasn't bad.
We received nineteen billion five hundred forty-
four million in subscriptions, of which one billion
three hundred forty-seven million one hundred thousand
was allotted in full.
So that leaves about seven percent allotment.
Seven percent allotment will give us two billion six
hundred twenty-one million, and with adjustments that
will go close to two billion seven.
H.M.JR: How much with the adjustment?
MR. BELL: It may go enough to be two billion seven.
H.M.JR: And what will the percentage be?
Regraded Unclassified
219
- 18 -
MR. BELL: Seven percent.
H.M.JR: I told Burgess - did he call you yester-
day?
MR. BELL: About what?
H.M.JR: About this.
MR. BELL: He called me but he didn't call me
about this. He called me about the other matter.
H.M.JR: I told him to call you about this.
MR. BELL: About the allotment?
H.M.JR: Yes.
MR. BELL: Yes, he did.
H.M.JR: What was his advice?
MR. BELL: Against it.
H.M.JR: Against what?
MR. BELL: Against cutting down the one hundred
thousand.
H.M.JR: He was?
MR. BELL: Yes.
H.M.JR: Now, where do I sign?
MR. BELL: Just initial it.
(Press release regarding the basis for allotment
initialed by the Secretary.)
H.M.JR: You are going away tomorrow night, or
tonight?
Regraded Unclassified
220
- 19 -
MR. BELL: Tonight.
H.M.JR: Be back Monday?
MR. BELL: Yes.
H.M.JR: Boys, anything you want let me know.
(Laughter)
MR. BELL: I didn't know I had 80 much influence.
H.M.JR: Just let me know. (Laughter)
MR. BELL: I don't know what you can do, but it is
all right. (Laughter)
MR. SULLIVAN: Same results, less fuss. (Laughter)
H.M.JR: Be fine to be Acting Secretary of the
Treasury. (Laughter)
I will be Acting Secretary of the Treasury.
MR. BELL: All right. That is a lot of fun,
too.
H.M.JR: He is the important fellow around here.
(Laughter)
MR. BELL: This is the acceptance of this gift to
the Library of Congress.
(Letter dated June 26, 1943, signed by Mr.
Archibald MacLeish, approving acceptance of donation,
initialed by the Secretary. Telegram to Federal Re-
serve Bank Presidents showing basis for allotment signed
by the Secretary.)
MR. BELL: That is all.
H.M.JR: Harry the White?
Regraded Unclassified
221
- 20 -
MR. WHITE: The Green bill passed last night in
its present form.
H.M.JR: Good. When do you and I go to school?
At least, when am I going to school?
MR. WHITE: There are two things. One is the
silver. Joe just told me he made the arrangements for
ten-thirty tomorrow morning. I don't think you need
much time for that - about ten minutes for that.
H.M.JR: Can I put you down for nine-thirty
tomorrow morning?
MR. WHITE: Nine-thirty to ten, that will be enough
time for that.
H.M.JR: Would you rather say nine 'clock? Does
your car get in by nine?
MR. WHITE: I get in by nine, but I think nine-
thirty would give you enough time. (Laughter)
H.M.JR: In order to give me enough time we will
make it nine-thirty. (Laughter) And Joe will be there
and any other silver experts he has got. You haven't
Handy and Harman? (Laughter)
MR. WHITE: Indirectly I thought we might ask
somebody from Lend-Lease to be up there, in any case.
H.M.JR: Why indirectly?
MR. WHITE: The Director - why not call him - why
don't you call him and ask him if he wants to come up?
H.M.JR: Stettinius?
MR. WHITE: Yes, and it is on India.
You saw Halifax. He was supposed to have had a
communication from his Government, which Phillips was
Regraded Unclassified
222
- 21 -
going to deliver. We haven't heard. Did he give it
to you?
H.M.JR: No. Do you people want to hear a good
joke on me? I wanted to do something for Halifax's
son who has no legs, so I asked him for supper here at
the Treasury, where we have the lift. They are coming
tonight.
I said, "Now, anything that they want to see, I
would be glad to have that picture."
So the social secretary up there said, "The
Ambassador is just crazy to see 'Mission to Moscow'".
And Miss Chauncey said, "Well, the Secretary will be
crazy if he sees it", but with the net result I got
to see it again tonight and I can't say I have seen
it before. (Laughter)
But I don't think they ever asked the boy. Do
you?
MISS CHAUNCEY: I am not so sure that they did
because the Ambassador's first preference was Mission
to Moscow."
H.M.JR: I was going to give them 8. picture -
Mission to Coney Island. (Laughter) So that is why
we are having it twice.
Now, he didn't raise the question.
MR. WHITE: Well--
H.M.JR: Well, I can wait.
MR. WHITE: We have to do something.
H.M.JR: We will wait.
MR. WHITE: Do you want to wait?
Regraded Unclassified
223
- 22 -
H.M.JR: I don't want to do it at supper.
MR. WHITE: No, but the other agencies are pressing
us, and it is our responsibility to get an answer.
H.M.JR: For what, Harry?
MR. WHITE: For the letter we sent to Phillips with
respect to the two hundred million dollars on Lend-Lease
in Reverse, which they were going to comment on.
H.M.JR: When you are in here - is it eleven-thirty?
MR. WHITE: Yes.
H.M.JR: You remind me, and I will call up Halifax
at that time. I will call him up then, Harry.
MR. WHITE: All right. There are a number of other
things. Some of them I will take up then, but there is
one matter I would like to raise.
This is largely Dan's and the Legal--
H.M.JR: I will be here tomorrow. Dan is leaving
tonight. (Laughter)
MR. WHITE: Well, still, that is pay for the American
soldiers. You remember, we just got 8. cable from Iran
saying they are agreeable to have us buy gold on our
account, which means that we will be getting reals a
lot cheaper than what we are paying the soldiers for--
MR. BELL: You mean selling gold?
MR. WHITE: Selling gold but buying the reals at
a very low price. Now, the law requires soldiers to
be paid in dollars. I think it has been interpreted,
either in the Treasury or in the War Department, that
they can give them the equivalent in local currency.
Regraded Unclassified
224
- 23 -
Now, what that squivalent is in local currency
raises, it seems to me, an important legal question.
It seems to me that the Army men could sue somebody for
getting currency at a very different rate from either
what we buy--
H.M.JR: May I make a suggestion?
MR. WHITE: Yes.
H.M.JR: Supposing you pay the man fifty bucks in
U. S. currency and the captain, so to speak, kind of
holds on to the coin and says, "Now, look, Bill, here
is fifty bucks, but if you want local currency for it
I will give you so much." And we supply him with these
cheap reals. Now, the fellow has it, and the finance
officer of the company - every company has a finance
officer - we supply him with the reals. Then he can
give it to the men, and the men get the benefit of it.
(The Secretary held a telephone conversation with
Mr. Stettinius.)
H.M.JR: He will be here at quarter of ten.
