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Volume 768, September 1 – September 4, 1944
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Volume 768, September 1 – September 4, 1944
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Henry Morgenthau, Jr. Papers
Diaries of Henry Morgenthau, Jr.
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DIARY
Book 768
September 1-4, 1944
Regraded Unclassified
- A -
Book Page
Argentina
See Foreign Funds Control
- B -
Bruening, Heinrich
See Post-War Planning: Germany
Business Conditions
Haas memorandum on situation, week ending September 2, 1944 -
9/4/44
768
208
- C -
Correspondence
Mrs. Forbush's mail report . - 9/1/44
33
- F -
Financing, Government
Cutbacks before and after defeat of Germany: War Department
reply to letter of August 25 - 9/1/44
32
Foerster, Friedrich Wilhelm
See Post-War Planning: Germany
Foreign Funds Control
Argentina: State Department-Churchill conference results
in recommendation of "quiet period" of indefinite
duration - - 9/4/44
226
France
Financial Attache Valensi's letter to HMJr concerning
agreements signed in London and Washington concerning
payments in dollars either by American authorities or
French authorities for payment of certain civilian
supplies - 9/4/44
238
a) Treasury reply - 9/16/44: See Book 772, page 62
- G -
Gerard, James W.
J.P. Morgan & Company handling of Mexican Railway Bonds:
See Latin America (Mexico)
Germany
See Post-War Planning
Goldstein, Kurt
See Post-War Planning
Gow, Ralph 1. - Colonel
See Post-War Planning: Germany
Greenbaum, Edward S. - Brigadier General
See Post-War Planning: Germany
Regraded Unclassified
- H -
Book Page
Hopkins, Harry
Future plans discussed with HMJr - 9/4/44
768
133
- K -
Kohn, Hans
See Post-War Planning: Germany
- L -
LaGuardia, Fiorello (Mayor of New York City)
See Post-War Planning: Surplus Property. Disposal of
Latin America
Argentina: See Foreign Funds Control
Mexico: J.P. Morgan & Company handling of Mexican
Railway Bonds and Morgan partner Dwight Morrow's
Ambassadorship to Mexico discussed in James W. Gerard-
FDR-HMJr correspondence - 9/4/44
227
Lend-Lease
United Kingdom: Gold and dollar holdings - 9/4/44
240
Looted Property
See Post-War Planning: Bretton Woods Conference
- M -
Mexico
J.P. Morgan & Company handling of Mexican Railway Bonds:
See Latin America
Morgan, J.P., & Company
Handling of Mexican Railway Bonds: See Latin America
(Mexico)
Morrow, Dwight
J.P. Morgan & Company handling of Mexican Railway Bonds:
See Latin America (Mexico)
- N -
Netherlands
Reconstruction Finance Corporation loan: FDR's letter to
Secretary of Commerce Jones after consultation with
Secretaries of State and Treasury (Hull and HMJr) -
9/4/44
236
- P - -
Post-War Planning
Bretton Woods Conference
Looted Property (See also Book 755):
White memorandum on present status of action in London -
9/1/44
41
State Department told Orvis Schmidt will represent
Treasury on committee to discuss - 9/7/44
See Book 770, page 100
Regraded Unclassified
- P - (Continued)
Book
Page
Post-War Planning (Continued)
Bretton Woods Conference (Continued)
White memorandum: Program for future publicity -
9/1/44
768
42
Germany
Treasury drafts: "Suggested Post-Surrender Program for
Germany" - 9/1/44
1,158
Draft of "Directive for Military Government in
Germany"
8
"Financial Guide for Germany"
17
"Economic Guide for Germany"
21
War Department (Office of Assistant Secretary McCloy)
draft: "Unconditional Surrender of Germany"
24
State Department plan "American Policy for Treatment
of Germany After Surrender" discussed by Hopkins,
White, McCloy, Hilldring, Riddelberger, and Matthews -
9/2/44
67
Conference: present: HMJr, Bell, White, Gaston, Pehle,
O'Connell, and McConnell - 9/4/44
104,134
a) FDR's reaction to White's memorandum discussed;
found wanting in (1) treatment of Ruhr (see
discussion on page 112); (2) treatment of present
Nazis from 16 to 40 and their children
b) FDR stresses 3 things: (1) no aircraft: (2) no
one in uniform; (3) no marching
108
c) Uniforms: White suggests no insignia and no
medals
108
d) War criminals discussed
109
1) Action after World War I discussed
111
e) Educational job to be done in all United Nations
on post-war treatment of Germany stressed by
HMJr
122
f) Hull's agreement with drastic plan forecast by
HMJr
125
g) "Ghost town" idea for Ruhr accepted by Hopkins
137
h) McConnell describes map showing natural
resources
135,144
Dinner conference at HMJr's home; present: HMJr.
Stimson, McCloy, and White - 9/4/44
156
a) Stimson stresses fair trial for war criminals:
questions partitioning plan; doubts wisdom of
destroying Ruhr
Treasury draft of "Suggested Post-Surrender Program for
Germany" - 9/4/44
158
Treasury draft: "Punishment of Certain War Crimes and
Treatment of Special Groups" as presented to HMJr
prior to submission to FDR - 9/4/44
163
War Department draft of directive for period immediately
following cessation of organized resistance - 9/4/44
166
a) Political directive
170
b) Financial directive
176
c) Economic directive
183
d) Relief directive
186
Regraded Unclassified
- P - (Continued)
Book
Page
Post-War Planning (Continued)
Germany (Continued)
"Suggested Recommendations on Treatment of Germany
from the Cabinet Committee for the President" -
State Department draft given by Hull to HMJr -
9/4/44
768
190,193
a) HMJr discusses meeting in Hull's office
(Stimson and Hopkins also present) with Bell,
White, and Gaston - 9/5/44: See Book 769, page 9
Greenbaum (War Department) memorandum on industrial
demobilization problems following defeat of Germany -
9/4/44
196
Gow (War Department) memorandum on industrial
demobilization problems following defeat of Germany -
9/4/44
200
Foerster (Friedrich Wilhelm), Goldstein (Kurt), and
Kohn (Hane): Biographies - 9/4/44
132
a) Bell-White-Gaston conference with above discussed
by HMJr and McCloy: Book 769, page 107
1) Consider Bruening worse than Hitler:
Book 772, page 228
b) Foerster leaves memorandum "The German Escape Plan"
written by T.H. Tetens (outspoken anti-Nazi who
has long resided in South America) - 9/26/44:
Book 775, page 85
Rate of Exchange
Stimson-HMJr conversation reported - 9/2/44
66
Hopkins-Hull
#
.
- 9/2/44
66
Brand's request for conference and plan to be
suggested to him discussed by HMJr and McCloy -
9/4/44
128
Conference; present: Brand, HMJr, Bell, and White -
White memorandum - 9/4/44
146
a) Chancellor of Exchequer's message to HMJr
148
b) Conference reported to Leahy
152
War Department financial directive
176
Stimson deeply concerned at conference with HMJr,
Hull, and Hopkins: Book 769, page 10
Brand-HMJr-White-NcCloy conference - 9/6/44:
Book 769, page 110
a) Brand suggests 12g# rate; HMJr will not go
higher than 10#
b) Chancellor of Exchequer's views set forth in
memorandum: Book 769, page 112
Brand-HMJr telephone conversation - 9/7/44:
Book 770. page 47
a) HMJr: "My Chief agrees with my proposal and
I am now so informing the War Department"
(For FDR's OK see memorandum on page 74)
b) McCloy informed of conversation - 9/7/44:
Book 770, page 54
Regraded Unclassified
- P - - (Continued)
Book Page
Post-War Planning (Continued)
Germany (Continued)
Rate of Exchange (Continued)
Brand-HMJr-White conference - - 9/7/44:
See Book 770. page 68
a) Brand asks whether HMJr informed FDR of
British view
British Chancellor agrees to 10# rate and HMJr so
informs McCloy - - 9/8/44: Book 770, page 123
a) Chancellor of Exchequer-Treasury correspondence
concerning - 9/15/44: Book 772, page 19
War Criminals
Discussed at conference; present: HMJr. Bell, White,
Gaston, Pehle, O'Connell, and McConnell -
9/4/44
768
109
a) Action after World War I discussed
111
Stimson stresses fair trial for - discussion at
dinner conference at HMJr's home; present: HMJr,
Stimson, McCloy. and White - 9/4/44
156
Treasury draft "Punishment of Certain War Crimes
and Treatment of Special Groups" as presented to
HMJr prior to submission to FDR - 9/4/44
163
Surplus Property, Disposal of: LaGuardia letter dated
August 29 discussed by HMJr and O'Connell - 9/4/44
104
a) Reply - - 9/9/44: Book 771, page 72
b) LaGuardia's second letter discussed - 9/20/44:
Book 773, page 83
- R -
Reconstruction Finance Corporation
See Netherlands
- S -
Schmidt, Orvis A.
See Post-War Planning: Bretton Woods Conference
Surplus Property, Disposal of
See Post-War Planning
- T -
Tetens, T. H.
See Post-War Planning: Germany (Foerster, Friedrich Wilhelm)
- Y -
War Department
Cutbacks before and after defeat of Germany:
See Financing, Government
See also Post-War Planning: Germany
Regraded Unclassified
Treasury
1
9/1/44 - Original sent to Secretary Proft at
Fishkill, N.Y.
2
TOP SECRET
September 1, 1944
Suggested Post-Surrender Program for Germany
It is suggested that the position of the United States
should be determined on the basis of the following principles:
1. Demilitarization of Germany
It should be the aim of the Allied Forces to accomplish
the complete demilitarization of Germany in the shortest possible
period of time after surrender. This means completely disarming
the German Army and people (including the withdrawal or destruc-
tion of all war material) and the total destruction of the whole
German armament industry as well as those parts of supporting
industries having no other justification.
2. Partitioning of Germany.
(a) Poland should get that part of East Prussia which
doesn't go to the U.S.S.R. and the southern portion of Silesia
as indicated on the map.
(b) France should get the Saar and the adjacent territories
bounded by the Rhine and the Moselle Rivers.
(o) As indicated in part 3 an International Zone should
be created containing the Ruhr and the surrounding industrial
areas and the Kiel Canal.
(d) Denmark should be given the territories between its
present borders and the International Zone, north of the Kiel
Canal.
(e) The remaining portion of Germany should be divided
into two automomous, independent states, (1) a South German
state comprising Bavaria, Wuerttemberg, Baden and some smaller
areas and (2) a North German state comprising a large part of
the old state of Prussia, Saxony, Thuringia and several smaller
states.
There shall be a custom union between the new South German
state and Austria, which will be restored to her pre-1938
political borders.
Regraded Unclassified
3
- 2 -
3. The Ruhr. Here lies the heart of German industrial power.
It should be dealt with as follows:
(a) An International Zone should be created containing
the Ruhr and the surrounding industrial areas. Included in the
Zone should be the Kiel Canal and the Rhineland. The Zone
should be governed by the international security organization
to be established by the United Nations. The approximate borders
of the Zone are shown on the attached map.
