Ask the Scholar
Document scope · 1 page
Scholar
Ask about this object, its catalog metadata, its source description, or the page inventory.
For page-specific OCR and visual context, open one of the page chats.
Scholar Source Context
Document identity
localId
28277494
label
Volume 739, June 3 – June 5, 1944
core
doc
dtoType
document
citationUrl
pageCount
1
Source metadata
id
28277494
sourceUrl
contentType
document
title
Volume 739, June 3 – June 5, 1944
citationUrl
collections
Henry Morgenthau, Jr. Papers
Diaries of Henry Morgenthau, Jr.
imageCount
1
hasImages
yes
source
import
hasTranscription
no
Source extras
naId
28277494
levelOfDescription
fileUnit
recordType
description
ocrSource
nara-archive
Single page context
seq
1
pageIndex
0
type
document
mediaId
e430adc99e953d81
ocrText
Diary
Book 739
June 3-5, 1944
Regraded Unclassified
- A -
Book Page
Africa, South
See Post-War Planning: Currency Stabilization
(International Conference)
Aldrich, Winthrop
Netherlands and Belgian request for commercial credit
discussed by 9:30 group - 6/5/44
739
158
(See also Netherlands, Book 736)
Arabia, Saudi
See Saudi Arabia
Argentina
See Post-War Planning: Currency Stabilization
(International Conference)
. Foreign Funds Control
- B - -
Belgium
See Aldrich, Winthrop
If Occupied Territories
Bretton Woods, New Hampshire
See Post-War Planning: Currency Stabilization
(International Conference)
Business Conditions
Haas memorandum on situation, week ending June 3, 1944 -
6/5/44
261
- C -
Callahan, Vincent F.
For newsletter see Procurement Division: Surplus Property,
Disposal of
Canada
See Post-War Planning: Currency Stabilization
(International Conference)
China
Aide Memoire presented by T.L. Soong (copy also given to FDR)
and memorandum thereon for FDR discussed by HMJr, Lipsman,
and Bernstein - - 6/3/44
3
a) Political side (Mme. Chiang) as well as military side
of treatment accorded China to be discussed
b) Somervell consulted on FDR's memorandum
14
c) Treasury reply to FDR based on Aide Memoire -
6/8/44: See Book 741, page 91
d) War Department letter agreeing to future negotiations
by Treasury Department looking to settlement of
military financial problem - - 6/26/44: Book 747, page 71
e) Kung letter to FDR, presented by Ambassador Wei,
returned to White House - - 6/28/44: Book 747, page 257
Cyprus, Island of
See War Refugee Board
Czechoslovakia
See Post-War Planning: Currency Stabilization
(International Conference)
- E -
El Salvador
See Post-War Planning: Currency Stabilization (International Conference)
- 7 -
Book Page
Financing, Government
War Savings Bonds
5th War Loan Drive
Schedule of HMJr's appearances
discussed by HMJr, Gamble, and Smith - 6/3/44
739
53,67,250
a) Los Angeles schedule attached
65
discussed by Mr. and Mrs. HMJr. Robert Smith,
Fred Smith, Delehanty, Gamble, and Shaeffer - -
6/44: See Book 740, .page 25
Schedule for broadcasting scripts - Smith memorandum -
6/6/44: Book 740, page 51
Foreign Disposal Advisory Committee
See Procurement Division: Surplus Property, Disposal of
Foreign Funds Control
Argentina: Memorandum to FDR outlining State-Treasury
views on freezing of - - 5/10/44
284-E
a) FDR's memorandum to HMJr: "See Hull again" -
5/23/44
284-C
1) HMJr's letter to Hull concerning - 6/5/44
284-A
- H - -
Holland
See Occupied Territories
- I - -
Iceland
See Post-War Planning: Currency Stabilization
(International Conference)
Italy
See Occupied Territories
- J -
Jeidels, Otto
See Post-War Planning: Currency Stabilization
(International Conference)
- L -
Latin America
Argentina: See Foreign Funds Control; War Refugee Board
El Salvador: See Post-War Planning -
Currency Stabilization (International Conference)
Lend-Lease
United Kingdom: Dollar and gold holdingsas of April 30, 1944,
reported by Brand - 6/3/44
81
- M -
McAllister, Elliott
See Post-War Planning: Currency Stabilization
(International Conference)
Regraded Unclassified
- N -
Book
Page
Netherlands
See Aldrich, Winthrop
# Post-War Planning: Currency Stabilization
(International Conference)
Newcomer, Mabel
See Post-War Planning: Currency Stabilization
(International Conference)
Norway
See Occupied Territories
- 0 -
Occupied Territories
British Government position in supplying funds for relief
of liberated areas during military period
Memorandum as prepared in British Embassy, Washington,
discussed by HMJr, McConnell, O'Connell - 6/3/44 739
26
a) Memorandum
36
Acheson-HMJr discussion
72
Italy: Urgency of improvement in economic situation
reported by American Consul, Naples - 6/3/44
147
Payment of troops in Norway, Holland, and Belgium, and
foreign exchange rates, discussed by
a) Treasury group - 6/5/44
178
b) Treasury and State Department groups - 6/5/44
191
1) British sharing discussed
195
a) View of British Government again
reiterated
216
2) McCloy-HMJr conversation - 6/5/44
201,208
3) Barkley-HMJr conversation - 6/5/44
223
c) Conference; present: HMJr, D.W. Bell, and Glasser -
6/20/44: See Book 745, page 198
1) Miss Tully-HMJr conversation: Book 745, page 201
- P -
Post-War Planning
Currency Stabilization
International Conference
FDR asked to finance preliminary activities from
Emergency. Fund - 6/3/44
80
Bretton Woods as site of conference: Foreign countries
informed - 6/3/44
138
(See also Book 743, page 224 - 6/15/44)
Czechoslovakia appoints delegation - 6/3/44
142
Iceland accepts - 6/3/44
143
Netherlands announces delegation - 6/3/44
144
South Africa
II
If
- 6/3/44
146
Newcomer, Mabel: Invited by HMJr to become a delegate -
6/5/44
153
a) HMJr's letter to President N.M. Butler of
Columbia University - 6/7/44: See Book 740, page 334
b) Butler reply - 6/8/44: Book 741, page 118
Regraded Unclassified
- P - - (Continued)
Book Page
Post-War Planning (Continued)
Currency Stabilization (Continued)
International Conference (Continued)
(Jeidels, Otto
(McAllister, Elliott
Suggested as delegates from West Coast by Olrich -
6/5/44
739
192
Canada accepts - - 6/5/44
312
El Salvador accepts - 6/5/44
313
(See also Book 745, page 96)
Procurement Division
Surplus Property, Disposal of
Progress discussed by HMJr, Olrich, and C.S. Bell -
6/3/44
39
a) Inventories discussed; WPA and NYA present
problems
b) Items (significant) received from May 15-May 27,
inclusive - - 6/3/44
49
Callahan newsletter - 6/3/44
78
Foreign Disposal Advisory Committee: Clayton to invite
Treasury participation - - 6/5/44
275
a) Clayton-HMJr correspondence - 6/7/44:
See Book 740, page 330
(See also Book 741, page 136 - 6/8/44)
- S -
Saudi Arabia
Report on negotiations sent by American Embassy, Cairo -
6/3/44
84
South Africa
See Post-War Planning: Currency Stabilization
(International Conference)
Speeches by HMJr
Costs of specific expeditions to be worked up for use in
speech - Haas memorandum concerning - 6/5/44
176
- U - -
United Kingdom
See Lend-Lease
. Occupied Territories
- W -
War Conditions
Costs of specific expeditions discussed in Haas memorandum -
6/5/44
176
Regraded Unclassified
- W - (Continued)
Book
Page
War Refugee Board
Cyprus, Island of: Facilities there described by
McConnell - 6/3/44
739
31,38
"Argentina Brews Anti-Jewish Drive" - New York Times
article - 6/4/44
151
Halifax-Stettinius discussion concerning possibility of
getting 1 million Jews out of Europe reported to HMJr -
6/5/44
239
a) Aide Memoire left by Halifax
242
1) Discussion by HMJr, Luxford, Pehle, DuBois,
and White - 6/7/44: See Book 740, page 231
War Savings Bonds
See Financing, Government
Regraded Unclassified
1
June 3, 1944
9:40 a.m.
HMJr:
Sam.
Sam
Rayburn:
Yeah.
HMJr:
Henry talking.
R:
Yeah.
HMJr:
Sam, at your convenience, Dean Acheson and I
would like to talk to you about who we might
appoint as a delegate from the House -- two
delegates
R:
Yeah.
HMJr:
for this Monetary Conference.
R:
Yeah. Well, I'll be in the office all afternoon,
Henry.
HMJr:
You will?
R:
Yeah.
HMJr:
All afternoon?
R:
Yeah, up until four or five o'clock.
HMJr:
What's that?
R:
I'll be there until four or four-thirty anyhow.
HMJr:
Well, should I say four-thirty?
R:
Howle that?
: -
HMJr:
Can we come up there at four-thirty?
R:
You bet.
HMJr:
Well, we
....
R:
Yes, sir.
HMJr:
Well, we'll come up there. Is that too late?
R:
No. That's all right.
HMJr:
Well, Acheson and I will come up there at four-
thirty this afternoon.
Regraded Unclassified
2
- 2 -
R:
Fine.
HMJr:
I thank you.
Regraded Unclassified
3
June 3, 1944
9:40 a.m.
CHINA
Present: Mr. Lipsman
Mr. Bernstein
Mrs. Klotz
H.M.JR: The President sent me this. I wondered,
is this the same memorandum that the Chinese Ambassador
left me? Take a look. (Refers to attached Aide Memoire)
MR. BERNSTEIN: It is the same one.
H.M.JR: All right. Then that helps matters.
MR. BERNSTEIN: Do you want these documents in front
of you, Mr. Secretary? (Refers to attached letter from
H. H. Kung to the Secretary, dated May 5, 1944)
H.M.JR: This is another letter which must be answered.
MR. BERNSTEIN: Is that the one just brought by Soong?
H.M.JR: Yes, handed me by T. L. Soong.
Let me just give a brief, you see, of what I think
we ought to do.
"My dear Mr. President:
"I beg to acknowledge receipt of your memorandum of
June 1, enclosing a memorandum from the Chinese Ambassador.
The Chinese Ambassador gave me an identical copy of this
aide memoire.
Regraded Unclassified
4
-2-
"I also have from you, Mr. Stimson's letter of May
26, which you sent me on May 29.
(The Secretary holds a telephone conversation with
Mr. Acheson, as follows:)
Regraded Unclassified
5
June 3, 1944,
9:43 a.m.
HMJr:
Good morning.
Dean
Acheson:
Good morning.
HMJr:
I finally got hold of Speaker Rayburn.
A:
Yes.
HMJr:
And he said that we could come up to see
him this afternoon at four-thirty. Is that
going to be all right for you?
A:
Yes.
HMJr:
What?
A:
Yes, sir.
HMJr:
It is?
A:
Yeah.
HMJr:
Well, I'm going to go there directly from
the house, so if you don't mind, I'll meet
you at the Speaker's office. in the Capitol.
A:
All right.
HMJr:
Is that all right?
A:
Yes. That's fine.
HMJr:
Now, Harry isn't here so you and I will just
do'it and you've got the list of the people
we're thinking about in the House.
A:
I'll bring the list.
HMJr:
And, you know, Barkley said he would be back
Monday and let us know.
A:
Yes.
HMJr:
But I thought -- I didn't want to leave
everything until the last minute.
A:
Yes. Now, Henry.
Regraded Unclassified
B
- 2 -
HMJr:
Yes.
A:
I would like to talk with you about this
damned troop pay.
HMJr:
Well.
A:
And see if we could get it cleaned up before
the conference.
HMJr:
Right.
A:
It's harrassing me and I think it will be a
trouble in the conference.
HMJr:
Well, now, let me just look at my calendar
and we can give you an appointment which is
agreeable to you. Just a moment. Would
three o'clock Monday be all right?
A:
Three o'clock Monday would be fine.
HMJr:
Now, that's in connection with these lowland
countries?
A:
Right.
HMJr:
Right?
A:
Yes, sir.
HMJr:
Three o'clock. Now, one thing which you don't
have to answer, I saw on the ticker last night
that Mr. Hull is going away for a nine-weeks
vacation.
A:
Oh, no, no, no.
HMJr:
That's what the ticker said.
A:
Nine -- oh, no, he's going away for a few days.
HMJr:
Well, that's funny. United Press said he's going
up to Hershey, Pennsylvania for a nine-weeks
vacation.
A:
Oh, no, that's entirely wrong.
HMJr:
That's erroneous?
A:
Oh, yes, entirely SO.
Regraded Unclassified
- 3 -
HMJr:
Well, is he going away now?
A:
I think he has probably gone.
HMJr:
Oh.
A:
And he was going to go over the week-end and for
a few days more.
HMJr:
Because I wrote him a letter saying that the
President asked me to see him again on the
Argentine and I had no reply from him.
A:
Do you want me to look into that letter?
HMJr:
Would you?
A:
Yes.
HMJr:
Would you, please?
A:
Yeah. Now, I spoke to Joe O'Connell about a
matter that we've been talking with Harry. He's
going to talk with you this morning.
HMJr:
That's right. And they said to please not to
discuss it until they primed me.
A:
I told Joe that I would not mention it so I
will not prejudice his case, but this is somewhat an
urgent thing and
HMJr:
Well
A:
I don't think there's any trouble about it. I
think Joe agrees.
HMJr:
Well, I'm seeing them at a quarter of eleven.
A:
Yeah.
HMJr:
And I'll be primed and then maybe you and I can
talk about it on the way back from the Speaker's.
How's that?
A:
All right. Fine.
HMJr:
Is that fair enough?
A:
Yes.
Regraded Unclassified
8
- 4 -
HMJr:
Anything else on your mind?
A:
No.
HMJr:
But you
....
A:
That's the whole works.
HMJr:
Right. But you will look up this letter of
mine to Mr. Hull on the Argentine? It must
be a week old, anyway.
A:
Yes. I'll see who has it and what they're
doing about it and all about it.
HMJr:
I thank you.
A:
Fine.
É
HMJr:
Bye.
Regraded Unclassified
9
-3-
(To reporter: Put at bottom that we will return
these things to him)
Then I want to go on from there and say, "You see,
it is our belief," and so on and so forth. Now, may I
just make this suggestion to you people along these lines
and you can make notes. It seems to me that what we
should tell the President, if you agree, is that when he
received - I am going to try to do this on one page -
this letter from Madame Chiang sometime along in February -
and I would puil out that sentence - the one where she
more or less threatened to quit, do you see? You have
all this stuff. If you haven't you can get it from Mrs.
Klotz - and at that time, after consulting with the Army,
they told me I could get as rough as I wanted to with the
Chinese, because they felt that from a military standpoint
we were not dependent upon the Chinese for a successful
warefare in the Pacific.
The President then sent Madame Chiang a letter which
I am enclosing herewith, which will be Exhibit "1".
"After having taken that firm position" - this ought
to come on the political side - "I subsequently got a
second letter from Madame Chiang which was very concilia-
tory" - do you see? "So I feel that the position we took
opposite the Chinese on the political side proved to be
successful."
Then on the military side - extract from the last
paragraph of all the fifteen pages - "The War Department
says that things are going along well, which we are con-
vinced is right."
"During this period" - I would say from whenever this
heavy construction started - I don't know whether it was
October, or when it was - this heavy construction or air-
fields - "During this period we have spent in China many
millions of dollars, United States dollars, or the equi-
valent of so many yuan. This program, according to
General Somervell" - he ought to confer on this letter and
I don't want to go too long- I will ask him who can work
Regraded Unclassified
10
-4-
with you on this thing--"will be completed on or about
the first of June. And General Somervell said that as
soon as his construction program is completed, he is
going to ask that the Army can turn back the handling of
this monetary situation to us. He told me this only
yesterday." You can read these notes, do you see?
"During this period I had this letter from Dr. Kung which
came in just about, oh, a couple of months ago, saying
things were much better. And to show you Mr. President,
we did get up to a high, whatever it was, three or four
hundred, I don't know what the high peak was, of yuan to
a dollar and now for the moment it has settled down to
around a hundred and eighty. Only as of Thursday, or
whenever it was, T. L. Soong, who has just returned from
China, came in to see me and give me a letter from Dr.
Kung, and T. L. Soong said that the exchange situation
has greatly improved, that thanks to their selling about,
I think he said, a thousand to fifteen hundred ounces of
gold a day, that it has greatly helped the situation, that
this gold is being bought by farmers who in turn will
release their rice for gold, so that rice is coming into
the markets and that T. L. Soong feels that the situation
has greatly improved. He said, of course, in the final
analysis, the only thing which will cure their inflation
problems is merchandise.
"So summing up, Mr. President, taking the word of the
United States Army who are on the ground, Treasury repre-
sentatives who are on the ground, messages from Kung and
more recently, T. L. Soong, I feel the Army and the Treasury
almost accompiished the impossible, that they have built
these gigantic fields, that in a province where the governor",
or whatever the name of the province is--
MR. LIPSMAN: Szechwan Province.
H.M.JR: Where the governor is more or less independent
of General Chiang Kai-shek. Right?
MR. LIPSMAN: Yes, sir.
Regraded Unclassified
11
-5-
H.M.JR: "In the face of great corruption, a not too
stable Government, a people who have--now it is all this--
who have fought the Japanese for seven years under the
most trying conditions, privations, and so on and SO forth,
I feel that the Chinese people have done extremely well in
cooperating with us, in giving these hundreds of thousands
of people find out in one case where it took three or four
hundred thousand people to build one airfield. "So I feel
that you as Commander-in-Chief have every reason to feel
that you have passed a very serious crisis in China, very
serious military crisis in China I don't want to say
economic; because it may get worse- "and we are now at a
situation where the only thing that can help China get
better--I mean, we have used all kinds of monetary devices
to hold the situation until the Army got what they needed,
and .now we are at a point where the only thing from now on
that we can help them is pending the time when merchandise
can actually move from China. But, as you know, for the
time being, General Chennault" and you can get these
figures-- needs some thousand tons, you need so many thousand
tons to maintain the Army and so many tons going in by air
for the Chinese Army over the Hump, and X tons for civilians.
"So there isn't much to look forward to in the way of
being able to transport any goods in for the civilians--
I don't know, but I believe the military demands are still
not satisfied and they will increase." That can all be
checked, "and therefore the Chinese people will have to
continue to be patient, to show this marvelous patience
which they have during the past years until either a sea
port or the Burma Road can be restored and goods can flow
in through one channel or the other."
Now, that is an outline. How does that strike you?
Talk up.
MR. BERNSTEIN: It sounds very good.
MR. LIPSMAN: I do think it was very cogent and very
clear.
Regraded Unclassified
12
-6-
H.M.JR: Does that sum up the situation?
MR. LIPSMAN: Very well.
MR. BERNSTEIN: It is the only thing that can be
done, and it is better to tell the President that now,
in the last paragraph of the letter.
H.M.JR: The only thing that will what?
MR. BERNSTEIN: The only thing that will be the
final solution is to open the Burma Road.
H.M.JR: I said that the situation of inflation
may get worse, but right now, for the moment, it is
being checked. But as I say, so much has to go in for
Chenault--T. L. said this: So much for the American
Army; so much for the Chinese Army; and what is left,
the total of tonnage, is civilian, which is nil. And
I believe the Army will need more.
I think if we could give them a little chart of
the fluctuations, by month if you have it, of the Chinese
yuan. Now, T. L. comes in and says, "It is wonderful, we
sell a thousand or fifteen hundred dollars' worth of gold a
day, and the rice is coming out."
Then he said something - "We don't always give them
gold; sometimes we give them a certificate which is good
as gold.' I don't know what he means.
MR. BERNSTEIN: A certificate for the future delivery
of gold - something they are using in South America, now,
too.
H.M.JR: And I think - there are evidently two
schools of thought in China; one is political, and the
other one which evidently stems from Madame and General
Chiang Kai-shek and the Foreign Office. The other one
comes out of Dr. K'ung and our own military. The two
people don't agree - and our own Embassy.
Regraded Unclassified
13
-7-
MR. BERNSTEIN: Yes, I think they are in agreement
with us, in general.
H.M.JR: So we can put them in with us, do you see?
I would like to end up and say, "I want to congratu-
late you, Mr. President. We have passed this very diffi-
cult situation, and you have got the airfield."
I think it is one of the most magnificent stories;
I think he should boast about it. I try to tell him
that.
They held a pistol to his head--this woman-- a five
hundred million dollar loan, and we called her bluff and
won. I think you could say that--we called her bluff and
she backed down. You have to give me a flowery thing.
MR. BERNSTEIN: Do you want this this morning, Mr.
Secretary?
H.M.JR: If I get it Monday, I will be lucky; if I
get it Tuesday, I won't cry. If I have it Tuesday, it
would be very nice.
We will see.
(The Secretary holds a telephone conversation with
General Somerveil, as follows:)
Regraded Unclassified
14
June 3, 1944
10:00 a.m.
General
Somervell:
This is Somervell, sir.
HMJr:
How are you?
S:
Oh, I'm still here.
HMJr:
Same here. (Laughs)
S:
(Laughs)
HMJr:
General, the Chinese thing is up again.
S:
Oh, my God!
HMJr:
And, you see, I have not only the memorandum
which went from you to Stimson to the President
but an aide memoire which a General Shang Chen
gave the President.
S:
Yeah.
HMJr:
Now, I'm trying to answer this. I'm giving a
rough draft.
S:
Yes.
HMJr:
And I'm giving you fellows a great send-off and
telling the President he ought to be very proud
of what's happened over there.
S:
Well
HMJr:
But who can work with my boys 80 we're sure that
what I'm saying is correct?
S:
Carter and Clay.
HMJr:
Carter and Clay?
S:
That's right.
HMJr:
Now, White's away but E. M. Bernstein is here.
S:
Yes.
HMJr:
Now, would you tell General Clay he'll get a
call from E. M. Bernstein?
Regraded Unclassified
15
- 2 -
S:
I will.
HMJr:
And that
....
S:
I'll tell him to work with him on the memo.
HMJr:
And I'd like to have it by Monday night if
possible.
S:
I think it will be entirely possible.
HMJr:
Do you know this General Shang
....
S:
I know him, yes.
HMJr:
Is he good?
S:
Yes, he's the straightest shooter of the bunch
that I've met.
HMJr:
I see.
S:
He's the fellow that pulled our chestnuts out
of the fire over there at Chungking and was a
pretty helpful individual.
HMJr:
Thank you. Well, if you'll just give General
Clay a. word, he'll get a message from E. M.
Bernstein.
S:
All right.
HMJr:
Thank you.
S:
Thank you, sir.
Regraded Unclassified
16
-8-
H.M.JR: He said Clay and Carter, but Carter doesn't
know a damned thing about this. Right?
MR. BERNSTEIN: Yes, sir.
H.M.JR: (To reporter) Have them contact Clay and
give him a copy of this top memorandum. (Refers to
memorandum from the President, attached)
MR. BERNSTEIN: I will call Clay as soon as I have
a rough draft.
H.M.JR: You had better call and make an appointment
for him to see you this afternoon, do you see?
But let me do it once more. I want to get over to
the President that we really ought to start in Cairo.
In Cairo the President had conversations with the Chiangs
and they asked him for the loan. He said he would think
it over. Then she writes a letter and holds a pistol
to his head. The Army should tell the woman where she
should go - jum- in the Yangtze - she backs down; then
they come through with another letter, much more quiet.
Then in the meantime, in the background, what is going
on - here is the Army with this enormous construction
program up in some province. During this period we spend
this stuff. They take the airfield away from the farmers,
don't pay them for the land, throw them out - the farmers
lose the land and they still haven't paid them. I mean,
it was under very difficult conditions.
Do you remember the story where the Governor's son
collected three jeeps, or seven jeeps - do you remember?
MR. LIPSMAN: Yes.
H.M.JR: What is the town up there?
MR. LIPSMAN: Szechwan is the Province in which Chengtu
is located. There was also construction going on in the
Northeast section of Yunnan.
Regraded Unclassified
17
-9-
H.M.JR: Come over here. (The Secretary and Mr.
Lipsman consult map)
The big money has been spent at Szechwan; as I
understand, the Governor of Szechwan is more or less
independent.
MR. LIPSMAN: You are quite right.
H.M.JR: I think you will find that the bulk of
the money has been spent up in Szechwan. Right?
MR. BERNSTEIN: I don't know, Mr. Secretary. I
just marvel how you can remember so many details about
China.
H.M.JR: Well, it interests me. Anyway, it is nice
to fuss around and stump the experts.
But again, you date the thing from Cairo - how much
money has been spent, dollars - then a little table showing
what has happened to the foreign exchange - then when did
they begin to do the gold.
Here are the two crowds, the political crowd pleading
that they will quit fighting unless we give them a loan;
we disregarded them. Then there is this other crowd - He
says this general is a square-shooter. This general is
over here now to try to pull the thing through. I'd like
to meet nim some time. Tell Clay. He says this is the
fellow that pulled him through - all right, we might even
use his name. Here are the other fellows who have gone
out and helped build the field. And Kung, as far as I
can tell, has played the game. ne have supplied this money
to them - I would bring that in - then towards the end, we
have given them gold. They fed out this gold. And temporarily
we have passed this crisis while we were building the field.
Only yesterday, they say, the fields are finished. The Army
wants to step out and turn back this thing to me.
Of course, the important thing is to point out to the
President that in that second letter we said this should be
between Generals - between General Stilwell and General
Chiang Kai-shek.
Regraded Unclassified
18
-10-
Now they say as soon as these fields are finished
they want to turn them back to me and let me carry the
ball. I didn't agree to it.
But tell that to the President. Try, if possible,
in not more than two pages. Then say, "Mr. President,
I want to congratulate you on your organization. It
has been successful. We have done it with a minimum
of injury to the Chinese people." Tell him about the
tonnage each month - who it is going to, how much is
for civilians. "My belief is that you will need more
tonnage going in over the Hump. And, Mr. President,
we have held the fort. I can't promise you how long
we will hold it. We have been very fortunate with the
cooperation. It may get worse any time. For the moment,
we are holding it, and gold is going in and rice is coming
out. But in the final analysis, until either the Burma
Road is opened, or one of your ports, nobody can tell
what can happen, and nobody can do much. But we have
used all the monetary devices, all the tricks in the bag,
and up to now, at this point, we have been successful.
With close cooperation, I would say between State, Army,
and Navy in the field - which is true--
MR. LIPSMAN: That is right.
MR. BERNSTEIN: The practical test of the success
of the program is the fact that we have the airfields,
and the monetary situation in China is nowhere near so
bad as we had feared it might be.
H.M.JR: Yes, and I would say, if I correctly remem-
ber the figure, that it cost about half as much as they
thought it would.
MR. LIPSMAN: Quite SO.
H.M.JR: If I remember, they said it would cost so
many dollars, and actually it has cost us half as much.
MR. LIPSMAN: The figures were considerably revised
downward.
Regraded Unclassified
19
-11-
H.M.JR: "I am pleased to inform you that it only
cost us half as much, again due to close cooperation
between the Army and the Treasury" - I think that last
thing is very important - "It only cost half as much as
we thought it would."
I know I am repeating myself, but "The Chinese people
are wonderful"; we have done this thing and we ought to
feel pleased. And I think we ought to end up with & letter
from the President summing this up.
If they are finished, ne might thank General Chiang
Kai-shek for what has happened during the last six months.
Say, "I want to thank you for your cooperation in the
completion of these fields, If and so forth and SO on. I
don't want to get into this Lend Lease in Reverse.
MR. BERNSTEIN: "We feel sure that the friendly
relations between us will result in an amicable settle-
ment of the remaining problems between the Two Treasuries."
H.M.JR: And then give him this letter to send to
the General, and you might say, "My dear Mr. Generalissimo:
We can look forward to making good use of these fields to
the defeat of the enemy and the sinking of the Rising Sun."
Get a little dramatic.
But I think if we give the President something to pat
the Chinese on the back - "This has been a most difficult
period; your people have been magnificent, and I want to
thank you. I am pleased with the sacrifices that your
people have made. Now that this very difficult period is
over we can look towards a not-too-distant future victory."
That will be his answer. The President should answer
it - from the President to the Generalissimo.
MR. BERNSTEIN: And you will send separately to Kung
much the same answer?
Regraded Unclassified
20
-12-
H.M. JR: I don't think it will be necessary. I
can say, "My dear Dr. Kung: I know that the President
has recently sent a memorandum to the Generalissimo in
regard to this situation, which fully covers the present
situation. With your good wishes - my father is well,
my mother is well, my wife is well - I hope your wife
is well
MR. BERNSTEIN:
If
and well provided for, too."
MRS. KLOTZ: We hope!
H.M.JR: End up with an answer from the President
on this aide memoire on the positive side.
MR. LIPSMAN: I would just like to mention that of
course there are certain proposals in Dr. Kung's letter
to you which, presumably, we should want to take up.
H.M.JR: Well, that will be taken care of. But
let's take care of the present, first.
Now, let me tell you; I told somebody in the White
House about how one letter the President sent to Madame
Chiang - let's call her Meiling - she was out of town,
so they gave the letter to Madame Kung.
"That is nothing," he said: "The President sent a
message to the Generalissimo and he was asleep, so they
gave it to his wife and she didn't like it. She held it
for weeks before she delivered it." So now the orders
are that when the President sends a letter, the man should
stay there until the Generalissimo wakes up! That is,
no one else should get it. It has to go by hand from this
office right to the Generalissimo.
Regraded Unclassified
Handed %- Decy 21
Doong
MINISTRY OF FINANCE
lane 1444
National Government,
China.
Chungking, May 5, 1944.
The Honorable Henry Morgenthau, Jr.,
Secretary of the U.S. Treasury,
Treasury Department,
Washington, D.C., U.S.A.
Dear Mr. Secretary,
When Ambassador Wei left here for Washington
last month I asked him to bring you a letter which I
trust has safely reached your hands.
I now have pleasure in informing you that Mr.
T. L. Soong is instructed by our Government to return to
Washington to take part in the experts' conference on
monetary questions sponsored by your Department. As
Mr. Soong is known to you, I need not introduce him to
you. However, if you can spare the time, I would like
to have you see him because he has information on China's
financial and economic conditions which may be useful
to you and your Department.
I am interested in reading the press comments
published in America and Britain on the Monetary Plan.
Judging by these comments, I believe there are still
many difficulties to overcome before the Plan can be
put into operation. However, I wish to assure you of
China's support and close cooperation with you. It is
my hope that the Conference will be crowned with success.
Madame Kung joins me in sending you and Mrs.
Morgenthau our best wishes. When you see your parents
next, please remember us to them. We still recallthe
pleasant time we spent with them and hope that when the
war is over, we shall have the pleasure of seeing all
of you again.
Yours sincerely,
/s/ H. H. Kung
Regraded Unclassified
22
THE WHITE HOUSE
WASHINGTON
June 1, 1944.
MEMORANDUM FOR
THE SECRETARY OF THE TREASURY:
This memorandum is from the
Chinese Ambassador and was brought to me
by General Shang Chen direct from Chungking.
I think you might have a talk with the
Chinese Ambassador in regard to the Chinese
exchange situation. I do not think he
feels it is much better.
F.D.R.
Regraded Unclassified
23
COPY
AIDE MEMOIRE
To meet the requirements of the United States Army in
China the Chinese Government has advanced in toto the sum of
eighteen billion yuan.
The United States Government has signified its intention
of paying for its military expenditure in China which is greatly
appreciated by the Chinese Government. As a basis of settlement
of the funds advanced by the Chinese Government, United States
Army representatives in China have made proposals at different
times since February for the conversion rate to be fixed variously
at; U.S. $1 to 100 yuan, 200 yuan, 120 yuan, and 150 yuan. The
Chinese Government, however, is unable to consider these proposals
to alter the exchange rate of 20 yuan to one U.S. dollar, because
the lowering of the exchange rate under the present circumstances
would further undermine confidence in Chinese currency, as well as
stimulate the rise in commodity prices.
The Chinese Government, therefore, suggests the following
solutions:
(a.) The. agreement for Reverse Lend-Lease as
proposed by the United States and agreed to
by China shall be signed and implemented as
soon as possible.
(b.) China undertakes to pay for land needed for
the construction of air fields.
(c.) China
Regraded Unclassified
24
- 2 -
(c.) China undertakes to pay for the food and
lodging of the United States Army in China,
such payments to be credited under Reverse
Lend-Lease.
(d.) For United States Army expenses other than
those covered in (b) and (c) above, the Chinese
Government offers the following alternative
solutions:-
1.) China shall contribute twenty wan
as Reverse Lend-Lease, in addition
to twenty yuan exchanged at official
rate for every United States dollar
credited to China. China is further
prepared to raise such Reverse Lend-
Lease contribution to forty yuan for
each United States dollar placed to
her credit.
2.) Alternatively, if the above arrange-
ment (d.1.) is considered not satis-
factory, the Chinese Government shall
be prepared to permit the United States
authorities in China to sell in open
market United States currency notes,
United States Government bonds, gold,
and commodities for the purpose of
securing
Regraded Unclassified
25
- 3 -
securing Chinese currency needed to
meet United States Army expenditure.
The Chinese Government also believes that the most
effective measure of controlling inflation in China is
increased importation of commodities for daily use,
especially if such importation is combined with the
arrangements under (d. - 1 or 2)
It is to be observed that for every yuan issued, the Chinese
Government and banks assume the obligation of its redemption accord-
ing to law. In comparing China's present foreign exchange accumulation
to the amount of yuan issued China's exchange reserve is infinitesimal
and far below her minimum requirements, not to mention China's post-war
needs for rehabilitation and reçonstruction, and her monetary stability
which especially needs assistance. Hence any appreciable increase in
China's foreign exchange and reserve would greatly mitigate her
difficulties and be of vital importance to development of American
trade with China.
(Received in Division of Monetary Research on May 19, 1944) Regraded Unclassified
26
June 3, 1944
10:30 a.m.
PURCHASE AGREEMENT WITH BRITISH GOVERNMENT
Present: ar. O'Connell
Mr. McConnell
Mrs. Klotz
H.M.JR: I had a talk with Dean Acheson this morning
on another matter. He said, "I am not allowed to talk
to you, but as soon as that can be cleared, I will appreciate
it. I promised Joe 0' 'Connell not to bring it up." That is
all ne said.
MR. O'CONNELL: He really didn't promise but I told
him we were hoping to talk with you and give you informa-
tion about this thing before he did. That was very decent
of him not to prejudice our case.
H.M.JR: What is the case?
MR. McCONNELL: The British nave prepared a draft, the
Britisn Embassy people, I guess, have a memorandum which
they propose to submit to London to be presented to the
State Department as to the position of the British Govern-
ment in supplying funds for the relief of the liberated
areas during the military period.
This is the draft which State brought to us for comment
and approval.
(Hands Secretary attached draft)
H.M.JR: CCAC. What the heck is that?
MR. O'CONNELL: Civil Affairs Group in London.
H.M.JR: Will Taylor is on?
MR. O'CONNELL: That's right.
Regraded Unclassified
27
-2-
H.M.JR: What is the matter with this?
MR. McCONNELL: Now, there are supplies ear-marked
for about ninety days requirements. It is necessary now
to begin ordering beyond ninety days requirements. With-
out prejudice they propose that they adopt what is cailed
Plan "A"; that is, the commitments of the underwriting,
or the purchase commitment, would be made by the United
States, fifty percent, and by Great Britain, fifty percent.
Then, as soon as they can do it they will discuss the final
settlement as to how that is divided.
As you know, in Italy, up to date, it has been about
eighty to twenty. Now, furthermore, in Great Britain's
percentage, there is an unknown amount of Lend Lease goods
SO that still further reduced their rabbit to a haif a
rabbit or something of that sort.
H.M.JR: Baby rabbit!
MR. McCONNELL: In that memorandum, sir, we pointed
out to Mitchell--
H.M.JR: Who is he?
MR. McCONNELL: The State Department man who has charge
of liberated areas over there. The first paragraph seemed
to be- entirely all right with the Treasury. The second
paragraph was entirely all right, but the third paragraph,
where they state that it is predicated upon relative
financial strength of the two countries, immediately
prejudices an unprejudiced position. In the second
paragraph they say we will not be prejudiced, but in the
third paragraph they say we want relative financial strength
basis.
So the position of the Treasury is this, sir, which
has been approved by everybody here.
Regraded Unclassified
28
-3-
(Hands Secretary Memorandum of May 31, 1944, attached)
H.M.JR: Okay. I'll initial it now. That's all right.
He might be impressed and he might not.
MR. O'CONNELL: Dean Acheson talked with me this
morning about this, and he indicated that they would be
perfectly willing to try to get the British to delete the
third paragraph. Last night he was not willing to suggest
to them that they delete it. He went on, though, after
saying this morning that they would try to get the British
to delete the paragraph, to say that he doubted whether
they could do that, would acquiesce. He said if they do
not, then he would suggest that in our reply to their
cable, which is the one we are discussing, we would say
that in the ultimate settlement, all relevant factors
would of course be taken into account.
H.M.JR: This is McConnell's first experience. Dean
Acheson will always take the British viewpoint, always,
against his own Government, and Goddammit, excuse me, la-
dies, you might just as well stick, and I will stick
with you till hell freezes. The third paragraph goes out
and you might just as well cut his throat now, and then
he will cable Churchill and Churchill will cable the
President, and SO on and so forth.
Let's lay this thing. It's not terribly important.
It is the first time. He and Stettinius, both, and you
might just as well get this thing.
MR. McCONNELL: Well now, I think there is a lot
of importance to this, back of it anyway. Let me just
give you our thinking on it if you have a minute.
Now this ratio the British are driving at is the
ratio of UNNRA, eighty percent United States and twenty
percent British. That is what they put in that relative
financial strength which was the ratio of national income
ending in June 1943.
Regraded Unclassified
29
-4-
Now, if that is the major financial strength, the
twenty percent that the British put up on that may be
half. That is a guess. Therefore, only ten percent is
really British account. We are taking a full-fledged
partner into the distribution of relief for the liberated
areas with only a ten percent commitment. And I told Joe
this morning that my thinking is, I would rather see the
United States do a hundred percent of it, because it will
cost us less in the last analysis than do ninety percent
and have to defer to the British.
H.M.JR: There is another thing which just gets me
up to here. I am choked. In Italy we go in, eighty-
twenty, but Churchill insists that it must be King Victor
Emanuel the Fifth and it must be Badoglio, because it is
an English sphere of influence. But who pays the bill?
We do. Some day Congress is going to wake up and say,
"We pay the bill but they say what should happen." Do
you see? Now, I agree with you, it would be much better
for us to pay for it all and say, "Okay, we are boss."
MR. McCONNELL: And it would cost less. I mean--
H.M.JR: I don't know. I just spent hours this
morning on this Chinese thing. We just completely dis-
regarded the British. We don't pay any attention to them.
We have the most expensive construction program the Army
has undertaken anywhere in the world. It has been finished
on time and cost half what the Chinese told us. But
completely General Stilwell and the United States Treasury.
And every memorandum that has gone to the President was
drafted completely here and the President has never changed
a word.
And the result is, it is the biggest and most expensive
program anywhere in the world, under General Somervell, and
we end up practically on time at half the expense, but we
completely disregarded the English in the area.
Regraded Unclassified
30
-5-
This was something simply stupendous, and cost half
as much, and if I would have fiddled around with the British,
my God, we wouldn't have started to build these public
works.
MR. McCONNELL: Well, that is a billion dollars.
H.M.JR: I know it. Take coal. We haven't settled
that situation yet. I told you about it. Listen, put
up a fight and I have initialed it. This is something
that if we start, don't give in on. And Acheson, he will
immediately go around and see Halifax and the whole business.
We may get licked from Churchill to Roosevelt. That is
the only way we get licked. And you might remind me
Monday whether we might better let the President know of
the Treasury's position. You might prepare a memorandum
to the President, "This is Our Position", so that he has
it, because I haven't done that enough. Then he gets a
letter from Churchill and doesn't know where I stand.
He only hears the State Department side.
MR. McCONNELL: You want to go beyond this memorandum
of Procurement or--
H.M.JR: No, let's do the one thing. Don't let's be
too obvious.
MR. McCONNELL: Go right on with the final settlement.
Do you agree, sir, if we have to do ninety percent, we
might as well do it all?
H.M., JR: Why did it take eight months to get anywhere
at Anzio? Combined Chief of Staff, all this twaddle stuff.
I tried to get an answer out of the Combined Chiefs of
Staff two and a half months to get an answer. You will
see. And when you are talking to Dean Acheson, you are
talking to a more British than a Britisher.
MR. McCONNELL: Anglophile.
Regraded Unclassified
31
-6-
H.M.JR: That's too nice a word. Incidentaily,
you were connected with a company in Cypress. We are
looking for a place for some Jews and Yugoslav refugees.
Do you know Cypress or run a company there?
MR. McCONNELL: I just ran & company there.
H.M.JR: You can't tell me of hotels and places?
MR. McCONNELL: Oh, yes.
H.M.JR: Tell it to John Pehle, will you? Any place
to take in refugees?
MR. McCONNELL: Our whole camp is vacant. We have
put up six thousand men there. They are not operating.
H.M.JR: I told the President you had a company there.
MR. McCONNELL: Pyrite, from which they get sulphur
and iron and copper. We had six thousand men working in
the plant.
H.M.JR: And it is empty?
MR. McCONNELL: They are not working. The Army may
have occupied it, I don't know.
H.M.JR: We can fill it up. This will be the British
Army. They can give you an English chit in payment.
Where is this Cypress?
MR. McCONNELL: Bay Morphou.
H.M.JR: Somewhere off Greece?
MR. McCONNELL: In the far eastern part of the
Mediterranean. Not far from Beirut, north and east of
Cairo.
Regraded Unclassified
32
-7-
H.M.JR: Nice place?
MR. McCONNELL: Very nice.
H.M.JR: Are you sure the camp is empty?
MR. McCONNELL: I will get all the data for you
in a few minutes.
(Secretary holds a telephone conversation with
Mr. Luxford, as follows:)
Regraded Unclassified
33
June 3, 1944
10:55 a.m.
HMJr:
Hello.
Operator:
I have Mr. Luxford.
HMJr:
All right.
Operator:
Go ahead.
HMJr:
Luxford.
Ansel
Luxford:
Good morning.
HMJr:
Bob McConnell's in here and I knew he was
connected with a company that mined pyrex or
something -- pyrite -- I don't know. Anyway --
out of which comes sulphur eventually.
L:
Yeah.
HMJr:
But they've got a work camp there of six
thousand -- held six thousand workmen -- the
Island of Cyprus.
L:
Yeah.
HMJr:
And it's empty.
L:
Isle of Cyprus.
HMJr:
He's not sure but he's -- but he said it's --
he's going to find out. Beautiful climate
like San Diego.
L:
Well, that's wonderful.
HMJr:
Bob McConnell.
L:
Yeah.
HMJr:
Take it away from him.
L:
All right. We'll get it.
HMJr:
(Laughs) Okay.
L:
All right. Bye.
Regraded Unclassified
34
-8-
MR. McCONNELL: Do you want to smile a minute? It's
a good thing I went down with B. M. yesterday. He was
broke when he went down to the station.
Regraded Unclassified
35
25
June 2, 1944
Mr. Sidney A. Mitchell
Chief
Division of Liberated Areas
Department of State
Washington 25, D. C.
Dear Mr. Mitchell:
You have asked for comment on your memorandum of
May 31, 1944:
The first paragraph seems entirely satisfactory, if
our understanding of Plan A is correct.
The second paragraph is also satisfactory, but if you
think it is desirable to add the words "on an equitable basis"
after the words "ultimate financial settlement", there is no
objection.
I feel, and Mr. White concurs, that paragraph $ should
be deleted because this paragraph, or the modification of this
paragraph which you suggested yesterday over the telephone,
does in effect prejudice the ultimate financial settlement.
The matters which should be taken into consideration in the
ultimate financial settlement do net properly belong in this
memorandum unless we are now willing to prejudice that settle-
1
of course we both agree that discussions with the
Pritish looking toward final settlement should be undertaken
promptly, and we will be pleased to discuss our views with you
at your earliest convenience.
Yours very truly,
R. E. McConnell.
RJC REM:ESD fca M.H.A.
Regraded Unclassified
36
MEMORANDUM
May 31, 1944
The British Government are prepared, subject to the
reservation contained in the following paragraph, to
agree that initial procurement under Plan A should go
forward on the following basis. That the United States
shall bear initial procurement responsibility for
purchases in the United States, that the United Kingdom
shall bear initial procurement responsibility for purchases
in the United Kingdom and the British Commonwealth excluding
Canada, and that procurement responsibility for purchases in
countries other than the United States and the British
Commonwealth shall be divided equally between the United
States and the United Kingdom.
This agreement is however subject to the reservation
which has been accepted by the United States members of the
CCAC that the arrangement outlined above shall in no way
prejudice the ultimate financial settlement for the cost
of relief during the military period which is a matter for
negotiation between the two governments.
It is the view of the British Government that any such
final settlement between the supplying countries must be on
an equitable basis which will take into consideration among
other things the relative financial strength of the countries
concerned.
Regraded Unclassified
37
- 2 -
It will be noted that in paragraph (1) the position
of Canada has been specifically reserved. This will be
treated separately and will be the subject of special
negotiations between the three governments.
Sidney A. Mitchell
LA:SAM:MJC
Regraded Unclassified
Original to Pehb. 6/5/44 38
June 3, 1944
Secretary Morgenthau
R. E. McConnell
The company village of the Cyprus Mines Corporation
at Mavrovuni has for three years past been occupied by
the British Army. The management has not been informed
but thinks the British may have left in recent months.
This village accommodated about 1500 families. In
addition, there are some White staff houses available,
and an American Intelligence Unit has been occuping
a number of the staff houses under a Captain Daniels.
I imagine that Army Intelligence could tell you
promptly what accommodations there are in the company
buildings there now.
REM:ESD
Regraded Unclassified
39
June 3, 1944
10:55 a.m.
REPORT ON SURPLUS PROPERTY DISPOSAL
Present: Mr. Olrich
Mr. C. S. Bell
H.M.JR: Good morning, how are you?
MR. OLRICH: Fine, thank you, Mr. Secretary.
H.M.JR: I haven't had a memorandum from you. All
I have to do is have somebody from Chicago teil me you
are alive. So I just wondered how things were going.
MR. OLRICH: So long as it is good tidings, why--
I am working, Mr. Secretary, I am in some trouble because
I am trying to straighten out the inventory. We have had
three days of very intensive sessions and I have come to
the conclusion we are going to separate the inventory into
the NYA properties, which were turned over to us a long
time ago, the WPA properties, which were turned in a long
while ago, and surplus commodities of the current stuff
which we are selling.
H.M.JR: That makes,sense.
MR. OLRICH: We can separate them on the cards. We
will freeze the WPA and the NYA inventories, because most
of the goods in those categories have been sold and it is
just a question of documentation. The inventory this
morning is up to thirty-five million. I don't think the
inventory is right within twenty or twenty-five million
dollars. I am making statements that have been made to
me. I have been working nights.
H.M.JR: You are not getting mad about it, are you?
Regraded Unclassified
40
-2-
MR. OLRICH: No. If I get mad, then I won't do
so well.
H.M.JR: But I gathered WPA and NYA spoils your
picture.
MR. OLRICH: It does. As an illustration, we had
an increase in the inventory of this two-week period of
thirteen million six hundred thousand and I drew off the
increases. An increase in special industrial machinery
of eight hundred and three thousand dollars. Now an
adjustment comes through, it is overstated by six hundred
thousand dollars. So we are adjusting that figure down.
On the metal working machinery, we have an increase
a million one hundred and forty-four thousand, and that
is all adjusted downward, so there is no increase.
On the finished product of the metal working industry,
the increase was two million two hundred and thirty-six
thousand or the inventory went up from eighteen thousand
to a quarter of a million dollars and now they have reduced
that by eight hundred thousand dollars. That is within a
three or four day period.
That is caused by documentation. In other words, when
they sold this thing, all of these papers were dumped in.
The inventory had been set up, but their inability to pro-
cess the disposals have left large items on the inventory
which will be disposed when these documents are put through.
In the last two days I have smoked most of this out. It has
been general conversation. This morning I said, "How can
we get an inventory of what we have got to sell?" All
right, we can put on the machine and have, by Wednesday,
an inventory of the NYA stuff, most of which has been
liquidated but will be removed from our inventory when
the document is through. We will put a special crew in
each office to document that stuff for other reasons which
I will discuss next week. The WPA is the same way. Then
we will have left goods which we have on hand and are
Regraded Unclassified
41
-3-
selling currently.