MR. WHITE: I think the Treasury has some re-
sponsibility in this. I don't know, but I think, Dan,
that you might have the lawyers go into the whole
business because I think we are getting a little bit
vulnerable. We are paying in China at a five-cent
rate.
H.M.JR: Well, Harry, you raised the point. Whose
responsibility is this, Mr. Bell?
MR. BELL: I guess it is up to us to buy the local
currency. We have been going on the official rate of
exchange. I think this is going to middle the whole
thing up because I doubt if they will continue the policy
of selling gold right straight through. They are going
to have to do something with it before we get through
Regraded Unclassified
225
- 24 -
besides selling gold. It is just an experiment, that
is all it is.
H.M.JR: What is the matter - supposing we get a
lot of cheap reals, can't you turn them over to the
finance officer of the troops and give them the benefit
of it?
MR. WHITE: Then you have to do it - you have to
give them dollars everywhere. They will go out in the
black market, and they can always get 8. better rate than
the Government can give them.
H.M.JR: With gold?
MR. WHITE: Or dollars, either one. They probably
can get a better price for the dollars. They can get a
better price for dollar bills than we are giving them
in the official rates of exchanges. It differs in every
country and differs from month to month.
H.M.JR: Do you want to take it on with General
Carter?
MR. BELL: Yes, sir.
H.M.JR: Will you?
MR. BELL: Yes, sir.
H.M.JR: Is that what you want, Harry?
MR. WHITE: Yes, although I think also that some-
body ought to indicate whether there is a responsibility
there.
H.M.JR: Bell calls in the lawyers - when he has
to. (Laughter)
MR. O'CONNELL: We have been in on all your dis-
cussions involving China, and this is a variation of the
same problem.
Regraded Unclassified
226
- 25 -
H.M.JR: When he has to he calls in the lawyers.
(Laughter)
MR. WHITE: On Martinique, Feis called in response
to--
H.M.JR:
... my talk with Hull.
MR. WHITE: He told me very confidentially they
were sending a Naval man there to make inquiry. I hadn't
looked at my morning paper. It was plastered all over
the morning paper.
H.M.JR: Horner or--
MR. WHITE: Hoover. He said--
H.M.JR: I had the "Ho." (Laughter)
MR. WHITE: He said when their man was ready to go
in - the State Department man - then they would get in
touch with us.
H.M.JR: My suggestion - I talked with the President
about it. He was very much interested. He said he would
talk to Cordell, too. But my suggestion is I would get
in with the Navy on this thing, and I would trot along
with the Navy on it.
MR. WHITE: Well, you want to take it up with the
Navy?
H.M.JR: No. Is it being now - is it with Feis
now?
MR. WHITE: It was left with Feis.
H.M.JR: All right. O.K.
MR. WHITE: He also wants a memorandum from us
as to what we want done with respect to the gold as
soon as they get in there.
Regraded Unclassified
227
- 26 -
H.M.JR: I think you will find the President has
put a little heat on it. This, gentlemen, is Mr. Laval's
money. He is supposed to be residing in Martinique,
and the State Department is just falling all over itself
to help us.
MR. WHITE: That is all. The Army has asked us
for 8. series of studies on these occupied countries.
H.M.JR: Chuck, you all right? You are coming out
from under the corn? (Laughter)
CAPT. KADES: Yes, Mr. Secretary.
H.M.JR: You are going to see these three economic
staffs of mine, aren't you, when you leave here?
CAPT. KADES: Yes, sir.
H.M.JR: You can meet in the hall if you want to.
(Laughter)
Where is your office now?
CAPT. KADES: At the corner of Fifteenth and
Pennsylvania. (Laughter)
H.M.JR: Whose is that?
CAPT. KADES: It is the diagonal corner from here
on the third floor.
H.M.JR: On the third floor? Well, listen, why
not give him what's-his-name's office?
MR. THOMPSON: Ted Gamble's?
H.M.JR: Yes. Let him have that suite there.
He wouldn't have to--
MR. THOMPSON: Odegard is still there.
Regraded Unclassified
228
- 27 -
H.M.JR: Well, let him have half of it. Odegard
will be out momentarily. Why isn't Odegard out now?
MR. GAMBLE: Pending this rearrangement of space--
H.M.JR: Don't wait so long.
MR. GAMBLE: We don't have the space in the other
building.
H.M.JR: I thought he was out.
MR. THOMPSON: No.
MR. GAMBLE: We just didn't have the space.
H.M.JR: Well, is there an empty room there?
MR. GAMBLE: There is an empty room there now,
yes.
H.M.JR: That you had?
MR. GAMBLE: Yes, sir, that is empty.
MR. BELL: There were two rooms there. Peter
occupied one, and Ted the other.
H.M.JR: What's-his-name downstairs - Buffington
had a suite of four rooms.
MR. GAMBLE: I meant we didn't have room to move
him out of the building.
H.M.JR: Why not put him down there with Louis?
MR. GAMBLE: We will do that.
MR. THOMPSON: Plenty of space there.
MR. BELL: There is space on the third floor down
at the other side.
Regraded Unclassified
229
- 28 -
H.M.JR: Let him go down with Louis, and then you
will move Louis and him over. How is that?
MR. THOMPSON: Louis has moved over, as a matter of
fact, hasn't he?
MR. GAMBLE: Yes, Louis has.
H.M.JR: And let Kades have the two rooms there
because he will need people to help him, see, right
opposite Mr. Gaston.
CAPT. KADES: All right, sir. I am perfectly
content where I am. I don't need two rooms.
H.M.JR: I want you where I can walk down and see
you.
Odegard will be perfectly happy down there.
MR. GAMBLE: He won't be unhappy about it.
H.M.JR: But if he was in there with his stenographer
they would get all in a jam in there. He ought to -
nobody ought to be around where Kades is working because
it is too confidential, anyway. What?
MR. THOMPSON: We will do it right away.
H.M.JR: Roy?
MR. BLOUGH: I sort of summarized this consumer
rationing business in Great Britain, if you want to see
the results.
H.M.JR: I will get around to it. You are on my
mind, number one.
MR. WHITE: What is this meeting on expenditure
rationing? Are you taking that up again, or is the
Department of Commerce taking that up again?
Regraded Unclassified
230
- 29 -
MR. BLOUGH: There is a young man over in the
Department of Commerce who, with the backing of
Mordecai Ezekiel, has asked us to give him an hour to
explain some new wrinkles that he has. We are not
pushing it. He is pushing it.
H.M.JR: We got a wrinkle within & wrinkle.
(Laughter)
MR. WHITE: I was curious to hear about it. On
this tax on individual incomes--
H.M.JR: We are going to take care of the gap.
We have a proposal to take care of the whole gap. We
are going from A to zed, the whole business.
White will find the time to see you (Blough).
(Laughter)
MR. WHITE: I will make sure of that. (Laughter)
H.M.JR: Joe?
MR. O'CONNELL: No, I don't have anything this
morning.
H.M.JR: George?
MR. HAAS: I have nothing this morning.