(b) The internationalization of this area shall in no way
interfere with: (a) total destruction of the German armament
industry and supporting industries in the Ruhr in accordance
with Part 1 of this memorandum, (b) restitution and reparations,
including removal and distribution of industrial plants and
equipment, in accordance with Part 4 of this memorandum.
(c) Ownership and control of major industrial properties
remaining shall be transferred to the international organization.
(a) The international organization shall be governed by
the following general principles:
(i) The natural resources and the industrial capacity
of the Ruhr area shall not be used or developed
50 as to contribute in any way to the military
potential of Germany or the Ruhr area.
(ii) The Zone will be a free trade area. However, the
importation of capital should be discouraged.
4. Restitution and Reparation.
Reparations, in the form of recurrent payments and deliveries,
should not be demanded. Restitution and reparation shall be
effected by the transfer of existing German resources and
territories, e.g.,
(a) by restitution of property looted by the Germans in
territories occupied by them.
(b) by transfer of German territory and German private
rights in industrial property situated in such territory to
invaded countries and the international organization under the
program of partition.
Regraded Unclassified
4
- 3 -
(c) by the removal and distribution among devastated
countries of industrial plants and equipment situated within the
International Zone and the North and South German states delimited
in the section on partition.
(a) by forced German labor outside Germany.
(e) by confiscation of all German assets of any character
whatsoever outside of Germany.
5. Treatment of Special Groups.
(a) A particularly intensive effort must be made to
apprehend and punish war criminals.
(b) All members of the following groups should be detained
until the extent of the guilt of each individual is determined:
(i) The S.S.
(ii) The Gestapo
(iii) All high officials of the police, S.A. and other
security organizations.
(iv) All high Government and Nazi party officials.
(v) All leading public figures closely identified with
Nazism.
(c) Apart from the question of established guilt for
special crimes, mere membership in the S.S., the Gestapo and
similar groups will constitute the basis for inclusion into
compulsory labor battalion to serve outside Germany for
reconstruction purposes.
(a) The Nazi Party and all affiliated organizations such
as the Labor Front, The Hitler Youth, The Strength-through-Joy,
etc., should be dissolved and their properties and records
confiscated. Every possible effort should be made to prevent
any attempts to reconstitute them in underground or disguised
form.
(e) All members of the following groups should be dismissed
from public office, disenfranchised and disqualified to hold any
Regraded Unclassified
5
- 4 -
public office or to engage in the journalist, teaching, and
legal professions, or, in any managerial capacity in banking,
manufacturing or trade:
(1) The Nazi Party.
(11) Nazi sympathizers who by their words or deeds materially
aided or abetted the Nazi program.
(111) The Junkers.
(1v) Military and Naval officers.
(f) All Junker estates should be broken up and divided
among the peasants and the system of primogeniture and entail
should be abolished.
6. There should be abrogated and declared null and void all
pre-surrender laws, decrees, regulations or aspects of the same
which discriminate on the basis of race, color, creed or
political opinions.
7. Education and Propaganda.
(a) All schools and universities will be closed until an
Allied Commission of Education has formulated an effective
reorganization program. It is contemplated that it may require
a considerable period of time before any institutions of higher
education are reopened. Meanwhile the education of German
students in foreign universities will not be prohibited.
Elementary schools will be reopened as quickly as appropriate
teachers and textbooks are available.
(b) All German newspapers, magazines, weeklies, etc., will
cease publication immediately and shall not resume publication
until so directed.
(c) All German radio stations will be discontinued
immediately and shall not be permitted to resume operations until
so directed.
8. Political Decentralization.
The military administration in Germany in the initial period
should be carried out with a view toward the eventual partition-
ing of Germany into three states. To facilitate partitioning
Regraded Unclassified
6
- 5 -
and to assure its permanence the military authorities should
be guided by the following principles:
(1) Dismiss all policy-making officials of the Reich
government and deal primarily with local governments.
(11) Encourage the reestablishment of state governments in
each of the states (Lander) corresponding to 18 states
into which Germany is presently divided and in addition
make the Prussian provinces separate states.
(111) Upon the partition of Germany, the various state
governments should be encouraged to organize a
federal government for each of the newly partitioned
areas. Such new governments should be in the form
of a loose confederation of states, with emphasis on
states' rights and a large degree of local autonomy.
Eventually such confederacies would assume sovereign
functions, including separate currency and postal
systems, powers of foreign representation and negotia-
tion, etc.
9. German Economy.
The sole purpose of the military in control of the German
economy shall be to facilitate military operations and military
occupation. The Allied Military Government shall not assume
responsibility for such economic problems as price controls,
rationing, unemployment, production, reconstruction, distribution,
consumption, housing, or transportation, or take any measures
designed to maintain or strengthen the German economy, except
those which are essential to military operations and are indi-
cated above. The responsibility for sustaining the German
economy and people rests with the German people with such
facilities as may be available under the circumstances.
Regraded Unclassified
7
- 6 -
10. United States Responsibility.
(a) The responsibility for the execution of the post-
surrender program for Germany set forth in this memorandum is
the joint responsibility of the United Nations. The execution
of the joint policy agreed upon should therefore eventually be
entrusted to the international body which emerges from United
Nations discussions.
Consideration of the specific measures to be taken in
carrying out the joint program suggests the desirability of
separating the task to be performed during the initial period
of military occupation from those which will require a much
longer period of execution. While the U.S., U.K. and U.S.S.R.,
will, for practical reasons, play the major role (of course
aided by the military forces of other United Nations) in
demilitarizing Germany (point 1), the detailed execution of
other parts of the program can best be handled by Germany's
continental neighbors.
(b) When Germany has been completely demilitarized there
would be the following distribution of duties in carrying out
the German program:
(1) The U.S. would have military and civilian representa-
tion on whatever international commission or commis-
sions may be established for the execution of the
whole German program and such representatives should
have adequate U.S. staffs.
(11) The primary responsibility for the policing of Germany
and for civil administration in Germany would be
assumed by the military forces of Germany's continental
neighbors. Specifically, these should include Russian,
French, Polish, Czech, Greek, Yugoslav, Norwegian,
Dutch and Belgian soldiers.
(c) Under this program United States troops could be with-
drawn within a relatively short time. Actual withdrawal of
United States troops should not precede agreement with the
U.S.S.R. and the U.K. on the principles set forth in the above
parts of this memorandum.
Regraded Unclassified
8
TOP SECRET
ENCLOSURE
IRAFT
DIRECTIVE FOR MILITARY GOVICUMENT IN GENERANT
MASK I
1. This directive in drawn to apply to the period designated as
Phase I which shall be the pariod prior to defeat or surrender of
Comany or witil enror time as it is desided by the Allied Governments
to institute new procedures, and to such parts of Gemany as are over-
run by the forces under your cousend during such period.
2. Hilitary goverment will be established and will extend over
all parts of Centany progressively - the forces under your command
capture or occupy German territory. Your rights in Cermany will be
those of an occupying power.
3. & by virtue of your position you are clothed with supress
legislative, exacutive, and judicial authority and power in the areas
occupied by forces under your constant. This authority will be treadly
construed and includes authority to take all nessures desned by you
necessary, desirable or appropriate in relation to the exigencies of
military operations and the principles and objectives of the Allied
Governments in the military occupation of Germany.
be You are authorised at your discretion, to delegate the
authority herein granted to you in whole or in part to nambers of your
command, and further to authorize them at their discretion to make
appropriate sub-delegations. You are further authorised to appoint
sembers of your consumed as Hilitary Governors of such territory or areas
as you my determine.
de You are authorized to establish such military courts for
the control of the population of the compled areas as may soon to you
destrable, end to establish appropriate regulations regarding their
jurisliction and powers.
Regraded Unclassified
9
- 2 -
d. The military gogermant shall be a military administration
which will show every characteristic of an allied undertaking, acting
in the interests of the United listions. Whether or not U. S. and U. K.
civil affairs personnel will be integrated other than at your headquarters
will be a natter for your decision.
4. the U. S., British and Soviet flage shall be displayed at head-
quarters and posta of the military government. The administration shall
be identical throughout these parts of Germany occupied by forces under
your community subject to any special requirements due to local circum-
stances.
5. The military administration shall contain no political agencies
or political representatives of the U. Sep U.K., or other Allied Covern-
ments. However, U. S. and U. K. political officers appointed at your
headquarters will continue in office.
6. Representatives of civilian agencies of the U. S. - U. 11. Govern-
nonts shall not participate unless and until you consider such partici-
pation destrable. Representatives of the civilian agencies of other
Allied Governments or of UNRIRA may participate only upon your recomends-
tion and the approval of the Combined Chiefs of Staff.
7. You will reselve a separate directive for military government
in Austria.
Regraded Unclassified
10
- 3 -
POLITICAL OUIDE
1. The military administration shall be firm in earrying out all
INSURER Decembery to Aulfill the objectives of Allied occupation of
Certuny. It should be made clear to the local population that under
military occupation nothing will be pensited which shall interfere in
any way with
(2) military operations
(2) the complete destruction of Name and the Hard Horarchy
and the Common additary machine
(3) or with IDENTIFICATION demond consential by military government.
2. The following persons shall be arrested and imprisoned and hold
pending further instructions:
41
Adolf litler and all renking mebers of the liast party down
to the secretaries of local party united
"
Persons halding important and lazy positions in
(1) government
(11) industry
(111) finance
(1v) education
(v) the judioiny
st
All persons suspected of having conditted war orines;
di
Any national of any of the United Nations who are believed to
have conditted offenses against his national 20mg
= Any other person whose - or designation appears on lists to
be committed to you, or whose name may be notified to you separately.
3. Proclemation shall be issued dissolving the Hast party and affi-
listed organisations throughout Commany. In Authermence of this objective
you should
a take imatiate possentes of officer and reserds of an party
and affilisted organizations, take immediate investory of much
records and place them under adequate military protection.
(2) meport activities of all party and affiliated organizations
and
Regraded Unclassified
4 -
(3) Party property and that of affiliated organizations shall
be taken into custody and may be used for such purposes
as you may direct.
(4) All records and plans of the (a) German adlitary organisation
and of (b) the Hand party and affiliated organisations and
of (e) the security, criminal and ordinary police, and (d)
Institutes and special bureaus established by the Hasis,
such as those dovo ting themselves to race, political or other
Hasi research,
4. You will take imediate steps to abrogate or declare mill and void
all laws, decrees, regulations or aspects of laws which discriminate on
the basis of raco, color, creed or political opinions. All persons who
are detained or placed in custody by the Hasis on these grounds will be
released except that when dictated by reasons of military security or
in the interest of the individual concerned you may retain then in protective
custody. in this event you will tale steps to insure that such people are
provided with adequato quarters, food and clothing.
5. & Criminal and civil courts will be closed. They my be
respened under your jurisdiction and subject to (1) the elizination
of all Nasi elements; (2) the retention of review and voto by A.N.O.,
and (3) close supervision and regulation by A.M.O. All politically
objectionable courts, Peoples Courts, Trauhander dar Arboit courts,
etc., will be abolished and provisions rade for a review of such
judgants still outstanding.
5. be Uniformed (Schupo) police gendarmerio will continue in
existence after being dissumed and Hard elements eliminated.
& Responsibility for the enforcement of curfere, blackouts,
the prevention of political meetings deemed inimical to additary
operations, sta, will rest with the Allied Hilitary Police
Regraded Unclassified
12
- 5 -
until such time as you my direct any or all of these activities
to be undertaken by authorised Corman pelice. Persons arrested
for such violations will be tried in Allied Military courts.
6. The replacement of government officials who may be removed
will rest with the Suprese Commander who will decide whether the objectives
of military government are better served by the appointment of officers
of the occupation force, or by the use of the services of Germans who
have been cleared by the security branches of the army. No German shall
fill important policy positions except under adequate Allied control and
supervision. Under no circumstances shall Hasi officials or ardent
sympathisers be retained in office even if 18 is necessary to sacrifice
good administration to attain this objective. Failure by such German
officials to conform with Allied directives and instructions will be
subject to severe punishment.
7. Subject to the provisions of paragraph 10, and to the extent
that military interests are not prejudiced, freedom of speech and press,
and of religious worship, should be permitted. Consistent with additary
necessity, all religious institutions shall be respected and all efforts
will be made to preserve historical archives, classical commants, and
objects of art.
8. Diplomatic and consular officials of countries at war with any
of the United Natdons will be taken into protective custody and held for
further disposition. Explomatic and consular officials of neutrals will
be dealt with in accordance with instructions to be issued by the Combined
Chiefs of staff.
9. & Prisonare of wir belonging to the ailitary forces of the United
liations and associated nations and their nationals confined, interned
or otherdes under restruint by Genera authorities will be freed
from confinment and placed under additary control or restriction as
my be appropriate pending other disponition.
Regraded Unclassified
13
- 6 -
by 30 for as practicable after identification and examination, allied
nationals should be given opportunity to join the and forces of their
country if represented by units in the theater, or to serve in labor batte-
lions organised by the military or in other approved civilian work, provided
thair loyulties to the allies have been detensined and they qualify *
sically and otherwise. All practical massires should be taken to insure
the health and walfare of Allied nationals and repatriation should be under-
taken as rapidly as military conditions pendt. Pending repatitation, much
nationals should not be pendited to disparate until plans are unde for their
employment or other disponition. Former primones of war released w the
Axis should be identified and requests addressed to thair respective
military commis for instructions as to thair disposition.
& Allied civilian internes found in the territory should be placed
in restricted residence with provided being made for thair care until they
show that they cm provide for themselves. Work should be provided when
practicable. They should be identified - to nationality ta order that thair
presence in the territory 187 be comminicated to thair respective governments.
so Ineque nationals other than nationals of the country under occupation
will be identified and registered and nationals of countries with which my
of the United Watdons are at war and others whom freedom of novement would
ordanger the security of the and forms, or be undestruble, will
be interned or thair activities ourtailed as my be necessary under the air-
currtance.
10.
+ All schools and universities will be closed until an Allied
Consission of has formilated an affective reorganization program
It is contemplated that is may require a considerable period of time before
any institutions of higher aducation are responsd. Hearthile the education of
Common students in foreign universities will not be prohibited. Hommtary
kachersand
schools will to required as quickly as appropriate textbooks can
be supplied.
All name, magardnes, weekliss, steep throughout the area unle
your current will caste publication invistately and shall not publica-
tion until you are directed to permit this.
& All radio stations in the area under your command will be dis-
continued immittately and shall not be pendtted to resume operations until you
Regraded Unclassified
- 7 -
are directed to permit it.
$ No political activity of any kind shall be countenanced unless
authorized by you. No political personalities nor organized political
groups, shall have my part in determining the palicies of the military
administration, It is essential to avoid any conditments to, or nego-
tiations with, any political elements, Comun political leaders in
exile shall have no part in the adsinistration.
& You will institute such consoruhip and control of press,
printing, publications, and the dissemination of news or information
by the above means and by mil, novies, radio, telephone, and cable or
other noans - you consider necessary in the interests of military
security and intelligence of all kinds and to carry out the principles
laid down in this directive.
11. A plan should be prepared by you to prevent transfers of
title of real and personal property intended to defeat, evade, or
avoid the orders, proclemations, or decress of the military government
or the decision of the military courts established by it.
12. & All property belonging to the Cerman Covernment or to
any Covernment of any country with which any of the United
Nations are as war will be controlled directly or indirectly
by you and will be subject to such use thereof as you may direct.
be Your responsibility for the property of the United
Nations other than U. K. and U. 5. and their nationals in areas
to be liberated or occupied by Allied Forees shall be the saw
as for the property of U. S. and 1. X. and their nationals except
where a distinction is expressly provided by treaty or agreement.
Within such limits an are imposed by the military situation you
should take whatever stops necessary to preserve and protect mah
proporty.
Regraded Unclassified
15
- 3 -
13. You vill undertake imediate and complete disamment and denill-
tarination of that part of Certify under your commole Occuracy will not be
permitted to reinted araed forces of any kind for internal security, policing
or any other purpose.
&
All military organizations including and liary essociations such as
veterans' association, attitary labor bettelions, military social clubs,
class, will be abolished. The creation of substitute organizations will
be forbidden.
1 All allitary personnel will be hold under your control until a decision
to disband them has been issued to you by the Combined Chinfs of staff.
No descrilisation of regular Oursen any units shall be undertaken until
Allied authorities have had on opportunity to allocate responsibility
for war crimes and other offenses as I serbers of the Generals
and forces. Subsequent denobilization should be effected only produ-
ally and for selected groups and under states control.
& The S.S., Schop and other para-nilitary organisations will be
separated out from regular any units and imprisoned, and will
not be released pending future of policy.
&
the General Sugara Command and the Comman Staff will be arrosted
and ingrisoned. You will salse all military documents, mape, films, records,
equipment and facilition of the Gegram Superate Command the General
staff.
& You will take imediate possession of all adlitary equipment, all
military supplies, all war anterial, military installations, military
defenses, and military devides of any Idnd, including all adlitary
paraphernalia of whatever type. You will take control of the entire
mmitions industry and all associated facilition. You will require the
Gomen Supress Connard and all other Coman authorities the my be in
possession of such knowledge to - available to you fortimith lists of
quantities and locations of such returnal and installation. Eubjest to
1 use M you my mis of such untertal and installations they will
remin under your control pending ultimate disposal. as prescribed by
the United National
Regraded Unclassified
16
- 9 -
&
The manufacture, production and construction of war naterial,
military equipment, military supplies, or additary installations or
military devices of any Idnd in Cermany and the import, export and
transit of such material and installations will be prohibited except -
directed by the United States.
1. The possession of firearns or military devices of my Idnd in Commany
except with your express permission will be prohibited and offenders
hereunder will be subject to sovere pundshment by AMG courts.
Regraded Unclassified
FINANCIAL GUIDE FOR GERMANY
1. The U.S. forces will use yellow seal dollars and regular U.S.
coins and the British forces and other Allied foroes under your command
will use British Military Authority notes and regular British coins for
payment of troops. The rate of exchange between the U.S. yellow seal
dollars and the B.M.A. notes will be 4.035 dollars to 1 pound, and the
two currencies will be interchangeable at that rate. The U.S. Treasury
will make the necessary arrangements with the British Treasury. Records
will be kept of the amounts of currencies used by the U.S. and British forces.
2. Allied Vilitary Marks and Reichmark currency will be used by
the Allied Military Government for all civil administration purposes and
by the Allied forces for purchase of local supplies and services in Cernany.
/ilitary marks and Reichamark currency and coin now in circulation in
Germany will be legal tender without distinction, and will be interchangeable
at par. Reichskreditkassenscheine and other German military currency will
not be legal tender in Jersany. Records will be kept of the amounts of
German rarks used by the Allied Military Government and the military components
of the Allied forces will submit full reports to Washington and London of
marks used for the purchase of supplies and services in order that the rele-
vant appropriations may be debited.
3. A rate of exchange between the mark and Allied currencies employed
in the operation will not be set during this period. You will inform the
personnel under your command that the exchange by them of U.S. dollars or
British Vilitary Authority notes for mark currency will be at their own risk.
You will advise such personnel that conversion of U.S. dollars into local mark
currency should be limited to their local requirements, as you will provide no
facilities for the reconversion of local mark currency into U.S. currency.
4. The Financial Division of the Givil Affairs Section in Germany will
include in its functions the control of all eark currency used by the Allied
Military Government and the Allied foross within the area, Yellow seal dollars
and B.H.A. notes will be under the control of the U.S. and Dritish forces
respectively.
Regraded Unclassified
- 2 -
4. In so far as operations relate to the provision of currencies for
civil administration, the Financial Division will supply Allied
Military marks from currency on hand and will record the debit
against the Allied Vilitary Covernment.
b. In so far as operations relate to the provision of currencies for the
purchase of local supplies and services by military components of the
Allied forces, the Financial Division will supply Allied silitary
marks from currency on hand and will record the debit against the
military force concerned.
c. The Financial Division will maintain all the accounts and records
necessary to indicate the supply, control, and novement of these
currencies including yellow seal dollars and IMA notes, and other
funds, as well as financial data required for the determination of
expenditures arising out of operations or activities involving par-
ticipation of Allied Vilitary forces. The U.S. and British forces will
make the necessary information available to the Financial Division con-
carning the supply, control and novement of yellow seal dollars and
BWA notes.
d. If found practicable and desirable, you will designate, under direct
military control and supervision, the Redehabank, or any. branch thereof,
or any other bank satisfactory to you, as agent for the Financial Divi-
sion of Civil Affairs Sections. When satisfied that the Reichsbank, or
any branch thereof, or other designated bank, is under adequate military
control and supervision, you may use that bank for official business,
and, if necessary, by making credits available, place such bank or banks
in a position to finance other banks and branches thereof, for the con-
duct of their business as determined necessary for military operations
by the Allied military authorities,
6, the records of the Financial Division of the Civil Affairs Section -
tablished within the area will indicate in all cases in what currency -
ceipts were obtained or disbursements rade by the Financial Division,
Regraded Unclassified
- 3 -
5. Upon entering the area, you will take the following steps and
will put into effect only such further financial neasures as you may deem
to be necessary from & strictly silitary standpoint:
a. Banks should be placed under such control as deened necessary by
you in order that adequate facilities for military needs may be
provided and to insure that instructions and regulations issued
by military authorities will be fully complied with, Banks should
be closed only long enough to introduce satisfactory control, to
remove objectionable personnel, and to issue instructions for the
determination of accounts to be blocked under paragraph b below.
b. Pending determination of future disposition, you will impound or
block currencies, foreign securities, accounts in financial insti-
tutions, credits, valuable papers and 11 similar assets held by or
on behalf of the following and you will permit their use only in
accordance with instructions which you may issue,
(1) Cerman national, state, provincial, and local governments,
and agencies and instrumentalitiss thereof.
(2) Other energy governments, the agencies and instrumentalities
thereof and their Nationals,
(3) Cimers and holders, including neutral and United Nations
Ooverments or national authorities, absent from the areas
of Germany under your control.
(4) Nasi party organizations, including the party formations,
affiliates, and supervised associations, and the officials,
leading members, and supporters thereof,
(5) Persons under detention or other types of custody by Allied
Military authorities and other persons whose activities are
hostile to the interests of the military government.
No governmental or private bank or agency will be authorised to issue
banknotes or currency, except that, if found practicable and desirable,
you may DO authorise the ited.chabank and the Rentembank when they are
under adequate military control and supervision,
Regraded Unclassified
20
- la -
d. All dealings in gold and foreign exchange and all foreign
financial and foreign trade transactions of any kind, in-
cliuding all exports and imports of currency, will be
prohibited, except as permitted under such regulations as
you may issue relative thereto and for strict military pur-
poses. Except as you may otherwise authorise, local banks
will be permitted to open and operate only mark accounts.
The banks may, of course, acquire or otherwise deal in yellow
seal dollars and HMA notes except that the exportation or in-
portation of yellow seal dollars and BMA notes will be prohibited.
6. Non-yellow seal U.S. dollar notes and regular British pound notes
will not be legal tender. No person, agency or bank engaged in the exchange
of money will acquire or otherwise deal in these notes except as you may
so authorize. U.S. Army and Navy Finance ficers and British Paymasters
may, however, be authorised to accept non-yallow seal U.S. dollar notes and
regular British pound notes from United States and British Military or
authorized personnal for conversion into yellow-seal dollars or ZONA notes,
after satisfying themselves as to the source of the notes.
7. All bona fide government pensions, allowances and social security
payments way continue to be paid, but. you will take steps as Boon as prac-
ticable for a study of pensioners records with a when to nullifying all
unnecessary and undesirable pensions and bonuses of Nami inception.
8. The railways, postal, telegraph and telephone service, radio and
all government nonopolies will be placed under your control and their
revenues sade available to the military government.
9. You will immediately rescind all "discriminatory taxes" introduced
by the Hasi regine which discriminate in the basis of race, color, creed,
or political convistion.
Regraded Unclassified
21
ECONOMIC GUIDE FOR GERMANY
The following directive relates to Phase Is
1. Your sole purpose in control of the German economy shall be to
facilitate military operations and military occupation.
2, You will saize all plants, property, patents and equipment
and impound all books and records, of large German industrial companies
and trade and research associations that have been essential to the
German war effort and the Germen economy. You will pay particular
attention to research and experimental establishments of such concerns.
You will preserve intact all such plants, equipment and other assets
for such allied disposition as you will be directed to make by the
Combined Chiefs of Staff.
3. You will take steps to insure that no sabotage or destruction
is carried out by the Germans of any industrial plants, equipment or
stocks or of any of the books or records relating thereto. Anyone found
violating this provision will be tried before Allied Military courts and
these courts will be instructed to inflict severe penalties upon such
offenders.
4. You will prohibit immediately the production of any munitions
or war material except in so far as their production 1s needed to neet
your requirements.
5. Consumers goods industries may be permitted to continue in
operation except as they may conflict with the requirements of military
operations. You will report on any surpluses of the production of con-
sumers goods above the minimum requirements of the German population that
may be available for export and you will accumulate such goods within
Germany pending instructions from the Combined Chiefs of Staff for their
disposition. No exports or imports of any character will be penditted
without the express authorization of the Allied Military Government.
Only such civilian goods as are considered by you to be ensential for
Allied Military operations shall be imported into Germany. Records will
be lospt of all import and export transactions.
Regraded Unclassified
02
- 2 -
6. German food and other supplies will be utilized for the German
population. Howevery German consumption standards should be hald to a
minimm so as to enable surpluses of German food and agricultural pro-
duction to be made available to the devastated countries of Europe. You
will report on any surpluses that may be available with regard for which
separate instructions will be issued.
7. You will exercise full control over German shipping, inland trans-
portation and communications in the interests of the Allied Military
effort.
8. You will be responsible for procuring such goods and materials
for export as you may, from time to time, be directed by the Combined
Chiefs of Staff, to obtain for the use of the United Nations. You will
take only such steps to control the systems of production and distribution
within Germany as are necessary to obtain such goods and materials.
9. The German authorities may be permitted to maintain or establish
systems of rationing and price controls, except in so far as they may be
inconsistent with military requirements or the objectives of the Allied
Military Government.
10. The Allied Military Government shall not assume responsibility
for such economic problems as price controls, rationing, unemployment
production, reconstruction, distribution, consumption, housing, or trans-
portation, or take any neasures designed to maintain or strengthen the
German economy, except those which are essential to military operations
and are indicated above. The responsibility for sustaining the German
economy and people rests with the German people with such facilities as
may be available under the circumstances.
Regraded Unclassified
23
From War Dept., Office of Assistant Secretary
Cloy - September 1, 1944.
TOP SECRET
APPENDIX "F"
UNCONDITIONAL SURRENDER OF GERMANY
The German Government and the German High Command,
recognising and acknowledging the complete defoat of the German
armed forces on land, at sea and in the air, hereby announce
Germany's unconditional surrender.
The Representatives of the Supreme Commands of the United
States of America, the United Kingdom and the Union of Soviet
Socialist Republics, hereinafter called the "Allied Representa-
tives," acting by authority of their respective Governments and
in interests of the United Nations, announce the following terms
of surrender, with which Germany shall comply:-
Article 1.
Germany vill cease hostilities in all theaters of war
against the forces of the United Nations on land, at sea, and
in the air. The Germen Government and the German High Command
will at once issue instructions to all German military, naval
and air authorities and to all forces under German control
to cease hostilities at
hours Central European Time
on
(date)
Article 2.
(a) All armed forces of Germany or under German control,
wherever they may be situated, including land, air, anti-
aircraft and naval forces, the S.S., S.A. and Gestapo, and
all other forces or auxiliary organisations equipped with
weapons, will be completely disarmed, handing over their
weapons and equipment to local Allied Commanders or to
officers designated by the Allied Representatives.
- 20
Annencix "F"
Regraded Unclassified
25
TOP SECRET
(b) The personnel of the formations and units of all the
forces referred to in paragraph (a) above shall, at the
discretion of the Commander-in-Chief of the Armed Forces
of the Allied State concerned, be declared to be prisoners of
war, pending further decisions, and shall be subject to
such conditions and directions ES may be prescribed by the
Alliod Representatives.
(o) All forces referred to in paragraph (a) above,
wherever they may be, will remain in their present positions
pending instructions from the Allied Representatives.
(d) Evacuation by the said forces of all territories
outside the frontiers of Germany as they existed on the 31st
December, 1937, will proceed according to instructions to be
given by the Allied Representatives.
(e) Detachments of civil police to be armed with small
arms only, for the maintenance of order and for guard duties,
will be designated by the Allied Representatives.
Article 3.
(a) All aircraft of any kind or nationality in Germany
or German-occupied or controlled territories or waters,
military, naval or civil, other than aircraft in the service
of the Allies, will remain on the ground, on the water or
aboard ships pending further instructions.
(b) The German authorities will forthwith order all German
or German-controlled aircraft in or over territories or
waters not occupied or controlled by Germany to proceed to
Germany or to such other place or places as may be specified
by the Allied Representatives.
Article 4.
(a) The German authorities will issue orders to all German
or German-controlled naval vessels, surface and submarine,
auxiliary naval craft, and merchant and other shipping,
Regraded Unclassified
26
TOP SECRET
wherever such vessels may be at the time of surrender, and
to all other merchant ships of whatever nationality in
German ports, to remain in or proceed immediately to ports
and bases as specified by the Allied Representatives. The
crevs of such vessels will remain on board pending further
instructions.
(b) All ships and vessels of the United Nations, whether
or not title has been transferred as the result of prize
court or other proceedings, which are at the disposal of
Germany or under German control at the time of surrender,
will proceed at the dates and to the ports or bases specified
by the Allied Representatives.
Article 5.
(a) The German authorities will hold intact and in good
condition at the disposal of the Allied Representatives, for
such purposes and at such times and places as they may
prescribe -
(1) all arms, ammunition, explosives, military
equipment, stores and supplies and other implements of
war of all kinds and all other war material;
(11) all naval vessels of all classes, both surface and
submarine, auxiliary naval craft and all merchant shipping,
whether afloat, under repair or construction, built or
building;
(111) all aircraft of all kinds, aviation and anti-
aircraft equipment and devices;
(1v) all transportation and communications facilities
and equipment, by land, water or air;
(v) all military installations and establishments,
including airfields, seaplane bases, ports and naval bases,
storage depots, permanent and temporary land and coast
fortifications, fortresses and other fortified areas,
- 22
Armen 1% "F"
Regraded Unclassified
27
TOP SECRET
together with plans and drawings of all such fortifications,
installations and establishments;
(v1) all factories, plants, shops, research institutions,
laboratories, testing stations, technical data, patents,
plans, drawings and inventions, designed or intended to
produce or to facilitate the production or use of the
articles, materials and facilities referred to in sub-
paragraphs (1), (11), (111), (1v) and (v) above, or
otherwise to further the conduct of war.
(b) The German authorities will at the demand of the
Allied Representatives furnish -
(1) the labor, services, and plant required for the
maintenance or operation of any of the six categories
mentioned in paragraph (a) above; and
(11) any information or records that may be required by
the Allied Representatives in connection with the same.
(c) The German authorities will at the demand of the
Allied Representatives provide all facilities for the move-
ment of Allied troops and agencies, their equipment and
supplies, on the railways, roads and other land communica-
tions or by sea, river or air. The German authorities will
maintain all means of transportation in good order and repair
and will furnish the labor, services and plant necessary
therefor.
Article 6.
(a) The German authorities will release to the Allied
Representatives, in accordance with the procedure to be
laid down by them, all prisoners of war at present in their
power, belonging to the forces of the United Nations, and
will furnish full lists of these persons indicating the
places of their detention in Germany or territory occupied
- 23
Amencix "E"
Regraded Unclassified
28
TOP SECRET
by Germany. Pending the release of such prisoners of war,
the German authorities will protect them in their persons and
property and provide them with adequate food, clothing,
shelter, medical attention and money in accordance with their
rank or official position.
(b) The German authorities will in like manner provide
for and release all other nationals of the United Nations
who are confined, interned or otherwise under restraint,
and all other persons who may be confined, interned or
otherwise under restraint for political reasons or as a
result of any Nazi action, law or regulation which discrimin-
ates on the ground of race, color, creed or political belief,
(c) Without prejudice to the foregoing provisions of
this Article the German authorities will hand over control
of the places of detention there mentioned to such officers
as may be designated for the purpose by the Allied
Representatives.
Article 7.
The German authorities vill furnish to the Allied
Representatives -
(a) full information regarding the forces referred to in
Article 2(a), and in particular will within twenty-four
hours of the time of surrender furnish all information
which the Allied Representatives may require concerning
the numbers, locations and dispositions of such forces,
whether located inside or outside Germany;
(b) complete and detailed information concerning mines,
minefields and other obstacles to movement by land, sea or
air, and the safety lanes in connection therewith. All
such safety lanes will be kept open and clearly marked;
all mines, minefields and other dangerous obstacles will as
far as possible be rendered safe, and all aids to navigation
24
Anneno 1x "F"
Regraded Unclassified
29
TOP SECRET
will be reinstated. Unarmed German military and civilian
personnel with the necessary equipment will be made available
and utilised for the above purposes and for the removal of
mines, minefields and other obstacles as directed by the
Allied Representatives.
Article 8.
The German authorities will prevent the destruction,
removal, concealment, transfer or scuttling of, or damage to,
all military, naval, air, shipping, port, industrial and other
like property and facilities and all records and archives,
wherever they may be situated, except as may be directed by the
Allied Representatives.
Article 9.
Pending the institution of control by the Allied Representa-
tives over all means of communication, all radio and telecommuni-
cation installations and other forms of wire or wireless com-
munications, whether ashore or afloat, under German control,
will cease transmission except as directed by the Allied Repre-
sentatives.
Article 10.
The forces, nationals, ships, aircraft, military equipment,
and other property in Germany or in German control or service
or at German disposal, of any other country at war with any
of the Allios, will be subject to the provisions of this
Instrument and of any proclamations, orders, ordinances or
instructions issued thereunder.
Article 11.
The Allied Representatives will station forces and civil
agencies in any or all parts of Germany as they may determine.
2°
Annehix "F"
Regraded Unclassified
30
TOP SECRET
Article 12.
(a) The United States of America, the United Kingdom and
the Union of Soviet Socialist Republics shall possess supreme
authority with respect to Germany. In the exercise of such
authority they will take such steps, including the complete
disarmament and demilitarisation of Germany, as they deem
requisite for future peace and security.
(b) The Allied Representatives will present additional
political, administrative, economic, financial, military and
other requirements arising from the surrender of Germany.
The Allied Representatives, or persons or agencies duly
designated to act on their authority, will issue proclama-
tions, orders, ordinances and instructions for the purpose
of laying down such additional requirements and of giving
effect to the other provisions of the present Instrument.
The German Government, the German High Command, all German
authorities and the German people shall carry out uncon-
ditionally the requirements of the Allied Representatives
and shall fully comply with all such proclamations, orders,
ordinances and instructions
Article 13.
This Instrument will enter into force and effect 1m-
mediately upon signature. In the event of failure on the part
of the German authorities or people promptly and completely to
fulfil their obligations hereby or hereafter imposed, the
Allied Representatives will take whatever action may be deemed
by them to be appropriate under the circumstances.
Article 14.
This Instrument is drawn up in the English, Russian and
German languages, The English and Russian are the only authentic
texts. In case of any question as to the meaning of any of
Regraded Unclassified
31
TOP SECRET
the provisions of this Instrument, the decision of the Allied
Representatives shall be final.
(Date and year)
(Place )
(Hours - Central European Time).
Signed by the Allied
Signed by the Representatives
Representatives:
of the German Government and
the German High Command
thereunto duly authorised:
(Name)
(Title)
(Name)
(Title)
(Name)
(Title)
(Highest German civil
(Name)
(Title)
authority)
(Name)
(Title)
(Highest German military
authority)
- 27 -
Appendix "P"
Regraded Unclassified
CONFIDENTIAL
fy to Mr. Hans 32
WAR DEPARTMENT
WASHINGTON 25. D.C.
9/2/44-
SEP 1 1944
My dear Mr. Morgenthau:
Bu766:59
With reference to your letter of August 25, 1944, there is
no immediately foreseeable change in over-all munitions production
prior to the defeat of Germany, though there will be continual
program adjustments involving both increases and decreases in some
items, the effect of which is largely unpredictable. Upon the de-
feat of Germany, however, the War Department has made extensive
plans for adjustment in procurement schedules which indicate an
over-all cutback of between 35 and 40 percent.
These outbacks are applied to the prime contractor directly
and reach the subcontractors and material suppliers through the
prime contractor. It is, therefore, impossible for the War Depart-
ment to estimate the geographical variations in the impact of cut=
backs on employment because of the complexity of the subcontracting
chain. However, the detailed figures upon which our present estimate
of cutbacks is based have been furnished the War Production Board
and I understand that the Director of the Bureau of Planning and
Statistics of WPB has developed methods of statistical projection
of the effect of cutbacks upon employment. I believe, therefore,
that you may be able to obtain the information you desire from his
office.
RLJPP Sincerely yours,
Acting Secretary of War,
Honorable Henry Morgenthau, Jr.
The Secretary of the Treasury,
Washington, D. C.
FORVICTORY
BUY
UNITED
STATES
WAR
BONDS
AND
STAMPS
CONFIDENTIAL
33
MEMORANDUM FOR THE SECRETARY.
September 1, 1944.
Mail Report
The week's tax mail -- still at very low ebb --
included a few repetitious inquiries about deductions
for advertising expenses allowed Montgomery Ward,
scattered questions about future tax rates for cor-
porations, and 14 demands for refunds.
Bond mail was also uninteresting, with questions
about procedures dominating all other subjects. A few
persons who had read of extensive cashing of bonds
suggested that the practice might be curbed by giving
holders of E Bonds the privilege of converting them
into larger bonds with slightly higher rates of in-
terest. There was still very little comment on the
plan for cashing bonds over the counter, and none of
it decidedly pro or con.
The number of bonds submitted for redemption
dropped from 88 last week to 54 this week. Also the
number of replies to redemption slips fell off. Of
those who responded, one said that he was converting
small bonds into larger ones, and the others told of
personal emergencies.
Five donations were received, the lowest a dollar
bill, and the highest a check for $950 transmitted
through the Navy Department. Aside from a few requests
for copies of the report of proceedings, there was
nothing else about the Bretton Woods Conference.
74
General Comments
Miss Sincerity Faith, New York City. PEACE You will
find enclosed three U. S. Series E. Bonds I am giving
to our Government, and want it recorded that I de-
sire to transfer beneficiary from Miss Sincerity
Faith to the Government. The bond issued in July
was made over, or in other words, named the Govern-
ment as beneficiary. Please thank Father Divine 8.8
He is the Giver of all Good and Perfect Gifts. It
was Him that lifted me from lacks and wants, giving
me afull and aplenty and some to spare.
P. J. Evans, Waltham, Massachusetts. Congratula-
tions on your explanation of the purposes of the pro-
posed World Bank as broadcast Tuesday night, August
22, by the Forum. It was a masterpiece in simplicity
of enlightenment for the rank and file of Americans.
# In conclusion, Mr. Secretary, in my humble
opinion, the proposed World Bank and use of its fund,
plus the Stabilization of Currencies measured by
Gold, together with a fair adjustment of tariff
schedules should make for an easier flow of com-
modities and monies between nations, (by bringing
both closer to parity) and thereby solve two major
problems concerning postwar international agreements.
It means greater prosperity and a continuous employ-
ment in all walks of our social and economic lives.
Captain Howard A. Lowry, M.C.O., A.P.O. 627, c/o
Postmaster, New York City. A situation has arisen
in China which I feel should be brought to your atten-
tion. For the past several years the American
missions in China have been obtaining their funds
through Chinese banks at the official rate of 20
Chinese dollars, and, more recently, 40 Chinese
dollars, to one U. S. dollar. With inflation, the
35
- 2 -
present unofficial rate is approximately 190
Chinese dollars to one U. S. dollar, 80 that the
missions have obviously been at EL great disadvan-
tage. Recently, as I understand it, arrangements
were made with the U. S. Treasury and the Chinese
Government whereby the United Clearing Board of
the Missions, Educational and Relief Agencies in
'China, could sell drafts or checks on their account
in the National City Bank in New York, at the rate
of 115 Chinese dollars to one U. S. dollar. # # #
Recently, however, an order has come through from
the U. S. Treasury prohibiting the sale of these
drafts to American military personnel. I, and many
others, feel that this new order is discriminatory
and very unfair. As the situation now stands, the
only ones who can and do benafit from this arrange-
ment are Chinese Government officials, rich Chinese
with "connections", and nationals of other nations.
Inasmuch as these funds are contributed by Americans
for the American missionaries in China, I feel quite
strongly that the benefits to be derived from the
purchase of these bank drafts should be available
to American citizens, particularly those serving in
the Armed Forces. The percentage of purchases of
these drafts by American military personnel was
small, but the opportunity was appreciated. The
withdrawal of this privilege is resented by many of
us. We fail to see why Americans should be deprived
of the chance to help the. American missionaries,
and at the same time help ourselves when this same
opportunity is granted to Chinese and nationals of
other nations. I would appreciate any rational
explanation for this ruling of the Treasury Department.
E. P. Kohl, Hotel St. Francis, San Francisco,
California. With a manpower shortage, I find on
San Francisco Streets hawkers with machines making
souvenirs by mutilating U. S. coins. How come?
36
- 3 -
Favorable Comments on Bonds
Joe Perez, Moorpark, California. I am a boy 16
years of age and live in a small town called Moor-
park. There are plenty of people, Mexicans and
Americans both. I write to you to ask how I can
get bonds and stamps to sell in our neighborhood.
Of course, there is the Post Office and bank which
sell bonds and stamps, but I feel even if we are a
small vicinity we have not bought all the bonds
and stamps we should have bought in the past few
years. There are some people that haven't even
bought one, and I feel that the only way for them
to buy bonds is for someone to go to their homes
and sell bonds and stamps. That is why I write
to you. I would like to sell bonds and stamps in
the homes.
Abraham Wiener, Director, Camps Dalmaqua and Diana,
Glen Spey, New York. Kindly be advised that in the
course of the summer season (July 2--August 28) our
girls and boys have succeeded in selling War Stamps
and Bonds for a total of $20,066.00. Although they
were up here for a vacation, our girls and boys,
ranging in age from five to sixteen, conducted this
campaign and succeeded in reaching the total already
mentioned. We want you to know that these children
were ever conscious of their duty as good citizens
even while they were on vacation.
37
4.
Unfavorable Comments on Bonds
Albert Leon, Albert Leon & Son, (Home Furnishers
Since 1905), Perth Amboy, New Jersey. Some time ago
I purchased three Treasury Bonds. I bought these
bonds at the Perth Amboy Savings Institution, Perth
Amboy, New Jersey, for Harry L. Jacoby or his mother,
Sylvia E. Jacoby. Through an error at the Perth
Amboy Savings Institution, the bonds were made out
to Harold L. Jacoby, instead of Harry L. Jacoby.
The bank informed me that a change was not necessary
in his name, but unsatisfied with this explanation,
I took these bonds to the First Bank and Trust Co.,
Perth Amboy, New Jersey, who advised me to cash them
and repurchase bonds of equal value, bearing the
correct name. When application was made for
the sale, the bank refused to accept the signature
of Mrs. Sylvia E. Jacoby and insists upon a Power
of Attorney given by Harry L. Jacoby before this
transaction can be completed. Harry L. Jacoby is
now serving in the Armed Forces somewhere in France,
and mail to him and from him has been very uncertain.
The mistake was made at the Perth Amboy Savings
Institution, and the money was intended as a nest-
egg for this boy, who is my grandson, when he returns
to civilian life. We are heavy purchasers of War
Bonds and feel that some easier way ought to be
designated whereby the mistake made by & bank can be
rectified without going through all this red tape.
Thornton J. Davis, Marysville, California. Is it
contemplated to float another bond issue in view
of the 75-100 billion dollar surplus war material
Congress is now trying to dispose of?
38
- 5 -
Wm. G. Curnow, Flint, Michigan. I turned in 25
bonds and did not even get face value for the bonds,
even though some were 2 years old and it cost me
68¢ a bond to hold them 2 years, and we are expected
to buy more. Why was I penalized $17.01 on my 25
bonds? Please explain the discount.
Edythe Misel, Brooklyn, New York. My husband is a
defense worker and up until August 9 his shipyard
was under the payroll deduction plan for the purchase
of War Bonds. Since then, the Dekom Shipyards have
been taken over by the J. K. Welding Company, and
they refuse to deduct bond money, saying it is too
much trouble. I have found it difficult to buy bonds
unless it is immediately deducted, and my husband
told me that there were over one hundred and fifty
men enrolled in this plan before it was dropped.
I believe it is unpatriotic and unfair, if this
company is all out for the war effort, not to deduct
money from the men's payroll. I sincerely hope the
plan may be resumed there, as I'm sure would be the
other one hundred and fifty war workers' wives at
the J. K. Welding Company. This yard is located at
Strickland Avenue and Mell Basin. If any report is
made, I prefer that my name be withheld.
39
- B -
Unfavorable Comments on Taxation
Miss Florence W. Foster, Rochester, New York. For
a number of years I have tried to get a classifica-
tion as head of the family for my income tax. How-
ever, due to the ruling that one must live under
the same roof as the family, it seems that I am not
qualified. # # I work in Rochester and consequently
have to live here. My aunt, who is 83 years old,
lives in her home in Geneva, New York. My sister,
who keeps house for my aunt, has no income except
that she receives from me; I contribute a regular
weekly amount to her. # My financial circumstances
make it impossible for me to keep this up much longer
as the only deduction I am allowed on my income tax
is the small one for one dependent. The numerous
and very large deductions that are made from my salary
(especially the huge income tax) do not leave me
enough to live on, even though I exercise the greatest
economy, and I feel very strongly that an adjustment
should be made in my status. It seems to a great
many of us who have always worked and earned our own
living, that the tax laws make it much harder for us
than for any other class of people.
%
#
John M. Dietrich, Parkville, Maryland. # Last
March, after checking my income, I found that I must
pay $100.18 tax. I paid $66.00 of the $100.18 at
that time. On July 5, 1944, I received a notice
claiming to be the second one (I never received the
first one) from George Hofferberger, the Collector
at Baltimore, demanding the balance with 6% interest
charge. I wrote to him (Mr. Hofferberger) and asked
him to read rule 15 on Form 1040-A, and he would
learn that the balance was not due until March 15,
1945. My letter was ignored, as usual. Instead of
the courtesy of a polite reply, on August 3, 1944,
I received a threatening notice from Robert S. McKenna,
Deputy Collector. I wrote to Mr. McKenna and sent
40
- 7 -
him a copy of rule 15, Form 1040-A, and asked him
to explain to me what it meant. Instead of explain-
ing it, he requested that the amount claimed due,
be paid at once. I paid said amount, with interest,
which is not legal and just, as I see it. As yet
I have received no receipt for amount paid. I also
mentioned to Mr. Hofferberger that on my 1942 tax
I made a mistake and paid on my entire year's earn-
ings. As a single man I believe I was allowed credit
of $750.00 that W8S not taxable -- is that not correct?
I asked for a correction to be made, but only to be
ignored again.
Mrs. Hazel Birkhead, Chicago Heights, Illinois. I am
writing to you in regard to the 1943 income tax of
myself and husband. My husband filed at the Flintkote
Company, where he works. They had a man there to
file for all the employees. We each filed separate
returns there. My husband owed $131.86 (approximately),
while I had overpaid $130.00. The company called up
the Internal Revenue Office in Chicago and asked them
if it would be all right to let my $130 go on my
husband's debt, and they told them it was all right,
provided I wrote a letter telling them I wanted it
filed that way. So I did this, also sending a Money
Order for the $1.86 on or about March 1st. We thought
it was o.k. as a lot of our friends filed this way
also. Then in May my husband receives a notice from
Chicago saying if his. income tax of $130, plus some
$2 interest, wasn't paid in 10 days, he would be
liable for a fine of several hundred dollars. We
immediately took this to the Company where he works,
and they called the Revenue Office in Chicago and
asked them why this was, and we were told that after
we filed, the law was changed and we weren't allowed
to file that way; that he would have to pay his, and
I would receive my $130 in check in a few days. That
was over 4 months ago, and I haven't received it.
I have written to them asking about it and have re-
ceived no answer. # If we do not receive this in
a few days, it will be necessary for us to cash our
War Bonds to buy our winter's coal.
41
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE September 1, 1944
TO
Secretary Morgenthau
FROM
Mr. White
For your information.
Subject: Present S tatus of action in London on question of looted
property and hidden enemy assets
The essence of a report from Mr. Hoffman on the above sub-
ject, made at our request, is to the effect that " nothing
effective 18 being done in the Embassy or anywhere else about
implementing either the United Nations Declaration of January 5,
1942 or the Bretton Woods Resolution No. 6."
Hoffman states that the Inter-Allied Commission, C onsisting
of the Foreign Ministers of "about fourteen" of the United Nations,
met in London in connection wd. th the issuance of the Declaration
of January 5, 1942 but that it has never met since. A sub-
committee exists which met a few times and prepared some reports
which Hoffman will endeavor to obtain and forward but no meetings
have been held since early 1944 because the Poles insisted on dis-
cussing the question of the treatment of Polish property by
Russia, a procedure to which the Russians would not agree.
Hoffman reports that neither the F.E.A. nor Economic Warfare
people at our Embassy knew of the Bretton Woods Resolution No. 6
until he read it to them. Neither is anyone at the Embassy aware
of what steps, if any, have been taken by the British or the
exiled Governments outside the Inter-Allied Commission and sub-
committee arrangements. mentioned above. Hoffman is under the
impression that some informal discussions among these govemments
have taken place and he will endeavor to ascertain and report
their significance.
12
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE September 1, 1944
TO
Secretary Morgenthau
FROM
Mr. White
Subject: Program on the Fund and Bank Projects
Members of the Treasury staff, including Mr. Smith and
Mr. Luxford, have been considering means of securing wide
public support for the Fund and the Bank. We are agreed that
every possible form of publicity must be utilized to reach
large and important groups.
We plan to arrange a number of conferences with repre-
sentatives of important organizations, including some of those
listed below. If you could see Mr. Murray and Mr. Green, and
the leaders of a few outstanding groups, it should be possible
to secure their active cooperation in favor of the Fund and
the Bank.
There is summarized below the program we are planning to
inform the public on the Bretton Woods Conference.
Cooperation with Organizations
One of the most effective ways of reaching large numbers
of people and securing their support for the Fund and the Bank
is through organized groups interested in international cooper-
ation and public affairs.
We hope that it will be possible to secure the cooperation
of the following organizations in arranging meetings and in dis-
tributing information in support of the Bretton Woods Conference:
World Peace Foundation
Council on Foreign Relations
Foreign Policy Association
United Nations Association
League of Women Voters
Federation of Women's Clubs
Women's Conference on International Affairs
American Association of University Women
National Foreign Trade Council
Congress of Industrial Organizations
American Federation of Labor
Railroad Brotherhoods
Federal Council of Churches
National Catholic Peace Society
13
- 2 -
There are other organizations through whom we expect to
arrange meetings and the distribution of publications.
We have already had very helpful meetings with the
research people of the C.I.O., and A.F.L., the Council on
Foreign Relations, the Women's Conference on International
Affairs, and some smaller groups. We have found these groups
very eager to work with us in bringing to the attention of
their members the importance of United States participation
in the Fund and in the Bank.
Meetings
We are receiving many invitations for meetings.
It would be most helpful if you would address a number
of important meetings. The Foreign Trade Convention wishes
you to make the principal address at the luncheon meeting
of the first day of their convention. This would give you
an opportunity to sound the keynote for a post-war world
based on international economic cooperation.
The Detroit Economic Club, which includes all of the
important industrialists in the Detroit area, would like to
have you for their luncheon meeting of February 5. They assure
us of a very large attendance and a wide interest in what you
have to say.
The Council on Foreign Relations will arrange meetings
with organizations in 20 cities affiliated with them. The
National Foreign Trade Council wishes to arrange similar meet-
ings in 40 cities in which they have members. We also expect
to arrangé meetings either through the Federal Reserve Board
or through the bankers' organizations in some 15 or 20 cities.
It will be sometime before we complete our plans for the
meetings which should run us steadily for the next few months.
I hope to give you a tentative list of meetings which we have
scheduled very soon.
Radio and Press
Obviously it is not possible to reach many people through
meetings. While meetings have the advantage of giving personal
contact with influential groups, they must be supplemented by
radio talks and popular publications.
44
- 3 -
The recent Forum of the Air was probably heard by a
couple of million people. A number of discussion programs
of this character might be arranged. In addition, there
should be a few addresses that explain the necessity of our
participation in the Fund and in the Bank. With you on the
program it will be possible to reach a very large public.
It is equally important to secure the support of radio
commentators, columnists, and the press. We hope it will be
possible for us to see men like Swing, Lippmann, Lindley
and others and give them our view of the importance of inter-
national monetary and financial cooperation.
Publications
We are now preparing publications designed to reach a
wide range of audiences.
We think it would be helpful to publish an article by
you in some national magazine of very high standing, such
as Foreign Affairs, the Atlantic Monthly, or Harpers. Such
an article is now being prepared.
We are also working on material for general distribution:
1. A popular explanation of the Fund and the Bank.
2. Simple questions and answers on the Fund and the
Bank.
3. An elementary discussion of the Fund and Bank,
illustrated with pictographs.
4. A pamphlet on what the Bretton Woods Conference
means to labor.
5. A pamphlet on what the Bretton Woods Conference
means to the farmer.
6. A pamphlet on what the Bretton Woods Conference
means to the foreign trader.
7.
The Bretton Woods Conference and peace.
We expect to distribute most of the material through the
organizations with which we are cooperating.
15
PROM LONDON
RI.CD: Septamber 5, Spains
UNIVSTRICTED
Secretary of Stute
"ashington
A-1069, September 1, 1944
1:00
1944 SEP 6
For the Secretaries or State nno
Teasury
ROS
AM
OF
The following editorial appeared in gesterguy's
"vening Standard:
57
OF STATE
"Key to the Earth
"Nearly two thousand years ago, Pliny the Elder described
the fanous cave out or which the north-east V ind VLS said to
issue and which pluce - because it was u gold nine - 'they
cell the cloister, or key to the earth,'
"In this cave dwelt the Arimaspians una the Criffins.
The urinaspians were 'known for having one eye only in the
midst of their foreheads' and for being enguged in pertetual
war , ith the Griffins, "a kind of vila benst that flies and
filches gold out of the voins of those nines,' "The savage
beasts', wrote the Roman mistorian in what might have been
a comment on nogern man's struggle to maintain the Golo
Standard, 'strive as eagerly to keep and hold the gola mines
as the Arimaspians to get the gold away from them.'
"Happily, the British people have put this childish
suvagery behind them. In the terrible years between 1925,
when they returned to the Gold Stundard, and 1931, when they
were forced off it, they learned that pursuit of the burbaric
relic could be achieved only by sucrificing the workman's
standard of living and frustrating the community's enterprise.
They saw their export trade destroyed and their home market
depressed. So they rejected the idea of confining economic
development within a gilded cafe. They refused to 'wear a
golden sorrow'. 'hat the British people rejected in 1931 they
v.111 not accept in 1944, even the Eh the wind be tempered
in an experts' cave at Bretton "ooûs.
""'e do not know whether Lord Keynes, un architect-in-
chief of the Monetary Plan, is un Arimaspian or & Griffin,
That ve no know is that nis Plan perpetuates the foolish
battle between the cyclops and the cannibals by restoring at
Gold Standure, 10 elso know that this newspaper and its
companions are no longer a long voice crying against 8 return
to the ilderness, There is no responsible section of the
ritish Press - from the Times to The Tribune one the Duily
xpress to the conomist - that has not expressed at least
grave doubts about time viscon of the Bretton Moons proposuls,
The
18
- 2 -
A-1069 LONDON
The a titude 02 the overnment, too, is clour. It is
'one 02' most vehiclent opposition' to any monetary policy
implying the restoration of the Gold tonaard.
o shoul. be neither cyclops nor cunnibe ls. ]or
us there is only one 'key to the earth's It 1s froedom
to make ane frusp opportunity to sell our LOOUB in who
markets of the MORIA. interprise, inconuity ana the
energies of our skilled und industrious people - those are
our [olden usnets. Upon the vigour with which 10 nourish
an., exploit them depende our hope of full employment, our
more 0,1 retaining in peace-tine the higher curnings achieved
by our workers in ver-time and our hope 02 contributing
greatly to our own and the vorld's unricment."
L - :
47
A-337
SECRET
5:40 p.m.
AMEMBASSY
LA PAZ
The following message of August 9 has been received from
Amembassy, Madrid:
QUOTE In response to Embassy's representations Foreign
Office has formally expressed willingness of Spanish Government
to cooperate in bringing to successful conclusion proposed
arrangements for exchange on Spanish territory of German
nationals in Paraguay and Bolivia for persons in German-occupied
territories bearing documentation of those countries but has
informed Embassy orally that it is not yet in receipt of repre-
sentations on this subject from Paraguayana and Bolivian Govern-
ments whose representatives in Madrid are still without instruc-
tions. UNQUOTE
In view of earlier promises given to you in this respect
and reported in your A-288 of June 27, please urge Bolivian
officials to take speediest action necessary to enable Spain to
bring to conclussion said exchange arrangements. In this connection,
you may repeat assurances given in Department's A-221 of June 2
stating that QUOTE In contemplating such exchange negotiations
it is not expected that the government to which you are accredited
will physically admit any such persons into its territory even on
& temporary or tentative basis. This Government is prepared
to take full responsibility for all arrangements necessary
to route these persons to places elsewhere. UNQUOTE
HULL
glw
WRB:MMV:KG
NWC
9/1/44
48
SECRET
A-1551
September 1, 1944
5:30 p.m.
AMEMBASSY
HABANA
The following is from War Refugee Board.
1. Reference is made to Department's A-1229 of July 21,
The clarification requested therein is still awaited.
2. Amlegation Bern cabled that Julian Gelernter, a
Cuban, born on February 21, 1905, in Warsaw, Poland, has
been moved by German authorities from internment camp Clermont.
It is believed that German authorities will consider him a
stateless Polish Jew and condemn him to deportation and death.
In view of promises given to you and reported in your
A-1294 fof June 16, please endeavor to obtain specific request
of Cuban Foreign Office to Swies authorities to demand for
Gelernter and any other pessons similarly situated treatment
to which Cuban nationals are entitled.
The assurances given by this Government in Department's
Circular Airgrams of March 31 and April 11 will apply to the
case of Gelernter and all other persons similarly situated.
HULL
glw
WRB:MMV:KG
9/1/44
49
AIR MAIL
Lendon. September 1. 1944.
RESTRICTED
No. 17816
Subject: Transmitting Copy of Memorandum Submitted by
the Director of the Intergovernmental Consittee
on Refugees to the International Red Cross
Delegation in Lendon.
The Honorable
The Secretary of State,
Washington.
Sir:
1/
I have the hener to transmit herewith a copy of a
memorandum which was submitted to the International Red
Cress Delegation in Lendon by Sir Herbert Emerson, Director
of the Intergevernmental Committee on Refugees, after a
discussion between his and Mr. Burckhardt. The memerandum
sets forth the steps already taken by the Intergevernmental
Committee, as well as action which it proposed to take, in
implementation of the acceptance of the offer of the Govern-
ment of Hungary with regard to the release and treatment of
Jews. It is suggested that a copy of the nemerandum be
furnished to the War Refuges Board.
Respectfully yours.
For the Ambassaderi
W. J. Gallman,
Counseler of Hubasay
Enclesure:
1/ Copy of
memerandum.
SHatem
50
Enclesure No. 1 to despatch No. 17816 of 9-1-44
from the Embassy at Lendon, England.
31st August. 1944
COMMITTEE ON RETUGNED
MEMORANDUM
The Vice-Direster and I had 8. talk with Mr. Burckhar41
of the International Red Cress Delegation in Lenden regard-
ing. first, the present position in Hungary. and second, the
possible monas by which advantage my be taken of the effer
of the Hungarian Government. He has shown us a message
received from the International Red Cress, Geneva, disputch-
ed on the 26th August, 1944, regarding the present situation
of Jevs in Hungary. This, like other recent information,
is not re-assuring, and since it was sent events have been
noving rawidly in Roumania and Hungary. with regard to the
specific matter nentioned in it. I have ascertained that the
British Government has already authorized the Svies Consul
in Budapest, through the Swise Government, to make the
necessary endersement on the travelling documents of those
who are on the list for immigration to Palastine. which vill
enable the International Red Cress to satisfy the German Aughorities
that there will be no difficulty about their extrance into
Palestine. These endorsements will also facilitate the issue
of transit visas by the Governments of the countries through
which they may have to pass.
2. Ve have infermed Mr. Burckhardt that, following
discussions with the American and British Governments, it
10 probable that the Intergevernmental Committee. noting in
clese cellaberation with the Var Refuges Beard, will be the
authority responsible for co-ordinating the work oft
(a) Finding temperary homes inside Durope for these
who cannot proceed direct to their places of asylum outside.
(b) Providing maintenance where Recessary. and
(e) Assistance in transport arrangements.
51
- 2 -
For those who are preceeding to Palestine, the necessary
discussions in regard to certificates, etc., will be carried
out by the Jewish Agency with the British Government. but the
Intergevernmental Committee will keep in teuch with the Jewish
Agency and also with the British Government.
3. The responsibility of the Intergevernmental
Committee vill not extend to negotiations with the Hungarian
Government, which will, it is hoped. be continued by the
International Red Cross to when the offer was made by the
Hungarian Government.
4. The action required at present would seem to be as
fellows:
(a) For the Lenden Delegation of the International
Red Crees to inform Geneva of the position of the Inter-
governmental Committee.
(b) To request Geneva to keep the Intergovernmental
Committee fully informed of all developments through the
London Delegation.
(e) To concentrate ON two groups as offering the neet
favourable prospects, first, children. and second, these
on The Palestime list.
5. Vith regard to children. the imuediate possible
places of asylum would seen to be Svitserland and Sweden,
if the children con be transported there pending reception
outside Burope. of these transport to Sweden may be an
insuperable difficulty. We shall be glad of views of
International Red Cress on this. Transport to Switzerland
seems more promising. but here again, ve should like to know
the prospects.
6. With regard to the Palestinium group, recent events
presumably rule out the Balken routes. If this is so, the
immediate course would seen to be to obtain temperary
sanctuary for them in Switserland until they can be removed
by other reutes to Palestine, which events in France should
facilitate.
52
- 3 -
7. If maintenance has to be provided for these re-
coived in neutral or other countries, this will probably be
done through the Intergevernmental Committee in pursuance
of the Declaration of the American and British Governments.
8. The Intergevernmental Committee leeks forward to
the closest co-speration with the International Red Cress.
H. W. MMERSON,
Director.
Regraded Unclassified
53
AMT=999
London
This telegram must be
paraphrased before being
Dated September 1, 1944
communicated to onyone
other than a Government
Rec'd 5:36 p.m.
Agency. (SECRET-0)
Secretary of State,
Washington.
U. S. URGENT
7146, September 1, 8 p.m.
FOR DEPARTMENT, FEA AND WRB
IRCC have requested British to assist the more
than 100,000 inhabitants of Warsaw now interned at camp
in Druszkow. IRCC think that effective help can only
be given by direct action of belligerents. They
particularly suggest that Soviet Union could assist by
parachuting food and medicines. IRCC also suggest that
food on way to Gothenburg for prisoners of war in Germany
be diverted to this use. British are replying that
parachuting of food is impossible but that they would
welcome use of parcels now being sent via Gothenburg for
civilian internees if distribution can be made by IRCC
in Druszkow in same way as IRCC suggested in Bern's 4578,
July 18 to Department for other concentration camps.
WINANT
LMS
54
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
American Consulate General, Jerusalem
TO:
Secretary of State, Washington
DATED:
September 1, 1944
NUMBER:
124
CONFIDENTIAL
RESHEI FRUMKIN SENDS THE FOLLOWING MESSAGE FOR ISAREL
MEREMINSKI.
I have received your 18 through the Consulate and
shall answer your quaries in the near future. News of the
renewed deportation of twelve thousand daily from Hungary
has just been received. Strengthened and renewed sharp warn-
ings to the population of Hungary and to its government
officials is demanded by those nearer Hungary, and in addition
frequent broadcastings and air dropped leaflets. It 18 most
important that there be naximum activisation of the Red Cross
and a strong approach to the Pope. The foregoing 10 in ref-
erence to the Department's August 18 telegram No. 136.
PINKERTON
DCR:EBH:1IM
9/2/44
Regraded UInclassified
55
A-238
SECRET
5:30 p.m.
September 1, 1944
AMEMBASSY
ASUNCION
The following is from War Refugee Board.
1. Reference is made to previous communications relative
to Jewish victims of Nazi oppression holding Latin-American
passports.
The following message of August 9 has been received from
Amembassy. Madrid:
QUOTE In response to Embassy's representations Foreign
Office has formally expressed willingness of Spanish Government
to cooperate in bringing to successful conclusion proposed
arrangmments for exchange on Spanish territory of German
nationals in Paraguay and Bolivia for persons in German-occupied
territories bearing documentation of those countries but has
informed Embassy orally that it is not yet in receipt of repre-
sentations on this subject from Paraguayan and Bolivian Govern-
ments whose representatives in Madrid are still without
instructions. UNQUOTE
In view of earlier promises given to you in this respect
and reported in your A-139 of April 22, in your A-148 of
April 29, and in enclosure to your 2163 of June 8, please urge
Paraguayan officials to take speediest action necessary to
enable Spain to bring to conclussion said exchange arrangements,
In this connection, you may repeat assurances given in Depart-
ment's A-118 of April 11 stating that QUOTE In contemplating
such exchange negotiations, it is not expected that Paraguay
will physically admit these holders of Paraguayan passports
into Paraguay even on B. temporary or tentative basis. This
Government is prepared to take full responsibliity vis-a-vis
Paraguay for all arrangements necessary to route these persons
to places outside Paraguay. UNQUOTE.
2. The following is the substance of a message received
from Amlegation Bern:
QUOTE I recommend that you urge the Paraguayan Government
in particular (see our cable of July 14, 1944, No. 4518) to
give the Spanish Government authority to extend through its
Embassy at Berlin the shortly expiring Paraguayan passporte
which persons, especially those in Bergen Belsen camp, are
holding. Several Jewish organizations and individuals have
addressed to ne desperate appeals calling to our attention
the fact that Paraguayan passporte hold by many in Bergen
Belsen were issued originally in 1942 and are due to expire
soon.
With respect
56
-2- Asuncion, A-238
With respect to the general question of representation
by Spain of Paraguayan interests in German territory, it is
claimed by Sternbuch of Union of Orthodox Rabbie that a
telephone conversation with the Spanish Embassy in Berlin
in mid-July revealed that even at that late date that
Embassy had no knowledge of removal from Vittel of any persons
holding documents issued by Paraguay. While we have not con-
firmed this fact, it seems fairly clear that the Spanish have
never protected with much despatch or energy the holders of
Paraguayan Decuments who are in German territory. UNQUOTE
Please take appropriate action.
3. Appreciation is expressed at information contained
in your 2302 of July 21. This information is being forwarded
to Amembasey Madrid for supporting action.
HULL
glw
WRB:MMV:KG
9/1/44
57
EMBASSY OF THE
UNITED STATES OF AMERICA
Lima, September 1, 1944.
RESTRICTED
No. 1292
Subject: Informally expressed attitude of Foreign Office
efficial concerning possibility of reception by
Peru of children of Hungarian nationality.
The Honorable
The Secretary of State,
Washington, D. C.
Sir:
I have the honer to refer to the Department's circular tele-
gram of August 12, 8 p.m., directing me to ascertain if, in addi-
tion to & limited number of refuges children of French and Belgian
nationality which the Peruvian Government had expressed willingness
to accept under certain conditions, the group night be expanded to
include refuges children of Hungarian nationality.
In the above regard I an able to inform the Department that,
while a written communication on the subject was promptly addressed
to the Foreign Office (August 14, 1944) to which no reply has as
yet been received, occasion was taken by the Counseler of the Em-
bassy, in the course of a call - the Ministry's Secretary General
- another matter, to make inquiry concerning any decision in
regard to the Hungarian refuges children which the Peruvian Govern-
ment might have taken during the past fertnight.
Dr. Correa stated in reply that he did not believe his Govern-
rent would find. itself in a pesition to extend acceptance of refugee
children to include those of Hungarian nationality. Not only were
facilities for the accommodation of such children distinctly limited
in Peru, but it wes felt that it would be wise to limit acceptance
of refuges children tepersens whose nationality indicated they
might be readily assimilable into the Peruvian population.
Should a more formal expression of view be communicated to the
Embassy, I shall not fail to inform the Department thereof.
Respectfully yours,
For the Ambassader:
711
JP:bw
Jeffersen Patterson
Counseler of Embassy
58
GEM-23
Lisbon
Distribution of
true reading only by
Dated September 1, 1944
spocial arrangement.
(SECRET 17)
Rec'd 6:35 p.m.
Secretary of State,
Tashington.
2702, Soptomber 1, 4 p.m.
WRB 172. REURTEL 2391.
Weissman World Jewish Congress representativo
willing pay for furniture if so instructed by his
New York office. Please consult World Jowish Congress,
New York and telegraph authorization.
NORWEB
BB
Miss Chauncey (for the Suc'y), Abrahamson, Akzin, Cohn, DuBois,
Drury, Friedman, Gaston, Hodel, Laughlin, Lesser, Mannon, Marks,
McCormack, Pohle, Sargoy, Standish, Heinstein, Cable Control Files
Unclassified
Distribution of
true reading only by
special arrangement.
(SECRET W)
SECRET "W"
War Refugee Board
AMEMBASSY,
September 1, 1944
MADRID.
7 p.m.
2427
The following 1a from War Refugee Board.
1. Reference is made to your 2753 of August 9. Informa-
tion therein contained is being communicated to Amembassy,
Asuncion.
2. The following is the substance of 8 message received
from Amlegation Bern:
QUOTE With respect to the general question of representa-
tion by Spain of Paragusyan interests in German territory, it
is claimed by Sternbuch of Union of Orthodox Rabbis that a
telephone conversation with the Spanish Embassy in Berlin in
mid-July revealed that even at that late date that Embassy had
no knowledge of removal from Vittel of any persons holding
documents issued by Paraguay. While we have not confirmed this
fact, it seems fairly clear that the Spanish have never pro-
tected with much despatch or energy the holders of Paraguayan
documents who are in German territory. UNQUOTE
Please make appropriate representations with a view to
obtain more satisfactory attitude of Spanish officials in
Madrid and in Berlin in discharge of this humanitarian duty
voluntarily undertaken by Spain.
3. As a specific example, Amlegation Bern cabled that
Swiss Legation Berlin referred to Spenish Legation Berlin the
case of Josef Rappaport or Jose Frappaport, a Paraguayan,
born on July 28, 1910 in Sanok, Poland, and moved by German
authorities from internment camp Clermont. Please ascertain
what Spanish officials in Madrid and Berlin are doing in his
case and in that of other Jewish holders of Paraguayan docu-
ments.
4. Amembassy Asuncion reports that Paraguayan Government
has requested Spanish Government to take appropriate steps in
its name with a view to permitting commissioners of Intercross
to visit concentration camps in German-controlled territory
in which persons claiming Paraguayan nationality are held and
to which Intercross had in the past no or little access.
Please take appropriate action in support of Paraguayan request.
HULL (GLW)
ARB:MMV:KG
WE
RPA
SWP
9/1/44
60
CORRECTED
PARAPHRASE CBP TELEGRAM RECEIVED
FROM:
American Legation, Bern
TO:
Secretary of State, Washington
DATED:
September 1, 19/4
NUMBER:
5734
SECRET
The following message from McClelland for IRB is transmitted.
From Comito Refugees Intellectuals, for Meissmann of Self Help,
the following:
Honey and packages were received by Harrold and Renate Peis,
Walter Huglasnder, and Otto Geldschmid Thiodei, in Holland. In Germany,
at camp of Bargon Belson, Karll Andauer; at the Resienstadt, Kattkoff;
for "Rassenschande" Harkein imprisoned Berlin. On August 23, 12732
Swime france were received; it 18 assumed that this money is the stated
$3,000 additional. 22.30. For the above I thank you sincerely.
HARRISON
DCR:LCW:CR 9/4/44
61
ORIGINAL TEXT OF TELEGRAM SENT
FROM:
Secretary of State, Washington
TO:
American Legation Bern
DATED: September 1, 1944
NUMBER: 3022
CONFIDENTIAL
Reference is made to Department's telegram No. 2367 of
July 10, 1944, relative to license No. W-2149 issued to Unitarian
Service committee, Boston. Please advise Mr. Noel Field that
Treasury Department has again smended section 1 of license No.
W-2149 go as to permit him to arrange for operations contemplated
therein in enemy and enemy-occupied territory. In view of such
amendment, such operations are no longer limited solely to
France. Also, section 2 has been amended to read as follows:
"The total amount of funds paid out or set up in blocked
accounts or otherwise obligated under the terms of this
license shall not exceed the amount of dollars (or the for-
eign currency equivalent thereof) authorized by specific
Treasury licenses to be used under this license."
The Unitarian Service Committee is remitting under a specific
license the Swise franc equivalent of $30,000 in connection with
the amendment to License No. W-2149. These operations are ap-
proved by the Department, the War Refugee Board and Treasury.
HULL
Regraded Unclassified
62
CP-870
Bern
This telegram sust be
paraphrased before being
Dated
September 1. 1944
communicated to shyone
other than & Government
Rec'd 10:30 a.m.
Agency. (RESTRICTED)
Secretary of State
Washington
5718. September 1. 2 p.m.
FOR WRB FROM MCCLELLAND
For FEA from American Friends Service Committee
Geneva: "Following purchases through Joint Relief Commission
IRC planned: 10,000 kilograms macaroni from Hungary, 3000
kilograms sugar from Slovakia for combining with Swies
fruit to can 6000 kilograms Jam in Switzerland. 250 cases
(48 boxes of 340 grams each) unsweetened condensed milk
and 3200 250 gram boxes cheese, last two items of Swies
origin. Totoal value approximately 60,000 Swiss francs".
HARRISON
WSB
63
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
AMEEGATION, Bern
TO:
Secretary of State, