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    "ocrText": "Diary\nBook 729\nMay 8, 1944\n- A -\nBook Page\nAppointments and Resignations\nJapanese girls - employment in Treasury discussed by\nC.S. Bell at 9:30 meeting - 5/8/44\n729 16\n- B -\nBusiness Conditions\nHass memorandum on situation. week ending May 6, 1944 -\n5/8/44\n107\n- C -\nChina\nSee Post-War Planning: Currency Stabilization\n(International Conference)\n- 1 -\nEmployee Relations, Treasury\nMonthly bulletin for the 90,000 Treasury employees discussed\nat 9:30 meeting - 5/8/44\n6\n(See also Book 732. page 10 - 5/16/44)\n- 7 -\nFinancing, Government\nWar Savings Bonds\n5th War Loan Drive: Motion picture industry not to be\nheaded by Charles P. Skouras although HMJr had so\nindicated; correspondence concerning - 5/8/44\n102\nFrance\nSee Occupied Territories\n- J -\nJapanese\nSee Appointments and Resignations\n- M -\nMendes-France, Pierre\nSee Occupied Territories: France (Currency Stabilisation)\nMonnet, Jean\nSee Occupied Territories: France (Currency Stabilization)\nMotion Picture Industry\nSee Financing, Government: War Savings Bonds\n(5th War Loan Drive)\n- 0 -\nBook Page\nOccupied Territories\nFrance: Currency Stabilization\nDiscussed by HMJr. White, and Luxford - 5/8/44\n729\n21\n#\nby Monnet, Mendes-France, HMJr. White, and\nLuxford - 5/8/44\n35\na) Ordinances used in Corsica to control the profite\nmade since the fall of France discussed\n41\nb) New notes - printing of discussed\n51\nc) Purchasing power of troops discussed\n55\nHMJr, White, and Luxford discuss final draft of letter on\nwhich Mendes-France and Monnet are now working -\n5/9/44: See Book 730, page 25\n(For draft see page 36)\nConference; present: HMJr, White, Luxford, Mendes-France,\nand Monnet - - 5/9/44: Book 730, page 38\nMemorandum to FDR - 5/16/44: Book 732, page 94\na) HMJr expresses displeasure at fractions\nLuncheon for Mendes-France and Monnet - 5/17/44:\nBook 732. page 177\nExpenses of the United States in Continental France -\nequitable adjustment of: White memorandum giving points\nto be covered in letter to the Treasury by Mendes-France -\n5/8/44\n64\n- P -\nPost-War Planning\nCurrency Stabilization\nInternational Conference\nSee also Books 724,727,728\nChina: Soong, T.V., rather than T.L., preferred by HMJr;\ncable to Adler - 5/8/44\n91,97\na) T.L. Soong assures Kung - on return to China -\nthat HMJr is \"very friendly to China and realizes\nneed of maintaining official rate\": See Book 730.\npage 109\nb) T.L. coming - Adler cable - 5/10/44: Book 730,\npage 172\nDominion Ministers \"approve conference and will back\ndebate in Parliament\" - HMJr-Acheson conversation -\n5/9/44: Book 730, page 26\nU.S.S.R. letter of acceptance - 5/9/44: Book 730.\npage 103\nUnited Kingdom\nWinant transmits Chancellor of Exchequer's message;\n.\ntells HMJr (1) date acceptable; (2) Chancellor\nof Exchequer cannot attend: (3) exiled Governments\nwill be able to get travel permits for small groups -\n5/11/44: Book 731. page 32\na) Opie (British Embassy) and White discuss cable:\nBook 731. page 37\nWinant-HMJr-White conversation - 5/16/44: Book 732,\npage 69\n- P - - (Continued)\nBook Page\nProcurement Division\nSurplus Property, Disposal of\nStandards (Code of Ethics) by which $1-a-year assistants\nto Olrich are chosen discussed by\na) HMJr and Olrich - 5/8/44\n729\n1\nb) # # 9:30 group.\n8\nc) Conference: present: HMJr, Sullivan, Olrich,\nO'Connell, Hill, Lynch, and C.S. Bell - - 5/8/44\n75\n1) Clayton has no \"formal code of ethics for\n$1-a-year men working under his jurisdiction\"\n88\nd) Conference; present: HMJr, O'Connell, Olrich,\nC.S. Bell, Lynch, and Thurman Hill - - 5/9/44: See\nBook 730. page 69\n1) Draft: Book 730, page 76\nUnited Nations Relief and Rehabilitation Administration:\nArrangements made for utilizing salvaged articles -\n5/8/44\n126\n- S - -\nSkouras, Charles P.\nSee Financing, Government: War Savings Bonds\n(5th War Loan Drive)\nSoong, T. V.\nSee Post-War Planning: Currency Stabilization\n(International Conference)\n- T -\nTreasury Department\nMonthly bulletin for the 90,000 Treasury employees\ndiscussed at 9:30 meeting - 5/8/44\n6\n(See also Book 732, page 10 - 5/16/44)\n- U -\nUnited Nations Relief and Rehabilitation Administration\nSee Procurement Division: Surplus Property, Disposal of\n- V -\nWar Savings Bonds\nSee Financing, Government\n1-2\nMay 8, 1944\n8:40 a.m.\nErnest\nOlrich:\nGood morning, Mr. Secretary.\nHMJr:\nGood morning.\n0:\nThis 18 Olrich speaking.\nHMJr:\nI hope you had a good week-end.\n0:\nI did. I went up to New York City and I got\nsome things done but instead of having a nice\nday, it rained from early morning until late\nat night.\nHMJr:\nOh, I'm sorry.\n0:\nBut I accomplished much.\nHMJr:\nMr. Olrich, there are two things. I am going\nto have Sullivan get in touch with you and I\nwant to have a little meeting between you and\nsome of the lawyers and before you've seen me\nI want to draw up a kind of a standard on which\nwe -- everybody will be satisfied on these dollar-\na-year men that you're going to bring in, you see?\n0:\nYes, sir.\nHMJr:\nI think we ought to have a formula.\n0:\nYes, sir.\nHMJr:\nI'll have Sullivan get in touch with you in a\nlittle while and then I'd like to see you all\nthis afternoon.\nO:\nYes, sir. I'll be available.\nHMJr:\nAnd then, I mean this business of -- I'm not\nsure how I want to proceed on -- for instance,\nin getting -- I was reading your memo on West-\ninghouse and General Electric -- to appoint a\nrepresentative, you see?\nO:\nWell, that 1s to suggest someone.\nHMJr:\nWell, I -- I'd like to spell it out and have a\nlittle talk with you.\n0:\nYes, sir.\n3\n- 2 -\nHMJr:\nThen the other thing, there's nobody on your\nwire, 1s there?\n0:\nNo, sir.\nHMJr:\nYou don't have -- I was out for dinner last\nnight and in my hearing what's his name --\nLoeb said he spent from two to six Saturday\nafternoon with Will Clayton.\n0:\nYes.\nHMJr:\nI wondered if he did that at your request.\n0:\nYes, sir, he did. It was to check over the\nform that he and I had gone over, with the\nreporting on the information that shall come\nto the Procurement Division from the Army or\nother Divisions on the surplus that they were\nto give us.\nHMJr:\nBut I mean, that was at your request.\n0:\nThat was at my request, yes, sir.\nHMJr:\nI see.\n0:\nThey called the meeting. I was going to New\nYork. I had some appointments there and they\ncalled the meeting at 12:30.\nHMJr:\nYeah. Well, when we get around to having you\ngo on in Sullivan's place, you see....\n0:\nYes, sir.\nHMJr:\n....\nthen somebody has got to be appointed as\nan alternate to you.\n0:\nYes, sir.\nHMJr:\nAnd I very much want to be consulted. Well,\nanyway, I have the appointing.\n0:\nThat's right.\nHMJr:\nAnd you be thinking over who you want as your\nsecond.\n0:\nI will.\n- 3 -\n4\nHMJr:\nAnd talk to me before you make any commitments\non that. Will you?\n0:\nYes, sir. I will.\nHMJr:\nThank you.\n0:\nThere have been no commitments.\nHMJr:\nWell, that's good, because as I say, well, I\nwant to talk it over and, as I say, it's up to\nme to do it but naturally I want somebody that\npleases you and me.\n0:\nYes, sir.\nHMJr:\nI think you know what I'm talking about.\n0:\nI do, s:r.\nHMJr:\nRight.\n0:\nAll right.\nHMJr:\nThank you.\n0:\nAll right.\nHMJr:\nI'll see you later.\n0:\nYes, sir. I'll be available.\nHMJr:\nThank you.\n0:\nGood bye.\nMay 8, 1944\n5\n9:19 a.m.\nHMJr:\nHello.\nOperator:\nMr. Acheson.\nHMJr:\nHello.\nDean\nAcheson:\nGood morning, Henry.\nHMJr:\nGood morning to you. Anything from Argentine?\nA:\nI was just inquiring about it. I was out at the\nfarm over the week-end.\nHMJr:\nYes.\nA:\nAnd I have just asked the Secretary's office\nto go through the files of incoming messages....\nHMJr:\nWell....\nA:\nand see if they can find one.\nHMJr:\nif there's something, will you call me\nback?\nA:\nYou bet. I will.\nHMJr:\nThank you.\nA:\nYou bet. So long.\n6\nMay 8,1944\n9:30 a.m.\nGROUP\nPresent: Mr. C.S. Bell\nMr. O'Connell\nMr. Sullivan\nMr. Gaston\nMr. Gamble\nMr. Smith\nMr. White\nMrs. Klotz\nH.M.JR: For once in my life I tried to get around\nthe situation by saying what I did, and this Congressman\nfrom North or South Dakota did it in a very nice way,\nand I squirmed out of it, which Drew Pearson didn't get\nat all.\nMR. GASTON: Mundt. He is an isolationist, isn't\nhe?\nMR. WHITE: But the story was very sordid.\nMR. SULLIVAN: There is something on the ticker\nthis morning about a fellow trying to attack Paul McNutt.\nIt says he was the same man who tried to attack you in\n1942.\nH.M.JR: Attack me, how?\nMR. GASTON: He was going to shoot Paul McNutt over\nthe telephone.\nH.M.JR: That is very risky.\nMR. WHITE: That is Radar!\n7\n- 2 -\nH.M.JR: We have the French at eleven.\nNow, I have a couple of odds and ends here. I got\nthis memorandum from Mr. Charlie Bell--\nMR. BELL: Oh, that series of press releases. You\ngave it back to me.\nH.M.JR: Have you consulted Mr. Smith?\nMR. BELL: No, sir.\nH.M.JR: Would you?\nMR. BELL: Yes, sir.\nH.M.JR: And before it comes to me. He is over-all,\nin case you don't know it, on public relations for the\nTreasury.\nMR. SMITH: Cover-all!\nH.M.JR: I think you have a good idea, but it would\nsave me time, and you, if you would take it up with\nSmith.\nMR. BELL: All right, sir.\nH.M.JR: This idea of getting out a monthly bulletin\nto the ninety thousand employees, I think, is a good\nidea. That was the only thing in there, wasn't it?\nMR. BELL: That is it, one each month - a series.\nH.M.JR : There is a press release - if it is all\nright with Smith, it is all right with me.\nNow, I got this memorandum from Mr. Oirich, and I\nspoke to him this morning. I will tell you what I would\nlike you to do, John; I would like you to get together,\nyou and Joe and Lynch - do you want to make notes? Then\nthis Thurman Hill - that is the fellow--\n8\n- 3 -\nMR. O'CONNELL: Chief Counsel.\nH.M.JR: ...and Charlie Beil, and gt Olrich here.\nI want a kind of - I don't know what you all it - proto-\ncol, or something - drawn up as to what we require of a\ndollar-a-year man who is going to go to work over there.\nDo you see?\nMR. SULLIVAN: Yes.\nH.M.JR: A code of ethics; I don't think we have such\na thing. Now, for example, he engaged H.O. Penn of the Penn\nConstruction Company, to act as head of the Construction\nEquipment Section. He is to give us three weeks of his\ntime each month.\nNow, I think he said, as I understand it, that Mr. Penn\nmust agree that during this time his company would not\nsell any construction to Procurement. That was my under-\nstanding.\nWell, let's say he did it; there should be something\nin writing.\nMR. SULLIVAN: There will be other cases, 80 we\nbetter just draw a formula.\nH.M.JR: He has arranged for top executives of\nWestinghouse, General Electric and Graybar, to get to-\ngether and arrange for & man to take charge of our Electri-\ncal Supply Section. I don't want them picking the man\nwho is going to sell back to Westinghouse, General Electric,\nand Graybar.\nMR. SULLIVAN: I agree.\nH.M.JR: The man is being perfectly frank about it,\nbut he has to be educated. And I think that you fellows\nshould get together, as I said - you and Joe and Lynch,\nand Thurman Hill and Charlie Bell and this man, and draw\nme up & code of ethics. Could you have it ready for me\nat three? Is that rushing you too much?\n9\n- 4 -\nMR. SULLIVAN: No, I don't think SO. You will be\naway, won't you, Joe?\nMR. O'CONNELL: I had expected to go on the Hill at\nten. Lynch will be there with Dan Bell on the Public\nDebt bill. We will be back by noon. That is the only\nthing that makes me hesitate on three o'ciock.\nH.M.JR: What are you doing on the Hill?\nMR. O'CONNELL: Lynch is going down with Bell in\nconnection with the testimony on the Public Debt bill.\nI have a tentative appointment to see Patman this\nmorning. He is on the same Committee. I thought I\nwould go down with them at ten.\nH.M.JR: When are you leaving?\nMR. O'CONNELL: In five minutes, if you will let me.\nWe should be back before noon.\nMR. SULLIVAN: Then you get in touch with me when\nyou get back and I will call Olrich.\nH.M.JR: Could you still do that thing? Would three-\nthirty help any?\nMR. O'CONNELL: We can shoot for three. I guess that\nis as good a name as any - code of ethics.\nH.M.JR: Code of ethics under which the people can\ncome - and I thought if you fellows met first, and then\ncame in here--don't you think it is very. important?\nMR. SULLIVAN: Yes, I do. I think you have to set\nyour pattern now, so when he hires these people he can\ntell them where they stand.\nH.M.JR: I don't want Westinghouse, General Electric,\nand Graybar picking a man who is going to handle electrical\nsupplies. That is part of my job. It is you fellows' job\nto see that we get him off to the right start. Does that\ninterest you at all, Herbert?\n10\n- 5 -\nMR. GASTON: No, I think not.\nH.M.JR: Oh, now on that, I wrote down - ofcourse,\nI am sure that Will Clayton hasn't got a code of ethics,\nbut let's draw up our own and simply tell him - \"Here is\nthe one we have; what are the other agencies under you\ngoing to do?\"\nBut I think we should draw up our own.\nMR. SULLIVAN: I will call him up this morning and\ntell him we are going to do that, and ask him if he has\nany guides or standards.\nH.M.JR: Do you want to make a bet on it that he\nhasn't?\nMR. SULLIVAN: No, I wouldn't bet one way or the\nother.\nMR. O'CONNELL: I don't think there is a code of\nethics in town. I don't think WPB, or any of the outfits,\nhave done anything as definitive as you are suggesting.\nI think it is a good idea.\nH.M.JR: I want something. It wouldn't do any harm\nto let the world know about it. What do you think,\nMr. Over-All?\nMR. SMITH: Let's take a look at it first.\nH.M.JR: Well, Herbert?\nMR. GASTON: I have nothing this morning.\nMR. SULLIVAN: Nothing.\nMR. O'CONNELL: Nothing. May I leave?\nH.M.JR: Yes. You are going up on this trip that I\nmade?\nMR. O'CONNELL: Yes.\n11\n- 6 -\n(Mr. O'Connell leaves the conference)\nH.M.JR: Theodore?\nMR. GAMBLE: I have one matter I would like to bring\nup. Sometime in the next week or ten days I would\nlike to bring down some twenty top people in the radio\nindustry, much as we did during the Third War Loan Drive,\nin preparation for the Fifth War Loan Drive.\nSo, if you will set a date when we could have them\nfor luncheon--\nH.M.JR: Well, now, this is the 8th. How is Wednes-\nday, the 17th?\nMR. GAMBLE: That is not so good. If you could do\nit Monday, the 15th--\nH.M.JR: No, and I can't promise Tuesday. What is\nthe matter with the 17th?\nMR. GAMBLE: The 17th I have to have a bankers'\nmeeting.\nH.M.JR: Where?\nMR. GAMBLE: In the State of Colorado.\nH.M.JR: Are you going clear out for that?\nMR. GAMBLE: I will only be out over one day.\nH.M.JR: When will you be back? Do you go to Colorado\nand back in a day?\nMR. GAMBLE: Yes, over night.\nH.M.JR: Well, do you want to make it the 19th?\n12\n- 7 -\nMR. GAMBLE: Is that 8 Saturday?\nH.M.JR: No, a Friday.\nMRS. KLOTZ: In case he can't fly back--\nMR. GAMBLE: Yes, I will be back for that date. I\nwill be in Colorado on the 17th.\nH.M.JR: That gives you an extra day.\nMR. GAMBLE: The 19th is all right.\nH.M.JR: Do you want the luncheon downstairs?\nMR. GAMBLE: Yes, sir.\nH.M.JR: Mr. Bell, will you reserve enough room for\nus down there to have Mr. Gamble and twenty beautiful girls?\nMR. GAMBLE: Twenty lovely starlets!\nH.M.JR: Incidentally, has Mr. White asked you to supply\nthe entertainment for his World Monetary Conference?\nMR. GAMBLE: He hasn't yet, but I will be a little\ndisappointed not to help out.\nMR. WHITE: I should certainly think it would smooth\nmatters.\n13\n- 8 -\nMR. SMITH: Gypsy Rose Lee, and put a sign on her,\n\"Fort Knox.'\nMR. WHITE: For all those who sign!\nH.M.JR: Anyway--\nMR. GAMBLE: That is all.\nH.M.JR: Now for tonight, would you notify--I would\nlike Dan Bell to come tonight.\nMR. GAMBLE: Mr. Bell, Mr. Gaston, Mr. Sullivan, Mr.\nSmith, Mr. Charles Bell, Mr. Haas, Mr. Lindow, and Mr.\nTickton are on the list. And I have given the names to\nFitz already for nine o'clock.\nH.M.JR: What a man!\nAll right.\nFrederik?\nMR. SMITH: I have nothing.\nH.M.JR: Just like that?\nMR. SMITH: Yes.\nH.M. JR: I talked to Acheson. He has not yet heard\nwhether they had any cables at ten minutes past ten. He\nwas going to find out and let me know.\nMR. WHITE: Mr. Bill Taylor left hurriedly yesterday\nmorning. He had an opportunity to go and said he wanted to\ncome in and see you first, but he had no way of reaching you.\nHe left at eight o'clock on Sunday morning. He was informed\nSaturday in the late afternoon.\nH.M.JR: He got a seat?\nMR. WHITE: He got a plane; I don't know whether it was\na bomber or not.\n14\n- 9 -\nH.M.JR: He left when?\nMR. WHITE: At eight Sunday morning. You had a note\nabout it. T. V. Soong--\nH.M.JR: Yes--could you stay behind a minute? I would\nlike to talk to you about that.\nBell was upset because you called Hall at eleven\no'clock Saturday night.\nMR. WHITE: I don't know why Bell should be upset about\ncalling Hall that night. I called Hall, not Bell.\nH.M.JR: Well, it was 80 unusual for you to call.\nMR. WHITE: Well, the actual story was as follows:\nWhen I came back here I was here but a short time to pick\nup the Russians for our afternoon meeting.\nH.M.JR: I don't need to know. He wanted to know if\nanything had happened.\nI said that nothing had happened.\nMR. WHITE: So I didn't think of that.\nI would like to finish, since it seems so unusual and\nso ridiculous for me to have called him that late. But I\nthought of it after I got home. I put in a call about seven\no'clock. Hall wasn't there, and I told him to call me when\nhe got back. Hall came back late, so he called me. I told\nhim I didn't want to disturb Bell and he should tell Bell\nabout it. He had quite a long story, and I told him to take\nit up with Bell.\nApparently the Russians misunderstand him. There is\ncomplete misunderstanding between them.\nH.M.JR: Is there?\nMR. WHITE: Yes, apparently.\n15\n- 10 -\nH.M.JR: As far as the Ambassador was concerned, he\nwasn't disturbed. I told him about our bet. I don't have\nto get in on it, do I?\nMR. WHITE: Not unless Mr. Bell feels you do. All I\nknow now is that there is complete misunderstanding.\nH.M.JR: Would you mind telling that to Bell yourself?\nMR. WHITE: That will be all right.\nH.M.JR: When he comes down off the Hill.\nMR. C. S. BELL: We are going ahead with acoustical\ntreatment in the whole cafeteria. We found a lot of the\ntile down in the Bureau of Engraving and Printing. We are\nbuying the additional that we need.\nH.M.JR: That is good.\nMR. C. S. BELL: The American Legion has taken up with\nthe President the matter of selling poppies in Government\nbuildings. We are going along with the Bureau of the Budget\nand are holding that down just to the entrance so they will\nsell poppies at the entrance, inside.\nMR. GASTON: The Legion, or Veterans of Foreign Wars?\nIt is usually the Veterans of Foreign Wars.\nMR. C. S. BELL: Veterans of Foreign Wars is correct.\nI will have all of the dope on the air raid tonight.\nH.M.JR: Is there going to be one?\nMR. C. S. BELL: Apparently, according to the paper\nthis morning.\nMRS. KLOTZ: Two hours.\nH.M.JR: The boys have to play.\nMRS. KLOTZ: That is terrible.\n16\n- 11 -\nMR. C. S. BELL: We have hired two Japanese girls in\nChicago. Foreign Funds is requesting the appointment of a\nJapanese girl here to interpret for them. This seems to be\na regular appointment procedure throughout the Government.\nThere are twenty-six naturalized Japanese appointed in the\nGovernment service. This War Reallocation Board makes the\noriginal recommendations to the Departments. We are check-\ning them pretty thoroughly.\nH.M.JR: I hope so. I am not very enthusiastic about\nthat, but--\nMR. C. S. BELL: That will be three in the whole\nTreasury Department.\nH.M.JR: One would be too many--could be too many!\nMR. C. S. BELL: Yes, sir.\nH.M.JR: What are they going to do in Chicago?\nMR. C.S. BELL: Just routine clerical work on the bonds.\nH.M.JR: Born in America?\nMR. C. S. BELL: Yes, sir. Mr. White has recommended\nthe appointment of Otto Nathan, born in Germany, and came\nto this country in 1933. We are running an investigation\non him. He has a very good background. He would get sixty-\nfive hundred as assistant to Bernstein. Mr. White can tell\nyou about it.\nMR. WHITE: It is a temporary job during the summer.\nThe man is a professor. He is going to help work on German\nreparations and some other problems connected with it. He\nhas been working around town with the Government here for\nmany years.\nH.M.JR: That is all right.\nMR. C. W. BELL: Do you want to see a list of the\ncommittees, Procurement Division? There are two on\nthere that Mr. Sullivan feels that Mr. Olrich should have\non. (Hands Secretary list entitled \"Interdepartmental\nCommittees with Procurement Representatives.\")\n17\n- 12 -\nH.M.JR: The President's Soviet Protocol Committee,\nCliff Mack and Walsh. Is there any reason why that should\nbe changed?\nMR. SULLIVAN: No, sir, I am against putting Olrich on\nany more than two committees.\nH.M.JR: I justwant to read it. Every once in a while\nI think it is a good thing to check these things.\n\"Procurement Policy Board Committee.\" Now, whom does\nthat meet with?\nMR. SULLIVAN: Army, Navy, and Maritime Commission.\nH.M.JR: Mack and Walsh.\n\"Surplus War Property Committee on Policy, John Sullivan\nand John Loeb.\"\nMR. SULLIVAN: Olrich will take my place on that committee.\nH.M.JR: He will be the Treasury representative?\nMR. SULLIVAN: Yes, he should.\nH.M.JR: When will that happen?\nMR. SULLIVAN: Right now.\nH.M.JR: Do you want that to happen now?\nMR. SULLIVAN: He can wait a couple of weeks, I mean.\nH.M.JR: They will meet when?\nMR. SULLIVAN: Once every two weeks.\nH.M.JR: You don't want that to happen now, do you?\nMR. SULLIVAN: The first of June will be all right.\n18\n- 13 -\nH.M. JR: Then Olrich succeeds Sullivan; and then there\nwill be the question of appointment of an alternate. I\nwant to be consulted on that subject, very definitely. I\nhave told that to Olrich this morning.\n\"Army and Navy Munitions Strategic Material Committee,\nMack and Walsh.\" My God! Cliff Mack.\n\"American Standards Council Committee.\"\n\"Federal Specifications Executive Committee, N. F.\nHarriman.\n\"Joint Contract Termination Board, Thomas J. Lynch,\nTom David.\"\n\"Purchases on Blind Made Products Committee, Mack\nand LeFevre.\"\n\"Advisory Committee on Procurement Policy, Robert\nLeFevre.\" What is that, Advisory Committee on Procurement\nPolicy?\nMR. SULLIVAN: I don't know what that is.\nMR. C. S. BELL: It sounds like a small inter-office\ncommittee.\nH.M.JR: I thought LeFevre had been moved out.\nMR. C. S. BELL: No, sir, he is still there.\nH.M.JR: \"Inter-Agency Committee on Standard Commodity\nClassifications.\" Would you mind, John, sort of taking\nup these others, other than the ones of surplus war? Sort\nof raise the question with Cliff on all of these. Would\nyou mind?\nMR. SULLIVAN: Sure, I will be glad to.\nH.M.JR: My God, if he goes to all of these things, I\ndon't see how he ever gets a chance to work.\n19\n- 14 -\nMR. SULLIVAN: They take up an awful lot of his\ntime, Mr. Secretary.\nH.M.JR: Would you mind? Can I give him this?\nMR. SULLIVAN: Sure.\nH.M.JR: One other thing, John, that I wish you would\ntake up when you meet with him is, I want a method of\nreporting from Olrich to me. For instance, he closes these\nseventeen hundred automobiles on a negotiable basis, not on\na bid basis. When that thing is finished--while it is too\nlate for me to change it, still I want a report that such\nand such & deal was consummated. In other words, I want,\nas he does these things, to be informed, how he sold\nseveral hundred automobiles, the method, and 80 forth, and so\non. I don't want to wait too long. After all, there should\nbe some reporting somewhere of what he does, Charlie. See?\nNow, I understand he will have an inventory every two\nweeks. He says he has thirty-seven million dollars worth\nof stuff on hand. Well, if he is going to get one, I would\nlike to know it. If he sets up a statistical organization,\nI want Haas to be consulted. In other words, if it is going\nto be every two weeks, I want to know it. As he closes\nthese things, I want to know it. He has to set up a report-\ning system between his office and mine. I think Charlie\nought to get in on that.\nMR. SULLIVAN: That is right.\nH.M.JR: There should be some kind of reporting system.\nMR. C. S. BELL: Well, we have that definitely in mind.\nWe will let him feel his way along this week.\nH.M.JR: But he is moving very fast. He had dinner\nwith me Friday night. Stuff that has been hanging fire,\nhe is just closing it. He is a very fast mover. So you\ncan't wait too long. I want him to move fast.\nMR. SULLIVAN: Sure, he does.\n20\n- 15 -\nH.M.JR: He set up a little policy board of his own.\nHarry, would you stay?\n21\nMay 8, 1944\n10:30 a.m.\nFRENCH CURRENCY STABILIZATION\nPresent: Mr. White\nMr. Luxford\nH.M.JR: Why is the deadline tonight?\nMR. LUXFORD: We have a'hotification provision\nunder their license which says we have so many days in\nwhich to say no. Otherwise, under the license they\nmay proceed.\nNow, previously, we had to withdraw the notifica-\ntion. We then went to State and State said, \"You must\ngo ahead with this transfer.\" So they have again filed\nfor the transfer, and under the notification, it will\nexpire unless we stop it. I, personally, don't see\nhow we can stop it with State squarely on record.\nMR. WHITE: All right then, we won't.\nH.M.JR: This is stopping the transfer of funds -\nfrozen Jugoslav funds.