H.M.JR: Sounds like a business proposition to me.
MR. OLRICH: It should be, but it took a little while
to get it out. I have had the inventory broken down by
regions. In the Chicago region we have a pretty big in-
ventory. We have an inventory of nine, ten or eleven
million dollars. They estimate that they have a million
dollars to sell. The rest is documents that will have
to be processed. Now that man has been there since March
and he is doing a yeoman job. I have talked to Mapes. We
are going to give Mapes help. True, it is Procurement,
but regardless, we will step in, because it is necessary.
H.M.JR: It is only a matter of a few days before you
will have the whole thing.
After all, we have to wait until the Democrats get to-
gether in New Hampshire, if they can.
MR. OLRICH: If we don't get to go, the Republicans
will!
H.M.JR: The trouble about John Sullivan, he says 'the
Republicans are all for me, but the Democrats aren't.'
That is his trouble.
MR. OLRICH: So that is why you haven't had any reports,
because any report that I might have given you, I would
simply have to say these are wholly unsatisfactory and
it hasn't been lack of work. We have had inventories. I
have been checking and rechecking. We have had a movement
of goods. You will get & report today, though, on receipts
which have come in in the past week. We have cots and
bedding of seventy-two thousand dollars, shoes of five
hundred and forty-four thousand, new construction equipment
of eighty-one thousand, building supplies and materials of
fifty thousand, clothing of four hundred thousand. The
sales that we have made is motor vehicles, a million and
Regraded Unclassified
42
-4-
fifty-seven thousand; clothing, a million and sixty-nine
thousand; metal machinery, two hundred and fifty thousand;
lumber, sixty-three thousand; coal, sixty-one thousand;
ice boxes, thirty-five thousand; horses, twenty-three
thousand; and steel, eighty-seven thousand.
Little side-lights in it. I think Mr. Bell has told
you, we have gone to the dogs. We inherited & hundred
sled-dogs up in Helena, Montana.
H.M.JR: Some puppies!
MR. OLRICH: I told somebody thank God, they are not
guinea pigs!
H.M.JR: That is wonderful.
MR. OLRICH: Now we are having some interesting meetings
with other departments. We had a meeting with Elliott
and on these meetings with the heads of other divisions--
H.M.JR: Who is Elliott?
MR. OLRICH: OCR, Office of Civilian Requirements.
New Assistant to Mr. Nelson in that Division.
We had a meeting some weeks ago in the Office of
Mr. Ducas in which they started talk of stock piling.
Mr. Hills wasn't quite clear of what he wanted. I talked
to Mr. Elliott and said, "We want to work with you but
we need to know what you want." Elliott came over with
his three assistants. We agreed they would furnish us
with & list of critical items that we might get, two, having
that list of items we would immediately notify our various
regional offices to make an effort to dispose of those as
quickly as possible, so that they are out of our warehouses,
three, so that he would have information on what surplus
is doing, his relationships to his directives to manu-
facture these goods, we would indicate to him weekly, if
possible, but bi-weekly, surely, of the receipts of these
materials and the sales of these materials.
Regraded Unclassified
43
-5-
In the instance of some area in the country having
a critical shortage of any particular commodity that we
might have that we would be willing to move that inventory
into that region and sell it. One of the regions that is
particularly short of all hardware is the Seattle, Portland
area where they have an influx of people. So we are prepared
to do that.
H.M.JR: Can I interrupt you one minute? I wish you
would think if you know anybody on the West Coast that I
might appoint as 8. delegate to this monetary conference,
who really knows the financial aspect of business in the
Far East. Is there any great--
MR. OLRICH: I think I would be in a position to
find that, because one of the vice presidents of the
Continental National Bank is executive vice president of
the California Bank of Los Angeles, and I could talk to
him.
H.M.JR: If there is anybody out there that really
knows the financial end of the Far East--
MR. OLRICH: I will call him long-distance.
H.M.JR: Continental what?
MR. OLRICH: Continental of Chicago, but he was brought
by Anderson to become the next president of the Los Angeles
Bank of California or the California Bank of Los Angeles.
It is a strong, not the largest--
H.M.JR: Not the Giannini Bank?
MR. OLRICH: No, no!
H.M.JR: "We no likee Giannini."
MR. OLRICH: I didn't mention him. I will do that.
H.M.JR: The fellow has to be somebody that everybody
respects on the West Coast.
Regraded Unclassified
44
-6-
MR. OLRICH: Frank King will not be the man, but
Frank King will probably tell me who the man is. He
is that honest. King is a man about forty-five.
H.M.JR: I don't want an oil man, either.
MR. OLRICH: All right.
We also agreed with Mr. Elliott-by the way, he doesn't
like to be called Doctor any more. It is Mr. Elliott or
Bill. We would notify him of foreign sales of these
critical materials that might go through the Army or
any difference SO that they could readjust their manu-
facturing quota that is being shipped abroad, so they
in turn will give us the list of any prospective purchasers
of this equipment through our regional offices. The meeting
was helpful to us and helpful to them.
H.M.JR: Who is Doctor Elliott when he is at home?
MR. OLRICH: He was a Professor at Harvard University.
MR. BELL: "Elliott's Five-foot Book Shelf".
MR. OLRICH: No, no, no! This is Bill Elliott. He
has been an economist. No, this fellow is, I would say,
under fifty, about six feet one tall, broad-shouldered,
an economist from Harvard. He has been in Washington for
about three years on different assignments. He is now
Assistant to Nelson, in charge of Office of Civilian
Requirements.
H.M.JR: Well, now is that about the story?
MR. OLRICH: One more. We have a meeting with ODT.
ODT was prepared to ration used trucks and we talked them
out of it. We said we had a suggested method. "If you are
afraid of a little heat why not give this method a trial.
Rationing will slow up the sale of trucks and reduce the
Regraded Unclassified
45
-7-
price of trucks. Try it. If it doesn't work out, we
can soon go to rationing". So that is it, but I think
by Wednesday we will begin to have some inventories.
H.M.JR: Now will you, Charlie--he is going to get
together with you this afternoon?
MR. OLRICH: That is right. The reason you haven't
had reports is that the reports I would give you wouldn't
be worth the paper they are written on. Unless I can get
accurate information, I won't give you any.
H.M.JR: Don't forget I am waiting for a bill.
MR. OLRICH: That, I told the office to do. You will
get it, don't worry.
H.M.JR: Did Will Clayton take that fellow from the
Middle West?
MR. OLRICH: The man couldn't come. He was very
pleased with him but the man is purchasing a new business,
buying the property on which his present business stands,
which made it impossible for him to come for sometime.
They all have reasons for not coming down.
Regraded Unclassified
46
OFFICE OF
FORVICTORY
TREASURY DEPARTMENT
BUY
UNITED
STATES
WAR
WASHINGTON 25
BONDS
AND
THE
SECRETARY
STAMPS
June 3, 1944
MEMORANDUM TO THE SECRETARY
As I explained to you in your
office, you have received no reports in
the past two weeks because we regard the
inventory figures as unreliable. This
condition is occasioned by the inability of
the field staff to pass through their records
on sales or transfers of merchandise as
quickly as we might expect.
The inventory for want of a better
word is cluttered up with items from the
N.Y.A. and W.P.A. transfers. Most of these
inventories have been disposed of but the
documents representing disposal have not yet
passed through the records. Therefore, items
appear on the inventory which are no longer
in our possession.
As indicated to you, we will immedi-
ately reclassify the inventory into three
divisions:
1. N.Y.A. Inventory
2. W.P.A. Inventory
3. Surpluses which are on hand
and which we are trying
to sell.
Regraded Unclassified
2
Memorandum to the Secretary
47
6/3/44
The first two classifications will
disappear as quickly as we are able to clear
up a bottle-neck in the handling of documents.
The third classification is the merchandise
on hand that we are trying to sell. The
inventory presently 1s indicated at approxi-
mately $30,000,000. The best guess of those
who should be informed indicate that the
amount should be more nearly $10,000,000.
We expect to give you a reasonably
correct figure in the inventory situation
on Friday, June 9.
Assistant to the Secretary
Regraded Unclassified
48
OFFICE OF
FORVICTORY
TREASURY DEPARTMENT
BUY
UNITED
*
STATES
WAR
WASHINGTON 25
BONDS
AND
THE SECRETARY
STAMPS
June 3, 1944
An
MEMORANDUM TO THE SECRETARY
Following my visit of this morn-
ing, attached is a memorandum of the sig-
nificant items that have been declared to
and received by us.
E.L. Olrich
Assistant to the Secretary
Attachment
Regraded Unclassified
49
From May 15 to May 27, Inclusive
Receipts
Cots and Bedding
$ 72,731.27
Shoes
544,000.00
Construction Equipment
81,545.00
Building Supplies and
Materials
50,000.00
Clothing
400,000.00
We have effected sales from
May 15 to May 27, inclusive, in significant
amounts as follows:
Motor Vehicles (Trucks--
principally used Army
trucks of commercial
types)
$1,057,966.00
Clothing (for ship-
ment Abroad)
1,069,000.00
Metal Working Machin-
ery
250,160.00
Lumber
63,561.00
Coal
61,561.60
Ice Boxes
35,300.00
Horses
23,756.00
Steel
87,801.00
50
OFFICE
OF
FORVICTORY
TREASURY DEPARTMENT
BUY
UNITED
STATES
WAR
WASHINGTON 25
BONDS
AND
THE
STAMPS
SECRETARY
June 3, 1944
MEMORANDUM TO THE SECRETARY
I had a meeting with Mr. William
Elliott, Assistant to Mr. Donald Nelson,
in charge of Office of Civilian Requirements.
1. We have agreed to do everything
do expedite the sale of critical items on the
list that he furnished.
2. We will furnish him b1-weekly
as far as practicable a list of these critical
items inventory receipts within that period.
3. The sales of critical items
within the period.
4. We will agree to transfer criti-
cal items to territories with acute short
supply of such items whene ver he requests us
to do it.
5. We will keep him informed of
sales or transfers of critical items for use
in foreign countries so that he may adjust
his pool on the list of items to be manufactured
for sale abroad.
Regraded Unclassified
#2
51
Memorandum to the Secretary
6/3/44
His office and our office are in
accordance with these ideas.
Assistant to the Secretary
Regraded Unclassified
52
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE June 3, 1944
Secretary Morgenthau
OM R. E. McConnell
M
It may be that the West Coast banker that Mr. Baruch
was thinking about was Mr. Frederick L. Lipman, president
of the Wells Fargo Bank in San Francisco. The bank has
had substantial participation in Far Eastern business.
Mr. Lipman is an older man, but I understand he is
still extremely keen and active. He is, I believe, the
dean of bankers on the Pacific Coast.
R.E.M.
Regraded Unclassified
53
June 3, 1944
11:10 a.m.
SCHEDULE OF FIFTH WAR LOAN DRIVE
Present: Mr. Gamble
Mr. Smith
Mrs. Klotz
H.M.JR: I just talked to Mrs. Morgenthau and she
says that she has talked to you about this opening of
this thing in New York on the 21st. It is funny that
they staged the two things on the same day.
MR. GAMBLE: One crowd didn't know about the other
event. We have changed the date on it this morning. I
talked to her about it.
H.M.JR: They had this carnival up in Vassar, and
this Dr. MacCracken, the President - I mean, this Founders
Day - each girl would come up and he would guess her
weight, and it would cost ten cents. Joan didn't come
up. She said, "I haven't got ten cents." He said, "That
is all right. Here is ten cents. I will pay for it."
Incidentally, McConneil took B.M. Baruch down to
the station. When he got down there he didn't have a
penny in his pocket.
MR. GAMBLE: When we first scheduled this, Mr.
Secretary, it didn't look as though it would--
H.M.JR: It is all happy now?
MR. GAMBLE: Yes, but they have blown this affair
into such magnitude on the 21st, I think it will over-
shadow anything that is going to happen in New York that
day. The Chinese Ambassador, the British Ambassador -
they are going to have about twenty or thirty Ambassadors.
Regraded Unclassified
54
- 2 -
H.M.JR: How about the Russian Ambassador?
MR. GAMBLE: Mr. Gromyko - they are still trying
to get through the Second and First Secretaries. The
Second Secretary told them Gromyko was going to be in
Russia. The fellow said he is going to have to get back
to New York in a hurry because he has a special engagement
the following week.
H.M.JR: You fellows can't do very much without
checking with me. Greenbaum called me up yesterday,
"How important is it to have Mr. Patterson in New York
on the 12th?" I said, "Very important."
He said that Mr. Gamble had been after him. I said,
"I consider it of the greatest importance."
MR. GAMBLE: Thank you. We are using Under Secretaries
Patterson and Bell. It is going to be a very important
affair on that date.
H.M.JR: Now, you fellows do me first, and then I
will do you.
MR. SMITH: Boy, are you going to get done!
This is the complete schedule which I shall now
endeavor to read to you. (Refers to draft of Drive
schedule, attached)
H.M.JR: Just one second. I have an idea here. What
I am trying to do is to find some place not too close,
within a couple of hundred miles of Texarkana, where we
might spend Saturday and Sunday night and then fly down
there - where we could breathe and think. Do you see
what I mean?
MR. SMITH: Yes.
H.M.JR: N₀ₜ too dumb?
MR. GAMBLE: Very smart.
Regraded Unclassified
55
- 3 -
(Miss McCathran enters the conference with a map.)
MR. SMITH: The town will be alive--
H.M.JR: Commander Hesford told you?
MISS McCATHRAN: Yes, sir.
H.M.JR: What's-his-name be back Monday?
MISS McCATHRAN: McCaffery? He has the mumps.
H.M.JR: Who is going to take me?
MISS McCATHRAN: They didn't say. Maybe he will be
over them. (Miss McCathran leaves the conference)
H.M.JR: Can I give you this and look into this idea
of going to Little Rock Saturday and Sunday?
MR. SMITH: Yes. Here is Little Rock and here is
Hot Springs. They have a lake and everything else.
The idea would be to stop at Little Rock?
H.M.JR: Not get to town until maybe Monday morning.
MR. SMITH: I think that is a good idea.
H.M.JR: I was thinking if we could get away from
here and go down there, it would be quiet and we could
knock out the speech and rest. If it is some place close
enough SO that if it is bad weather we can jump in a car
and drive down there - and from all accounts, Hot Springs
is very nice.
MRS. KLOTZ: It is beautiful.
MR. SMITH: I will check on that right away.
MR. GAMBLE: It is a good deal like White Sulphur.
H.M.JR: I believe it is very nice.
Regraded Unclassified
56
- 4 -
MR. GAMBLE: Many people like it better than White
Sulphur as a resort.
MR. SMITH: I will get somebody up to investigate.
H.M.JR: Well, I was thinking of getting out of
here Friday.
MR. SMITH: All right, that is fine. We have no
commitments on Sunday in Texarkana, anyway. If we get
there, there will be a press conference at the airport,
but it isn't essential.
H.M.JR: If I could get a couple of days of quiet
some place, so I can get a little bit conditioned for
this thing--
MRS. KLOTZ: We are all for it.
MR. SMITH: You don't have to sellus!
H.M.JR: Do we have to do that nine-thirty at night
after all day?
MR. SMITH: You don't have to. It is set up now,
but it can be pulled off. It isn't a big thing. But we
are springing you after the luncheon there. You don't
have to do anything except just show up.
H.M.JR: If you don't mind, I would like to cut
out the nine-thirty. I know I will be & wreck, and
what I may want to do - if you will make a note - I may
want to go on that night to a place called Wichita Falls
where there is an Army air station. I have a nephew -
maybe the Army could put us up there. You might make
some inquiries. It is about three hundred miles toward
Los Angeles. As soon as we get through, we could fly it
in an hour and a half, and get out of this hot town and
sleep in tents, or something.
Regraded Unclassified
57
- 5 -
MR. SMITH: That eliminates one other problem we
have, which is this Daingerfield thing the next morning,
which they have been trying to get us to do. If we can
avoid it, we are better off.
H.M.JR: If I go to Wichita Falls, I want that
definitely off the record.
MR. SMITH: That is right.
MR. GAMBLE: There is a Wichita Falls in Texas.
H.M.JR: About three hundred miles due west from
Texarkana - get out of this hot town, which will be a
madhouse. The Army can give us a nice tent and a
shower, and we can sleep there with the stars.
MR. GAMBLE: Sounds like a good trip up to now.
MRS. KLOTZ: He needs it so badly.
H.M.JR: That will get us out and get us away from
all these back-slappers, and the rest of the stuff.
Daingerfield is out.
MR. SMITH: O.K. Now, June 13, that is the day
after, we are scheduled to leave on--
H.M.JR: We would be three hundred miles nearer
to Los Angeles.
MR. SMITH: And you would stay there at Wichita
Falls, and you could stay part of Wednesday - you could
stay Monday night and part of Tuesday if you get to
Los Angeles, which they want you to do, on Tuesday
night. You will just stay all night, then, at Wichita
Falls?
H.M.JR: I could see this boy that night and have
breakfast with him, and we would go on. I would talk
to his officers. He is having a kind of bad time. Then
we would get into Los Angeles Tuesday night?
Regraded Unclassified
58
- 6 -
MR. SMITH: Yes.
H.M.JR: You have breakfast Club at eight-thirty;
that is out.
MRS. KLOTZ: Mr. Smith flipped a coin.
(The Secretary signs letter to M.S. Link, dated
June 3, 1944)
H.M.JR: Visit to Lockheed during the morning. Now,
I don't care - the plant I would like to go and see is
the North Americanwhere they make the P-51.
MR. SMITH: That is a little farther out of town,
but that is all right.
H.M.JR: I have never seen that. I would much
rather go there. You might inquire.
MR. SMITH: There is no commitment on this at all.
They just send a lot of things around and this was one
that was suggested. Before you get any farther, did
you notice that you have a dinner on the night you get
in there - on Tuesday night? The Banking Committee
wants to bring twenty people to your hotel.
H.M.JR: No, I won't do anything like that.
MR. SMITH: All right. Is that all right, Mr.Gamble?
MR. GAMBLE: Well--
H.M.JR: I just won't.
MR. GAMBLE: Well, that settles it. Of course,
knowing you, you will probably want to do it when you
leave Wichita Falls. You don't have too long a flight.
H.M.JR: No, I am not going to kill myself on this
trip if I can help it.
Regraded Unclassified
59
- 7 -
Now, the Breakfast Club is out. The Lockheed plant -
do you think I should go to Howard Hughes? He is quite
a fellow.
MR. SMITH: He invited you through this office.
This didn't come from California. He wants to show you
a big eight-motored wooden airplane they have got.
H.M.JR: When Knudsen went there and knocked on
his door, he couldn't get in. Did you know that?
MR. SMITH: No.
MRS. KLOTZ: Maybe he didn't knock hard enough!
H.M.JR: The thing I would really enjoy seeing is
the P-51, or I would like to go to Kaiser's steel plant.
MR. GAMBLE: I would go to see the P-51 if I were
you, and cancel the other two.
H.M.JR: You wouldn't go to the Kaiser steel plant?
MR. GAMBLE: I don't think you can see very much
there. It is just getting under way.
H.M.JR: Then 1 would like to go to North America.
Dutch Kindleberger and his P-51 is the sensation. I
helped get the engine for him.
MR. SMITH: That is good. I don't think you have
time for anything else, anyway.
H.M.JR: Let's have lunch out there.
MR. SMITH: They have a luncheon for a thousand
businessmen at noon. You have to get back for that.
H.M.JR: Then certainly I can wash out the twenty
bankers the night before. No businesswomen?
MRS. KLOTZ: You are so unkind to the bankers.
Regraded Unclassified
60
- 8 -
H.M.JR: You know I love them!
Now, the afternoon free - I don't believe it!
MR. SMITH: Well, it is a luncheon and I don't
know how long that is going to last, so that is sort of
a hopeful gesture, this "afternoon free."
H.M.JR: Put down swim in the Pacific.
MR. GAMBLE: Swim in the Ambassador - it is a
beautiful outdoor pool.
MR. SMITH: You have the most wonderful ideas
this afternoon. Oh, how I love you.
H.M.JR: We'll go down to Marion Davies' place.
MR. SMITH: (To Gamble) You are not going along,
you say?
MR. GAMBLE: That was yesterday!
H.M.JR: Broadcast from Hollywood Bowl.
Let's leave a question mark on Wednesday and Thurs-
day, see?
MR. SMITH: Yes, that is strictly tentative. He
offered to do it. Instead of telling him not to, he
wrote to Charlie Bell and I told him to have it ready
in case you wanted to do it, but it was not a commit-
ment to do it at all.
H.M.JR: What time do we get through "ednesday?
MR. SMITH: Wednesday night after the broadcast.
There is a show after the broadcast - probably ten-
thirty or eleven o'clock.
H.M.JR: Would you mind if I don't go any further
than that, today? Then we can do this thing again Monday.
Doesn't this clear you fellows up far enough?
Regraded Unclassified
61
- 9 -
MR. SMITH: There isn't any farther to go, anyway.
The Chicago program is not set yet.
MR. GAMBLE: The luncheon at the Waldorf is the
only other matter.
H.M.JR: O.K. Do you mind, when this is cleaned
up, giving us all copies here? Are you satisfied?
MR. GAMBLE: Yes, sir.
MRS. KLOTZ: Did you clear up the Waldorf? I
thought you were going to send a letter. Is it in?
MR. GAMBLE: It must be. It should be here this
morning.
H.M.JR: Is this all right?
MR. SMITH: Sure.
H.M.JR: This is just a little thing. When I went
to see Herbert yesterday the old boy was sparking on a
speech for up at Bretton Woods.
Will you tell A.M. Bernstein to put down the facts
of various things I have done since I have been Secre-
tary of the Treasury toward world stabilization of
currencies, so he can have the facts?
MR. SMITH: Good, yes.
H.M.JR: What I have done, because Herbert thought
I could give a speech which would be a review of what I
have done since I have been Secretary. The old boy lies
there in bed - I said, "Herbert, you be back in time; you
can write it."
MR. SMITH: Good, that will be a big help. Fitz
wanted me to show you the list of reservations. (Hands
Secretary proposed list of reservations)
Regraded Unclassified
62
- 10 -
H.M.JR: As a matter of fact, if I hold to my
schedule, 1 won't sleep in a hotel.
MR. SMITH: That will be helpful, I understand, be-
cause every time I speak to anybody down there they
remind me politely that there are bugs in the bathroom.
H.M.JR: It is all right.
MR. GAMBLE: You can have anything you want in
Los Angeles. Do you want me to arrange a place for you
to swim?
H.M.JR: No, I would like to go some place without
any fanfare - no motorcycles - put on a pair of bathing
trunks and go in the water.
MR. GAMBLE: You could take some place on the beach -
some home out there.
MR. SMITH: Now, you will be interested to know what
our schedule is on broadcasts. Now, the script on the
Hollywood thing - the first script - I don't know what
it is going to be like - we will have that Monday and
Paul Stewart who is going to run it, will be here on
Monday. We can talk to him. Ted tells me this morning
that the people from the Chicago operation are coming
down maybe wednesday or Thursday, and before that time
they will send us a script.
H.M.JR: On Chicago?
MR. SMITH: On the Carnation Hour. If it is a good
script, fine. If not, we will have to start from scratch.
H.M.JR: Isn't it true that Orson Welles will go
through the whole thing if I like him and he likes me?
MR. SMITH: That is right.
MR. GAMBLE: In that connection, Fred, he could be
the greatest producer in the world, Mr. Secretary, and
couldn't cover those three spots for you.
Unclassified
63
- 11 -
I think you ought to be pretty well pleased with
those scripts before you leave here. When he gets
through with Texarkana--
MR. SMITH: he will get a copy of the Paul Stewart
script and there won't be a case of rebuilding that,
because that is only two days off. But a lot of
things can happen, and the whole Chicago script could
easily change.
Welles is going to move his show to Chicago so
he can stay with us from Los Angeles right through to
Chicago. We may completely rebuild the show.
MR. GAMBLE: I appreciate that, but you are working
with all kinds of personalities. If you have a group
of people in Chicago who are trying to do a good job - I
am talking about the Carnation people - and you like it,
we ought to let them do it.
H.M.JR: You are satisfied?
MR. GAMBLE: Yes.
H.
JR: You are satisfied?
MR. SMITH: Yes.
One other thing - I. talked to welles yesterday. He
has some rehearsals, so he is going to rehearse the basic
spots in this program - the back-end, which is good - I
mean the dead soldier spot, and the Hollywood spot, which
is much eloquence about democracy from Plato on to
President Roosevelt. It is very short, about six minutes
and the big home spot which you haven't heard yet. If we
change it, we can change it, but he has to get it for
rehearsal.
H.M.JR: Fine. If we got away from here Friday
night and went some place like this place and had two
days, it would be wonderful. I can rest and swim and
so can the rest of you. If we have to work, it is a good
place to work. Don't you think it is a good idea?
Regraded Unclassified
64
- 12 -
MRS. KLOTZ: I think it is a marvelous idea.
MR. GAMBLE: Keep on, Mrs. Klotz and I will join!
MRS. KLOTZ: I asked to go and I was turned down.
MR. SMITH: One other thing I want to clear. On
this Texarkana thing, one of the things I planned to
do if Texarkana is willing to do it - Texarkana is
two towns, and in the present script he has the people
of Arkansas playing the part of Germany, showing how
absolutely ridiculous for a little group of people
suddenly discovering they are super-men and they have
got to take over all the rest of the counties, and
everything, and run them. It is comedy, but at the
same time, it is satire. Now, it is a pretty elaborate
piece of business, and if you have no objection to it,
shall we leave it to Texas and Arkansas, and if they
are willing to do it, let them go ahead, or should we
stop it now? It is good.
H.M.JR: Let them settle it on the ground.
Regraded Unclassified
65
COPY
TREASURY DEPARTMENT
Inter Office Communication
May 29, 1944.
To
Secretary Morgenthau
From
Fred Smith
Here is a tentative plan for your appearance in
Los Angeles:
June 13:
(1) Arrival at Burbank late Tuesday afternoon.
(2) Press Conference at airport.
(3) They want to have a dinner for approximately
twenty people who comprise the Banking Committee for
Southern California.
June 14:
(4) You have been invited to the Los Angeles
Breakfast Club between 8:30 and 9:00. You would be ex-
pected to speak extemporaneously, and a local radio
station carries the broadcast of these meetings.
(5) A visit to a war plant during the morning.
(6) Luncheon for 1100 businessmen and War Finance
leaders at the Biltmore Bowl, sponsored by the Los Angeles
Chamber of Commerce.
(7) Afternoon free.
(8) Broadcast from the Hollywood Bowl. At the
present time this looks like a documentary program with
you going on at the beginning and at the ending. It
will not require extensive rehearsal.
I am not worried about anything except the dinner on
Tuesday evening after you land. That seems to me to be
Regraded Unclassified
2
COPY
66
crowding things a little bit, 80 I'd like for you to
decide whether you want to try it, and let me know so I
can make arrangements.
The Lockheed plant is only ten miles from downtown
and has a very bad record. There are 70,000 workers.
They only made 55% of their quota in the Fourth War Loan.
87% of their employees are putting 7.3% of their earnings
into payroll savings.
June 15:
(9) We have also tentatively set a tour of the
harbor with William Jennings Bryan, II, the collector
of the port, for the morning. They are standing by
on this strictly for your own pleasure, and it has
nothing to do with the War Bond people or your official
appearance.
Regraded Unclassified
67
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE
June 3, 1944
TO
Secretary Morgenthau
FROM Fred Smith
Trip Schedule to Date
Friday, June 9:
Leave for Hot Springs.
Saturday, June 10:
At Hot Springs with Welles to work on
broadcast.
Sunday, June 11:
At Hot Springs.
Monday, June 12:
Arrive Texarkana.
Trip to Lone Star and Red River Ordnance
Plants. Workers will be assembled for a
few words.
Luncheon 12:30 p.m. to be attended by the
Governors and other prominent people.
Go to theater for rehearsal from luncheon.
From 3:45 to 4:30 go to post office to
review parade and participate in extempor-
anéous sectional broadcast.
Return to rehearsal. Rest of the day
clear until after the broadcast. Leave
after broadcast for Wichita Falls.
Stay over night at Wichita Falls.
Tuesday, June 13:
Leave Wichita Falls.
Arrive in Evening at Los Angeles.
Press Conference at airport.
Regraded Unclassified
68
- 2 -
Wednesday, June 14: Trip to North American Plant to see P-51.
Luncheon for 1,100 businessmen and War
Finance leaders at the Biltmore Bowl,
sponsored by the Los Angeles Chamber of
Commerce.
Afternoon free to swim in Pacific.
Rehearsal - Broadcast from the Hollywood
Bowl from 8:30 to 9:00. Documentary with
you going on at the beginning and at the
ending. It will not require extensive
rehearsal.
Thursday, June 15:
We have tentatively set a tour of the
harbor with William Jennings Bryan, II,
the collector of the port, for the morning.
They are standing by on this strictly for
your own pleasure, and it has nothing to
do with the War Bond people or your
official appearance.
Leave for Washington. Stay over (where?)
en route.
Friday, June 16:
Arrive Washington.
Saturday, June 17:
Sunday, June 18:
Monday, June 19:
Leave for Chicago. Program not yet set up.
You will want to see Dan Bell's War Bond
office. Checking with Carnation Milk
people next week on radio.
Tuesday, June 20:
Return to Washington.
Wednesday, June 21:
Luncheon at Waldorf Astoria and opening of
Fifth Avenue as "Avenue of the Allies.
Thursday, June 22:
Friday, June 23:
Saturday, June 24:
Sunday, June 25:
Regraded Unclassified
69
- 3 -
Monday, June 26:
Speech at the end of Cavalcade broadcast
"What Price Freedom". 8:00 to 8:30 p.m.
from Washington.
Tuesday, June 27:
Wednesday, June 28:
Thursday, June 29:
Friday, June 30:
Leave for Bretton Woods.
Saturday, July 1:
Key-note speech on International Stabili-
zation for monetary conference.
Sunday, July 2:
Monday, July 3:
Tuesday, July 4:
Broadcast in Philadelphia in connection
with the Navy celebration.
Regraded Unclassified
70
June 3, 1944
Dear Mr. Westover:
Thank you very much for your offer to
help on the Los Angeles trip. Unfortunately,
I will be unable to see much of Los Angeles
beyond the program which the War Finance
Committee has set up. I have a very tight
schedule.
However, I shall look forward to seeing
you.
Sincerely,
(Signed) H. Morgenthau, Jr.
Mr. Harry D. Westover, Collector
Treasury Department
Internal Revenue Service
Los Angeles, California
FS:vem
Regraded Unclassified
TREASURY DEPARTMENT
INTERNAL REVENUE SERVICE
OFFICE OF THE COLLECTOR
Los ANGELES, CALIF.
(12)
SIXTH DISTRICT OF CALIFORNIA
IN REPLYING REFER TO
May 29, 1944
Honorable Henry Morgenthau, Jr.
Secretary of the Treasury
Washington 25
D. C.
Dear Mr. Morgenthau:
It is with much interest that I have read of
your contemplated visit to Los Angeles the middle of next
month. I am wondering just what we can do to make your trip
to Los Angeles a memorable one. We are looking forward
eagerly to seeing you and to becoming better acquainted
with the man who controls the financial reins of the
Government.
Usually visitors from the east coast are in-
terested in our moving-picture industry and enjoy a trip to
Hollywood studios. But, of course, the studios are not
the only interesting sights we have in Southern California.
If you would give us some indication of what
would interest you out here--what you would like to do,
what you would like to see, and where you would like to go--
we will appreciate it very much.
Let Respectfully yours,
Harry d. Westover,
COLLECTOR.
HCW
ps
FOR VICTORY
BUY
UNITED
STATES
WAR
BONDS
AND
STAMPS
Regraded Unclassified
72 2
June 3, 1944
MEMORANDUM FOR THE SECRETARY'S FILES:
I attended a meeting in the Secretary's office
this afternoon at 5:15. Present, in addition to the
Secretary, were Dean Acheson and Mrs. Klotz.
Mr. Acheson had asked for a meeting with the
Secretary to discuss the proposed exchange of notes
with the British evidencing a tentative agreement as
to the division of procurement responsibility and cost
of procurement of supplies needed for liberated areas
in the period immediately following military occupation.
Mr. Acheson had. been advised that the Department
is in general agreement with the tentative arrangement,
which provides for a 50 - 50 sharing of the initial
procurement with the understanding that an "equitable"
financial settlement will later be made. However he had
also been advised that the Department is strongly opposed
to inclusion in the British note of a statement to the
effect that the ultimate financial settlement will be
based, in whole or in part, upon the relative financial
strength of the two countries. It was our position that
since the exchange of notes is admittedly tentative, and
involves a 50 - 50 division of responsibility, but reserves
for later settlement the ultimate division of financial
burden, that it would be entirely inappropriate and would
prejudice the ultimate settlement for us to concede the
importance of the relative financial strength of the two
countries at this point.
Mr. Acheson argued very strongly that we should be
willing to admit the relevancy of such a factor in our
note to the British. The Secretary, on the other hand,
said that he was unwilling to go that far and would only
be willing to agree to a statement in our note to the
effect that'in the ultimate settlement, which is to be on
an "equitable" basis, all relevant factors will be taken
into account, without specifying any.
Regraded Unclassified
73
- 2 -
Mr. Acheson indicated that he would see if he could
work it out on that basis.
At that point the Secretary stated that as far as he
was concerned he would rather take all of the financial
responsibility in these situations than be a partner of
the British, especially since we will ultimately probably
bear most if not all of the cost anyway. Mr. Acheson was
apparently quite shocked at such a suggestion and said he
thought it was entirely impossible.
The Secretary then stated that the problem was
essentially one of finance and that as such he understood
it was his responsibility as Secretary of the Treasury to
decide it, and to use his best judgment as to what was or
was not a good deal. He went on to say that it was his
view that in the long run it would be as cheap if not
cheaper in terms of actual cost if we accept the entire
responsibility for expenditures of this type. He sug-
gested that to do so would probably be productive of some
good-will, which has been sadly lacking in such areas as
North Africa and southern Italy -- where we are "partners"
in an area which is a sphere of British influence and in
which we pay about all the bills.
The Secretary indicated that he expected to see
Mr. Acheson again on Monday at which time they would dis-
cuss the matter further, but as of today he felt that the
deal being worked out is not in the financial interests
of this country.
220C
Regraded Unclassified
74
Dan Bell
Roy Blough
June 3. 1944
Stanley Surrey
Secretary Morgenthau
At lunch yesterday I asked Mr. B. M. Baruch,
point blank, whether he was doing any work on post-
war taxes and he said, "No". He said he would look
to the Treasury for any work along those lines and
he felt it was up to us to do it and he was doing
nothing about it.
Regraded Unclassified
75
WREE PARENICO
JUN 3 1944
Dear Mr. Gallager:
I have noted with keen interest the splendid
results of The Four Freedoms War Bond Show.
Here 1s a picture of democracy at work in its
hour of crisis. The retailers of the country are to
be congratulated for sponsoring this community-wide
event. Their employee organizations made personal
solicitations during end after store hours.
The voluntary support of business and labor,
nationality and church groups was most effective.
The theatre end motion pictures, the press and radio
told the story of this bond-selling show.
Norman Rockwell's paintings, the Four Freedoms,
are dramatic illustrations of the principles for
which we fight. The number of E bonds sold proves
the success of the show in reaching the average
citizen.
Your organization made 8 splendid contribution
to the war effort. It is desply appreciated by those
of us who have the responsibility for directing the
sale of United States War Bonds and Stamps,
Sincerely,
(Signed) Henry Morgenthau, Jr.
Mr. A. J. Gallager
The Saturday Evening Post
Independence Square
Philadelphia, Pennsylvania
JESivb
Regraded Unclassified
76
JUN 3 1944
Dear Mrs. Perry:
Thank you for your letter of May 28. It was a
pleasure to extend the facilities of the Treasury
Department to the American Theatre Wing for the
entertainment of service men on May 31. I attended
the dance on the South Portico and felt that the
affair WELD an outstanding success.
It is my understanding that this location will
be used on Saturday evenings throughout the summer,
and I hope that you will find it possible to attend
on some future occasion.
Sincerely yours,
(Signed) BY Morgenthau, Jr.
Secretary of the Treasury.
Mrs. Antoinette Perry,
Chairman of the Board,
American Theatre wing,
730 Fifth Avenue,
New York 19, New York.
CSB:em
6-2-44
Regraded Unclassified
Bee
AMERICAN THEATRE WING
WAR SERVICE, Inc.
STAGE, RADIO, SCREEN, VAUDEVILLE, MUSIC AND ALL THE ALLIED CRAFTS
730 FIFTH AVENUE
BOARD OF DIRECTORS
NEW YORK 19, N. Y.
RACHEL CROTHERS, President
COLUMBUS 5-6638
ANTOINETTE PERRY,
Chairman of Board and Secretary
GERTRUDE LAWRENCE, First Vice-Presidens
HELEN HAYES, Second Vice-President
May 28, 1944
VERA ALLEN, Third Vice-President
Mas. MARTIN Beck, Treasurer
JOSEPHINE HULL, Honorary Treasurer
Hon. Henry J. Morganthau, Jr.
BROOKS ATKINSON
Secretary - The Treasury
KERMIT BLOOMGARDEN
HARRY N. BRANDT
Washington, D.C.
ILKA CHASE
JANE Cowl
My dear Mr. Morganthau:
MORTON DOWNEY
PAUL DULLZELL
The American Theatre Wing War Ser-
VINTON FREEDLEY
vice, Inc. 18 delighted at your in-
JOHN GOLDEN
MARCUS HEIMAN
vitation to the Washington Canteen
GEORGE HELLER
to transfer its activity on the night
EMILY HOLT
of Wednesday, May 31st from your beauti-
VINCENT JACOBI
ful Belasco Theatre to your Treasury
ABB LASTPOGEL
grounds.
ALFRED LUNT
BERT LYTELL
FRED MARSHALL
It sounds like an ideal plan for the
HELEN MENKEN
boys and we are deeply appreciative
GILBERT MILLER
of your invitation.
WARREN P. MUNSELL
BROCK PEMBERTON
Our gratitude to you.
SOLLY PERNICK
JAMES C. PSTRILLO
JAMES F. REILLY
Sincerely,
ARTHUR RICHMAN
JACOB ROSENBERG
automette Prry
J. ROBERT RUBIN
Antoinette Perry
JAMES E. SAUTER
Chairman of the Board
OLIVER M. SAYLER
MORRIE R. SEAMON
Las SHUBERT
NILES TRAMMELL
AP:mh
RICHARD F. WALSH
DWIGHT DEERE WIMAN
BLANCHE WITHERSPOON
SIDNEY R. FLEISHER,
Counsel
Regraded Unclassified
78
SURPLUS WAR PROPERTY NEWSLETTER
A Private Weekly Washington Information Service on
Disposal of U.S. Surplus War Goods and Properties
Telephone
NATIONAL
2444
VINCENT F. CALLAHAN, Editor
1701 H STREET, N.WWASHINGTON6,D.
Letter No. 4, Washington, D. C., June 3, 1944.
Dear Sir:
Surplus war property is not Government's responsibility alone.
Government expects American business to join with it in solving the
problem.
The surplus picture is viewed in the same light as the war produc-
tion job. Half a dozen key men in the big enterprise of disposal made
this clear and strong before the National Association of Purchasing
Agents in New York this week - Government cannot handle the task alone,
must have the help of business.
These men told the purchasing agents how they could aid in dispos-
ing of surplus: Col.D.N.Hauseman, Director Readjustment Div., Army
Service Forces; Col.C.R.Baxter, Redistribution Branch, WPB; Lt.Col.J.P.
Woodlock, Executive Officer, Surplus War Property Admin.; Hans A. Klags-
brunn, Deputy Director of Surplus, RFS; Clifton E.Mack, Director Pro-
curement, Procurement Division, Treasury Department.
Here are highlights of the information provided:
Disposal methods and operations must be developed in complete con-
'cert with all existing Government controls. If an item is under an OPA
ceiling it cannot be disposed of at a higher price. Eligible suppliers
are put in touch with disposal regional offices having jurisdiction
over the property. (See NEWSLETTER No. 2)
Government has enough war plants on hand to cover more than the
area of New England. During the first quarter of 1944 the War Depart-
ment redistributed, transferred and sold $98,500,000 worth of excess and
surplus property. Twenty-two thousand contracts already have been term-
inated. Termination inventories will be circularized. Disposal boards
will be set up in all Army districts.
The 75-per-cent-price formula for sales of surplus (which means
that sales may be made at 75 per cent of the original cost or at 75 per
cent of the market price, whichever is lower) was deliberately set at a
conservative level to discourage speculators.
Copyright 1944, Vincent F. Callahan, Washington, D.C.
Regraded Unclassified
Four fundamental considerations actuate pricing policies: Impor-
tance of quickly clearing plants for resumption of war or civilian
production; prompt settlement of claims; making available now materials
and equipment that can be funnelled into other necessary production;
converting of surpluses for which there is a ready demand into produc-
tion, so they cannot accumulate and clog vital storage facilities, only
to flood the market later.
Except for war contract termination inventories and salvage, the
War Department is steping out of the sales business. Treasury Procure-
ment will dispose of most Army surplus.
WPB ACTS AS A SURPLUS BROKER
WPB's 13 regional offices currently are moving some 30,000 tons of
surplus steel and large quantities of other materials weekly.
This is being done under arrangement with SWPA and according to
SWPA's recently established price policies. The property is in the
hands of the armed services, left over from terminated contracts. The
regional offices work with the agencies of the services to find buyers
permitted under WPB regulations to purchase surplus material. WPB has
undertaken to do an active selling job as a broker on all significant
disposable items involved in claim settlements.
Each regional office has on file lists of property available in its
territory. These surpluses include raw materials, semi-finished goods,
and scrap--steel, copper, aluminum, chemicals, textiles, lumber. Pur-
chased parts and supplies also are listed.
An important purpose emphasized by SWPA Administrator Clayton is
the necessity for clearing left-over materials out of plants so that
other war production or essential civilian production may go forward
without interruption.
NEWSLETTER already has given you the 38 regional offices of dis-
posal agencies. Roster of the 13 WPB agencies:
Region I, Boston 8, Mass. -- W. H. Wheeler, Jr., regional director, 17
Court St., Boston. Telephone Lafayette
7500.
Region II, New York 1, N.Y. -- Lewis S. Greenleaf, Jr., regional direc-
tor, Empire State Bldg. Murray Hill
3-6800.
Region III, Philadelphia 3, Pa. -- Orville H. Bullitt, regional direc-
tor, 1617 Pennsylvania Blvd., Locust
3400.
Region IV, Atlanta 1, Ga. --
Harry G. Thornton, regional director, 116
Candler Bldg., P.O. Box 1322. Walnut 4121.
Region V, Cleveland 1, 0. --
John C. Virden, regional director, 1300
Union Commerce Bldg. Cherry 7900.
Region VI, Chicago 6, Ill. -- John Nuveen, Jr., regional director, 226
W. Jackson Blvd. Andover 3600.
Regraded Unclassified
79
Region VII, Kansas City 6, Mo. - William B. Satterlee, regional di-
rector, Mutual Interstate Bldg.
Riverside 5711.
Region IX, Denver 2, Colo. -- Virgil L. Board, regional director, Conti-
nental 0il Bldg. TA 3173.
Region X, San Francisco 3, Calif. -- James A. Folger, regional director,
1355 Market St. Klondike 2-2300.
Region XI, Detroit 2, Mich. -- Carsten Tiedeman, regional Director, 800
Boulevard Bldg. Trinity 2-4900.
Region XII, Minneapolis 1, Minn. -- David J. Winton, regional director,
326 Midland Bank Bldg. Main 3244.
Region XIII, Seattle, Wash. -- Kenneth B. Colman, regional director,
White-Henry-Stuart Bldg. Elliott 0200.
Puerto Rico -- Gordon W. Foote, Chief, Territorial Possessions, Bldg.
B, Stop 8, San Juan. Telephone 46.
Honolulu -- Fred R. Kingman, Acting Manager, Hawaii Office, Iolani Pal-
ace. 4951.
Canada -- William J. Zepp, Chief of Ottawa Branch, Tempo "3" Bldg.
2-2811.
SWPA REPORTS TO CONGRESS ON LEGISLATION
Will L. Clayton, Surplus War Property Administrator, has just sent
to Congress this week suggestions on legislation.
Action in the shape of legislative regulation of disposal may be
expected almost any time now. It will take form in the War Contracts
Sub-committee of the Senate Military Affairs Committee, Senator Murray,
Chairman. It was to this committee Clayton's proposals were dispatched.
BUSINESS ACTIVE FACTOR
Business, industry are taking an increasing interest in distribu-
tion of surplus.
Aviation, drug, food, machinery, real estate groups, among others,
have men in Washington following the changing picture. Government wel-
comes recommendations. It is turning to men and companies in the vari-
ous fields for counsel on prices, advice on markets, for the loan of
experts to assist with the huge job.
Indicative was action taken to encourage sale of surplus motors in
foreign markets, reported this week by the War Production Board.
The recommendations were made by the Integral Horsepower Electric
Motor Manufacturing Industry Advisory Committee at a recent Washington
meeting. Members pointed out that if foreign users of motors are aware
they can obtain equipment in this country, sales to them will increase,
and there will be a lessening of the surplus which might be thrown on
the U.S. market after the war.
Private industry is taking a hand, too. Beech Aircraft Corporation
has established a subsidiary for the sole purpose of redistributing
surplus materials. This unit's services are at the disposal of other
war contractors.
Regraded Unclassified
REAL ESTATE TO THE FORE
Real estate running into many millions will become surplus; some of
it already is in that category. Early action is to be looked for in
this field.
Step has just been taken by Administrator Clayton of SWPA in the
appointment of Col.M.J.O'Byrne of Cincinnati, to head the activities of
the organization in disposal of land.
O'Byrne's first function will be to assist in the study of the
problems undertaken by SWPA. Clayton was told to survey the situation,
make suggestions. O'Byrne, with more than 20 years' experience in ap-
praising, buying, selling real estate is qualified to advise in forma-
tion of SWPA real estate policy. Recently he has been on activeduty
as real estate officer for the War Department on the Pacific Coast.
Maj.Gen.L.D.Clay, Director of Materiel, Army Services, told the
House Military Affairs Committee that the War Department leaned toward
disposal of land in small lots. He pointed out that some broad legisla-
tion was needed before selling could proceed.
"IN" FOR SMALL BUSINESS
Look for a quick, intelligent report and recommendations from Maury
Maverick, who is at work in his new post as chairman of a committee to
give small business an opportunity to participate in disposal of
surplus.
New plan gives small business a close working relationship with the
disposal agencies functioning under SWPA. One of the guiding principles
of that agency is to see that surpluses are offered in lots of such pro-
portions as to enable business of all kinds, small as well as large, to
have part in marketing unneeded war goods.
RECOMMENDED FOR READING - "The Coming Fire Sale," by Herbert Brat-
ter, in the June issue of Nation's Business, just out. This is a round-
up article on steps taken by Government to handle war surplus.
SEND US YOUR QUESTIONS
What do YOU want to know about surplus war property?
Aim of NEWSLETTER is to give the best service possible. Many
queries have been received and answers are being sought, if they are to
be had. We want to round up all subjects that should be covered.
Let's hear what's on your mind.
Cordially,
Vincent 7.Callahan 7. Callahan
Editor.
ISSUED EACH WEEK FROM WASHINGTON AT $75 A YEAR OR AT $40 FOR SIX MONTHS
THIS NEWSLETTER IS WRITTEN PRIVATELY FOR SUBSCRIBERS ONLY AND HAS NO CONNECTION
WITH THE SURPLUS WAR PROPERTY ADMINISTRATION OF THE U.S. GOVERNMENT. IT MAY
NOT BE COPIED IN WHOLE OR IN PART, NOR BE REDISTRIBUTED IN ANY MANNER OR FORM.
Regraded Unclassified
80
June 3, 1944
My dear Mr. President:
Reference is made to the International Monetary
Conference to be conducted at Bretton Woods, New Hampshire,
beginning July 1, 1944.
In connection with such conference, you are advised
that certain proliminary activities will make it necessary
that a pre-conference of Government officials be held
prior to July 1.
It is estimated that approximately $12,000 will be
required to defray the expenses of these Government
officials for travel and per diem for the pre-conference.