H.M.JR: Ted?
MR. GAMBLE: I have those ads that you asked
about last night. (War Bond advertisements appearing
in the Times Herald handed to the Secretary.)
H.M.JR: Oh, my gawd, don't - I got an advertising
manager. Fix them up.
MR. GAMBLE: They will be fixed up. I just wanted
you to see them. Also, here is the report on the War
Production Board.
Regraded Unclassified
231
- 30 -
(Circular Letter of War Production Board dated
October 23, 1942, addressed to Labor-Management War
Production Drive Committees; memorandum to Joint
Labor-Management War Production Drive Committees dated
October 17, 1942, signed by Donald M. Nelson; and
letter to Mr. Nelson dated October 10, 1942, signed
by the Secretary, handed to the Secretary by Mr. Gamble.)
H.M.JR: Look at the way Chiang Kai-shek sends me
something! Don't give me stuff like that. (Laughter)
MR. GASTON: Do you want it in ebony or jade?
(Laughter)
MR. GAMBLE: We will fix it up. I have sent for
finished proofs for you to take to the White House.
H.M.JR: Give me something nice.
MR. GAMBLE: I wanted you to see these.
H.M.JR: Give me something nice.
MR. GAMBLE: That is all I have.
H.M.JR: The Washington Herald prints Mr.
Roosevelt's picture with a statement that somebody
pays for. It is the only time he gets into the
Washington Herald. Show it to Harry. He is a great
doubter. (Laughter) The right kind of paper - show
it to Harry. He will like it.
MR. WHITE: Is that in the Washington Herald?
MR. GAMBLE: Times Herald.
MR. WHITE: Its readers wouldn't know who he was
unle 88 they said. (Laughter)
H.M.JR: Fred?
Regraded Unclassified
232
- 31 -
MR. SMITH: Nothing.
MR. SULLIVAN: You recall I told you there was
pending a letter that needed your approval on the
price of rubber.
H.M.JR: I don't remember, but that doesn't make
any difference. (Laughter)
MR. SULLIVAN: I objected to it. I have been all
through it with Joe and Tom Lynch. Lynch used to be
with Jeffers and was in on this from the beginning.
I am convinced I am wrong, and I am approving a
letter today.
H.M.JR: Price on what? I don't know even what
you are talking about.
MR. SULLIVAN: They were selling - the Rubber
Reserve Company was selling rubber for twenty-two and
a half cents, and as the old stockpile diminished the
price they were paying for rubber went up. The South
American rubber is very expensive, and they decided an
over-all of forty cents would be about right. The
Army and Navy and WPB had agreed to that. Then Leon
Henderson objected. The rubber was going into articles
that were not being taken by the Army and Navy but sold--
H.M.JR: It is too complicated.
MR. SULLIVAN: It is too complicated to give it
to you, but they have been through it and sold me the
book on it, and I am going to approve it today.
Also, I spoke to you on the attitude of the Army
ending special amortization of the twenty percent.
They have recommended three different ways of doing
it. One is terminating it by legislation, which I
think is the best way. With your permission, I will
talk with Knox when he gets back.
Regraded Unclassified
233
- 32 -
H.M.JR: You have already talked to me about
that.
MR. SULLIVAN: Yes, I did.
H.M.JR: Won't that come into postwar plant con-
version?
MR. SULLIVAN: A little bit.
H.M.JR: You had better let Chuck know about it.
I want to tie up all these ends around the Treasury -
anything that has to do with a plant or business.
MR. SULLIVAN: That is all.
H.M.JR: Mr. Gaston, the great traveller. (Laughter)
MR. GASTON: Yes. Ted didn't mention our travel
plans, but perhaps you know about them. We are planning
to leave tonight, to be gone a week.
H.M.JR: I saw Ted last night. I think it is fine.
MR. GASTON: We have had a little controversy with
Commodity Credit. I don't know whether it came up in
your meetings with them, but it isn't tremendously
important. It is the question of their imports - the
war materials purchased abroad - free-of-duty materials -
which they intend for distribution in the retail trade
in the United States. It is not yet settled.
MR. BELL: Did the Comptroller General get in on that?
MR. GASTON: He is in on it whether he is entitled
to be in on it or not. There is no question about his
position. He is against it.
H.M.JR: All right.
Regraded Unclassified
234
July 6, 1943,
10:04 a.m.
HMJr:
Hello.
Operator:
Mr. Stettinius is out of his office for just a
few minutes.
HMJr:
Well, the minute he gete back, let me talk to him.
Operator:
All right.
10:12 a.m.
HMJr:
Hello.
Operator:
Mr. Stettinius. Go ahead.
HMJr:
Hello.
Edward
Stettinius: Henry.
HMJr:
Yes.
S:
How's your wife?
HMJr:
She's getting along slowly, Ed.
S:
Well, you know Henry Cabe is one of my most devoted
friends.
HMJr:
Yes, I know, he said that you were his first patient
S:
Well, now
HMJr:
when he came to New York.
S:
It's great comfort that she's - that you've got
Henry. He's a great fellow.
HMJr:
of course, the trouble wasn't from result of his
operation. It was other troubles
S:
Yeah.
HMJr:
which came in afterwards.
S:
Well, is she making - is she making satisfactory
progress now?
Regraded Unclassified
- 2 -
235
HMJr:
Uh - just about - just about.
S:
Well, I've been
HMJr:
It's seven weeks now.
S:
Uh huh. That's awful. I've been thinking about
you, fellow.
HMJr:
Thank you. Ed - uh - I've asked for an opportunity
to appear before the Great Silver Committee at 10:30
tomorrow on silver to India. (Pause) Hello.
S:
India?
HMJr:
Yeah.
8:
Yeah.
HMJr:
India wants some silver very badly.
S:
I know.
HMJr:
Would you like to go up with me?
S:
I can. I went before, you know, and got them the
three million ounces for U.K.
HMJr:
I know.
S:
If you'd like me to go, I'd be delighted. I doubt
if it would add much.
HMJr:
Yes, it would. I'll tell you what I was going to do.
I was going to go to school here a little bit before
hand, with Harry White - see?
S:
Yeah.
HMJr:
And if you'd care to drop over here at a quarter of
ten, we - at least, you can listen to me go to school
anyway.
8:
Tomorrow morning at a quarter of ten.
HMJr:
Yeah, and I'll post myself - then we can go up
together.
S:
All right, Henry. That's a date.
HMJr:
How will that be?
- 3 -
236
S:
That's fine. I'll be in your office at a quarter
of ten.
HMJr:
Thank you, very much.
S:
And I'll go with you and you - you'll make the
statement
HMJr:
I'll make the statement and you can simply back me
up if you will.
S:
I'll just back you up and support what you say.
HMJr:
If you will.
S:
Okay, Henry.
HMJr:
Thank you very much.
S:
Thank you, sir.
Regraded Unclassified
237
July 6, 1943
12:22 p.m.
Operator:
Here he is.