\nMR. WHITE: They are now in commercial banks, to\nthe account of the Royal Jugoslav Government.\nThey are making one significant change in the\nnegotiations with the Russians on this post-war Lend-Lease.\nThey have accepted the terms which were suggested.\nH.M.JR: Who accepted them?\nMR. WHITE: State Department in their negotiations\nwith the Russians. Whether it was satisfactory to the\nRussians, we don't know yet, but they are including this\n22\n- 2 -\nphrase - I think it is good, but it is something new -\nIf by reason of extraordinary and adverse economic\nconditions, during the course of the payment, the making\nof the transfer of money is not in the joint interest\nof the United States and Soviet Russia, further trans-\nfers may be agreed upon by both countries.\"\nIn other words, for some reason or other, either\nthey are unable to transfer - in the case of Russia, it\nis a matter of transfer - it is a question of whether\nthey can get dollars. Here is a provision which permits\npostponement of payment by both countries. It is the\nonly other change. I gather that would have your\napproval.\nH.M.JR: 'Now, wait a minute. Is this what you are\nreading from? (Refers to schedule of transfers submitted\nby State Department)\nMR. WHITE: This is a further move than that. We\njust got this yesterday - - this additional item.\nOn the Dutch monetary agreement - I have just been\ntalking with Luxford on it and he thinks, and he convinced\nme, that we can stall on it even as long as a week or two,\nand desirably so, because in the first place, that other\nmatter - that Argentine matter - hasn't come through; and\nin the second place, he feels we ought to deal directly\nwith the Dutch Government on this, rather than through\nState, so as not to give the Dutch Government the impres-\nsion that State has forced us to change our mind.\nH.M.JR: That is ail right.\nMR. WHITE: But he has convinced me it isn't urgent\nwithin the next week, so we can let that slide. So he\nwill unquestionably--\nH.M.JR: He hasn't pressed me. I keep bringing it\nup. I get a lot of fun kidding him on it.\nMR. LUXFORD: He can't press the Secretary now.\n23\n- 3 -\nH.M.JR: He didn't say a word the other day. His\nanswer was, \"Please don't kid me in front of anybody\nfrom the State Department,\" but he has got it very much\nin mind, and so forth and so on.\nIncidentaily, I don't know whether I told you, &\nweek ago I saw Herbert Lehman and I said, \"Does this mean\nanything to you from the standpoint of relief?\"\nHe said, \"I frankly don't know what you are talking\nabout.\"\nI tried to explain it to him. He said, \"I can imagine;\nI don't know.\"\nI said, \"If you will call up, I will be glad to\nhave somebody come over and explain it to you.\"\nHe said, \"Can I have other people present?\"\nI said, \"Yes,\" and he has never done anything about\nit. It is so important on the relief problem, and Herbert\nLehman doesn't even know about it.\nI was there, roughly, & week ago.\nMR. WHITE: He hasn't called?\nH.M.JR: He hasn't called. And if it isn't important\nto him, and everything - I just think it is another one\nof these things that the State Department made a pretty\ntough bargain and they would like to sweep it up at our\nexpense. So, it doesn't worry me, but I am dying to\nknow what Armour's answer is.\nMR. LUXFORD: He should be replying by now. He\nsent that, \"Special, Urgent.\"\nH.M.JR: I called this morning - I called Acheson.\nHe had just gotten in.\nMR. WHITE: I would like to bring you up to date\nin our discussions on the mark rate.\n24\n- 4 -\nH.M.JR: I think you ought to bring me up to date\non the French before you do that.\nMR. WHITE: The French - he is going to bring you\nup to date - Mendes-France.\nH.M.JR: But you better tell me our side of the\nstory first.\nMR. WHITE: I will dispose of the mark. It will\ntake me less time, I think.\nThere have been prolonged discussions as to what\nrate will be over the mark.\nH.M.JR: I can't move Harry this morning. Have\nyou tried him? He wants to go right down the line.\nMR. LUXFORD: He makes an excellent trial lawyer.\nThe Judge asks the question and he goes right back to\nwhat he was saying.\nH.M.JR: I don't think he wants to hear me this\nmorning.\nMR. LUXFORD: He is coming to that.\nMR. WHITE: They are bringing pressure to come to\na decision. There is a very great variation in opinion.\nThe British first suggested a twenty-cent rate.\nH.M.JR: This is for the mark?\nMR. WHITE: For the mark.\nH.M.JR: My God!\nMR. WHITE: I don't know why they are in 8. hurry.\nH.M.JR: Twenty cents!\n25\n- 5 -\nMR. WHITE: Ridiculous, absurd! The official rate\nis forty cents. The rate at which they operate mostly\nis twenty-four. The black market rate is thirty-four\nand thirty-five cents. By the time they get into Germany\nit will be something else again. But the State Department\nwanted the seventeen-cent rate; FEA wanted the sixteen-\ncent rate; the Treasury - we said something between a\nfive and a ten-cent rate. They thought it was very ridi-\nculous. I called a very large meeting, finally, at our\noffice. We got them all around the table and explained\nto them why we thought this rate should be low, because\nif the occupation authorities were going to be saddied\nwith the responsibility of maintaining some kind of order,\nthey had a chance only at a low rate; they had no chance\nat all at a high rate.\nSuffice it to say that when we got through with the\ndiscussion they backed away from their high rates and be-\ngan coming down. They agreed we were correct, in the main.\nThe British had a discussion with us; they, too,\nabandoned their position after hearing us. They have come\ndown to a thirteen-cent rate. So they are probably making\nfor about a ten-cent rate, but before we finally decide,\nI will marshall ail the arguments for you, and tell you\nwhy, before we let them know.\nH.M.JR: What does Macy's want?\nMR. WHITE: Macy's would probably like a five-cent\nrate.\nH.M.JR: You just want to bring me up to date? Is\nthat all?\nMR. WHITE: That is all on that, because you will\nprobably hear from that from many sources. Thething is\nassuming an urgency which really doesn't exist. We\nasked permission to take it up with the British and\nRussian Governments, which they gave us. We have dis-\ncussed it with the British; I don't know who discussed\nit with the Russians.\n26\n- 6 -\nI asked them whom we should discuss it with. They\ngot & message back that Morozov is coming back. It\nwill be interesting to hear. We haven't heard their\nview yet.\nH.M.JR: Incidentally, can't you ask the Russians\nwhat rate they are using in Roumania?\nMR. WHITE: I will ask them.\nH.M.JR: And what they are doing for money.\nMR. WHITE: I did ask them, and got nowhere. I\nwill ask them officially.\nH.M.JR: The rate and the money.\nMR. WHITE: The money, I think they told you. Didn't\nthey tell you they are using special Roumanian money?\nYou remember, you asked him a question to find out, and\nhe came back about a week later. The rate they never\ntold us.\nH.M.JR: And while they are right on the edge of\nCzechoslovakia, what rate are they going to use there?\nMR. WHITE: Their answer to that question to me\nwas a perfectly blank answer, but it said, \"Well, you\nknow the Russian soldiers don't need any foreign money.\nWe give them everything they need and they don't need\nany money.\" So he said, \"We are not very interested in\nthar.\" We asked them what about the marks. They thought\nthat would be & different story.\nH.M.JR: Very interesting.\nMR. WHITE: Now, the French situation is as follows:\nMonet brought Mendes-France up to see me at my house\nlast night, because he wanted to know how to clear some\nground, because he felt he wouldn't have time enough with\nyou. He wanted to clear some of the ground and get some\nof the facts.\n27\n- 7 -\nNow, this is what their view is - what he wants:\nThey are very worried that the two-cent rate, which is\nthe same rate which the President gave in North Africa,\nand which is the rate which practically the whole Com-\nmittee wants to apply in Metropolitan France, they are\nvery much worried that that rate is too high. They are\nafraid they can't keep it.\nThen, I think I told you, I had a long number of\ndiscussions previously to that. It is my view that they\ncan't keep it, either, but they don't want to go in for\na lower rate for political and psychological reasons.\nIt will be bad psychologicaily, because they feel that\nthe people in France will say, \"Ah, the franc is on the\nskids again. You are going to make it less than two\ncents, and it is going to be still less, and we are\ngoing through the same process that Germany went through.\"\nPolitically, they will be very unpopular with the lower\nrate.\nOn both accounts, they want to go in with the two-\ncent rate; that is the same rate which prevails in North\nAfrica; and then sometime later, make an adjustment -\nsome adjustment - in the light of the prevailing circum-\nstances.\nThey are placing very strong emphasis, and he will\nrepeat that here, on the fact that they can make that\nadjustment later without difficulty if there is an Inter-\nnational Stabilization Fund, because then it will become\npart of a large agreement, and the French people won't\nfeel it is a sign of weakness, but rather & sign of ad-\njustment to a new circumstance.\nSo they are pressing, and are hopeful that there\nwill be an International Stabilization Fund in operation\nbefore the end of the year, which will enable them to\nmake the adjustment which they feel is absolutely essen-\ntial.\nNow, he has also added this one thing, which I think\nis very reasonable and very decent of them, which the\n28\n- 8 -\nother countries are not ready to do. They know that that\nrate is going to be lower. Now, if we get the francs\nwhich we need for our soldiers now, at the high rate,\nand then later on the rate gets lower, it would seem as\nthough we are not getting a fair deal, or at least they\nwould get the better of the deal. So this came entirely\non his own, and no mention on my part. He said, \"What\nwe propose to do\" - Mendes-France stated this definitely -\n\"...is to adjust the rates sometime later, whenever the\nadjustment takes place for the costs, not on the basis\nof what prevailed before, but on the basis of what is\nreasonable, which may be much lower, even though you\nmust have the francs now at a higher rate.\" He is the\nonly one that has. said that.\nH.M.JR: Say it again, will you?\nMR. WHITE: You see, if we were to buy the francs\nnow in the same way that the Dutch want us to buy the\nguilders, it would be at the present rate of exchange,\nwhich is two cents a franc. Actually, they are not worth\nit. Actually, at a later period, both the guilder and the\nfranc is going to be lower. But by that time we will have\nbought all we had to buy for our soldiers, and will have\npaid this high price, which is far above their actual\nworth.\nNow, Mendes-France, knowing that, is not asking us\nto pay, in the final adjustment, the present rate. What\nhe says is--\nH.M.JR: You had better get that in writing.\nMR. WHITE: He will. You ask him for that. He is\ngoing to tell you this, and I think that is important,\nand I think you ought to get it in writing. I have told\nhim that was important, and among the things - he went\nover a list of the things as to what was important enough\nto talk to you about, and that is one of the several\nwhich he will explain.\nIs it clear what he has in mind with respect to that?\n29\n- 9 -\nH.M.JR: Yes, that is good.\nMR. WHITE: There is another part of that.\nH.M.JR: I am scared to interrupt you, because you\ngo right ahead, anyway.\nMR. WHITE: Oh, well, I didn't know you interrupted\nme.\nAnother matter that they are interested in is the\nquestion as to whether or not they will get any dollar\ncredits if they need it prior to the adjustment.\nIn other words, we are using this French currency;\nthe assumption is there is not going to be any adjust-\nment, and we are not going to settle the balance until\nsometime in the future. They have already agreed to pay\nfor the imports of civilian goods in cash - in dollars.\nThey have, as you know, two billion dollars.\nMR. LUXFORD: Over here?\nMR. WHITE: No. Mendes-France is very much concerned\nthat they can't afford to spend, at the most, half of\nthat, because they will have no backing at all for their\nmonetary system, and that is an important item.\nSo he doesn't know how rapidly the rest of the money\nwill go, and he is wondering - he is not certain whether\nhe is going to raise this, because he is not clear in\nhis own mind.\nH.M.JR: He made a good impression on you, didn't\nhe?\nMR. WHITE: He is sincere; he has a rather simple\nmind, you know, compared to Monet. Monet gives you the\nimpression of being very shrewd - one of the fellows\nyou want to nail down everything while he is around. But\nthis other fellow did not give me that impression.\n30\n- 10 -\nH.M.JR: Any relation to Anatole France?\nMR. WHITE: I didn't find out; I didn't want to ask\nhim then.\nHe is a young fellow who spent the first couple of\nyears of the war on a bomber. lie was a flier. He went\nover Germany and France many times on bombing missions.\nHe was either bombardier or tail gunner, I don't know\nwhich.\nH.\nJR: How long has he been out of France?\nMR. WHITE: Four years. He was in England.\nH.M.JR: He has been out four years?\nMR. WHITE: I think he went out right at the start.\nH.M.JR: I thought he just came out.\nMR. WHITE: I asked Monet about anyone out recently.\nThey couldn't think of anybody.\nThis fellow France suggested once, \"Well, we have\nplenty of people in Algiers who have just come out; why\ndon't we get somebody over right away to talk with the\nSecretary?\"\nH.M.JR: Oh.\n31\n- 11 -\nMR. WHITE: They have plenty of people there, but\napparently there is no one here who has been there recently.\nMonnet mentioned this same chap whom I had talked to and\nsaid he had been out eight months. France says that is too\nlong ago.\nSo this fellow seems like a simple, able chap. I would\njudge he is in the middle thirties.\nH.M.JR: Somebody said thirty-five.\nMR. WHITE: Somewhere around there.\nH.M.JR: But he has come up through the school of the\nFrench Treasury, hasn't he?\nMR. WHITE: I think he has been in the French Treasury\nat some time in the past. I don't think he had a very high\noffice, but I don't know. He seemed able and straightforward.\nHe speaks English pretty well, better than--\nH.M.JR: What am I going to do about entertaining him?\nMR. WHITE: I didn't find out how long he was going to\nbe here, but I think he is going to be here at least a\ncouple of weeks. That will give you time to do anything you\nwant.\nH.M.JR: Is he here with his wife?\nMR. WHITE: His wife is in New York. He hadn't seen\nhis wife and children for four years. They were in New York.\nI don't think he brought them down here. Monnet suggested\nthat they wanted to have a dinner in his honor and invite you\nsome evening that was satisfactory to you. I just shrugged\nmy shoulders, because I didn't know. But I think that if\nhe is going to be here next week, as I suspect he will, that\nwill give you time.\nThey a re also interested--particularly interested--in\nknowing whether they can look for assistance from the United\nStates in getting them going. They are always interested\nin that. Their position, as they expressed it, is that\nthe opportunity that France has of assuming the leadership\nin Europe and not being forced to do business too closely\nor depend entirely upon England, depends in part on whether\n32\n- 12 -\nthey can get some support here. I don't mean to say\ngiving business to England, but it is a question of their\nfeeling that England cannot help them enough, anyhow. She\nis too weak herself. It is important that they have a\nsuccessful democracy, and they cannot have that without\neither support for their monetary system or some additional\nfunds.\nNow, whether he will mention that or not, I don't know.\nH.M.JR: I interrupted you. They want an advance on\nthis currency?\nMR. WHITE: Not yet, but if the occasion comes in which\nthey feel that the money they are spending is leaving them\ntoo rapidly, they would like to know whether it would be\npossible to get something on account.\nMR. LUXFORD: The more I think of that, the more I\nthink they made 8. bad deal when they didn't allow Lend-Lease\nto cover civilian supplies in this period. That is where\nState made the real mistake.\nMR. WHITE: They took the position that as long as\nthey have money they want to pay for it.\nMR. LUXFORD: But every one of these countries is going\nto run short of dollars because they have to pay dollars\nfor civilian supplies. That could have been lend-leased.\nH.M.JR: Why did State do it that way?\nMR. LUXFORD: I don't know, myself.\nMR. WHITE: Wait a minute. We took the position; it\nwasn't State. We took the position as long as they have\nmore money than England and we couldn't treat them better\nthan England, if they had money they ought to pay it. I\nstill think that is true. The time to assist them is when\ntheir money is running low.\nMR. LUXFORD: I agree with that, but if you say now\nwe have to work out some other way to pay them--\n33\n- 13 -\nH.M.JR: You and I went further than that.\nMR. WHITE: Yes, I think so.\nH.M. JR: We said it would be easier for the President\naround the peace table if they were broke. I don't know\nwhether it was your language or mine. That is before you\nmet Mendes-France.\nMR. WHITE: I still feel that they ought to have a lot\nless money.\nH.M.JR: That is what you thought.\nMR. WHITE: I still think so.\nMR. LUXFORD: I only had in mind why we have to work\nout a system now to give them some dollars.\nMR. WHITE: We don't now.\nH.M.JR: Is Luxford going to stay with us? I think\nit would be nice.\nMR. WHITE: It normally would have been Taylor, but\nTaylor is gone.\nH.M.JR: I would like for you to step out and ask if\nit is all right to have Mrs. Dickinson here.\nNow, who is taking Taylor's place on the McCloy Com-\nmittee as your alternate?\nMR. WHITE: Well, Glasser will when he comes back.\nIn the meantime, if the big committee meets, I will go\nmyself with one of the boys, one of the lawyers. Glasser\nwill be back in a few weeks.\nH.M.JR: Will you tell that to McCloy? He was quite\nbothered as to who--\nMR. WHITE: Yes, I will when I see them, but if there\nis a meeting of the larger committee, I will go myself.\n34\n- 14 -\nH.M.JR: We don't know, though, whether it has finally\nbeen cleared as to recognition of this committee, but that\ndoesn't have to bother us. The French committees are\nrecognized to do business with?\nMR. WHITE: Yes, everybody is doing business with them.\nState is doing business with them. We actually aren't\ngiving them anything yet. The only business we are doing--\nwhat he is coming here for mainly, and his principal business\nis to get you to agree on the two-cent rate. That is what\nis holding the Army up. We have to hear definitely from\nthem. The minute he tells you that and if you accept--\nH.M.JR: Accept what?\nMR. WHITE: The two-cent rate for metropolitan rate;\nthat is the one rate that remains unsettled.\nH.M.JR: Why should we not?\nMR. WHITE: Naturally we should. I expected that we\nprobably would agree to that, but that is going to be their\nrecommendation.\nH.M.JR: I think I will listen and then talk it over\nwith you boys; then I will tell him to come back tomorrow\nmorning. You can't expect anything faster than that.\nMR. WHITE: That is right.\n35\nMay 8, 1944\n11:00 a.m.\nCONFERENCE WITH FRENCH AMBASSADORS\nPresent: Mr. White\nMr. Luxford\nMr. Monnet\nMr. Mendes-France\nH.M.JR: Won't you gentlemen sit down, please?\nHow did you find your family?\nMR. MENDES-FRANCE: Very fine, thank you very much.\nH.M.JR: How many children do you have?\nMR. MENDES-FRANCE: Two.\nH.M.JR: How old are they?\nMR. MENDES-FRANCE: Nine and ten.\nH.M.JR: And how many years since you have seen them?\nMR. MENDES-FRANCE: Two years.\nH.M.JR: That is too long.\nMR. MENDES-FRANCE: That is right. They are quite\nAmerican boys.\nH.M.JR: Both boys? Where did they go to school?\nMR. MENDES-FRANCE: In New York. They forget the\nFrench; they only speak English.\nH.M.JR: Really?\nLast night we were at MadameT. V. Soong's. She has\nthree girls. They have been here three years. They have\n36\n- 2 -\nAmerican slang; no foreign accent of any kind. She is very\nrapidly forgetting Chinese.\nMR. MONNET: That is the case with our little girl.\nShe speaks French with a terrible accent.\nH.M.JR: Well, gentlemen, I am at your service.\nMR. MENDES-FRANCE: I am very glad to come to see you\nand to speak of such affairs, but first you must excuse me\nfor my English; it is 80 bad.\nH.M.JR: You must excuse me, because I don't speak\nany French.\nMR. MENDES-FRANCE: Maybe it would be good for you to\nunderstand what I am speaking.\nH.M.JR: I understand you very well.\nMR. MENDES-FRANCE: In these last months we were speak-\ning of some questions, and I assume it would be a good\nthing if I come here to speak with you and with him, because\nwe have a feeling that the moment came now and we thought\nit was very important that you know exactly what we mean and\nwhat we think and what we hope.\nAnd I understand with the information that Mr. Monnet\ngave us that finally--I think we have the same aim and the\nsame motives to realize. What we want to establish in France\nis, I think, what you want to establish in the world after\nthe war. And we wanted to do it in the best cooperation\nwith you, and we understand we cannot do it without you.\nWe were very concerned in the last times with the exchange\nrate question.\nThe aim we have--what we want to realize is, of course,\nto get a sort of equilibrium in the money, which will be\nreached in other countries, and the exchange rate will be\nexactly the rate that will realize this equilibrium. But\nwe feel it is quite difficult to know immediately which\nwill be this leaven, inside or outside. And we think maybe\nit would be 8: good thing to realize this exchange rate, not\n37\n- 3 -\nimmediately, but in the time we have more information than\nwe have now. We have a plan for cleaning up our monetary\nsituation in France, and we hope very much about these\npolicies we will try. It will mean for the French people\ncourage and hard work and, of course, privation. We think\nit will be better realized if the French people understand\nexactly that we will and we can save our money.\nOur worst enemy in this thing is the lack of confidence\nwhich exists in Europe about monies, and principally in\nFrance about all money. The French people think that we\nhave in the franc the same as what happened after the last\nwar with the mark. They think the franc cannot be saved.\nAnd this lack of confidence is the most important enemy\nwe have to fight at the beginning.\nH.M.JR: May I interrupt you? I should know, but I\ndon't, what the internal and external debt was prior to\nSeptember '39.\nMR. MENDES-FRANCE: In September of '39 the external\ndebt was negligible. It is a very little thing. Of course,\nafter the war it will be different. But before the war it\nwasn't.\nH.M.JR: May I interrupt again? External--that is\nGovernment. Did you have many private debts outside,\ndollar bonds, and so forth?\nMR. MENDES-FRANCE: Not as much as we had credits. We\nhad more external credits and external debts before the war.\nMR. MONNET: Yet not much external debt.\nMR. MENDES-FRANCE: This is a big question for us.\nH.M.JR: That will not be a big question after the war.\nYour external debt both public and private--that will not be\na big post-war question?\nMR. MENDES-FRANCE: I hope so, but I think it is more\nthan it was before the war.\n38\n- 4 -\nH.M.JR: As of September '39.\nMR. MONNET: We will have after this war, or we will\ncreate a debt, but as of '39, no.\nH.M.JR: I mean as of '39.\nNow, what about your internal debt as of '39.\nMR. MENDES-FRANCE: That was about five hundred billion\nfrancs before the war. I think it is now about twelve\nhundred billion. And when we make calculations, we make\nabout fifteen hundred as the internal debt, but it is a big\nchange. It is three times more than before the war. But\nthis new debt is not so heavy as you can first see, because\nit was done at a very low interest rate. The internal con-\nditions prevailing now in France are that the Vichy Govern-\nment can find money at about one and a half percent, two\npercent, or two and a quarter percent.\nH.M. JR: May I interrupt you? Is it your thought that\nyou will recognize the Vichy?\nMR. MENDES-FRANCE: I think we are obliged--the internal\ndebt--I think we can't do otherwise, because what is this\ninternal debt? Most people in France have a lot of notes,\nbut you can't do anything with the notes. You can't buy\nanything. They have notes or money in banks, and they\nare two kinds: All these people who have nothing to do\nwith their money--and I think it is more important--they are\nbanks who have deposits, and these deposits they buy Treasury\nbonds with. If we wash out the Treasury bonds, all the\nbanking system will receive a shock.\nH.M.JR: What I would like--there must be different\nstages. I mean, what was the internal Government debt as\nof September, '39?\nMR. WHITE: We have it.\nH.M.JR: I mean by stages.\n39\n- 5 -\nMR. WHITE: You want to see the development?\nH.M.JR: Yes, and I would be interested, because you\nare going to recognize the debt credit by the Vichy Govern-\nment.\nMR. MENDES-FRANCE: I think we can't do otherwise. We\nstudied a few months ago the question to say on the radio\nto the people, \"Don't take these bonds; we will not recognize\nthem after the war.\"\nH.M.JR: You did do that?\nMR. MENDES+FRANCE: No, we studied it. Finally we\ndecided we couldn't do it because now we have to choose\nwhen we arrive in France whether we will find more notes\nin circulation or more Treasury bonds. We prefer to find\nmore Treasury bonds than more notes.\nMR. WHITE: In other words, the French Government would\nhave been forced to meet their financial needs both to\nGermany and themselves by printing more currency instead of\nborrowing from the banks, so by stopping it from the banks\nthey merely would have had more currency. But I think there\nis another point he said first that probably didn't register\nbecause he went over it very quickly. They do have in mind,\nwhen he said cleaning up the monetary system, freezing all\nthe bank accounts and permitting only withdrawals until\nuntil they are examined, the large amount, to see whether\nthey are collaborationists or whether they have them under\nconditions which they would want to check.\nH.M.JR: They shoot the collaborationists and seize their\nmoney; isn't that what they do?\nMR. MONNET: Yes.\nMR. WHITE: That will settle a lot of debts.\nMR. MENDES-FRANCE: We started to do it in Corsica; we\nobliged all the people to bring their notes, and each man\nreceived only five thousand franc notes. We find it is too\n40\n- 6 -\nmuch. We think in France it will be, say, four thousand\nor less. But it doesn't matter.\nMR. WHITE: Turn in all their money.\nH.M.JR: You mean five thousand was the maximum, or\nthey only took up to five thousand?\nMR. MENDES-FRANCE: They are obliged to give all the\nnotes they have, and they only receive five thousand.\nH.M.JR: On the average?\nMR. MENDES-FRANCE: Not on the average. Each man\nreceives five thousand francs.\nMR. MONNET: To begin with the beginning, we go in\nFrance--\nH.M.JR: What did they do in Corisca?\nMR. MONNET: The moment we went into Corsica, all the\nnotes that anybody had had to be turned in because it was\ndeclared that they couldn't be used any more.\nNow, this man had ten thousand francs. Five thousand\nfrancs were put into a bank account that was frozen, and he\nreceived in new notes five thousand francs. In other words,\nevery man had to turn in the total of the notes; he received\npart in an account in the bank which was blocked, and five\nthousand in new notes.\nH.M.JR: In other words, irrespective of whether he\nhad fifty thousand, he would only get five thousand back\nand forty-five thousand would be frozen.\nMR. MONNET: That is ight.\nMR. MENDES_FRANCE: Then we make an investigation of the\norigin of this.\nMR. WHITE: An investigation of how he got the money?\n41\n- 7 -\nMR. MONNET: Go over the accounts and investigate?\nMR. MENDES-FRANCE: Yes, an investigation. Now in\nCorsica we made very drastic two things: First, requisition\nand confiscation of all the money which has a dishonest\norigin. And secondly, taxation--drastic taxation for the\npeople who are rich; but when it is an honest origin, first\npeople who are mortgaged have to pay taxation. For those\non which the origin was illicit, it is requisitioned, and\nit is taken.\nMR. WHITE: They put into effect in Corsica what the\nTreasury advised them to do in Tunis.\nH.M.JR: While I was in Algiers, I received a delegation\nof Jewish people, and among them was a very prominent owner\nof cinema houses. You most likely know who he is.\nMR. MENDES-FRANCE: Yes.\nH.M.JR: I am interested in what happened. He had sold\nout his cinema theaters to somebody--I forget who. Let's\nsay he got thirty or forty million francs, and he wanted\nto buy them back at the same price he sold them for, but the\nman said that now they were worth seventy-five million\nfrancs. As I got it, all the people while I was there were\nwaiting; nothing was happening. Now, in that particular case,\ndo you know what finally happened?\nMR. MENDES-FRANCE: I know what you mean. It is not\nsettled today, because there is a resistance of the local\nsituation which, of course, is not exactly the same as it\nwas in occupied territories. For these now we have an\nordinance which is not settled by the Comite', but will be\nsettled quite soon, I think. But what I mean is another\nthing which is connected with this one, but not exactly\nthe same, and which is to take requisition of all the\nincreasing of money, of fortune, by people who vote on\nsuch things, because they profit on the situation. It is\ndone for Corsica now, and the text we made at Corsica--\nthere are two ordinances; we made them with the idea of the\nsame text we had taken in France.\n42\n- 8 -\nH.M.JR: Could we be furnished with copies of that?\nMR. MENDES-FRANCE: Yes. It is quite new.\nMR. WHITE: We know they were contemplating that\nbecause it was in the discussion.\nH.M.JR: Could you get those, because what the people\ndid--and I appreciate that everybody has to learn, including\nourselves, but both in Algiers and Tunis, the Banque du Maroc--\nin all of that our experience wasn't & very happy one, and\nwhen I visited there with Couve de Murville and all that--\nMR. MENDES-FRANCE: In the beginning, things were not\nas clear as they are now.\nH.M.JR: If you don't mind my saying so, from our\nstandpoint, and we think from yours, it is 8. better job in\nCorsica.\nMR. MENDES-FRANCE: We have these two things here.\nH.M.JR: I want to know about them if you have them.\nMR. MENDES-FRANCE: Yes, I have them in Washington.\nH.M.JR: Do you have the original?\nMR. MENDES-FRANCE: Yes, it is in the French text, but\nwe can translate it.\nH.M.JR: We can have both?\nMR. MENDES-FRANCE: Yes, but I hold them here because\nit is new and I thought it wasn t here. All the people have\nto bring their notes, and these^notes will be frozen. These\nfrozen notes will be subjected to first investigation, and\nsecond, this confiscation.\nH.M.JR: Could it be set down in a condensed form, Harry?\nMR. WHITE: Yes. It will be quite a difficult job to\ndo that in France, and Corsica has a small population, but in\nFrance instead of freezing that, they expected to make the\n43\n- 9 -\nlarge notes--notes of large denominations--not valid until\ninvestigation has been made, and they expect to freeze the\nbank accounts.\nH.M.JR: All bank accounts will be frozen by the Army\nwhen they first go in?\nMR. WHITE: Yes, in their territory.\nH.M.JR: Certainly in occupied France.\nMR. WHITE: Yes, that is what they expect to do, but\nvery quickly release--\nMR. MONNET: That is why we are so anxious to have the\nfamous notes--I mean the notes which you are printing here\nfor us. Without these notes, what he is talking about is\nimpossible.\nH.M.JR: Have you seen the two-franc pieces?\nMR. MENDES-FRANCE: No.\nMR. MONNET: I forgot to show them to you.\nH.M.JR: I stole a couple! (Shows them to Mr. Mendes-\nFrance.)\nMR. MENDES-FRANCE: That is very nice. Is it good?\nH.M.JR: It looks all right. I stole a couple.\nMR. MONNET: That is a very nice job.\nH.M.JR: Don't you think it is nice?\nMR. MENDES-FRANCE: It is very good. It is exactly\nthe size we have in France.\nH.M.JR: Is that made from discharge shells the way\nthe other is?\nMR. WHITE: I don't know. I think it is, because\nthat is what they have plenty of.\n44\n- 10 -\nH.M.JR: Our own pennies now--we take the outside\nof 8. cartridge and melt it down and make it into money.\nI think that is what it is; that is why it is so pretty.\nMR. MENDES-FRANCE: It is interesting.\nMR. MONNET: It is quite a story.\nH.M.JR: I think that is correct. It is made from\ndischarged shells. They save them and melt them down.\nMR. MONNET: Do they bring them back from the battle-\nfield? That is quite an interesting point.\nH.M.JR: We will find out. I am sorry to interrupt\nyou so much.\nMR. MENDES-FRANCE: You are right; it is better to.\nH.M.JR: What got me started was the question of post-\nwar France. You were going to lead up to the rate, I take\nit.\nMR. MENDES-FRANCE: Yes, it was about the rate. I\nthink I was saying what we have to do after the war is over.\nOf course, as you know, prices in France are quite low, but\nsalaries--\nMR. MONNET: The official prices--\nMR. MENDES-FRANCE: The black market, which is very\nimportant, but salaries are lower. Salaries are about\none hundred and thirty or one hundred and forty in comparison\nwith September '39, but prices--official prices are about\ntwenty-seven or twenty-eight. That is to say, the salaries\ntoday have buying power half of what they had in '39.\nMR. MONNET: Unofficial prices.\nMR. MENDES-FRANCE: And it is not possible for anyone\nto live only with official things you buy. All the people--\n45\n- 11 -\nsome of them have much, some of them not so much, but all\nthe people buy things in the black market. They can't live\nwithout them. Then you understand how low the purchasing\npower of the salaries is. We have to increase the salaries\nvery much, but we think it should be done quite slowly. At\nthe beginning, say, thirty or forty percent, and then as\nthe food comes, the production is better, the imports come,\nthen we have to give more to the worker so it is possible\nfor him to buy with the salaries all the things which are\navailable and which are on their ration cards. The prices,\nwe think, have to be increased, too, but not SO much. When\nthe market is full, and when the products and food are there,\nI don't think it is necessary to bring the official prices\nvery high in comparison with the actual official prices.\nWhen we calculate all these things, and when we think\nan equilibrium will come a few months after the liberation,\nand when we can create this equilibrium equal to the other\ncountries--as fast as we can know what will happen--we\nunderstand we have to make quite an important devaluation\nof the franc. The only question is, is it necessary to do\nit immediately without knowing exactly how far it is necessary\nto go, or is it better to do it in the moment when we have\nthe information about prices, salaries, inside and outside.\nWhat will be difficult for us is the lack of confidence\nin France about money. If we come in France, and if we\nsay, for example, it is three hundred for a pound, people\nwho have the experience of before the war that each new\ndevaluation--\nH.M.JR: Like myself, I went all through that with you.\nMR. MENDES-FRANCE: Yes, I know. You knew this thing\nbefore the war. And, of course, you know all these difficulties\nwe had, and I know you helped us as far as you could. But\nalways the internal situation was bad, and always the lack\nof confidence was the same situation for us.\nH.M.JR: Is Bonnet alive or dead?\nMR. MENDES-FRANCE: He is alive, unfortunately.\n46\n- 12 -\nH.M.JR: Where is he?\nMR. MENDES-FRANCE: I think he is in France, but we\nheard a few weeks ago he was in Switzerland; it was not\nconfirmed.\nH.M.JR: Is Madame Bonnet alive, too?\nMR. MENDES-FRANCE: Unfortunately, yes.\nH.M.JR: She was a smart piece--too smart!\nMR. MENDES-FRANCE: Then this experience before the\nwar will lead the French people to say it was one hundred\nand seventy-six for a pound; then it was two hundred; now\nit is three hundred. Maybe in a few weeks it will be three\nhundred and fifty or four hundred.\nIt is a bad thing for the country if we start with\nthe devaluation. I think on the contrary if we arrive\nand if we say in the Empire it is two hundred for the\npound, that is fifty for the dollar, and we think it is no\nreason to change it immediately before we know what will\nhappen.\nIf the French people see that it is very surprising\nfor him that we don't do a very large devaluation at the\nbeginning, and if he sees we do it with the approval of\nthe Allies, it is a very big reason for them to have con-\nfidence. If they think that the French Government, with\nthe help of the Allies, will try to save the money and\nthat it is possible to save it, then it will be a very good\nthing for the French confidence in the money. And it will\nbe a help for the Government to avoid excess in prices and\nsalaries, because we will be asked very big increases for\nfarm prices, corn, and so forth, and for salaries, and so\nforth.\n47\n- 13 -\nI think we can resist it better and give these modi-\nfications quite slowly if the French people understand that\nit is to organize monetary systems in which the money will\nbe saved.\nThen after a few months, if they have the feeling it\nis possible to realize it, and if a good equilibrium is\nrealized inside, and if we come, say, and make a devalua-\ntion based on the prices which prevail now and which is\nbased on an international arrangement, if, for example the\nplan you have now for international stabilization is realized,\nin this time I think the French people will understand it\nvery well, and the devaluation which will come then, instead\nof being a reason for lack of confidence in between, that\nis to say, in the early times.\nOf course, we will have an exchange rate which is not\nan actual exchange rate, which is not a technical exchange\nrate, but which is more in my opinion a political manifes-\ntation, and I think in such a case we can have in France\na goodly action, and it will help to make & good internal\nmonetary policy.\nH.M.JR: Excuse me, what rate do you have in mind?\nMR. MENDES-FRANCE: For the first or last one?\nH.M.JR: When you start.\n48\n- 14 -\nMR. MENDES-FRANCE: To start, I think there is no\nreason to change what we have. I give you an example:\nWhen We came in Corsica, nobody asked, What are the\nprices? What are the salaries in Corsica?\" We had\ntwo hundred in North Africa. It was not a very good\none, I thought. But so it was. Then we kept it. What\nis the difference between Corsica and a little foothold\nyou have on the Continent? I don't know how the inva-\nsion will be. Maybe all of France will be invaded in\ntwo or three months. Maybe you have a little foothold.\nIt can be. Maybe half of France is liberated and the\nother half is occupied. Do you think it is a good thing\nto give an exchange rate immediately, without knowing\nfor which territory it will be?\nMR. WHITE: You have to give a rate.\nMR. MENDES-FRANCE: You have to have a rate, but--\nH.M.JR: May I interrupt? Whatever happened about\nsome of these other places that General DeGaulle was\ngoing to bring into line? Weren't there some other\nplaces?\nMR. WHITE: They have all been brought into line,\nnow - all except Syria, which is two hundred.\nH.M.JR: What about that Island down in the South\nPacific?\nMR. LUXFORD: Madagascar?\nMR. WHITE: It is two hundred.\nMR. MENDES-FRANCE: Yes, we united it.\nH.M. JR: Everywhere now?\nMR. MENDES-FRANCE: Yes, every place it is two hundred.\nAnd I think if we could know exactly what happens after\nthe invasion, of course, it would be easier. But now we\ndon't know, if the invasion will be a very big success or\na slow success. We don't know, after the liberation of\n49\n- 15 -\nFrance if Germany will be collapsed and finished, or\nif Germany will continue the war.\nH.M.JR: Again, I am sorry to interrupt you--\nMR. MENDES-FRANCE: No, please, please.\nH.M. JR: One thing Mr. White told me he had in the\nconversation with you last night, as I understand it, one\nof the things you said was that if we agreed on the two\nhundred rate, that you su ggested that later on in a period\nof adjustment, that if that proved not to be right, you\nwould be glad to make the final adjustment with us on\nthat.\nMR. MENDES-FRANCE: Yes, so I said.\nH.M.JR: I think that is very important, and that\nwill influence me, and I think that if you didn't mind,\nI would like to get that formaily in writing.\nMR. MENDES-FRANCE: Yes.\nH.M.JR: That would influence me largely. I think\nthat if I could get that in writing - would that be\npossible?\nMR. MENDES-FRANCE: Yes, yes; it is possible. It\nis no difficulty; I tell you why, because the first\nexchange rate - this two hundred exchange rate - for me\nit is not an exchange rate; it is a political manifesta-\ntion.\nH.M.JR: Well, if I could get that in writing, that\nwould influence me in making up my mind, do you see?\nMR. MENDES-FRANCE: Yes, we can write it.\nH.M.JR: I think we have heard most of the arguments\nand I would like to think this over for twenty-four hours.\nI would like to explain what my plans are - I had expected\nyou last week.\n50\n- 16 -\nMR. MENDES-FRANCE: Yes. Excuse me.\nH.M.JR: I am planning to leave here Wednesday noon\nand not to be back until next Tuesday, but I will be\nwhere they can get me. But I can meet with you Tuesday\nmorning, and I can meet with you Wednesday morning. We\ncan settle this rate thing before I go away. We will\nsettle it.\nSo, if there are any other things which ought to be\nsettled in the next day or two, if you would mention\nthem now, do you see? Then, if it is convenient for you\ngentlemen, we would work each morning before I go. There\nis no reason why the rate cannot be settled between now\nand noon, Wednesday.\nI don't know what else there is which is pressing,\nand I don't know how long you are planning to stay.\nMR. MENDES-FRANCE: Of course, it depends on this\nsettlement, but my idea, of course, is not to stay here\ntoo long, if it is possible to settle it before. But\nother questions that we wanted to speak to you about are\nthese notes which we were speaking about.\nMR. MONNET: The printing.\nMR. WHITE: The printing of the additional notes -\nthe same kind of notes that are being printed. That is\nin the mill. But they are interested in getting substan-\ntial amounts sent to North Africa, not in this control,\nbut control of the Army, so if a decision is made to\nturn it over to them for the pay of their troops, which\nthey will need, and other purposes, that it will be easily\navailable in North Africa instead of in Washington or\nLondon.\nH.M.JR: Well, couldn't you maybe explore that with\nthe Minister this afternoon? Have you got any conferences?\nMR. WHITE: Well, they had written a letter on it and\nwe are preparing a draft. I think that is something we\n51\n- 17 -\nwill probably have to take up with the Army. We just\nturn the money over to the Allied authorities; whether\nthe Allied authorities want to ship it there is a\nmatter which I think we will have to take up, also, with\nthe Army.\nH.M.JR: With McCioy?\nMR. WHITE: Yes.\nH.M.JR: Is it waiting on me?\nMR. WHITE: This is something they raised at the\nend of last week.\nMR. MONNET: But we need your support.\nH.M.JR: Well, this is the first time I have heard\nof it. I want to do everything - I mean, I don't want\nanybody to wait on me.\nMR. MONNET: No, we are not waiting.\nMR. WHITE: Just got the letter Friday.\nH.M.JR: Well, there is that question; between now\nand tomorrow morning we can say whether we will give\nthem our support or not.\nMR. WHITE: That is right.\nH.M.JR: We will have an answer for you on that\ntomorrow morning. I will try to have an answer for you\ntomorrow morning on the franc rate. I will try to have\none for you, if possible.\nNow, what else?\nMR. MENDES-FRANCE: Another thing about these notes -\nI explained to you before the idea we have to make a change\nin notes which are in circulation in France. The people\nhave to give their notes and receive other notes.\n52\n- 18 -\nOf course, it is necessary that the new note is\nnot the same as the old one. If, instead of taking this -\nof course, there will be terrible speculation, and some\npeople will keep their old notes. Then you have printed\nforty or fifty billion notes for military purposes of the\nfirst times.\nThese notes are now printed, and as I understand,\nthese notes are now in England and will be used ata\ngiven time. When we try to clean up the monetary situa-\ntion, we find two kinds of notes in circulation; in\nthe first place, these Banque de France notes, and\nsecond, these notes you have given.\nH.M.JR: The military.\nMR. MENDES-FRANCE: Our new notes must be different.\nThen I wanted to ask you to put on these notes which are\nnow in printing, some modification that the people cannot\nmix them with the military ones.\nH.M.JR: You mean the ones that will be the final\nones.\nMR. MONNET: Now there is no printing the same notes\nas the first forty billion. What he is now asking is if\nit is possible to make some change to this text of the\nnote which is now in the course of being printed.\nH.M.JR: Text or color?\nMR. MONNET: Something.\nMR. WHITE: I had in mind an over-printing; 1 suppose\n\"The French Republic,\" or something like that. (Laughter)\nH.M.JR: I don't think we want to start that, do we,\nMr. Monnet?\nMR MONNET: I would like it very much if we could\nfinish it.\n53\n- 19 -\nH.M.JR: Right. We tried hard enough.\nMR. MONNET: I told him about it.\nMR. WHITE: I think what they have in mind is not\nquite the same thing.\nH.M.JR: He knows about this discussion which Jack\nMcCloy and I had. we got by the \"Liberte, Fraternitè,\nEgalite.\"\nMR. WHITE: He is suggesting something that will be\nkept for later use. I thought - you are printing these\nnotes in England, are you not? Aren't you printing some\nnew notes in England?\nMR. MENDES-FRANCE: No, I think we can ask them to\ndo it, but at this time, we have not the arrangements\nmade.\nMR. MONNET: In any case, they can't print enough.\nThe question is very simple. The only way by which he\ncan get his note is to have them printed in this country.\nThey are in the course of being printed, but they are the\nsame as the original batch. The question is, what\nchange could be made in this issue so that not only the\nBank of France notes, but also the military notes could not\nbe exchanged with this. That is the point.\nMR. WHITE: That is a large question.\nH.M.JR: That they couldn't answer by tomorrow. I\nhave got to leave something I can't answer so you can\nhave a little time to your family. If I answer every-\nthing too quickly, you have to have some excuse.\nMR. MENDES-FRANCE: So I have.\nMR. MONNET: We could try to produce that in writing.\nMR. MENDES-FRANCE: Only I wanted to say, to finish\nthis thing - I wanted to ask you, on these notes, two\n54\n- 20 -\nthings: First of all, to put something which is a dis-\ntinguishing mark; and secondly, I want to ask you\nanother thing, to take out something which is on this\none, because--\nMR. WHITE: Your \"Liberte, Egalite, Fraternite.\"\nMR. MONNET: He means the counterfeiters.\nH.M.JR: They can print something on the notes,\nbut what they can't do is to take off. Then I wanted\nto ask you, first of all--\nMR WHITE: It is the same problem; not only putting\nsomething on, but also taking something out.\nH.M.JR: They can take these notes and print right\nacross them, \"Victory,\" and cail them the \"Victory Notes.\"\nMR. MONNET: That is right.\nMR. WHITE: He also would like to take something out.\nH.M.JR: There is a technical question, but if you\nprinted right across the word--\nMR. MENDES-FRANCE: Yes, \"Victory,\" that is good,\nbut counterfeiters can print it, too; but what the counter-\nfeiters cannot do is to--\nH.M.JR: That could be done. You could make them\na different color, too, which the counterfeiter can't do.\nWhen you start tampering with those plates, then you\nhave to make all new plates. But if you made it a\ndifferent color - the color thing is very hard to counter-\nfeit, you know.\nMR. MENDES-FRANCE: Yes.\nMR. WHITE: And mix different inks.\n55\n- 21 -\nH.M.JR: Just make a different color, and print the\nword; but if you start taking something out, it means\nall new plates. But that could be done. I don't know\nwhether we are through printing what the Army thinks\nthey need - is that done here in Washington?\nMR. WHITE: Partly. Most of it is not.\nH.M.JR: Now, what else is there?\nMR. MENDES-FRANCE: Another question which is a\nvery delicate one, is the purchasing power of the troops\nand our troops in France. As you know, when the troops\nare hired in France, at the beginning there is nothing\nto buy in the shops - and the few things which are\navailable - of course, we hope they are reserved for the\ncivilian purposes. Then we are very anxious about the\nsituation which will appear - and is it not possible from\nthe very beginning to have a temporary arrangement to\navoid this competition between troops who have plenty\nof money and people who have very little?\nH.M.JR: I don't think there will be any trouble,\nbut you are going to see McCioy, aren't you?\nMR. MONNET: Yes.\nH.M. JR: I don't think there will be any trouble.\nAn order can be issued that the troops don't buy any.\nIt is true here in America. My son, when he was on\nmaneuvers, could buy nothing from the local population.\nNo soldiers, when they were on maneuvers in Tennessee,\ncould buy anything from the local population. I mean,\nthat was an order.\nMR. MONNET: That would be something.\nH.M.JR: If they do it here in the U.S., they cer-\ntainly can do it there.\nMR. MONNET: But you see, it goes further; restric-\ntion of purchases, but also a limitation of amount.\n56\n- 22 -\nH. JR: If you would take that up with McCloy,\nwe would be very glad to back you up on that.\nMR. MONNET: That is what we are asking you.\nH.M.JR: I don't have to think that over. We hope when\nthe soldiers land they will have no money in their\npockets.\nMR. MONNET: I don't know that you can go to that\nextent, but certainly they don't need any.\nH.M.JR: I will be very glad to back you up. There\nshould be no question that the Allied troops when they\nland should have orders not to buy any food or whatever -\nanything at the beginning - at least they shouldn't.\nMR. WHITE: But not approach it from the point of\nview of not giving the soldiers money. The approach\nshould be prohibitions on what the soldiers can spend.\nHe had the idea that he could stop them from paying\nmoney.\nH.M.JR: I think that they just would have to be\ntold that they cannot buy any French - I remember an\namusing story an American soldier told me about the\noccupation after the first war. In Germany they had\norders that the American troops could not buy any food\nin the Rhineland. This morning, after they had been\nthere about a week, at the officers' mess they all had\nfresh eggs. So the Colonel said, \"Well, you know about\nthe order. He was very cross. \"You have been told\nnot to buy it; where did you get these fresh eggs?\nThe answer was, \"It didn't say we couldn't rent the\nhens.\"\nHad you heard that?\nMR. MONNET: I hadn't heard that, but that is a very\ngood story. That showed which way.\nH.M.JR: It always will be 30. Had you heard that\nstory?\n57\n- 23 -\nMR. mendez-france: No. That proves it is difficult\nto limit.\nH.M.JR: So they rented the hens.\nMR. MONNET: But you realize?\nH.M.JR: It is very important, and I can assure you\nthat we will do everything possible to back you. I\ndon't think you will have any trouble with Mr. McCioy,\nbut if you do--\nMR. MONNET: We want to ask, not on the restriction\nof purchase, but restriction in the money given to the\nsoldiers.\nH.M.JR: As far as I am concerned, we feel they\nreally oughtn't to have any money when they land.\nMR. MENDES-FRANCE: What is important is that the\nFrench people see a contradiction on what happened when\nthe Allies arrive and what happened when the Germans\ncame. When the Vermans came, they had plenty of money.\nThey were ordered to buy things in shops and to send\nthem to Germany.\nH.M.JR: I know.\nMR. MENDES-FRANCE: We must make the French people\nfeel that it is contrary to what happened--\nH.M.JR: I don't know when you are going to see\nMr. McCioy, but--\nMR. MONNET: Today or tomorrow.\nH.M.JR: Now, have you something else?\nMR. MENDES-FRANCE: No.\nH.M.JR: I would like to continue again at eleven\no'clock tomorrow, if that is agreeable. Is that all\nright?\n58\n- 24 -\nMR. MENDES-FRANCE: Yes.\nH.M.JR: I have had such short notice. It seems\nsilly to put it so far in advance, but I would like to\nhave some of the people here in Washington meet you at\na luncheon, do you see?\nAs I say, it so happens that I can't just explain\nnow, but I have a very good reason for going. You will\nbe here the 17th? That is a week from wednesday.\nMR. MENDES-FRANCE: That is all right.\nH.M.JR: Mr. Monnet, too?\nMR. MONNET: Yes.\nH.M.JR: Would you put that down?\nMR. MENDES-FRANCE: Yes, thank you very much. I\nthink it will be exactly at the end of my stay.\nH.M.JR: I am sorry, but I have certain things.\nI had planned it all. You didn't expect him?\nMR. MONNET: Transportation from North Africa is\nawful.\nH.M.JR: I had expected you last week, but you\nunderstand.\nMR. MENDES-FRANCE: Yes.\nH.M. JR: Tomorrow is Mr. Stettinius, just so you\ncan see - today is Mr. Sulzberger of the New York Times.\nThe arrangements I have made, and then Wednesday noon I\nwon't be here and I couldn't change them.\nMR. MENDES-FRANCE: I understand.\nMR. MONNET: The travelling was in the hands of the\nArmy, as you know.\n59\n- 25 -\nH.M.JR: I know, but normally I would have been ready,\nand would have dropped everything, but this way I am\ngoing to give you my business hours, although I can't\ngive you my social hours.\nMR. MENDES-FRANCE: I see.\nMR. MONNET: Mr. France will want to have a general\ntalk with you, not in detail, but a general talk about\nthe Stabilization Fund, and Monetary Conference views.\nMR. MENDES-FRANCE: Yes, we are very interested.\nH.M.JR: Definitely, but I am not going to leave\nuntil I have what is, I think, tomorrow, the most\nimportant, the rate. Is that right?\nMR. MENDES-FRANCE: Yes.\nH.M.JR: We will try to be ready to talk to you by\neleven tomorrow. Then this other matter, at that time\nyou will bring a letter saying for the rate to be adjusted\nin the future.\nMR. MONNET: That is a very important document.\nH.M.JR: Could I have that by eleven tomorrow?\nMR. MONNET: Yes, but we would like to know in just\nwhat form.\nMR. WHITE: I should imagine it would be & letter\nfrom Mr. Mendes-France to the Secretary.\nMR. MONNET: How would it be phrased?\nMR. WHITE: I think we can work something out,\nif you would like a suggestion.\nMR. MONNET: Yes, we would be glad to have it from you.\nH.M.JR: Then I will look for you at eleven o' clock\ntomorrow.\nTreasury Department\nDivision of Monetary Research\n60\nDate May 8, 1944\n19\nTo:\nMr. White\nFrom:\nMr. Tonlinson\nM. Pierre Mendes-France \"Commissaire aux\nFinances du Comite Francais de la Liberation\nNationale\".\nThis may be translated \"Commissioner of Finance\nof the French Committee of National Liberation\" or\n\"Commissar of Finance of the French Committee of\nNational Liberation\". There is no exact translation.\n\"Commissioner\" is usually used but he is really more\nthan a \"Commissioner\" as his office is comparable\nto the Minister of Finance in Metropolitan France.\nThe French Committee has not accorded any of its\nmembers the title of \"Minister\".\n61\nOFFICE OF\nTHE SECRETARY OF THE TREASURY\nTiene Mendes France\nCommissaire any Finances.\n62\n62\nOFFICE OF\nTHE SECRETARY OF THE TREASURY\nban Monnet\nCommissioni en Mission\nComete Francais a a\n,\nbeheration Nationals-\n/\n63\nDr. \"hite thinks Secretary might\nbe interested in reading this.\n64\n14\nMay 8, 1944\nMEMORANDUM FOR THE FIIES\nIn connection with the letter to be sent to the\nSecretary, of the Treasury by M. Mendez-France confirming that\nthe Comite intends that there should be an equitable adjustment\nin the expenses of the United States in continental France in\nthe light of the permanent rate of exchange established in\nFrance after liberation, the following points should be noted:\n(1) The letter is worded in terms of the intention\nof the Comite, rather than in terms of an agreement with the\nComite. This is due to the fact that this Government has not\nrecognized the Comite as the Government of continental France\nand hence the authority of the Comite to bind any future\nGovernment of continental France is open to question. All that\nwe can hope for is that the Government of continental France,\nultimately recognized by this Government, will adopt the\nposition of the Comite as a moral obligation.\n(2) It is not intended that the letter in any way\nshould represent an understanding between France and the United\nStates, or between the Comite and the United States, as to the\nterms of any ultimate financial settlement between France and\nthe United States or to indicate the nature or extent of any\nobligation on the part of the United States to reimburse France\nfor expenses incurred in connection with U. S. participation in\nthe liberation of France.\n(3) It is specifically contemplated that the\n\"equitable adjustment\" for U. S. expenses in continental France\nprior to the establishment of a permanent rate, does not necessarily\nmean that the permanent rate will be automatically applied\nretroactively to all U. S. expenses between the date of invasion\nand the date upon which a permanent rate is ultimately established.\nThus, the \"adjustment\" may very well reflect some rate (or rates)\n65\n- 2 -\nbetween the North African rate and the permanent rate, i.e.\nan adjustment that tends to compensate for changing conditions\nbetween the date of invasion and the establishment of a\npermanent rate.\n(4) It is recognized that this arrangement makes no\nprovision for passing on the rate \"adjustment\" to U. S. troops.\nThus, we will be paying our troops at the rate of approximately\nfifty francs to the dollar for that portion of their pay they\nreceive in local currency. At the same time we may actually\nsettle for these franc expenditures at a substantially lower\nrate (e.g. seventy-five francs to the dollar). Whether or not\nthis subsequent adjustment could or should be passed on to our\ntroops is left entirely open for future consideration. In any\nevent it is a matter exclusively of interest between the United\nStates and the soldiers and of no concern to the French.\nHDW\naoh\nMay 8, 1944\n66\n12:13 p.m.\nHMJr:\nHello.\nOperator:\nGromyko.\nHMJr:\nAll right.\nAmbassador\nGromyko:\nHello.\nHMJr:\nYes, Mr. Ambassador.\nG:\nGood morning, Mr. Secretary.\nHMJr:\nHow are\nG:\nHow are you today?\n$\nHMJr:\nFine. After your good luncheon Saturday, I\nfelt good all week-end.\nG:\nOh, I am very glad to hear this.\nHMJr:\nYeah.\nG:\nI'm very glad. Mr. Secretary, I have just\none question I would like to -- to ask you to\nexplain it.\nHMJr:\nPlease.\nG:\nMr. Chechulin left already -- already Washington.\nHMJr:\nYes.\nG:\nI am wondering -- I am seriously wondering whether\nhe will be able to -- to come back by the proper\ntime.\nHMJr:\nYes.\nG:\nPlease tell me, Mr. Secretary, whether the\nconference which was scheduled for May the 26th\nwill be held in this -- will begin its work on\nthis date or there is -- there is chance that it\nwill be postponed.\nHMJr:\nWell, Mr. Ambassador, I can't answer you because\nI don't know what the answer 1s.\nG:\nI see.\n67\n- 2 -\nHMJr:\nSee?\nG:\nUh huh.\nHMJr:\nAnd the minute I do know, I'll let you know,\nbut right now, I don't know myself.\nG:\nBecause I am wondering -- I am thinking -- uh --\nif this date is certain\nHMJr:\nYeah.\nG:\nI am ready to give -- to give a red light\nfor Mr. Chechulin to proceed -- to come back\nfrom Great Falls, Montana.\nHMJr:\nNo.\nG:\nBut if there is -- there is chances that it\nwill be postponed, I am not going to stop Mr.\nChechulin.\nHMJr:\nWell, it may be several days before I know the\nanswer.\nG:\nBut certainly not today?\nHMJr:\nCertainly not today.\nG:\nUh huh.\nHMJr:\nI'm sorry, but I'm giving you the fact. I just\ndon't know myself.\nG:\nUh huh. Well, but from my conversation with you,\nI think that you -- you are not fully sure -- you\nare not certain that it will be held on this date.\nHMJr:\nI just don't know, Mr. Ambassador.\nG:\nDon't know?\nHMJr:\nI don't know.\nG:\nAll right. Thank you.\nHMJr:\nThank you.\nG:\nThank you. Good bye.\nHMJr:\nBye.\nMay 8, 1944\n68\n2:27 p.m.\nOperator:\nGo ahead.\nHMJr:\nHello.\nFred\nVinson:\nHenry?\nHMJr:\nYes, Fred.\nV:\nThis is Fred.\nHMJr:\nHow do you do?\nV:\nHow are you?\nHMJr:\nFine.\nV:\nHave you seen the Boss?\nHMJr:\nNo.\nV:\nI understand\nHMJr:\nHave you?\nV:\nI haven't seen him, no, but I understood\nthat he is in fine fettle.\nHMJr:\nThat's what they say.\nV:\nWell, that's fine.\nHMJr:\nNo, I haven't seen him.\nV:\nDid you -- were you able to contact Gamble?\nHMJr:\nYeah.\nV:\nIn regard to that.\nHMJr:\nThere's a letter coming over from his office\nthis afternoon which ought to reach you this\nafternoon.\nV:\nI see.\nHMJr:\nOn that subject. He had very positive notions.\nV:\nThat's all right.\n- 2 -\n69\nHMJr:\nAnd it will be in your hands before you go\nhome.\nV:\nWell, that's fine. Whatever\n....\nHMJr:\nSorry, the delay, but he only got back\nSaturday.\nV:\nAnd he 1s stating your views?\nHMJr:\nHe is stating -- I'm going to sign the letter.\nV:\nI see. Well, whatever you say about it, we'll\ndo.\nHMJr:\nThank you 80 much.\nV:\nAll right, old man.\nHMJr:\nSorry there's been the delay.\nV:\nAll right, Henry.\nHMJr:\nThank you.\n70\nMay 8, 1944\nDear Fred:\nIn our recent phone conversation you suggested a\nchange in some fact material you are getting out in\nconnection with your Economic Stabilization program.\nThe statement that you offered as a substitution for\npoint \"4\", \"Buy and hold all the War Bonds you can\nafford....\", instead of the line \"Save. Pay off debts.\nProtect yourself and family against a rainy day with\nadequate life insurance and savings.' is much more\ncompatible with our own guide material on War Bonds.\nIn all of our dealings with life insurance\ncompanies and savings banks the point that buying War\nBonds was the first and most important place for the\nindividual's funds in time of war, has been clearly\nunderstood. There has never been any serious question\nraised about this and in the main, their support of\nour program has been commendable.\nI appreciate your interest in the question that\nwas raised about this and your willingness to modify\nsome of your own copy to the end that we are more\nconsistent in our mutual undertakings. Thanking you,\nI am,\nSincerely yours,\n(Signed) Henry\nMr. Fred Vinson, Director,\nEconomic Stabilization Board,\nThe White House.\nTRG:ecb\n71\nTREASURY DEPARTMENT\nINTER OFFICE COMMUNICATION\nDATE May 6, 1944\nTO:\nSecretary Morgenthau\nTed R. Gamble\nFROM:\nWith reference to your conversation with Mr. Vinson\nplease be advised that I am the fellow who has objection\nto OWI's new fact sheet on the Economic Stabilization\nprogram.\nThere is no question but that we have benefited by\nthe work carried on by Economic Stabilization and I am\nsure, as I know they must be, that their program has\nacternal\nmaterially benefited as a result of our efforts. The\ntwo\nsubstitution suggested by Mr. Vinson, where they would\nuse for point \"4\", \"Buy and hold all the War Bonds you\nprogram\ncan afford\ninstead of the line \"Save. Pay off\nLo\ndebts. Protect yourself and family against a rainy day\nwith adequate life insurance and savings.\" is certainly\nmore compatible with our work. For your information\nthere is a strong inference in the material prepared by\nOWI and Economic Stabilization that buying life insurance\nis as good as buying War Bonds. Personally, I don't think\nthey ought to make any reference to life insurance at all.\nThe substitution suggested by Mr. Vinson is not bad.\nOWI got the life insurance people to spend some\nmoney on an Economic Stabilization advertising program\nand as a consequence they have been \"pulling a few\nchestnuts out of the fire\".\nBecause of the early policy set by yourself in this\nconnection, we have been very successful in our dealings\nwith both life insurance companies and savings banks in\ntheir handling of War Bond appeals. My objection was\nbased on a reluctance to lose any ground on this front.\n72\nMay 8, 1944\n3:00 p.m.\nCABARET TAX\nPresent: Mr. Blough\nMr. Surrey\nH.M.JR: I read this memorandum of yours. (Hands\nSecretary Memorandum of May 8, 1944, attached)\nIt doesn't make a recommendation on the cabaret tax.\nI promised to let what's-his-name know.\nMR. SURREY: The reason I wrote it that way was this:\nWe had been requested by the Committee to make a report\non the bill, and I presumed that we would let that report\ngo through in the general fashion, and any recommendation\nwe care to make would be given to them in that report\nwhich they asked for by wednesday of this week.\nH.M.JR: I tell you what I would suggest: I told\nhim I would let him have something today. Supposing one\nof you find out if it is all right to have it by Wednes-\nday.\nMR. BLOUGH: Yes.\nH.M.JR: Will you do that? Well, one of you do it,\nanyway, 80 Doughton won't say that I was to let him know\ntoday and didn't.\nMR. SURREY: As you notice, that indicates we haven't\nenough information upon which to make a recommendation.\nThat would be in our report, if that is all right.\nH.M.JR: My inclination is that we should say it\nought to run for at least a couple of months.\n73\n- 2 -\nMR. BLOUGH: We won't know a thing about it until,\ncertainly, May 12, when the Bureau gets done with its\nspot check, and really not very much until after a month\nor two of operation.\nAs a matter of fact, since the spring is the time\nwhen this tends to decline, you probably wouldn't get a\nreal accurate picture until considerably later; their\nreply being that in the meantime - \"We are being driven\nout of business while the Treasury tries to get some\ninformation.'\nI doubt whether there is sentiment enough in the\nCommittee to put this thing over.\nH.M.JR: One of you contact Doughton.\nDid you have a nice trip home?\nMR. BLOUGH: Very, thank you.\nH.M.JR: That is about all.\nIs everything else all right?\nMR. SURREY: Yes. We had a meeting this morning\nwith the Senate Finance Committee - just a short meeting.\nThe plan was generally explained by Stam. They seem\ndisposed to move very rapidly on it.\nMR. BLOUGH: Nothing came up to indicate substantial\nresistance.\nH.M.JR: Good.\nThank you all.\n74\nMEMORANDUM\nTO:\nSecretary Morgenthau\nMay 8, 1944\nFROM:\nMr. Surrey\nSUBJECT: Cabaret Tax /\nI telephoned Chairman Doughton and stated that\nwe expected to get our report to him on Wednesday.\nHe said that was satisfactory and asked if I could\ngive him a \"hint\" as to our position. I stated that\nsince the tax had been in effect for a short period\nof time there was no accurate information available\nupon which to base any recommendation.\n75\nMay 8, 1944\n3:05 p.m.\nDISPOSAL OF SURPLUS PROPERTY\nCODE OF ETHICS\nPresent: Mr. Sullivan\nMr. Olrich\nMr. O'Connell\nMr. Hill\nMr. Lynch\nMr. C.S. Bell\nH.M.JR: Do you fellows have something for me?\nMR. O'CONNELL: Well, we have a very rough draft.\nWe are finishing it up and it hasn't been retyped.\nBut Mr. Olrich could read to you what we agreed upon.\nIt is only one page long - very rough.\nH.M.JR: Are you a lawyer, Charlie?\nMR. BELL: No, sir.\nH.M.JR: That makes three of us who aren't.\nMR. O'CONNELL: Just three.\nMR. OLRICH: We are in the minority.\n(Reading from draft of Code of Ethics:) \"Mr. Olrich\nsuggested as a matter of general personnel policy for the\nselection of Divisional Managers: - Divisional Managers\nare the top group - \"Divisional Managers acquainted with\nparticular commodities may be selected from within the\nindustry, which selection shall be referred to the Secretary\nfor confirmation. No Divisional Manager who retains any\nconnection with the company shall participate in any tran-\nsaction involving that company. Any transaction in the\ncommodity field of such person involving his company shall\nbe submitted for approval of Mr. Olrich and the General\nCounsel. On any significant case, Mr. Oirich may refer\nsame to the Secretary.\n76\n- 2 -\n\"Wherever possible, Divisional Managers will be\nselected on a full-time, salary basis. Where this is not\npossible, he may be retained as Consultant by Mr. Olrich\non a part-time and/or per diem basis.\"\nH.M.JR: Is that the whole thing?\nMR. OLRICH: Yes.\nH.M.JR: Would you mind reading it again? There are\n8. lot of ideas in a few words.\nMR. OLRICH: Ail right. (Mr. Olrich re-reads first\nsentence from draft of Code of Ethics.)\nH.M.JR: Why limit it to that top? Why limit it?\nMR. O'CONNELL: I thought our rule would be at least\nas stringent and possibly more so with respect to people\nfurther down the line. There isn't any reason why these\nrules shouldn't be applicable to everyone.\nH.M.JR: That would be the first question.\nMR. OLRICH: We were trying to have the selection\nof as few people come to you as possible.\nH.M.JR: I am going to come to that later. But I\nwould like - Mr. Olrich, these rules apply to anybody\nwho is coming out of business - coming into your group -\nif that is agreeable to you.\nMR. OLRICH: That is right.\nH.M.JR: Let me just tell you a little story to\nshow you how embarrassing this can become for you or\nanybody in the room, including myself. In the first\nplace, we have always had our own standard of ethics\nhere; this isn't apropos, but for example, nobody who\nworks for the Treasury can sell a story to any publica-\ntion. That doesn't apply in the Government, generally,\nbut it applies here. They can say, \"Well, so-and-so\ndoes it. I say, \"That doesn't make any difference; as\nlong as you work for the Treasury, you can't sell &\nstory. I wouldn't write a story for any publication\n77\n- 3 -\nover my signature. So, I mean, we have got different\nrules, and maybe that is one of the reasons you were\nwilling to come to work for the Treasury.\nBut to show you how embarrassing this can be, I\nknow of an incident - I think Mr. Sullivan told me -\nwhere a man who used to be a secretary for & trade\norganization - he happened to be a rubber man - he\nis here in another Section but comes over to see us in\nregard to taxation affecting the former industry that\nhe was on leave of absence from. Now, it is just as\nbad, isn't it?\nMR. OLRICH: Yes, sir.\nH.M.JR: So I am not going to make it so difficult -\nalthough you, yourself, from what you told me - the\ncase of this Penn man - you made it as difficult as for\nanybody. But I just thought, rather than having it\nin your head, and not too good in my head, I thought we\nought to set it down on paper.\nMR. OLRICH: Well, we discussed that, and ultimately,\nwhat reflects on me, reflects on you, so we want the whole\nDepartment to clear the original words we had in here -\n\"No Divisional Manager or other person who retains any\nconnection with a company, shall participate in any tran-\nsaction involving that company.\"\nH.M.JR: What is the matter with that?\nMR. OLRICH: There is nothing the matter, except\nwe were figuring how an employee could retain any con-\nnection with the company - where he might be & large\nstockholder - but if we put that \"No Divisional Manager\nor other employee who retains any connection\"-\nH.M.JR: II can do business with that company.\"\nThat is all right. I will give you case after case.\nI am an old-timer here.\n78\n- 4 -\nBefore Lend-Lease we were buying & lot of planes.\nMr. Hanes, before he came in, laid down his list of\nsecurities. He was a large holder in GlemMartin, as\nwas his stockbrokerage firm which he used to be connected\nwith but had resigned from. So I said, \"Johnnie, I think\nyou had better get rid of the Glenn Martin. We are buying\na lot of planes, and it might hurt you.\"\nHe said, All right. But I am also going to make\nevery one of my associates sell.\" He went that far, and\nhe did. He made the people that he formerly was asso-\nciated with, sell. I think that was unnecessary, but I\nam citing it. the went so far as to make everybody he\nhad been associated with in business, so they caulen't\nsay that his former business associates had brought in-\nfluence on him and on me to buy Glenn Martin planes for\nthe Treasury.\nSo I think this, that if 8. man is connected with\nthe Penn Company, and is going to help us, let's say,\nwith agricultural equipment machinery, and let's say\nhe severs his connection and goes on our pay roll, but\nhe is still a stockholder - that is your point - I\ndon't think that the Penn Company - the Penn Company,\nIwould say, could not buy from Procurement while this\nman was a large stockholder working for us.\nMR. OLRICH: Yes, because if he is a large stock-\nholder, he is still working for the company.\nH.M.JR: I don't think that is unreasonable.\nMR. SULLIVAN: That is not the way it is here.\nMR. O'CONNELL: I just wanted to be clear.\nH.M.JR: No, I am thinking out loud - you men have\nbeen thinking about this and I haven't.\nMR. OLRICH: \"No Divisional Manager or other\nemployee who retains any connection with a company,\nshall participate in any transaction involving that\ncompany. Any transaction in the commodity field of\n79\n- 5 -\nsuch person involving his company shall be submitted\nfor approval of Mr. Olrich and the General Counsel.\"\nH.M.JR: Wait a minute. Aren't we going to say\nhis company can't? why submit that?\nMR. O'CONNELL: That is what I say. what we have\nbeen saying is not exactly what you have been suggesting.\nWe discussed that, and the sort of situation we were en-\nvisaging was, Mr. Olrich wants to get a man to handle\ndrugs, pharmaceuticals, or something of that sort;\nthere are six companies, as I say, in the business. He\nfinds that the best man that he can locate is with Parke\nDavis; so Parke Davis lets the man \" to us, say, on a\nleave of absence basis, but we hire him - he is a full-\ntime employee for us; and having gotten to that point,\nour solution for that situation was that Parke Davis\nCompany could participate in connection with this purchas-\ning surplus property, only ruling this man out of partici-\npating in the deal, and on the approval of Mr. Olrich\nand the General Counsel, but they would not be barred\ncompletely from participating.\nH.M. JR: Now, let me just talk. I have from now\nuntil three-thirty - I can't go beyond that.\nI read a story in the New York Times a couple of\ndays ago, on the back page. This fellow who used to\ncover the Treasury and went with Time Magazine--\nMR. SULLIVAN: John Crider.\nH.M.JR:\n...in which he said - I don't know whether\nhe was quoting Charlie Wilson or not, but it certainly\nwas a credit to Charlie Wilson - said when he came they\nplaced a lot of orders for irons, that Charlie Wilson\nhad given the order to Westinghouse, although General\nElectric was anxious to have the business and were\nequipped and ready.\nMR. OLRICH: I can tell you of my own case, Mr.\nSecretary. We have issued instructions we will bid on\n80\n- 6 -\nno Lend-Lease goods, nor will we attempt to purchase any\ncommodity--\nH.M.JR: You told me you wouldn't buy any. I\ndidn't ask you not to continue to sell to Procurement.\nDo you remember?\nMR. OLRICH: Well, if you want us to bid on them,\nwe will, but I have issued those instructions until I\nhave an opportunity to clarify it. We have cut that.\nH.M.JR: No, but do you remember?\nMR. OLRICH: Yes, sir.\nH.M.JR: You can think the thing over. I will have\nto think this over. I want this thing to sort of boil\ninside of me a little bit. But let's be thoroughly\nhonest with the fellow who is coming from Parke Davis.\nLet me look at Joe O'Conneil. Now, don't let's kid the\nfellow, because it is much better to say no to him first.\nTo say no to Mr. Olrich - \"Your company must discontinue\nbidding from Procurement for underwear\" - the thing was\ndiscussed and I didn't think that was necessary, because\nhe is selling us something. I wouldn't want him to buy\nused underwear back again, but I didn't see why it\nwasn't all right to sell.