To provide for such expenses, an allotment to the State
Department in the smount of 12,000 from the Emergency
Fund for the President is respectfully requested. It
will be appreciated if the funds for this purpose are
made available immodiately.
Faithfully yours,
(Signed) X. Morgenthan, JJ
Secretary of the Treasury
Secretary of State
The President,
The White House.
OHJ:CSB:en
6-3-44
Regraded Unclassified
UNITED KINGDOM TREASURY DELEGATION
BOX 680
BENJAMIN FRANKLIN STATION
WASHINGTON, D.C.
TELEPHONE EXECUTIVE 2020
REFERENCE:
4-A
3rd June 1944
Dear Dr. White:
I write to inform you that the
figures for our gold and dollar holdings
in million dollars as at April 30th, 1944
are as follows:
Gold
1,273
Less gold liabilities
316
Net gold
957
Official dollar balances 749
Less dollar liabilities 186
Net dollars
563
Net gold and dollars
1,520
Yours sincerely,
R.H.
R.H. Brand.
Dr. H.D. White,
Assistant to the Secretary,
United States Treasury,
Washington, D. C.
82
6/7/44
C. Original to Mr. Bell
Photostat to Mr. Pehle
Regraded I Inclassified
83
Cable from Jacobs, American Embassy,
airo, for Mr. Acheson and Mr. Crowley on
Saudi Arabian matters.
Mr. Jacobs asked that copy be given
to the President and Secretary Morgenthau.
This is Secretary Morgenthau's copy.
Dau Bue
Pelice
EPARTMENT
INCOMING
DIVISION OF
OF
COMMUNICATIONS
STATE
TELEGRAM
AND RECORDS
Secret
AMT-176
Cairo
This telegram must bE
paraphrased before being
Dated June 3, 1944
communicated to anyone
CONFIDENTIAL
For security reasons the
be text of this message must
other than a Government
Rec'd 4:20 p.m.
Agency. (SECRET-O)
closely guarded.
Secretary of State,
DEPARTMENT OF STATE
Washington.
JUN 6 1944
DIVISION OF
U.S. URGENT
COMMUNICATIONS & RECORDS
1503, June 3, 11 a.m., (SECTION ONE)
3 TO ACHESON AND CROWLEY. PERSONAL AND CONFIDENTIAL
FOR LANDIS
Subject Saudi Arabian matters.
OnE. After long negotiations WE have reached a
considerable measure of agreement. WE have an agreed
supply program conditional upon acceptance of our
proposals.
Two. WE are not agreed on the 1944 budget.
Our difference here is ten million riyals. In reaching
this figure WE have receded from a better than twenty
million riyal figure in an effort to meet the British.
The issue involved is the Extent to which TE will force
Saudi Arabic to curtail her present program of the
free distribution of goods. The British proposal forces
a 50% reduction. This T/E believe too much and VE think
it endangers amicable relationships that exist with
Saudi Arabs. WE are thus adamant on this point
although
Regraded Unclassified
85
-2- #1503, June 3, 11 a.m., (SECTION ONE) from Cairo.
although WE have been agreeable to other Economies.
Three. British have communicated our proposal to
London in a sympathetic manner.
Four. Our proposal leaves a budgetary deficit
after the goods subsidy of about ten million riyals.
This would have to bE made up by Lend-Lease in riyals.
Five. British here, I believe, would accept our
proposal because of its intrinsic merit EXCEPT for the
fact that it forces Cairo to let Jordan, British
Minister to Jidda, down and they would prefer to have
London do it and British Treasury heretofore has been
adamant against introduction of more LEnd-Lease riyals
into Saudi Arabia on allegedly fi(*)n our judgment
have to merit and WE believe they screen political
reasons.
Six. Our proposal cuts over-all subsidy British
and American last year from about 80 to 60 million riyals.
Of the latter subsidy some 35 millions has already been
granted; our share in that has been negligible.
SEVEN. You will bE interested to know that
British Treasury has determined that all subsidies
granted or to bE granted to Saudi Arabia are clear gifts.
This has not yet been communicated to Saudia Arabs.
Eight. Our budgetary proposal is sensible in
light
Regraded Unclassified
86
-3- #1503, June 3, 11 a.m., (SECTION ONE) from Cairo.
light of potentially increasing revenues to Saudi
..rabia. WE can balance her budget when oil production
reaches 250,000 barrels per day. It, will reach
100,000 next September and the pips line would easily
bring it over 350,000 mark.
JACOBS
JT
LIIS
(*) Apparent omission.
Regraded Unclassified
DEPARTMENT
INCOMING
DIVISION OF 87
OF
COMMUNICATIONS
STATE
TELEGRAM
AND RECORDS
Secret
NMC-40
Cairo
This telegram must bE
paraphrased before being
Dated June 3, 1944
communicated to anyone
other than a Government
Rec'd 6 p.m.
agency. (SECRET-0)
CONFIDENTIAL
For text security reasons the
be of this message must
closely guarded.
Secretary of State,
Washington.
US URGENT
1503, June 3, 11 a.m., (SECTION TWO)
Nine. WE have not discussed provision of advistra
to Saudi Arabian Government but it has been agreed in
the interim that no DEW projects for aid to Saudi
Árabia will bE started independently,
Ten. WE have not Communicated with Saudi Araba
during course of negotiations. They are aware that
WE have been struggling for a fair budget as against
the fearful Economies proposed by Jordan.
There are reasons other than politionl for not
communicating as in paragraph ten which cannot be
disclosed EXCEPT personally.
Twelve. British and ourselves are completely
agreed that WE should present n common program to
Saudi Arabs and adhere honestly to the concept of
joint action. I do not believe WE can do otherwise.
Neither as a nation nor institutionally are WE equip-
ped to handle this issue alone and in competition
with the
Regraded-Unclassified
88
-2-1503, June 3, 11 a.m., (SECTION TWO) from Cairo
with the British. To are not far advanced in our
overall forsign policy nor have WE the resources out
here successfully to carry through such a program.
Thirteen. There will bE left over provided WE
BEt agreement from London (a) mechanics for fifty
fifty division of subsidy (b) general instructions
to our respective Ministers (c) currency reform
(d) nature of advisory help to be rendered Saudi
Arabian Government. These matters cannot b.E settled
here. I propost therefore pursuant to authority
granted in Department's 1158 May 16, 1944 to proceed
to Washington on this and many other Middle East
matters as soon as word from London has been received.
WE have a change now to do an overall concrete job
for Saudi Arabia involving concrete Anglo-American
cooperation and WE should not let that chance Inpse.
If WE can SUCCEED in this case the pattern and the
spirit of this cooperative affort may well apply to
other countries of the Middle Enst and result in
the formulation of a concrete and clear American policy
for the Middle East. Saudi Arabia presents the best
test CASE for concrete cooperation with British in
all the Middle East and WE should succeed in making
it work here.
Fourteen.
Regraded Unclassified
89
-3- 1503, June 3, 11 c.m., (SECTION TWO) from Cairo
Fourteen. I am Informing British of my intention
to proceed to Washington and the objectives of my visit.
Fifteen. Among the Middle East matters I wish
to discuss are my relationships with the Department
my responsibility with reference to the Balkans a
series of problems that have the commodity index as
their focus the area of importers choice relaxation
of import restrictions policy regarding the disposi-
tion of salvage and installations and others.
Sixteen. MOOSE has sighted this telegram it
also represents his views.
Seventeen. Please pass copy of this cable to
the President and the Secretary of the Treasury.
Sent Department as no. 1503.
Repeated to Winant personal in London as 80.
(END OF MESSAGE)
J.COBS
HTM
Regraded Unclassified
90
Report of War Refugee Board
for Weak of May 29 - June 3, 1944
TEMPORARY havens FOR REFUGEES IN THE UNITED STATES
For some time now we have been exploring the possibility of
establishing in this country temporary havens for European
war refugees. On several occasions Secretary Morgenthau
and the Executive Director have met with the President to
discuss the matter. The President has indicated that he is
deeply interested in the development of such a measure, and
we are now working out the details of such a program.
Since early April, when the matter of "free ports" for refu-
gees was first publicly proposed by newspaper columist
Samuel Grafton, there have been numerous indications that
the establishment of such havens wouls meet with a favorable
public response. Resolutions or statements in support of
temporary havens have been adopted by the American Friends'
Service Committee, the National Committee Against Persecution
of the Jews, the American Federation of Labor, the Congress
of Industrial Organizations, the National Farmers' Union,
the International Labor Office and the Convention of the
Diocese of Washington of the Protestant Episoopal Church,
among others. An urgent appeal signed by former Governor
Alfred E. Smith of New York and 8. committee of 72 other
leading Americans has been addressed to President Roosevelt
and to the governments of all the United Nations. This
appeal, which was signed by the Governors of 18 States as
well as by members of Congress, educators, clergymen, business-
men, labor leaders, and authors, declared temporary havens
for refugees in this country to be a "moral obligation." In
addition, we have received letters from some 250 individuals
warmly supporting the proposed havens.
The prompt transfer of refugees from such "gateway" countries
as Italy, Turkey, and Spain, with their limited facilities,
to temporary havens elsewhere will not only pave the way
for the escape from enemy territory of additional thousands
of intended victims of the Nazi executioners; it will also
demonstrate to the Germans, and to the world at large, that
the policies and recommendations of this Government are being
implemented by equally bold and concrete action.
EVACUATIONS TO AND THROUGH ITALY
Current military developments have increased the importance
of the potential escape route not only of refugees from
Regraded Unclassified
91
- 2 -
Yugoslavia itself, but of refugees from the other Balkan
countries and from Hungary through Yugoslav territory. The
desnerate plight of the Jews in Hungary and indiscriminate
slaughtering by the Germans in the Balkans have made the
expansion of this route all the more urgent.
Because of the limited facilities in southern Italy, however,
Allied Vilitary Forces have not been able, generally speaking,
to encourage the escape of such refugees across the Adriatic
to Italy. According to information reaching us, refugees
have been arriving in Italy from Yugoslavia through their
own efforts at the rate of some 1300 per week, and the pro-
blem of caring for such refugees has considerably burdened
military authorities. In fact, we were advised that the
facilities for the care of refugees in southern Italy became
so overtaxed that the military authorities had decided to
take steps to actually discourage the escape of further
refugees to that area. We immediately discussed the matter
with the Army, 'T'RRA, FEA and the President. The President
indicated that under no circumstances should the entry of
refugees into Italy be discouraged. Accordingly, appro-
priate instructions were sent to the military authorities
in North Africa. In addition, the Board arranged for $50,000
to be sent to the Yugoslav Partisan Relief Committee in
Bari for the specific purpose of facilitating the flow of
refugees through Yugoslavia to Italy.
Temporary Havens for Refugees escaping through Italy
Since the crux of this matter is finding suitable places
to which these people can be removed so that the flow of
refugees need not in any way be discouraged or impeded, we
are vigorously exploring a number of possibilities in
addition to the temporary refuge. to be afforded & divited
number of refugees in the United States.
As many as possible of these refugees will be moved to
camps in the Middle East. Toward this end, the United Nations
Relief and Rehabilitation Administration is making every
effort to supply sufficient medical and other personnel.
The President has suggested the possibility that some
of these refugees might be taken to Sicily. Cyprus was
suggested by the President as another possible haven.
Accordingly, we have asked Robert Murphy and Board Repre-
sentative Ackermann in Algiers to explore these oossibilities
carefully. Murphy and Ackermann have also been asked to
investigate the possibility of a substantial expansion of
refugee facilities on the Italian mainland.
Regraded Unclassified
92
- 3 -
While we do not consider it desirable to bring refugees
from Italy to Camp Lyautey at Fedhala since all of the
accomodations of that camp are to be made available for
refugees being evacuated through Spain, the possibility of
establishing other centers in French North Africa for refu-
gees from Italy is under consideration. Murphy's recommen-
dations on this score have likewise been solicited.
Insofar as Jewish refugees are concerned, we hope to
move as many as possible to Palestine without delay. In
this connection, in the case of Turkey the British have
adopted the policy that all Jews escaping into Turkey from
the Balkan countries will be permitted, after a preliminary
security check, to go to Palestine. Once in Palestine,
these people are placed in camps, where another security
check is made by the British. If found satisfactory, they
are gradually released as legal immigrants to Palestine
against the current half-yearly immigration quota.
Since the application of a similar policy in the case
of Jews now in southern Italy would make possible the prompt
removal of such refugees to Palestine, we have asked Ambassa-
dor Winant in London to ascertain at the earliest possible
moment whether the British Government will cooperate by
granting Palestine certificates to Jewish refugees reaching
Italy and by facilitating their prompt removal to Palestine.
For some time we have been pressing the British to
cooperate with us in the joint establishment of temporary
havens in Cyrenaica and Tripolitania. This proposal first
arose in the course of the Bermida Conference in April of
1943. Upon our recommendation, the British have repeatedly
been approached over the past few months on this score, but
without any results. to date.
Board Representative for Italy Named
Permission has been granted by the Supreme Allied Com-
mander of the Mediterranean Theatre for the appointment,
for territories adjacent to Italy, of a Special Representa-
tive to be attached to ACC Headquarters. In view of the
importance of having an accredited Board Representative
authorized to act in Italy, we are advising the Var Depart-
ment that we propose to authorize Leonard Ackermann, our
Special Representative for the Mediterranean Area, to serve
in this capacity.
Unclassified
93
- 4 -
RELATIONS WITH GREAT BRITAIN
While assurances of "warmest support and sympathy" have not
been lacking, we have received little active cooperation
to date from the British in connection with refugee rescue
and relief. The failure of the Foreign Office to respond to
our proposal that havens of refuge be set up on a coopera-
tive basis in Cyrenaica and Tripolitania is a case in point.
The "linistry of Economic Warfare has continued to voice con-
cern over our licensing of rescue and relief operations,
particularly International Red Cross purchases, in enemy
territories. In response to our proposal that Palestine
immigration certificates be authorized for certain child
refugees reaching Switzerland from France so as to permit
them to enter Palestine within the total allowed under the
White Paper, the Foreign Office in effect declined on the
grounds that, in the absence of any direct representations
on the part of the Swiss Government to either the British
or the Intergovernmental Committee and in the absence of
any permission from Vichy to the Swiss with respect to exit
permits, our proposal was "entirely hypothetical."
There is, of course, in the British Government no really
comparable agency whose function it would be to cooperate
with us in concrete measures. While the absence of a com-
parable agency does not necessarily preclude active coopera-
tion any more than the establishment of such an agency would
automatically guarantee it, our experience with the British
to date suggests that this absence of even the framework
for cooperative action has been a real stumbling block.
SITUATION IN HUNGARY
Tinister Johnson has advised us from Stockholm that German
authorities are reliably reported to have evacuated all Jews
from the southern and northern frontiers of Hungary and to
have concentrated them in ghettos in various communities.
An urgent memorandum outlining suggested methods of rescuing
Hungarian Jews from annihilation has been addressed to us
by the American Chapter of the Religious Emergency Council
of the Chief Rabbi of Great Britain. This memorandum points
to a recent report appearing in the New York Times from the
Times correspondent in Istanbul, confirming previous advices
as to the intentions of the Hungarian regime and its Nazi
cohorts. "Baths" or gas chambers are reportedly being pre-
pared to slaughter not only the Jews of Hungary but also large
numbers of refugees of the Jewish faith from Poland and other
Nazi-held lands who have found asylum within Hungary's borders.
Regraded Unclassified
94
- 5 -
Because of the limitations of underground channels, it was
urged that Turkey be approached with a view to her permitting
the entry of all genuine refugees, to be housed there in
temporary camps, if necessary, under supervision of the
United Nations Relief and Rehabilitation Administration.
The memorandum also urged that the Apostolic Delegate in
Washington be approached with a view to enlisting the aid
and cooperation of the Vatican in certain specific rescue
operations. It was suggested that, as a result of Vatican
pressure, the authorities in Budapest might be influenced to
permit a gradual exodus of Jews.
According to a report from Minister Harrison in Bern, Hun-
garian authorities are reportedly considering a memorandum
said to have been prepared and submitted by Jewish leaders,
proposing that Jews in Hungary be exchanged against Hungarian
prisoners of war in Russian hands and against Hungarians
residing in overseas countries. This proposal allegedly
involves the creation of a mixed commission, including
representatives of the Hungarian Government, the Jewish
Agency in Hungary, and the International Red Cross, which
would be requested to aid in the exchange.
In a cable to Ankara we have asked Ambassador Steinhardt to
consider the advisability of directly or indirectly approach-
ing the Hungarian mission there, or other personalities in
Turkey, along the lines of Ira Hirschmann's talks with
the Rumanian Foreign Minister, as a result of which the
Rumanian Government agreed to facilitate the emigration of
Rumanian Jews.
Assistance from the Vatican Requested
In a cable from this Government to the Cardinal Secre-
tary of State, we have called to the attention of the Holy
See the recurrent reports that present authorities in Hun-
gary are planning to slaughter the 800,000 Jews in that
country. We have indicated that while this Government has
warned the authorities and the people of Hungary of the
material consequences that will follow the perpetration of
such inhumane acts, we believe it to be both timely and
fitting that they also be reminded of the moral values in-
volved and of the spiritual consequences that must flow
from indulgence in the persecution and mass murder of help-
less men, women and children. In view of the great numbers
of persons in Hungary professing adherence to the Roman
Catholic Church, we have suggested that the Holy See may
find it appropriate to express itself on this subject, by
Regraded Unclassified
95
- 6 -
radio and through the Nuncio and clergy in Hungary, as well
as through a representative of the Holy See to be despatched
to Hungary for that particular purpose.
Warnings Shortwaved to Hungary
In a stirring statement by members of the Senate Foreign
Relations Committee, shortwaved to Hungary by the Office of
War Information, the people of Hungary have been asked to
use every means possible to protect the lives of their
fellow citizens of the Jewish faith. Hungarians were asked
to make note of authorities aiding the Nazi executioners
as well as of those authorities who extend mercy, until such
time as the guilty and the innocent can be adjudged.
According to a report from the U. S. Embassy in London,
the British Broadcasting Company has now, in response to our
request, broadcast warnings to the Hungarian Government
against the continued deportation and persecution of Jews.
EVACUATIONS TO AND THROUGH TURKEY
Word has reached us from Jerusalem of the safe arrival in
Haifa of the group of 317 refugees who reached Turkey recently
on the "S.S. Maritsa." Included in this group were a few
Jews who escaped from Hungary early in May and who were able
to forward to us the names of certain Hungarian officials
actively associated with the Germans in the Jewish persecu-
tions.
"Maritsa" Reported to have Sunk
Ambassador Steinhardt subsequently advised us of the
receipt of an unconfirmed report that the "Maritza" foundered
at sea while en route to Constansa on her return to Istanbul
after disembarking her load of refugees. "In view of the
recognized unseaworthiness of the 'Maritsa,' "Steinhardt
cabled, "we must regard it as an act of Providence that the
ship did not sink while carrying refugees en route to Istan-
bul."
Negotiations re the "Bardaland."
We have been advised by Minister Johnson and Board
Representative Olsen that the Swedish Foreign Office has
continued to be extremely cooperative in response to our
request that the "S.S. Bardaland" be chartered for evacus-
tion operations in the Black Sea. The Swedish Minister in
Berlin has now been instructed to ask the Germans for per-
mission to divert the vessel and to grant it safe-conduct,
Regraded Unclassified
96
- 7 -
and the Swedish Red Cross has agreed to act as charter
party on our behalf. Reassurances have been obtained from
Regraded Unclassified
the master of the "Bardaland" to the effect that the vessel
is sufficiently seaworthy to make the voyages proposed.
After the proposed refitting in Istanbul to provide sanitary
accommodations and lifesaving and kitchen equipment, it is
estimated that the vessel will be able to accommodate be-
tween 400 and 500 persons.
In a cable to Ankara we have asked Ambassador Steinhardt
to make all arrangements for the selection of refugees for
embarkation, for their exit permits, and for assembling
them at the port of embarkation, as soon as the likelihood
of the "Bardaland's" sailing for Constansa becomes more
concrete.
"Tari" Negotiations Continue
Minister Harrison has reported from Bern that in the
course of his discussions with the Swiss Foreign Office he
was advised that the Swedish Government had supported the
International Red Cross request for German safe-conduct
of the "S.S. Tari," but that its request had "not been
productive nor had the German Government received it well."
Ambassador Steinhardt has advised us from Ankara that,
despite the fact that the Director General of the State
Steamship Lines has been pressing him on the matter for
some time, to date be has been able to avoid signing the
charter party for the "Tari" and thereby incurring a daily
penalty for its idleness pending advice as to whether or
not German safe-conduct is to be granted. Inasmuch as the
matter has now been referred to the Turkish Foreign Minister,
Steinhardt reported that be had explained to the latter the
various reasons for his failure to sign the charter party
thus far and had also asked about the prospects for & Ger-
man safe-conduct. The Foreign Minister replied that although
he had made four requests of German Minister von Papen for
a safe-conduct for the "Tari," he was now convinced that
it would not be forthcoming, particularly in view of the
current severe strain on political relations between Turkey
and Germany.
Steinhardt then proposed that the "Tari" be allowed to
sail for a Bulgarian port without a German safe-conduct for
the purpose of bringing refugees to Istanbul, where they
might remain on board the vessel pending their gradual
transportation to Palestine. The Foreign Minister replied
that Steinhardt's proposal would be taken under consideration
if he could secure a Bulgarian safe-conduct and permission for
the "Tari" to enter a Bulgarian port. Steinhardt reported
97
- 8 -
that he has therefore asked the International Red Cross
representative in Ankara to press the Bulgarian Minister
Regraded Unclassified
for such a safe-conduct and for port-entry permission.
Although Steinhardt anticipates that the reply on these
two points may be delayed as a result of the recent resigna-
tion of the Bulgarian Cabinet, the reply is expected to be
favorable unless Bulgaria's two Black Sea ports are under
complete German control.
Steinhardt also advised us that the Turkish Foreign
Minister clearly implied in the course of their discussion
that even though a contract has not yet formally been signed,
he considers the "Tari" to be under charter to the Board.
Eventual difficulties in determining the amount to be paid
are therefore anticipated. In this connection, Steinhardt
asked that we indicate to him the maximum obligation we are
prepared to incur for the "Tari," whether or not the vessel
is ultimately available.
In response to Steinhardt's request, we are indicating
that we are anxious to retain the right to use the "Tari"
as long as there is any reasonable hope that it may ulti-
mately be permitted to sail. Steinhardt is being authorized
to use certain funds previously transmitted to hold the
"Tari," if necessary.
The reportedly sympathetic attitude of the Bulgarian
Minister in Stockholm is also being relayed to Steinhardt
for his confidential information, in case Steinhardt should
find it desirable to enlist the support of the Bulgarian
Minister there in connection with this or any other project
requiring the dooperation of the Bulgarian Government.
Re-Chartering the Adana Shipe
We have been advised by the State Department that the
British are requesting this Government's views concerning
appropriate conditions to be proposed to the Turkish Govern-
ment in consideration for the renewal of the charters of
five British cargo vessels now in Turkish service and known
as the Adana ships. These vessels are said to have been
chartered to Turkey originally for the on-shipment of mili-
tary supplies from Egyptian ports to Turkey, but the stoppage
of military shipments to Turkey has nullified the purpose
for which the ships were originally chartered.
We have recommended to the State Department that, as one
condition to the re-charter of the Adana ships, the Turkish
98
- 9 -
Government be required to make available either the "Tari"
Regraded Unclassified
or a similar vessel for repeated refugee evacuation voyages
across the Black Sea to a Turkish Black Sea port -- with
German safe-conduct, if possible -- whenever in the opinion
of the British and American Ambassadors to Turkey such
voyages become feasible. The re-charter of the Adana ships
would constitute fulfillment of any Turkish demand that &
substitute passenger vessel be made available to the Turks
while the "Tari" is engaged in refugee evacuation operations.
As another condition to the re-chartering of the ships,
we have proposed that the Turkish Government agree to cooper-
ate with Ambassador Steinhardt and with the British Ambassa-
dor to Turkey in making arrangements for additional evacua-
tion operations across the Black Sea, without German safe-
conduct to be carried on by small boats such as the "Maritza,"
the "Milka" and the "Bellacitta," carrying relatively small
numbers of passengers. We would, of course, agree to arrange
for the payment of a reasonable charter-hire for the use of
any such Turkish vessels made available, and to assume
responsibility for the maintenance and support of refugees
in transit or awaiting transportation in Turkey.
Because of the necessity of using for military purposes
all passenger ships available to us, we are also recommending
that if the Turkish Government insists upon a guarantee of
replacement in kind in the case of loss of any Turkish vessel
made available in the future for evacuation operations, con-
sideration should be given to using the re-chartering of the
Adana ships as a basis for requesting the Turkish Government
to waive such a guarantee in the future, unless the Turks are
willing to make a similar guarantee to replace any of the
Adana ships that may be lost.
In a cable to Ambassador Steinhardt in Ankara we have
outlined this situation in detail, We have indicated for
Steinhardt's guidance, however, that if the giving of a
guarantee in kind appears absolutely necessary in order to
obtain the use of Turkish vessels, we will seriously consider
giving such a guarantee in connection with future voyages
of the "Tari" or any other Turkish vessel, because of the
urgent humanitarian considerations involved. Steinhardt has
also been advised that our original guarantee to replace the
"Tari" in the event of loss on its first voyage still stands;
the conditions we now propose refer to subsequent voyages
of the "Tari" and any other Turkish vessels made available
for evacuation purposes.
99
- 10 -
SITUATION OF THE JEWS IN GREECE
According to a memorandum from a Legal Advisor of the Greek
Foreign Office transmitted by our Embassy at Cairo, approx-
imately 60,000 Jews were involved in the German deportations
to Poland last year from Greece. "There are serious reasons,"
the memorandum continued, "to fear that most of those who
were shifted to Poland in sealed railway trucks (horse
carriages) were exterminated when they ultimately reached
their destination." Following the collapse of Italian
administration in Greece in the fall of 1943, when the
Germans began to enforce further anti-Jewish measures, most
of Athens' 8,000 Jews are said to have found refuge in Christian
homes, where many of them are still hidden. It was estimated
that 20,000 to 25,000 Jews still remain in Greece.
Because of recent German orders threatening death to any
Christians caught aiding Jews and offering informers fifty
percent of the property belonging to any Jew exposed to the
Gestapo, it has become increasingly difficult for the in-
poverished Jews of Greece to remain in hiding, according to
this memorandum. The sending of funds as soon as possible,
and the wide distribution of such funds, were urged as
measures of more immediate importance than any expansion of
the routes of escape by sea.
Minister Norweb has indicated to us that the matter of Sephar-
die Jews in Greece claiming Portuguese nationality, to whom
we have urged that Portugal extend recognition and protection,
has been referred by the Portuguese Government to its repre-
sentative in Athens "for attention."
A report from Ambassador Steinhardt in this connection stated
that the Turks have not, to his knowledge, refused admission
to any Jewish refugees arriving in Turkey from Greek Islands
or from Greece itself, without visas. It was stated that,
on the contrary, thus far Turkish authorities have promptly
provided transportation from Ismir to Palestine for those
refugees who have reached Turkish soil.
EVACUATIONS TO AND THROUGH SPAIN
In the absence of any reports from Ambassador Hayes out-
lining more cooperative action in connection with our pro-
gram, we propose to send a representative to Spain in order
to review with Hayes the situation there. The services of
James G. McDonald have been obtained for this mission.
McDonald is to have diplomatic status while in Spain and
will be attached to the Embassy as a Special Attache.
Regraded
Unclassified
100
- 11
According to a report from the Lisbon representative of
the American Jewish Joint Distribution Committee, 25 addi-
tional adults recently reached safety in Spain and are now
being cared for by the JDC. It was also reported that seven
additional children have reached Barcelona from France
bringing to 13 the total number of child refugees under JDC
care in Spain, and making a total of more than 200 newcomers
there of all ages. While the number of children reaching
Spain clandestinely was expected to, increase, it was pointed
out that under present circumstances large numbers of child
refugees cannot be anticipated there because of physical and
other difficulties involved.
Ship's Sailing to North Africa Scheduled
Board Representative Ackermann has advised us from Al-
giers that because of failure to give advance notice of the
sailing date, a ship scheduled to have sailed from Spain on
May 20 bearing refugees for Lyautey was unable to depart.
June 7 has been set as the new tentative date for the ship's
departure. Ackermann also indicated that he is now at work
on a major problem that has recently arisen in connection
with Camp Lyautey -- that of securing Army aid for guarding
the camp and protecting its property.
EVACUATIONS TO AND THROUGH PORTUGAL
According to a report from the Lisbon representative of the
War Relief Services of the National Catholic Welfare Con-
ference transmitted to us by our Embassy in Lisbon, there
remained in Portugal at the beginning of May only between
1;000 and 2;500 refugees, exclusive of Spanish Republicans.
In April, it was stated, the American Jewish Joint Distri-
bution Committee had on its relief rolls some 600 persons,
the Unitarian Service Committee about 250, the Quakers about
70, and the Catholic War Relief Services 80, these totals
being exclusive of Belgian, British, Dutch and Polish refu-
gees being supported there by their own governments.
The JDC is said to have sent 250 refugees to Palestine from
Portugal in February. Another 150 refugees left Portugal
aboard the Portuguese "Serpa Pinto" in March, bound for the
United States and Canada.
"Serpa Pinto" Reaches U. S. Safely
According to the New York Times for June 1, the "Serpa
Pinto," carrying still another load of refugees bound for
the United States and Canada and sailing under a safe-conduct
Regraded Unclassified
101
- 12 -
from the belligerent powers, was stopped in mid-Atlantic by
gunfire from a German submarine. After the passengers
were forced to spend nine hours in lifeboats on threat of
torpedoing the vessel, the submarine departed, leaving the
ship and passengers unharmed, except for the accidental
deaths of three of the 385 persons aboard and the taking
of two American citizens as prisoners. The "Serpe Pinto"
subsequently reached Philadelphia safely. The refugees
bound for Canada were taken under guard from the ship and
put aboard a sealed train for the last lap of their trip,
without technical entrance into the United States.
EVACUATION OF ABANDONED CHILDREN FROM FRANCE TO SWITZERLAND
According to a report from the JDC representative in Lisbon,
during the past three months 500 child refugees from France
succeeded in reaching safety in Switzerland.
Ambassador Long has reported from Guatemala that the Guate-
malan Government, in response to our proposal, has agreed
to accept from Switzerland up to 100 child refugees under
conditions previously outlined. It was indicated that
Guatemala would prefer that, insofar as possible, these
children be selected from among French and Belgian refugees.
RECOGNITION OF LATIN AMERICAN PASSPORTS
Reports reaching us indicate that a number of nationals and
persons claiming the nationality of the United States and
of other American republics may be held in camps situated
in German and German-controlled territory to which the
Protecting powers and the International Red Cross have no
access, or else access of the most restricted kind. In-
cluded in this category are the camps of Belsen-Bergen near
Hannover, Bergau near Dresden, Dost or Tost in Silesia, and
Drancy near Paris.
In a pending cable to Minister Harrison and Board Repre-
sentative McClelland in Bern we are asking that the attention
of the Swiss Government, as the protecting power of the United
States, be drawn to this situation. The Swiss are to be
requested to take steps to insure supervision by them of any
and all camps and other establishments in German and German-
controlled territory in which persons holding or claiming
United States citizenship are held, We are asking Harrison
and McClelland to stress the fact that this Government has
taken the view that, insofar. as persons in danger of per-
secution are concerned, claims of American citizenship are
Regraded Unclassified
102
- 13 -
to be honored by Germany until notification has been received
that the claim has been rejected by the country in whose
name the document was issued or whose nationality was claimed.
A similar request with respect to such camps and establish-
ments is to be addressed to the International Red Cross.
In a circular communication to our Missions in the various
Latin American countries we are outlining the steps being
taken in this connection. Our Missions are being asked to
call this matter to the attention of appropriate authorities
in the various Latin American countries, 80 that they may
take parallel action.
According to a communication from our Embassy in Haiti, the
Haitian Minister for Foreign Affairs proposes to ask this
Government to transmit to the Spanish Government, in support
of our own representations, a request that the Germans in
turn be asked to accord all persons holding Haitian pass-
ports the rights of Haitian nationals until the receipt from
the Haitian Government of a report on the validity of the
passports in question.
In response to this report, we are indicating that since
Switzerland is the protecting power of Haitian interests in
enemy territory, the Haitian approach should be made through
Switzerland rather than through Spain.
Ambassador Frost has reported that the Paraguayan Foreign
Minister has now orally but officially confirmed the fact
that his Government approves negotiations by this Government
for an exchange of persons from American countries r.holding
passports of such countries, including Paraguay, and now
detained in German concentration camps.
In a later communication Frost advised us that the Paraguayan
Foreign Minister is extremely anxious to obtain a reply con-
cerning the possibility of including in the proposed exchange
two girls, native Paraguayan citizens, residing in the pro-
vince of Hannover, Germany, as well as certain Dutch nationals
related to a prominent Paraguayan.
We have been advised from Colombia that the Polish Minister
there has, in accordance with the State Department's sug-
gestion, indicated that he would refrain from sending his
proposed notes to the Governments of Colombia, Venezuela
and Ecuador. It was indicated that he planned to refer
the matter back to his Government, which might in turn con-
sider State's suggestion that the Polish Government consult
the Inter-American Emergency Advisory Committee for Politi-
cal Defense on the matter.
Regraded Unclassified
103
- 14 -
COOPERATION WITH THE OFFICE OF CENSORSHIP
It was recently proposed by Director Price of the Office of
Censorship that we should assume the responsibility, from
a security standpoint, for the transmission to and from
various foreign points of all messages having to do in any
way with refugees. Under the procedure proposed, Censorship
would pass incoming and outgoing messages only with our
specific approval.
In a conference held with Mr. Price on June 2, Executive
Director Pehle pointed out that by its nature the Board
is not primarily a regulatory body, nor are we the only
Federal agency concerned with refugee matters. Executive
Director Pehle stated that while we deal only with those
private agencies which we believe are sincerely interested
in rescuing and helping victims of enemy oppression and
which we believe to be thoroughly reliable, we do not have
intelligence reports on the addressees and senders of such
messages, nor do we have facilities for such reports. In
order to insure cooperation to the greatest extent possible,
however, it was agreed that we would designate someone to
serve as liaison officer with Censorship, to examine se-
lected communications and to indicate whether we have any
special concern with them. This person would also be in a
position to furnish Censorship with any information in our
possession pertaining to individuals or situations referred
to in the communications involved. Ultimate responsibility,
from the security point of view, will remain with Censorship.
(Signed) J.W. Pehle
J. W. Pehle
Executive Director
Regraded Unclassified
104
CABLE FOR ROBERT MURPHY AND ACKERMAN, ALGIERS
From the War Refugee Board.
Please refer Department's No. 1669, May 27.
In further discussions with the President concerning
the general refugee situation, the President suggested the
possibility of taking refugees to Cyprus. This should be
carefully explored along with the other suggestions contained
in No. 1669.
THIS IS WRB CABLE TO ALGIERS NO. 18.
June 3, 1944
9:40 e.m.
JED:ecr
6-1-44
Regraded Unclassified
105
MMS
June 3, 1944
Distribution of true
reading only by special
Midnight
SECRET
arrangement. (SECRET w)
AMREP,
ALGIERS.
1759
The following is WRB cable 17, refers to your 1709
of May 24 and is for Murphy, Chapin, and Ackermann.
War Department has now informed us that permission
for the appointment, for territories adjacent to Italy,
blied special representative to be attached to ACC
headquarters has been granted by Supreme Allied Commander,
Mediterranean Theatre. Word regarding present unavail-
ability, Lt. Commander Lawler, whose appointment was
proposed, also received.
We are informing War Department that Ackermann,
Board's special representative for Mediterranean area is
authorised to represent Board in Italy, pursuant
to above-mentioned permission of Allied Commander, in
view of importance df having an accredited Board repre-
sentative authorized so to act. Ackermannn will be
advised, as soon as this designation confirmed. Mainten-
ance Ackermann's headquarters in Algiers may continue
but, whenever he deems necessary he should go to Italy.
Sexon will be expected to represent Board in Algiers.
during Ackermann's absence, in addition to his duties as
Senior Treasury Representative. Treasury Department
has approved arrangements concerning Saxon and
Ackermann.
STETTINIUS
ACTING
(GHW)
S/CR
WRBIMMV:KG
VE
48/3
6/3/44
Regraded Unclassified
106
MMS
June 3, 1944 SECRET
Distribution of true
reading only by special
Midnight
arrangement. (SECRET W
)
AMREP,
ALGIERS.
1761
The WRB cable no. 18 given below is for Murphy and
Ackermann and refers to Department's 1669 of May 27.
The President, during discussions covering gensral
refugee situation, has suggested possibility of taking
refugees to Cyprus. Please explore this along with
other suggestions contained in above-mentioned cable.
STETTINIUS
ACTING
(GHW)
S/CR
WHB1MMV:KG
WE
BC
6/3/44
Regraded Unclassified
107
107
FBM-119
Algiers
Distribtuion of true
reading only by special
Dated
June 3, 1944
arrangement. (SECRET W)
Rec'd
7:06 p.m.
Secretary of State
Washington.
1833, June 3, 6 p.m.
FOR WAR REFUGEE BOARD FROM ACKERMANN. No.
25. Advised today by War Shipping representatives
that ship should sail from Sapin about June 25.
Definite date will be fixed about June 15.
Sent to Department, repeated to Madrid for
Blickenstaff.
CHAPIN
RR
REP
Regraded Unclassified
108
MMS
June 3, 1944
Distribution of true
SECRET
reading only by special
MIDNIGHT
arrangement, SECRET W
AMREP,
ALGIERS
1762
For information of Murphy, Chapin and Ackermann.
Contents Department's 1169 of May 27 repeated to London
which has also been advised supplementarily as fbllows:
QUOTE Several thousand Jewish refugees, according to
best information atailable, are now in southern Italy. An
important step in helping solve the problem indicated would
be taken by prompt removal of these refugees to Palestine.
Information desired therefore at earliest possible moment
whether Palestine certificates will be granted these Jewish
refugees and t heir prompt removal to Palestine will be
facilitated by the British Government.
The following should be borne in mind in taking up this
matter with the British Government!
The British Government, since closing of the Bulgarian-
Turkish frontier in May 1943, has been following the policy
of suthorizing the onward transport to Palestine of all
Jews who succeed in escaping from enemy territory to Turkey,
after a preliminary security check in the latter country.
Another security check is made in camps in Palestine in which
the British place these people. If found satisfactory, they
are gradually released against the current half-yearly immi-
gration quota, as legal immigrants to Palestine. The
application of a similar policy in the case of Jews now in
southern Italy would make possible the prompt removal to
Palestine of such refugees. An early report of the attitude
of the British Government in this matter is urgently requested.
UNQUOTE
STETTINIUS
ACTING
(GHW)
S/CR
WHB:MMV:KG
BC
WE
SE
NE
6/1/44
Regraded Unclassified
109
PROPOSED CABLE TO AMERICAN LEGATION, BUENOS AIRES, ARGENTINA
War Refugee Board requests your good offices in expedi-
tiously obtaining authorization from the Foreign Office for
Argentine Consul General, New York, to vise American pass-
ports of Morris D. Waldman and Jacob Landau who are travel-
ing with the Board's approval to Argentina as representatives
American JewishCommittee for purpose of studying conditions
of refugees in certain Latin American countries including
Argentina. Both are permanent residents United States and
have round-trip paid passages Pan- American Airways.
June 3, 1944
10:45 a.m.
MStandishilem 6-1-44
Regraded Unclassified
11Q
PROPOSED CABLE TO AMERICAN LEGATION, SANTIAGO, CHILE
War Refugee Board requests your good offices in expedi-
tiously obtaining authorization from the Foreign Office for
Chilean Consul General, New York, to vise American passports
of Morris D. Waldman and Jacob Landau who are traveling with
the Board's approval to Chile as representatives American
Jewish Committee for purpose of studying conditions of refugees
in certain Latin American countries including Chile. Both are
permanent residents United States and have round-trip paid
passages Pan-American Airways.
June 3, 1944
10:45 a.m.
MStandish:lcm 6-1-44
Regraded Unclassified
111
ORIGINAL TEXT OF TELEGRAM SENT
FROM : Secretary of State, Washington
TO
;
American Embassy, London
DATED : June 3, 1944
NUMBER: 4411
SECRET
To Ambassador Winant, London, England
Repeated inquires are made of War Refugee Board
concerning eligibility for exchange of Jews in German-
controlled territory holding Palestine certificates.
Please inquire from proper Foreign Office officials
whether such persons declared eligible by Britain and
Germany, whether any such exchanges have actually taken
place, and if response is affirmative, the procedure
followed in placing such persons on exchange lists,
HULL
Regraded Unclassified
112
ORIGINAL TEXT OF TELEGRAM SENT
FROM:
Secretary of State, Washington
TO:
American Babassy, London
DATED: June 3, 1944
NUMBER: 4413
CONFIDENTIAL
Facilities in southern Italy for caring for refugees who
have escaped from enemy territory are becoming 80 over=crowded
that it is essential to remove refugees rapidly to other areas.
It is particularly important that this be done whout delay se
that the flow of refugees into southern Italy is not in any
way discouraged or impeded. The following cable which has
been sent to Robert Murphy in Algiers indicated more fully
the nature of this problem and its importances
"Our information indicates that refugees have been
arriving from Ingoslavia to Italy at the average rate
of over 1800 per week and that this flow is expected to
continue and may well increase. It also appears that
unless these refugees can be removed rapidly to other
areas, the military authorities are fearful that the facilities
in sauthern Italy for refugees may become seriously over-
taxed.
The whole matter has been discussed with the President
who has made it clear that under no circumstances should
the escape of refugees to Italy from the Balkan countries
be discouraged. The flow of refugees from Yugoslavia to
Italy is important not only from the standpoint of saving
the lives of Yugeslavs but also in order that as may
refugees as possible from other Balkan countries may be
able to escapa through Fugoslavise In this connection,
Cable No. Yugos 102 from Cairo, dated April 29, indicates
that support in rescuing Hungarian Jews has been promised
by Tito. In view of the plight of Jews today in Hungary,
it is essential that we do what we can to facilitate their
escape.
We recognise that the crux of this matter is finding
suitable places to which these refugees can be removed.
In this connection, the following should be borne in mindt
(1) As many as possible of these refugees should
be moved to caps in the Middle East. UNREA is making
every effort to supply sufficient medical and other
personnel.
(a) In R far as Jewish refugees are concerned,
present plans to nove as many as possible to Palestine
should be carried out without delay. In this connection
it should be borne in mind that in the case of Turkey,
the British have adopted the policy that all Jews
escaping.....
Regraded Unclassified
113
- 2 -
escaping into Turkey from the Balkan countries will be
permitted to go to Palestine. These refugees are then
placed in camps in Palestine where they are checked for
security purposes.
Regraded Unclassified
(3) For some ime we have been pressing the British
to establish with our cooperation havens of refuge for these
people in Tripolitania and Cyrenaica, but without any
results to date.
(4) The President suggested the possibility that
some of these refugees might be taken to Sicily. This
should be carefully explored together with the possibility
of a substantial expansion of facilities on the Italian
mainland.
(5) While we do not consider it desirable to bring
refugees from Italy to Camp Lyautey at Fedhala since all
of the accommodations of that camp must be kept available
for refugees from Spain, the possibility of establishing
other camps in French North Africa for refugees from
Italy should, of course, be borne in mind.
Bearing in mind that the flow of refugees into Italy
from the Bal kan countries must not be interfered with,
you are requested to submit as soon as possible your
views and recommendations as to all possible havens
of refuge in which these people might be temporarily placed.
Please convey the contents of this cable to representatives
of UNNRA and Ackermann of the War Refugee Board, as well as
the appropriate military authorities. You should discuss
this whole matter with them and cooperate with them in
selving this most urgent problem."
According to the best information available there are in
southern Italy averal thousand Jewish refugees. The prompt
removal of these refgees to Palestine would constitute an important
step in helping to solve the problem indicated. Accordingly, the
Department and the War Refugee Board would like to know at the
earliest possible moment whether the British Government will grant
Palestine certificates to these Jewish refugees and will facilitate
their prompt removal to Palestine.
In taking up this matter with the British Government you
should bear in mind the fellowingt
Since the clesing of the Bulgarian-Turkish frontier in
May 1943, the British Government has been following the policy
of authorizing, after a preliminary security check in Turkey,
the onward transport to Palestine of all Jews who succeed in
escaping to Turkey from enemy territory. Once in Palestine
the British place these people in capps where another security
check is made, and if found satisfactory, they are gradually
released as legal immigrants to Palestine against the current
half-yearly immigration quota. It is apparent that the
application.
114
- 3 -
application of a similar policy in the case of Jews now in
southern Italy would make possible the prompt removal of such
refugees to Palestine.
Please advise us urgently of the attitude of the British
Government in this matter.
This message has been repeated to Murphy, Chapia and Ackermann
in Algiers.
STETTINIUS
(Acting)
Regraded Unclassified
115
3068 (R-2835)
AMERICAN CONSULATE GENERAL
Istanbul, Turkey, June 3, 1944.
STRICTLY CONFIDENTIAL
SUBJECT: Further Information Regarding the Jews
of Greece
THE HONORABLE
THE SECRETARY OF STATE
WASHINGTON.
SIR:
I have the honor to report information concerning
Jews, who continue to escape from Greece and also con-
cerning the conditions of Jews still in Greece. This
information was obtained from a representative of the
Jewish underground organization of Izmir, from Mr.
Solomon Barki who is the source of information reported
in Despatch No. 2844 (R-2642) of April 15, 1944, and
from reports of the Greek Consulate of Izmir.
Attached as an enclosure is a report of the Greek
Intelligence Service of Izmir concerning the deportation
of Jews from Athens on April 2, 1944.
According to the representative of the Jewish under-
ground organization of Izmir, many more Jews have escaped
from Greece during the last six months than have been re-
ported officially. This is due to two reasons: first, a
Regraded Unclassified
116
- 2 -
fairly large number of Jewish refugees are brought to
Turkey without the knowledge of the Turkish authorities
or of the British, American and Greek Intelligence Ser-
vices; and second, because many Jews have assumed Greek
names and so appear in official records as Greeks. For
example, during the period April 1 to May 11, the arrival
of 192 Jews is recorded officially but according to the
representative of the underground organization there was
actually a total of 217.
Since May 11 Jews have arrived in greatly decreased
numbers and with increasing difficulty. Those who have
made their own arrangements for departure have been obliged
to pay almost prohibitive prices. The places available
for Jews in the official British-Greek services continue
to be limited in number. Recently, the Jewish underground
organization has been confronted with almost insuperable
obstacles in continuing the system of transportation which
for some time worked very smoothly. As yet no special
arrangements have been made for the transportation of
Jewish refugees from Euboea to Turkey, as was recommended
by Mr. Barki and called to the attention of the Department
in Despatch No. 2844 (R-2642) of April 15, 1944.
It is difficult to obtain reliable estimates of the
numbers of Jews still in Greece. On March 30, before the
deportation of Jews from Athens, Mr. Barki was of the opini-
on that there were 6,000 to 8,000 Jews in Athens and vici-
nity. According to estimates reported in Despatch No. 2917
(R-2706) of April 29, 1944, 750 to 800 Jews from Athens and
3,000 from the provinces were deported in April. These
figures are corroborated by statements in the report attached
as an enclosure. On May 11, the representative of the
Jewish underground organization of Izmir stated that 2,000
or more Jews are probably still hidden in Athens and there
are 5,000 or 6,000 with the andarts. According to this
source, many Jews from Yannina and other towns of western
Greece have escaped to Italy.
Mr. Barki corroborated the statement reported in
Despatch No. 2917 (R-2706) that on March 24 an order was
published stating that all Jews living in the provinces
were to be arrested and brought to Athens. It will be noted
Regraded Unclassified
117
- 3 -
in the enclosure to this despatch that Jews from Arta were
among those deported from Athens on April 2. Evidence
that the arrest of provincial Jews has continued since
March 24 was provided by Michael Boyiadjoglou, a Greek
tobacco merchant recently arrived in Turkey. On April 30,
while on the train from Athens to Salonica, Mr. Boyiadjoglou
talked with three German SS officers who said that they
were on their way to Corfu, where they were to deport all
Jews within an inverval of 48 hours. These officers left
the train at Larissa.