HMJr:
Hello, Nelson.
Nelson
Rocke-
feller:
How are you, Mr. Secretary?
HMJr:
Fine. Thank you.
R:
Say, I think I've got some good news for you.
HMJr:
I can stand it.
R:
You remember that magazine you spoke to me about?
HMJr:
Yeah.
R:
I think it's finished.
HMJr:
Wonderful.
R:
I haven't got an official confirmation in writing
but there was a telephone call - I had a long talk
with a fellow who went down there
HMJr:
Uh huh.
R:
three weeks ago
HMJr:
Uh huh.
R:
uh - I gave him the whole background and he said
he thought he could do the job. We got a telephone
call
HMJr:
Wonderful.
R:
which, of course, came through their censor and
ours
HMJr:
Yeah.
R:
in which the indications were that the job had
been done and it was oke. I'll get confirmation on
that as soon 8.8 he gets back
HMJr:
Yeah.
R:
in detail
Regraded Unclassified
- 2 -
238
HMJr:
Good.
R:
But I believe - I have enough confidence in him
and what he says to be pretty sure that the thing.
HMJr:
Yeah.
R:
....18 finished and we won't have to worry about
that.
HMJr:
You haven't got another one of those electric
broughams stored away somewhere have you, in your
stables up there?
R:
Electric what?
HMJr:
Brougham - didn't you see the picture of your
parents in an electric
R:
Oh, yes - yes - yes - I know what you're talking
HMJr:
You don't even know what an electric brougham 18.
R:
Oh, I'd forgotten about it.
HMJr:
You don't know what an electric brougham 1s....
R:
No, that 18
HMJr:
you're too young
R:
18 - is out of my area.
HMJr:
I say, you're 80 young you don't know what an
electric brougham 18. Well, that's what they were
driving around in - in case you don't know.
R:
Yeah. I've got it now. Say, isn't that a wonderful
one though.
HMJr:
Marvelous.
R:
I thought that was a pretty cute picture.
HMJr:
I thought it was lovely.
R:
Well, they - nobody can - no O.P.A. official can
get em in that.
HMJr:
(Laughs) Okay, Rock.
Regraded Unclassified
- 3 -
239
R:
How have you been?
HMJr:
I've been all right.
R:
Good.
HMJr:
Thank you.
R:
Listen, if there is anything that - any more things
or angles that come up like this....
HMJr:
There will be, don't worry.
R:
Okay, and I'll let you have the detailed confirmation
when I get it in writing.
HMJr:
Thank you.
R:
Okay.
HMJr:
'Bye.
e-Randolph Paul
July 6, 1943
240
3:57 p.m.
Robert
Doughton: All right.
HMJr:
Hello, Bob.
D:
That you, Henry.
HMJr:
It's me, in person.
D:
How's that?
HMJr:
That's me talking.
D:
Yes, sir.
HMJr:
Now....
D:
You recall the last time We talked over the 'phone,
as far as I remember, I told you as soon 8.8 we could
ascertain about a recess program, that I'd call you
again about taxes.
HMJr:
That's right.
D:
Well, looks like we're going to recess this week
and on the basis of that I called our committee
together - full membership - this morning to dis-
cuss the time that we'd begin consideration of
the tax bill 80 far as the committee was concerned.
HMJr:
Yeah.
D:
So we set September the 8th....
HMJr:
Good.
D:
to come back here and I'd like to do this,
Henry
HMJr:
Yeah.
D:
if you think well of it
HMJr:
Yeah.
D:
before I leave - is Paul still going to officiate
for you?
HMJr:
Officiate when?
Regraded Unclassified
- 2 -
241
D:
Well, kind of - when you're not here,be looking
after tax matters for the Treasury?
HMJr:
That's right, but I'm....
D:
The same capacity he's been in?
HMJr:
That's right.
D:
As head of your staff that studies and works on it....
HMJr:
There's no change.
D:
How's that.
HMJr:
There's no change.
D:
Well, if it's agreeable with you - I haven't said a
word to anybody about it....
HMJr:
Yes.
D:
If it would be agreeable with you - you thought well
of it,...
HMJr:
Yeah.
D:
....I'd like for - uh - to have a meeting with Paul
and Stam before I leave....
HMJr:
Good.
D:
....and see how they are getting along and to what
extent they are working together and see how much
I can get them to push up their work and then if -
when they - anything they don't get together on, if
they have some independent thoughts or separate
thoughts, why let them have those ready when we come
back.
HMJr:
I think that would be fine.
D:
That's what I thought. Well, I'll try to get in
tough with them then sometime tomorrow.
HMJr:
Good.
D:
....and if it's all right now, I'll call Paul--you
tell him about it....
HMJr:
Yeah, he....
242
- 3 -
D:
and find out what suits Stam and then I'll call -
I'll set a date - could - could Paul come most any
time? Is he here?
HMJr:
Well, I'm not sure, but let me call him and get word
to him to get in touch with you
D:
You didn't - yeah, tell him to get in touch with me
as soon as he can.
HMJr:
When do you want to see him? Tomorrow?
D:
Tomorrow - or not later than the next day.
HMJr:
I'll get in touch with him.
D:
Tomorrow would be better.
HMJr:
Righto.
D:
I wanted to say this - that the spirit of the
meeting this morning
HMJr:
Yeah.
D:
we realized we had to work out a tax bill
HMJr:
Yeah.
D:
and the Republicans manifested a very fine spirit
HMJr:
Good.
D:
and a cooperative spirit and they didn't want to
play politics
HMJr:
Good.
D:
They are willing to go along and work and I told them
that we'd had two or three little preliminary meetings
- just a few of us - just to decide on dates, etc. -
that I had suggested - we did not discuss amounts nor
methods.
HMJr:
Good.
D:
That seemed to please them.
HMJr:
Well, I'm glad to hear that.
Regraded Unclassified
- 4 -
243
D:
Yeah, it looked all right now today on the surface.
HMJr:
Fine.
D:
All right.
HMJr:
Thank you.
D:
You ask Paul to call me, will you?
HMJr:
I'll get in touch with him right away.
D:
And then another thing about this
HMJr:
Yeah.
D:
now when we come back here the 8th - I've just
been talking to the Speaker and he thinks that the
Congress won't have anything much to do
HMJr:
Yeah.
D:
for two or three weeks
HMJr:
Yeah.
D:
probably just meet and adjourn for three days
at a time, you know.
HMJr:
Yeah.
=
D:
That being the case, you see our committee can work
right along and do three times as much work as we
could if the House was busy and we had to answer
roll calls.
HMJr:
Well, that sounds very encouraging.
D:
How's that?
HMJr:
That sounds very encouraging.
D:
Well, all right, Henry, it looks all right.
HMJr:
Yeah.
D:
Well, good bye.
HMJr:
Thank you.
Regraded Unclassified
cc: Dr. White
244
July 6, 1943
4:02 p.m.
HMJr:
Morgenthau.
Lord
Halifax:
Hello. Halifax here.