\nBut take the Parke Davis fellow - we are going to\nbuy drugs, now--\nMR. O'CONNELL: Sell drugs.\nH.M.JR: Let's say we are going to buy, and a big\norder comes; if it were up to you (0' Conneil) tomorrow,\nwould you say that Parke Davis could be one of the six?\nMR. O'CONNELL: I would probably lean over backwards,\nbut I would say they could. If this fellow had nothing\nto do on the operation, and on quality and everything\nParke Davis was as good as the others, I would not think\nthat ought to disqualify them, if I kept their man from\nparticipating in the transaction.\n81\n- 7 -\nNow, ideally, you are right, 1 think.\nH.M.JR: No, I said that in the case of Munsingwear\nthat I didn't see why they couldn't continue, because\nthe buying, I feel, is to be entirely separate from the\nselling, and Mr. Olrich isn't to have anything to do with\nit.\nNow, I would say, offhand, that these drugs that\nwe have got to sell, that Parke Davis could not bid on\nthem as long as this man was an assistant to Mr. Olrich\non the selling side; they couldn't buy any used drugs.\nI don't think there will be any question about that.\nMR. SULLIVAN: Then you get into the situation where,\nin a small field, you don't have very many boys with the\nknow-how. You are going to run into a great deal of\nreluctance on the part of anyone to furnish you a top-\nnotch man, because automatically, that forfeits their\nright to participate in the business.\nH.M.JR: I have heard all about this know-how busi-\nness. Take Mr. Olrich's own case: He is perfectly\nwilling to forego the buying of these second-hand goods, but\nI am not so sure that you are right and, anyway, I am\nnot so sure that a good merchandising fellow can't sell\nsome drugs to a group of drugstores. Take a drugstore\ntoday - it is a general merchandising store, anyway,\nisn't it - pretty near?\nMR. OLRICH: Everything except drugs.\nIn this particular case there may be instances\nwhere the policy of the Unit may be to have them go back\nto the manufacturer for resale. That would preciude\nthat manufacturer having his product go through the\nregular channels.\nNow, there are places where manufacturers have\narrangements with various companies limiting the sale of\ntheir product to specific stores. That might be in the\ndrugstore field, and I am just giving you hypothetical\ncases.\n82\n- 8 -\nThis would prevent that company from acquiring its\nown products and throwing them on the field. I don't\nknow now serious it might be.\nThe man we have in this particularly narrow field\nis now a Major in the Army, who is acquiring these goods\nfor the Army, and may soon be available. He is probably\nthe best man in the field. he is from McKesson and\nRobbins. His name is Noh.\nH.M.JR: That is why he has the know-how? (Laughter)\nMR. OLRICH: Yes, but on this I think I would like\nto look it over. It isn't any serious bar.\nH.M.JR: I think this is so important that nothing\nshould be decided today.\nMR. OLRICH: No, this was to get our thoughts\ntogether.\nH.M.JR: The last thing in the world I want to do\nis to make it impossible, but I think it is much better\nto be a little stiff-backed and have a few less head-\naches. But let's think the thing over, and I don't want\nto put anything in here - for instance, like - \"...refer\nto the General Counsel,\" knowing in advance he is going\nto turn it down.\nMR OLRICH: No, that wouldn't be smart.\nMR. O'CONNELL: Under your rule we wouldn't have to\nrefer it to anybody. Just have an arbitrary rule?\nH.M.JR: I don't know. I am not saying.\nMR. O'CONNELL: The only reason for not doing it,\nand for doing it the way you suggested, it seems to me\nthat if it would embarrass Mr. Olrich in getting people -\nif it was impossible for him to get top-notch people under\nsuch a rule, would be a reason--\n83\n- 9 -\nMR. OLRICH: This is going to be particularly so,\nMr. Secretary, when we get into the textile and depart-\nment store field. For instance, we are now talking\nabout getting a young man from the May Company. I am\ntrying to get that young men. We seil a lot - the Army\nand Navy is already selling a lot of goods to the May\nCompany and Macy's.\nH.M.JR: Of course, as long as he keeps his Army\nstatus--\nMR. SULLIVAN: Oh, I don't think that solves the\nproblem at all, Mr. Secretary.\nMR. O'CONNELL: He might very well be getting paid\nby the May Company; many companies continue to pay.\nH.M.JR: All right. This is difficult, but it can\nbe solved. I am not going to solve it today. Let's\nhear some more.\nMR. OLRICH: \"Wherever possible, Divisional Managers\nwill be selected on a full-time, salary basis. where\nthis is not possible, he may be retained as Consultant\nby Mr. Olrich on a part-time and/or per diem basis.\"\nH.M.JR: That is all right.\nMR. OLRICH: That is the gist of the matter.\nH.M.JR: The part where it was referred to me, I\ndefinitely want to change that.\nMR. OLRICH: \"Divisional Managers acquainted with\nparticular commodities may be selected from within the\nindustry, which selection shall be referred to the\nSecretary for confirmation.\"\nH.M.JR: No.\nMR. O'CONNELL: There is another one later.\n84\n- 10 -\nMR. OLRICH: Regarding appointments?\nMR. O'CONNELL: No, transactions.\nMR. OLRICH: \"No Divisional Manager who retains\nany connection with the company shall participate in\nany transaction involving that company.\"\nThen it says, \"Any transaction in the commodity\nfield of such person involving his company shall be\nsubmitted for approval of Mr. Olrich and the General\nCounsel. In any significant case, Mr. Olrich may\nrefer same to the Secretary.\"\nThat is the way we had it.\nH.M. JR: Where it goes back and says to refer to me,\nI don't want anything referred back to me. I would say,\nwhere it says to me or the General Counsel - I think\nthis may make it & little bit slower, but I would say,\n\"\nto the General Counsel and Charles Bell.\" Does\nGeneral Counsel include both of you fellows (O'Connell\nand Lynch)?\nMR. O'CONNELL: Yes.\nH.M.JR: I am leaving you (Sullivan) out.\nMR. SULLIVAN: That is right.\nH.M.JR: Now, you are part of the General Counsel's\nOffice?\nMR. HILL: Yes, Treasury Procurement, Chief Counsel.\nI am the workingman over there. I bother Joe.\nH.M.JR: Let's have a little committee of four to\nwork with you on this thing, see, which will have full\npower to act without referring it back to me; and that\nwould be Mr. Hill, Charles Bell, Lynch and O'Conneil.\nThis is your group, and if you have something that is at\nall bothersome on this thing - and I think you should\n85\n- 11 -\nrewrite it and leave it elastic enough 80 this committee\nand yourself have some leeway--\nMR. OLRICH: So we can sell goods.\nH.MJR: And I don't want anything to come back up\nto me. Mr. Hill says he is the workingman. These other\npeople are supposed to be, too. But I would much rather\nhave a certain amount of elasticity. llere is a group,\nthat any time you have somebody, they are there to meet\nwith you, and they give you a yes or no, and just tell\nme the results. That ought not to slow you up more than\nhalf a day at any time. If it has to come to me it\nmight hold you up more than twenty-four hours.\nIs that satisfactory?\nMR. OLRICH: Yes, sir, it is.\n11\nselection shail be referred to the Secretary\nfor confirmation. The selections?\nH.M.JR: No.\nMR. OLRICH: You don't want that?\nH.M.JR: No, I don't even want that.\nMR. SULLIVAN: I like your suggestion. It is very\neasy to put down on paper - the ideal situation - assum-\ning there are a lot of top-notch Divisional Managers who\nare just waiting for a chance to go to work for Uncle Sam.\nWhat you are up against here is that you are terribly\nanxious, because of the importance and the size of the job,\nto get the very best people; and your very best people\nare often people who are in a personal situation that they\ncan't afford to give up everything, and their companies\ncan't afford to give up everything, and you just weigh\nthe advantages and disadvantages. This suggestion of\nyours, I think, is the very best one.\n86\n- 12 -\nH. JR: It gives it a certain amount of elasticity,\nbut nothing has to come back to me. You want to appoint\nsomebody; you say, \"Boys, can you see me this afternoon?\nCan we get together?\" They say, \"Sure.\" They get to-\ngether and the thing is settled.\nMR. OLRICH: We will write it up and have the memo-\nrandum on your desk.\nH.M.JR: I would like once more to go over those\nregulations after you have another meeting.\nMR OLRICH: When would you like to set the time, sir?\nH.M.JR: I would make them fairly elastic; John\nhas elaborated. Do you want to sit in with them?\nMR. SULLIVAN: I will, if I am here.\nH.M.JR: You sit with them when you can. How is\nthat?\nMR. SULLIVAN: That is fine.\nH.M.JR: I am available at three, tomorrow. And\nthen you will have another drafting of the thing?\nMR. OLRICH: All right, sir.\nH.M.JR: Is what I have suggested all right, Charlie?\nMR. BELL: Fine. I haven't had an opportunity to\nclear the other little item, that is the weekly report.\nH.M.JR: Well, I want to have you work out, at\nregular intervals - I am a great fellow for statistics,\nlike you are - I want to know what our position is - I\nwant a report. I don't know - you teil me we have thirty-\nseven-odd million dollars' worth on hand; I want to know\nthe in-take and out-put, and net position.\n87\n- 13 -\nMR. OLRICH: The report is under way and it is promised\nme it will be on a regular basis on the 16th of May, in\nwhich we will be able to report to you the opening inven-\ntory, the acquisitions, the disposal by transfer, disposal\nby sale, and the closing inventory by a significant group\nwith high spots marked.\nH.M.JR: Well, what I would like is to have it come\nin the form which I am used to. George Haas is our chief\nstatistician. If you could consult with him so it will\ncome to me in a way that I can absorb it--\nMR. OLRICH: Yes, sir.\nMR. SULLIVAN: That doesn't mean the way we have been\ngetting it, Ernest, because I have been getting reports.\nI have one in my desk now; it took me so long to make\nsense of it, I didn't bring it in to the boss.\nMR. OLRICH: No report is a good report that doesn't\nmake sense.\nH.M.JR: Well, I think if you meet this fellow Haas\nyou will like him. He does do a nice job.\nAre you going away satisfied with this meeting?\nMR. OLRICH: Yes, sir.\nH.M.JR: Completely?\nMR. OLRICH: Yes, sir.\nH.M.JR: Still happy?\nMR. OLRICH: Yes, sir.\nH.M.JR: All right.\nAnything else?\n88.\nMay 8, 1944\nMEMORANDUM FOR SECRETARY MORGENTHAU\nAM\nFrom: John L. Sullivan\nJLS\nMr. Clayton advises me that there is no \"formal\ncode of ethics\" for dollar-s-year men working under his\njurisdiction. He says he believes the general rule that\nno dollar-s-year man can participate in the discussion of\ntransactions in which his own company is involved is the\nonly practical solution of the problem.\n89\nOFFICE OF\nS\nTREASURY DEPARTMENT\nWASHINGTON\nTHE\nSECRETARY\nMay 8, 1944\nMEMORANDUM TO THE SECRETARY:\nMet with other members of the Space Control\nCommittee and drew up final draft of order to be\nsubmitted to Mr. Clayton for his signature and\nissuance. This order will formally establish the\nSpace Control Committee and state its purposes.\nSold 500,000 square feet of shearlings,\nbacked 3/8\" pile, at 30 cents per square foot,\nf.o.b. Topeka, Kansas, through negotiation, to\none company. This is the approximate market price.\nInitiated plans for expansion of office\nspace for surplus property disposal organization.\nAttended sub-committee meeting of Clayton\nBoard to discuss proposed Regulation #1 which\nhas to do largely with the division of commodities\namong the disposal agencies.\nEdul\nSO\nMay 8, 1944\nHarry White\nSecretary Morgenthau.\nWould you talk to me to see if there is anything\nthat I could do about bringing T. V. Soong back to\nthis country? I understand that T. L. Soong has been\ndesignated to be one of the Monetary Committee delega-\ntion to come over here and it 18 in my mind and I\ndon't know where but I think that T. L. Soong has\ngiven the impression that it is I who want him over\nhere. If I wanted anybody over here, I'd want T. V.\nSoong over here, so please talk to me about it.\nFamished\n91\nMay 8, 1944\n3:35 p.m.\nCABLE TO CHINA\nPresent: Mr. White\nMr. John Carter Vincent\nMR. WHITE: Since talking to you, this cable came in.\n(Hands the Secretary cable from Mr. Gauss dated May 6, 1944.)\nWe checked back at this end to make sure it isn't an\nerror at this end, but we are both inclined to think it is\nan error at the other end.\nMR. VINCENT: I don't know what they have done, but\nit isn't a decoding error. That is the only thing.\nH.M.JR: Are you sure the V is for \"V\"?\nMR. WHITE: I thought we might make sure and send that\ncable. (Hands the Secretary memorandum to Mr. Collado from\nMr. White dated May 8, 1944, attached.)\nH.M.JR: The only suggestion I would have is, I would\nsay, \"Secretary Morgenthau learned that T. V. Soong has\nplanned to c ome to the United States\" period.\nMR. VINCENT: I didn't recall the rest.\nH.M.JR: The rest is to attend the monetary conference.\nMR. VINCENT: Yes.\nH.M. JR: Let's just put brackets around it and take a\nlook at it.\nMR. WHITE: We have been informed that T. L. Soong is\na member.\n92\n- 2 -\nH.M.JR: I know, but leave the rest in. You say,\n\"We will be glad to have him come to the United States.\"\nMR. WHITE: I think if we place this emphasis on\n\"V as in victory,\" Adler will get the point, and the\nAmbassador--\nH.M.JR: But by leaving it that way, \"We will be glad\nto have him come to the United States,\" doesn't just limit\nhis coming to the monetary conference.\nMR. VINCENT: What the Secretary has in mind is that\nany time now T. V. Soong might come back. And again, I\nasked him whether he had heard anything about T. V. planning\nto come back. He says, \"No, he is too busy. I am quite\nsure he is not going to come back.\" But Wei is not the most\ntruthful man in Washington, anyway.\nH.M.JR: But do you see what I mean? Then the next\nsentence says--but this leaves it SO he can read it--\"We\nwill be glad to have him come to the United States.' I\nthink it improves it, personally.\nMR. WHITE: We can at least send that. I don't know\nwhether that will--if it is a mistake over there-\nH.M.JR: I would like you to add this sentence--put\nthis sentence on at the end: \"How soon may we expect him?\"\nMR. WHITE: That is a little hard in the light of his\nasking us how soon he should be here. His cable questions\nwhat is the last minute he can leave. I see a little double-\ntalk; you men might help.\nWell, let's cut this last sentence out then and say,\n\"T. V. Soong is to come to the United States. How soon can\nwe expect him?\"\nH.M.JR: How would it read?\nMR. WHITE: \"Secretary Morgenthau was glad to learn that\nT. V. (V as in victory) Soongis planning to come to the\nUnited States. How soon may we expect him?\" They will\n93\n- 3 -\npuzzle like the devil over it, which is all right. They\nwill come back with something. They might say, \"We meant\nT. L. Soong,\" but at least they will know that you are\nglad. You can say \"very glad\" if you want to.\nH.M.JR: Yes.\nMR. VINCENT: Why not say \"return\"?\nMR. WHITE: \"Very glad to learn that T. V. Soong is\nplanning to return to the United States. How soon can we\nexpect him?\" They will rush for the cables to see what\nthey wrote. Then we won't refer to his cable.\nMR. VINCENT: Yes, I would. As 8. matter of fact, I\nstill think that having gotten that off your chest, I would\ntake this sentence here still as a separate paragraph.\nMR. WHITE: We can't tell them anything, anyhow.\nH.M.JR: The Russian Ambassador called me up just\nbefore lunch, pressing me very hard, and I can't tell him.\nWe are waiting on him.\nMR. WHITE: \"How soon may we expect him?\" They won't\nknow what to make of that, and they will cable back and\nsay, \"Well, we asked you how soon he has to be there, but\nthat will fix that. If they meant T. L. Soong, then you are\ngetting across a message which you had no way of doing without\nit.\nH.M. JR: That is right. The way I feel is this: I had\ndinner with the Ambassador Wei the night before he left. He\nwent back and completely misquoted me on this question.\nThen White had an experience. He said that they wanted\nT. L. Soong. I don't know how you feel, but I have real\nconfidence in T. V. Do you agree?\nMR. VINCENT: I do, too, confidence in his ability.\nH.M.JR: I go further, and his integrity.\n94\n- 4 -\nMR. VINCENT: On this thing, yes; not on China.\nH.M.JR: I have never seen him, but vis-a-vis me, he\nhas been 8. hundred percent on the level.\nMR. VINCENT: I can say that Gauss finds him the same\nway.\nH.M.JR: Well, with me--you say Gauss does, too?\nMR. VINCENT: Yes.\nH.M.JR: Now, I have nobody here I can do business\nwith representing the Chinese Government. That would still\nbe true after T. L. Soong got here, SO I would like to have\nsomebody here at this very critical time that I do have\nconfidence in. I am not familiar with what he does in China\nand the goings on there.\n95\nMay 8, 1944\nTo:\nMr. callade\nFrom:\nMr. White\nPlease send the following cable to the American Embassy,\nChungking, China.\nTo Adler from the Secretary of the Treasury.\n\"Reply to your cable 787 of May 6.\nSecretary Morgenthan is very glad to learn that T. V.\n(v as in victory) rather than T. L. (L as in liberty) Soong\nis planning to return to the United States. How seen could\nT. v. leave?\"\n- 5/8/44\nmr. Ite 1000. Friend\nDEPARTMENT\nINCOMING\nDIVISION OF\n96\nOF\nSTATE\nTELEGRAM\nCOMMUNICATIONS\nAND RECORDS\nGMY-599\nChungking\nThis telegram must bE\nparaphrased before being\nDated May 6, 1944\ncommunicated to anyone\nother than a Government\nREc'd 10:14\nCONFIDENTIAL\nAgency. (SC-00)\nFor security reasons the\ntext of this massage must\nSecretary of State,\nDEPARTMENT OF STATE\nWashington.\nMAY 7 1944\nDIVISION OF\nURGENT\nCOMMUNICATIONS 0 RECORDS\n787, May 6, 9 a.m.\nTO SECRETARY OF TREASURY FROM ADIER.\nT. V. Soong having much Government business to attend\nto here wishes to leave for conference at last minute. HE\nhas asked ME to ascertain when approximately monatary con-\nference is due to begin. Immediate reply would bE apprec-\niated.\nGAUSS\nLMS\nWTD\nPECLION\nbis V 11\nBESEARCH\nPION Ot\nEPARTMENT\nOUTGOING\n97\nDIVISION OF\nOF EC\nSTATE telegram must TELEGRAM\nCOMMUNICATIONS\nparaphrased before being\nMay 8, 1944 AND RECORDS\ncommunicated to anyone\nother than a Government\n7 p.m.\nagency. (SC-00)\nCONFIDESTIAL\nFor security recions the\nDEPARTMENT OF STATE\ntext of this first\nDIVISION OF\nbe closely que\nMAY 12 1944\nCOMMUNICATIONS\nAND RECORDS\nAMEMBASSY,\nCHUNGKING.\n621\nFOR ADLER FROM THE SECRETARY OF THE TREASURY\nSecretary Morgenthau is very glad to learn that\nT. V. (V as in victory) rather than T. L. (L as in\nliberty) Soong is planning to return to the United\nStates. (Reference your 787 of May 6.) How soon\ncould T. v. leave?\nHULL\n(EGC)\nPEOLION\nCA\n5/8/44\nOt\n98\nMay 8, 1944\nMr. Smith\nSecretary Morgenthau\nI met Mr. T. Y. Lo, 1601 V Street, N.W.,\nTelephone Dupont 1530, Extension 23, and he is in\ncharge of getting moving pictures in and out of\nChina. I suggested that perhaps he might like to go\nto Bridgeport, and he said that he would like to very\nmuch.\nHe has been asked to furnish some movies\nfor War Bonds in the Chinese section of Seattle. I am\nwondering whether it wouldn't be a good idea to do this\nin other cities with large groups of Chinese.\nFil-\nJULY 1944\nCONTENTS ON BACK COVER\n99\nReader's The Digest\nUNITED STATES SAVINGS BOND\n100\nUNITED STATES OF WILL MERICA WAY\nONE TEN HUNDRED DOLLARS\nFROM THE ISSUE DATE HEREOF\nB.\nTo\nMr. and Mrs. America\nNo. 1 Main Street\nU.S.A.\nCLEVELAND\nTwis BOND & ISSUED UNDER yes SECONO LIBERTY BOWD ON M\nWNO CONSITIONS STATED\nM AMENDED, AND is SUBJECT\nINSCRIBED AND DATED\nwar SAVINGS\nBOND SERIES\nE\nBACK WEWEOF a will or van\nVECEIPT or NON/INT THERE\nDELIVERED BY BY AN AUTHORIZED\nTREASURY DEPARTMENT\nSTATE\nWASHINGTON\nMorgertta\nof\nBuy One of These\nBonds Today!\nTO:\n100\nSecretary Morgenthau\nD\nThis came over from War\nFinance for the use on the front\nof a radio promotion book.\nF.S.\nFS\nFred Smith\nRoom 2901\n5/8/44 101\nTO THE RADIO STATIONS OF AMERICA\nOn June 12, the Treasury Department will\nlaunch the Fifth War Loan --the world's largest\nwar financing program, and perhaps the most\nimportant of all the war.\nThe goal is $16,000,000,000 of which\n$6,000,000,000 is to come from sales to indi-\nviduals. To achieve this goal we must increase\nour sales to imdividuals by $700,000,000 over\nthe amount subscribed by individuals during\nthe Fourth War Loan.\nThe Fifth War Loan comes at a busy season\nfor rural people, and at a time of the year\nwhen urban dwellers will be tempted to spend\nextra money for vacations. It will take added\neffort on the part of everyone to reach our\ngoal -- a goal $2,000,000,000 higher than that\nof the Fourth War Loan.\nThe Treasury Department sincerely appreciates\nthe splendid cooperation of the radio industry\nduring the past War Bond campaigns, and urges\neven greater effort in the Fifth War Loan Drive.\nSincerely,\n(s) Henry Morgenthau, Jr.\n102\nAlthough Mr. Skouras understood that\nwas to head Motion Picture Industry's cam-\npaign in the 5th War Loan Drive, unfortunately\nthe War Activities Committee appointed 8. new\nchairman, Mr. R.J.O Donnell of Dallas, Texas.\nwhen Ted gamble\nreturns please talk (5/6.)\nto me about\n103\nMay 8, 1944\nDear Mr. Skouras:\nIn the light of the excellent campaign conducted\nby the Motion Picture Industry under your leadership\nin the Fourth War Loan, it had seemed to us here that\nthe same committee might well be held for the Fifth\nWar Loan. Your letter, and a subsequent talk with\nTed Gamble, explains to me why this did not work out.\nI regret that we are not going to have the benefit\nof your good services, but I am happy to receive the\npledge of support of the numerous companies and theatres\nunder your direction. I wish to assure you too, that\nwe at the Treasury are delighted to know that the War\nDepartment Art Exhibit is to be handled by yourself and\nyour associates. This is a most important undertsking\nand properly identified with our War Bond program will\nunquestionably bring about a more realistic understanding\nof the needs for and uses of the individual's participa-\ntion in the big task of financing the war.\nSincerely yours,\n(Hgued) IL Morgenthau, Jr.\nMr. Charles P. Skouras, President,\nNational Theatres Amusement Company, Inc.,\n1609 West Washington Boulevard,\nLos Angeles, California.\nTRGiecb\nNational Theatres Amusement Co. Inc.\n1609 West Hashington Boulevard\nTiv Ingeles, California\nKourius\nApril 25, 1944\nHot fenry Morgenthau, Jr.\nSet ary of the Treasury,\nWas ngton, D.C.\nDes Mr. Morgenthau:\nRecently when I had the honor and pleasure of meeting you in\nNew York you paid me a very high compliment by urging me to head the Motion Pic-\nture Industry's Campaign in the Fifth War Loan, 8,8 I had done in the case of the\nFourth War Loan.\nI deeply appreciate your most gracious invitation and em\nmindful of the Honor which you thus bestowed upon me. You made the path of duty\nclear to me in the presence of those who head the War Activities Committee of the\nMotion Picture Industry, and after the conversation I had with you, official accep-\ntance on my part was understood by you and me to be but a mere formality. Unfor-\ntunately, however, perhaps because of jealousy that existed among those members of\nthe War-Activities Committee, they ignored my understanding with you reached in\nth ir presence, and the very next day they appointed a new chairman for the Fifth\nWas Loan, Mr. R.J. O'Donnell of Dallas, Texas.\nThe entire incident as far as you, Mr. Ted Gamble and I are\n:\nirned is most regrettable and embarrassing, and I fully intended informing you\nmatter personally, but Mr. Gamble told me that the pressure of events made\nfficult for you to talk to me.\nI want to assure you that Mr. O'Donnell who is a personal\na of mine of many years standing, is an able citizen well qualified and\nped to do a good job. He will have my fullest support, especially in view of\nery great impression you made upon me by your friendly expression of appre- to\non for what we had accomplished in the Fourth War Loan, and your desire ...\nkind of a job continued.\nAs President of National Theatres Corporation operating in\nthan six hundred important situations in nineteen states, I believe I will be\nMrs. cipation and her associates will give me an opportunity not only\nposition plus the Treasury, War Department Art Exhibit which we are undertaking to\nto contribute materially to the success of the Fifth War Loan. This\nfy the Morgenthau great faith that you have shown in our work, but to unify many useful\na for the good of the War Finance Program.\n123\nCharles P. Skoures\nCharch\nrepun TION queq.rodu; #144 at Arqunce 20 w\nUSTA 7704 in 4044 upon Aus of OXFT ptnom I\n142 -\n106\nTHE UNDER SECRETARY OF THE TREASURY\nWASHINGTON\nMay 8, 1944.\nMEMORANDUM TO THE SECRETARY:\nI found that Jake Viner was in Princeton on\nFriday with Walter Stewart so I called him there\nand asked him to come down this week. He said he\nhad been away for ten days and was compelled to go\nhome Saturday night. He did not want to leave\nagain this week unless it was absolutely urgent\nthat he come. He would, however, be glad to come\ndown next week.\nI told him the problem and asked him if he\nwould be thinking about it and he said he would.