The situation of the Jews in Greece has undergone
considerable change since mid-March, at which time con-
ditions were reported in Despatch No. 2680 (R-2494) of
March 18, 1944. The prediction made then by Jewish refu-
gees that "all Jews remaining in Greece, whom the Germans
can find, only await the fate that befell the Jews of
Salomica in March, 1943" has regrettably been fulfilled,
since all registered Jews of Athens and large numbers of
provincial Jews have been deported. Concerning the Jews
still in hiding, the statement made in Despatch No. 2844
(R-2642) of April 15, 1944 that "their situation becomes
more precarious every day as their funds are gradually
exhausted" is corroborated by refugees who continue to
arrive in Izmir. Their vulnerability to betrayal was es-
pecially emphasized by the representative of the Jewish
underground organization of Izmir, who stated that the
growing activities of the Gestapo and the offers of rewards
for information concerning Jews result in an appalling
number of arrests.
Respectfully yours,
Burton Y. Berry
American Consul General
Enclosure: as stated above
To Department in original and hectograph
File No. 820.02
HVD:gdw
Regraded Unclassified
118
Enclosure No. 1 to Despatch
No. 3068 (R-2835) dated
June 3, 1944, from the
American Consulate General,
Istanbul, Turkey.
The Departure of the Jews from Athens, April 2, 1944
I learned by chance that the Jews of various nation-
alities, including Spanish, Portuguese, et cetera, who had
been arrested by the Germans, were to be deported Sunday,
April 2, 1944. I also learned that thanks to the interces-
sion of the International Red Cross, the Germans had grant-
ed permission for food to be distributed to the deportees
by the Greek Red Cross. Two lorries loaded with packages
containing food, clothing and medicines, arrived at 9 a.m.
at the station platform where the train was waiting.
The train consisted of 37 or more freight cars of the
type intended for transporting the army; on the sides were
signs "8 Horses, 40 Men". The cars were already sealed
and across the narrow windows barbed wire and boards were
nailed. I approached a car and looked in. The car was
crowded beyone the limits of the imagination: 80 to 100
dishevelled people, piled one upon the other -- pregnant
women, babies, cripples, old people, all in a state of
nervous over-excitement, were gesticulating and yelling
for aid. I heard shouts of "I shall give birth at any
moment, what shall I do?"; "They separated me from Isane,
I have lost my child an."; "They brought us here from Arta
and we have been 8 days without food.
The German guard drove me away from one car with
curses but I succeeded in approaching others. There was
the same misery everywhere. S.S. officers kept a very strict
guard and watched the Jews with a hard, sarcastic expression.
After a little while three lorries brought the Spanish
subjects from the Haidari concentration camp. All these
Jews were well-to-do and well dressed. They also were
piled into cars, but the cars in this case were not sealed
and the windows were not barred with wire. The Spanish
Jews were allowed to take with them a little food which the
Spanish Minister brought them. In spite of many efforts
and attempts to negotiate with the German authorities,
this was all that he as a neutral could do for them.
Regraded Unclassified
119
- 2 -
After two hours the "Obersturmbandfuhrer" Burger, an
S.S. officer, arrived in a great hurry and in a very angry
mood. He gave orders for the train to leave at once and
roughly forbade the Greek Red Cross to give the departing
Jews the food and supplies that they had provided. I shall
never forget the agonized expression of those poor Jews
when they heard this order.
I followed the train to the Larissa Station where I
learned that it would stop for a few moments. I arrived
in plenty of time and waited near the track. After a few
minutes the tragic train of more than 37 cars came slowly
in. Faces reflecting the martyrdom that was to last for
days looked out through the barricaded windows. I watched
the Greek Red Cross doing its best to give aid but it was
very difficult to do so. However, they did succeed in
passing a few tins, one by one, through the wires obstruct-
ing the windows. Where there was scarcely room to put
a hand through the opening, they slipped in bread cut
in slices. A woman who asked for milk for her child
was mistreated by the guard.
The German Commander of the S.S. explicitly
forbade that the cars should be opened to throw out
the dead. A German mechanic who had watched the
actions of the guards, cried at this point "I am a German
but I can't stand this." The train left. I asked
myself how many would arrive at their destination
and in what condition.
Regraded Unclassified
120
CORRECTION
A - 189
10:35 AM
June 3, 1944
SENT BY SECRET AIRGRAM
AMEMBASSY,
PORT-au-PRINCE (HAITI).
The date of this cable should be June 9, 1944 instead
of June 3, 1944.
Regraded Unclassified
121
EMBASSY OF THE
UNITED STATES OF AMERICA
No. 2148
Asuncion, Paraguay, June 3, 1944.
Subject: Paraguayan Government willing to receive
refugee children.
CONFIDENTIAL
The Honorable
The Secretary of State,
Washington.
Sir:
I have the honor to refer to the Department's con-
fidential circular airgram of April 20, 1944, 7:35 p.m.
to certain Embassies stating that the Department has
now authorized the American consular officers in Switz-
erland to issue up to four thousand quota immigration
visas to refugee children, and requesting this Embassy
to approach the Paraguayan Government with & view to
obtaining its consent to accepting a fixed number of
refugee children and giving assurances to the Swiss
Government of such willingness.
There has now been received & Note from the
Ministry of Foreign Relations on this subject, in reply
to this Embassy's Note of May 5, 1944. Copies and trans-
lations of these notes are transmitted herewith, and
it will be noted that the Paraguayan Government is
willing to cooperate in this work provided that adequate
financial assistance is available for the purpose.
Regraded Unclassified
122
As respects the notification by the Paraguayan
Government to the Swiss Government, concerning which
nothing is said in the Paraguayan note, it should be
mentioned that the Paraguayan Government does not main-
tain a diplomatic mission in Switzerland.
Respectfully yours,
Leslie E. Reed
Charge d'Affaires ad interim
Enclosures:
1. Copy and translation of Embassy's
Note No. 260 of May 5, 1944.
2. Copy and translation of Note No. 461,
May 21, 1944, from Ministry of Foreign
Relations.
848.
LER/ajl
Original with reverse carbon
to the Department.
Regraded Unclassified
123
Enclosure No. I to Despatch No. 2148
American Embassy, Asuncion, Paraguay
June 3, 1944
Note No. 260
Asuncion, May 5, 1944
Excellency:
With reference to previous conversations with Your
Excellency and with your distinguished predecessor regard-
ing the possibility that Paraguay may participate in the
humanitarian work of giving asylum to some of the unfortunate
refugees from Europe, I have the honor to inquire concerning
the attitude of your Government with respect to receiving
some refugee children.
It is estimated that there are in France alone, 8,000
to 10,000 abandoned or orphaned refugee children, and the
War Refugee Board is endeavoring to make arrangements for
their care in the future. My Government has decided to per-
mit the immigration to the United States of up to 4,000
children under 16 years of age irrespective of their
nationality, religion or stateless status and has authorized
the granting of the necessary visas by American consular
officers. These visas will remain valid or may be renewed
until such time as transportation facilities to the United
States may be available.
If there are private organizations or agencies in
Paraguay which are willing and able to care for a group of
refugee children, it is believed that the War Refugee Board
can provide such agencies with adequate funds for the main-
tenance, education, and welfare of as many children as your
country would be willing to admit. Should it be necessary,
funds would also be available to cover their transportation
expenses from Europe to Paraguay.
If your Government is willing to participate in this
work, and a suitable agency in Paraguay is disposed to as-
sume the care of such children, your Government may desire
to so inform the Swiss Government. Upon receiving informa-
tion of the attitude of Your Excellency's Government in
this matter, I shall be glad to furnish further details of
the arrangements which are being made, if such information
is desired.
Regraded Unclassified
124
- 2 -
Please accept, Excellency, the renewed assurance of
my most distinguished consideration.
His Excellency
Dr. Horacio Chiriani,
Minister of Foreign Affairs and Worship,
Asuncion.
848
LER:ps
Regraded Unclassified
125
TRANSLATION OF ENCLOSURE NO. 2
Mr. Charge d'Affaires:
With reference to Note D.P. & D. 402 of the 10th
instant, I have pleasure in quoting the following commi-
nication received from the Ministry of Education, which
states:
"536, Asuncion, May 26, 1944. Most Excellent Mr.
Minister: I have pleasure in addressing Your Excellency
in order to acknowledge receipt of Note 398 of May 8 of
the present year from your Chancellery, as well as the
authenticated copy of document No. 260 from the American
Embassy which accompanies it. With reference to the
contents of the document referred to, this Ministry desires
to announce its complete conformity to collaborate in re-
lieving the affliction of European childhood deprived of
homes by the present war, accepting the number of refugees
which may be fixed in view of, and with previous determina-
tion of our possibilities. In order to make possible this
noble activity, this Ministry ventures to point out the
necessity that the economic collaboration offered contem-
plate the construction of a building (internado) adequate
for the purpose desired, and its equipment, as well as the
amounts necessary for the maintenance and clothing of the
refugee children. This Ministry would bear the cost of
the administrative and teaching staff of the asylum, in
order to assure the pupils the benefits of the most complete
education possible. Within these general lines, this
Ministry will remain in the expectation of further infor-
mation and proposals on the subject. Receive, Excellency,
the expressions of my special consideration. Signed:
Juan Dario Quiroz, Minister."
I take this opportunity to salute you with my distin-
guished consideration.
Signed: Mario Ferrario
Subsecretary of State of
Foreign Relations.
Regraded Unclassified
126
AIRGRAM
SECRET BY COURIER
From: Asuncion
Date: June 3, 1944
Rec'd: June 10 11 em
SecState
Washington, D.C.
A-236, June 3, 1944, 11:15 a.m.
With reference to the Department's secret airgram A-158,
May 22, 1944, 6:15 p.m. FOR THE PERSONAL AND CONFIDENTIAL
INFORMATION OF THE A BASSADOR, directing this Embassy to
continue its efforts to procure a favorable action on two
points mentioned in this Embassy's airgram A-139, A pril 22,
such favorable action has already been taken, as stated in
this Embassy's A-148, April 29, 10 a.m., and A-185, May 20,
9:15 a.m.
Copy of Paraguayan note to Spanish Legation has not
yet been obtained, but efforts will be continued to that
end.
REID
848
LIR/gm
Regraded Unclassified
127
PROPOSED CABLE TO AMERICAN LEGATION, ASUNCION, PARAGUAY
War Refugee Board requests your good offices in exped1-
tiously obtaining authorization from the Foreign Office for
Paraguayan Consul General, New York, to vise American pass-
ports of Morrís D, Waldman and Jacob Landau who are travel-
ing with the Board's approvel to Paraguay as representatives
American Jewish Committee for purpose of studying conditions
of refugees in certain Latin American countries including
Paraguay. Both are permanent residents United States and
have round-trip paid passages Pan-American Airways.
June 3, 1944
10:45 a.m.
MStandish:lem 6-1-44
#; Regraded Unclassified
128
ORIGINAL TEXT OF TELEGRAM SENT
FROM
:
Secretary of State, Washington
TO
:
American Legation, Lisbon
DATED :
June 3, 1944
NUMBER :
1601
SECRET
From War Refugee Board to Norweb
Please deliver the following message to Isaac Weissman,
c/o American Legation, Lisbon, from Mr. Mendes-France of the
French Committee of National Liberation:
"I thank you for your message. The question is
now being considered both in Algiers and in Washington,
in order to procure you the help you are asking for."
THIS IS WRB LISBON CABLE NO. 33.
HULL
Regraded Unclassified
129
PARAPHRASE OF TELEGRAM SENT
FROM:
Secretary of State, Washington
TO:
American Legation, Bern
DATED: June 3, 1944
NUMBER: 1905
CONFIDENTIAL
P ayment of 16,667 france to Seiligmann by Riegner,
suggested in the Legation's telegram of May 11, 1944 No. 2991
and payments to Worms and Levy, upon their arrival in Switzerland,
of the Swies franc equivalent of the amounts purchased from them
are authorized by the Treasury Department. The authorization
given above is subject to both Riegner and you being satisfied
that these individuals are bonafide refugees and intend to
remain in Switzerland for other neutral territory or territory
which the Allies control and other than in Switzerland no
such payments should be made.
STETTINIUS
(ACTING)
DCR: IDB:HL 6/7/44
Regraded Unclassified
130
PARAPHRASE OF TELEGRAM SENT
FROM:
Secretary of State, Washington
TO:
American Legation, Bern
DATED;
June 3, 1944
NUMBER:
1906
SECRET
Section (B) of license number V-2160 issued to the
American Jewish Joint Distribution Committee, which was described
in Department's Number 39 of June 5 has been amended by the
Treasury Department. The amended section referred to is
paraphrased below:
Individual licenses will be issued by the
Treasury authorizing the use of specific
amounts following issuance of this license.
The aggregate of the amounts expended or
otherwise obligated pursuant to this license,
plus the total amounts of claims against
any blocked account established pursuant
hereto, shall not be in excess of the total
sun in dollars (or the equivalent thereof
in foreign currency) so specified in
Treasury's authorization.
In line with the above, this license has been amended
by Treasury in connection with a specific license issued to the
Joint Distribution Committee authorizing the payment, in addition
to amounts formerly authorized, of the equivalent of $50,000 in
Swiss francs to Saly Mayer, with the understanding that this
amount is to be used under license W-2160 to which we refer
above.
We request that the foregoing information be transmitted
to Saly Mayer, St. Gall, representative of the Joint Distribution
Committee in Switzerland,
License W-2150, issued to the American Committee for
Christian Refugees, Inc., which was described in Department's
Number 851 of March 15, has also been amended by Treasury. This
amendment is identical in every way to the amendment applying to
the license of the Joint Distribution Committee described above.
License W-2150 is amended in order to enable the American
Committee for Christian Refugees to make payment to DB. Freuden-
berg of the equivalent of $25,000 in Swiss Francs. This sum is
in addition to sums authorized prior to this time, and is to be
used pursuant to said license.
We request
Regraded Unclassified
131
- 2 -
We request that notification of the above-mentioned
amendment be sent the representative of the American Committee
for Christian Refugees, Inc. in Switzerland, Dr. Adolf Freudenberg,
41 Avenue de Champel, Geneva.
The War Refugee Board, the Treasury and the Department
concur in the foregoing.
STETTINIUS
Acting
Regraded Unclassified
132
PARAPHRASE OF TELEGRAM SENT
FROM:
Secretary of State, Washington
TO:
American Embassy, Ankara
DATED :
June 3, 1944
NUMBER:
506
SECRET
War Refugee Board sends the following for Steinhardt.
Inasmuch as the War Refugee Board is anxious to facili-
tate Hirschmann's departure, the Board requests that you
facilitate, in any way possible, the issuance of a Turkish
visa which is being awaited by Hirschmann.
STETTINIUS
Acting
Regraded Unclassified
133
ORIGINAL ----- OF TELEGRAM SENT
FROM:
Secretary of State, Washington
TO:
American Embassy, Ankara
DATED:
June 3, 1944
NUMBER:
602
CONFIDENTIAL
The Governments of the United States and Great Britian
have agreed that in furtherance of their joint policy to use
every means available consistent with the sucfessful prosecu-
tion of the war to bring about the rescue of the victims of
German persecution in imminent danger of death a joint approach
should be made to the Turkish Government in the sense of the
following:
QUOTE The Governments of the United States and Great
Britain are appreciative of the assistance already rendered
by the Turkish Government to refugees who have fled from German-
controlled Europe as the result of persecution on account of
race, religion, or political belief. The Governments of the
United States and Great Britain believe, however, that if the
persecuted minority groups still remaining in German-controlled
Empoye have further assurances that, if they are able to make
their way to neutral territory, they will be received and their
minimum material needs provided for until such time as they an
be moved onward to other havens of refuge or repatriated to
their homeland, the rescue of still greater numbers from inhuman
oppression might be effected. If such assurances are not forth-
coming, it is feared that the death toll among the persecuted
minority groups will continue to increase.
The Governments of the United Statesand Great Britain
in furtherance of their joint pelicy to use every available
means monsistent with the successful prosecution of the var to
bringsbout the rescue of victims of German oppression in
imminent danger of death, appeal to the humanitarianiem
of the Turkish Government in behalf of these rsecuted persons
in the hope that the Turkish Government will find it possible to
adopt an even more liberal policy than heretofore as regards
the reception and temporary care of refugees from German-controlled
Europe.
The Governments of the United States and Great Britain
wish to assure the Turkish Government that for their part they
will be glad to arrange for the provision of such additional
food and other supplies as may be required to meet the added
burden on Turkish resources resulting from the temporary care of
refugees, as well as funds if needed. The Governments of the
United States and Great Britain wish further to assure the
Turkish Government that they will make every effort to arrange
for the onward movement to other havens of refuge of such refugees
as may be received by Turkey. UNQUOTE
You arep......
Regraded Unclassified
134
- 2 -
You are requested to concert with your British colleague
who is expected shortly to receive instructions substantially
in the sense of the above.
Similar joint approaches are being made to the Swedish,
Spanish, Portuguese, and Swiss Governments.
HULL
Regraded Unclassified
135
FMH-94
Montevideo
This telegram must be
paraphrased before being
Dated June 3, 1944
communicated to anyone
other than a Government
Rec'd 8:13 p.m.
agency. (RESTRICTED)
Secretary of State,
Washington.
509, June 3, 5 p.m.
FOR KNAPP FROM SANDERS
Text of "Resolution concerning the exchange of
persons between the American Republics and Germany"
is as follows:
"Whereas A. The Emergency Advisory Committee
for Political Defense in its resolution 20 approved
May 21, 1943 reco mended to the American Republics
that as a general policy they not permit the
repatriation of unofficial German nationals except
in very small numbers and only for the exchange of
American nationals under German control or for similar
speciel reasons of particular importance.
B. There are in Germany or German-controlled
areas in Europe approximately 2,000 individuals,
most of them presently in concentration camps, who
while identified with various European minority
groups are nevertheless in possession of documents
and certificates which have been issued by or in the
name of many American Republics as well as other
non-European states and which reflect a right of
admission toor. of, protection by such stetss,
C. It has not previously been possible to
nominate such detained individuals for inclusion
in the recent exchanges which have been effected of
nationals of American Republics for German nationals
because of the strict standards governing exchange
as established in Resolution 20 and because of the
extraordinary difficulties involved in discovering
identifying and communicating with such individuals.
D: The Committee is informed that the German
Government apparently believing that the American
Republics and other non-Buropean States concerned
are indifferent to the fate of these individuals,
now intends
Regraded Unclassified
136
now intends to deprive them of any protection, and
to subject them to the severe persecution, including
slave labor end extermination, suffered by other
members of the racial and political minorities with
which these individuals are identified.
E. The prospect of such dire consequences 1s
repugnant to the common ideals of liberty and humanity
held by the American Republics and calls for the
utmost humanitarian and preventive efforts on the
part of the governments of this hemisphere consistent
with their own security.
F. Safe refuge for and support of all such
individuals, including those whose admission to the
country concerned may not be feasible, may be provided
for under existing arrangements.
G. There are now available in the American
Republics a number of German nationals whose
repatriation under present circumstances would not
materially conflict with the strict standards of
Resolution 20 of the Committee.
The Emergency Advisory Committee for Political
Defense resolves:
One. To direct the attention of the Governments
of the American Republics to the desperate plight
of those persons now in Germany or German-controlled
areas who are identical with European racial or
political minority groups and who possess certain
documents issued by or which in the name of the
American Republics reflect B. right of admission to
or protection by said republics.
Two. To inform the American Republics that, in
the opinion of this Committee, the need to rescue
such persons constitutes a sufficient basis for their
admission to this hemisphere in exchange for German
nationals resident in the American Republics selected
with due regard for security requirements set forth
in Resolution 20 of this Committee.
Three. To recommend strongly to the various
American Republics that they immediately take such
uniform action in concert 88 may be necessary to
facilitate the exchange of these individuals for
certain German
Regraded Unclassified
137
certain German nationals in this hemisphere, and in
particular.
A. That they inform the German Government
through the appropriate channels that the individuals
who possess documents of the character mentioned in
the first paragraph and issued by or on behalf of an
American Republic, are entitled to full protection
in accordance with the terms or customary incidents
of such documents.
B. That they authorize negotiations with the
German Government on their behalf in order to effectuate
the exchange of such individuals for German nationals
fromthe Western Hemis) here who desire to be repatriated
and who are selected in accordance withsuch security
sefeguards as the Republics may mutually deem
appropriate in the light of all the circumstances
surrounding each particular case.
DAWSON
RB REP
Regraded Unclassified
138
DEPARTMENT
OUTGOING
DIVISION OF
OF
June COMMUNICATIONS
STAT Eparaphrantd before DEINS
this Lelegvan mus TELEGRAM
6 p.m.
AND RECORDS
corrunicated to anyone
X
other Than a Government
agency. (RESTRICTED)
DEPARTMENT OF STATE
CIRCULAR TELEGRAM TO PLACES LISTED
JUN S 1944
U. 8. URGENT
DIVISION OF
GEORGIAR
COMMUNICATIONS a DECORDS
nererence circular telegram May 25.
You are requested to inform the appropriate authori-
ties of selection of Mount Washington Hotel, Bretton Woods,
New Hampshire, as site of Conference, Anticipated duration
two to three weeks, beginning July 1. Location, base of
Hount Washington, White Mountains, approximately 600 miles
and eighteen to twenty hours by regular train from Washing-
tion, Special train being arranged for opening; delegations
will purchase their own accommodations.
Hotel will provide lodgings on American plan. Ample
meeting rooms evailable, but suitably furnished office
anse restricted and hotel obliged to charge delepations
desiring offices a flat rate for these extra facilities
Please ascertain end telegraph immediately minimum office
requirements end preliminary estimate of number of officers
and clerks expected to combose delepation. As these
figures will form basis of preliminary room allotments by
the hotel, please take care to specify sex and to include
those persons already in the United States. . Double
occupancy of beárooms required, except for heads of dele-
gations.
Regraded Unclassified
139
&
CIRCULAR June 3,
As soon e.6 more detailed information becomes avail-
able please telegraph name, title and delegation function
of each individual, including subordinate personnel, and
also mode of travel and date and port of entry into United
States; in case of air travel this information essential
in recommending air priorities. If persons are appointed
concerning whom Department has not been furnished recent
biographic date, such information should also be included.
Since thie is a technical wartime meeting, social
entertainment will be held to A minimum. Limited hotel
facilities will not permit the accommodation of wives or
other family members. Business suits, light-weight woolens
suggested, will be adequate for all occasions.
STETTINIUS
ACTING
(WK)
800.515
SA/E
MA
SA
S/CR
IC:DBE:MCL
6/2/44
Regraded Unclassified
140
CIASULAR
June S, G
CODE ROOM:
This telegram is to be sent to the following:
AMREP, Algiers (Algeria)
ARLEGATION, Canberra (Australia)
AMERBASSY, Rio de Janeiro (Brazil)
AMEMBASSY, Ottawa (Canada)
AHERBASSY, Santiago (Chile)
ANDREASSY, Chungking (China)
ALISHBASSY, Bogota (Colombia)
AMEMBASSY, San Jose (Costa Rioe)
ALEMBASSY, Habana (Cuba)
ALEMBASSY. Ciudnd Trujillo (Dominican Republic)
ARLEGATION, Cairo (Egypt)
alienbassy, Sen Salvador (El Salvador)
ARLEGATION, Addis Ababa (Ethiopia)
Akenbassy, London (England)
AMENBALK, Cairo (GREEK)
AMERBASSY, Guatemala (Guatemala)
AMENBASSY, Port-au-Prince (Haiti)
AREMBASSY, Tegucigalpa (Hondures)
ARLEGATION, Reykjavik (Iceland)
AMERICAN MISSION, New Delhi (India)
AELEGATION; Tehran (Iran)
ANLEGATION, Beghdad (Irac)
ALLEGATION, Monrovia (Liberia)
AMERBASSY, Mexico (Mexico)
AMLEGATION, Wellington (New Zealand)
ANERBASSY, Managua (Niceragua)
AMERBASSY, Panama (Panama)
AMERBASSY, Asuncion (Paraguay)
ahembassy, Lima (Peru)
ALLEGATION, Pretoria (Union of South Africa)
ALEMBASSY, Mosoow (Union of Soviet Socialist Republics)
AMERBASSY, Montevideo (Uruguay)
AMEMBASSY, Caracas (Venezuela)
AMEMBALK, Cairo (YUGOS)
Regraded Unclassified
141
-1- CIRCULAR June
CODE ROOM:
Please add the following to the telegram for
AMREP, Algiers:
"Circular under reference was sent to Algiers
as the Department's 1633, May 25, 7 p.m. a
Please add the following to the telegram for
AMEMBASSY, London:
"Repeat immediately to Schoenfeld for notifica-
tion to Belgian, Caechoslovak, Luxembourg, Netherlands,
Norwegian, end Polish Governments."
Regraded Unclassified
142
DEPARTMENT
INCOMING
DIVISION OF
OF
COMMUNICATIONS
STATE
TELEGRAM
AND RECORDS
AMT-960
PLAIN
London
Dated June 3, 1944
Rec'd 2:40 p.m.
SECRETARY of State,
Washington.
UUN sk 1944,
CZECHOSLOV.K SERIES
8, Third.
FROM SCHOENFELD
Your circular telegram May 26 and my 7 of June 1.
Cztchoslovak Government appoints following
delegation to Monetary Conference:
Dr. Ladislav FEIERABEND, Minister of Finance
Dr. Jan Mladek
Consul General Josef Hanc
Dr. Antonin Basch
Dr. Ervin HEXNER
Dr. Ernest Sturz, Secretary of Delegation.
WINANT
WTD
LMS
Regraded Unclassified
DEPARTMENT
INCOMING
DIVISION OF143
OF
COMMUNICATIONS
STATE
TELEGRAM
AND RECORDS
LFG-219
Reykjavik via Arry
This telegram must be
paraphrased before being
Dated June 3,, 1944
communicated to anyone
other than & Government
Rec'd 7 a.m. 4th
Agency. (RESTRICTED)
DEPARTMENT OF STATE
Secretary of State,
JUN 7 1944
Washington.
DIVISION OF
COMMUNICATIONS & RECORDS
239, June 3, 10 a.m.
Note was delivered to the Foreign Office as
instructed by the Department's circular telegram
dated May 25. The Foreign Minister has replied
accepting invitation to participate in Monetary and
Financial Conference. Names of Icelandic delegates
will be given to the Legation within a few days and
the Department will be informed promptly.
HULLEY
RB RR
Regraded Unclassified
144
DEPARTMENT
INCOMING
DIVISION OF
OF
COMMUNICATIONS
STATE
TELEGRAM
AND RECORDS
DMH-959
PLAIN
London
Dated June 3, 1944
Rec'd 2:40 p.m.
Secretary of State
Washington
NETHERLANDS SERIES
9, third
FROM SCHOENFELD
Your circular, May 26
In note of June 3 Nethorlands Government states
it accepts invitation to Monetary Conference. Delega-
tion will consist of Dr. J. W. Beyen, Financial Adviser
to Netherlands Government, as chairman; Dr. H. Riemens
of Netherland Embassy in Washington and possibly one
other as yet unnamed.
Note adds acceptance is contingent on (1) waiver
or removal of current British travel ban (2) definite
assurance from British and United States Governments
that no obstacle will be placed against return to UK
on conclusion of Conference (3) free exchange uncen-
sored code telegrams between government and delegation
on matters pertaining to Conference and (4) that dele-
gation can leave England with necessary codes in sealed
parcel
Regraded Unclassified
145
-2- #9, third, from London
parcel not subject to examination by United States or
UK authorities.
Nethorlands Government is approaching British
Government regarding above conditions and would ap-
preciate United States lending cooperation and sup-
port.
WINANT
WTD
LMS
Regraded Unclassified
146
DEPARTMENT
INCOMING
DIVISION OF
OF
COMMUNICATIONS
STATE
TELEGRAM
AND RECORDS
MJB-63
Pretoria
This telegram must be
paraphrased before being
Dated June 3, 1944
communicated to anyone
other than a Government
Rec'd 5 p.m.
agency. (RESTRICTED).
Secretary of State,
DEPARTMENT OF STATE
DIVISION OF
Washington.
7 1944
66, June 3, noon.
COMMUNICATIONS
AND RECORDS
The Dopartment of External Affairs has informed
me that the following persons will make up the South
African delegation to the monetary and financial
conference referred to in the Department's circular
telegram of May 25, 5 p.m.
Leader of delegation, Dr. S. F. Ngie, South African
Minister at Washington; co-delegate, Dr. J. E. Holloway,
Secretary for Finance, co-delegate, Dr. M. H. de Kok,
Deputy. Governor of the South African Reserve Bank;
Secretary, Dr. W. Naude, South African Legation at
Washington; typist-clork, Miss Hahn, South African
Legation at Washington.
Dr. Holloway and Dr. de Kok plan to leave South
Africa by air on or about June 14 en route to the
United States.
The formal accoptance of the Union Government
is to be handed to the Legation on June 5 and will be
forwarded to the Department by air mail.
EMB
GROTH
Regraded Unclassified
147
FROM:
American Consulate General, Naples
TO:
Secretary of State, Washington
ATED:
June 3, 1944
PARAPHRASE OF TELEGRAM RECEIVED All
NO.:
117
SECRET
Beyond all question there is urgent need for improvement in the present
economic situation. Moreover, what must be kept foremost in mind is that if we are
to hope to forestall a wave of popular discontent of disastrous potentialities for
prestige of any Government that may be in power, evidence of such improvement
must show itself in the very near future. Although there is at present a relative-
ly favorably wheat crop in prospect which, if successfully collected and distri-
buted, should case the bread shortage for a period of months, there is the pos-
sibility that eventually this crop may have to be supplemented by shipments from
the United Nations and this possibility should be faced now. Highly critical
shortages persist in various essential consumer goods of which glaring examples may
be mentioned in items of shoes and clothing and leather and fabrics necessary for
their manufacture and in the meantime this condition intimately affects public
morale. The shortage of trucks and tires, scarcity of which is a basic cause of
the partial paralysis in distribution of Italian-produced foodstuffs from agricultural
regions to needy urban centers, is equally, if not more, critical. Of course, the
list could be extended but it is sufficient here to say in general that shortages
are so acute that, without manifesting its resentment, no modern people could be
expected to support them long.
If the situation is to be alleviated the alleviation must come in form of ship-
ments from United Nations, i.e. shipments in greater volume for selected items
than are now being received; and making allowance for all possible efforts of self-
help that Itelians can exert, they cannot supply these deficiencies.
In regard to promotion of economic improvement for the longer term, there can
be mentioned as one primary essential the importation of fertilizer in substantial
volume for insurance of next season's crop. The question of rehabilitating indust-
rial plants will also be an increasingly important matter for consideration and
action as the German forces move north. For the intermediate period ahead, here is
& field of special employment possibilities, but here again substantial assistance
from the Allies is of paramount importance. Recently, in this general connection,
the Secretary General of the Italian Foreign Office (see my despatch of May 20, no. 4)
put the question of whether in the reorganization of the Italian railroad system the
United States would lend its collaboration. AS being pertinent to the problem of
reconstruction of Italian industry in general, I refer to my comments in the despatch
under reference.
Of course, ACC has analyzed in detail the needs of the Italian economic situa-
tion. However, I wish to point out that ACC in making recommendations is limited by
relatively short term objectives determined predominently by the consideration of
preserving tranquility in an operational theater and to emphasize that if conditions
conducive to maintenance of a stable democratic Government are to be realized, a
broader measure of assistance must be furnished than has been furnished heretofore.
Of course, the problem of inflation exceeds in the gravity of its implication
even the difficulties of scarcity mentioned above; and as the Department is aware,
in drawing up a program to combat this evil 2. special committee of ACC is actively
engaged.
The matter is, at the same time, of such fundamental importance that it should
receive attention on the highest plane. In July there is to be assembled in the
United States an international conference on monetary stabilization and I submit for
Regraded Unclassified
148
- 2 -
the Department's consideration that studies with particular reference to stabili-
zation of Italian currency should, if possible, be initiated now 28 of possible
interest in connection with the adoption of any international program. Having this
in mind, I recommend that in view of the continued absence of Mr. Grady and the
recent departure of Mr. Glassor serious consideration be given to the desirability
of sending a recognized American expert of high caliber to study the stabilization
question in Italy and to make due recommendations for appropriate measures. In
order to study the question of possible American collaboration in the rehabilitation
of selected Italian industries, such expert could well be accompanied or followed
by industrial experts of corresponding standing. Whether any such experts should
operate within or without the framework of ACC is a question for the Department's
decision.
This message was transmitted by Kirk.
BRANDT
DCR:MAS:EA
6-10-44
ef:copy
6-13-44
Regraded Unclassified
Cop No
11
14
NOT TO BE RE-TRANSMITTED
SECRET
OPTEL No. 177
Information received up to 10 A.M. 3rd June 1944.
1. NAVAL
On lst, aircraft from H.M. Aircraft Carriers attacked a
heavily escorted convoy of 3 ships off NORWAY, all 3 ships were hit
by bombe and 4. escort vessels damaged by fighters. 2 fighters
missing.
One of H.M. Submarines off SOUTHERN FRANCE sank a 1000 ton
armed salvage ship, a 400 ton lighter and an R-Boat on 30th, a
minesweeper on 31st and an armed 5,000 ton ship on 2nd.
2, MILITARY
Italy 2nd. Continued good progress. New Zealanders althoug
hampered by extensive demolitions have advanced about 4 miles north
of SORA, they are being helped by parachutists dropped ahead who are
sabotaging German communications. Indians have captured VEROLI and
5 miles to N.E. U.K. troops are fighting for ALATRI.
Canadians have taken FERENTINO and are advancing along
Highway 6. U.S. Forces are now well across Highway 6 in VALMONTONE
Sector, the town itself fell early yesterday and their advance
continues, forces from this area are turning back down Highway 6 to
meet the advancing French and Canadians. VELLETRI has been captured
and heavy counter attacks repulsed in this area, Further gains
reported on COLLI LAZIALI. Bitter fighting continues between VELLETRI
and the sea particularly in LANUVIO-CAMPOLEONE Sector, but here
also some progress has been made.
Yugoslavia Recent German drive by combined ground and
parachute troops was aimed particularly at :
capture of Tito's headquarters in BOSNIA. Bulk of headquarters
including Tito escaped. Heavy German pressure continues. Partisan
operations have been much assisted by support of Allied Air Forees.
3. AIR OPERATIONS
Western Front 2nd. 1,245 escorted heavy bombers, (7. missing
dropped 2,006 tons on batteries and defences in the BOULOGNE area in
complete cloud conditions, 167 tons on military construction near
ABBEVILLE, 411 tons on railway yards in PARIS area where cloud
varied from nil to 3/4 with results generally good, and 339 tons on
6 airfields NORTHERN FRANCE, results - 2 poor, 1 fair, 1 good,
2 unobserved.
1,145 aircraft of A.A.E.A.F. supported by 160 fighters went
to attack objectives in NORTHERN FRANCE and BELGIUM. The few reports
so far received state that 13 tons of bombs were directed at R.D.F.
installations (3 fighters missing).
2nd/3rd. 728 aircraft despatched - coastal and railway
batteries BOULOGNE area 336, (1 missing), W/T station near DIEPPE 107
TRAPPES Goods Yards 128 (16 missing) LEVERKUSEN and other objectives
27, sea mining 53, Intruders and leaflets 77 (1 missing), Weather
conditions BOULOGNE varying EMI cloud, DIEPPE and TRAPPES no cloud,
good visibility.
Italy On 31st and 1st, 713 medium and 128 light bombers
attacked troops and communications in the battle area.
Rumania On 31st/lst Allied bombers dropped 74 tons on
railway tracks over the IRON GATE CANAL at TURNUL SEVERIN.
2nd. Heavy bombers 13 missing) dropped 225 tons on CLUJ Railway
centre and total 395 tons on 3 other important railway centres.
Hungary 2nd. Heavy bombers (1 missing) dropped total 410
tons on railway centres at SZOLNOK, MISKOLC and SZEGED.
Aegean 1st. Allied aircraft attacked convoy North of CRETE:
2 ships and 2 escorts were left burning and other ships were damaged.
Regraded Unclassified
150
NOT TO BE RE-TRANSMITTED
COPY NO.
11
SECRET
OPTEL No. 178
Information received up to 10 a.m., 4th June, 1944.
1, MILITARY
ITALY. 3rd, Further satisfactory progress. New Zealanders
now about 6 miles N.W. SORA in contact with enemy north of High-
way 6. ALATRI and ANAGNI have been occupied. Leading troops
South African Armoured Division reached point on Highway 6 16
miles N.W. FROSINONE. Mines and demolitions have caused delay.
French are in touch with U.S. Forces on Highway 6 two miles east
VALMONTONE. North of VALMONTONE U.S. troops are within one mile
of PALESTRINA. North of VELLETRI they have captured MONTE CERASO,
1t miles S.E. of ROCCA PRIORA and are within a mile of ROCCA DI
PAPA. N.W. and W. of VELLETRI they have captured NEMI and LANUVIO.
Adriatic assault force of British, U.S. and Partisan troops
landed on BRAC Island on lst/2nd. Fighting is in progress.
2. AIR OPERATIONS
WESTERN FRONT. 2nd. Additional reports now received
state that aircraft of A.E.A.F. attacked coastal defences - 350
tons; Roads and railways and bridges - 175 tons; and military
constructions - 115 tons.
2nd/3rd. Tons dropped BOULOGNE area - 865; W/T Station
DIEPPE - 540; Trappes Goods Yards - 470. Nine German aircraft
destroyed.
3rd. Following objectives attacked N.W. France. Fort-
resses and Liberators without loss dropped total 1,445 tons on
gun positions and R.D.F. Stations BOULOGNE area. Aircraft of
A.E.A.F. (4 fighters and 3 Bostons missing) attacked road and
rail communications and bridges - 342 tons. Fuel dumps AMIENS -
50 tons; R.D.F. installations - 91 tons and 500 rockets; coastal
defences - 206 tons; CHARTRES airfield - 113 tons.
3rd/4th. Aircraft despatched:
R.D.F. Station near CHERBOURG
100
Batteries, CALAIS
70
WIMEREUX
65
HAVRE
6
Sea-mining
57
Mosquitoes to LUDWIGSHAFEN
20
Rail junction ARGENTAN
5
Bomber Support
9
All aircraft returned safely. Weather Northern France clear with
good visibility. Good and accurate bombing all four targets.
ITALY. 2nd, 886 medium and fighter bombers (five missing)
operated north and east of ROME and on clcse support tasks in
battle area, Roads, bridges and transport were the main objectives
and results generally were very good. Many hits on bridges re-
ported and 164 motor vehicles,
FMI
Regraded Unclassified
151
The New York Times.
JUN
4
1944
ARGENTINA BREWS
"Break the windows of any such Several official ceremonies have
houses. Tear out the red beards been prepared for tomorrow's cele-
the Jews who are the leaders of bration of the anniversary of the
ANTI-JEWISH DRIVE
the revolt against the governments June Fourth revolution. Among
Bnatch the filthy frocks and the other things, Argentines will for
kull caps off the rabbis in the the first time hear "The March of
hetto and break the teeth of any the Fourth of June," which is des-
rgentine who betrays his country tined officially to take its place by
y asking your cooperation in this the side of the Axis nations' an-
Nationalists Promise Beatings
arcical civil disobedience cam- them such as the "Horst Wessel"
if One-Day Disobedience
paign."
song and "Giovenezza" in Germany
Anti-Jewish Acts Denied
and Italy, respectively.
Few of the original Cabinet Min-
Campaign Takes Place
The Argentine Sub-Secretariat ister and top-rank officials have
of Information has officially de- survived the stress of events that
mied the Reuter Agency story have kept Argentina in a state of
REGIME PLANS JUNE 4 FETE
date-lined in Montevideo to the ef-agitation for the past twelve
fect that there has been a recru- months. It can hardly be said.
descence in Argentina of acts of
therefore, that Argentina is ruled
violence against the Jews, especial-
today by the men who seized
Celebration to Observe Revolt
ly in the Province of Entre Rios.
power in last year's successful rev-
The Sub-Secretariat says the
olution.
of Last Year Prescribed
charge is untrue because ample
Nevertheless, President Farrell
(reedom exists in Argentina for all
and his collaborators owe their
by Military Leaders
reeds.
present position to that event, and
Nevertheless. it is a. fact that
it is not surprising if they, at any
the end of last month the Buenos
rate, celebrate its anniversary as
By Wireless to THE NEW York Times
lires newspaper Radical published
a great date in Argentine history.
MONTEVIDEO, Uruguay, June
list of Jewish-owned business
Bitter internal squabbles be-
3-While the Argentine Govern-
premises in Entre Ríos that had
tween rival groups of officers, on
ment is preparing to celebrate the
been attacked and damaged. On
whom the military regime depends
first anniversary of the June Fourth
May 29 the Federal Commissioner
for its very life, have character-
revolution of last year that deliv-
for that province issued a commu-
ized the year since last June 4.
ered the nation to the mercies of
niqué acknowledging that Jewish
Visible evidence of the divided
military governments with dictato-
property had been damaged in at-
counsels within the Government
rial powers, Argentine nationalists,
tacks, which he attributed to "ir-
has been afforded by the kaleido-
are threatening to hold an anti-
responsible elements" against
scopie succession of men in the
Jewish demonstration if the one-
whom he promised to take action.
principal Government posts. There
day civil disobedience campaign
Thus the press and provincial au-
have been three Presidents, all of
scheduled for next Wednesday is
thorities confirm what the central
them generals, and all of whom
put into effect.
authorities deny.
NE sed the Presidency by more or
Liberal and Leftist elements had
The Ministry of Public Instruc-
ler violent means Five Foreign
on of Argentina has expelled two
or keing Foreign Min-1
proposed that all Argentines mani-
fest their repudiation of President
ouths from the schools they were
istess. of whom two were atmirals
tending and has closed all other
and hree generals, have bllowed
Edelmiro Farrell and his govern-
qcational institutions in the
one another into the Palatio San
ment on Wednesday by refusing to
engage in any of their usual activi-
antry to them. The disciplinary
Martin, A total of thirty Ministers
ties. The nationalists have coun-
don against them, which was
has been appointed, almost enough
to
renew
the
whole
Cabinet
four
tered by electing to hold the Jews
gedly motivated by the fact
responsible and are threatening
they showed disrespect for
times.
them with bloody reprisals,
Argentine (lag. comes at just
The wavering indectaion of the
Violence Prescribed
right time to act as a powerful
militory governments has been evi-
Irrent to any boy or girl who
dent particularly in its foreign pol-
The nationalist threat was con-
planning to participate in the
which is dominated by the
tained in a proclamation that was
vil disobedience campaign" by
question of Argentina's relations
widely circulated yesterday and
t. attending classes when the
with the Axis. At first, Argentina
today. The threat was couched in
line revolution anniversary is be-
seemed more than once to be on
such scurrilous language that it
celebrated.
the verge of a breach, only to draw
cannot be reproduced textually in
back at the last minute. Finally
any decent newspaper. It says
Newspapers Spare Praise
she severed relations with Ger-
that the government was obliged,
Both Nación and Prensa,
themany and Japan on Jan. 26 under
"as a temporary emergency." to
two greatest Buenos Aires demo- circumstances that have never
suppress some of the political free-
cratic dailies, published editorialabeen fully explained. Immediately
doms of the Argentine people to
today, on instructions from theafterward, however, & strong re-
save Argentina from a war fo-
Government. dealing with the pres-action manifested itself in the
mented by the Jews. Then it ap-
ent military regime's twelveArmy, and almost exactly one
pealed to all Argentines, saying:
months of office. Both made theirmonth later President Pedro Rami-
"Observe which are the house
ditogials mainly historical andrez and the Ministers principally
that have the audacity to keep
were sparing of
espe-resporable for the breath of rela-
their doors closed next Wednesday
cially of praise. They primised. tion were thrown out.
and then make liberal use of clubs,
however, to comment on the Gov- Since then, Argentina has shown
You know what we mean."
ernment's actions more fully in
After recalling the anti-Jewish
coming issues.
riots of Jinuary, 1919, in which
several hundred people were killed
the Nationalist proclamation
tinues:
Regraded Unclassified
The New York Times.
152
JUN 4 1944
no further disposition to make
by a rutniess suppression of the
been warned that their children
"concessions" to the United Na-
personal freedoms that had been
will not receive diplomas if the
tions. DE even to accept the logical
most cherished by the people of
children do not attend classes dur-
consequences of the breach with
Argentina. The press has been
ing those days.
the Axis as far as continental se-
curity and defense are concerned.
effectively gagged and must now
One slogan is "Argentina in al-
For this reason, the Argentine
take orders from the Government.
ways right." which calls back to
not only as to what it may not
memory the Fascist slogan "Mus-
Government has not yet been rec-
say, but also as to what it must.
solini is always right." Other alo-
ognized by the principal world
The rights of free speech and of
gans, picked at random out of
powers.
assembly are things of the past.
about two dozen, are: "Argentina
Nazi Techniques Adopted
Constitutional guarantees have
for Argentines." The new Argen-
The present regime now seems
been abrogated and the Govern-
tina wants healthy, strong, heroic
to be firmly entrenched and able
ment does not hesitate to arrest
women." A. set of alogans issued
to force upon an unwilling nation
persons right and left at the slight-
by the Ministry of Public Instruc-
tion for use in girls' schools in-
a program that bears a remark-
est hint of opposition. Leftist la-
able and suspicious similarity to
bor leaders and unions are relent-
clude: "Women exist to beget he-
the programs that the Nazis and
lessly persecuted.
roes, not to give birth to rene-
the Fascists applied in Germany
The Fascist tinge that colors the
gades" and "Argentine women
and Italy. There is hardly a point of
mentality of Argentina's present
must learn to fulfill the obligations
Nazi or Fascist creed that does not
rulers was illustrated once again
set for them by nature."
have an almost exact counterpart
by the great number of slogans
As was to be expected, the at-
in present-day Argentina, from
that. on instructions from the Cen-
tempt to graft Nazi-Fascist ide-
hatred of the Jews to the belief
tral Government, must be written
ologies onto Argentina met with
that women exist only to bear
on the blackboards of every school
strong opposition, especially in
children: from an acute contempt
throughout Argentina during the
Leftist circles. A hundred labor
for everything that is foreign to
June Fourth celebrations, and that
leaders and workers are in prison
a boartful pride in everything that
must be duly commented upon by
or in concentration cample for dar-
in native.
teachers.
ing to express their repudiation of
Alli this has been accompanied
Incidentally, all parents have
totalitarian ideas.
Regraded Unclassified
153
June 5, 1944
10:15 a.m.
HMJr:
Hello.
Operator:
Go ahead.
HMJr:
Hello.
Mabel
Newcomer:
Hello.
HMJr:
Miss Newcomer.
N:
Yes.
HMJr:
Henry Morgenthau, Jr.
N:
Oh, yes.
HMJr:
How are you?
N:
I'm fine, thank you.
HMJr:
Miss Newcomer, the President has authorized me
to invite you to be a delegate to the Monetary
Conference and I hope very much you will be
able to accept.
N:
I'd like to very much. I'm supposed to be
teaching all summer. I'm not sure it's possible.
HMJr:
Well, would you find out if it could be arranged?
N:
When -- what are the dates?
HMJr:
From the first of July to the twentieth.
N:
First of July to the twentieth?
HMJr:
Yes.
N:
That really isn't possible because I have agreed
to teach at Columbia for the whole summer.
HMJr:
You don't think you could
....
N:
I don't see -- I mean, I'd have to ask to be
released completely and I don't think I could
make any contribution at the Conference that
would justify it.
HMJr:
Well, could I differ with
....
Regraded Unclassified
154
- 2 -
N:
I'd like to do it.
HMJr:
Could I differ with you on that?
N:
Well, I appreciate that very much.
HMJr:
I'd be glad to ask President Butler if he would
release you.
N:
Well, may I think it over for -- you need to know
right away, don't you?
HMJr:
No. No. I'd like you to think it over but women
economists who can contribute something on this
subject are very rare.
N:
(Laughs)
HMJr:
And maybe you differ with me on that but we've
looked over the whole list.
N:
Yes.
HMJr:
And it's something that we'd like very much to
have you.
N:
Well, of course, I'd like very much to do it.
I ....
HMJr:
May I be a little personal? Is it a monetary
consideration?
N:
No. I mean -- of course, there would make a
difference there, but that isn't the
....
HMJr:
Because I could find out whether we couldn't
put you on an expert basis for the Treasury.
N:
No, I don't think that would make the difference.
It's a question of my obligation to Columbia.
HMJr:
Well, I'd be glad to
....
N:
It's a question of where I can be useful. That's
the real point.
HMJr:
Well, President Butler, the few times I've asked
him, he's always said, "Yes". I've never had any
trouble with him.
N:
Well, I'm -- I'm just not convinced myself that
I would be more useful at the Conference.
Regraded Unclassified
155
- 3 -
.
HMJr:
After all, he let us have Magill for quite a while.
N:
Yeah.
HMJr:
And there've been -- what's his name -- the other --
the man on taxes -- finance -- Shoup.
N:
Yes.
HMJr:
We've had -- been able to get Carl Shoup any time
we wanted him.
N:
Well, may I think that over for twenty-four hours?
HMJr:
And if you'll call me up collect on District 2-6-2-6.
N:
District 2-6-2-6.
HMJr:
Yes.
N:
All right. Thank you very much.
HMJr:
I want you to come now.
N:
Well, thank you very much.
HMJr:
You know, you won't be turning me down. You'll
be turning down the President of the United States.
N:
Yeah. Well, thank you.
HMJr:
So, you think it over.
N:
All right.
HMJr:
Right.
--
....
N:
I will.
Regraded Unclassified
156
June 5, 1944
10:18 a.m.
Edward H.
Heller:
Yes.
HMJr:
This is Henry Morgenthau.
H:
Yes, how are you?
HMJr:
Are you a Colonel or a General now?
H:
I'm a Colonel.
HMJr:
Well, I'm sorry. I should have started Colonel
and then I'd be
....
H:
Lieutenant Colonel.
HMJr:
What?
H:
Lieutenant Colonel.
HMJr:
All right, Colonel.
H:
(Laughs).
HMJr:
Well, listen, Ed.
H:
Yes.
HMJr:
Do you know anybody on the Pacific Coast who is:
first, his sympathies are with Roosevelt
....
H:
Yes.
HMJr:
and second, knows something about the monetary.
situation in the Pacific area. What I have in mind
is a delegate to the Monetary Conference.
H:
Gee, that's a tough one.
HMJr:
What?
H:
That's a tough one.
HMJr:
Well, that's why I'm calling you.
H:
(Laughs). I don't know of anyone off-hand but
I'd like to think about it.
HMJr:
Isn't there any, either exporter or banker who
is thoroughly versed in the Far Eastern situation?
China, Japan -- there must
Regraded Unclassified
157
- 2 -
H:
Could I -- could I think about that for a day and
call you back?
HMJr:
Will you do that?
H:
All right, sir, I will. I can't think of anybody
off-hand, but I will -- let me consider it today
and I'll call you back.
HMJr:
Call me on District 2-6-2-6.
H:
District 2-6-2-6.
HMJr:
And being you're in the Army I'll let you reverse
the charges.
H:
Okay. (Laughs). Okay, well, I'll certainly think
about it, Henry, for a day. I'm not very optimistic
that I'll be able to help you because I just can't
think of anyone off-hand at all.
HMJr:
My God, isn't there anybody on the Pacific Coast
who's sympathetic to Roosevelt?
H:
Well, there are not many in that field.
HMJr:
What?
H:
There are very few in that field.
HMJr:
Very few. Is there anybody in that field?
H:
Oh, yes, I know a lot of people in the field.
HMJr:
You do?
H:
I'm just trying to winnow out the sheep from the
goats and I find that they're mostly goats.
HMJr:
Goats?
H:
Yes.
HMJr:
Well, you think about it.
H:
All right, sir, I will.
HMJr:
Good bye.
H:
Good bye.
Regraded Unclassified
158
June 5, 1944
11:00 a.m.
GROUP
Present: Mr. D.W. Bell
Mr. O'Connell
Mr. Haas
Mr. Blough
Mr. Gamble
Mr. Smith
Mrs. Klotz
Mr. White
H.M.JR: There are a few people absent, aren't
there?
MR. O'CONNELL: Herb and John and Charlie Bell and
Sullivan.
H.M.JR: Dan?
MR. BELL: Winthrop Aldrich was just in to see me.
He says that he has been approached by the Dutch Govern-
ment for a hundred million dollars credit - commercial
credit, and what was put up to him was practically the
same thing as has been. put up to us with the three
hundred million dollars credit.
He has been to see Mr. Hull who has told him that
they have asked for this credit. He says he doesn't
want to do anything about it except in cooperation with
the Treasury, but he feels that if something could be
done to encourage these people to go to commercial
channels rather than Governmental and UNRRA, it would
be much better.
I think he talked to the Belgians, also. He sug-
gested to both of them that UNRRA was open. They seemed to
sort of resent UNRRA as being on relief. They would rather
do their own job and do it through credit operations.
Regraded Unclassified
159
- 2 -
He just wants to know what he should do about it,
whether he should pursue it. I told him to wait a few
days and maybe we would have some decision on the
thing.
H.M.JR: Let me ask you a question. Have I - has
the President invested in anybody the authority to
supervise foreign loans? Do you have to get a license?
Supposing, for argument, that I said I didn't want
to do it. Could he go ahead and do it anyway?
MR. BELL: I don't think he would.
H.M.JR: But can he, legally?
MR. WHITE: They have frozen funds, but they have a
general license.
MR. O'CONNELL: You could change that.
MR. WHITE: That is your authority.
H.M.JR: Change it how?
MR. O'CONNELL: You could require all transfers of
funds to be pursuant to a special license and then re-
fust the license. But you would have to change the
whole setup.
H.M.JR: Has anybody seen Barkley? Is he sore at
us or anything?
MR. O'CONNELL: I haven't seen him since--
H.M.JR: He snooted me on the phone the other day.
He said he would let me know.
MR. BELL: He was fine on the debt hearings.
MR. WHITE: The last time we saw him on this, he was
very good.
Regraded Unclassified
160
- 3 -
MR. O'CONNELL: He was all right.
H.M.JR: He promised he would see me.
MR. WHITE: This is exactly the position that we
have taken, Mr. Secretary, and it seems to me it vindi-
cates us a hundred percent. We have said that the
Netherlands is one of the countries that could borrow
on the commercial market, and it would be a great mis-
take for the Government to extend loans to those coun-
tries that have the highest credit. They ought to
try the private market.
They have tried and apparently the private market
is willing to respond, and it seems to me that we ought
to encourage that as much as possible.
MR. BELL: They are trying to get an advanced
credit here in order to get some commitments in the
industrial market for securities, which gives them
priority.
Now, Aldrich says, "I appreciate that is what they
are trying to do. I don't think I ought to step out
here and make this commercial credit and give them that
priority unless the Government knows exactly where we
are going on it."
MR. WHITE: It doesn't give them a priority unless
the WPB will give it to them. but in any case, the
question is not--
MR. BELL: It would give them priority when WPB
relaxes. When they enter into a contract with industry
to furnish machinery - after this war, it gives them
first chance at our market.
H.M.JR: Not necessarily.
MR. BELL: Well, at least they are ahead of the
others.
Regraded Unclassified
161
- 4 -
H.M.JR: I think that is - what shall I say -
somebody eise's problem. I think this, Dan - I mean,
after all, the President has a Committee, and all the
rest of that stuff, on priority.
Now, let's say that they want to buy locomotives.
Well, Mr. Nelson knows how much our American railroads
need. I suppose they have requests in for two years
for locomotives and cars, and so forth and so on.
MR. WHITE: The conditions of their obtaining the
loan, you will remember - that they were willing to
agree to when Jones was considering giving it to them -
was that they would place orders wherever they could, but
that those orders would be filled under such conditions
and at such times as whatever authorities existant at the
time would grant, and they would be subject to whatever
priorities or allocation of materials was required. But
it has gone beyond that. It is a question of whether
the Government will make the loan privately.
MR. BELL: I feel as you do, that we ought to guide
them towards the commercial market if we can do it. He
feels that certainly Belgium would like to go the same
way. He thinks Norway would like to, and that France
wouldn't like to go the same way.
H.M.JR: Do you mind calling that UNRRA?
MR. WHITE: I think the Johnson Act might
stop France, but not Norway and Holland.
MR. BELL: It would stop Belgium.
H.M. JR: Can I get a word in, please? In the first
place, on this thing of the Government giving the thing,
Hull has finally, after months, written a letter to Jones
saying that he approved this - I mean, of Jones doing it.
I will show you a memorandum from the President
where I cabled the President asking about it. The first
time I submitted it to the President, months ago, I
Regraded Unclassified
162
- 5 -
submitted a memorandum showing why I thought it was a
mistake. He never answered me, but he got my memorandum.
I sent him one when he was down in South Carolina.
He comes back and says, "I want to talk to you
about this, indicating he was interested. Soit is only
a question of time. I thought that we would be licked on
this thing. Now, along comes Winthrop Aldrich and says
we can make it. I say, "Wonderful."
MR. BELL: I thought maybe this might help at the
White House.
MR. WHITE: It would help a great deal, it seems
to me, to strengthen the position you took.
MR BELL: He said this would be a three-year bank-
ing credit, and after that it would be public quotation
of the Dutch bonds to take up the banking credit.
H.M.JR: I would say this, gentlemen, that I would
like to go ahead with it, but when we do this simultaneously
or just change it SO that these fellows - if we have the
authority, we have to license them. Now, if we suddenly
announce nobody can make a loan from a bank - no Govern-
ment - without licensing it, and then have no business,
they would say, "Ah ha, more interference." But if we
did it simultaneously and issued the license, then we
establish the precedent.
MR. O'CONNELL: I would like to think about it a
little bit. You have to change the general license
that is outstanding now under which this deal could be
made without special license.
MR. BELL: You could make this an exception to
your general license.
MR. O'CONNELL: By amending the general license.
H.M.JR: I didn't make myself clear. Let me give you
the result. I want it so that if any bank - before any
Regraded Unclassified
163
- 6 -
bank can make a loan to a foreign Government, it has to
get the permission of the U.S. Treasury. Now, take me
through all the intricacies. I just want the result.
I want the thing changed so they will have to do it,
but we will do it simultaneously with issuing the
license under the first system.
Can be?
MR. O'CONNELL: I think it can be.
H.M.JR: Mr. Roosevelt always says to the Attorney
General, "This is what I want, Francis. Now I am not
trying to influence you."
MR. O'CONNELL: I get the point, but I would like a
chance to see how it could be done mechanically.
H.M.JR: But the thought is, I don't want to start
anything without any business, but with a piece of busi-
ness in hand, let's do it. If they kick, you can say,
"Why kick? We will give you a permit, and then come and
see us. If it is O.K., all right."
MR. BELL: He said Hull did tell him this was more
in the Treasury field than the State Department.
H.M.JR: That was nice of him!
MR. WHITE: Oh.
H.M.JR: Ought we to clear a thing like that with
the President?
MR. WHITE: I think so, because it is the first
of its kind, and moreover, it supports the position you
took and it is evidence of the justice of your turning
it down six months ago. I told the Dutch six months ago
they could borrow two hundred million dollars at a
reasonable rate in the New York market. They thought
they could do a better deal with Jones, and if the Govern-
ment gave them a loan it would give greater status to
the Exiled Government.
Regraded Unclassified
164
- 7 -
That is why they didn't want to go to the private
market. So I think it would be helpful, in view of the
fact that it is the first loan of that character, and
in view of the memo that the President gave you.
H.M.JR: Would you get word to Mr. Aldrich that I
am giving it sympathetic consideration?
MR. BELL: I will.
H.M.JR: He could give that to the Dutch and that
will let up on the pressure on the other thing. If
Jesse hears about it, of course, he will make the loan
right away in order to get his commission for the RFC.
MR. BELL: I am having lunch with the Ambassador.
I might get it to him before.
MR. O'OONNELL: You think these two things are
mutually exclusive? Aldrich proposes a hundred million
and Jesse's is three hundred million.
MR. WHITE: They said they needed three hundred
million to give the orders they want to give. They may
have talked three hundred million to Aldrich, but he
said to try a hundred.
MR. O'CONNELL: But if they make a deal with Aldrich
for a hundred million, does that exclude Jesse's?
MR. BELL: I should think SO. He said the Dutch
mentioned the pledging of the sequestered property here.
He said, "I don't like that, frankly, because we expect
to do business in Holland and we think we might get some
very dissatisfied customers if we undertook to take their
property in pledge for this loan. We prefer to make it
just a straight Government bank credit and possibly have
an understanding with the people in Washington that this
property would not be released until satisfactory arrange-
ments can be made."
MR. WHITE: He doesn't want any collateral - except!
Regraded Unclassified
165
- 8 -
MR. BELL: No, he wants a sympathetic Government
down here. After all, the Government has never been
sympathetic with foreign loans.
MR. O'CONNELL: Hasn't the Dutch Government got
property?
MR. WHITE: No, giving them collateral raises the
question you would want to go into, because we haven't
wanted to investigate those interests. But the Dutch
Government has been willing to leave gold as collateral.
MR. O'CONNELL: I mean Government-owned property.
MR. WHITE: Yes, they have. They have claimed it
belongs to the Bank of the Netherlands when they don't
want to--
H.M.JR: Excuse me. One other thing, Mr. General
Counsel: I am sure you would think of this, but can
we issue a license to a bank that the Department of
Justice is suing for evading Treasury regulations?
MR. O'CONNELL: Sure. We probably issue licenses
to the Chase Bank every day. Oh, sure.
H.M.JR: How the New Deal has slipped!
MR. O'CONNELL: You think we should put them out
of business when we have them indicted? Well, we deal
with law-breakers all the time, even the Chase Bank.
H.M.JR: And then you make me stick to the OPA rules.
It is the little fellow that pays. If you are big enough
you can get away with it.
MR. O'CONNELL: Sure, double standard.
H.M.JR: Chase Bank with three million dollars' worth
of deposits - it is O.K.
What else do you have, Mr. Bell?
MR. BELL: That is all the time I will take up this
morning.
Regraded Unclassified
166
- 9 -
H.M.JR: I want to do this thing that I am seeing
Acheson last, and I will have McConnell come in. The
thing that Acheson is coming in on, Harry, with McConnell-
and I will ask Bell and you--
MR. WHITE: McConnell should be here on the major issue.
H.M.JR: He will. I said I would do it last and
then invite him in.
Theodore?
MR. GAMBLE: You asked me to get another poster on
this (indicates poster of Eisenhower).
H.M.JR: Bring it a little closer, will you please?
MR. GAMBLE: Don't you think it is good?
MRS. KLOTZ: Beautiful.
MR. GAMBLE: This is by Charlie Leyendecker the
singer's son.
H.M.JR: Good, but I don't see - the glasses, I think,
are too prominent. It looks like an advertisement for
Bausch and Lomb.
MR. GAMBLE: You understand, the base goes on here.
H.M.JR: But it looks like an advertisement for Bausch
and Lomb. Let Fred see it. I don't see why you need that.
Just take that out. You could have a map there--
MR. WHITE: I agree it detracts from the center of
attention.
MR.SMITH: I think they are just too black, that is all.
H.M.JR: I don't see why you need it. But I bet you
that agency handles Bausch and Lomb.
MR. SMITH: It isn't an agency. That is the fellow
that does the things for Time - Charlie Leyendecker.
Regraded Unclassified
167
-10-
H.M.JR: I think it's swell. Simply do away with
the Bausch and Lomb, will you?
MR. GAMBLE: Yes. That is all I have, sir.
H.M.JR: I like the picture. I think they can
bring up the background. God, Bausch and Lomb ought to--
MR. GAMBLE: We couldn't put a gun in his hand or
a spear in his hand. We wanted to put something that
tied him to the actual invasion.
MR. WHITE: From London he is looking at the North
Africa Campaign!
H.M.JR: He could perfectly well have in both hands
the map.
MR. GAMBLE: If you don't have too much objection,
I think he will just cut in to that.
H.M.JR: All right, and wash it out.
MR. SMITH: It will wash out and the red will come
up in the reproduction.
H.M.JR: Look, Roy, you are not the forgotten man.
I have got your things. The way I am thinking along
without having gone into too much and I wish you would
think about it, I would like to be able to say to you,
"Roy, this post-war taxing is your baby. Give me agenda.
Please go ahead with it and I will see you about it the
first of August.'
MR. BLOUGH: Well, if you are willing to give us
more or less carte blanche, we'll be glad to operate
that way.
Regraded Unclassified
2
168
-11-
H.M.JR: Well, I am. I have enough confidence in
you. But I just can't take on another thing. I have
to harvest my strawberries and I am very busy.
MR. BELL: Does that include the outside contacts?
H.M.JR: Yes, I just want to say to Roy, this is
your baby, will you please take it and go to town?
MR. BLOUGH: Thank you. I will do what I can. Leon
Henderson, you may have noticed it Saturday night in com-
paring what you call the "preparedness of England for the
post war period and the unpreparedness of the United States",
went through a long list of things and came to taxes
and said there is absolutely no post-war tax plan in
Washington. I thought that would be a matter of interest
to you.
H.M.JR: Well, you know Leon pretty well, don't you?
MR. BLOUGH: Yes, I think you are being extremely
generous to me by making that statement.
H.M.JR: Do you know Leon?
MR. BLOUGH: Oh, I thought you said, do I know you
very well. Oh, yes, I know Leon well enough to get in
touch with him.
H.M.JR: Well; I would go ahead with it, use your
judgment in getting it around, and so on and so forth.
But otherwise, I have you stalled and I don't want to
stall you. I want to go ahead with you.
MR. BLOUGH: That is fine. I appreciate that.
H.M.JR: That won't mean you can't come in and say,
"Look, which way would you go?"
MR. BLOUGH: I would like to do that and send you
little notes from day to day as to what is going on.
Regraded Unclassified
169
-12-
H.M.JR: Just go ahead. I would keep Fred posted
and everybody else, but I mean so you can let it leak
out. Now, Baruch at twelve-thirty, Friday, I asked him
point-blank, "Mr. Baruch, are you doing anything on post-
war tax?" He says, "No, that is a Treasury job. I am
glad you asked me, they misquoted me. I believe that the
old-line departments should do that kind of thing. If
we want something, we will look to you.'
MR. BLOUGH: Fine.
H.M.JR: He says, "I am very interested"- so as you
go along, if you will, kind of as Baruch advised, consult
with him, flatter him, and he has a good head--not Hancock,
Baruch. Keep him posted and he will be perfectly happy.
MR. BLOUGH: Good. On another matter, the reason
you were not able to get Senator Barkley may be that the
men who were to be conferees on the debt bill were meeting
informally at ten o'clock this morning.
H.M.JR: They said he was in a committee meeting.
MR. BLOUGH: And we have an understanding with the
House Clerk that if we are needed they will get in touch
with us. Otherwise, we are not going to the meeting.
H.M:JR: You just get that thing rolling, will you?
MR. BLOUGH: Yes, thank you.
H.M.JR: George?
MR. HAAS: I have gone over that Myers material.
You said you might want to talk to me.
H.M.JR: Now listen George, get your gang together,
will you, and do a little original thinking on trends that
I can use in my speeches, along the line that I asked you
Regraded Unclassified
4
170
-13-
for this thing;for instance, that I want to use this,
that in the month of May we spent more money for the
war than we have any other month since the war started.
And this talk that everybody can sit back and let nature
take its course is the bunk. Now there must be a lot
of statistics. Get your gang together and say, "What
can we give the boss to use in a speech to show the
people the need of buying bonds?"
MR. HAAS: We are already working on that.
H.M.JR: I know, but I just want to drive it home
with a sledge hammer.
MR. GAMBLE: George got one good story on this rumor
that is coming from the battlefronts, to quit buying bonds
and the war will end sooner. It is a very good story.
H.M.JR: But please, the next two or three days,
nothing is as important as that.
MR. HAAS: We can get you, we can go farther ahead
than May. We can get the calendar '44, what the aircraft
and the whole business will amount to. About these cut-
backs, we have an argument on that.
H.M.JR: I can't take all of you along, so get this
stuff down so we have this stuff, some vital statistics
to show the people that the war is all ahead of us still.
Now--
MR. HAAS: I will give them a kit.
H.M.JR: I'll bet you, we could get some figures,
what it took, the materiel, to get to Rome.
MR. SMITH: You would have to get them from Marshall's
office.
H.M.JR: Will you make a note?
Regraded Unclassified
5
171
-14-
MR. SMITH: Yes.
H.M.JR: From September 8th until July 4th, what did
it cost, the materiel, shipping tonnage, and manpower.
Do you see? To go what, one hundred and fifty miles?
MR. SMITH: I don't know, we will check.
MR. GAMBLE: Less than a hundred.
H.M.JR: And say, "All right, we gave the Sicilian
figures, you see. But from the time we landed until--
just for the United States--we had to take so many ships,
SO many this and that. Our casualties were so many."
I mean, I am beginning to think about this speech. I
will try to make some contributions. But this is what
it was. Now just this one little piece. "Now ladies
and gentlemen, I will give you some idea of what it is
going to take to get from here to Berlin. You can use
your own imagination what it is going to take to go from
the Channel to Berlin, if it took so long to get from
Naples to Rome. II Let George help.
MR. SMITH: Can you get those figures or will we
have to get them through Marshall's office?
MR. HAAS: We work that way, too. The last time
Sid got what it cost to bomb Berlin . He got it from
the captain. The captain cails up and says, "Don't tell
anybody who gave you those figures."
H.M.JR: You make a start on it. If you don't, some-
where by sunset, let me know. But I think it would be
quite dramatic, don't you?
MR. SMITH: I think it would.
H.M.JR: So much from Naples to Rome. You can use
your own imagination what it will be from the Channel to
Berlin. Also from the nearest--and let's do the Navy thing.
Regraded Unclassified
172
-15-
What can we use comparable? Think of something comparable.
MR. HAAS: How about that thing in the Marshalls?
That Kwajalein thing.
H.M.JR: Something comparable. Some cut-off date.
MR. HAAS: That expedition in the Marshalls, where
they took Kwajalein.
H.M.JR: Something like that. You can ask Gene
Duffield. He will help you.
MR. BELL: The Navy has lost quite a bit in the
Mediterranean, Mr. Secretary.
H.M.JR: Not relatively.
MR. BELL: Isn't that the most expensive thing they
have done?
H.M.JR: No, relatively, no. But tell Gene what I
want. Tell him to give us some information on expedition
like this and say, "Now gentlemen, you use your own
imagination what it is going to take to go from there to
Tokyo. And if you want a third one, that Burma thing
must be terribly expensive. Do you get the idea, George?
Tell these people. what these things cost and then say,
"All right, now we have to open up the Burma Road, get
goods into China. That is ail still ahead of us." If
they would let us say, "Don't forget that the Japanese
still have ten million troops, which I think is the figure,
"and the Germans have so many troops"--
MR. HAAS: How about some of these--well the bombard-
ment of Germany?
H.M.JR: No, we have used that to death. If I can
get it over to them that the Japanese have so many foot
soldiers. You hear everything will be won in the air.
They still have ten million troops. The Germans have S0
many troops, and we have got to lick those troops before
Regraded Unclassified
7
173
- 16 -
we get Tokyo and before we get to Berlin. Because every-
body thinks you are going to win in the air.
MR. BELL: Suppose they would let you use the number
of divisions we had to whip in Italy. It cost us so much
money and you might be faced with several times that many
in France.
H.M.JR: After all, the Germans have been fighting
for a year with a verymuch smaller air force, but when
I talk with these soldiers they keep reminding me how
many millions of troops the Japanese still have on foot,
and the Germans have. "Now, those people, ladies and
gentlemen, have to be licked, and it will cost lots of
money and lots of lives." I don't think anybody has
said it just like that, have. they?
MR. SMITH: No, nobody.has.
H.M.JR: And if you begin to use the air, everybody
thinks you are going to win the war from the air.
MR. GAMBLE: You may get a good story out of the
Maritime Commission.
H.M.JR: All right. George, you have from now until
Wednesday hight. Drop everything and get on this, will
you, please?
MR. GAMBLE: Saturday. our man Simons was here. He
had just left a meeting in the Maritime Commission and
they had agreed to supply MacArthur with a one hundred
and nineteen troop transport to move five hundred thousand
men before the first of September to some destination.
They are converting to do it.
H.M.JR: Who is that ex-advertising man that is in
charge of all public relations?
MR. GAMBLE: He is out of there now.
H.M.JR: Did he go back to business?
MR. GAMBLE: Yes, but you would have to get pretty
Regraded Unclassified
8
174
- 17 -
high up to get the story.
H.M.JR: Admiral Land.
MR. BELL: They wouldn't let you tell that, would
they?
MR. GAMBLE: But something comparable to that, Mr.
Bell.
H.M.JR: But I think of all the things, let's tell
these people the number of foot soldiers our enemies
have and how much it has cost to'do just a little piece.
I don't know which one it was, where the first Cavalry
Division landed, on one of those things. You ask the
Army. But if necessary, George, -don't leave a stone un-
turned. Go over and sit on somebody's desk until you
get it.
MR. HAAS: Okay.
MR. SMITH: Sit on somebody's lap and get it.
H.M.JR: Leave that to George!
MR. HAAS: I don't do it that way.
H.M.JR: Bob says there is a new era. When a marine
or soldier walks down to these offices in the Navy Department
with all the girls, he says they whistle at the men just
the way the boys used to whistle at the girls crossing
the football field. But you get busy now.
MR. HAAS: Yes.
H.M.JR: Fred?
MR. SMITH: I have nothing. I am just working on
this broadcast which we will have in here at four o'clock.
H.M.JR: Joe?
MR. O'CONNELL: These things are to be taken up in
that later meeting if you want to talk about Acheson.
Regraded Unclassified
175
- 18 -
MR. BELL: Did you see the Russian Ambassador's
letter?
H.M.JR: All Mrs. Klotz says is that they have lost
everything.
MR. BELL: No, just one plane. He gave us the number
of boxes that have to be replaced. The unfortunate part
about it was they lost the dandy roll that will make the
impression. That is the first thing they start with.
MR. WHITE: Where did this plane crash?
MR. BELL: I don't know, but, God, we would lose
that! We lost all the samples of the material and all of
that which is the hardest stuff we had to replace.
H.M.JR: Was it a Russian plane?
MR. BELL: No, our plane. Just said it crashed and
lost everything. I assume that it burned, I don't know.
I didn't make any inquiry of the Army. I let it go. we
are doing everything we can to replace it, but it is
going to take a few days.
MR. WHITE: Didn't he say they were going to provide
the planes?
MR. BELL: They went from here. I don't know where
theymet them, but five American planes left here.
H.M.JR: Well, if Mr. Bell, Mr. White, Mr. Joe O'Connell
will stay - is there any lawyer you have working on this
with you?
MR. O'CONNELL: Aarons.
Regraded Unclassified
176
TREASURY DEPARTMENT
HH
INTER OFFICE COMMUNICATION
DATE June 5. 1944
TO
FROM Mr. Haas
Secretary the Morgenthau
In accordance with your request this morning for
information on Army and Navy costs for specific expedi-
tions, such as, the Naples to Rome campaign, the Burma
campaign, or the invasion of the Marshall Islands, we
have proceeded in the following manner:
1. We asked Mr. Bell to call Under Secretary of
War Patterson and Secretary of Navy Forrestal; to outline
to them the question you had in mind; and to ask them to
designate an Army man and a Navy man to help us obtain
the information desired. Mr. Bell made these calls
shortly after noon today and General Carter was desig-
nated for the Army and Mr. Duffield for the Navy.
2. We held a conference with Colonel Troper from
General Carter's office about 3 p.m. and with four Navy
Officers sent by Mr. Duffield about 3:30 p.m. We set
the question before them and told them you would need an
answer by noon on Wednesday.
3. During our conversation with the Army and Navy
representatives, we phrased the question for which an
answer was desired as follows:
How much did it cost the United States for
the Army that moved from Naples to Rome?
that conducted the Burma campaign? for the
Navy units that conducted the invasion of
Marshall Islands?
We brought out in our discussions that you wanted to know
how much the people of the United States had invested in
the military machine commanded by General Clark in the
Naples to Rome campaign, or by Admiral Nimitz in the
Marshall Islands campaign. This would include not only
the cost of the materiel at the command of General Clark
or Admiral Nimitz, but also the cost of training, equip-
ping, feeding and supplying the men involved in these
Regraded Unclassified
177
Secretary Morgenthau - 2
operations. We made it clear that the figure desired was
the entire capital cost of the military machine involved
rather than an out-of-pocket cost for the particular opera-
tion undertaken by that machine. A figure 80 arrived at
would be more or less comparable to a figure on the total
war expenditures to date, inasmuch as a large part of
these expenditures have been for the purpose of building
up a military machine for the United States which is still
to undertake its most important operation.
4. Neither the Army nor Navy representatives were
optimistic about being able to obtain the information
desired by noon on Wednesday.
Regraded Unclassified
178
June 5, 1944
11:40 a.m.
FOREIGN EXCHANGE RATES
Present: Mr. D.W. Bell
Mr. O'Connell
Mr. White
Mr. Luxford
Mr. Aarons
H.M.JR: I am going to talk first about this pay-
ment of troops.
MR. WHITE: Do you have reference to this? (Refers to
Memo transmitted by Mr. McCloy to the Secretary on June 3)
H.M.JR: What I want to settle first, because that
is what this appointment is for, is this question of
how we could pay our troops in Norway, Holland, and
Belgium, do you see?
Would you mind stating the position as it is now,
and then - who is in on this for you? We will do this
thing first.
MR. WHITE: Several men--
H.M.JR: I don't know whether we need them, but
let's go ahead. Is Luxford in on this?
MR. WHITE: Luxford has been in on it.
H.M.JR: I want to settle that first.
(The Secretary sends for Mr. Luxford)
(Mr. Aarons enters the conference)
Regraded Unclassified
179
- 2 -
MR. WHITE: The situation as it exists is as
follows: With reference to the three countries which
you cited, currency of those countries has been specially
prepared by those Exiled Governments and in amounts ade-
quate and units desired, are in the physical possession
of the Bank of England who are acting as fiscal agents
for General Eisenhower; and they are to be used by
General Eisenhower in such amounts at such times as he
sees fit.
The terms of adjustment have not been settled and
that is what you are taking up now.
MR. BELL: Any rates of exchange established at
all?
MR. WHITE: Exchanges on three countries are estab-
lished, and currency is there; so as far as the actual
operations of the army, they are set to go.
MR. BELL: So there is no adjustment there?
MR. WHITE: There will be an adjustment, but
there is no adjustment as far as their initial operation
is concerned. The reason why I can't answer your ques-
tion is because : - I mean, I will bring it in later.
There is some adjustment, but the exchange rate is set
and the money is there.
(Mr. Luxford enters the conference)
MR. WHITE: The Dutch Government and the Belgian -
the Norwegians haven't taken a definite position. The
Dutch Government is the leader; the Belgians right along
with them. They want this sort of an arrangement. They
want the United States to credit them every month or
so the amount of dollars equivalent to the amount of the
currency, their currency, which is used for pay of
soldiers, SO that they will have dollars available at
once.
H.M.J.R: Pay for what?
Regraded Unclassified
180
- 3 -
MR. WHITE: The Dutch currency which the American
troops use, which they receive as pay. Accompanying
that, they have an arrangement which hasn't been consum-
mated yet with respect to what they will provide as
Lend-Lease in Reverse - certain services and certain
materials in those countries. It is an agreement with
the State Department which has not yet been signed, to
my knowledge.
-
But so far as the currency which is used for troops,
they want to get paid in cash, in dollars. If the Army
needs to buy other things, they would like to have them
buy those things through this Lend-Lease in Reverse, so
that the Army will not use any currency.
H.M.JR: You are going too fast. Let me see if I
understand this thing myself. The way we stand now,
the Dutch have given us SO many guilders, for which they
have been given a bookkeeping credit.
MR. LUXFORD: we are keeping entry.
MR. WHITE: AS we take it, we put it on the record.
H.M.JR: Let's say they have given us a billion
guilders and we have to give them a receipt for it.
Now, what they are saying is that as we spend those
guilders, if we spend a hundred million guilders - when
I say spend, that is, we use them in the form of pay to
our troops--
MR. WHITE: That is right. The troops will be paid
in guilders.
H.M.JR: Then they want us to pay them - to credit
them with, for instance - let's say a guilder is worth
twenty cents--
MR. BELL: Twenty million dollars.
H.M.JR: Is that right?
Regraded Unclassified
181
- 4 -
MR. WHITE: That is right.
MR. BELL: That is the first step.
MR. AARONS: On a monthly basis.
H.M.JR: My position up to now was that I didn't
want to settle that until we get around to the general
settlement of what bill they would render us for having
liberated their country.
MR. LUXFORD: Render our bill to them!
MR. BELL: You wanted to put it on the same basis
we are operating in Italy and France.
H.M.JR: France?
MR. WHITE: You see, we didn't meet their problem
directly with France because we are using money which
we printed. But the same type of adjustment that we
contemplate in France is what we would like to do with
Holland, and so forth.
H.M.JR: As I understand it, the reason that Acheson
is so pressing on this thing, he has got a Lend-Lease in
Reverse in which he has been, I think, too tough, for once,
because they are saying that the Netherlands must furnish
all the food, and SO forth and SO on, and pay for it,
that our troops need.
MR. WHITE: Provided that that grant of food and
services does not necessitate imports.
The reason I say that "provided" is because that is
an important area, both for confusion, controversy, and
you may come out with very different results. We had
wanted the Army to be provided with the necessary cash
or banking deposits, either, to buy whatever they need,
80 that they won't have to go, hat in hand, to ask for
it.
Regraded Unclassified
182
- 5 -
H. JR: But you have sort of taken the position
right along that on this particular thing we haven't
been on too sound ground.
MR. WHITE: We have been on sound ground, but we
haven't had any support. The State Department has brought
great pressure against us, because they have felt that
the British Treasury is thoroughly in sympathy with them,
and not with us. The British reasury is thoroughly in
sympathy with them and not with us. The British Treasury
is ready to write the kind of agreement they have asked
for. They are ready to give them sterling for the
guilders which they would use for troop pay.
MR. BELL: In other words, the Treasury is absolutely
alone in this position.
MR. LUXFORD: Except the President is in agreement
with the Treasury.
H.M.JR: They claim the President understands.
There are certain things I want to fight for and do
fight for until I either win or get licked. As I say, I
have the feeling from Harry right along that he didn't
feel that this was too important a thing to fight for.
Now, this other thing is much more important - this
question - the McConnell thing.
(Miss Chauncey enters the conference)
H.M.JR: (To Miss Chauncey) This thing when we
wrote the President, he sent us back a note. The first
time I think Mr. Beil took it up with him in regard to
the Dutch and how we should pay our troops, and the
money - will you bring that in - what Mr. Bell sent
him, and the little memo that came back.
MISS CHAUNCEY: It was discussed at Cabinet, I
think.
H.M.JR: Yes.
Regraded Unclassified
183
- 6 -
(Miss Chauncey leaves the conference)
MR. WHITE: I think there is one further point I
should mention before you make up your mind.
H.M.JR: I haven't made up my mind. I don't want
to find myself in the position - and I am being very
frank with all of you - that the State Department
thinks we are just unreasonable from their standpoint,
and everything. We have got this monetary conference
coming along, and so far, on the surface, they have been
very good.
Now, of course, the thing that Acheson doesn't like
me to say is that I made a bargain. I said, "You deliver
a freezing on the Argentine for me and I will do this."
Well, he hasn't been able to. I think the fellow really
made an effort.
The two things have nothing to do with each other.
They are totally unrelated. But I could be influenced
either way on this thing.
Now, if you will?
MR. WHITE: We have made one additional gain which
I think should be mentioned. As the situation stood
before, if they had their way; if We went along with the
State Department, we would have paid them cash at the
present rate of exchange for the currency which we took
as pay for soldiers. The present guilder rate is, I
think, forty-three cents, or something like that - some
odd figure.
H.M.JR: What is N.E.I.?
MR. WHITE: Netherlands East Indies. It was around
fifty-three.
Now, we want to make the same arrangement with them
that we have with the French; namely, that there will be
Regraded Unclassified
184
- 7 -
an adjustment in the rate on the basis of the final rate
which is adopted, under the assumption that the Dutch
rate may be depreciated a year or two from now, or less
than that. So, instead of paying for the money we buy
now at the high rate, which we feel is too high, anyhow,
there will be some chance for us to make an adjustment.
H.M.JR: What is the rate we said on my letter to
the President.
MR. WHITE: The official rate; I think it was forty-
three cents. We have accepted the rate which they wanted.
H.M.JR: We are going in on forty-three?
MR. WHITE: It amounted to a thirteen-cent deprecia-
tion, I think, from what they had before. I am not sure
of my figures.
H.M.JR: Well, whatever it is--
MR. WHITE: We told them it was too high, but it is
their responsibility and we will take it. At the time
we accepted, we felt that we weren't going to pay them
for the currency and we would have an opportunity for
adjustment. But if we are going to give in and pay them
cash, then we will want the same agreement that we have
with the French; namely, that the rate will be adjusted
if there is to be a substantial depreciation in the
Netherlands guilder.
MR. BELL: That gives us no opportunity, though,
to get any credit back on the back transactions?
MR. WHITE: Yes, it is retroactive. In other words,
SO we would not be in the position--
(The Secretary turns on the radio)
MR. WHITE: You expecting a Second Front?
Regraded Unclassified
185
8
H.M.JRI My God! Everybody questions me. 1 can't
de anything without--
MR. WHITE: I have got up a couple of mornings for
nothing.
H.M.JR: Every time 1 blink an eye, somebody -
All right.
Didn't the French sign thist I thought he had to
go back to get it confirmed.
MR. WHITE: That la right, but he says there in 1,
doubt about getting it.
One other question that bus mentioned, if there is
an adjustment, it La not our Intention, unless that is
decided, to make any adjustment to the soldiers. This
la just an adjustment between the Treasuries.
In other words, you pay the American soldiers going
into France at the two-cent rate. Suppose, sometime a
year from now that an adjustment la made between the
two Governments at a rate, let's say, one and a half
centa. There la no intention of going back to the
soldiera and saying, "We have a better rate than we
thought we would, and ne will give you the difference."
MN. BELLI Are we going to get an adjustment on
what we have paid the soldiers?
H.M.JRI The french offered us: it was their
auggestion.
MR. BKLL: We will be having claims for the next
fifty years.
MR. O'CONNELL: If you attempt to adjust with the
soldiers.
H.M.IN: No, it may seem inconsistent, but that is
a thing between Governments. Still, this doesn't prevent
Regraded Unclassified
186
- 9 -
us from doing what Bell and I were talking about, of
adjusting the rate every month for the soldiers.
MR. WHITE: Oh, no. You can adjust that rate as
often as you want, but you can't adjust the rate as
long as an official rate is maintained.
H.M.JR: Why not? As I understood in the talk with
the French, they said we could raise this thing any time
we wanted to, didn't they?
MR. WHITE: We could raise it with them, but not
announce publicly that we are using a different rate
while they are trying to keep a two-cent rate, officially.
H.M.JR: No, but we can raise it with them.
MR. WHITE: Oh, yes.
H.M.JR: How good records are you keeping on all
of this stuff?
MR. WHITE: On this part here we are keeping very
good records, but in the Treasury files, legal files -
our files and your files.
We mentioned at a discussion, how do we know we will
be here when people will negotiate for these terms?
H.M.JR: Harry, does that mean Mr. Roosevelt isn't
going to run?
MR. BELL: He may not be elected.
MR. WHITE: My God, I let the cat out of the bag!
(Laughter)
H.M.JR: I think that this gives me a very graceful
retreat.
MR. WHITE: You see, the Dutch haven't accepted that
adjustment. We have tried them out with the N.E.I.
Regraded Unclassified
187
- 10 -
We refused to accept their letter, you remember,
and we sent them a letter very recently in which we have
said that this money should be turned over, and in which
this adjustment should take place. He is taking it up
now with the Minister of Colonies.
H.M.JR: You made them this offer?
MR. WHITE: Oh, no. We have said that in any case,
any rateof exchange that is to be used, will be subject
to this adjustment.
H.M. JR: Why don't we say to Acheson this afternoon
at three, "We will use the French formula"?
MR. WHITE: But the French formula is not what the
Dutch want. It is only that part of the formula.
H.M.JR: To hell with what they want.
MR. BELL: They want the dollars.
H.M.JR: Oh, I give them the dollars.
MR. BELL: But aren't you going to have to go back
and re-work it with the French?
MR. WHITE: That is another question. We are in a
peculiar position. If you give it to the others and you
don't give it to the French--
MR. AARONS: It is a different political picture.
MR. WHITE: You can find an excuse for it.
MR. BELL: It is a question of whether the French
are an ally or an enemy.
MR. WHITE: we are on weak ground when you put them
on a different status.
Regraded Unclassified
188
- 11 -
MR. LUXFORD: Mr. Secretary, I think a great many of
us think that on the merits, we have the better position
on this; that this is a thing that ultimately should be
settled in your over-all negotiations.
Now, since the President did take our position on
this once, I would suggest that before we say, "Well,
we are going along with State," that at least we ought
to raise the matter with the President, not argue the
thing hard, but simply say, "Here are the two positions;
we don't care too much, but what is your decision on it?"
H.M. JR: I think you are right. We have insisted
that we had to abide by his decision.
MR. WHITE: You also said certain things before
Congress when you spoke of the terms under which you
are providing this money in Italy; you said that in
these occupation finances that you are so arranging it
that Congress or the President would be able to--
MR. LUXFORD: Well, I think we have gone a good
way; we have said we will raise it with the President
again. You state both sides of it and not fight it
too hard.
H.M.JR: Now, let's say we will raise it with the
President again, and then if the President says some-
thing we will say - shall we say to Dean - would this
be going too far - that whatever we do, if we pay them
in cash we want the same formula that the French have;
namely--
MR. WHITE: I take that for granted. I would men-
tion it to him, though.
H.M.JR: Subsequently, if they arrive at a different
rate, we want a retroactive adjustment.
MR. WHITE: Show him the part of the letter that we
have sent to the Dutch East Indies and say, "This is
what we want."
Regraded Unclassified
189
- 12 -
H.M.JR: Have you done this?
MR. WHITE: Yes.
MR. AARONS: I think State, itself, favors that kind
of adjustment.
H.M.JR: But if we did that with the Dutch we
would also have to do it with the French.
MR. WHITE: If we gave the Dutch cash for money
that we used, it would certainly be a great gesture to
do it to the French.
MR. O'CONNELL: It would be pretty hard to do it.
H.M.JR: Why is Dean so - why is this one of the
things that mean so much to him? Why?
MR. WHITE: They made a commitment to the Dutch,
unquestionably, and to the Belgians, in which he has
taken the position that this Lend-Lease in Reverse
agreement excludes, by mention, pay to the soldiers.
And although he hasn't told me this, everything the
Belgians and Dutch have said, has led me to believe
that he has indicated to them that we will pay cash for
the soldiers.
MR. LUXFORD: I think that is clearly the case.
They went too far without clearing with us at all on
their reciprocal aid agreements, and now we are having
to pull their chestnuts out of the fire.
MR. BELL: Doesn't he want to be in the same posi-
tion as the British in this?
MR. WHITE: He uses that as an argument, but we
already told the British a long time ago that we don't
have to pursue an identical course. we told them that
when they first made the offer about eight months ago.
Regraded Unclassified
190
- 13 -
H.M.JR: All right. You all better be back here -
I will try, somewhere along about two-thirty or so, to
have you fellows in again. I will get in touch with
you - and with McConnell. And do the other one; we have
to do a little talking about that.
Regraded Unclassified
191
June 5, 1944
2:30 p.m.
FOREIGN EXCHANGE RATES
TROOP PAY
Present: Mr. White
Mr. Luxford
Mr. Aarons
Mr. O'Connell
Mr. McConnell
Mr. Bell
Mr. Acheson
Mr. Collado
MR. BELL: They took the twenty percent cabaret but
they eliminated the soldiers.
H.M.JR: I had a letter from Mr. Girard Swope on this
thing and I have been holding up a letter because I didn't
know how to answer it. I don't mean Girard, but the
Public Relations man, Girard's brother, Bayard. He is
smart. I will write him and send him this release.
(Secretary refers to ticker news, attached)
What's-his-name must be happy.
MR. BELL: Blough.
MR. O'CONNELL: He must be.
MR. BELL: He didn't have to go near the place.
(Secretary holds telephone conversation with Mr.
Olrich, as follows:)
Regraded Unclassified
192
June 5, 1944
2:37 p.m.
HMJr:
Hello.
Operator:
Mr. Olrich.
HMJr:
Yes.
Operator:
Go ahead.
Ernest
Olrich:
Hello.
HMJr:
Hello.
0:
Good morning, Mr. Secretary.
HMJr:
Good afternoon to you.
O:
Oh, it's still morning here. Regarding that
information that you asked.
HMJr:
Yeah.
0:
Out on the West Coast.
HMJr:
Yeah.
0:
The two outstanding men on the Coast are as
follows: The one man's name is Otto Jeidels,
J-e-i-d-e-1-s.
HMJr:
No.
0:
He is the number one man on the whole West
Coast, but I would tell you he comes from the
Bank that you mentioned that you are not so
interested in.
HMJr:
I know Otto Jeidels.
O:
Right. The second man is Elliott McAllister.
HMJr:
Elliott McAllister. I'm -- (Aside: Harry.) Yes,
go ahead; I was just repeating to Harry White.
Yeah.
0:
Right. Vice President of the Bank of California
of San Francisco.
HMJr:
Oh, yeah.
Regraded Unclassified
193
- 2 -
HMJr:
Edward McAllister?
0:
Elliott.
HMJr:
Uh -- say it again.
O:
Elliott. E-1-1-1 ....
HMJr:
Elliott McAllister.
0:
That's right.
HMJr:
Of the Bank of California.
O:
Of San Francisco.
HMJr:
Of San Francisco.
0:
That's probably the most conservative and
substantial bank on the West Coast.
HMJr:
I see. (Aside: Have you got the name? Answer:
Elliott McAllister. HMJr: Yeah.) Of the Bank
of California of San Francisco?
O:
That's right.
HMJr:
Isn't that Los Angeles?
0:
No, no. There's another -- there is one at Los
Angeles, too, but this is of San Francisco.
HMJr:
Yeah. And this fellow is supposed to be good?
0:
Yeah, he's supposed to be the number man on --
two man on the Coast.
HMJr:
Yes.
0:
They said that of all the banks on the Coast, the
Bank of California would be the second one. The
other bank was first and this would be the second
in their relationship with the Orient.
HMJr:
Yeah.
0:
The man
....
HMJr:
There's no question that Jeidels is smart but he's
a little bit too smart for me.
Regraded Unclassified
194
- 3 -
0:
Right. Well, I -- you can see the source of my
information
HMJr:
Yeah.
0:
how they rate.
HMJr:
Well, there's no question as to Jeidels' ability
but ....
0:
Right.
HMJr:
Well
0:
Now, this man is about forty-five years old and
meets people easily, is conservative but smart.
HMJr:
Right.
0:
And he would -- he would have the confidence of
the Coast. Now, this was told to me by the --
a man named Frank King
HMJr:
I get you.
0:
of
HMJr:
I know who -- you told me who he was.
0:
Right. And I told him -- now, I said, "This might
be something important. I won't tell you and you
can't ask any -- but it is that important that I
must know the two best men."
HMJr:
Yeah.
0:
I said, "Your bank is not interested in either
of these men?" And he said, "No". He doesn't
know what it's for.
HMJr:
Well, thank you very much.
0:
Righto.
HMJr:
Thank you.
0:
Thank you, sir.
Regraded Unclassified
195
-2-
H.M.JR: Did you get that name?
MR. WHITE: Yes.
H.M.JR: I don't know the Bank of California.
MR. BELL: I know what it is.
H.M.JR: Is that a conservative bank?
MR. BELL: Yes, I think it is one of the conservative
banks.
H.M.JR: This fellow is the vice president. He has
a great following on the West Coast.
Now look, gentlemen, I don't know what I brought you
away from, but I figured you should be in on this.
MR. McCONNELL: Right, sir.
H.M.JR: Did you get some lunch?
MR. McCONNELL: I got some lunch and I have a man, too.
I would like to talk to you later about it.
MR. BELL: It took you a week end to sell him, Bob?
MR. McCONNELL: Just about.
H.M.JR: There are two things this afternoon that
Acheson is coming in for. I think the thing ne wants first
is this thing of yours. Have you been brought up to date?
MR. McCONNELL: Yes, sir.