HMJr:
I've done pretty well for you. I got that silver bill
through.
H:
Well done.
HMJr:
Hello?
H:
Well done.
HMJr:
(Laughs) I don't know how much credit I'm entitled
to, but anyway, I'm going to take it all.
H:
anyway, that's very good.
HMJr:
And then I asked for a chance to appear before the
Silver Committee at 10:30 tomorrow to tell them what
we wanted to do for silver for India, and I'm going
un tomorrow morning.
H:
Uh - huh.
HMJr:
And I'm taking Ed Stettinius with me.
H:
That's real good.
HMJr:
So we're - we're moving right along on that front.
H:
Well done. Thank you very much.
HMJr:
Now - your man, Phillips, before he left, told Harry
White that you had a memorandum in connection - from
your government - that this request of ours that we
would like to have your government furnish us with
$200 million worth of goods for our army in England.
H:
Yes.
HMJr:
Hello?
H:
Yes. In raw materials, you mean?
HMJr:
Pardon?
H:
In raw materials?
Regraded Unclassified
245
- 2 -
HMJr:
Right.
H:
Yes.
HMJr:
And, I Just - I - I don't want to talk business
tonight, and - any more than you do - and I just
wondered if Phillips was correct that you had such
a memorandum and - the other departments are pushing
us on this thing - and I wondered possibly, if there
was such a memorandum in existence, when we could
talk about it.
H:
Well, I don't know quite what he meant by a memorandum.
He and I and Opie had a good deal of talk about it.
HMJr:
Yes.
H:
and I think he talked with White and he talked
with - with Stettinius.
HMJr:
Yes.
H:
And I rather think Opie talked with Dean Acheson.
HMJr:
Yes.
H:
And the up-shot of all that talking
HMJr:
Yes.
H:
was that just before he went, I had a long - long
talk with Phillips about it
HMJr:
Yes.
H:
and we discussed the - and I think sent the
telegram to London - and we discussed the lines that
he should - that - do the best to handle the case on -
8.8 soon a.s. he got to London.
HMJr:
Oh!
H:
And, there had been some telegram from London to say
that - either Winant or Averill Harriman was going to
talk to the Chancellor again about it also from that
end, and I gathered from - I suppose from Stettinius or
second hand through Phillips, that if they got - you -
your people got an answer by the time they - they
wanted it in August - that that would be all right.
HMJr:
No.
Regraded Unclassified
246
- 3 -
H:
And, accordingly it was left that Phillips should
argue it - talk about it 88 soon AB he could get
back, and I've heard no more. I can very well - if
you want me to - I can very well send 8. telegram
to hurry them up.
H/Jr:
Would you mind, end saying that I have been inquiring
and I - I don't want to wait until Phillips gets back.
B:
Ah - not until he rets back here.
HMJr:
Yes.
H:
But he 1s back in England now.
HWr:
Yes, oh - I - yes - I thought you meant that I would
have to wait until he got back
E:
Oh - no - no - no. He's back there now
HWr:
I see.
H:
and I shall be expecting to hear from him any
time and I can very well - I can verywell send the
telegram to them to ASK them to hurry un with it.
HMJr:
Would you?
H:
Yes.
HMJr:
I'd - I'd appreciate it, because we lay considerable
stress on it here.
H:
Yes. My thought had been - and I might well have been
wrong - that what you all wanted it for WEB to make B.
case when you - when - in some message or some - some
document that you had to prepare for August.
HMJr:
Well, it's a little bit - that may be true, but it's
a little bit more than that. It's frankly a question
of your balances
H:
Yes.
HMJr:
it's fairly high
H:
I know.
UMJr:
and this would be one way to work them off. I mean,
I believe - you know I - I'm always very frank
247
- 4 -
H:
Yes.
HMJr:
and
H:
Well, I
HMJr:
so if - if you could and then - then when you
have the answer maybe you and I could sit down and
talk about it.
H:
Certainly. Certainly. Well, I'll - I'Ll send
Kingsley Wood a telegram at once, to tell him that
you've spoken to me
....
HMJr:
Yes.
E:
and that you would like to know where we were
on it as soon as possible.
HMJr:
Within a few days.
H:
Yeah. I will, certainly, I'll get it right off at
once.
HMJr:
Thank you.
H:
Well, we meet this evening.
HMJr:
Right.
H:
How is your wife?
HMJr:
I'm glad to report that she's making slow progress.
H:
But in the right way.
HMJr:
In the right way.
H:
Oh, well, that's all right.
HMJr:
In the right way.
H:
Good. Good.
HMJr:
Thank you.
H:
All right. Good-bye.
Regraded Unclassified
248 L
July 6, 1943.
4:16 p.m.
HMJr:
Hello, Marvin?
Marvin
Jones:
Yeah.
HMJr:
Henry talking.
J:
Yes, sir.
HMJr:
Marvin, have you got some administrative fellow
over there that - I could send over and just - I'd
like him to know what We went through the other day
trying to get a price set for Hudson River Co-op -
I mean that we went up - I've been all through this
thing now myself, you see - and seen how many
agencies have got to set a price
J:
Uh huh.
HMJr:
on currants and berries
J:
Yeah.
HMJr:
and it's just damned nonsense.
J:
Well, of course, that thing ought to be straightened
out where they could have quick action and
HMJr:
Yeah. Now, have you got some fellow over there - he
talked to ( Talking aside: Who'd you talk to?) Dodd.
Is he - Dodd - have you got a man over there
J:
Yeah, I've got Ed Dodd - he's the AAA Administrator.
HMJr:
Is he under you?
J:
Yeah.
HMJr:
Well, could this man - Norman Tietjens - of mine
talk with him?
J:
Yes, but I - I rather think he'd better go down
to the berry man
HMJr:
No, it's all been settled
J:
It's all been
HMJr:
it's all fixed - it's all settled, but what I -
I am again worrying about your problem.
J:
Yeah.
Regraded Unclassified
- 2 -
249
HMJr:
Why should there be four fellows trying to settle
a price on berries like - when the crop is already
half over?
J:
That's true - well, O.P.A. has 8. part in that.
HMJr:
Yeah. He went all through this thing. He spent
two days on it.
J:
O.P.A....
HMJr:
He went from O.P.A. to Agriculture - to O.P.A. -
and I don't know whether you want to hear about it
but I told the President about it and its as good
a case - because its 80 ludicrous - uh - could
strengthen your hand - that's what I'm thinking of.
J:
This Dodd - it's another Dodd in the food and
vegetable branch, you're talking about
HMJr:
Oh.
J:
Well, yes, I....
HMJr:
No, what I - I'm thinking about - here's a good
case that I went through personally
J:
Uh huh.
HMJr:
and it's just damned nonsense and nobody can
operate like that
J:
Well, I....
HMJr:
Now what can I do with all this - if it's
J:
Well, I don't know. I rather think I'd like for
Grover Hill or Porter to talk to him.
HMJr:
Have who?