\nHe said, just thinking about it while we were talk-\ning over the telephone, it seemed to him it was not\nworth running the risk of disturbing the American\npublic on a currency matter.\nDWB\nFORVICTORY\nBUY\nUNITED\nSTATES\nWAR\nBONDS\nAND\nSTAMPS\n107\nTREASURY DEPARTMENT\nINTER OFFICE COMMUNICATION\nCONFIDENTIAL\nDATE May 8, 1944\nTO\nSecretary Morgenthau\nFROM\nMr. F\nSubject:\nThe Business Situation,\nWeek ending May 6, 1944.\nSummary\nFood situation: The removal of most meats from rationing focused\nattention last week on the improvement, at least temporarily,\nof the civilian food supply. Important factors in the\nimprovement include the shortage of livestock feeds, E tight\nstorage situation, and a reduction in Army, Navy and Lend-\nLease requirements. While increased food supplies are\ncurrently helping to stabilize living costs, lower prices\nfor some foods, together with the tight feed situation,\nmay result in a decrease in food supplies next year.\nCommodity prices: Commodity prices showed little change in\nquiet markets last week. The BLS index of 28 basic\ncommodities was up a trifle but it continues within the\nnarrow range of the past two months. The all-commodity\nindex remains about unchanged.\nStock prices: Industrial stock prices in London last week rose\nto a new war-time high, and now stand 37 percent above the\nlevel prevailing on the eve of the outbreak of war in Europe.\nIn comparison, industrial stock prices in New York are only\n3 percent above that level. Recent buying of stocks in\nLondon is reported to have been prompted by inflationary\nwarnings and prospective post-war tax concessions contained\nin the recent budget message.\nNational income: Payments rose less than seasonally in March,\nand the annual rate of income dropped to $154.1 billions\nfrom the previous month's record high of $155.1 billions.\nIn contrast to the gradual decline in factory payrolls since\nlast fall, Government payrolls (including military pay) have\ncontinued to rise, and in March accounted for approximately\none-sixth of all income payments.\nRetail trade: Department store sales in April were 5 percent\nabove those of April 1943, but substantially lower than in\nMarch. Indicative of the heavy volume of pre-tax buying in\nMarch, department store sales of furs and jewelry in the New\nYork Federal Reserve District rose 141 percent and 73 percent,\nrespectively, above year-earlier levels.\n108\n- 2 -\nMore food for civilians\nAttention was focused last week on the improvement in\nthe civilian food supply situation by the startling action\nof the OPA in removing all meats from rationing except beef\nsteaks and roasts, and the dropping of canned fish from the\nration list. Coupled with this Was the statement of the\nDeputy Director of the WFA, Lieut. Col. Olmstead, before a\nSenate Agriculture subcommittee, that within the next few\nmonths there would develop surpluses of 10 to 15 farm\ncommodities, on a scale that will require Government\nbuying to maintain farm prices.\nThe removal of most meats from rationing follows similar\naction taken recently in which most canned vegetables and all\nshortening and rationed salad and cooking oils were, at least\ntemporarily, made point-free. Moreover, the ration cost of\nbutter and oleomargarine has been reduced for May, and all\nfrozen foods are free from rationing. Meanwhile, the WFA\nhas increased the sales quotas of fluid cream and fluid milk\nby-products, and bountiful supplies of eggs and potatoes have\nnecessitated the WFA taking various steps to support prices\nof these items.\nFeed shortage increases livestock marketings\nAmong the factors which have importantly contributed to\nthe current improvement in civilian food supplies are the\nfollowing: (1) the shortage of feeds, (2) a tight storage\nsituation, (3) a reduction in Army, Navy and Lend-Lease\nrequirements, (4) the mild winter, and (5) large production\nin victory gardens.\nUnder the influence of high prices and plentiful feed\nsupplies, the livestock population of the country had by\nJanuary 1, 1944 reached record levels. During the past year,\nhowever, consumption of feeds has outrun production, and feed\nsupplies have become very tight. Moreover, rising feed costs\nhave reduced considerably the profit margin in livestock\nproduction.\nThe tightening feed supply, particularly for corn, and a\nreduction in the Government support prices on hogs scheduled\nfor next October, appears to have already caused some liquidation\nof hogs. Thus, although hog marketings and slaughtering have\nshown some seasonal decline from the peak levels reached in\nJanuary, they have continued to be very heavy in recent months.\n(See Chart 1.) The demand for hoge has become noticeably\nsluggish, due in part to a marked decline in Government\n109\n- 3 -\npurchases, and some stock yards have had to place embargoes\non shipments, with the result that prices of non-support\nweights of hogs have declined sharply.\nSheep and lamb slaughter is now moderately larger than\nlast year, and calf slaughter 18 substantially larger. In\naddition to a tight dry-feed situation, drought conditions\nin pasture lands of some of the more important producing\nsections of the Western states is expected to cause premature\nmarketings of lambs and calves. The early lamb crop, however,\nwhich 18 marketed in May and June, is estimated to be about\n6 percent smaller than that of last year.\nLack of storage space increases civilian food supplies\nThe increase in civilian food supplies is partly the result\nof E. lack of storage space to hold reserve stocks. Food holdings\nin cold storage have been at very high levels during the past\neight months, with freezer space 87 percent or more occupied.\nThe elimination of frozen foods from rationing represents an\neffort to move these items out of storage to make space for\ncurrent production of various products. Storage stocks of\nmeat on April 1 were almost 60 percent larger than a. year\nago, and stocks of lard, which 18 now ration free, were\n230 percent above a year ago. Moreover, the action eliminating\nmost canned vegetables from rationing was taken to move existing\nstocks into the hands of retailers and consumers, in order to\nmake way for new supplies from this year's crops.\nArmy, Navy and Lend-Lease food purchases lower.\nA reduction in current Army, Navy and Lend-Lease food\nrequirements has undoubtedly been an important factor in the\nincrease in civilian food supplies. While no figures are\navailable on Army and Navy purchases, Price Administrator\nBowles and Deputy Director Olmstead of the WFA indicated\nlast week that Army, Navy and Lend-Lease demands had moderated\nconsiderably, with the Army and Navy buying now on a monthly\nbasis. Food stock preparations for the European invasion\nhave probably been completed. England is reported to have\nset up food stocks for the invasion period, when perhaps\nlittle ocean transportation will be available for importing\nfood. The elimination of meat rationing in Canada, which was\nannounced over two months ago, was attributed in large part\nto a reduction in export requirements due to a tight shipping\nsituation.\n110\n- If -\nA relatively mild winter has tended to increase the\nproduction of milk and eggs. The winter and spring vegetable\ncrops are considerably larger than those of last year, although\nthis is chiefly due to expanded acreage. Meanwhile, home\ncanning of victory garden produce last year has moderated the\npressure on supplies of commercially-canned vegetables.\nLarger civilian food supplies aid in price control\nThe improvement in food supplies has tended definitely\nto help stabilize food prices, which hold a dominant position\nin the stabilization of living costs. In fact, prices for\neggs, potatoes and several other vegetables in recent months\nhave fallen below the levels of a year ago. The farm price\nindex in April dropped below year-earlier levels for the first\ntime since December 1939. Moreover, a 2.4 percent decline in\nretail food prices during the past year has largely offset\nincreases in other living costs, with the result that the\nBLS cost-of-living index on March 15 (the latest data available)\nvas only 0.8 percent above that of a year ago. This has doubtless\ntended in some degree to restrain demands for further wage\nincreases. Important factors in the decline in retail food\nprices from last year's levels, however, have been the subsidies\non butter and meat, and the extension of price ceilings.\nWhile an increase in food supplies may tend to ease food\nprices, it should be noted that its influence may be offset in\npart by the elimination of rationing of many items. By reducing\nthe demand, rationing has had a restraining influence on prices.\nWith most meats now ration-free, it is possible that the increase\nin demand may forestall price declines for meat products. Never-\ntheless, the spending of a larger portion of the consumer's\nincome on increased food supplies will, in general, tend to\nrelieve pressure on other prices. The elimination of many\nitems from rationing should help to curtail black market\nactivity.\nFood supplies may be lower next year\nOn the other hand, in the current food situation there\nare certain factors which have unfavorable implications for\nthe food supply next year. The tight feed situation, the less\nfavorable corn-hog ratio, and the reduction in support prices\non hogs next October, may result in a sharp decrease in meat\nsupplies next year. According to the December 1 pig report,\n111\n- 5 -\nfarmers intended to farrow 16 percent fewer BOWS this year\nthan last, and actual farrowings may show an even lower\nfigure in view of the tightening supply of feed. The sharp\nbreak in egg prices in the latter part of March caused a\ncancellation of hatching orders, with the result that egg\nhatchings during the first five months of this year are\nexpected to fall 18 percent below those of last year.\nFinally, the current easing in the food supply situation\nmay tend to encourage a relaxation in the efforts of\nfarmers and victory gardeners. Concern 18 felt over such\ne. possibility, as was evident in a statement by Food\nAdministrator Jones last week, in which he pointed out\nthat the present abundance of food is only temporary.\nWeather more favorable for arriculture\nSince the continuance of abundant food supplies will be\ndependent in part on favorable crops this year, the rapid\nprogress in planting made last week in some sections of the\ncountry as a result of much sunny weather and light rainfall\nis distinctly encouraging. Improvement in farming conditions\nwas marked in the Northeast and Middle Atlantic areas, but\ncontinued heavy rains in the western Ohio, central Mississippi,\nand lower Missouri Valleys continued to impede or prevent\nplanting.\nDrought conditions, however, continue to prevail on the\nranges in some parts of the Southwest, and last week's\nsubstantial rainfall in the central and northern states from\nthe Rockies westward was decidedly favorable, particularly\nfor the Pacific Northwest. According to the Weather Bureau,\nmoisture is now ample for present needs practically every-\nwhere except in the Southwest from Texas westward.\nCommodity markets quiet\nCommodity markets were quiet last week and prices showed\nvery little change. While the BLS index of 28 basic commodities\nwas a trifle higher, it has continued to move in a very narrow\nrange during the past two months. (See Chart 2.) Steer prices\nwere up moderately, and hog prices of non-support weights firmed\nnear the end of the week following the suspension of pork\nrationing. Prices of support-weight hogs, however, continued\nat the support level. Rosin and wool top prices were up very\nslightly, while spot cotton prices were off fractionally.\nThe corn supply situation for the processing industry\nimproved considerably last week as a result of the recent\n112\n- 6 -\naction making the 000 sole purchaser of corn in certain\nCorn Belt areas. At the beginning of last week farmers\nhad made commitments to supply over 27 million of the\n80 million bushels which the Government has requested\nin the next 60 days. Several important corn refining\nplants that had been closed for lack of supplies were\nable to reopen. This diversion of corn to processors,\nhowever, reduced the supply for livestock feeders. To\nhelp offset the reduced corn supplies for feed, the CCC\nhas increased its allocation of feed wheat from 29 mil-\nlion bushels in April to 37 million bushels in May.\nIn the week ended April 29 the BLS all-commodity\nindex rose 0.1 percent. Higher prices for apples, potatoes,\nand meats, and the OPA action in allowing an increase in\ncement prices in the Northeastern area largely accounted for\nthe rise in the index. At 103.7 percent of the 1926 average,\nthe index is only 0.2 percent higher than a. year ago, although\nit is 38.3 percent above the pre-war level of August 1939.\nStock prices rise moderately\nRecent nervousness of speculators and investors over\ninvasion prospects appears to have abated somewhat, and stock\nprices have strengthened moderately, although the aggregate\nrise since April 24 has been less than 3 percent. At the\nclose on Saturday the Dow Jones average of 65 stocks was\nabout 1.5 percent higher than a week earlier, and the recent\nrecovery has carried it to around mid-April levels. Stock\ntrading activity on the New York Exchange in April dropped\nto the lowest level since November 1942, and showed a decline\nof 59 percent from the corresponding month last year. Trading\nactivity last week continued relatively quiet, with daily\naverage stock transactions amounting to less than 630,000 shares.\nLondon stock prices rise to new high\nDespite the recent moderate improvement, industrial\nstock prices at New York are still 5 percent below last year's\nhigh, and are only 3 percent higher than on the eve of the\nGerman invasion of Poland. In contrast, industrial stock\nprices in London last week rose to & new war-time high and\nstood 37 percent above the pre-war level of August 31, 1939.\n(See Chart 3.) The latest show of strength in stock prices\nmessage presented to the House of Commons by the Chancellor of\nat London appears to have been generated by the recent budget\nthe Exchequer. The Chancellor's warning of the inflationary\n113\n- 7 -\ndangers of rising wages 18 said to have provided the initial\nimpetus to renewed buying of stocks 8.8 an inflation hedge.\nIn addition, greater optimism over post-war prospects appears\nto have developed recently, stimulated in part by liberal\npost-war tax concessions for new plant and machinery costs\nand for research, as announced in the Chancellor's budget\nmessage. Moreover, the relative shortage of stocks caused\nby the war-time ban on new issues, together with the\ncontinuing pressure of idle funds, serves to provide a\ngenerally favorable background for the rising trend of\nprices in the London market.\nIncome payments rose less than seasonally in March\nDue largely to the customary March rise in interest and\ndividend disbursements, total national income payments during\nthe month rose above February levels. However, the increase\nin the total was less than seasonal, and the annual rate of\nincome payments in March declined to $154.1 billions from\n$155.1 billions in the previous month. (See Chart 4.)\nPayments for salaries and wages in trade and industry actually\ndeclined slightly, but all other major categories showed in-\ncreases. Government payrolls, including military payrolls,\nrose to a new high in March and accounted for approximately\none-sixth of all income payments.\nIn contrast to the gradual decline in factory payrolls\nsince last fall, Government payrolls have moved steadily\nhigher in line with the expansion in the armed services, and\nin March were 23 percent above year-earlier levels. All\nmajor groups shared in the rise during this period, but the\ngain in Government payrolls was considerably larger than the\n12 percent rise in total income payments. (Refer to Chart 4,\nlower section.) Interest and dividend payments in March were\n22 percent greater than in the corresponding period last year.\nThis doubtless reflects the increased interest payments on\nFederal security issues, since reported cash dividend payments\nin March, according to the Department of Commerce, were only\n7 percent higher than a year earlier.\nDepartment store sales above year-earlier levels\nWith sales comparisons no longer distorted by holiday\nrose 17 percent above last year's levels. This contrasts with\ninfluences, department store sales in the week ended April 29\na decline to 11 percent in the previous week, when year-to-year\nsales comparisons were adversely affected by the later occurrence\nof Easter in 1943. (See Chart 5.)\n114\n- 8. -\nFor the month of April a.8 a whole, department store\nsales were 5 percent above those of last year. They were\nlower than in March, however, and the FRB seasonally-adjusted\nindex of sales for April dropped to 140 from 154 in March.\n(See Chart 6.)\nHeavy sales of luxury items in March\nDepartment store sales (adjusted) in March had risen\nto the third highest level on record, due to the stimulus\nof pre-Easter and pre-tax buying. Indicative of the heavy\nadvance buying of luxury items to escape higher excise taxes,\ndepartment stores in the New York Federal Reserve District\nreported that sales of furs and jewelry in March were 141 per-\ncent and 73 percent, respectively, above the March 1943 levels.\nLikewise, sales of handbage and small leather goods were up\n88 percent, while toilet articles and drug sundries showed\na gain of 62 percent.\nFurther evidence of booming jewelry sales in March 1s\nseen in a Census Bureau report for the month, which showed\nsales of independent retail jewelry stores 63 percent above\nyear-earlier levels. This exceeded gains of all other groups\nby a very wide margin, and contrasted with a 14 percent gain\nin total retail sales of independent stores for the same\nperiod.\nDepartment store stocks still relatively large\nDespite the boom in sales in March, department store stocks\n(in dollar value) increased about 2 percent during the month,\nand at the end of the period were 11 percent above the previous\nyear's levels. However, this rise was less than seasonal and\nthe FRB adjusted index of stocks dropped to 101 from 105 in\nFebruary. (Refer to Chart 6.) While this figure represents\na considerable decline from the war-time peak of 142 reached\nin July 1942, it is still 6 points above the level prevailing\nin November 1941 just before our entry into the war.\nDespite the heavy sales of jewelry in March, jewelry\nstocks of department stores in the New York Federal Reserve\nDistrict at the end of that month were 28 percent higher than\na year earlier. The maintenance of large jewelry stocks 18\nsurprising, in view of the cessation of output of watches and\nclocks for civilians, the WPB restrictions on the use of gold\nand silver, and the ban on platinum in jewelry manufacture.\nRising prices for jewelry have tended to inflate inventory figures,\nhowever, and supplies have been augmented by large imports of\nSwiss watches, the increased use of non-restricted materials, and\nperhaps by some black market manufacturing.\nHOG PRICES COMPARED WITH HOG SLAUGHTER\nAND U.S.D.A. PURCHASES\n1942\n1943\n1944\nSEPT\nNOV.\nJAN.\nMAR.\nMAY\nJULY\nSEPT.\nNOV.\nJAN.\nMAR\nMAY\nJULY\nSEPT.\nNOV.\nDOLLARS\nDOLLARS\nPer 100 Lbs.\nPer 100 Lbs.\n16\n16\n14\n14\nPrice of Live Hogs'\n12\n12\n10\n10\nTHOUSANDS\nMILLIONS\nOF HOGS\nOF LBS.\n(Sloughter)\n(U.S.D.A.\nPurchases)\n1400\nSlaughter\n1200\n240\n27 Centers\n1000\n200\n800\n160\n600\n120\n400\nU.S.D.A. Purchases\n80\n200\n40\no\no\nJULY\nSEPT.\nNOV.\nJAN.\nMAR.\nMAY\nJULY\nSEPT.\nNOV.\nJAN.\nMAR,\nMAY\nJULY\nSEPT.\nNOV.\n1942\n1943\n1944\n. Chicago good to choice, 180-200 pounds\n132 Centers beginning week ended April 8\nSource: Department of Agriculture\nOffice of the Secretary of the Treasury\nDivision Retainsh and Statistics\nP-248-B\n115\nMOVEMENT OF BASIC COMMODITY PRICES\n1942\n1943\n1944\nPERCENT\nPERCENT\nAUGUST 1939.100\n220\n220\n210\n210\n9 Uncontrolled Commodities\nAs of February 1942\n200\n200\n190\n190\n28 Commodities\n180\n180\n170\n170\n19 Controlled Commodities\n160\n160\nDEC\nFEB\nAPR.\nJUNE\nAUG\nOCT\nDEC\nFEB\nAPR\nJUNE\n1942\n1943\n1944\nPERCENTAGE CHANGE DEC. 6. 1942 TO APR. 28. AND May 5. 1944\nPERCENT\nPERCENT\n19 Controlled\n9 Uncontrolled\nBarley 760%\nCommodities\nCommodities\n+ 70\n+ 70\nFlaxseed 64.6%\n+ 60\n60\nRosin 603%\nCarn 56.9%\n+ 50\n50\nWheat 44.6%\n116\n. 40\n40\n\"Hogs 35.8 %\nLard 28.8%\n+ 30\nShellee 12.3%\n+30\nLoad 111%\nSugar 6.9%\nSteers 27.6%\nCottonseed Oil 6.3%\n+20\nPrint Cloth 4.9%\n20\nCotton 205%\nBurlap 2.6%\nMool Tops %\nButter 18.8%\nZinc 3%\n. 10\n0% Change\n- 10\nHides, Sill,\nTin, Rubber,\nCoffee, Copper,\no\nSt. Scrap, dom.,\nSt. Scrap. exp.\no\nCocoa -.0%\nTellew -4.1%\n- 10\n10\nDec. 6.\nApr. 28,\nMay 5,\nDec. 6,\nApr.28,\nMay 5,\n1941\n1944\n1944\n1941\n1944\n1944\n*All commodities in index are now under some form of price control, except rosin and cotton.\nOffice of the Secretary of the Treasury\nof Research and Subtotics\nP-244-B\nChart 2\nINDUSTRIAL STOCK PRICES IN U.S. AND U.K.\nAUGUST 1936 = 100\n1942\n1943\n1944\nPERCENT\nPERCENT\nWeekly (Average of Daily)\n115\n115\n110\n110\n105\n105\n100\n100\nU.K. 56 Industrial\n95\n95\nStocks\n90\n90\n85\n85\n80\n80\n75\n75\nU.S. 30 Industrial\n70\nStocks (Dow-Jones)\n70\n65\n65\n60\n60\n55\n55\n50\n50\nAPR.\nJUNE\nAUG\nOCT\nDEC\nFEB\nAPR.\nJUNE\nAUG.\nOCT.\nDEC.\nFEB.\nAPR.\nJUNE\n1942\n1943\n1944\nChart 3\nFO-MA-C\n117\nChart 4.\n118\nNATIONAL INCOME PAYMENTS AND COMPONENTS\n1939\n1940\n1941\n1942\n1943\n1944\nDOLLARS\nDOLLARS\nBillions\nAnnual Rote. by months\nBillions\n160\n160\n150\n150\n140\n140\n130\n130\n120\n120\n110\n110\n100\n100\n90\n90\n80\n80\n70\n70\nA O D F A J A 0 D F A J A o 0 F A J A o o F A J A o D F A J A o D\n1939\n1940\n1941\n1942\n1943\n1944\nDollar Totals for Selected Components. Mar. 1943 and Mar. 1944\nDOLLARS\nDOLLARS\nBillions\nBillions\n4.5\n4.5\nMar. 1943\nMar. 1944\n4.0\n4.0\n3.5\n3.5\n3.0\n3.0\n2.5\n2.5\n2.0\n2.0\n1.5\n1.5\n1.0\nI.O\nis\n.5\no\no\nCommodity Pro-\nGovernment\nDividends\nNet Income\nOther Income\nDistributive\nduction Industries\nIncluding\nand\nof Proprietors\nPayments\nand Service\nMilitary\ninterest\n(includes Forms)\nIndustries\nChiefly Mfg)\nSolories and Wages\nSource Department of Commerce\nYou el - Secretary of the Trumery\nC-485-A\n- # Reserved - -\nChart\n119\nDEPARTMENT STORE SALES\n1935-39 . 100. Unadjusted\nPERCENT\nPERCENT\n300\n300\nWeekly\n280\n280\n260\n260\n240\n240\n220\n220\n200\n200\n180\n180\n160\n160\n1944\n1943\n140\n140\n120\n120\n1942\n100\n100\n80\n80\n60\n60\nJAN. FEB. MAR. APR. MAY JUNE JULY AUG. SEPT. OCT. NOV. DEC.\nOffice of the Secretary of the Treasury\nC-390-C\nDivision of Research and Statistics\nDEPARTMENT STORE SALES AND STOCKS\nDollar Values, 1923-25=100. Adjusted\nPERCENT\nPERCENT\nIBO\nIBO\n170\n170\n160\n160\n150\n150\n140\n140\n130\n130\n120\n120\n110\n110\n100\n100\nSales\n90\n90\nso\nBO\nStocks\n70\n70\n60\n60\n50\n1938\n1939\n1940\n1941\n1942\n1943\n1944\n50\nthat\n1936\n1937\nSource: Federal Reserve Board\nC-430-A\nOffice of the Secretary of the Transury\n- # - - -\n120\nLISTER HILL, ALABAMA\n121\nCOMMITTEES\nDEMOCRATIC WHIP\nEXPENDITURES IN EXECUTIVE\nDEPARTMENTS, CHAIRMAN\nCURTIS MCPHERSON\nMILITARY AFFAIRS\nSECRETARY\nUnited States Senate\nINTERSTATE COMMERCE\nEDUCATION AND LABOR\nOFFICE OF THE DEMOCRATIC WHIP\nWASHINGTON, D.C.\nMay 8, 1944\nHonorable Henry Morgenthau, Jr.\nSecretary of the Treasury\nWashington, D. C.\nMy dear Mr. Secretary:\nUpon my return to Washington, I find\nyour good letter of May 5 and I do want to thank\nyou for it.\nIt was indeed a splendid victory for\nAll of us and I want you to know that I appre-\nciate your fine message.\nAll my thanks.\nVery sincerely,\nLH:RM\nProtorphice\n122\nTREASURY department\nINTER OFFICE COMMUNICATION\nDate\nTO\nSecretary Morgenthau\nMay 8, 1944\nFROM Fred Smith FS\nA group of State Liquor Administrators, appointed by\nthe various governors, would like to come in and see you\nabout liquor black markets and etc. As I understand, they\nwill be in town tomorrow morning. They would very much\nlike to have an appointment at that time.\nHoward Jones, of the Distilled Spirits Institute,\nis asking for the appointment.\nDo you want to do anything about it?\n10 am Trues.\nsmith\nBankshire\nhere.\nfullwan\nnuman\norine,\n123\nMay 8, 1944\nMEMORANDUM FOR SECRETARY MORGENTHAU\nFROM: Assistant Secretary Sullivan Jeff,\nI an attaching herewith a memorandum regarding an\nincrease for Emil Schram.\n124\nTREASURY DEPARTMENT\nWASHINGTON\nOFFICE OF\nOMMISSIONER OF INTERNAL REVENUE\nADDRESS REPLY TO\nMAY\nCOMMISSIONER OF INTERNAL REVENUE\n6\n1944\nAND REFER TO\nSSU\nMEMORANDUM FOR MR. SULLIVAN:\nIn Re: Salary plan for Mr. Emil Schram,\nPresident, New York Stock Exchange.\nThe New York Stock Exchange, on March 22, 1944, filed\nan application requesting approval to increase the salary of\nMr. Schram from $48,000 to $65,000 a year for three years be-\nginning July 1, 1944 and ending June 30, 1947 and for seven\nyears thereafter to employ him in an advisory capacity at a\nsalary of $30,000. After some discussion with Mr. Drake of\nthe New York Regional Office as to the propriety of the\nseven year contract, Mr. Coleman asked for some time for the\nBoard of Governors to further consider the matter, as a result\nof which, on April 11, they filed the present application,\nwhich requests 8. salary of $55,000 a year (an increase from\n$48,000 to $55,000) for a three year period beginning July 1,\n1944 and ending June 30, 1947. This employment contract also\nprovides that he would be employed in an advisory capacity for\n8. seven year period beginning July 1, 1947, at 8. salary of\n$35,000 a year, and contained the further provisions that in\nthe event of his death during the three year period his widow\nwould receive $35,000 a year for seven years from the date of\ndeath and that in the event of his incapacitation during the\nthree year period, Mr. Schram would continue to receive com-\npensation at the rate of $35,000 a year for seven years.