H.M.JR: Now, does anybody want me to change my position
on that? (No reply)
I will give it very briefly. They are about to enter
into an arrangement with England as to who is to pay what
share of the food and stuff that goes into Europe behind
Regraded Unclassified
196
-3-
the Army, and they have written a letter in which they
have that this thing should be-all consideration should
be taken into account, including the relative wealth of
the two countries. Now, we are willing to say all matters
should be taken into consideration, but we don't want to
put down the relative wealth of the two countries, because
if that is it, that sets a precedent and we are sunk. Do
you see? We are willing to say all considerations, but
not that. We went all around the circle. I told them
to. Now I don't know where he is at today, but I simply
feel that once we agree on that, everything is on that
basis and I told them as far as I was concerned, I would
much rather recommend to the President we pay the whole
bill than to do that and then take our chances on getting
something back from England around the peace table. He
says we won't get anything, anyway. I said Italy--I went
all through it--was eighty-twenty and I would rather go
to the American public and say that we are going to do
the whole job, and so on and so forth.
Well, he is very much upset about it.
MR. BELL: Acheson is?
H.M.JR: Yes, it had to be settled Saturday night.
Why, I don't know. I told him I wouldn't change my position
barring going to the President and having the President take
a look at it and have the President say what he wants.
MR. McCONNELL: I saw him Saturday, you know, Mr.
Secretary?
H.M.JR: Is that oversimplifying it?
MR. McCONNELL: His position was exactly the same.
He said that he wanted to see you.
H.M.JR: Well, he did. Fortunately, Joe was there,
but I didn't give.
MR. WHITE: I don't think we can sustain the position
that we are willing to pay all of it, because there is
Regraded Unclassified
197
-4-
supposed to be several hundred million dollars' worth,
three hundred million dollars'. worth of goods coming from
England, which England is going to pay for. So, I don't
think we ought to make the gesture that we want to pay for
it all.
H.M.JR: I thought we would get a better bargain. I
am not going to stress that. I simply said that--
MR. WHITE: I think that part ought to be kind of
forgotten.
MR. McCONNELL: That is a bridge to be crossed in
the future.
H.M.JR: Well, I want the President to say to me,
"Henry Morgenthau, you settle the thing on the basis of
our relative wealth." I am willing to bet three-to-one
he won't do it.
MR. WHITE: The relative financial strength, which
is even worse.
H.M.JR: I am willing to bet two-to-one he won't.
His hands are tied. From that moment on, that is the
yardstick for everything. What is the relative financial
strength?
MR. WHITE: Anything you want to make it. They want
to take the position that their foreign situation has
grown greatly worse, ours is better. They will point to
that memorandum which was sent to you by the Chancellor
of the Exchequer and say "This is the basis upon which
we think the discussion should proceed." Or they may
take the position that we ought to share it in proportion
to our national income which would be about four-to-one.
They can make financial strength mean any of many things.
H.M.JR: He mentioned seventy-thirty.
MR. WHITE: Well we started out with the negotiations.
They were going to ask for fifty-fifty and you remember, I
spoke to you about it and you said you were willing to go
Regraded Unclassified
198
-5-
two-to-one, sixty-six, thirty-three. So I told them sixty,
sixty-forty. Then if they do make it we could rediscuss
it. They had in mind they were willing to go seventy-thirty
but we never went that far. But that sixty-forty or two-to-
one, if you want to go as high as you said before, related
to the entire expenditure and not to certain parts which
would not fit that pattern if you took all the expenses.
H.M.JR: What was the UNRRA?
MR. WHITE: Four-to-one, proportion of national income.
But that is, all countries are contributing, each in pro-
portion to their income and it is a matter of relief which
the world knows is the United Nations' relief. This matter
is & question which--it is Allied Governments and they
presumably have the same decision, as much voice in the
decision as we do, as much control. They distribute
either half or more, so I don't think--
H.M.JR: Let me interrupt. This is to do exactly what?
MR. WHITE: This is as to pay for goods which has to
be shipped from the United States, from the British Empire,
and to be purchased in Third Countries for the use of
civilian populations during the period when the Army is
supposed to be in control and after UNRRA takes over.
H.M.JR: Well, now you know whether we are holding up
anything?
MR. WHITE: We needn't be holding up anything unless
he wants to make us hold up something.
H.M.JR: Let me ask McCloy while these negotiations
are on--
MR. WHITE: I can tell you before you ask McCloy.
They claim it is being held up because of inability to
come to an agreement under the terms of Procurement.
The position that we are taking is--
H.M.JR: Who says this?
Regraded Unclassified
199
-6-
MR. WHITE: State Department. They say they have
to have this matter settled.
H.M.JR: Let me ask McCloy. I want to find out
what he has to say.
MR. O'CONNELL: It seems to me important to remember
that it isn't necessary to hold up at all on the immediate
deal which merely involves a fifty-fifty difference of
procurement. It isn't necessary to hold that up because
you are discussing or thinking about what kind of final
settlement there will be, because admittedly we aren't
making final settlement at this point. We are to go
fifty-fifty in terms of procurement.
MR. McCONNELL: The fifty-fifty arrangement is for
the commitment and all subject to final settlement. If
half the material is bought in the United States, the
United States places those orders and in placing the
orders they are responsible in making the commitment.
But the final settlement will determine what part of that
order--
H.M.JR: I didn't understand it. I thought the
whole thing was being held up.
MR. WHITE: We are trying to get them to go ahead
with that commitment which we agree on, saying that the
adjustments, the negotiations will go forward.
MR. BELL: What do you do with purchases in other
countries?
MR. McCONNELL: They are split.
MR. WHITE: Which is quite satisfactory.
MR. BELL: You said sixty-forty.
MR. McCONNELL: That is the final settlement.
MR. BELL: What do you do with the countries invaded,
for instance? Supposing you go into Holland. Are the
Regraded Unclassified
200
-7-
Dutch going to pay any part of it?
MR. WHITE: That is the next point I am coming to.
This whole problem is reduced in significance when we
realize that we are going to get paid for some of these
civilian goods. However, you don't know. It depends
on how much you need to send them, how much money they
have. We will get some money back. That will be divided
in the same proportion of the initial payment.
H.M.JR: Look, will somebody state the whole problem
instead of giving it to me in tidbits?
(Secretary holds telephone conversation with Mr.
McCloy, as follows:)
Regraded Unclassified
June 5, 1944
201
2:40 p.m.
HMJr:
Hello.
Operator:
Mr. McCloy.
HMJr:
Hello.
Operator:
Go ahead.
John J.
McCloy:
Hello.
HMJr:
Hello, Jack.
M:
Yes.
HMJr:
How are you?
M:
Fine. Swell.
HMJr:
Look, I'm seeing Acheson at three on this
question of England and ourselves furnishing
materiel for the Army -- the civilian population.
Hello?
M:
Yes.
HMJr:
And while we aren't in agreement with them as
to the ultimate division
M:
Yeah.
HMJr:
and -- is the Army being held up in any
way by these discussions which are going on?
M:
Oh, not that I know of.
HMJr:
Yeah.
M:
Not that -- I haven't heard of it.
HMJr:
We don't see why they should be because the
proposal is that in the first case, England and
ourselves go fifty-fifty.
M:
Yes, that's right.
HMJr:
And the only argument is the -- as to the ultimate
settlement.
M:
That's right.
Regraded Unclassified
202
- 2 -
HMJr:
Well, is there any reason why you fellows can't
go right ahead pending an agreement on the ultimate
settlement?
M:
Well, that's just what we're doing, as I understood
it.
HMJr:
Well, would you just check and make sure....
M:
Yes.
HMJr:
that we in the Treasury are not holding up the
Army in any way?
M:
As the result of holding out for an ultimate settle-
ment rather than an immediate one, you mean?
HMJr:
That's right.
M:
I'll check up.
HMJr:
The point is, I don't -- I don't want to arrive at
a formula now until I can get the President to have
a look at it, because once we arrive at it, that
will be the formula and his hands are tied from now
on and forever.
M:
That's right.
HMJr:
See?
M:
Yes.
HMJr:
And I think he should'pass'on the ultimate.
M:
Well, let me check.
HMJr:
Right.
M:
I'll call you back.
HMJr:
Thank you.
M:
All right.
Unclassified
203
-8-
MR. WHITE: That is exactly what we are doing in
Italy. The understanding I had with the British--this
thing has been discussed for at least eight months.
I am probably the only one who knows all the angles,
because they just got in on the picture within a couple
of weeks.
H.M.JR: You or McConnell simply give me what the
thing is right now, just so I have this thing in my head.
MR. WHITE: Let McConnell try it.
MR. McCONNELL: Correct me if I am wrong.
There are goods ear-marked in the pipeline in transit
to supply the estimated requirements for relief of the
liberated areas during the military period for, say, ninety
days. It becomes necessary, now, to order shoes, clothes
or flour or whatever you need in Minneapolis or St. Louis
or Chicago, in this country, to get these goods in the
process of manufacture, to get them into transportation
into the pipeline so that beyond ninety days there will
be another batch of supplies in the pipeline. These are
all estimates, of course. I don't know just the amount
that ninety days amounts to.
Now, to place those orders it has been determined
without prejudice that in conformity with the military
break-down in the world where these materials should best
come from, strategically, and so on, that about half of
them would be ordered in the British Empire, and about
half of them would be ordered in the United States or
perhaps & third in the United States, a third in the British Empire
and a third in the rest of the world. I don't know just
how that is divided, but equally between the United States
and the British Empire. Therefore, the State Department,
or somebody, did propose that we go ahead and place those
orders which will not tie our hands in any way as to the
final settlement. It is merely the procurement commitment
that we are discussing in this memorandum. The State
Department says Plan "A", which is that basis where we
will order everything, the United States Government orders
Regraded Unclassified
204
- 9
everything in the United States, the British Government
will order everything in the British Kingdom and we will
divide the rest of the world and we will order half and
the British will order half. Now that, without in any
way tying anybody's hands, is what they propose to do on
a fifty-fifty basis which works out about that, because
we want about the same amounts from the United States we
do from the United Kingdom, So that first paragraph says
just that, Plan "A". The second paragraph says "We will
do it without prejudice of the final settlement."
The third paragraph says, "In the final settlement,
we will take into account the relative financial strength,'
which denies the second paragraph which states in my opinion--
which is the whole contention here--that there is no precedent.
Nobody has tied anybody's hands. Just making these orders
effective so that we have them pouring into the pipeline
beyond the ninety days they estimate now. Is that right?
MR. WHITE: There are some additional parts to fill
out the picture, but that is right--
MR. McCONNELL: One point, to my mind, is important.
No one knows (that I have talked about) what part of the
United Kingdom's commi tment or their final settlement
agreement to pay for, will be Lend-Lease goods which
originates from here.
MR. WHITE: That's right. We have taken two different
positions: State Department says. that if.. there are Lend-
Lease goods, there ought to be a certain ratio of payment.
It is our position that if England is sending goods to
France, that we have Lend-Leased to England, or similar
goods, that that ought not to be a part of England's share.
Those are our goods which we have given England because
they were unable to pay for them. We have stuck to that
position and the State Department is very much upset about
that angle. But that is a separate question which I will
comment about in the adjustment like a lot of others.
MR. McCONNELL: Harry, when you are thinking of four-
to-one, part of that twenty percent is Lend-Leased goods
and it becomes nine-to-one.
Regraded
Unclassified
205
-10-
MR. WHITE: That's right. In four-to-one, the
one must be England's.
MR. McCONNELL: And the State Department does not
agree with that.
MR. WHITE: There is another part of this you might
mention. In the shipping of this type of relief goods
for civilian use in Italy, that is the position we took,
namely, that we can't settle as to who is to pay how much,
because we couldn't get into an agreement with the British.
They wanted us to pay four-to-one. So we agreed that the
purchases should be made, the stuff should be sent, records
are neing kept, and that whatever adjustment we make in
France, we want to make that retroactive, because in the
meantime, we have been paying for most of this stuff in
Italy.
MR. McCONNELL: It has been four-to-one in Italy.
H.M.JR: More.
MR. BELL: Is there an understanding of a subsequent
adjustment?
MR. WHITE: Yes, because otherwise they were insisting
upon a solution in the same way that the State Department
is insisting upon this. Since they were not willing to go
along with us, and in order to break the log jam, we said,
"Go ahead and buy this stuff and send it and we will make
the adjustment later. That was to avoid being placed in
exactly the position in which they are trying to place us
now, by saying, We are holding this up unless you agree."
We said, "We will agree when we have plenty of time to
thrash this out. That is exactly the position with respect
to the stuff in England.
H.M.JR: In other words, what we have done in Italy
will be pooled with whatever we do anywhere else. Is that
in writing?
MR. WHITE: Yes, there are some letters we have with
the Army and the Army understands that thoroughly.
H.M.JR: Is there anything between the British Treasury
and ourselves?
Regraded Unclassified
206
-11-
MR. WHITE: I think SO.
H.M.JR: Make a note.
MR. WHITE: I think SO. Whether they are formal also
or not, I don't know.
MR. McCONNELL: Mr. Secretary, I may be looking way
beyond the horizon on this thing, but there is one criterion
which is the UNRRA formula. If this is set up and it is
as large as Harry explains, it may be a billion dollars,
but we don't know how much is coming back. But it isn't
large in relation to Lend Lease. We get another criterion
set up and also the Italy division. You may have a slate
pretty well covered with precedents.
MR. WHITE: No question about that. The Secretary
is a hundred percent right that whatever criteria you are
employing here will go a long way toward settling the final
one and that is why the British are making a fight on these
issues. They want to establish that pattern.
H.M.JR: I think for me and the State Department to
agree on this thing without the President knowing about
it would be just selling him down the river.
MR. McCONNELL: It looks that way.
H.M.JR: If he wants it, okay.
MR. McCONNELL: But he should be clearly informed.
H.M.JR: He certainly should be informed.
MR. LUXFORD: I am a little bit troubled about that
hundred percent proposal, though.
H.M.JR: Well, okay.
MR. WHITE: Although if we pay it all and we get it
all back it won't be so bad.
Regraded Unclassified
207
-12-
H.M.JR: Do you believe in fairy tales?
(Secretary holds telephone conversation with Jack
McCloy, as follows:)
Regraded Unclassified
208
June 5, 1944
3:00 p.m.
HMJr:
Hello.
John J.
McCloy:
Henry, I find we're rather in this position on it.
HMJr:
Yeah.
M:
That we haven't got -- we haven't been able to get
any official combined paper on it because every
time we try it, there's always the charges made that
this may prejudice the final settlement.
HMJr:
Yeah.
M:
We've been doing a good bit of sub rosa procurement.
HMJr:
Yeah.
M:
People down the line rather think that, we've pretty
much reached the end of that.
HMJr:
Yeah.
M:
And that we would like to get it -- in other words,
so we'd sort of become "honest women".
HMJr:
Yeah.
M:
We need combined authority which, for one reason
or another, either the British or ourselves hold
up for fear that if we officialize it, why, it is
in some way going to prejudice final -- final
settlement. So far, we haven't been -- we're all
right to date but they think we've about reached
the end of our rope.
HMJr:
Well, I'll tell you. When I get through with this
conference, I'll give you a ring and let you know
where we stand.
M:
All right.
HMJr:
And -- but I think where we -- what I -- the way
I feel that this is tying up the President's hands
and nobody should do that without his knowing it.
M:
Oh, I think that's right. There's no question
about it.
Regraded Unclassified
209
- 2 -
HMJr:
And if we don't get anywhere this afternoon, I'll
let you know, but
M:
Yeah.
HMJr:
I'll be more than willing to tell you informally,
keep right on buying.
M:
Yeah.
HMJr:
See?
M:
Right.
HMJr:
But I'll call you back later this afternoon.
M:
Good. Thanks a lot.
Regraded Unclassified
210
-13-
(Mr. Acheson and Mr. Collado enter conference)
H.M.JR: We have been talking about the thing which
you brought up Saturday night. Also prepared to talk
about payment of troops in the low countries.
MR. ACHESON: Start with that, shall we? Whichever
one you want to start with.
H.M.JR: We have just been discussing for half an
hour this one of buying goods for the civilians, so would
you just as leave do that?
MR. ACHESON: Surely.
H.M.JR: We will start where we left off Saturday
night.
MR. ACHESON: Fine. I thought I was through on that
one. I am glad to have another try at it.
H.M.JR: I thought that was what you were coming over
for, wasn't it?
MR. ACHESON: No, you told me on Friday we would have
this appointment today to talk about troop pay.
H.M.JR: I don't care. Do either one.
MR. ACHESON: I am glad. I thought I was foreclosed
on the other one. If I could have another two or three
minutes I would be glad to take a shot at it.
H.M.JR: Any way.
MR. ACHESON: If you feel the same way about it, I
won't take your time.
H.M.JR: May I summarize the thing? We were discussing
the thing here. Some of the men think maybe I didn't make
myself quite clear. They way I feel is this. I think
Regraded Unclassified
211
-14-
that we ought to tell the Army to continue to buy the
supplies, which I gather they have been buying, sub
rosa. As I understand it, roughly, England is to supply,
or the United Kingdom is to supply fifty percent and we
are to supply fifty percent and we are to go fifty-fifty
in hird countries. The fifty that England puts up is
not to be Lend Lease or substituted Lend Lease.
Now then, it gets down to the question of the ultimate
settlement, and that is the place where I think the President
should come in, because I feel very strongly that if we agree
to a yardstick now, that will be with them from now until
he or whoever sits at the peace table conclude the final
settlement. And I don't think that--talking for myself--
that I have any right to commit him or the representative
of this government on a yardstick of settlement without
the President passing on that personaily. I have not the
authority. Now if he says to me, "All right, I am satis-
fied about using the relative financial wealth of the two
countries," that's that. But at least I would like to point
out to him the dangers of it. If, on the other hand, he says,
"I don't want it, then I am sure you people would be satis-
fied too.
Maybe that is oversimplified.
MR. ACHESON: Well, in one way it is oversimplifying
it. In another way, I think it misunderstands a bit what
I asked on Saturday. I do not ask that anybody establish
a yardstick or have anything which determines the yardstick
now.
First of all, as to what is actually going on, the
present arrangement is tentatively and without prejudice
to a final settlement, we will buy, for procurement purposes,
what is to be bought within the United States. The British
will buy what is to be bought within the Commonwealth,
except Canada, which will be done separately, what is to
be bought in Third Countries we will divide fifty-fifty.
That is a procurement basis.
H.M.JR: Could I interrupt you? Does that mean dollar-
wise that the Commonwealth and ourselves will not be on a
fifty-fifty basis?
Regraded Unclassified
212
-15-
MR. ACHESON: It depends where the cards fall at
the beginning. In the first blush of the thing, it
probably will be weighted more adversely to the British
than it will later on, because most of the things are
close at hand and are in England. After you go forward
toward the end of the program, it will come more the
other way. But this is purely procurement.
H.M. JR: Could we just hold it there a minute,
because that isn't the way it was explained.
MR. WHITE: Plan "A" calls for about five to six
hundred million dollars and according to the estimates
by Chief of Staff and the State Department that would
actually divide about fifty-fifty, if they carry out
the present plans. There are purchases outside of plan
"A" which are even beginning now and will continue after
Plan "A", in which the proportion will be different.
It will be weighted more heavily, that we will pay a
larger proportion.
H.M.JR: But under Plan "A", will the English con-
sider that what they contribute they can draw out of
Lend-Lease stock piles?
MR. WHITE: That is a difference of opinion among us.
MR. ACHESON: I don't think that there is any argument
now as to the accounting of things which come out of the
Lend-Lease stock piles. Physically we will want the British
to draw on all their stock piles, because that is necessary
in the first ninety days to get things from near at hand.
Whether they are Lend Lease or of British origin won't make
any difference in the actual ultimate accounting. The
British would not get credit for turning over Lend Lease
stuff which we have put in England. But the first blush
of the thing is a procurement device and as I said, the
idea of the procurement idea is the British buy what comes
from British areas, we buy what comes from our areas and
we split the Third Countries fifty-fifty.
H.M.JR: Now, may I again interrupt you? Does anybody
object to that arrangement?
Regraded Unclassified
213
-16-
MR. WHITE: No, I thought it was our position. I
didn't know it was theirs. But it is all right if it
is theirs. Buz, in your discussions on the matter did
you think that that was the position that had been agreed
upon? If it is, fine.
H.M.JR: Don't agrue. I always remember my father
who practiced law up until 1900. From then on he didn't.
He said the first thing the judge said was, "When you win
your case, quit arguing". So if you win a point, don't
raise it.
MR. WHITE: There may be some difference of opinion
as to what are Lend Lease arguments.
MR. ACHESON: That will come in the settlement.
H.M.JR: He always told me that, which is pretty good,
isn't it? Advice from the Bench.
MR. ACHESON: Very sound view.
H.M.JR: So we won't ask what Buz thought. You may
disturb Mr. Acheson if you tell him what Buz really thought!
(Laughter)
MR. ACHESON: Now, going on from the procurement stage
to the settlement stage, the British want to have an ultimate
settlement, which they wish to describe in the note they
write us, as one which is equitable. They then want to go
on and say, "and shall be based upon the relative financial
strength of the two countries." We are not for that. That
isn't what we want to say at all. What I did. want to say
to them is that it would be fair and equitable in the light
of all the circumstances and no relevant factor would be
excluded, including the one they talk about. In other
words, the strength of the countries, a hundred other things
are relevant factors, but there is no yardstick, there is
no anything. The field is open, except that we are not
going to exclude the capacities of the countries to bear
the burden. Now, the purpose of that was to reassure them
and get them not to try and make reservations now, that
if they had to pay more than they thought was fair on this,
Regraded Unclassified
214
-17-
they would have to cut down in some other direction. That
is the whole purpose.
H.M.JR: Well we are all right down to that one point.
Is that right?
MR. WHITE: Yes.
H.M.JR: Might I ask, you are coming in and saying
that you thought the matter was closed, have you presented
a viewpoint to them?
MR. ACHESON: No, the British were coming in at six
o'clock and I expected they would be upset about this and
they probably will do something which will be foolish, but
I thought that that just had to happen.
H.M.JR: Well I have spent a lot of time on this,
just so it wasn't a personal opinion. Everybody, as far
as the Treasury goes, feels that this is a yardstick, that
we would be commiting the President and that it should be
submitted to him in advance to make sure that that is
agreeable to him, or not.
MR. BELL: Where is this difference here? I don't get
it. We feel that there is a yardstick, when you speak of
the relative wealth.
MR. ACHESON: There would be if you spoke of that alone.
MR. BELL: Dean says there isn't.
MR. WHITE: I think it might be well specifically to
read the statement, because, as Dean puts it, it is a little
different than it was in the statement.
MR. O'CONNELL: I have a paraphrase of it.
MR. COLLADO: No, we didn't bring these papers.
MR. ACHESON: I remember it SO well I think I could
recite any points you want recited.
Regraded Unclassified
215
-18-
MR. COLLADO: As you say, it sounded almost exactly
like the document.
MR. WHITE: As I remember the document, it said that
there should be an equitable settlement.
H.M.JR: Do you mind getting that?
(Mr. McConnell leaves conférence to get document)
MR. BELL: Doesn't seem to me there had been that
much difference of opinion. The document says-
H.M.JR: The point I remember is this, while we are
waiting, it said you could bring in any relevant matter,
including the question of the relative financial strength.
We are willing to say you can bring in any relevant matter.
MR. LUXFORD: We are not determining whether this is
a relevant matter.
MR. WHITE: If there is no difference between the two.
MR. BELL: I see.
MR. ACHESON: Luxford is quite right. This thing says
that the relative financial strength of the countries is a
relevant factor. Now, if that is a yardstick, I am a
Chinaman. It simply says that something which is reievant
is relevant.
MR. WHITE: Then why would the British care to have
that?
MR. ACHESON: Because the British want to say that is
the only factor and in order to get that out, I am perfectly
willing to let them say they want it based on that and then
have us say, "No." We are not agreeing to this yardstick,
but you could bring in all the relevant factors there are,
including this one, which, God knows, is relevant, all right.
But it doesn't mean you are going to accept it.
Regraded Unclassified
216
-19-
MR. BELL: You are trying to satisfy the British,
who want that as the only basis for the yardstick and
you say that that can be included as a part of the yard-
stick, the basis of the yardstick.
MR. WHITE: You want to satisfy the British by not
giving them anything. If he is giving them nothing,
they won't accept it. If they do accept it, I think it
all depends on how it is phrased. Maybe you can phrase
it so as to have less of that. The general impression
was that it was SO phrased that it highlighted--
MR. O'CONNELL: When we were first asked to comment
on this, it was the question as to what the form of the
British note would be, and it was ou-r suggestion that if
we had an opportunity to make suggestions with respect
to the form of the British note, that the British note
should make no reference to relative financial strength.
H.M.JR: Is that right?
MR. ACHESON: Well, the paper that you have before
you is not the British note. I know what it is. (The
Secretary hands Mr. Acheson memorandum of May 31st, attached)
MR. BELL: "It is the view of the British Government
that any such final settlement between the supplying
countries must be on an equitable. basis which will take
into consideration, among other things, the relative
financial strength of the countries concerned."
MR. ACHESON: Let me explain again, just where we are.
H.M.JR: Excuse me. I think what Joe said is the
first time I have heard it.
MR. O'CONNELL: That was my understanding- - you may
correct me--that our original reaction to this situation
was with respect to what the contents of a proposed note
from the British to us should be. It was our thought that
the paragraph which referred to relative financial strength
Regraded Unclassified
217
-20-
was inappropriate for that document, because the whole
thing was said when we said the original procurement
would be fifty-fifty without prejudice to the ultimate
settlement which would be on an equitable basis and Mr.
McConneil's suggestion in the letter he sent over to your
shop on Saturday was simply we would prefer that third
paragraph be eliminated. Is that foreclosed now?
MR. ACHESON: We are all agreed on that. We would
like that to happen. The point of the matter is that
the British have instructions to give us a note which
is not this note, but which goes much further than this,
in two respects. In the first place, this paragraph here
says "It is the view of the British Government that any
settlement between the supplying countries must be on
an equitable basis" and must be based upon the financial
strength of the two countries. It goes on to say, "If
this is not possible, the British Government will have
to reconsider various things which it is planning to do."
Now, I have said to the British, "Do not give me that note.
That is a silly note. It isn't going to get anywhere.
It is very bad." Then I came over and I had someone come
over to talk with you. The thing is, suppose we could
talk the British into this kind of note? Would you be
agreeable to our saying, "All right, we agree"? Now the
next step--since it is supposed you don't want to go that
far--we say to the British, "Write your own note but leave
out all this thinking out loud of what you are going to do
if we can't work it out, because it doesn't make any sense
anyway, and we will reply to you saying we believe, too,
that this settlement should be fair and equitable, and
in determining the settlement no relevant factor should
be excluded, including the one you mentioned, which is
the relative financial strength." By that reply, we would
not be saying that that is the yardstick, but that in our
view it would not be excluded as one among many considerations.
Now, that is where we are. That is what I would like to do,
but it may not be possible.
Regraded Unclassified
218
-21-
H.M.JR: Again, we feel there that bringing in at
that time, having dealt with it now for many years, they
don't do these things inadvertently, they are very clever,
and there it is. We feel it is a yardstick, that we are
going to put in a yardstick which we feel that they will
use continuously, up and through the peace conference,
that this is so important, that feeling the way we do,
the President himself should pass on it, if that is in
there. Because that is the way we feel. There are
differences of opinion here, but there isn't any on this.
We are all together on that.
MR. ACHESON: The way it will end up is that we will
get a note, I hope not exactly the one that has come over
the telegraph, but pretty close to it, in which they will
say that their view is that it shall be a fair and equitable
settiement and must be based on financial strength, to which
we will reply that it must be fair and equitable and no
relevant factor should be excluded, which you said you would
agree to, and that gets us practically nowhere. They may
not agree to take out their other stuff, in which case
we will have a mess. But that is the way it is, and that
is the way it will have to be, I guess.
H.M.JR: Then what I am going to do is this. I talked
to McCloy before. I will talk to him again later and simply
say that I am willing to share the responsibility with him,
that the Army continue to buy.
MR. ACHESONE I don't think you need worry about it
at all. The Army is going right ahead. This will just
be one more of the difficulties that we have.
H.M.JR: Do you agree that the Army can go right ahead?
MR. ACHESON: It is going right ahead. There is no
obstacle to the Army. The British may not agree to buy the
other half, but that either means we will have to buy it
or people won't get the food.
Regraded Unclassified
219
-22-
H.M.JR: Well, McCloy didn't seem to be at all dis-
turbed.
MR. ACHESON: No, there is no reason to be disturbed.
H.M.JR: Then that is that. Now--
MR. ACHESON: But I don't want you to really have in
your mind that anyone was proposing a yardstick. The
Treasury gentlemen may think it is a yardstick, but after
all there are some cannons of reason that exist in the
world and it was not a yardstick that we were proposing.
I am perfectly willing to be overruled but not for a wrong
reason.
H.M.JR: You weren't proposing it, the British Government
was.
MR. ACHESON: I know, and they still will. The British
Government will propose a yardstick and we will not accept
it. I was proposing some softer language than you were
willing to agree to, soiely for the purpose of straightening
out some extraneous things in the note.
MR. WHITE: It isn't that simple, Dean.
H.M.JR: Do you mind? What Dean says doesn't disturb
me, so shall we let it go?
MR. WHITE: It is all right with me.
MR. ACHESON: I wasn't trying to disturb anybody.
H.M.JR: Yes, but I don't agree with him, but we still
have the Italian matter that has to be settled, also--
ultimate settlement as to supplying of the foods, and so
on and so forth. So Harry, I know you will make your
speech sometime.
Now, on this matter of the currency, see if I can get
this together. I don't know how familiar you are with what
we did with Mr. Mendes-France's agreement that we arrived
at with him. Would you mind explaining it, Harry?
Regraded Unclassified
220
-23-
MR. ACHESON: I am not familiar with it.
H.M.JR: May we?
MR. WHITE: I don't have the particular letter that
Mendes-France is sending us, but we have & comparable
letter which we have sent to de Iongh as to the price at
which we will buy the Dutch East Indies guilders. We
have sent a copy to the State Department and I will have
to read two paragraphs, I am afraid, to cover the matter,
unless you prefer to read it yourselves; probably I had
better read it aloud. You received a copy?
MR. COLLADO: I received the de Iongh but not the
French one.
MR. WHITE: But this is the same point. (Quotes as
follows from letter to Mr. de Iongh dated May 16, 1944,
attached)
"It is the view of the United States Treasury Department,
after study of the relevant factors, that this rate would
place too high a value on the Netherlands East Indies guilder.
However, in light of the assurances provided by your Government
that the question has been carefully studied and that this
rate does not markedly overvalue the Netherlands East Indies
guilder, the Treasury is prepared, subject to the receipt of
the assurances mentioned below, to accept the recommendation
of your Government for the adoption of an exchange rate for
the. Netherlands East Indies guilder of 1.8835 guilders to
the dollar computed on the basis of a rate of 7.60 guilders
to the pound sterling at a crossrate of $4.035 to the pound
sterling.
"The Treasury would like, however, to have the present
assurances of your Government that, and the next is the key
sentence- "until such time as it is possible to review the
matter with a more complete knowledge of the relevant factors
after the liberation of the Netherlands East Indies, this
rate will be regarded by your Government as only a provisional
rate. The Treasury would also like to have the present
assurances of your Government that, if at such time a
permanent rate is established which differs from the
Regraded Unclassified
221
-24-
provisional rate of 1.8835 guilders to the dollar, the
expenses of the United States Government in the Netherlands
East Indies prior to the establishment of the permanent
rate should not be computed in terms of such provisional
rate but rather, in any over-all financial settlement
between the Netnerlands East Indies and the United States,
the United States should be accorded an equitable adjust-
ment for such expenses in the light of the permanent rate
of exchange established after the liberation of the
Netherlands East Indies.'
In other words, the rate at which the Netherlands
East Indies purchases may be made will be subject to sub-
sequent adjustment if the rate upon fuller knowledge is
found to be too high. The wording in the French letter
is not the same, but the idea is approximately the same.
MR. ACHESON: That is entirely reasonable.
H.M.JR: We never raised this with you before. Now
what I am prepared to do is this. I don't have very strong
feelings on this. I have reviewed the thing and it will
take me a minute or two, I just did it very quickly and
I would like to go over it once more.
It says here--these are just digests--on January 31st:
"Meeting with White and Luxford. Discussion as to
terms under which Belgians and Dutch will turn over their
currency to us;- HM, Jr. said Secretary Hull should take it
up with the President. Draft of agreement attached.
"Feb. 15, 1944. Mr. Bell's Memo of his conversation
with Secretary Hull and Mr. Stettinius. State feels
we should treat Belgium as an ally and pay for all of
our military operations; Beil and White agreed that
the matter should be set forth in joint memo by State
and Treasury and submitted to the President.
"Feb. 21, 1944. Letter to the President signed by
Mr. Bell, attaching memo presenting position of
Treasury and State on question of whether we should
Regraded Unclassified
222
-25- .
commit ourselves now to place dollars to credit
of governments-in-exile for their currencies furnished
to us during liberating operations, etc. (Copy to Mr.
Stettinius).
"Feb. 29, 1944. Memo from the President in reply to
joint memo from State and Treasury - thinks Treasury
position is the right one.
"March 5, 1944. Meeting with Mr. Stettinius at HM, Jr's
house. Stettinius said Treasury sent another memo to
President after joint memo and that is what made the
President decide in Treasury's favor."
(Secretary holds telephone conversation with Alben
Barkley, as follows:)
Regraded Unclassified
223
June 5, 1944
3:28 p.m.
Operator:
There you are.
HMJr:
Hello.
Alben
Barkley:
Hello.
HMJr:
Hello, Alben.
B:
All right. How are you?
HMJr:
Fine. And you?
B:
I'm all right.
HMJr:
How's your missus?
B:
Well, she was feeling a little better yesterday
when I left.
HMJr:
Well, that's good.
B:
She's, of course, pretty sick but she was feeling
better.
HMJr:
Well, that's good. Now, when would it be convenient
for you to receive or see Dean Acheson and Harry
White and me on this question of
B:
Well
HMJr:
delegates.
B:
any time when I'm not'tied'Up'here'in the
Senate. We've got up this O.P.A. bill
HMJr:
Well
B:
now and
HMJr:
How early do you start in the morning?
B:
Well, not any earlier than I have to.
HMJr:
Well
B:
But
HMJr:
Could you do it the first
....
Regraded Unclassified
224
- 2 -
B:
We have -- we have -- I think I've got a
Committee meeting tomorrow at ten-thirty.
I suppose -- how long would it take?
HMJr:
Not more than fifteen minutes.
B:
Well, suppose that you come over to my
office at ten?
HMJr:
At ten?
B:
Tomorrow morning.
HMJr:
Just a minute.
B:
Would that be all right?
HMJr:
Just a minute. Acheson happens to be here and
I'll ask him if that's convenient.
B:
Yeah.
HMJr:
(Aside: Ten tomorrow?) Ten o'clock. Now
which office will that be?
B:
2-0-5 in the Senate Office Building.
HMJr:
2-0-5.
B:
Yeah.
HMJr:
We'll be there at ten o'clock.
B:
All right.
HMJr:
Thank you.
B:
Good bye.
Regraded Unclassified
225
-26-
MR. ACHESON: In the Senate Office Building?
H.M.JR: Do you want me to meet you there? Which is
more convenient?
MR. ACHESON: I think I can get a car.
H.M.JR: I will have my car over at the State Department
at twenty minutes of ten.
MR. ACHESON: That will be fine.
H.M.JR: At the Secretary's entrance.
Then, he says here, "Referring to your letter of
February 21, relating to use of currency for military
operation, I have talked with Mr. Stettinius about this
and I think the position taken by the Treasury Department
is the right one.
"March 5, 1944. Meeting with Mr. Stettinius at HM, Jr's
house. Stettinius said Treasury sent another memo to
President after joint memo and that is what made the
President decide in Treasury's favor.
"March 0, 1944. Mr. Bell's memo giving his version
of what really happened on the Belgian currency matter.
"March 9, 1944. HM, Jr's letter to Mr. Stettinius
sending him copy of President's memo of February 29,
1944; HM, Jr assumes this is final word in the matter."
And that was March 9. That is the last written record we
have on this thing.
"Dear Ed:
Following up our conversation of last Sunday,
I am sending you herewith for your records a photo-
static copy and memorandum dated February 29th from
Regraded Unclassified
226
-27-
the President to the Treasury in which he stated,
'I have talked with Stettinius about this and I
think the position taken by the Treasury Department
is the right one.' I assume we can look upon this
as the final decision in the matter and proceed
according to the Belgian agreement."
That, other than you and I talking, is the last written
word.
MR. WHITE: We have a lot of written records.
H.M.JR: But this is where I am in the picture.
Now, in view of this documentary evidence, as far as
the President is concerned, I am perfectly willing to go
and see the President with you and let you state your
reasons, let us state ours which will be unemotional.
Simply say again, does he want to settle this thing now
or keep it in abeyance, I mean, this is something which,
I say, we are not very excited about. You can give your
reasons and we will simply say, "Look, Mr. President, do
you want this settled now, or would you like to keep
it open? Do you feel it would be good trading advantage?"
MR. ACHESON: Sure.
H.M. JR: But I feel, in view of this long document,
he should have *a chance to pass on it once more.
MR. ACHESON: I have no question about that.
H.M. JR: But that is all that we feel here. I want to
again say -- this isn't something-- I mean--I feel that you
feel it is very important. We don't. We will not, we will
simply refresh his memory, state our reasons why, but will
not press hard.
MR. ACHESON: All right. I shall be delighted.
H.M.JR: We will not press hard. You can state your
case first and we will state ours second. Is that fair?
Regraded Unclassified
227
-28-
MR. ACHESON: Surely.
H.M.JR: But I want you to know this is not something
which we here consider very importent. I am repeating my-
self, but in the light of this long document, I think he
should have a fresh look at it.
MR. ACHESON: Well, our view about it was entirely
in accord with what you have read, that this thing was
decided by the President and put up in accordance with
his directions to these two governments. They have sent
you communications and they filed a note with us, saying
that they object to this and they believe that the ex-
change of notes between the two governments on mutual
aid lays down a different principal, which is that the
pay of troops isn't anything which they ought to bear. It
seemed to us that they have a strong point in that respect
and also that it gives them a sense of injustice which is
a lingering injury and makes them harder to deal with and
it is just and fair that on whatever rate is right, the
rate being retroactive, that the amounts which we used to
pay our troops should be given to them as soon as you can
work out the rate question or subject to readjustment if you
give it to them on a rate which doesn't stick.
H.M.JR: But you would agree to this sort of French
formula?
MR. ACHESON: Oh, yes.
H.M.JR: That we agree to the 43 rate, or whatever
it is, and that would be retroactive as between governments.
MR. ACHESON: We ought to have the advantage of what-
ever the ultimate rate is.
H.M.JR: We wouldn't attempt to adjust the individual
soldier's pay, but as between governments--
MR. ACHESON: That's right, I agree entirely.
Regraded Unclassified
228
-29-
MR. WHITE: Would you treat the French the same or
make a separate case of the French?
MR. ACHESON: Well, with the French you have this
whole business about the Committee, which frankly, I
don't understand very well and I don't know whether
there is any one we can agree with.
MR. WHITE: I mean, raise the question as to whether
we should treat the French the same as the Dutch if we
pursue the policy that you are advocating, because we are
pursuing a different policy with the French.
MR. ACHESON: How do you mean?
MR. WHITE: We are not paying the French currently
for the francs which we will use to pay the soldiers and
that arrangement--there is no agreement.
MR. ACHESON: I don't know. I had nothing from the
French at all.
MR. COLLADO: We had a proposed note. It is in on
the reciprocal Lend Lease. They have brought the same
subject up in connection with some Lend Lease discussions
with Oscar Cox, and so on, just as the Belgians did. Their
note was obviously written after theyhad discussed it with
the Belgians.
MR. ACHESON: The point that we make is that in our
exchanges of notes with these governments, we have said
that the principais which govern Lend Lease and Reverse
Lend Lease are so and SO and that excludes their paying
for the pay of our troops. That has been a principle
agreed on It seems a fair and just one. Now they appeal
to that principle and it seems to me we are giving them &
sense that we are treating them unjustly and differently
from the way we are treating the Chinese and the British
and Austrians and New Zealanders and that that is unnecessary
and it makes a fortuitous handicap which comes up in all our
Regraded Unclassified
229.
-30-
dealings with these countries. And I think it will make
it harder when you are dealing with them in Bretton Woods,
if they have a sense of injury and injustice.
H.M.JR: On that matter, we have something here which
we thought was a good break on the Netherlands and for the
Government. You know, I have been opposed to the RFC
making a loan to the Netherlands. Mr. Hull wrote a letter
to Jesse Jones saying he favored it. Then today, Mr.
Aldrich came in to see Dannie Bell and said they wanted
to borrow a hundred million dollars from the Chase Bank.
MR. BELL: Chase and a syndicate.
H.M.JR: I told Bell, as far as we were concerned,
we would give it our blessing.
MR. ACHESON: That may solve it.
MR. COLLADO: He was in to see the Secretary on Friday.
H.M.JR: Aldrich?
MR. COLLADO: We suggested he come and see you.
H.M.JR: Did I tell it right?
MR. BELL: That's right.
MR. COLLADO: That is also based on these securities.
It is the same kind of deal that RFC wanted to make.
H.M.JR: We didn't make any commitment on that, but
you use your own language. What did you tell Aldrich?
MR. BELL: I haven't told him. I haven't been able
to get in touch with him. I left word for him to call me.
I was merely going to tell him that we were sympathetic
with the matter and would be glad to talk to him further
about it as we went along.
Regraded Unclassified
230
-31-
H.M.JR: I thought that that might ease the thing and
from our standpoint it is in the right direction. We would
like to see them go there, we feel they can go there and
all around, I mean, I think it is the way the thing should
be done, and it makes us feel once in a while we are right.
(Mrs. McHugh enters the conference)
MR. COLLADO: Our letter has a section in it that
they ought to try to get private financing.
MR. ACHESON: Then, that cleans us up on these things
and you will make an appointment sometime.
H.M.JR: I have a request in to see the President
tomorrow with Pehle to clear up the question of the
refugee camp in this country. As soon as I get that,
which he has announced publicly he is going to do--We had
this message all prepared on which Hull and Stimson and
I agreed. We thought the President would send the message
to Congress first and then announce it. He did it the
other way around. We are quite anxious for his sake he
send the message to Congress. You know, I am talking
about bringing a token group of refugees here. We have
the camp and everything. I will ask the next appointment
to be on this. I have got a request in for this.
MR. ACHESON: You think we can do that this week?
H.M.JR: It will have to be this week. I will ask
for it.
MR. WHITE: You feel you want to see him personally
on that, rather than repeat the performance of writing
a letter?
H.M.JR: I think Dean should have nis day in court
on this. He feels very strongly and I don't and he does
and I would like to see, and I will try my best, to get
Regraded Unclassified
231
-32-
in this week, between now and Thursday night, when I have
to go out on war bonds.
MR. ACHESON: All right. I would appreciate it.
H.M.JR: I will make every effort to get us in there
on Wednesday or Thursday, on the assumption he sees me
Tuesday on this matter. Otherwise, Dean, you send a memo-
randum and it may hang around for weeks. You don't want
that.
M. ACHESON: We would like to get it cleaned up.
I- wanted to say one thing while Harry was here, to see
if we could get a plan on this. I am very alarmed about
what may happen with the delegation to the Monetary Conference
if you are away on the bond drive and Harry is away on this
drafting committee and this group of delegates without any
real knowledge about what they are going to do and without
having gone over papers and without drill and all that
sort of thing, just suddenly assemble at Bretton Woods.
I think there is going to be all kind of trouble with
Senators and Congressmen and other people who haven't
been following the thing closely. And I think some arrange-
ment ought to be worked out by which you or Harry have a
series of meetings with the delegation, give them certain
papers and explain what their duties are and what this thing
is all about. It takes time.
MR. WHITE: The Secretary nas that in mind. He is
waiting to hear who the delegates are. But it is necessary,
sure.
H.M.JR: I am not going to be away. The longest time
I will be away from Washington will be this trip to Texarkana
and Los Angeles. That is the longest one. The only other
one I have is to go to Chicago. I go one afternoon and
come back the next morning.
MR. WHITE: You see, Eccles is already somewhat familiar.
Mr. Brown is studiously examining the proposal.
Regraded Unclassified
232
-33-
H.M.JR: Excuse me. Do you mean the American Delegation?
MR. ACHESON: Yes, because you will have four Congress-
men, all of whom are going to be more or less prima donnas.
And unless they know what committees they are going to and
what jobs they are supposed to get up on, unless everybody
understands the plan, they will be all over the place and
extremely difficult to handle.
MR. WHITE: The Secretary had in mind getting them to
go just as soon as they were a pointed and going over these,
not once but several times.
H.M.JR: The only outsider that has been a ppointed
is Mr. Brown and he just moved in here, lock, stock and
barrel and has gone at it with great enthusiasm. And I
finally reached Miss Newcomer. She is very reluctant
to go but she would let me know tomorrow. So we really
only have one outside delegate and ne is working.
MR. ACHESON: The four Congressmen! That is bad.
We met three times a week for three weeks, I think, before
we went to Hot Springs.
H.M.JR: Really?
MR. ACHESON: Each fellow knew he was going to be on
this subcommittee and he had about the first week's supply
of ammunition, so he could start off and not get in the
way of the technicians. But you get Mr. Spence and he
hasn't the faintest idea what it is about and he doesn't
know what committee he will be on and he will just raise
hell. He will get up and make a speech the first day,
which will make no sense at all.
MR. WHITE: As soon as you decide the four Congressmen,
we can have a meeting.
H.M.JR: I am glad you raised it. It makes it that
much more important.
Regraded Unclassified
233
-34-
MR. ACHESON: We really ought to have a string on
Mr. Harry D. White, to get him back here to lecture.
MR. WHITE: No, we were providing for that. We had
a discussion for that. We are just waiting to name the
delegates. The only three available are yourself--and
I presume you have substantial familiarity with it--
MR. ACHESON: I won't make any trouble for you, but
these fellows, God only knows!
MR. WHITE: As soon as they are appointed, we expect
to have a meeting.
H.M.JR: I am glad you raise it. I agree with you.
Regraded Unclassified
234
25
May 16, 1944
Dear Mr. de longht
1 refer to your discussion of April 12, 1944 with Mr. William H.
Taylor of the United States Treasury Department concerning the rates
of exchange. to apply upon the liberation of the Netherlands That
Indies, between the Motherlands Tast Indies guilder and the United
States dollar and the Writish yound sterling.
Mr. Taylor has informed me that your Devernment desires that
the rates of exchange for the Netherlands East Indies guilder should
be established at the care level AS existed before the outbreak of
the Pacific war, that is. 7.60 Netherlands Mast Indies guilders to
one pound sterling or approximately 53 United States cents to the
guilder.
It is the view of the United States Treasury Department. after
study of the relevant factors. that this rate would place too high A
value on the Netherlands Bast Indian guilder. However, in light of
the assurances provided by your Government that the question has been
carefully studied and that this rate does not markedly overvalue the
Netherlands East Indies guilder. the Treasury is prepared, subject to
the receipt of the assurances mentioned below, to accept the recom-
mendation of your Government for the adoption of an exchange rate for
the Netherlands East Indies guilder of 1.0835 guilders to the dollar
computed on the basis of a rate of 7.60 guilders to the pound sterling
at a orderrate of $4,035 to the pound sterling.
The Treasury would like, however, to have the present assurandes
of your Government that, until such time as it is possible to review
the matter with a more complete knowledge of the relevant factors
after the liberation of the Netherlands Sest Indies, this rate will
be regarded by your Covernment as only A provisional rate. The Treasury
would also like to have the present assurances of your Government that,
If at such time a permanent rate is established which differs from the
provisional rate of 1.8835 guilders to the dollar, the expenses of the
United States Government in the Netherlands Hast Indies prior to the
establishment of the permanent rate should not be computed in terms of
euch provisional rate but rather, in any over-all financial settlement
between the Netherlands East Indies and the United States, the United
States should be accorded an equitable adjustment for such expenses in
the light of the permanent rate of exchange established after the
liberation of the Netherlands Tast Indies.
Regraded Unclassified
235
- 2 -
I take this opportunity to confirm to you the position of the
United States Treasury that the pattern under which the United
States is to make settlement for its expenditures of Metherlands
East Indies guilders in the Netherlands East Indies should be the
name as the pattorn to be agreed upon for the Netherlands and that
this matter should be deferred until an agreement is reached with
respect to the Netherlands.