J:
Grover Hill or Porter - Grover Hill is the Assistant
Secretary of Agriculture - Grover Hill - or Paul
Porter is one of my assistante here
HMJr:
Well
J:
but I'd think he'd want to get this man Dodd
from down there who has been handling it.
Regraded Unclassified
250
- 3 -
HMJr:
Well, the thing is all settled. What I want is for
him to talk to
J:
I know, but I'd like to have his - his slant on it,
too, while your man is talking
HMJr:
Well....
J:
80 let me - uh - ( Talking aside: Can you talk to
this fellow - he's talking about this....)
HMJr:
Uh - uh....
J:
I'd like to have him talk to Grover Hill
HMJr:
Grover Hill.
J:
..Assistant Secretary of Agriculture.
HMJr:
Grover Hill.
J:
When could he come over to us - when Grover sends
for him?
HMJr:
Any time - his name 18....
J:
Let me - let me give it to Grover and give him your
boy's name, now.
HMJr:
Norman - his name is Norman Tietjens - - T-1-e-t-j-e-n-s.
J:
T-1-....
HMJr:
e-t-....
J:
T-1-e-t....
HMJr:
....j-e-n-s.
J:
j-e-n-s.
HMJr:
Yes - j-e-n-s.
J:
Now, what's his branch number.
HMJr:
He's in - well, he's in the General Counsel's office -
the Treasury.
J:
General Counsel - just....
HMJr:
The
251
- 4 -
J:
General Counsel's office.
HMJr:
Yeah. The point is, we got through it - see? - it's
settled - finished
J:
Yes, I understand, and you just want the story - and
you told the story to the President
HMJr:
I've told it to the President
J:
and he thought it took too long, huh?
HMJr:
Well, he thought it was crazy - just the way I
J:
(Laughs) I'm sure it is.
HMJr:
and the point is - here's a chance - where I
might be a little service to you - you think
J:
Oh, bless your heart - I'm going to - I'm going to
have this boy come over and I'm going have Porter
and Grover both talk to him and see if they can't
iron out some of this.
HMJr:
And use this as an example, 'cause somebody around
this town ought to be able to set the prices without
having to talk with Tom, Dick and Harry and then
Tom, Dick and Harry all over again.
J:
Uh huh. That's right. You ought to be - you ought
to be able to get quick action. Lord, that sometimes
is as important as just action.
HMJr:
And with the result that the people - try to cuiet
the people down a little bit in the field.
J:
All right. Well, you just - I'll take this - Norman
Tietjens - and he can call the General Counsel office
over there
HMJr:
Yeah.
J:
Counsel's office and get him.
HMJr:
Right.
J:
Now, I'll do it and thank you.
HMJr:
Am I bothering you too much? (Aside: He's gone.)
252
252
y
Y
T
E
L
E
G
of
1943 JUL 6 PM 6 41
P
H
WU70 13 GOVT
BD WASHINGTON DC JUL 6 523P
HON HENRY MORGENTHAU
SECRETARY OF & TREASURY
ECONOMIC STABILIZATION BOARD MEETING WILL BE HELD THURSDAY,
JULY 8, AT ELEVEN OCLOCK
FRED M VINSON DIRECTOR OF ECONOMIC STABILIZATION.
640P
yes=
11
253
JUL 6- 135;
Dear Colomel D'Olier:
I have your letter of June 25 in which you state your belief
that the current publicity about compulsory savings is dauaging to
the War Bond compaign as well as all other forms of anvings.
I agree that discussion at this time about foreing people to
lend a given amount of money to the Government can prove very damag-
ing not only to the sale of War Bonds but to all other savings media.
I feel also that the discussion is especially unfortunate at this
time because there is no indication that it vill be necessary or vise
to adopt compulsory savings as a Covernment policy.
Congress has made 10 clear that any tax bill passed in 1943
would not be retroactive on 1943 income. Ilven if Congress should
decide eventually that a compulsory lending plan would help to
control inflation, it seoms only reasonable that serious discussion
of such a plan should be postponed, in fairness to the millions of
patriotic Americans who are supporting the voluntary system, until
ve are faced with some need to make a decision.
As you no doubt know, any of us believe that consideration of
any sort of legislative savings plan should wait until there is some
indication that the same or better results in obtaining funds from
non-inflationary sources cannot be achieved by the voluntary method.
There is no such indication at this time. We have exceeded our goals
in each of the two Was Loan driven, and have raised 7 billion dollars
from individuals in the first six months of this year.
It should be possible at least to double in the next six months,
the 7 billions we raised in the first six months through the voluntary
method, and to get all the funds from new savings rather than by trans-
for from non-inflationary investments. The voluntary plum has the
great virtus of being flexible enough to permit bond buyers so continue
meeting visal commitments for life insurance, mortgage payments, and
other non-inflationary investments, at the time dissing deoply
into funds not needed to met such requirements. One of the great
weeknesses of a compulsory savings plan in Its lack of much flexibility.
To got from as. compulsory savings plan as much as 10 can get through the
voluntary method, would bene with crunhing weight on those with fixed
Complete File :f.
Diary.
Regraded Unclassified
254
- 2 -
incomes and heavy commitments, who are least able to afford 11. That
is one reason people who have such savings should support the voluntary
method to the fullest extent.
Sincerely yours,
(Signed) H. Morgenthau, Jr.
Secretary of the Treasury.
Colonel Franklin D'olier,
President, Prudential Life
Insurance Company,
Nevark, New Jersey.
Complete File in
Diary.
FSigr 7-1-43 BS
Regraded Unclassified
255
FRANKLIN D'OLIER
THE PRUDENTIAL INSURANCE COMPANY
PRESIDENT
OF AMERICA
HOME OFFICE, NEWARK, NEW JERGEY
June 29, 1943
The Honorable Henry Morgenthau, Jr.,
Secretary of the Treasury,
Washington, D. C.
My dear Mr. Secretary:
The United States Treasury War Finance Committee of
New Jersey, of which I am Chairman, has laid its plans and has every
expectation of making the coming War Bond campaign a great success in this
State, particularly as we are organizing to make it possible for almost
every citizen in this State to contribute to the war effort by the purchase
of war bonds and stamps. Based on past experience, we believe that their
patriotic response will be spontaneous and generous. However, we have been
disturbed lately by the discussion concerning compulsory saving, Continued
discussion at this time is bound to react unfavorably on the voluntary pur-
chase of war bonds in both the September and, if the discussion continues,
in the December campaign as well.
We should think that both the Administration and Congress would
want to see- the results of these two campaigns on a voluntary basis before
making any decision whatever in reference to compulsory saving. A premature
discussion of this subject would unquestionably materially impair the success
of these two drives.
The voluntary purchase of war bonds has been a very important factor
in reducing the danger of inflation and I would regret greatly if anything
should be done to discourage this very important activity, especially at this
time when probably nothing could be done in reference to compulsory saving
until the end of the year. To the extent that the discussion discourages the
voluntary purchase of war bonds, it is contributing toward inflation and I
hope something can be done to stop this discussion at this time, if it is at
all possible.