\nWhen the presidency of the Exchange was vacant in\n1938, the Exchange proposed to pay a salary of from $80,000\nto $90,000 a year and made an offer of that amount to one\nperson, but not being successful in obtaining his services\nthey employed Mr. Martin at $48,000 a year. He served in that\ncapacity until his induction into the United States Army in\n1941, at which time Mr. Schram became president. Since the\nExchange considered this position to be one calling for a\nsalary of from $80,000 to $90,000 a year, it may be assumed\nPORVICTORY\nBUY\nUNITED\nSTATES\nWAR\nBONDS\nAND\nSTAMPS\n125\nMemorandum for Mr. Sullivan.\n- 2 -\nthat for policy purposes that such a rate was established,\nand any annual salary not in excess of $90,000 a year could\nbe approved under the Act and regulations. The question\narises however, from a policy standpoint that the salary for\nthe advisory position beginning at the end of the three year\ncontract as president might be considered as an inducement\n(in effect, a deferred salary payment) to accept the salary\nof $55,000 a year for a three year period.\nMr. Wenchel, Chief Counsel, has stated that his ad-\nvice to the Commissioner, if called upon, would be that in\nhis opinion the Commissioner should not attempt to issue a\nruling at this time on the contract for the employment of\nMr. Schram for seven years as a consultant after the termina-\ntion of his present employment. It is impossible to know\nwhether the duties of Mr. Schram as a consultant are to be\nreal or whether the position is intended to be a sinecure.\nWhen the duties and responsibilities of the position are\nknown, the Commissioner will then be in a position to issue\na ruling, not only for salary stabilization purposes, but\nalso for the purpose of ascertaining the amount which may be\ndeductible under the provisions of Section 22(a) of the In-\nternal Revenue Code. Approval of the application without\nknowing the duties and responsibilities of the position would,\nin effect, be tantamount to a deferred salary increase.\nSo far as concerns the proposed payments to Mrs. Schram\nupon the death of Mr. Schram, this rests upon a different basis.\nIt appears that the New York Stock Exchange has established a\npolicy of making payments to its former employees' widows.\nTherefore, there should be no objection to permitting the con-\ntinuance of what appears to be a well-established policy. It\nis also believed that the payment to be made in the event of\nthe total disability of Mr. Schram may be likened to payment\nin the event of his death and treated accordingly.\nDeputy Commissioner.\n126\nLYICTORY\nTREASURY DEPARTMENT\nBUY\nPROCUREMENT DIVISION\nWASHINGTON 25\nPFICE OF THE DIRECTOR\nMay 8, 1944\nMEMORANDUM TO THE SECRETARY\nTo meet the requirements of the Relief and Rehabili-\ntation of the Foreign Economic Administration, the\nProcurement Division has entered into contracts for the\npurpose of utilizing existing Government salvaged articles;\nalso, for the packing of new supplies which are produced\nby sources which are not in position to prepare merchandise\nfor export shipment. These various facilities are as\nfollows:-\nRockaway, New Jersey- Sorting and packing of new\nshoes procured from distressed stocks of retailers and\nwholesalers. The shoes are delivered from various\nsuppliers, sorted, packed for export, then stored awaiting\ncall forward.\nAt the following locations, the salvaged army\nclothing is cleaned, repaired, dyed and baled, then stored\nawaiting call forward.\nBachman Comfort Products\nClothing Reclamation\nCohoes, New York\nServices\n10 Kingsland Road\nDadour & Belikoff\nNatley, New Jersey\n17 Elizabeth St.\nNew York, N. Y.\nA. Milder's Sons\nWinston Salem, N. Carolina\nBuford, Georgia - Salvaged army shoes are delivered\nby the War Department. These shoes are rebuilt at this\nplant under the supervision of the International Shoe\nCompany. This plant will rebuild approximately 150,000\nto 170,000 pairs of shoes per month. This was in opera-\ntion under the jurisdiction of the army who discontinued\nit as of May 1, 1944. Since May 1, it has been operated\nunder the jurisdiction of the Procurement Division.\n127\nMemorandum to the Secretary - 2 -\n5/8/44\nAt & location not yet determined, the Foreign Economic\nAdministration has asked the Procurement Division to take\nover the packaging of medical supplies procured under Lend-\nLease appropriations for distribution to the civilian popula-\ntion in the occupied countries. This operation would require\nthe packaging of medical and hospital supplies on the basis\nof specifications furnished by the Foreign Economic Adminis-\ntration for requirements based on the number of beds per hos-\npital. Certain of these supplies are already available from\npurchases made by the Surgeon General; others will have to\nbe purchases to be made known to the Procurement Division by\nthe Foreign Economic Administration.\nIt will be noted that the operation at Rockaway, N. J.,\nalso the proposed packaging of medical supplies for export,\ndo not involve manufacturing operations but are more in the\nnature of sorting, packing, and marking for shipment. The\noperations at Buford, Georgia, involve the rebuilding of\nsalvaged shoes, and at the four locations specified; there\nare cleansing, repairing, dyeing and baling operations of\nsalvaged clothing. All of these are Lend-Lease activities,\nand in the operations we are now carrying on, whether sorting\nor packing preliminary to shipment, or processing, as in the\ncase of salvaged shoes and clothing, the work is performed\nunder a contract arrangement in each case.\nClifton E. Mark Mack\nDirector of Procurement\n128\nMAY 8 1944\n* door Mr. Ministers\nThank you for informing as of the decision of your govern-\n1 to fix - enchange parity of the Belgian frane at\n43.887 france to the dollar.\nthis desision will of - be treated as highly con-\nfidential.\nVery truly yours,\n(Wigned) H. Mergenthau, Jr.\nSecretary of the Treasury.\nI 1 I\nSuban\n/\nN.W.I.\nI\n129\nMAY 8 1944\nI é * any\nThank you for forwarding a letter from Mr. Outt, the\nDelgiam Maister of Finance and Homondo Affeirs, to m.\nInclesed horowith to a reply to Mr. Outt's letter which\nÉ I $ I 1 1 H E\nVery truly yours,\n(Signed) H. Morgenthau, Jr.\nSecretary of the Trensury.\nMe Resellary,\nthe of Helgium,\nWashington, D. c.\nHup 5/0/44\nDE BELGIQUE\n43/6\nWashington, May 1, 1044\n140\nosure\nMy dear Mr. Secretary:\nI, am enclosing herewi th a letter Mr\ndu\nthe Belgian Minister of Finance and Economic\nAffairs, asked me to forward to you.\nMay I avail myself of this opportunity to\nrenew to you the assurances of my highest estee\nVery sincerely yours\nThe Belgian Ambassador\nhau, Jr.\nTreasus\nD. C.\nTel: Bloone\nand\nentia\n1.\n13 th April,1944.\nny dear Secretary,\nI wish to inform you that at one\nof our last Cabinet meetings my Government\nagreed to fix the exchange parity of the\nBelgian franc from the day of the entry\nof the Allied troops into Belgium, at\n43,827 france to the dollar.\nMay I ask you to consider this\ndecision as highly confidential ? It has\nbeen taken in view of the present situation.\nIt goes without saying that if & very long\ntime elapsed between now and the landing\nof the \\llied troops, or if the volume of\nquite unforeseen destructions wrought in\nBelgium before the landing were 80 much\n}\nbeyond expectations that it would have a\nmarked detrimental effect on the economic\nsituation of our country, my Government\nwould have to reconsi der such a parity.\nB lieve m, my dear Security\nwith ben bot regards\nYours very micorly\nMorgenthau, Ssq.,\nSecretary of the Treasury,\nWashington.\nGuts\nSECRET\nRESTRICTED\nCONFEDENTIAL\nPhotoctat to SECRET Whit 5/10/47- 132\nP-A-R-A-P-H-R-A-S-E\nPRIORITY\nINCOMING\nAMXXXXX\nWAR DEPARTMENT MESSAGE\nFROM: CG, Allied Central Commission, Naples, Italy\nTO:\nWar Department\n4545, 8th May 1944\nNUMBER:\nDATE:\nFor Morgenthau to AGWAR repeated AFHQ for MGS from ACC\nMain signed McFarlane.\nReceived from troopers is the following paraphrase cable.\nUnderstand that Glasser from US Treasury studying inflation in\nItaly at present. Grafftey Smith suggests that it would be of\nassistance if British expert could join Glasser for a few weeks\nand have a joint report submitted. Resident Minister Staff, Lloyd\nof Cairo, has been closely associated with the Middle East Anti\nInflation measures and has a great deal of experience in finance.\nLloyd is in Cairo and is immediately available to travel by air\nand remain for one month. It is considered that his cooperation\nwould be of value. Cable Minister Resident, if you agree, who\nagrees to Lloyd's parting for one month.\nParaphrase of reply which has been forwarded is as\nfollows. Finance subcommission is preparing financial Anti\nInflation programme for submission with assistance of Glasser to CCS.\nLloyd's assistance would be welcomed by Finance subcommision if\nhe is available at once. Glasser, who was to have left shortly,\nis still requested by us to remain pending Lloyd's arrival.\nNo sig.\nG-2 for Mr. Morgenthau\nACTION:\nINFORMATION:\nCM- IN-6012 (8 May 44)\nRESTRICTED\nRONDIDENTIALX\nSECRET\nSECRET\n133\nPARAPHRASE OF TELEGRAM RECEIVED\nFROM:\nAmerican Embassy, London\nTO:\nSecretary of State, Washington\nDATED: May 8, 1944\nNUMBER: 3728\nSECRET\nThe discussion regarding the monetary fund which was\nscheduled for last Friday has fixed the Government's posi-\ntion in support of the debate which will take place this\nWednesday in the House of Commons and it is requested that\nyou so inform Secretary Morgenthau.\nWINANT\nIgane copy to\nWhite\nany\n134\n25\nMAY 8 1944\nDear Mr. Secretary:\nis you know Mr. Harriman and Mr. Handl ton have given\nw effective help in securing the adherence of the technical\ndelegation of the Seviet Union to the Joint Statement of\nprinciples on an International Monetary Fund, and the\nagreement of the Seviet Government to attend a conference\ne I 8\nWould you be no good as to inform the Ambassador and\nthe Charge at Monoow of w appreciation of their help and\nmy thanks for what they have accomplished.\nSincerely yours,\n(Rigned) H. Morgenthau, Jr.\nSecretary of the Treasury.\nthe Monorable,\nthe Secretary of State.\n5/3/44\nRet to Rm 221\n135\nMay 8, 1944\nMEMORANDUM FOR THE PRESIDENT\nAttached is a memorandum discussing the proposal that this\nGovernment provide temporary havens of refuge in this country for\noppressed peoples escaping from Hitler - these people to be placed\nin camps established in this country and to remain there until the\ntermination of the war at which time they will be returned to their\nhomelands.\nUnder this proposal the refugees would be brought into the\ncountry outside the regular immigration procedure just as civilian\ninternees of Latin American countries have been brought here and\nplaced in internment camps. There could be no objection on security\ngrounds any more than in the case of prisoners of war.\nThe overwhelming humanitarian reasons for taking this action,\nand the considerations involved in deciding whether this step should\nbe taken now by Executive action or submitted to Congress, are\ndiscussed in the memorandum, which indicates the views of the\nBoard members on this matter.\nThe Board has decided that, in view of the importance and\nurgency of this question and the great responsibility involved in\nreaching a final determination as to what should be done, the whole\nmatter should be submitted to you for your consideration.\nAmong the possible courses of action which you will of course\nwant to consider are:\n(1) Consultation with appropriate members of Congress with\n& view to Executive action.\n(2) Putting the program into effect at once by Executive\naction.\n(3) Presidential message submitting the matter to Congress\nfor urgent action.\n(4) Having a bill first introduced in Congress, followed\nby a Presidential message urging its immediate enactment.\nSecretary of State.\nSecretary of the Treasury.\nHenry < Stenson\nSecretary of War.\nAttachment.\n136\nMEMORANDUM RE: Establishment of Temporary Havens\nof Refuge in the United States.\nIn the Executive Order creating the War Refugee Board you\ndirected that the Board make appropriate recommendations to you\nto overcome any difficulties encountered in the rescue and relief\nof war refugees.\nAlthough the Board has already initiated many measures which,\nif fully implemented, may result in saving many lives, there is\none basic obstacle which lies athwart all our efforts. This is\nthe simple fact that the United Nations have not been prepared to\nsupply even temporary havens of refuge for substantial numbers of\nthe persecuted peoples of Europe, particularly the Jews.\nWhy This Is The Main Obstacle\nThe following brief summary will reveal why this constitutes\nthe basic weakness in our whole program.\n(1) Our best chance of saving many people from death, partiou-\nlarly after recent events in the Balkans, lies in an effort to\nconvince the Hitlerite forces, and more particularly their function-\naries and subordinates, that it is in their interest to spare the\nlives of these people. In this connection, the statement issued\nby you on March 24, which is being given the widest possible\npublicity in German controlled territory, will of course be most\nhelpful toward this end, especially if followed by concrete action.\n(2) And there is also an opportunity to actually bring some\nof these people out of enemy territory. The recent developments\nin the Balkans may limit opportunities there, but there still remains\na possibility of stimulating the flow of refugees to Spain and\nSwitzerland.\nhowever, that we and our allies convince the world of our sincerity\n(3) It is essential to both of these avenues of approach,\nand to bear our share of the burden. Thus, great\nsubstance our willingness would be added to our threats, and other countries would\nbe much ready to cooperate in aiding the escape of refugees,\nif we made more it clear now by action that our doors are open to these\npeople.\nand ask them to stop killing Jews; the United Nations must\n(4) The United Nations must not merely threaten our enemies them-\nselves offer the Jews a haven. Only in that way can the great\nmoral issue involved be made clear.\nIt is even possible that after such an announcement of the these\nthreats of punishment a and promises of action are not mere Germans words.\nSuch step would show the Germans clearly that our\nmight be prepared to release or permit the escape\npersecuted peoples.\n137\n- 2 -\n(5) And such a step would certainly cause the neutral\ncountries to encourage the entry of more refugees into their\nterritory since they would then know that they would not be\nrequired to keep all refugees until the war ends. Thus, one\nof the reasons why we are not meeting with any success in Spain\nis the fact that the Spaniards are not convinced that we will\ntake the refugees off their hands. Although we have been stating\nfor a long while that we are going to take the Jewish refugees in\nSpain to Camp Lyautey at Fedhala (near Casablanca) in North Africa,\nnone have been moved there to date. And although several hundred\nare expected to be moved there shortly, under the agreement with\nthe French authorities only 2000 refugees may be in this small\ncamp at any one time. The Spaniards of course know of this\nlimitation and of the reluctant attitude of the French, which\nattitude has been the main reason for the long delay in moving\nthese refugees. And the inarticulate major premise of the French\nattitude is the conviction that such refugees are to be dumped and\nleft in French Africa and that neither the United States nor Great\n(\nBritain will receive them.\nProposed Solution\nMany private organizations, as well as John Pehle and his\nstaff, have strongly recommended that this Government act at once\nin this humanitarian cause and announce to the world that we will\nprovide temporary havens of refuge in this country for all oppressed\npeoples escaping from Hitler - these people to be placed in camps\nestablished in this country and to remain there until the termination\nof the war at which time they will be returned to their homelands.\nNature and Benefits of Proposal\neffect as prisoners of war. They would be brought civilian into the internees country\n(1) Under this proposal the refugees would be treated in\noutside from laws internment the termination would Latin the American be camps. regular involved of No the immigration countries violation war since and the have would procedure or refugees been attempt not brought come would just to evade in as here remain under immigration and only the placed quota until more in\nsystem. There could be no objection on security grounds any\nthan in the case of prisoners of war.\n(2) The principal United Nations involved have already who agreed have\nthat each their lives and have been given asylum in other countries. settled\nof them will receive after the war its nationals\nThese fled for nations have also agreed that it is 8. part of their\npolicy countries assure as will permit the return thereto of all persons displaced\nto such conditions in enemy and enemy occupied\n138\n- 3 -\ntherefrom who have sought refuge elsewhere. This agreement,\nalready concurred in by the United States, Great Britain, the\nSoviet Union, Luxembourg, Yugoslavia, Norway, The French Committee,\nGreece, Belgium, Poland, Czechoslovakia, and the Netherlands should\nserve to make clear to those concerned that such refugees as may\nbe accepted in camps here will be returned to their homelands at\nthe end of the war.\n(3) The humanitarian considerations which might be urged\nagainst the confinement of the refugees are answered by the simple\nfact that treating them as prisoners of war is better than letting\nthem die.\n(4) The general idea has been discussed with 8. number of\norganizations, Jewish and non-Jewish, and they have all expressed\ntheir approval. Most of them feel that it is by far the biggest\nstep the Board can take to accomplish the purposes for which it\nwas established.\n(5) The necessity for unilateral action now by this Government\nlies in the fact that we cannot expect others to do what we ourselves\nwill not do, and if we are to act in time we must take the lead.\n(6) The practical effect of such 8. step by the United States\nmight be tremendous. Our allies would without doubt follow our\nlead. That this country, which has always been a refuge for the\nfugitive from injustice, oppression and persecution, should take\nthe leadership in this matter would be in keeping with our heritage\nand with our ideais of liberty and justice.\n(7) In the hearts and minds of all peoples under Nazi domina-\ntion and throughout the world such action might well have an effect\nvery much favorable to our whole war effort and to our reputation\nas a nation which has always carried the torch in great undertakings.\nIn a report to the War Refugee Board in early March,\nIra Hirschmann, the Board's representative in Turkey, concluded as\nfollows:\n\"I am sure you will be gratified to learn that\nalthough still on the threshhold, the work of the War\nRefugee Board has injected new life and hope into\nthousands of down-trodden, tormented refugees throughout\nthe European continent. This is not my opinion but one\nthat is confirmed by all of the refugees I interviewed\nduring my visit in Istanbul. The first Jewish refugees\nof Turkish origin just arrived from France said to me\nfeelingly, 'For two years there has been only one phrase\non everyone's lips - when are the Americans coming?\"\n139\n(8) Even if no refugees were ever actually brought to\nthese camps, the mere announcement of our readiness to receive\nthem would remove the basic obstacle to our efforts to save them.\nIn view of geographical and time factors, it is not likely that\nmany refugees would actually come to the United States. The\nimportant thing is that we offer to receive them.\nQuestion of Congressional Approval\nSecretary Hull, Secretary Morgenthau and Secretary Stimson\ncarefully considered this proposal at the meeting of the Board on\nMarch 21. There was no disagreement as to the potential benefits\nof such 8. program, and all the members of the Board agreed that\nthe matter should be presented to the President.\nSecretary Stimson in particular felt that it was a matter\nwhich should be presented to Congress for its approval. Secretary\nStimson's views on this, in his own words, are as follows:\n\"The principal objection which I had to the proposal to bring\nthese refugees into the United States was my fear that the proposal\nwould be considered so at variance with the policy of our immigration\nlaws that the President should not undertake it without conferring\nwith and obtaining the consent of Congress. The reasons were as\nfollows:\n\"Our present immigration laws were the result of a very deeply\nheld feeling of our people that the future immigration of racial\nstocks should be 80 limited as to coincide with the existing ratio\nof such stocks already within the country. Furthermore these laws\nwere adopted at the close of the last war by overwhelming majorities\nof our Congress for the purpose of preventing the entrance into this\ncountry of large blocks of immigrants who were likely to come from\nwe are concerned now originate. Our people then showed that they\nthe very countries in which most of the present refugees with whom\nstrongly feared that an uncontrolled immigration from such countries\nwould modify the proportion of the racial stocks already existing\nin our own population and would introduce into the United States\npopulation and brought into conformity with our own institutions\nmany people who would with difficulty be assimilated into our own\nand traditions.\n\"I fear that your proposal would meet with a similar reaction\nfrom our people today who would feel that it was merely the beginning\nof 8. permanent immigration. This would be accentuated if it was\ncarried through by Executive authority alone and without the assent\nof Congress.\nobtain the consent of the European nations to take these people off\n\"One of the considerations which faces us in attempting to\nnot now free to make valid commitments supported by responsible\nour hands at the end of the war is that many of these countries are\ngovernments.\n- 5 -\n\"But even if the obtaining of such commitments were possible,\nI an informed that the mere introduction of these people today on\nsuch 8 scaie and for humanitarian purposes alone would be contrary\nto existing American law. In this connection I am not at all clear\nthat the war power of the President would be held to cover a trans-\naction like this which has no direct connection with the prosecution\nof the war.\n\"For these reasons I feit then and feel now that it would be\nunwise to advise the President to take such a step without the\nconsent of Congress.\n\"At our meeting at which this was discussed I think you stated\nyour belief that it would be impossible to get the consent of Congress.\nOn reflection I am not at ail sure that you are right. If presented\nwith the support of the overwhelming humanitarian reasons and with\nadequate safeguards for returning the refugees to their own countries,\nI am not at all sure that the measure could not be carried. If thus\npresented, the Congress would be able to take such precautions as\nit would deem necessary and would be consulted in regard to the\nfinancial responsibility which it is quite evident that this country\nmust ultimately assume.\nThe Attorney General has informally advised the Board that\nif you wish to put this program into effect without Congressional\napproval, legal justification could be found for such a temporary\narrangement. The Attorney General believes, however, that in view\nof the attitude of the Congress toward all immigration policies\nit would be unwise for you to take the proposed action without\nCongressional approval having been first obtained.\nSecretary Hull and Secretary Morgenthau feel that before\ntaking any action you should consult with appropriate members of\nCongress.\nIn considering whether this step should be taken now by\nExecutive action or submitted to Congress for its approval the\nfollowing points should also be borne in mind:\n(1) Time is of the essence and, even assuming Congressional\napproval could eventually be obtained, it might be too late to do\nany good.\n(2) If, as many believe, the immediate adoption of this\nis fundamental to our efforts to save many people from\nprogram death, the question arises as to whether you should not act at once,\nBritain - taking the leadership in molding public opinion in\nas you did in the case of the delivery of destroyers to Great\nsupport of the action.\nfailed to act, the result might be to minimize the gains which\n(3) If the proposal were put up to Congress and Congress\nhave already resulted from your establishment of the War Refugee\nBoard.\n141\nHotel Aldelphia\nPhiladelphia, Pa.\nMay 8, 1944\nThe Honorable Franklin D. Roosevelt\nPresident of the United States\nWhite House, Washington, D. C.\nDear Mr. President:\nPermit me to call your attention to a resolution adopted\nby the American Federation of Labor at its last convention which was\nheld during October 1943. As you will no doubt recall, the millions\nof men and women who compose the rank and file of the American Federation\nof Labor membership went on record urging the United States to grant\nat least temporary asylum to the victims of Hitler's bestial persecution.\nThe term \"free port\" had not been coined at that time but the sentiment\nof the membership was and is none-the-less synonymous with the proposal.\nI quote the following section from Resolution No. 73 which\nwas adopted at the convention:\n\"To this end, the American Federation of Labor\ncalls upon the United Nations to take immediate\nsteps to rescue the remaining Jews of occupied\nEurope. We call upon the United Nations, and\nour own country, to provide for them temporary\nhaven in their territories.\"\nI am writing at this time because I have learned that the\nWar Refugee Board which you established recently is interested in what\nis referred to as the \"free port\" plan. Please be advised that I fully\nand unreservedly support this program of rescue for refugees. I urge\nyou to effect the realization of this humanitarian measure, which is\nreally a small undertaking for a nation as great as ours. We are feeding,\nclothing and housing over 130,000 captured Nazis, while at the same time\nwe have made no move in the direction of alleviating the suffering of at\nleast a small fraction of that number.\nI understand that tiny Switzerland, despite its neutrality\nand hazardous geographical position on the map of Europe, has welcomed\nto its territories a far greater number of men and women driven out by\nthe Nazis than might be expected of her. These refugees live in camps\n142\n- 2 -\nand are permitted much more freedom of movement than the original\n\"free port\" suggestion calls for.\nI am proud to know that a great many newspapers in our\ncountry have published editorials supporting this proposal. It is\nencouraging to note that the carnage in which mankind at present finds\nitself engaged on a world-wide scale, has not lessened the American's\ntraditional sympathetic and humane attitude toward his fellow man.\nI urge you, Mr. President, in my own name and in the name\nof all the members of the American Federation of Labor to cause the\ncreation of \"free ports\" in this country for refugee victims of a\ncruel war -- now, before it is too late. Such action on your part,\nI believe, will clear the way for similar action in other parts of\nthe allied and neutral world.\nSincerely yours,\nWilliam Green\nPresident\nAmerican Federation of Labor\nThe Honorable Franklin D. Roosevelt\nMay 8, 1944\nNote: This was dictated by Gomberg of NRS from a carbon copy of the\noriginal sent him by Green.\nA.A.\nMay 9, 1944\n143\nCABLE TO AMBASSADOR WILSON, ALGIERS, FORACKERMANN FROM WAR REFUGEE BOARD\nPlease refer your No. 16 (Department's No. 1453) of May 3rd.\nYour prompt action in taking up admission of Sephardic Jews to\nCamp Lyautey is appreciated. Please confirm our understanding that so long\nas total number of refugees in Camp Lyautey does not (repeat not) at any one\ntime exceed 2,000, French will not object to entry of refugees merely because\nthey arrived in Spain subdequent to March first.\nWe are not able togige you information as to number of Sephardics\nwho might be rescued from occupied territory. This information must come from\nSchwarts, and if you do not hear from him please advise us.\nVe are inclined to believe that camp quota should not (repeat not) be\nfilled by bringing Jews there from Italy. If we are able to bring more from\nSpain in the future this may put us in a position to encourage entry of refugees\ninto Spain from occupied territory. For your information it is understood that\nmany Jewish refugees in s outhern Italy already have certificates entitl/ing them\nto enter Palestine and the possibility of their being taken to Palestine should\nnot be overlooked. As you probably know the British Government is presently\nadmitting into Palestine Jewish refugees who reach Turkey. It is understood\nthat more than twenty thousand refugees may still be admitted to Palestine under\nthe terms of the White Paper. When you have investigated the matter please\ngive us your views.\nThis is WRB Cable to Algiers. No. 8\nMay 8, 1944\n2:35 p.m.\nJDjpdk 5/8/64\n001 Sec'y. Abrahamson, Colum, DuBois, Friedman, Hodel, Laughlin, Lesser, Mana,\nStewart, Central Files, Cable Control Files.\n144\nCABLE TO AMERICAN EMBASSY, LONDON\nThe War Refugee Board requests that you deliver the\nfollowing message to Mr. Alex Easterman, 55 New Cavendish\nStreet, London, England:\nQUOTE Urge you to titke up matter of food for interned\nand segregated Jews with Shelbourne and Dingley Foot. Be-\nmind you of Law's assurance to you and Goldmann that there\nis no objection to using 12ed Cross food parcel stocks in\nSwitzerland for such internees. World Jewish Congress\nLeon Kubowitski UNQUOTE\nMay 8, 1944\n2210 P.M.\nBAksinijp 5/2/44\n145\nCABLE TO LONDON\nFrom War Refugee Board to Schoenfeld near Belgian Government\nReference our No. 634 of January 28 and your No. 109 of March 4\nconcerning cooperation between Belgian Government and War Refugee Board for\nfulfillment of objectives set forth in Executive Order No. 9417 of January\n22.\nFollowing cable has been received from Minister Norweb in Lisbons\nQuote. In getting adults and children from occupied\nterritory, representatives of Belgian Convention, Lisbon,\nare prepared to cooperateowith War Refugee Board. How-\never, instructions from the Belgian Government in London\nare desired by the Belgian Legation Here. It is suggested\nthat the Belgian Government be approached as regarding its\nattitude if the War Refugee Board agrees and the Department\nconcurs. We suggest that information be furmished its\nrepresentatives in event that it does not participate in\nprogram. Unquote.\nPlease request Belgian Government to instruct its Legation in\nLisbon to cooperate fully with Minister Norweb and Dr. Robert Dexter, War\nRefugee Board representative in Lisbon, as suggested in the above quoted\ncable. Please report result of your approach to Belgian Government.\nMay 8, 1944\n2:10 p.m.\nMJMarketlsk 5/6/44\n146\nORIGINAL TRXT OF TELEGRAM SENT\nFROM:\nSecretary of State, Washington\nTO:\nAmerican Embassy, London\nDATED:\nMay 8, 1944\nNUMBER: 3684\nSECHET\nThe War Refugee Board requests that you deliver the following\nmessage to Albert Cohen, World Jewish Congress: 55 New Cavendish,\nLondon, Englands\n\"Most anxious receive urgently &tailed report your\nconferences Speak Dents and other officials concerning\nrescue Belgium and Dutch Jews, what agreement reached,\nwhat instruction sent, what contact people appointed.\nAlso what latest suggestion made by Boris. World\nJewish Congress, Leon Kubowitski.\"\nHULL\n147\nPARAPHRASE OF TELEGRAM RECEIVED\nFROM:\nAmerican Embassy, Lim\nTO:\nSecretary of State, Washington\nDATED: May 8, 1944\nNUMBER: 610\nCONFIDENTIAL\nIn reply to an inquiry mentioning 48 unnamed persons, the Peruvian\nForeign Minister informed Born on August 19, 1943 that the passports which\nthe Consulate General issued were null as they had been obtained fraudulently.\nIn spite of a request for the names of these persons, they were never received\nhere. It was only in December that the Polish Charge, fellowed by the\nVations, Belgian and American representatives, attempting intervention for\nPeruvian passport holders detained in Germany. It is presumed that these\n48 persons are those which your secret airgram of May 1, 1944, 327 described\nas lest.\nNo others who would cerrespond to your \"remainder\" are known to the\nSecretary General of the Foreign Office. \" H. asks that the names be\nsupplied if such exists, and he will attemtpt for humanitarism purposes to\nsecure recognition of their passports.\nWHITE\nDCR:IDB:HL\n5/10/44\n148\nORIGINAL TEXT OF TELEGRAM SENT\nFROM:\nSecretary of State, Washington\nTO:\nAmerican Legation, Lisbon\nDATED:\nMay 8, 1944\nNUMBER: 1289\nCONFIDENTIAL\nReference your Nos. 11, 12 and 15 of May 1 (Embassy's 1307, 1308\nand 1317).\nIt appears that all of the foregoing cables may have been sent\nby you before you received our No. 8 (Department's 1229 of May 1).\nAs stated in that cable (WRB No. 8), Board is deeply disturbed over\npossibility that friction among private agencies operating in Pertugal\nwill interfere with the actual rescue of children from France. Board\nis relying on you to use your powers as WRB representative to prevent\ncompetitive duplication in this important rescue program. Our main\ngoal is the saving of lives and nothing must prevent the attainment\nof this end.\nBoard appreciates having Weissman's views on this program.\nHowever, Board requests you send at once the views of Dr. Schwartz of\nthe JDC, together with your own conclusions and recommendations.\nAs we stated in our No. 8 of May 1, the question of where to send\nthe children who are actually rescued should be determined after they\nhave been saved. The decision should be made on an individual case\nbasis. In this connection it should be borne in mind that 1000 U. S.\nvisas are presently available for these children in Spain and Portugal.\nCanadian visas are also available in addition to the Palestine certificates.\nWith respect to financing these rescue programs, the Board has\npublicly taken the pesition that it will rely on established private\norganizations for the necessary funds unless such private sources are\ninadequate, As you know the JDC is presently licensed to carry on a\nrescue program from Portugal and has substantial funds available for\nthese operations. In addition, the World Jewish Congress has applied\nfor a similar license, the issuance of which the Board has recommended.\nAs long as adequate funds are available from private sources, Board\nis net (repeat not) prepared to authorise use of Board's funds\neither for rescue of these children on their maintenance after rescue.\nPlease advised all interested persons of foregoing.\nTHIS IS WAR REFUGEE BOARD CABLE TO LISBON NO. 16.\nHULL\n149\nCABLE TO LISBON\nFrom War Refugee Board to Minister Norweb and Dexter\nReference your 1292 of April 28, concerning cooperation between\nBelgian Convention, Lisbon, and War Refugee Board.\nWe have cabled Schoenfeld, London, asking him to request Belgiam\nGovernment to instruct its Legation in Lisbon to cooperate fully.\nThis is Var Refugee Board No. 12.\nMay 8, 1944\n2110 p.m.\narkstlakic 5/6/44\n150\nORIGINAL TECT OF TELEGRAM SENT\nFROM:\nSecretary of State, Washington\nTO:\nAmerican Legation, Lisbon\nDATED:\nMay 8, 1944\nNUMBER:\n1293\nSECRET\nFrom War Refugee Board to Norweb\nPlease deliver the following message to Dr. Joseph\nSchwartz, 242 Rua Aurea, Lisbon, from Moses A. Leavitt of the\nAmerican Jewish Joint Distribution Committee:\n\"Most important you await Pat Malin's arrival Lisbon\nthird week May thereafter agree your proceeding Algiers,\nCairo other points. Your cable regarding purchases\nAzores not clear. If food packages intended for designated\nindividuals under our licenses for Theresienstadt, Poland\nother camps then no authorization from blockade authorities\nwould seem to be required since licenses specifically\ninclude purchase of supplies indigenous to Portugal and\nits European possessions. If supplies intended for stock-\npiling Switzerland and therafter distribution by International\nRed Cross we may have to secure requisite authorization.\nProposal for shipping shoes to Turkey from Palestine must\nbe authorized and matter being followed up. Agudas Israel\nremittance $25,000 Istanbul is for general relief rescue\npurposes not earmarked any specific proposal.\"\nTHIS IS WRB LISBON CABLE NO. 13\nHULL\n151\nORIGINAL THAT OF TELEGRAM SENT\nPROM:\nSecretary of State, Washington\nTO:\nAMLEGATION, Lisbon\nDATE:\nMay 8, 1944\nNUMBER: 1294\nSECRET\nFrom War Refugee Board to Norweb.\nPlease deliver the following message to Dr. Joseph\nSchwarts, 242 Rua Aurea, Lisbon, from Moses 4. Leavitt\nof the American Jewish Joint Distribution Committee:\n\"Please have our Barcelona office contact Jack Van\nMessel care of Netherlands Legation Barcelona or Ritz\nHotel Barcelona with reference to cable sent by him to\nBarend Brookman Stop Cable reply through American Legation\nchannels all circumstances surrounding purpose cable and\nadvise Van Hossel every effort being made to comply his\nrequest.\"\nWHB CABLE TO LISBON NO. 14.\nHULL\n(GHK)\nWHB:MMV5KG\n5/8/44\n152\nPARAPHRASE OF TELEGRAM RECEIVED\nFROM:\nAmerican Legation, Lisbon\nTO:\nSecretary of State, Washington\nDATED:\nMay 8, 1944\nNUMBER: 1382\nCONFIDENTIAL\nFollowing is substance of WRB 23.\nReference is made herewith to Department's message\n20. 1265 (WEB 12).\nDexter feels salary arrangements are satisfactory.\nFor accounting Department in Lisbon, advi se account to be\ncharged, sesume to WRB.\nWith Embassy accountant allocation of salary is being\narranged.\nNORWEB\nPARAPHRASE OF TELEGRAM RECEIVED\n153\nFROM:\nAmerican Legation, Stockholm\nTO:\nSecretary of State, Washington\nDATE:\nMay 8, 1944\nNUMBER:\n1622\nSECRET\nFollowing 1= for attention of WRB, and refers to\nour telegram No. 8.\nMarcus Ehrenpreis, Chief Rabbi of Sweden, and I\nhave held extensive disscussions. At present he is\npresiding over two Swedish committees which are actively\nengaged in relief operations for Jews in Europe, a\nspecial committee for saving Jewish children, and\nexecutive committee for Relief of Jews in Europe.\nApproximately half a million kronor have been expended\non following activities in recent years:\nOne. Relief for Rumanian Jews. Providing refugees\nreturning to Rumania from Transnistria with substantial\namounts of local currency which enabled them to purchase\nnecessities, was most recent help. With good prospects,\nefforts are being made now to expand this activity into\nBulgaria and Hungary.\nTwo. Assistance to Jews in Poland through contact\nin Cracow with Judi Scheunter Schutzungstelle. Shipment\nof paper clothing and medicine in March 1944 was most\nrecent help.\nThree. Local currency, food parcels and medicine\nare sent to the Resienstadt, to refugee groups in\nShanghai, to Jewish refugees living in Italy, Germany,\nand France, and to Jewish prisoners of war in Finland.\nFour. Jewish children in Rumania, Slovakia, Hungary,\nsouthern France, and Shanghai are given assistance. Much\nof current activities of these two organizations has been\nmade possible by Swedish Foreign Office with which they\nhave strong position, particularly Ehrenpreis. Communi-\ncation with enemy and occupied territory for example, has\nbeen made possible through facilities of Foreign Office\nwith Swedish Missions in these countries, the Swedish\nMinisters in those posts have in most instances, themselves\nprovided every possible assistance for execution of\noperations mentioned above.\nAt present time the two organizations are short of\nfunds and it is strongly urged that they be sent fifty\nthousand dollars. They have worked closely in the past\nwith Hias and the Joint World Jewish Congress. The\nleaders\n154\n- 2 -\nleaders of these organisations are known personally by\nEhrenpreis. Latter understands necessities of this type\nof problem and appears to be extremely capable. It is\nbelieved that with proper financial support his activities\ncah be expanded to considerable degree. In addition to\ncurrent relief activities, we are now working with\nEhrenpreis on methods of accomplishing certain\nevacuation programs.\nJOHNSON\n155\nPARAPHRASE OF TELEGRAM RECEIVED\nFROM:\nAmerican Legation, Steckholm\nTO:\nSecretary of State, Washington\nDATED:\nMay 8, 1944\nNUMBER: 1628\nSECRET\nFellowing is our no. 9 for the War Refugee Board.\nThrough confidential channebs, Bulgarian Minister\nhere, who recently replaced strong pro-Nazi, has expressed\nsympathy for the Jewish situation. We believe that he can\nbe induced to lond aid to any program that the Board may\nbe pushing in Bulgaria, although he is very much afraid of\nthe Gestapo element in lecal Bulgarian Legation. He has\nonly been brought in contact, for the present, with chief\nRabbi Ehrempries who for 15 years was formerly chief Rabbi\nof Bulgaria. It would be helpful, while this situation is\ndeveloping, to have details of any program under considers-\ntion for Bulgaria which would to pe rtiment to the above,\nas well as any suggestions which the Board may have as to\nmethods of expleiting the foregoing situation to the full-\nest advantage.\nMOHNSON\n156\nCABLE TO MINISTER HARRISON, BERN, SWITZERLAND\nThe War Refugee Board requests that you deliver\nthe following macsage to Isaac Sternbuch, Postfach 168,\nSt. Gallen, Switzerland:\nQUOTE Doing utmost for Vittel internees. Hopeful.\nAdvise us if detention place of deportees from Vittel known,\nalso if you have details condition internees Belsen-Bergen\nand other internment camps.\nRegarding proposed large number passports advise if\nafter Vittel matter you have positive definite hopes such\npassports useful, since we question their effectiveness but\nready cooperate on receipt report. Suggest you send funds\nLithuania, Hungary, Rumania via couriers to Rabbis, scholars,\nreligious leaders for use in redeeming themselves and commu-\nnities from extinction through all possible methods. Advise\nif you have reperts from couriers to Lithuania and Hungary.\nVaad Hahatsala Emergency Committee Rabbi Kotler and Kalmanowitz\nUNQUOTE\nTHIS IS WRB CABLE TO BERN NO. 16.\nMay 8, 1944\n2:10 p.m.\nBAksin:jp 5/4/44\n157\nORIGINAL TEXT OF TELEGRAM SENT\nFROM:\nSecretary of State, Washington\nTO:\nAmerican Legation, Bern\nDATED: May 8, 1944\nNUMBER: 1595\nCONFIDENTIAL\nReference is made to your 2282 of April 13, specifically\nto passage regarding reply by Cuba to Vatican.\nFor your information, Ambassador Braden has been instructed\nto convey to the Cuban authorities the Department's appreciation\nof Cuban attitude and the assurance that the United States has no\n(repeat no) objection to Cuban recognition of such documents.\nAmbassador Winant has been instructed to request a similar British\nassurance to Cube. Tittman has been asked to inform Vatican\naccordingly with a view to further Vatican action.\nÀs regards actual admission, Ambassador Braden has been asked\nto ascertain Cuba's attitude. Should he find that Cuba is not\n(repeat not) agreeable to the admission of such persons holding\nCuban documents, he has been authorized to repeat to Cube the\nassurance given to other Latin American republics to the effect\nthat Cuba will not (repeat not) be expected to admit persons con-\ncerned but that they will be routed elsewhere.\nAmbassador Hayes has obtained assurance that Spain will\nendeavor to arrange for return of deported refugees to Vittel.\nAmong the Latin American countries approached, Honduras and\nVenesuela have already acceded to all our requests referred to in\nDepartment's 1221 of April 10 to you.\nRefer to your 2510 of April 20. Appreciate your speedy action\nconcerning 238 deportees. War Refugee Board received unconfirmed\nreport that most or all of 238 d eportees from Vittel have been or\nare being place in Camp Drancy near Paris. Please take all necessary\nsteps through Swies, Intercross and otherwise to assure their welfare.\nPlease advise whether Swiss authorities have made the demarches\nrequested in our 1221 of April 10 and in our 1269 of April 13.\nTHIS IS WRB CABLE NO. 12\nHULL\n158\nPARAPHRASE OF TELEGRAM RECEIVED\nFROM:\nAmerican Legation, Bern\nTO:\nSecretary of State, Washington\nDATED:\nMay 8, 1944\nNUMBER: 2915\nCONFIDENTIAL\nGiven below is the substance of & cable which was sent to Lisbon\non May 8, 1944 as our No. 107.\nWe refer herewith to your cable dated May 4, 1944, No. 65.\nIt is requested that the following message from Islambek Khan,\nCounsellor, Afghan Legation, Bern, be delivered to Mr. Joffo:\nI very happy to know that you have arrived in Lisbon.\nIt is difficult to travel. I an attempting to obtain the\nvisas needed. I would like to know how long you expect to\nremain. I am at your disposal to be of any possible service\nunder the circumstances. Regards.\nThe officer of the Legation was informed by Islambek that it\nwould inevitably take time to obtain the visas for which application\nwas needed; that he would like to see Mr. Joffo, regarding who he spoke\nin very friendly terms; five weeks were required for him to obtain\nGerman permission to proceed from France to Switzerland where he is\nalso assigned as Counsellor of the Legation. Furthermore, there\nrecently arrived here from Vichy the Afghan Minister who is accredited\nto both countries and neither expect to return.\nThe foregoing message is in reference to Bern's cable of May 3, 1944,\nNo. 2800.\nHARRISON\nDCR:IDB:HL 5/10/44\n159\nCABLE TO ANKARA\nPlease deliver following message to Robert F. Kelley, Counseler of\nEmbassy, Ankara, from J. W. Pehle.\nFor our information please advise date you received 160,000 dollar transfer\nfrom War Refuges Board.\nTHIS IS WRB CABLE TO ANKARA No. 34.\nMay 8, 1944\n2:45 p.m.\nWStewart; pdk 5/5/44\n160\nPARAPHRASE OF TELEGRAM RECEIVED\nFROM:\nAmerican Embassy, Ankara\nTO:\nSecretary of State, Washington\nDATE:\nMay 8, 1944\nNUMBER: 828\nSECRET\nReference is made herewith to the Department's\ntelegram of May 5, 1944, No. 394.\nIt is requested that you advise Ira Hirschmann that\nthe familiarity which he has with conditions here makes it\nmore desirable, in my opinion, for him to remain in close\ncontact with WRB in Washington rather than to return at\nthis time to Turkey, especially in view of my probable\narrival in June in Washington. However, it is desirable\nthat a representative of WRB be sent to Ankara at the\nearliest possible moment by WRB to care for the innumerable\ndetails which arise each day in connection with war\nrefugee matters and which I have had to care for personally\nsince Hirschmann's departure from here. This function could\neasily be discharged by any young man or woman of limited\nadministrative ability. I will be glad to discuss with\nHirschmann the question of his return here after I arrive\nin Washington.\nSTEINHARDT\nDCR:IDB:RM\n5-12-44\n161\nPARAPHRASE OF TELEGRAM RECEIVED\nFROM:\nAmerican Consulate General, Istanbul\nTO:\nSecretary of State, Washington\nDATED:\nMay 8, 1944\nNUMBER; 281\nCONFIDENTIAL\nFollowing is for Vaadha Hatzala Emergency Committee,\n132 Nassau Street, New York, From Griffel, Kastner and\nKlarmann.\nYou are informed that sea transports started success=\nfully, in the last five weeks about one thousand persons.\nWith our help there is seen a possibility of enlargement.\nFor this purpose we need two hundred thousand dollar allot-\nment. Action is crucial in the next month. To ensure continuation of\nsea transport you are asked to please send this amount in\nfree Swies cureency at our disposal.\nSQUIRES\n162\nNOT 20 BE RE-TRANSMITTED\nCOPY NO,\n11\nSECRET\nOPTEL No. 147\nInformation received up to 10 a.m., 8th May, 1944.\n1. NAVAL\nU.S. Destroyers bombarded supply dumps and positives in ANZIO area.\npedoed by MTB' on 6th/7th and is now considered wish LOSS. On 5th\nThe German Destroyer (reference OPTEL N: 1181 was tor-\n2. MILITARY\nBURMA. On 6th/7th our forces evacuated BUTHIDAUNG in\naccordance with monsoon dispositions. 182 Japanese killed in this\narea on 5th. At KOHIMA although the Japanese occupy a strong posi-\nplaces have been cleared about five miles northeast and north of it.\ntion across the road immediately southeast and south of the town, some\n3. AIR OPERATIONS\n6th/7th. MANTES.- 602 tons, Two ammunition dumps, - 384\ntons and 267 tons. Clear weather and bright moonlight all three\nobjectives. Marking carefully carried out and accurate bombing re-\nsulted. Impressive fires and explosions both dumps.\n7th. Allied bombers with escorting fighters flew 3,881\noffensive sorties. Fortresses (8 missing) dropped 1,288 tons at\nBERLIN. Liberators (one missing) bombed OSNABRUCK - 400 tons.\nMUNSTER - 368 tons and goods yards LIEGE - 75 tons. Two enemy air-\ncraft shot down. Six escorting fighters missing. Medium and light\nbombers over FRANCE attacked 8 railway centres - 250 tons and 380\nrockets; Canal bridges - 92 tons and 535 rockets; military construc-\ntions and coastal defences - 222 tons; and aircraft repair factory -\n88 tons. Enemy casualties 2, 1, 2. Ours - nine aircraft missing.\n7th/8th. Aircraft despatched:\nAirfields NANTES, RENNES and TOURS\n210 (2 missing)\nAmmunition dumps BRUZ near RENNES and\nSALBRIS, south of ORLEANS\n117 (7 missing)\nBattery at ST. VALERY-EN-C/UX\n64\nNine-laying\n42\nLeaflets\n4\nMosquitoes to LEVERKUSEN and CHATEAUDUN 32\nBomber Support and Intruders\n39\nITALY. 5th. 78 bombers and 494 fighters (2 missing) at-\ntacked communications and supply dumps in Central Sector. 35 Kitty-\nhawks and Mustangs attacked Sluice Gates of a dam at TORRE, 20 miles\nsouthwest PESCARA and scored direct hits.\nRUMANIA. CAMPINA bombed by 71 aircraft and DANUBE mined\non 5th/6th. On 6th escorted heavy bombers (7 missing) bombed PLOESTE\n215 tons, Goods yards TURNUL SEVERIN - 90; ORAIOVA - 180; CAMPINA-290\nand BRASÓV - 305. Aircraft factory BRASOV also received 272 tons.\nEnemy casualties 23, 9, 11..\n6th/7th. Wellingtons, Liberators and Halifaxes (4 missing)\ndropped 76 tons on BUCHAREST.\n7th. Escorted Fortresses and Liberators dropped nearly\n1,000 tons on railway centre BUCHAREST. Photographs show consider-\nable damage to rolling stock and two goods yards. Enemy casualties -\n20, 2, 7. Ours - four aircraft missing.\nHUNGARY. 4th/5th. Wellingtons (1 missing) dropped 76 tons\nBUDAPEST."
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