The Secretary of the Treasury will probably want to write to
the Minister of Vinance of the Netherlands Government confirming the
views of the Treasury Department, as above expressed.
Very truly yours.
(Signed) H. D. White
H. D. White,
Assistant to the Secretary.
Mr. D. Grena de longh,
Board for the Netherlands Indies,
Turinan and Curacao.
10 Rockefeller Plaza,
New York 20. New York
5-15-44
Regraded Unclassified
236
TICKER NEWS
WCNS
12:10 P.M.
June 5, 1944
House Conferees agreed to the Senate Rider on the Debt Limit Bill
reducing the cabaret tax to 20 percent from 30 percent.
But the conference decided to eliminate the Senate provision which
would have exempted members of the armed forces from the tax.
At the same time, the House agreed to increase the Debt Limit to
$260,000,000,000, from the present ceiling of $210,000,000,000, receding
from the original position of the House which would have permitted an
increase to $240,000,000,000.
:
Regraded Unclassified
237
MEMORANDUM
May 31, 1944
The British Government are prepared, subject to the
reservation contained in the following paragraph, to
agree that initial procurement under Plan A should go
forward on the following basis. That the United States
shall bear initial procurement responsibility for
purchases in the United States, that the United Kingdom
shall bear initial procurement responsibility for purchases
in the United Kingdom and the British Commonwealth excluding
Canada, and that procurement responsibility for purchases in
countries other than the United States and the British
Commonwealth shall be divided equally between the United
States and the United Kingdom.
This agreement is however subject to the reservation
which has been accepted by the United States members of the
CCAC that the arrangement outlined above shall in no way
prejudice the ultimate financial settlement for the cost
of relief during the military period which is a matter for
negotiation between the two governments.
It is the view of the British Government that any such
final settlement between the supplying countries must be on
an equitable basis which will take into consideration among
other things the relative financial strength of the countries
concerned.
Regraded Unclassified
238
- 2 -
It will be noted that in paragraph (1) the position
of Canada has been specifically reserved. This will be
treated separately and will be the subject of special
negotiations between the three governments.
Sidney A. Mitchell
LA:SAM:MJC
Regraded Unclassified
239
June 5, 1944
3:47 p.m.
HMJr:
I've got you're partner here, Dean Acheson.
E. R.
Stettinius: Henry.
HMJr:
Yes.
S:
How are you?
HMJr:
I'm fine.
S:
You've got my partner there?
HMJr:
Yeah.
S:
How is he?
HMJr:
He's all right.
S:
Behaving himself?
HMJr:
Always does.
S:
Halifax has just left me.
HMJr:
Yeah.
S:
And left with me an aide memoire
HMJr:
Yes.
S:
....
that is very important
HMJr:
Yes
S:
relative to the possibility of getting
a million Jews out of Europe
HMJr:
Yes.
S:
for exchange of certain items.
HMJr:
Yes.
S:
Now, Weizmann has known about it. He's been
told.
HMJr:
Yes.
S:
He's the only one who has been told.
Regraded Unclassified
240
- 2 -
HMJr:
Yes.
S:
And I think it's -- I thought that -- I wanted
to let you know about it, personally, immediately.
HMJr:
Fine.
S:
And I'd like to have Pehle to -- Pehle to come
here immediately and get a copy of the aide
memoire so you can see it yourself.
HMJr:
Well, he's in New York. I'll send Joe DuBois.
Do you know DuBois?
S:
No.
HMJr:
Do you know Luxford?
S:
Anybody you send is all right with me.
HMJr:
Well, Joe DuBois.
S:
DuBois. And if he could come to my office
double-time quick
HMJr:
Yes.
S:
and return to yours
HMJr:
Fine.
S:
because this is something we must act pretty
quickly on.
HMJr:
Well, we can act as quick as anybody will let us.
S:
Now, listen, is Goldmann reliable?
HMJr:
Goldmann. He -- I'd have to check. I think he
represents Weizmann, doesn't he?
S:
That's correct. And he -- and the Foreign Office
in London
HMJr:
Yes.
S:
....
recommends to us
HMJr:
Yes.
S:
that we advise Goldmann of this offer.
Regraded Unclassified
241
- 3 -
HMJr:
Yes.
S:
But this is so important and such high stuff....
HMJr:
Yeah.
S:
....
that I think that maybe you ought to
....
HMJr:
Well, let me check a minute and when DuBois
comes over, he'll be able to tell you.
S:
All right, Henry.
HMJr:
D-u-B-o-1-8.
S:
All right, he'll come -- thank you, sir. Righto.
HMJr:
Right.
Regraded Unclassified
242
1/5/44
AIDE MEMOIRE
Attached to this Aide Memoire is the text of a tele-
gram received by the Foreign Office from the High Commis-
sioner, Jerusalem. His Majesty's Ambassador is instructed
to inform the United States Government of the proposal set
out in that telegram and to put before them the reactions
of His Majesty's Government which are as follows:
(a) Assuming suggestion was put forward by Gestapo
in form conveyed to us, then it seems to be sheer
case of blackmail or political warfare. Implied
suggestion that we should accept responsibility for
maintenance of additional million persons is equiva-
lent to asking the Allies to suspend essential mili-
tary operations.
(b) We could not bargain over any scheme with
Gestapo and agree to trade lives against military
and economic concessions calculated to stave off
Germany's defeat. Demand that we should in effect
raise blockade is totally inadvisable; to give
Germany 10,000 lorries would bring important access
of military strength to the enemy, and German stipu-
lation of Spain and Portugal as sole exodus seems
clearly designed to embarrass Allied military opera-
tions.
(c) Once committed to this kind of blackmail coupled
with raising of blockade, which seems inseparably
connected with it, the Allies would be driven to even
further lengths.
(a) It would appear that selection of persons, if
exchange were agreed, is to be in Hitler's hands. On
this we think should be borne in mind that immense
numbers of Allies are held by the Germans under
terrible conditions and that to arrange any exchange
on a basis to be determined by Hitler, leaving Allied
internees and prisoners in German hands, would lay
Governments open to extremely serious protest.
Regraded Unclassified
243
- 2 -
(e) While however refusing to deal with this scheme
and channels through which it has come, we realize
importance of not opposing a mere negation to any
genuine proposals involving rescue of any Jews and
other victims which merit serious consideration by
Allied Governments. Whole record of United States
Government and His Majesty's Government over refugees
is a proof of their active sympathy with victims of
Nazi terror. Accordingly if the German Government
were willing to release Jews in position of extreme
distress or danger, His Majesty's Government and
United States Government would be willing to examine
the possibilities of moving to and accommodating in
Spain and Portugal such persons as could be handled
without prejudice to vital military operations.
2. His Majesty's Government are informing Dr. Waizmann in
strictest confidence of this proposal, but are making no
comment beyond saying that they are in touch with the United
States Government. It is presumed that the latter will
similarly inform Dr. Goldman. His Majesty's Government are
anxious to learn at the earliest opportunity the views of
the United States Government on what action, if any, should
be taken. In particular they would be glad to know whether
the United States Government would agree to instruct their
Ambassador at Ankara, if he is approached by the Jewish
Agency, to associate himself in a reply on the lines set
forth above. His Majesty's Government would suggest that
Dr. Shertok should be told that we cannot sanction him or
any other Allied citizen having any. dealings with the
Gestapo, but that we would agree to his conveying the sub-
stance of our observations to his Zionist friend from
Hungary. This would show that, although we cannot enter
into the monstrous vargain now proposed by the Gestapo, we
are yet far from indifferent to the sufferings of the Jews
and have not shut the door to any serious suggestions which
may be made and which are compatible with the successful
prosucution of the war.
3. His Majesty's Ambassador at Ankara has been instructed
to communicate the foregoing information in strictest con-
fidence to his United States colleague, informing him that
Regraded Unclassified
244-
- 3 -
it has been transmitted to Washington in order that the
reaction of His Majesty's Government may be coordinated
with that of the United States Government. His Majesty's
Ambassador has been instructed to return no definite reply
to Dr. Shertok until the essential common line of action
has been established between the two Governments.
4. The Department of State may be interested to know that,
on being informed of the Gestapo's proposal, Dr. Waizmann
merely observed that it looked like one more German attempt
to embarrass the United States and United Kingdom Govern-
ments. He said, however, that he would like to reflect
on the affair and receive news of any developments.
BRITISH EMBASSY,
WASHINGTON, D. C.
5th June, 1944
245
Copy of Cypher Telegram No. 683
To: Foreign Office
From: High Commissioner, Jerusalem.
Ben Gurion and Shertok came to see me this morning and
stated as follows:
Special messenger started from Turkey on May 22nd and
reached Jerusalem May 24th bringing them statement from their
representatives in Istanbul (Barlas etc.) to following effect.
On May 19th well known and trusted Zionist representative
in Hungary Joel Brandt arrived in German aircraft in Istanbul
from Vienna accompanied by & Hungarian Gestapo agent who has
several aliases (e.g. Andrew George, Andrew Gross) and who so
far as is known is still in Turkey. Brandt has been sent to
Turkey with this man as watchdog by high German Gestapo chiefs
in Budapest to place the following order before Jewish leaders
in Palestine, England and America, and before the high Allied
authorities.
As an alternative to complete annihilation of all Jews re-
maining in Hungary, Rumania, Czechoslovakia and Poland, the Nazis
are ready to evacuate one million Jews from these countries to
Spain and Portugal (though not, as they specifically stated, to
Palestine). In return they require delivery of 10,000 motor
lorries and certain quantities of coffee, tea, cocoa and soap. As
an act of good faith they are prepared, once the offer has been
accepted in principle to release first batch of five to ten
thousand Jews before receipt of corresponding consideration.
They are also prepared to exchange Jews against German prisoners
of war. If the offer is rejected they will proceed with their
programme of wholesale liquidation. The emissary must return
to Budapest with a reply within a fortnight from May 19th.
2. Brandt has the impression that these negotiations can be
prolonged if evidence is forthcoming that scheme is being earn-
estly considered in high Allied quarters. It is also believed
that substitution of cash payments in Switzerland for deliveries
in kind wholly or in part is not to be excluded and both sides
barter transaction, namely evacuation and compensation can be
realised by successive stages.
Regraded Unclassified
246
- 2 -
3. Brandt reports that 300,000 Hungarian Jews are already
herded in concentration camps as a preliminary to deportation.
The rounding up of other Jews is in progress. Plans have been
made for daily deportation to Polish slaughter houses of 12,000
Jews of means but this is presumed to have been deferred pending
negotiations. This report of the position in Hungary is said to
be fully corroborated by various Hungarian Jewish eye witnesses
who reached Palestine on May 24th.
4. In the light of the above and past experience agency fears
that the fate of Hungarian, Czechoslovak and Roumanian Jews is
sealed unless they can be saved in time and "they firmly hope
that the magnitude and seemingly fantastic character of the pro-
position will not deter the high Allied authorities from under-
taking a concerted and determined effort to save the greatest
possible number. They fully realise the overwhelming diffi-
culties but believe they might not prove insurmountable if
the task is faced with boldness demanded by unprecedented
catastrophe".
5. Shertok is proceeding to Istanbul as soon as he can
(i.e. probably within a few days) for a more complete eluci-
dation of the facts and will report to His Majesty's Ambassador
Ankara.
6. Agency is keeping all the above information strictly
secret and wishes us to do likewise but they ask that His
Majesty's Government should at once communicate it on the same
terms to Washington and that the sole exceptions to the official
secret should be
(A) Dr. Weizman personally to be informed by His Majesty's
Government.
(B) Dr. Goldman personally to be informed by the United States
authorities.
I enquired whe ther the agency desired any other specific action
than communications referred to in preceding paragraph pending
Shertok's enquiries and report to His Majesty's Ambassador Ankara,
and they replied in the negative.
247
June 5, 1944
Dear Ed:
This letter will serve to introduce
to you Mr. Josiah E. Du Bois, Jr., General
Counsel of the War Refugee Board.
Yours sincerely,
(Signed) M. Morgenthau, Jr.
Honorable Edward R. Stettinius, Jr.,
Acting Secretary of State,
State Department,
Washington, D. C.
Regraded Unclassified
248
June 5, 1944
5:22 p.m.
HMJr:
Jack, Acheson was here for an hour
John
McCloy:
Yeah.
HMJr:
and he doesn't see any reason about why
these things we are talking about should hold
up what you're doing
M:
Yeah.
HMJr:
any more than I do.
M:
Yes.
HMJr:
So, I don't know whether the British are going
to join you, but
M:
Well, that's -- you see, what happens, 8.8 I am
told -- what happens is that when we try to get
this on a combined basis which it will all --
has to be some time or other, why, they hold back
and say, well, that paper may commit us to a final -
to a -- in some final settlement. They won't agree.
HMJr:
Yeah.
M:
At least, they haven't agreed to any papers that
we've put up to the Combined Chiefs of Staff yet,
and it sounds -- and it always is -- when you
really get down to brass tacks, it's always this
point of who's going to -- who's going to pay for it.
HMJr:
Yeah.
M:
Now, maybe we can, as I say, we -- the people
downstairs are beginning to get nervous because
the purchases that we're making are getting fairly
extensive and we don't like to go ahead until we've
got some authority behind us.
HMJr:
Well, let's leave it this way. If at any time you
have to hold back on account of this, you give me
a ring.
M:
All right, I will.
HMJr:
How's that?
Regraded Unclassified
249
- 2 -
M:
Okay. Now, you will -- you will try to see the
President about it?
HMJr:
Oh, you know that?
M:
Yeah.
HMJr:
Oh, Dean's talked to you?
M:
No, no. No, you told me that.
HMJr:
I've got to see the President between now and
Thursday night.
M:
Between now and Thursday, yes.
HMJr:
Yeah.
M:
You said you were going to try -- you go ahead
and if you can get the answer, so much the better.
I'm sure things will go much smoother if we can
get it cleared up.
HMJr:
Yeah.
M:
Okay.
HMJr:
Thank you.
M:
All right. Fine.
Regraded Unclassified
250
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE
June 5, 1944
TO
Secretary Morgenthau
FROM Fred Smith
We are making arrangements for you to go to the
North American plant to see the P-51. I am making an under-
cover arrangement to have North American put out the story
about your getting the motor for it.
I haven't seen any letter from Howard Hughes. FitzGerald
called me and relayed the message. Apparently Hughes had
called someone in Gamble's office first.
Regraded Unclassified
251
JUN 5 1944
Dear Mr. McCloy:
Receipt is acknowledged of your letter of
June 2, expressing the willingness of the Army
to make available camp facilities in this country
suitable to house approximately 1,000 refugees on
a temporary basis.
A representative of the War Refugee Board will
visit Fort Ontario and Madison Barracks within a day
or two, and both of these camps will be mentioned to
the President. On the basis of information now avail-
able, however, we are assuming along with you that
Fort Ontario is the designated camp.
It is contemplated that the War Relocation
Authority will actually administer the camp. We are
assuming that the Army will be in a position to take
the necessary security precautions and can arrange
for the transportation of the refugees from the port
of arrival to the camp.
I want you to know how much I appreciate the
sympathetic attitude which you have shown in this
whole matter, and the prompt action which your
Department has taken.
Very truly yours
(Signed) d. Morgentan, J1
Secretary of the Treasury.
Mr. John J. McCley
Assistant Secretary of War
Washington, D. C.
JEDuBois:ecr
6/5/44
Regraded Unclassified
STATE STATES OF OF
THE ASSISTANT SECRETARY OF WAR
WASHINGTON
STATE
OFFICE
2 June 1944
Dear Mr. Secretary:
This is to confirm the willingness of the Army
to make available a camp or facilities suitable to
house approximately 1,000 refugees on a temporary basis.
We understand that whereas the housing itself will be
furnished by the Army the operation of the camp will
be undertaken by the War Relocation Authority or some
other civil agency. I have no doubt that the Army can
afford considerable assistance in the way of use of
certain equipment which would be useful for such a
purpose, such as blankets, utensils, etc.
An examination of our facilities indicates that
probably the best available location would be Fort
Ontario, New York, which is near Oswego, and we are
prepared to designate that place if you wish. Another
possibility is Madison Barracks, New York, which is
near Watertown, where a similar number might be taken
care of, but we will assume that Fort Ontario is the
designated camp unless we hear to the contrary from you.
Sincerely,
Ju Jun loy
Honorable Henry Morgenthau, Jr.
Secretary of the Treasury
Regraded Unclassified
253
June 5, 1944
Dear Mr. Hoving:
For Mrs. Morgenthau and myself, I want
to accept your kind invitation to attend
the luncheon at the Waldorf-Astoria, June 21.
I regret that I was not in my office
when you were here last week. I am looking
foward to seeing you at the luncheon and the
opening of the "Avenue of the Allies".
Sincerely,
(Signed) H. Morgenthau, Jr.
Mr. Walter Hoving, President
Fifth Avenue Association
Empire State Building
New York, New York
FS:MLF
Copy to Mrs Regraded M 6/5/416
accept for
Fifth Avenue Association,
Empire State Building,
Suy & more.
New York, New York,
June 2, 1944.
m.-
1
The Honorable Henry Morgenthau, Jr.,
sorry are
Secretary of the Treasury,
mined him
Washington, D. C.
My dear Mr. Secretary:
I dropped in while I was in Washington to pay my respects.
I am busily engaged in completing the plans for the luncheon
at the Waldorf opening the "Avenue of the Allies" on Wednesday,
June 21. We are delighted that you will be with us, and I also
wanted to extend personally an invitation to Mrs. Morgenthau to be
with us. We have, as you may know, invited all the Ambassadors and
Ministers of the Allied Nations and their wives, and the program
will consist of Ambassador Wei, Ambassador Gromyko, Ambassador Lord
Halifax, and yourself. At least, this is the plan, if my trip is
successful today. Mr. Gamble has kindly lent me his assistance in
every way, so I have every hope that it will be.
With my best personal regards,
Sincerely yours,
WalterHoung Walter Hoving,
President.
Regraded Unclassified
255
June 5, 1944
FROM:
SECRETA RY MORGENTHAU
TO:
MR. SMITH
I am enclosing a copy of a letter to Admiral
Furlong which Ted prepared. Could I use this as an
example in one of my talks.
Regraded Unclassified
256
JUN 5 1944
Dear Admiral Furlong:
Based on the record made since the inception of the
War Bond Program, we have come to expect from the Nevy
outstanding results at all times. In this expectation
we have never been disap ointed. AB you well know, the
Navy was the first Depart ent of the Federal Government
to initiate the Payroll Savings Plan. Since then, it
has continued to hold first place in many phoses of the
Wer Bond Program.
or all Nevy activities anywhere, no record has been
more gratifying than that of the Pearl Herbor Navy Yard.
New records are made constantly by the Yard only to be
again broken by it.
A good share of the credit for this must go naturally
to the civilian personnel of the Yerd. Many of these men
end women were subjected to the sneak attno of the enemy
on December 7, 1941. All of them are still close enough
to the combat zone to be at all times conscious of the
grim nature end great cost of war, both in material and
lives. They know that the all-out effort of all our
citizens is needed in order to insure Victory.
With this consciousness, the men and women at Pearl
Herbor have set not only new War Bond records, but new
production records.
Such achievements are not possible without inspiring
leadership. That you have given such Leadership in
setting new production records is adequately attested
to by the fact that you have been awarded the Legion of
Merit. That you have given such leadership to the War
Bond Program is most recently evidenced by the Pearl
Harbor Day record, when over 83,000,000 of War Bonds
were purchased at the Pearl Harbor Navy Yard. This
placed the Yard head and shoulders above all other
activities in the Naval Establishment.
I wish to congratulate end thank you and, through
you, to extend my congratulations end thanks to the
Regraded Unclassified
257
-2-
War Bond representatives and to all the Navy Yard
workers for the inspiring example which they have set
to the Navy and to the Nation.
Sincerely,
(Signed) W. Morgenthan. Jr.
Rear Admiral William R. Furlong, USN,
Commendant, Navy Yard,
Navy 128, Fleet Post Office,
San Francisco, California.
TRG:hsh
Regraded Unclassified
258
June 5, 1944
My dear General Eisenhower:
I have just viewed the motion picture subject
which you so thoughtfully made for our Fifth War Loan
Drive. The film is magnificent and I am sure that
millions of Americans will be thrilled and inspired
by your very convincing message.
For your information, arrangements have been
made to exhibit this subject on a lot booking sched-
ule in all of the nation's theatres during the
period of the Fifth War Loan Drive. At the present
time there are approximately 90 million people
attending the thestres each week, so you cen get
some idea of how importent your message becomes to
our operation. In addition, we have embodied the
subject, with the aid of the Signal Corps, in three
special war films that we are exhibiting in plants
throughout the nation during the drive. We are
using 1,750 of these war pictures so that we can
during the period of the drive cover most of the
workers of the nation.
I wanted you to know how pleased we are with
the picture and to what good advantage we are
putting it. With every good wish, I am
Cordially yours,
(Signed) Henry Morgenthap, Jr.
General Dwight D. Eisenhower,
Supreme Allied Commander,
Allied Expeditionary Forces,
A. P. 0. 757,
c/o Fostmaster, New York, New York.
TRG:ecb
Regraded Unclassifie
259
JUN 5 1944
Dear Mrs. Holmes:
Thank you very much for your letter of June 1.
This opportunity to assist with the summer entertainment
program of the Stage Door Canteen has afforded me real
pleasure.
I should like to take this occasion to compliment
you and the other officers of the Canteen in Washington,
who are contributing so generously of your time and
energy. You are doing a grand job for our service men,
and I hope that you will call upon me at any time if I
can be of assistance to you.
Sincerely yours,
(Signed) H. Morgenthau, Jr.
Secretary of the Treasury.
Mrs. George R. Hodmes,
Co-Director,
Stage Door Canteen,
Lafayette Square,
mashington 5, D. C.
Regraded Unclassified
AMERICAN THEATRE WING
WAR SERVICE, INC.
STAGE DOOR CANTEEN OF WASHINGTON
Have HAVEL, Chairman
BRANCHES COMMITTEE
ASSERIA MANUFALL
STAGE, RADIO, SCREEN, VAUDEVILLE, MUSIC
Vice-Chairmas
Baock PRESENTON
Co-Chairmen
AND ALL ALLIED CRAFTS
MILTON SQUART
BOARD OF DIRECTORS
WILLIAM
Mas. A. G. Hospital
SHUBERT-BELASCO THEATRE
SOLLY Passics
Mas. Gso. R.
WASHINGTON 5, D.C.
Man. PAUL V. McMorr
EXECUTIVE 1519
CARDY Wassoon
MANAGER WALLER PURMAN, Administrative Assistant
James
D. LARGON, Treasurer
June 1, 1944
Insury CMD, Counsel
1
7. Brown, Executive Secretary
WASHIN BARRATT, Scenic Designer
The Honorable
COMMITTEE CHAIRMEN
Angel Table
Henry Morgenthau, Jr.
Mas. PARL V. McMum
Secretary of the Treasury.
Denations
Mai.
Goo. 2. HOLDERS
Geoses Maria
My dear Mr. Secretary:
Mr.
JAMES Docume
Food Bar
Mrs.
MAY 2. Secure
The Directors of the Stage Door Canteen
Mm
MAST Tournes
of Washington wish to thank you for making
Mas. four Insurance
possible the outdoor dance for the service
Hosteness
Mr.
Toward A. HAVES
men last night. Your generosity and your
Mrs.
Jomn DAVIDGS
cooperation made this gala event a reality
Montenes, Junior
Main
and we are all deeply grateful to you.
Mai. ALMIN W. MILLEOLLAND
With your consent we hope to continue
House Managers
these dances every Saturday night after the
Class WINSTON
tenth of June, and we are all looking for-
HOWARD P. BARRY
ward to the repetition of the pleasure that
House Committee
Mas. WM. 2. Docum
we know the boys had last Wednesday.
Mas. Joann Pulma, Ja.
Program
HAIRT Asseme
Sincerely yours
Income PLOMN
Publicity
Loos Human
Art
Mary Quily Holmes
FRANK F. Moun
(MPS. George R. Holmes)
Registration
Co-Director
Mas.
ALBER W. MILLEOLLAND
Mai.
J. L
Blage
- Class Rom
has 3.
Guilde and Labor
Actord Equity Association
Guild Variety Artists
ALEXANDOR McKays
Amar. Federation of Radio Artists
Guarm BACK
Front of Thestre Employees Local B 14
ELWOOD VIVIRN
Moving Picture Machine Operators Pro-
Union
Local 226
LEEMAN
Protective Union Local 161
1944 JUN 3 AM 9
SECRETARY OF TREASURY
OFFICE
PAUL SCEWARE
Blage
Employees
Local
No.
22
and
Ticket Ballers Local THE
Boom
led Goods Article
Classing form
BOARD OF DIRECTORS OF THE AMERICAN THEATRE WING WAR SERVICE, INC.
RACHIL
PRIMY, Chairman of Board and Secretary-Genraux LAWRENCE, 1st Vice-President-
EN HAYES, 2nd Vice-
President-Yana ALLEN, 2nd Vice-President-Man. MARTIN Back, Treasurer-JOSEPHINE HULL, Honorary Treasurer-EOWARD
KD, BROOKS ATKINSON,
HARRY BRANDT, ILKA CHASE, JANE Cow., MORTON DOWNEY, PAUL DULIZELL, VINTON FREEDLEY, John Golds
ABCUS HEIMAN, Grongs
Sum,
Secur Hour, Jacom, Ass LASTPOGEL, ALFRED LUNT, BERT LYTELL, FREE MARSHALL, HELEN MENKEN, GILBERT
WARREN P. MUNSELL,
Book
I
SOLLY JAMES C. PETRILLO, JAMES F. RETLLY, ARTHUR RICHMAN, JACOB ROSENBERG, J. ROBERT RUSIN, J/
E. SAUTER, OLIVER M.
BATLER, Momts R. BRAMON, Las SEVENT, Num TRAMMELL, RICHARD F. WALSH, DWIGHT Damas WIMAN
BLANCES WITHERSPOON. SIDNEY R. FLAISHER, Counsel.
Regraded Unclassified
261
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
CONFIDENTIAL
DATE June 5, 1944
TO
FROM
Mr. at
Secretary orgenthau
Subject: The Business Situation,
Week ending June 3, 1944.
Summary
Stock market: Stock prices rose to new highs for the year last
week, but resistance to further gains in the latter part of
the period held the net advance in the Dow-Jones average of
65 stocks to less than 1 percent. Industrial stock prices
in London have moved up to D. new high for the entire wer
period, and at the end of last week were 39 percent above
pre-war levels.
Commodity prices: The BLS index of basic commodity prices rose
0.3 percent last week to a new high due principally to gains
in prices of rosin and steers. The general wholesale price
index rose 0.1 percent in the week ended May 27 in reflection
of rising prices for certain farm products.
Retail trade: Although the year-to-year sales gain has narrowed
considerably since Mother's Day, department store sales in the
week ended May 27 were still 11 percent above the 1943 levels.
Sales of all retail stores in the first 4 months of 1944 were
9 percent higher than in the corresponding months of last
year. During the intervening period the Department of
Commerce's retail price index rose about 3 percent, thus
indicating some increase in the physical volume of goods
sold.
Consumer credit: In the face of a rise in retail sales, total
consumer credit at the end of April was 9 percent lower than
a year earlier. The aggregate reduction in consumer credit
since the 1941 peak amounts to nearly $5 billions, of which
$2 billions represents a decline in automotive instalment sale
debt.
Construction: The value of construction work in 1944 is expected
to be only one-fourth of the war-time high attained in 1942.
An acute shortage in lumber supplies is a restricting factor.
Military demands for lumber have been rising, and the lumber
industry has been hampered by a shortage of manpower, which 1s
currently accentuated by a strike of lumber workers in the
Pacific Northwest.
Regraded Unclassified
262
- 2 -
Rise in stock prices falters after reaching new highs
The gradual upswing in stock prices continued last week,
with industrial and railroad stocks reaching new highs for the
year on increased trading activity. However, resistance to
the rise developed after mid-week, and prices on the whole
were unable to make further upward progress. (See Chart 1.)
At the close on Saturday the Dow-Jones average of 65 stocks
was about 1 percent higher than & week earlier, while the
trading pace near the end of the week slackened from the
1,200, 000 share level attained on Wednesday and Thursday.
Although the Dow-Jones average of industrial stocks showed a
net gain of approximately 6 points in May, trading activity
continued to 108 for behind year-earlier levels, with total
stock transactions last month amounting to less than one-half
the volume attained in May 1943.
A generally cautious attitude on the part of investors
is indicated by brokerage comment, but continued strength in
corporate bond prices, particularly railroad issues, and the
rise in stock prices at London have served to bolster
speculative sentiment. The Dow-Jones averages of higher-
grade and second-stade railroad bonds advanced to new highs
since 1937 last week, although gains were less than in the
previous week. At the same time industrial stock prices in
London continued to forge ahead to new highs for the entire
war period. While U. S. industrial stock prices are still
about 2 percent below last year's peak, British stock prices
are 3 percent higher. (See Chart 2.) Moreover, British
industrial stock prices are now 39 percent above the level
prevailing on the eve of the outbreak of war in Europe, while
U. S. industrial stock prices are only. G percent higher
Commodity prices rising
Commodity prices showed some tendency toward further
advances last week, where price controls permitted, partly
reflecting the action of the Benate Banking and Currency
Committee in approving proposed amendments to the Price
Control Act designed to increase farm prices. The BLS price
index of 28 basic commodities rose 0.3 percent to another new
high 82.0 percent above the pre-war August 1939 level. (See
Chart 3.) The sharp upturn in this index in recent weeks
has been due very largely to price advances in the two basic
commodities not under some form of price control cotton and
rosin. During the past week cotton rose 0.2 percent further,
Regraded Unclassified
263
- 3 -
while rosin rose 3.3 percent. Steers also advanced on a
strong retail demand for beef, rising 2.4 percent during
the week.
Recent rising tendencies in certain farm products are
reflected in the general price index. The BLS all-commodity
index in the week ended May 27 rose 0.1 percent to 103.9,
led by an increase of 1.3 percent for fruits and vegetables
and 0.7 percent for livestock. (Refer to Chart 3.) The
index is now 0.1 percent lower than the level of a year
earlier, but is not likely to remain 80 in view of the sharp
drop in prices during June last year.
Farm prices in May slightly lower
The index of form prices for mid-May dropped to 194,
or 2 points under the April level, but the same as in May
last year. (See Chart 4.) Lower prices for meat animals,
dairy products, cotton, and strawberries were chiefly
responsible for the decline in the farm price index, but
prices for truck crops and certain other products advanced
during the month.
While farm prices in May this year averaged the same as
last May, the indexes for certain groups were substantially
lower, notably for truck crops, poultry and egys and meat
animals. The cost of goods bought by farmers has increased
over the year, hence farm prices in May averaged 114 percent
of parity as compared with 119 percent in May 1943.
Bankhead smendment would raise cotton prices
The proposed Bankhead awendment to. the Frice. Control Act,
recently approved by the Senate Banking and Currency Committee,
which would tie textile price ceilings to raw cotton prices,
is designed to raise cotton prices to parity. Cotton is one
of the few farm products now selling below parity, the farm
price in May being 94 percent of parity as compared with 99 per-
cent in May last year. The amendment has been strongly opposed
by the President and by Stabilization Director Vinson.
Cotton growing interests have charged that the present
textile ceilings are too low to permit mills to pay parity
prices for raw cotton, while mills have complained that the
ceilings on many textile lines are too low to enable them to
operate at a profit. As mills and retailers have tended to
concentrate on lines which yield the highest profit under
present ceilings, serious complaints have arisen from consumers
who have been unable to find many items of low-priced cotton
Regraded Unclassified
264
goods in retail stores. The CIO has called for a Congressional
investigation of the low-cost clothing shortage. To correct
this situation, the OPA and WPB have taken action jointly to
work out a program for the textile industry designed to
increase production of lower-priced cotton goods and clothing.
Any change in textile pricing methods, &B contemplated
by the Bankhead amendment, would cause considerable disturbance
among cotton goods distributors--wholesalers, jobbers, and
retailers--since many of them operate under fixed ceilings.
A flexible system of price adjustments throughout the industry
would be required to make the plan workable, and prices to
consumers yould be increased. The OPA has estimated that the
plan yould cost consumers between 225 end 350 millions.
President Roosevelt last Tuesday expressed his opposition
to any action which would increase the ceilings on basic
commodities, and intimated that an increase in cotton prices
was not justified.
Another proposed amendment to the Price Control Act would
raise the Government loan rate on the "basic" crops-cotton,
wheat, corn, rice, tobacco, and peanuts--to 95 percent of
parity from the present 90 percent. Since Director Vinson, in
& sharply-worded statement against the Bankhend amendment, spoke
favorably of raising the cotton loan rate, the belief is held by
some that the Administration may accept the loan rate increase
if the Bankhend smendment 18 killed. Increased loan rates on
"basic" crops, however, would initiate a series of price advances,
and would disturb the food production program unless prices
were raised for competing strategic crops.
A food-subsidy amendment has been approved by the Banking
and Currency Committee, which would continue the present subsidy
program intact until June 30, 1945, after which subsidies
could only be continued upon direct appropriation by Congress.
Increased subsidy on soft wheat flour
Ceiling prices on soft-wheat bakery flour sold by millers
in the eastern and central states have been reduced by 23 to
38 cents a hundredveight, effective June 1, to put prices more
nearly on & competitive basis with hard-wheat flour and with
Pacific Coast soft-wheat flour. The reduction will be
accompanied by a corresponding increase in the soft-wheat
flour subsidy paid by the Defense Supplies Corporation to
millers in those areus. Ceilings on family flour in 10 eastern
and southern states (chiefly made from soft wheat) have also
been appreciably reduced.
Regraded Unclassified
265
- 5 -
Department store sales above 1943 levels
Department store sales continue to run well above year-
earlier levels despite 8. decline from the recent peak reached
in the second week in May, when heavy gift buying for Mother's
Day was in progress. The sales gain over 1943 levels narrowed
to 11 percent in the week ended May 27 from 15 percent in the
previous week and 31 percent in the week before Mother's Day.
(See Chart 5.) These figures contrast with E cumulative
sales gain thus far in 1944 of only 7 percent, thus indicating
some quickening in the sales pace last month in comparison
with the earlier part of the year. The Atlanta and Dallas
districts continued to make the strongest relative sales
showing, with both districts reporting & 26 percent gain over
1943 levels in the 21 weeks ended May 27.
Total retail sales rise faster than department store sales
In the face of the sales gains shown thus far this year
by department stores, it 1s interesting to note that sales of
all retail stores have made a moderately stronger showing.
Thus in the first 11- months of 1944, department store sales
rose about 11. percent above the 1943 levels, while all retail
stores increased 9 percent. On the basis of the Department
of Commerce's retail price index only a portion of the rise
Was due to price increases, 0.8 the price index averaged 2.9 per-
cent higher in the first 21- months of 1944 than a year earlier.
The further rise in 1944 carried the retail price index
36.9 percent above the 1939 level.
Retail sales of durable goods have shown a gradual
recovery from the war-time low reached in the first quarter
of last year. Nevertheless, due principally to the heavy
loss in automobile trade, durable goods sales in the first
quarter of this year were still 40 percent below the peak
attained in the second quarter of 1941.
On the other hand, retail sales of nondurable goods have
risen considerably and have maintained a fairly close relation-
ship with the war-time expansion in consumers' disposable
income. In the first four months of 1944, the dollar volume
of eating and drinking places was 24 percent higher than in
the corresponding period a year ago, leading the rise in
retail sales of nondurable goods stores. Substantial sales
gains were also shown by liquor stores, book stores and florists,
which, together with the sharp rise in jewelry store sales,
points to considerable luxury buying during the current year.
Regraded Unclassified
266
- 6 -
Consumer credit declines
The retail sales gains of the past year have occurred
in the face of a further contraction in consumer credit. Following
& moderate expansion in March, total short-term consumer debt
again declined slightly in April and at the end of the month
was about 9 percent lower than a year earlier. Moreover,
reference to Chart 6 will disclose that consumer debt at the
end of April was nearly 51 percent lower than at the 1941
peak, with the aggregate reduction since the end of September
1941 amounting to nearly 35 billions.
The most important factor in this huge reduction, of
course, has been the virtual cessation of sales of new
automobiles, with a consequent drop of more than $2 billions
in automotive instalment sale debt. In April, however, in the
face of & general reduction in instalment sale debt, automotive
items increased slightly for the first time since August 1941,
but the amount outstanding at the end of April was only
$171 millions as compared with B. peak of 2,313 millions at
the end of August 1941.
Construction awards at low levels
With war plant construction substantially completed and
WPB curbs still in effect on private projects, construction
contract awards thus far have failed to show significant signs
of recovery. Preliminary reports indicate that engineering
construction awards last month were only slightly more than
half as great as a year earlier. Moreover, total construction
contract awards as reported by the F. W. Dodge Corporation,
have been running consistently under last year's levels, with
the decline in the first 21. months of 1944 amounting to
53 percent. The decline in awards for manufacturing buildings
during the same period was 45 percent. (See Chart 7.)
Last fall the MPB estimated 1944 construction activity
at 3.9 billions, but due to outbacks in construction projects
the estimate for this year was cut last month to 3.5 billions.
On this basis the value of construction work carried out this
year will be less than half of the 1943 total and only about
one-fourth of the war-time high attained in 1942.
Lumber shortage restricts private construction projects
In the latter part of last month an official of the
National Housing Agency predicted that the WPB would soon
permit a partial resumption of private housing construction,
but the WPB later indicated that a shortage of lumber would
Regraded Unclassified
267
- 7 -
prevent such action. Demands of the armed forces for lumber
for various purposes are reported to be steadily rising, and
estimated total demand in the third quarter of this year is
in excess of total estimated supplies. In an effort to cope
with the pinch in lumber supplies, the WPB is expected to
put an expanded system of lumber controls into effect in the
third quarter.
In addition to a rising demand, the lumber industry
has been hampered by a shortage of workers. As of March 1
a shortage of nearly 47,000 workers existed in the logging,
lumbering, timber products and wooden container industry.
Moreover, labor requirements on July 1 are expected to be
more than 21,000 higher than on March 1. The manpower
difficulties of the industry have been further accentuated
recently by a strike of lumber workers in the Pacific
Northwest, with an estimated 30,000 workers idle at the
end of May.
Regraded Unclassified
Chart 1
268
STOCK PRICES, DOW-JONES AVERAGES
Daily
1943
1944
DEC.
JAN.
FEB.
MAR.
APR.
MAY
JUNE
5
23
6
13
20
E7
5
12
19
26
2
9
16
23
30
7
14
21
28
4
=
16
25
12
19
26
2
9
16.
30
DOLLARS
DOLLARS
155
155
30 Industrial Stocks
150
150
145
145
140
140
135
135
130
130
125
125
120
120
40
40
38
20 Raiiroads
38
36
36
34
34
32
32
30
30
24
24
15 Utilities
22
22
20
20
18
18
SHARES
SHARES
MIIII one
Volume of Trading
Millions
2
2
I
I
o
0
5
12
19
26
2
9
16
23
30
6
IS
20
E7
5
12
9
as
2
9
16
23
30
7
14
21
28
4
II
IS
25
DEC.
JAN.
FEB.
MAR.
APR.
MAY
JUNE
1943
1944
Office of the Secretary of the Intery
Bree el - - Invoice
P-144-L
Regraded Unclassified
INDUSTRIAL STOCK PRICES IN U.S. AND U.K.
AUGUST 1936 = 100
1942
1943
1944
PERCENT
PERCENT
Weekiy (Average of Daily)
115
115
:
110
110
:
105
105
100
100
U.K. 56 Industrial
95
Stocks
95
90
90
85
85
80
80
75
75
U.S. 30 Industrial
70
Stocks (Dow-Jones)
70
65
65
60
60
:
55
55
50
50
APR.
JUNE
AUG.
OCT.
DEC.
FEB
APR.
JUNE
AUG.
OCT.
DEC.
FEB.
APR.
JUNE
1942
1943
1944
Chart 2 269
CM - - Treasity
FO-B6-C
Regraded Unclassified
WHOLESALE COMMODITY PRICES
1943
1944
PERCENT
PERCENT
WEEKLY
1926-100
106
106
105
105
104
104
889 Commodities. B.L.S.
103
103
102
102
28 Basic Commodities. B.L.S.
101
101
100
100
JUNE
AUG
OCT
DEC.
FEB.
APR.
JUNE
AUG.
OCT.
DEC
1943
1944
SELECTED BASIC COMMODITIES
Percentage Change December 6, 1941 to May 26 and June 2. 1944
PERCENT
Rosin 847%
+80
Borley 760%
+70
Flaxseed 64.6%
270
+60
Corn 56.9%
+50
Wheat 446%
+40
Hogs 35.0%
Steers 327%
+
+30
Lord 28.8%
Cotton 220%
+20
Butter 188%
+10
Sugar 6.9%
Print Cloth 49%
Wool Tops 47%
Coffonseed Oil 44%
o
Hides 0%
Tellow -4/%
1
-
10
Dec.6.
May 26,
June 2,
1941
1944
1944
Office of the Secretary of the Treasury
...
- of - at -
P-282
Regraded Unclassified
AVERAGE PRICES RECEIVED BY FARMERS
Indexes. August 1909-July 1914=100
PERCENT
PERCENT
All Farm Products
225
225
1944
200
200
1943.
175
175
150
150
125
125
1941
100
100
J
F
M
A
M
J
J
A
S
o
N
D
PERCENT
PERCENT
PERCENT
Truck Crops
Feed Grains
Fruit
350
200
225
1944
325
175
200
1944
1943.
300
150
175
1943.
275
125
150
1941
250
100
125
1944
1941
225
75
J F M A M J J A 5 o N D
100
1943
225
200
Cotton
75
200
175
1944
50
J F M A M J J A S o N D
175
250
150
Meat Animals
(1941
150
1943
225
125
125
200
19417
1943
100
1944
100
175
75
J F M A M J J A S o N D
75
150
J F M A M J J A S o N D
1941
225
225
Food Grains
Poultry and Eggs
271
125
J F M A M J J A 5 o N D
200
200
250
1943
1944
Dairy Products
175
175
225
1944
150
150
1944
200
1943
1943
125
125
175
1941
1941>>
100
100
150
1941
75
75
125
J F M A M J. J A $ o N D
J F M A M J J A S o N D
J F M A M J J A $ o N D
Office of the Secretary of the Treasury
Dividies of - - Statistics
P-257-B
Regraded Unclassified
Chart 5
272
DEPARTMENT STORE SALES
1935-39 . 100, Unadjusted
PERCENT
PERCENT
300
300
Weekly
280
280
260
260
240
240
220
220
200
200
180
180
160
160
1944
1943
140
140
120
120
1942
100
100
80
80
60
JAN. FEB. MAR. APR. MAY JUNE JULY AUG. SEPT. OCT. NOV. DEC.
60
Office of the Secretary of the Treasury
Division d Research and Statistics
C-390-C
Regraded Unclassified
RETAIL SALES AND CONSUMER DEBT
1939
1940
1941
1942
1943
1944
DOLLARS
DOLLARS
Billions
Billions
10
10
9
9
8
Consumer Debt
8
Total Short Term Outstanding
End of Month
7
7
6
6
5
5
4
4
3
Sales, All Retail Stores
3
2
2
:
I
I
...
0
o
J M MJSNJMMJSNJMMJS NJMMJSNJMM J S N J M M J S N
Chart 6
1939
1940
1941
1942
1943
1944
Office of the Secretary of the Treasury
Division of Research and Statistics
273.
Regraded Unclassified
274
Chart 7
TOTAL CONSTRUCTION CONTRACT AWARDS
(37 States. F. W. Dodge Corp.)
DOLLARS
DOLLARS
Millions
Millions
1000
1000
1942
800
800
600
600
1940
400
400
1943
200
200
1944
0
o
JAN
FEB
MAR
APR.
MAY
JUNE
JULY
AUG.
SEPT
OCT.
NOV.
DEC.
MANUFACTURING BUILDINGS
CONSTRUCTION CONTRACTS AWARDED
DOLLARS
DOLLARS
Millions
Millions
40,0
400
1942
300
300
1943
200
200
100
100
1940
1944
0
o
JAN.
FEB.
MAR.
APR.
MAY
JUNE
JULY
AUG.
SEPT
OCT
NOV.
DEC.
Office of the Secretary of the Treasury
Division of Research and Statistics
C-444-A
Regraded Unclassified
275
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE June 5, 1944
TO
Secretary Morgenthau
FROM
R. E. McConnell
In conversation with Mr. Clayton today regarding
their financial problems in connection with disposal
of surplus material in foreign countries, he volunteered
the opinion that it would be desirable to have the Treasury
represented on the Foreign Disposal Advisory Committee,
which was created by Mr. Clayton to act in an advisory
capacity to him, and has the following membership:
Mr. Crowley, F. E. A., Chairmar
Mr. Taft, of the State Department
General Clay of the War Department
Captain Strauss of the Navy Department
Mr. Nelson, of W. P. B.
I understand it is Mr. Clayton's intention to write
a letter to you inviting Treasury participation.
R. R.E.M.
Regraded Unclassified
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE June 5, 1944.
TO
Secretary Morgenthau
FROM
R. E. McConnell
Re:
Requested Tuesday morning appointment.
Mr. Joseph Bates has built up a small manufacturing
business of his own, known as the Bates Chemical Company,
near Philadelphia, which does a gross business of $200,000
or $300,000 a year, from which he derives a small but com-
fortable income.
In 1940, he was a Colonel in the Army as Major General
Maxwell's deputy concerned with export control. In 1941,
he was the principal, I believe, in the Chemical Section of
W.P.B. In March, 1942, I secured his transfer and he became
Executive Officer under me at General Aniline, and the success
attained in carrying on that operation ithout the key German
administrators and technicians was very largely due to Mr.
Bates' administrative ability and sound judgment.
He is about 45 years old, a graduate of Yale, has two
sons in the Service. He is public spirited and I feel he is
an extremely valuable and able citizen. He was unable to
agree with Mr. Crowley's and Mr. Johnson's policies and
resigned from General Aniline in August, 1943.
I think he would be of considerable value to the Treasury
Department in assisting in the type of work which you have
asked me to do. I may be able to sell him on the idea.
R.E.M. To,
O.K 1mn
Regraded Unclassified
277
OFFICE
OF
TREASURY DEPARTMENT
WASHINGTON
THE
SECRETARY
June 5, 1944
Att
MEMORANDUM TO THE SECRETARY
We have had a meeting with the
Office of Defense Transportation, who
indicated that there was a necessity for
rationing used trucks. This would slow us
up in the sale of trucks and would reduce
our selling prices because manufacturers
would be unwilling to hold a truck until a
rationing certificate might be available.
It was agreed that our present
method of distributing these trucks in the
critical areas indicated by the O.D.T. and
the schedule furnished us would be tried
out and when we have had more experience
than can be determined whether rationing
would be a more sensible method of handling
the situation to see that the trucks get in
the proper hands.
We agreed to furnish the O.D.T.
with information regarding any sales of used
trucks for export so they can adjust their
allotment of new trucks for export.
E. L. Olrich
Assistant to the Secretary
Regraded Unclassified
278
OFFICE
OF
FORVICTORY
TREASURY DEPARTMENT
BUY
UNITED
STATES
WAR
WASHINGTON 25
BONDS
AND
THE
SECRETARY
STAMPS
June 5, 1944
M
MEMORANDUM TO THE SECRETARY
NT
There was a severe blast on the
floor of Congress June 2 about a lot of
shoes being destroyed for fertilizer.
The attached article speaks for itself.
We have investigated and find that
the Procurement Division is in no way involved.
The last paragraph of this memorandum is merely
conjecture or supposition.
Olrich
Assistant to the Secretary
Attachment
Regraded Unclassified
THE WASHINGTON TIMES-HERALD
Saturday, June 3, 1944
279
Loads of Shoes
Charges for Trees
Sold for Scrap,
Johnson also charged that the
official two-billion-dollar figure
for reverse lend-lease aid to the
United States, in return for 24 bil-
Says Johnson
lions contributed by this country,
includes some strange and highly
dubious items.
For example, he said, our troops
By LAWRENCE BURD
stationed in French New Cale-
Carloads of army shoes in good
donia found it necessary to cut
condition are being sold for scrap
down trees to build a base for
and ground into fertilizer while
offensive operations against the
the Administration is spending
Japanese.
millions of dollars for new shoes
Now, he continued, we have
to send abroad as part of its
been charged $18 aplece for these
global relief plans, Representative
trees under reverse lend-lease.
Calvin Johnson (R.), of Illinois.
Similarly, Johnson said, we have
disclosed yesterday.
been charged $8 aplece for trees
The disclosure was made to as-
cut down in British Samoa as part
tonished House members during
of our military operations to aid
debate on a proposed $3,920,000,-
the British. "That's the type of
000 appropriation for Lend-Lease
reverse lend-lease we are get-
and the United Nations Rehabili-
ting," the Congressman told the
tation and Relief Administration
House,
for the 1945 fiscal year. The sum
Shipments of farm machinery
was recommended to the House
abroad while our farmers are un-
yesterday by the Appropriations
able to fill their own needs, were
Committee.
criticized by Representatives Vur-
sell, (R.), of Illinois, and Gross
Action Attacked
(R), of Pennsylvania who said
they have been unable to get a full
Johnson told the House the
account of the transactions.
turning of good shoes into fer-
The appropriations bill, which
tilizer at a time when footwear
is scheduled to reach a vote today
is rationed at home and being
or Monday, allots $3,920,070,000 in
bought for distribution abroad is
new funds for the year starting
indefensible, and typical of New
July 1 to the Foreign Economic
Deal waste and inefficiency.
Administration, which has charge
The Congressman said he has
of all economic operations abroad.
received a letter from the Smith-
Rowland Co., fertilizer manufac-
Figures Divided
turers, of Granite City, Ill., re-
porting the concern has received
Of the total, approximately 3½
the army shoes in "open coal
billions is for lend-lease, which
cars." The company, he explained,
will thus have 6½ billions for the
has perfected a. process for mak-
next year, including present un-
ing fertilizer from leather and
expended balances. UNRRA would
rubber.
get 450 millions under the bill,
Exhibiting to his colleagues B.
plus 350 millions to, be transferred
from the lend-lease allotment if
pair of the Army shoes, sent by the
company, Johnson noted they
needed, or & total of 800 millions.
The 800 millions is more than
were only recently Half-soled and
half the total of 1 billion 350 mil-
equipped with new rubber heels.
lions which Congress has author-
"It appears," he said, "that these
ized for eventual appropriation
shoes are newly repaired before
to UNRRA, The other 43 nations
they are sold for scrap. At the
supporting UNRRA are expected
same time, we find UNRRA is ask-
to contribute about 1 billion alto-
ing Congress for 215 million dol-
gether.
lars to buy shoes and other ap-
Of the 800 million, major items
parel for destitute people in Eu-
contemplated for distribution in
rope, and the Army is asking addi-
liberated countries include 373
tional millions for the same pur-
millions for food, 215 millions for
pose.
clothing, textiles and footwear,
"Why can't they send these
100 millions for repair and operat-
shoes instead of grinding them up?
ing supplies, 69 millions for health
I could use a pair of them myself."
supplies and soap, and 56 millions
Representative Rabaut (D.), of
for food production equipment.
Michigan, said Johnson's account
was a "far-reaching and strong in-
dictment," and urged that the
Army be asked to explain it. Rep-
resentative Lambertson (R.), of
Kansas, declared he could not
"conceive of any defense of this
wastefulness."
Regraded Unclassified
280
POB.VICTORY
BUY
TREASURY DEPARTMENT
UNITED
STATES
WAR
BONDS
PROCUREMENT DIVISION
AND
STAMPS
WASHINGTON 25
OFFICE OF THE DIRECTOR
June 5, 1944
MEMORANDUM TO THE SECRETARY:
We are placing increased emphasis upon the pricing
of war contracts negotiated by the Procurement Division
in view of the anticipated termination of the provisions
of the Renegotiation Act, effective December 31, 1944,
unless extended by the President.
The price analyses extend beyond the cost of the
materials to a study of other costs, such as transportation
allowances, charges for containers, and unusual services,
which has been found to be a productive field; for example,
our purchases of acetone are both in bulk or in drums,
as may be required, and the established trade practice is
to charge 1 ᵃ cents more per pound if purchased in containers.
A checkup resulted in a reduction which on this item will
amount to approximately $50,000 annually, as the volume
is substantial. In other words the analysis is not
restricted to the price of the commodity alone but to
other costs even though they may be described as charges
that have been established within the trade, as was the
case in the illustration just described
Our program is two-fold; first, to keep our buyers
informed P.S to pricing methods and the importance of the
so-called "extra" charges referred to above; and the
other is through the review of purchases for price
verifications, likewise, the results of the renegotistion
of cases with war contractors are made available to the
buyers concerned for their guidance in making further
purchases from the same concern.
Director of Procurement
grime Clifton E. Mack
Regraded Unclassified
281
6/5- Smith did not have a chance
to see Hajr yesterday. Will try
again today-
6/5- Smith talked to Hijn and Suy.
agreed to kill this suy quation-
Regraded Unclassified
282
June 5, 1944
Fred Smith
Secretary Morgenthau
Please inquire from Internal Revenue as to what,
if anything, goes out with the tax refund checks.
It seems to me that this might be an opportunity to send
every taxpayer a little memorandum from me.
Please talk to me about this today. Thank you.
Regraded Unclassified
, a
283
6/5- Pehle did not have chance
to talk to Hyrir agesterday - Will
try today.
15- See group.
Juncheon fa Pehb of Kuwhman
with 6/5/44
Regraded Inclassified
284
June 5, 1944
John Pehle.
Secretary Morgenthau.
Please talk to me about Ira Hirschmann going
out to see the Swiss Minister; also, about your own
relations with the Swiss Minister. Thank you.
Regraded Unclassified
284 - A
June 5, 1944
My dear Cordell:
On May 24th I wrote you a letter, copy of
which I am enclosing herewith.
1:
1
I see by the newspapers that you were here
last week, and I am bothered by the fact that,
not having heard from you, I am unable to carry
out the President's request that I see you. I
would appreciate hearing from you.
Yours sincerely,
(digned) Henry
Honorable Cordell Hull,
Secretary of State,
Washington, D.C.
By Hand Regraded Inclassified
marked Confidented
284- B
May 24, 1944
Dear Cordell:
On May 10th, I sent a letter to the President
in regard to the Argentine, copy of which I sent you.
On May 23rd, I received the following memorandum from
the President:
"Will you see Cordell again in
regard to the Argentina situation?"
At your convenience, I would like to call
on you, as suggested by the President, and continue
our discussion in regard to the Argentine.
Yours sincerely,
(Signed) Henry Morgenthau, Jr.
Honorable Cordell Hull,
Secretary of State,
Washington, D.C.
Regraded Unclassified
284-C
THE WHITE HOUSE
WASHINGTON
May 23, 1944.
MEMORANDUM FOR
THE SECRETARY OF THE TREASURY
Will you see Cordell again
in regard to the Argentina situation?
F. D. R.
284 - D
Copy of memo from the President and HM Jr's
letter to Hull to be shown to Luxford.
Luxford should also be told that when HM Jr
goes to see Hull he wants to bring to his
attention the memo Luxford wanted sent to the
President about platinum and diamonds going
from Argentine to the Germans. - Dons - 5/24/44
Regraded Unclassified
COPY
284-E
THE SECRETARY OF THE TREASURY
WASHINGTON
May 10, 1944
My dear Mr. President:
On October 25, 1043, Treasury and State sent you a
joint memorundum outlining their respective views on the
freezing of Argentina (Exhibit 1). On the same day you
replied:
"In regard to blocking Argentina, I think we
had better keep this matter on our desks, to
be reviewed every week or t.io." (Exhibit 2).
Since that time, the situation in Argentima has gotten
steadily morse,
We can win the battle of Europe and the Facific yet
find that in our own backyard we have lost out in the war
to crush Fascism. Argentima is already emerging as
the new champion of Fasciam and is actively engaged in
forcin_ into its orbit other countries in Latin America.
Since October, I have had numerous conferences with
Mr. Lull, Lr. Stettinius, and Lr. Acheson, all of them
amicable, Tut from the Treasury viewpoint, fruitless. we
in the Treasury feel that it is our responsibility to bring
this matter again to your attention, and to urge you strongly
to take further steps to stop the growth of Fascism in the
Argentine and neighboring States. we feel very strongly that
Secretary lull's cable of May 5, 1044, to Ambassador Armour,
which was drafted solely within the State Department and
without consultation with the Treasury, sets forth a realis-
tic Argentine program and should be put into effect at once.
This cable is attached as exhibit 3.
Yours sincerely,
FORVICTORY
The President,
BUY
UNITED
STATES
WAR
The White House.
BONDS
AND
STAMPS
C.C. to Secretary hull
284-F
EXHIBIT 1
....
284-G
COPY
OCT 25 1943
MEMORANDUM FOR THE PRESIDENT:
Action Proposed by the Treasury:
Treasury proposes that Argentina be added to the 35
countries already subject to the freezing control. Essentially,
these controls would follow the pattern already in effect with
regard to Portugal, Spain, Sweden and Switzerland. This is
in general the proposal made by Ambassador Armour. In view of
the flexibility of these controls, additional exemptions or
restrictions can be added as desirable.
Treasury Department's Position:
The Treasury, on economic warfare grounds, has repeatedly
urged that the freezing control be extended to Argentina--as it
has been to the neutral countries in Europe. Argentina is
recognized as the base from which the Axis conducts its financial
operations throughout the Western Hemisphere. On political
grounds, the State Department and Ambassador Armour have
consistently opposed freezing Argentina. However, last Wednesday,
Ambassador Armour recommended the freezing of Argentina, stating
in his cable:
"The Secretary's letter of August 30, together with other
events, has brought about bitter opposition to the present
Argentine administration from important and influential
sectors of the Argentine public, including elements in
the armed services. Any further action on the part of
the American Government must help to increase this opposition
rather than dispel it through creating a 'my country right
or wrong' reaction The Embassy believes that blocking
would be interpreted in Argentina as directed against the
Government and not against the people and would be gener-
ally understood."
The freezing of Argentina at this time is the natural follow-up
to Secretary Hull's letter to Foreign Minister Storni on Lend-
Lease and your criticism of the closing of the Jewish news-
papers. Any delay in acting not only gives Argentina a chance
Regraded Unclassified
284-H
- 2 -
to move substantial assets out of the United States but may
afford the present pro-Axis government time to strengthen its
position. Thus the present government might very well go through
the motions of breaking with the Axis, which would have no real
effect other than to bolster the Ramirez government. A dramatic
step by us at this time should crystallize the opposition and
might give Argentina a genuinely pro-Allied government.
State Department's Position:
I. The State Department continues to oppose this proposal,
which you declined to approve last year, primarily because we
believe it will retard, rather than hasten, a change of govern-
ment. The Treasury's proposal, although suggested on economic
warfare grounds, has as a major purpose the political ob jective
of upsetting the present Argentine government. In the Depart-
ment's judgment, contrary to the views of Ambassador Armour,
it is more likely that blocking Argentina would strengthen the
grip of the present government. Because of the sensitiveness
of Argentines to outside pressure, the government undoubtedly
would appeal to all Argentines to "defend" their country against
United States invasion of Argentine sovereignty. Past exper-
ience with Argentina indicates that this type of flag-waving
arouses popular patriotic fervor. We believe in this case the
growing opposition to the government would be temporarily
confused if not divided.
II. We consider the proposal would not directly attain
important economic warfare objectives.
III. The proposal runs the risk of (a) frightening the
other American republics, because they would figure that if the
United States used strong-arm tactics against Argentina it
might do the same to them; and (b) producing Argentine retalia-
tory action which might endanger United Nations procurement of
such vitally needed materials as zinc, hides and foodstuffs and
jeopardize the advantageous arrangements under which the
Argentine merchant marine carries to the United States a minimum
of 40,000 tons a month of cargo selected by us.
IV. The Argentine political pot is seething. The
universities are now on strike and attempts are being made at
this moment to organize a general strike with the specific
objective of overthrowing the government. We recommend that
Argentina be left to stew in its own juice at least until the
present confused movements take form.
(Signed) PUndassified
284-I
I
EXHIBIT 2
284-J
COPY
THE WHITE HOUSE
October 25, 1943
MEMORANDUM FOR
E. R. S., JR.
In regard to blocking Argentina, I think we
had better keep this matter on our desks, to be re-
viewed every week or two.
How would it be to let it leak out that some
freezing of controls is being studied?
F. D. R.
Regraded Unclassified
284-K -
EXHIBIT 3
Regraded Unclassified
284-L
COPY
PARAPHRASE OF TELEGRAM SENT
TO:
AMEMBASSY, BUENOS AIRES
FROM:
Secretary of State, Washington
DATED:
May 5, 1944, 10 a.m.
No.
741
MOST SECRET
I am seriously considering the desirability of subjecting
Argentina to a general Treasury freeze and the Secretary of the
Treasury has again urged this step similar to the one which last
January was proposed.
I have under consideration such a freeze which would be
part of a program similar to that which was suggested in the latter
part of your telegram of April 13, no. 970, of which the following
steps might be included:
(1) The Treasury to make immediate announcement of a
general Treasury freeze as last January was proposed utilizing
the same general statement, the same terms and also conditions
including private authorizations to banks and other financial
institutions which would permit financial transactions connected
with commercial transactions of an ordinary nature.
(2) The steps would include carrying forward also
one by one some or all of the following steps over a period of
a few months:
(a) As suggested in your 970 a tightening
up on general exports to Argentina.
(b) In order that Argentina's position as a
source of Britain's meat supply would be reduced we
proposed diverting an occasional meat ship from the
River Plate to the United States.
(c) The granting of licenses for Argentina
to acquire petroleum products at Caribbean supply
points would be reduced or eliminated.
Regraded Unclassified
284- - M
- 2 -
(a) With regard to coal reduce the availability
to Argentina.
It would be necessary of course to make public announcement
of the Treasury freeze. Without any public announcement the other
steps would be taken quietly and these would be spread over a con-
siderable period rather than announced as a program of economic
pressure. As each step was taken their effect would, of course,
become known to Argentina.
I would like to have your views urgently on any possible
repercussions in other American republics and I would appreciate
your comments urgently by telegraph on the workability and on the
desirability of such a program.
HULL
Regraded Unclassified
285
CABLE TO ALGIERS
FOR ACKERMANN FROM WAR REFUGEE BOARD
For your information James H. Mann, Assistant Executive
Director of War Refugee Board, now in Lisbon will subsequently
proceed to Algiers. Mann will advise you date of his arrival.
THIS IS WRB ALGIERS CABLE NO. 19
June 5, 1944
2:50 p.m.
JBF:db 6/5/44
Regraded Unclassified
286
CABLE TO MURPHY, CHAPIN AND ACKERMANN, ALGIERS, FROM WAR REFUGEE BOARD
Please refer your 1709 May 24, 1759 May 28, and 1790 May 30.
(1) As recommended in your No. 1709, the funds have now been
transmitted to Yugoslav Refugee Committee in Bari.
(2) USCC is requesting its representatives in Madrid to furnish up to
100,000 pesetas to persons designated by you, for payment of port dues in
Spain as indicated in your No. 1790. You should communicate with Embassy
in Madrid indicating the amount of pesetas required and to when such
pesetas should be furnished. USCC will be reimbursed in Washington for
the pesetas furnished.
(3) In view of the statement in your No. 1790 that the local War
Shipping Administration representative is giving full assistance in
assuring the availability of a ship for evacuation of refugees from Spain,
we have not taken this question up here as suggested in your 1759. Ip
you and Kalloch consider it necessary for us to do so, please advise.
THIS IS WRB CABLE TO ALGIERS NO. 20
June 5, 1944
4:10 p.m.
IRE.bbk-6/5//4
Regraded Unclassified
287
No. 3473
Stockholm, June 5, 1944.
Subject: Transmitting Copies of Bulgarian Reports.
STRICTLY CONFIDENTIAL
The Honorable
The Secretary of State,
Washington.
Sir:
I have the honor to transmit, as of possible interest
to the Department, copies of two documents concerning
Bulgaria. The first is an informational report (Enclosure
No. 1, "Report from Bulgarian Legation") and was received
from the Legation's regular Bulgarian informant. The
second, relating to the refugee problem (Enclosure No. 2,
"Bulgaria") was prepared by Mr. Iver C. Olsen, Financial
Attache to this Legation, in his capacity as Special Attache
for the War Refugee Board, was handed indirectly to the
Bulgarian Minister in Stockholm, and allegedly was forwarded
by the Bulgarian Minister in Stockholm to the government in
Sofia by courier on June 2, 1944.
Respectfully yours,
Herschel V: Johnson
Enclosures:
1. Report from Bulgarian Legation
2. Bulgaria - June 1, 1944.
CMR:FEN
File No. 711
Original to the Department.
Regraded Unclassified
288
Enclosure No. 1 to despatch No. 3473 of June 5, 1944
from the American Legation at Stockholm
Report from Bulgarian Legation
(Based primarily on conversations with commercial
councillor Seraphimov)
The Bulgarian Government is mobilizing 75% of its men who
are liable for military service, on the assumption that
thus they can gain control of public opinion and liquidate
opponents to the present regime. In respect to conscription,
no exception is made for diplomats. Secretaries at the
Berlin Embassy K. Dobreff (formerly of the economic division
of the foreign office in Sofia) and Kamen Gantscheff (former
private secretary to Minister Filov) have been called up.
The Berlin diplomats don't dare take the risk of putting
their private possessions or legation property in a secure
place. They have evacuated only the barest living necessities.
The Stockholm diplomat X requested from his colleague a
few articles for completing the installation of the Stockholm
legation, in order to save some of the most valuable pictures
and pieces of furniture. His Berlin colleague answered: "If
I were to do this, I might as well hand in my resignation now.
I should by doing this make myself intolerable (unmoglich) to
diplomats and to Germans!" The Slovakian Minister is said to
have shipped legation property to Slovakia. Today he is a
zero quantity in Berlin. His position is untenable. In the
b (Bulgarian?) legation furniture and household utensils are
standing out in the garden under sun and rain.
The former b (Bulgarian) minister to Stockholm, Dr. Alexander
Nicolaeff, is to receive the post of political director in
the foreign office in Sofia for the purpose of reinstating
himself. No one can understand that the reason was for his
sudden departure from Stockholm. This departure is designated
as a "mystery". Until now, Minister Altanoff held the position
of political director.
Regraded Unclassified
289
- 2 -
Ciryll Goranoff is regarded by the Bulgarian Legation as an
Allied or Russian agent. He has on several occasions attempted
to involve the Minister in conversations in which he hoped to
get him to make anti-Russian pronouncements. Finally he tried
the Minister's patience to the breaking point, and he was
expelled from the Legation. Now Goranoff is circulating reports
in Stockholm that the Minister is the worst kind of Nazi.
This stupid behaviour on the part of Goranoff is harmful
to other connexions.
The Swedish Government is blocking 22 million Lew -- the
equivalent of more than one million Swedish crowns -- from
Bulgarian deliveries until the conflict with the Tandsticks
A.B. is settled. At present, an agreement to the advantage
of the Swedes is the most likely prospect.
The Bulgarian Legation has received no money consignments
in the last three and one half months.
Ten days ago the Legation Secretary Ikonomoff was in Berlin
as courier. He returned in an exalted mood with strengthened
belief in Germany's ability to hold out. Postal communications
with Bulgaria were out of the question during the entire
month of April. Official and private mail from Bulgaria
reached here only in the beginning of May.
The Bulgarian subject, Dr. Bistreff is permitted to remain
in Stockholm only because his wife is engaged as governess
for the children of the Minister. Bistreff had expected to
be able to make business contacts in Stockholm, although as a
doctor and wealthy proprietor of a sanatorium he ordinarily
Regraded Unclassified
290
- 3 -
has nothing to do with business affairs. The Minister and
all the Legation staff are fed up with him, and would like
to get rid of him, as his conduct is vexatious. His visa is
valid until August of this year, and the opinion of people in
the Legation is that Shmedischeff will do nothing to have it
extended for him or his wife. He is referred to as a "dark
horse" (dunkle gestalt).
Regraded Unclassified
291
Enclosure No. 2 to despatch No. 3473 of June 5, 1944
from the American Legation at Stockholm.
June 1, 1944
BULGARIA
The Bulgarian Minister in Ankara, Mr. Balabanoff,
had some discussions through intermediaries, with certain
representatives of the American Embassy regarding the
status of Jews in Bulgaria. The Bulgarian Minister was
advised of the deep concern of the United States Govern-
ment with regard to these Jews and that it intended to
hold all persons and governments involved in the persecution
of these minorities fully responsible and accountable.
Mention was then made of certain reports concerning brutal
treatment and persecution of Jews and other minorities in
Bulgaria and Mr. Balabanoff was asked to communicate to
the Bulgarian Government the intention of the United States
Government to observe very closely any such developments
and to take them fully into account in the final settlement.
He was advised also to inform his Government that in its
own interests the Bulgarian Government would do well to
do everything possible to protect these minorities and to
take all actions which would assist these refugees in
escaping to safety.
Minister Balabanoff gave every assurance that it was
not the policy of the Bulgarian Government to persecute
and destroy minorities, and thereafter sent 8. cable to his..
Foreign Office strongly recommending that persecution of
minorities be stopped and that all steps be taken to protect
such groups. He advised representatives of the United States
Embassy that he would obtain the necessary assurances from
the Bulgarian Government and communicate them to the Americans.
These meetings took place early in April and no further
word has been received. Failure to receive the promised
assurances from the Bulgarian Government has made an
unfavorable impression upon the United States Government and
it would be greatly appreciated if steps would be renewed
in bringing the matter to the attention of the Bulgarian
Government and obtaining the assurances which were promised.
Regraded Unclassified
292
PARAPHRESE OF TELEGRAM RECEIVED
FROM:
American Embassy, London
TO:
Secretary of State, Washington
DATED: June 5, 1944
NUMBER: 4502
SECRET
Information which War Refugee Board requested in
Department's cable of May 19, 1944 No. 3979, which information
is to be transmitted to Leon Kubowitzki of the World Jewish
Congress, was contained in a letter received by the Embassy
from Ernest Frischer of the Czechoslovak State Council. The
Cz5choslovak Relief Action is sending about 4,500 food parcels,
each weighing 0.50 kg, per month to Terezin and 1500 parcels
to Birkenau, according to Mr. Frischer. In addition to these
approximately 10,000 parcels per month are being sent from
Lisbon to individual recipients, Czechoslovak nationals and
others in these two internment camps by the American Joint
Distribution Committees. A check should be made in New York
regarding this latter figure.
A Treasury license for monthly transfers of 3000 pounds
to Lisbon is held by the Czechoslovak Relief Action in Iendon
and MEW has signified a willingness to grant a license for
9,000 for one additional transfer. It is believed by Mr.
Frischer, however, that he will not be able to overcome present
difficulties in procuring the necessary means to use these
licenses fully and it is stated by him that he would appreciate
it if the Joint Distribution Committee would take over those
addresses who have been receiving parcès from the Ozechoslovak
Relief Action up to the present if he is not able to obtain the
required means. Through the Joint Distribution Committee's
Office in London he has approached Dr. Schwarts in this respect.
To be able to continue his program it would be necessary for
the Czechoslovak representative in Lisbon to have 4000 pounds
per month.
The addresses of 1321 Czechoslovak nationals in Birkenau
and 8342 in Terezin are on the records of the Csechoslovak
Relief Action.
WINANT
Regraded Unclassified
293
AIRGRAM TO AMERICAN EMBASSY, PORT-AU-PRINCE, HAITI
Your A-244 of May 3, A-248 of May 4, and A-286 of May 24 received.
This government gratified over readiness of Haiti, reported in your
A-286, to send requested note concerning treatment of persons holding
Haitian passports. You may assure Haitian authorities that any negotia-
tions will be conducted so as to safeguard the status of unquestioned
Haitian nationals under German control.
Judging by your A-286, a misunderstanding has arisen regarding the
proper channels for the formal approach to Germany. Such approach should,
of course, be made through Switzerland as the power protecting Haitian
interests vis-a-zis Germany. Supporting demarche to Sppin merely con-
sidered advisable, in view of our own representations there.
It is hoped therefore that note referred to in your A-286 will be
speedily sent to Switzerland.
In this connection, the hope is also expressed that Haiti will
(a) postpone any adverse determination of the validity of passports
issued in Haiti's name until the time when such determinations will no
(repeat no) longer expose their holders to death at the hands of the
enemy; and (b) approve of exchange negotiations between United States
and Germany on Haiti's behalf, for which such holders will be eligible,
it being understood that Haiti will not be expected to admit any of
them to Haitian territory.
June 5, 1944
12:00 noon
BAkzins
6/2/44
Regraded Unclassified
294
LC - 458
Jerusalem
This telegram must be
paraphrased before being
Dated June 5, 1944
communicated to anyone
other than a Government
Rec'd 4:10 p.m.
Agency. (RESTRICTED)
Secretary of State,
Washington.
77, June 5, noon.
Group of 769 Jewish immigrants arrived in Palestine
via Egypt on evening of June 2. 571 came from Italy
on Polish steamer BATORI and 198 came from Yemen.
Among those coming from Italy were 192 Czechoslovaks,
178 Jugoslavs, 113 Poles and 56 Austrians, largely
from Ferramonte, Santa Maria and Bari concentration
camps.
PINKERTON
JT-EJH
Regraded Unclassified
295
PROPOSED CABLE TO AMERICAN EMBASSY, PANAMA
War Refugee Board requests your good offices in expeditiously
obtaining authorization from the Foreign Office for Panamanian
Consul General, New York, to vise American passports of Morris D.
Waldman and Jacob Landau who are travellig with the Board's
approval to Panama as representatives American Jewish Committee
for purpose of studying conditions of refugees in certain Latin
American countries including Panama. Both are permanent residents
United States and have round-trip paid passages Pan-American Airways.
June 5, 1944
12:00 noon
001 Miss Chauncey (for the Sec'y), Abrahamson, Cohn, DuBois, Friedman,
Hodel, Laughlin, Lesser, Mann, Stewart, Central Files, Cable Control
Files.
Regraded Unclassified
296
AIRGRAM
A-171
5:30 pm
June 5, 1944
AMEMBASSY
SAN SALVADOR
It has been determined that the specific German nationals
referred to in Department's A-161, May 25, may pass in transit
through United States in pursuance of an exchange agreement
provided:
1. The agreement assures & substantial quid pro quo
from the German Government either of United States
citizens or nationals of San Salvador.
2. The German nationals are interned during such time
as they may remain in United States territory.
The Department has noted that, aside from Dr. Funes who
is in Switzerland, there appear to be no nationals of El
Salvador in Europe in whose repatriation the Salvadoran Govern-
ment is actively interested.
The number of repatriable Germans in the United States
appears to be insufficient to cover the exchange of all repa-
triable United States citizens and to provide exchange material
also for those persons associated with persecuted minorities in
Burope who have passports of Latin-American republics or other
documents reflecting the right of protection by or admission
to non-Luropean states. It is thus deemed necessary for our
Embassies in countries like El Salvador, which have no serious
problem of the repatriation of their own nationals, to compile
lists of Germans desiring repatriation from whom may be
selected individuals to be used in exchanges of the character
indicated. The Embassy 1s therefore requested, using such means
as it may deem necessary, to take all possible steps to compile
complete lists of the German nationals in M Salvador who wish
to be repatriated. If this information can be compiled without
publicity, that would be preferable.
The lists of Germans desiring repatriation should be broken
down into the following categories:
A. Diseased, insane and senile. (In this group
should be included all men over 60 unless there
is some special reason for placing an outstanding
individual in category D.)
Regraded Unclassified
297
San Salvador
-2-
A-171
B. Unaccompanied women and children
C. Men of military age (16 to 60) possessing no known
technical skill and believed not to possess knowledge
of great value to the enemy's war effort.
D. Men of military age possessing technical skill (seamen,
engineers, watch makers, mechanics, etc.) or knowledge
likely to be of great value to the enemy's war effort.
Family members of persons in Categories A, C and D should be
grouped with the head of family. Dependents of men in C and D who
would be willing to travel alone should be referred to but not
listed under B.
Stettinius
Acting
jhk
SWP:AEC:BB
5/30/44
ARA
FC
WRB CCA
Regraded Unclassified
298
CABLE TO AMBASSADOR HAYES, MADRID, FROM WAR REFUGEE BOARD AND DEPARTMENT
Please refer to No. 1790 May 30 from Algiers to Department,
repeated to Madrid as No. 102 for USCC.
Request of Ackermann, War Refugee Board representative in Algiers,
that USCC supply pesetas for port dues in Spain in connection with
forthcoming refugee evacuation voyage, has been taken up with USCC
here. USCC advising its Madrid representative to make available up to
100,000 pesetas for this purpose. Ackermann is being requested to advise
you of amount of pesetas necessary and persons to whom such pesetas
should be delivered. USCC will be reimbursed in Washington for the
pesetas furnished.
June 5, 1944
4:10 p.m.
JBF:bbk - 6/5/44
Regraded Unclassified
299
AIRGRAM
From
Stockholm
Dated:
June 5, 1944
Bec'd.
June 20, 8 a.m.
Secretary of State,
Washington.
A-526, June 5, 9 a.m. German Political.
Conditions in Poland
The Stockholm newspaper SVENSKA MORGONBLADET of
May 20, 1944, carried an interview with two recently
escaped Poles which is of some interest for its
description of conditions in Poland, the attitude of
the Ukrainians, treatment of the Jews, and the Polish
underground movement. In full translation, the article
reads as follows:
"Two refugee Poles in an interview with this paper
state that the Polish freedom organization is doing every-
thing to rescue the Jews from the Germans. (These two
Poles were deported from Poland in March in order to do
labor service for the Germans in the north, but have now
succedded in fleeing to Sweden.) Owing to the constant
mass executions of Jews, all the ghettos in Poland are
now totally liquidated. The large ghetto in Warsaw is
totally in ruins and the few Jews who survived the Germans
action on this field have dug themselves down into the
ruins and live like cave people. It is impossible to
find them and it is not known what they are living on.
Although the entire ghetto is & pile of sand, the 3 meter
high wall is still standing, and the German watch on the
area is extremely tight. Some of the Jewish population
managed even to escape from the inferno which the German
troops with the assistance of Ukrainian and Latvian
gendarmes made for them. These Jews were immediately
taken care of by Polish patriots who supplied them with
all essential identifications. In this way many Jews
are still living underground, and the German authorities
do not suspect them of being anything else but Poles.
"The greatest and most malignant persecutors of the
Jews are undoubtedly the Ukrainians. In the most bestial
manner they have exterminated all Jews in the eastern
provinces, state the two Poles. Their hatred of the Jews.
is old and they hate them more than they hate Poles and
Russians. The Ukrainians greeted the German troops with
great satisfaction and immediately became their hangment
They believed that they with the assistance of the Germans
would be able to establish a free Ukraine. But it is
typical that these Ukrainians do not know one word of their
mother tongue, but speak only Polish, It is, moreover,
Regraded Unclassified
300
-2-A-526, June 5, 9 a.m. from Stockholm
regrettable that so many Latvians are engaged in the
massacres of the Jews. They are all enrolled in the
ausiliary gendarmie established by the Germans.
"Of course, there has been a cettain anti-Stmitiem in
Poland prior to the war, but now 11 does not exist any
longer. Naturally, many Poles dare not help the Jews
owing to the threat of reprisals, but the underground
organization does all it can. And the Polish London
government has issued an order that all Polish citizens
in disaster must be assisted. And it is done even if it
costs a whole lot of Polish blood. Yes, it even happens
that the Germans themselves try to help these pople. The
assistance consists mostly in the Jews being given new
identification papers which certify that they are Poles,
and in their being given money. But also others where
in need of assistance get help. It is quite remarkable
that there still are so many Jews left in Germany and
that they largely do not wear the Jewish star.
"The underground freedom organization is widespread
and the Germans are totally pewerless in the face of its
activity. It is no political organ but may be called
communist, in that word's correct meaning. Here all
cooperate, whatever political view they may have
The foremost task is to prepare plans for sabotage
and partisan activity. The sabotage activity commenced
early in the German-occupied areas, but against the
Russians there have been no such actions.
"It is not until the last years that the organization
has grown strong and come under united leadership. What
they now are waiting for is the final battle against the
Germans, when they hope to be able to contribute towards
the shortening of the war. No Pole believed in German
victory and all are convinced that the peace will come
this year.
"The Poles who have fled to Hungary have been well
received there. The Hungarian population has helped them
to escape the Germans and mdeit it possible for them to
get in touch with Tito's troops, where there are many Poles."
JOHNSON
PLire
2 copies to American Embassy, Loddon.
Regraded Unclassified
301
ORIGINAL TEXT OF TELEGRAM SENT
FROM:
Secretary of State, Washington
TO:
American Legation, Stockholm
DATED:
June 5, 1944
NUMBER: 1113
SECRET
For Minister Johnson at Stockholm for Olsen from War Refugee Board.
Reference your 1820 of May 22 to the Department, your 20 to
the War Refugee Board.
Arrangements are being made to make dollars 50,000 available
to you as first installment for Lithuanien and Latvian projects.
Please advise whether remittance through banks practicable or
whether Good year channel suggested in response to your 1738 of
May 16 to the Department, your 14 to War Refugee Board is preferable.
If the latter, please advise whether Goodyear channel is
available, and if not, we will undertake to find another.
THIS IS WRB STOCKHOLM CABLE NO. 21 .
STETTINIUS
(Acting)
Regraded Unclassified
302
ORIGINAL TEXT OF TELEGRAM SENT
FROM:
Secretary of State, Washington
TO:
American Legation, Stockholm
DATED: June 5, 1944
NUMBER: 1114
CONFIDENTIAL
Please deliver following message to Minister Johnson, Stockholm,
for Olsen, War Refugee Board Special Attache, from J. We Pehle.
We are transferring ten thousand dollars to you for your
confidential use as needed in War Refuges Board operations. These
funds are not subject to usual government disbursing requirements
and you are responsible to me alone for their expenditure but you
should keep careful record and obtain receipts where possible.
These funds may be used at your discretion but should not be
used for routine administrative expenses.
THIS IS WRB STOCKHOLM CABLE NO. 23 .
STETTINIUS
(Acting)
Regraded Unclassified
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
American Legation, Steckholm
Regraded 303 Unclassifie
TO:
Secretary of State, Washington
DATED:
June 5, 1944
NUMBER: 2009
CONFIDENTIAL
Reference is made herewith to Department's cable of June 10
No. 1082, and previous related correspondence. It is advised
by the Swedish Foreign Office that the German Government has flatly
refused to authorise use of the BARDALAND for evacuation of
refugees and it has even expressed resentment at the Swede's
making the request. The German Government's official explanation
was that it had already as a favor to the Swedish Government
authorized replacement of the BARDALAND by the BORELAND (Please
see the Legation's message May 12, No. 1689). It is believed
by the Swedish Foreign Office that the real explanation is that
the German Government does not wish to facilitate the evacuation
of refugees. As the Government of Sweden and the Swedish Red Cross
very much Desired to take part in this humanitarian undertaking,
the Swedish Foreign Office expressed regrete over this outcome.
JOHNSON
304
CABLE TO BERN
From War Refugee Board to Harrison and McClelland.
Please deliver the following message to Isaac Sternbuch, 3
Teufener Strasse. St. Gallen, from Rabbi Abraham Kalamanowitz of
the Vaad Hahatzala Emergency Committee:
QUOTE Your May 18 report received. Requested Allied Nations
urging protective powers give fullest consideration internees
all camps also endeavoring secure exchange. Requesting Turkish
Government permit transit with assurances refugees will be taken
out immediately and sheltered in temporary camps. Jewish agency
granted all certificates demanded. Regarding refugees hiding
vicinity Krakau Teresienstadt other places and Jews in work camps
in Poland, you are authorized utilize every means give them
whatever help necessary to keep them alive. Cannot grant request
appropriation for placing children rescued from Holland France
Belgium in childrens homes as our moneys only for life-rescue.
Advise if received sums 85,800 and twice 64,350 Swiss Francs
from Polish Legation and if forwarded to Rabbi Szmulewicz
Shanghail What about your plans evacuation Shanghai. Send also
couriers with funds for redemption individuals and communities
and general rescue and escape to villages. Ask Griffel whether
further 100,000 Swiss Francs will make beginning effective
rescue possible eventually send him. Cable details concerning
your rescue work French Italian Jews. UNQUOTE
THIS IS WRB BERN CABLE NO. 35
June 5, 1944
11:15 a.m.
BAkzin:db 6/1/44
Regraded Unclassified
305
CABLE TO. INISTER HARRISON AND McCIELLAND, BERN, SWITZERLAND
1. Reports reaching the Department and War Refugee Board
indicate that a number of nationals and persons claiming
the nationality of the United States and of other American
republics may be held in camps situated in Germany and German-
controlled territory to which the protecting powers and Inter-
national Red Cross have either no (repeat no) or the most
restricted access. Included in this category are the camps
of Belsen-Bergen near Hanover, Bergau near Dresden, Dost or
Tost in Silesia, and Drancy near Paris. There may be others.
Please draw the attention of the Swiss government, as
the protecting power of the United States, to this situation
and request it to take steps to insure supervision by it of
any and all camps and other establishments in German and German-
controlled territory in which persons holding or claiming United
States citizenship are held. This request extends to camps and other
establishments which are or may be established in Hungary, Bulgaria,
Rumania and any other area under the control of authorities allied
with Germany.
You may, if you deem it advisable, draw the attention
of the Swiss government to this Government's stand on persons in
danger of enemy persecution who claim American citizenship, as
expressed in Department's 1269 of April 13, 1944.
2. A similar request to exert efforts to extend its humani-
tarian activities to such camps and establishments is to be
addressed to Intercross.
REPEAT TO AMERICAN MISSIONS TO BOLIVIA, BRAZIL, CHILE, COLOMBIA,
COSTA RICA, CUBA, DOMINICAN REPUBLIC, ECUADOR, EL SALVADOR, GREAT
BRITAIN, GUATE ALA, HAITI, HONDURAS, MEXICO, PANAMA, PARAGUAY,
PERU, URUGUAY, AND VENEZUELA, WITH THE FOLLOWING NOTE:
The foregoingis repeated to you for your information.
Please call this matter to the attention of appropriate authori-
ties, so that they may be in a position to take parallel action.
THIS IS WRB BERN CABLE NO. 36
June 5, 1944
11:15 a.m.
BAkzin:LSLesser:jh:1cm 6/2/44
Regraded Unclassified
306
ORIGINAL TEXT OF TELEGRAM SENT
FROM:
Secretary of State, Washington
TO:
American Legation, Born
DATED: June 5, 1944
NUMBER: 1922
CONFIDENTIAL
From War Refugee Board to Harrison
Please deliver the following message to Rene Bertholet,
Waserstresse 14, Zurich, from the International Rescue and
Relief Committee:
"No, 29. Did not receive your eleven. Our
representative Leon Denenberg can now be contacted
care of American Legation Ankara. Please reply whether
possible rescue Lazar Gurvic friends and other similar
cases indicate what was done for those cases in our
number 25 and 26. Inform Salomon Frank care of Frieda
Sommer Guggugstr 25 Zurich his American visa granted
Washington October 1942."
THIS IS WRB CABLE TO BERN NO. 32
HULL
Regraded Unclassified
307
PARAPHRASE OF TELEGRAM RECIEVED
FROM:
American Legation, Bern
TO:
Secretary of State, Washington
DATED: June 5, 1944
NUMBER: 3579
SECRET
Reference is made herewith to the ultimate paragraph of
Legation's cable of May 18, no. 3171.
From the Swiss Foreign Office the Legation has received
a list of 162 persons removed from Vittel for unknown desti-
nation of whom 3 allegedly claim Chilean citizenship, 8
Costa Rican, 8 Ecuadorian, 4 Haitian, 9 Honduren, 5 Nicara-
guan, 87 Paraguayan, 3 Venezuelan, 7 Peruvian, and 29 unknown.
Since the list contains error in numbering, Legation
is requesting Swiss to confirm whether 162 or 163 persons in-
volved.
You are asked to lease instruct whether the Department
wishes nominal list sent telegraphically which includes
date and place of birth.
There were born in Poland & large proportion of the
persons concerned.
Foregoing refer to Latin American interests--Germany
and France.
HARRISON
Regraded Unclassified
308
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
American Embassy, Ankera
TO:
Secretary of State, Washington
DATED: June 5, 1944
NUMBER: 1010
SECRET
Ambassador sends the following for WRB.
Referring to message Number 69 from Ankara and Depart-
ment's telegram of June 2, Number 499, it is my opinion that any
approach to the Hungarian Minister and his staff here would be
of no use whatever, since their pro-Nazi attitude is notorious,
as the Department knows.
In connection with the last paragraph of cable referred
to, it 1s thought that the Turkish agreement to an "arrangement"
involving violation of their own laws by allowing refugees or
any other individuals to enter Turkey without Turkish visas is
an extremely remote possibility. Separate representations
concerning each group or individual; upon arrival, have been
presented in obtaining permission for Jewish refugees to enter
and pass through Turkey without Turkish visas, and this fact
should be borne in mind in this connection. I believe, when
appropriate represent tions are made in each case, the Jewish
refugees entering Turkey from Bulgaria will be treated with
the same kindness as have those coming from Greece.
STEINHARDT
Regraded Unclassified
309
PARAPHRISE OF TELEGRAM RECEIVED
FROM:
American Embassy, Ankara
TO:
Secretary of State, Washington
DATED:
June 5, 1944
NUMBER: 1011
SECRET
Following is Ankara No. 70 from the Ambassador for the
War Refugee Board.
Reference is made herewith to Department's cable dated
June 3, No. 506.
I am informed by the Foreign Office that the Turkish
Embassy in Washington has authorized the issuance of a visa
to Hirschmann.
STEINHARDT
Regraded Unclassified
310
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
American Embassy, Ankara
TO:
Secretary of State, Washington
DATED:
June 5, 1944
NUMBER: 1018
CONFIDENTIAL
There follows Ankara's No. 71 from the Ambassador for
Pehle, WEB.
Replying to Department's cable of June 1, No. 492, it
is suggested by me that the proposal which is contained in
the message to the World Jewish Congress from its Swies
representative be submitted to Barlas of the Jewish Agency
for an expression of opinion or in the alternative that Hirschmann
on his arrival here, make an appropriate recommendation to
The War Refuges Board for transmittal to the World Jewish
Congress.
Due to the s teadily increasing number of organizations
and individuals who are interesting themselves in the rescue
of Jews from the Balkans and who are seeking funds for this
purpose, it is becoming increasingly difficult for no to judge
the extent to which their respective activities should be
encouraged. The board may wish to bear in mind that in this
connection the cost merely tends to increase by competitive
bidding for the limited number of vessels available without
increasing the number of vessels.
STEINHARDT
Regraded Unclassified
311
DEPARTMENT
INCOMING
DIVISION OF
OF
COMMUNICATIONS
STATE
TELEGRAM
AND RECORDS
DSH-544
Rio de Janeiro
This telegram must bE
paraphrased before bEing
Dated June 5, 1944
communicated to anyone
other than a Government
Rec'd 9:21 p.m.
Agency. (RESTRICTED)
DEPARTMENT OF STATE
JUN 7 1944
Secretary of State,
DIVISION OF
Washington.
COMMUNICATIONS & RECORDS
2046, June 5, 6 p.m.
Finance Minister today informed m E that Doctor
Octavio Bulhoes has been designated to serve on pre-
paratory committee. Bulhoes plans to leave Rio de
Jantiro by air on June 9. HE will also bE appointed
member of Brazilian delegation to conference, DE-
partment's 1644, May 27, 10 p.m.
ThE names of the other Brazilian delegates not
yet known, however it is believed Brazil's represen-
tation will bE small. Finance Minister will discuss
plans with President Vargas on June 7.
Department's circular telegram dated June 3,
6 p.m.
CAFFERY
JMS
EJH
Regraded Unclassified
312
DEPARTMENT
INCOMING
DIVISION OF
OF
COMMUNICATIONS
STATE
TELEGRAM
AND RECORDS
BJR - 526
Ottawa
This telegram must be
paraphrased before being
Dated June 5, 1944
çommunicated to anyone
other than a Government
Rec'd 8:28 p.m.
Agency. (RESTRICTED)
Secretary of State,
DEPARTMENT STATE
washington.
DIVISION OF
JUN & 1941
20, June 5, 6 p.m.
COMMUNICATIONS
Reference is made to the Department's circular
instruction of May 26, 9 a.m., regarding the Monetary
Conference. In a note number 53 of June 5, the
Canadian Government accepts invitation and states
that the Honorable J.L. Ilsley, Minister of Finance,
will head the Canadian Delegation. Despatch follows.
ATHERTON
RB
RR
Regraded Unclassified
313
DEPARTMENT
INCOMING
DIVISION OF
OF
COMMUNICATIONS
STATE
TELEGRAM
AND RECORDS
LC - 521
San Salvador
This telegram must be
paraphrased before being
Dated June 5, 1944
communicated to anyone
other than a Government
Rec 'd 7:17 p.m.
Agency. (RESTRICTED)
DEPARTMENT CF STATE
Secretary of State,
JUN ? 1944
Washington.
DIVISION OF
COMMUNICATIONS & RECORDS
194, June 5, 3 p.m.
Foreign Minister states that El Salvador will
gladly participate in Monetary Conference. Dopartment's
circular telegram dated May 25, 5 p.m.
THURSTON
JMS-EJH
Regraded Unclassified
NOT TO BE RE-TRANSMITTED
314
COPY NO.
SECRET
OPTEL No. 179
Information received up to 10 a.m., 5th June; 1944.
1. NAVAL
Two German ships, one a 6,200 ton minesweeper, other 4,200
ton ship loaded with ammunition believed sunk in air attack off
NORWAY 1st. Reference OPTEL 177. Promising attack 2nd by a Coastal
Command aircraft on surfaced U-boat off STADTTANDET. U-boat
straddled by depth charges, five personnel seen in water. Our
coastal forces in AEGEAN on 1st/2nd and 2nd/3rd captured a caique
and engaged a large motor vessel but were driven off by fire from
shore batteries.
2. MILITARY
ITALY. 4th, After a breakthrough between ALBANO and
PALESTRINA the 5th Army pushed rapidly forward to the outskirts of
ROME where fighting continued throughout yesterday. They are now
in the city itself. The 8th Army met resistance on roads running
north through APPENINES but reached approximate line New Zea-
landers six miles N.W. SORA, U.K. Armour ACUTO 3* miles north
ANAGNI, South Africans PALIÁNO, Canadians on highway 6 eight miles
S.E. VALMONTONE in touch with French, On right of 5th Army French
troops were on general line PALIANO-PALESTRINA.
YUGOSLAVIA. On BRAC Island Partisans oaptured three hill
positions S.E. of NEREZISCO and Scottish troops made an unsuccess-
ful attack on a hill two miles N.E. of MORVICE on the South Coast.
Partisans who had surrounded the German garrison at SUPETAR were
forced to retire slightly by artillery fire from the mainland. Our
troops were reinforced on 2nd/3rd.
3. AIR OPERATIONS
WESTERN FRONT. 3rd/4th. 507 tons dropped on R.D.F.
Station near CHERBOURG and total 672 tons on two batteries CALAIS
area with good results.
4th. 1,032 escorted heavy bombers dropped 1,323 tons on
defended localities, gun batteries and billets in the BOULOGNE area;
970 tons on airfields and railways in the PARIS/BOURGES area with
results generally good, One German aircraft destroyed. One
Bomber, three fighters missing. 612 aircraft of A.E.A.F. supported
by 125 fighters attacked objectives in Northern FRANCE dropping
367 tons on coastal batteries, 153 on road bridges and 70 on rail-
ways and other objectives with good results. One Thunderbolt missing.
4th/5th. Aircraft despatched:
Heavy coastal battery near CALAIS
79
Defended locality BOULOGNE
67
Coastal battery near CALAIS
56
Coastal battery near CHERBOURG
56
Other minor tasks
39
All returned safely.
SOUTHERN FRANCE. 4th. Allied heavy bombers dropped total
404 tons on ANTHEOR Viaduct and three bridges, (one over VAR and
other two in area S.E. of LYON).
ITALY. 4th. Liberators attacked the viaduct at RECCO
and railway centres at TURIN, GENOA, SAVONA and NOVO LIGURE, dropping
total 903 tons,
YUGOSLAVIA. 3rd. Liberators dropped 65 tons on SPLIT
and 53 on OMIS.
Correction to OPTEL 178 - last line. After "motor
vehicles" add "destroyed".
Regraded Unclassified