All voluntary savings where the proceeds are ultimately invested in
Government bonds are very powerful anti-inflationary forces, such as the pay-
ment of debts, including mortgages, and life insurance premiums, and nothing
should be done to discourage such savings, and these very important factors
should be very carefully considered in any compulsory saving plan. The dia-
cussion at this time of compulsory savings unquestionably would seriously
affect voluntary savings. Patriotic incentives of voluntary effort should be
maintained, if at all possible.
Regraded Unclassified
256
-2-
In short, I urge that the premature discussion of compulsory
savings, whatever its virtues, should not be permitted to hamper the
great flow of voluntary anti-inflationary investments.
Sincerely yours,
Franklin Dolin
Regraded Unclassified
257
FRANKLIN D'OLIER
THE PRUDENTIAL INSURANCE COMPANY
PRESIDENT
OF AMERICA
HOME OFFICE, NEWARK, NEW JERSEY
June 29, 1943
Mr. Frederick Smith,
Assistant Secretary of the Treasury,
Washington, D. C.
My dear Mr. Smith:
I appreciate very much indeed the suggested
draft you dictated over the phone and I have taken this draft
and put it in my own words and I am enclosing my letter to
the Secretary, which I thought you would like to have rather
than to send it to him directly.
Sincerely yours,
Franklin Doluer
Regraded Unclassified
258
SECRET
TREASURY DEPARTMENT
PROCUREMENT DIVISION
OFFICE OF THE DIRECTOR
WASHINGTON
July 6, 1943
MEMORANDUM TO THE SECRETARY:
There is submitted herewith the operating
report of lend-lease purchases for the week ended
July 3, 1943.
The policy of applying existing stocks to new
requirements is being developed in close coopera-
tion with representatives of the Lend-Lease organi-
zation.
Clif ton' E. Mack
Director of Procurement
FORVICTORY
BUY
UNITED
STATES
BONDS
AND
STAMPS
(37861)
Regraded UInclassified
259
SECRET
LEND-LEASE
TREASURY DEPARTMENT, PROCUREMENT DIVISION
STATEMENT OF ALLOCATIONS, OBLIGATIONS (PURCHASES) AND
DELIVERIES TO FOREIGN GOVERNMENTS AT U. S. PORTS
AS OF JUNE 30, 1943
(In Millions of Dollars)
Administrative
Miscellaneous &
Total
U. K.
Russia
China
Expenses
Undistributed
Allocations
$3958.5
$1926.8
$1557.0
$103.4
$10.2
$361.1
(3262.1)
(1625.8)
(1256.9)
(103.4)
(6.8)
(269.2)
Purchase Authoriza-
$2801.3
$1526.0
$1129.1
$40.3
1.
$105.9)
tions (Requisitions)
(2769.9)
(1509.4)
(1115.4)
(40.4)
-
(104.7)
Requisitions Cleared
$2721.0
$1474.8
$1103.6
$40.0
-
$102.6
for Purchase
(2675.7)
(1453.2)
(1080.8)
(40.1)
-
(101.6)
Obligations
$2626.3
$1450.8
$1048.8
$40.0
$6.4
$80.3
(Purchases)
(2590.6)
(1433.0)
(1032.3)
(40.1)
(6.3)
(78.9)
Deliveries to Foreign
$1148.9
$806.0
$311.7
$18.6
-
$12.6
Governments at U. S.
(1138.8)
(803.2)
(304.5)
(18.6)
-
(12.5)
Ports*
#Deliveries to foreign governments at U. S. Ports do not include the
tonnage that is either in storage, "in-transit" storage, or in the
port area for which actual receipts have not been received from the
foreign governments.
Note: Figures in parentheses are those shown on report of June 23, 1943.
Regraded Unclassifie
26Q
SECRET
EXPLANATION OF DIFFERENCE.
The reduction in the China columns
is a result of transfers of material in
storage to the War Department.
261
July 6, 1943
Secretary Morgenthau
Mr. White
1. About two years ago, Secretary Morgenthau directed
the Treasury staff to study the problem of currency stabili-
sation and the provision of international credit. As a re-
sult of these studies an extended memorandum was prepared in
the Treasury proposing tentatively the establishment of an
international stabilization fund and an international bank
for reconstruction and development.
2. On May 16, 1942, Secretary Morgenthau submitted to
the President a memorandum on these tentative proposals.
The President authorised the Secretary to have the studies
continued in cooperation with the State Department, the
Board of Economic Warfare and the Export-Import Bank. From
time to time the Secretary has informed the President of the
progress of the studies and discussions on these questions.
3. In accordance with the President's authorization,
Secretary Morgenthau brought together a Cabinet group for
the purpose of advising the President on these projects.
A committee of technical experts from other departments and
agencies was also formed to work with the Treasury experts
in formulating a program on currency stabilization and inter-
national credit.
4. on March 4, 1943, with the approval of the Cabinet
group and the State Department, the Secretary of the Treasury
wrote to the Ministers of Finance of the United Nations and
the countries associated with them, enclosing a tentative
draft proposal for an international stabilisation fund and
requesting them to send technical experts to Washington to
discuss the proposal en an informal basis. The covering
memerandum mentioned the need for an international bank to
provide international credit for reconstruction and develop-
ment.
5. During the discussions, frequent inquiry was made
by the technical experts of other countries regarding an
agency on international credit. They were informed that
7/12/43 - Mr. White advised "the Secretary read this".
Regraded Unclassified
262
- 2 -
preliminary studies were nearing completion and that a ten-
on several occasions Mr. Berle of the State Department and
tative draft proposal would soon be available. Furthermore,
Mr. White of the Treasury spoke informally to the British
technical representatives about later discussions on the
tentative draft proposal for an international bank. It was
agreed by Mr. Berle and Mr. White that the only reason for
separating the discussions on the fund and the bank was 02-
pediency, and that the bank proposal should be considered
as soon as feasible.
6. The questions of currency stabilisation and inter-
national credit are inseparably linked, and have always
been matters for discussion by Treasuries, of course with
the cooperation of the State Departments. The technical
experts sent by other Treasuries for preliminary discussions
in Washington expect quite reasonably that the problem of
international credit will be discussed by the same technical
experts with when they have discussed the problem of cur-
rency stabilisation.
7. The creation of mother committee on international
credit will result in unnecessary confusion. The agencies
invited by Secretary Huil to serve on the committee he
wishes to establish are already represented on Secretary
Morgenthau's committee. with the exception of Yr. Pierson,
all of the individuals are now on Sceretary Worgenthau's
committee, and Mr. Pierson can be added as a second repre-
sentative of the Federal Loan Agency. By proceeding with
Secretary Morgenthau's committee, the work already done can
be completed without undue delay and needless duplication.
The recommendations of the committee and the technical 02-
perts would be brought to Secretary Hull for his advice in
accordance with the instruction of the President to Secretary
Morgenthau.
EMB/jm
7/6/43
Regraded Unclassified
263
July 6, 1943.
My dear Mr. Secretary:
I write to acknowledge receipt of your letter
of July 5 advising me of the proposed creation of
a Special Committee on Shipping to prepare studies
and to advise the Department of State in respect
to proposals or positions which the Government
should make or take concerning international arrange-
ments relating to shipping and allied problems in
the post-war world. You suggest the desirability
of having the Treasury Department represented on such
committee and ask that if I concur I designate a
member from this Department.
I concur in your suggestion and I designate
Mr. Herbert E. Gaston, Assistant Secretary of the
Treasury, to represent the Treasury Department as a
member of the Special Committee on Shipping.
Sincerely yours,
(#igned) M. Morgenthau, Jr
Secretary of the Treasury.
The Honorable Cordell Hull
Secretary of State
Washington, D.C.
By measurer Sturges 5:17
File to Mr. Thompson.
Photo of incoming and
copy in Diary.
Regraded Unclassified
E
TO
SETARY OF STATE
ac. 25
DEPARTMENT OF STATE
WASHINGTON
In IS
By refer to
July 5. 1943
My dear Mr. Becretary:
In connection with the preparations of this Gov-
ernment for post-war arrangements being carried on by
the Inter-Departmental Committee on Post-War Foreign
Economic Policy, the State Department believes that
special attention must be given to problems of inter-
national arrangements relating to shipping.
There is, therefore, being established a Special
Committee on Shipping to work up the studies relevant
in that field and to advise the Department in respect
to proposals or positions which the Government should
make or take concerning international arrangements
relating to shipping and allied problems in the post-
war world. On this Committee it is believed the follow-
ing Departments and agencies should be represented:
Department of State
Department of the Treasury
Navy Department (Coast Guard)
Department of Commerce
Maritime Commission
I feel it would be most desirable for the Treasury
Department to be represented on this Committee. If you
concur, would you be good enough to designate a member
from your Department.
The Committee
The Honorable
Henry Morgenthau, Jr.,
Secretary of the Treasury.
CTORY
BUY
UNITED
STATES
patients
BONDS
ans
RTAMPS
Regraded Unclassified
-2-
The Committee is asked to report its conclusions
to the Inter-Departmentel Committee on Post-./ar
Foreign Leonomic Policy, of which Mr. Myron Taylor
is Chairman. I will lay the decisions arrived at
before the President for his determination us to
policy, in conjunction with the heads of the Govern-
ment agencies concerned therewith.
The Chairman will make available to the Committee
those members of the staff of the Department who may be
useful in the Committee's work. 4 member of that staff,
Mr. Walter Radius, will serve as secretary of the Com-
mittee. It is desired that the records of the Committee
be mintained in the Department of State where facili-
ties have been provided for that purpose.
I should be glad to have your designation of a
member as soon as practicable. It is hoped that the
Committee can meet and organize at the earliest pos-
sible date.
Sincerely yours,
Regraded Unclassified
266
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE
July 6, 1943
TO Secretary Morgenthau
FROM Frances McCathran
CONTROVERSIAL ISSUES BEFORE CONGRESS
Three major appropriation bills, a Second Deficiency
Bill and a new CCC extension and subsidy measure still stand
between Congress and a summer recess. Although all other
differences on the War Agencies Bill and the Labor-Federal
Security Bill were reconciled, both measures are still tied up
in conference by House refusal to accept the Senate's McKellar
amendments requiring Presidential appointment and Senate confir-
mation of all employees of agencies included in the two measures,
earning $4,500 or more a year. Agreement, however, was in sight
on the Interior Department Appropriation Bill, deadlocked for
days by Senate demands for funds for western irrigation and
reclamation projects. The Second Deficiency Bill also took the
spotlight yesterday as a highly controversial issue when it
emerged from the Senate, with the crop insurance program, pre-
viously surrendered to House demands on the Apriculture Bill,
and with some $358 millions approved instead of the $36 million
voted by the House. Meanwhile the subsidy controversy drew
near a settlement today as the Senate drafted a limited subsidy
program authorizing 700 million dollars for both CCC and RFC
commitments,
As the House passed the Green Silver Bill authorizing
sale of Treasury silver for war purposes yesterday, the Ways
and Means Committee also approved Representative Celler's
measure repealing the Silver Purchase Act of 1934 - and another
fight on the silver issue appeared in the offing.
Regraded Unclassified
C
267
o
P
I
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
AMERICAN EMBASSY, CHUNGKING
TO:
Secretary of State, Washington
DATED:
July 6, 1943
NUMBER: 1108
STRICTLY CONFIDENTIAL
Please be advised that information of a reliable
nature has reached us to the effect that at a recent
executive Yuan meeting the proposed reverse Lend-Lease
agreement received favorable discussion. The possi-
bility of a reverse Lend-Lease agreement with us has
80 far not been mentioned by either Dr. Kung, whom I
have frequently seen, or by any other Chinese official.
ATCHESON
Copy:bj:7-9-43
Regraded Unclassified
218
OFFICE
SECRETARY OF TREASURY
3 JUL 7 AM II 36
NOT TO BE RE-TRANSMITTED
EASURY DEPARTMENTO.
13
BRITISH MOST SECRIT
U.S. SECRET
OPTEL NO. 219
Infermation received up to 7 a.m. 6th July, 1943.
1. AVAL
HOME WATERS. Early 5th, 2 enemy Destroyers proceeding West
from DUNKIRK were attacked by 3 M.T.B's and later engaged by Coastal Batteries,
No torpedo hits claimed.
MEDITERRANEAN. One of H.L. Submarines sank a 2,000 ton
ship in GULF OF GENOA.
2. MILITARY
RUSSIA. On 5th, Germans attacked in OREL-KURSK and also
BYELGOROD areas with large forces of tanks and infantry strongly supported
by air. Except for slight penetration at some places all attacks regelled
with heavy losses.
3. AIR OPERATIONS
WESTERN FRONT. 5th. Fighters damaged 6 locomotives in
Northern FRANCE and a 800 ton Coaster off DUTCH Coast.
5th/6th. Aircraft despatched: HALBURG - 4, COLOGNE - 4,
Sea-mining - 34, (2 missing), Leaflets - 18, Intruders - 3.
MEDITERRANEAN. 2nd/3rd. Wellingtons dropped 72 tons on
OLBIA (SARDINIA) and 31 tons on TRAPANI (SICILY)
3rd. 349 Bomber and 353 Fighter Serties mainly against air-
fields in SICILY and SARDINIA.
3rd/4th. Wellingtons dropped 123 tons on TRAPANI and also
bombed Sea-plane base at LIDA DI ROMA and dropped Leaflets on ROLE.
4th, 121 heavy and medium bombers attacked airfields in
SICILY. Combat casualties in all above operations: Enemy - 34, 8, 10;
Allied - 15, 0, 55.
Regraded Unclassified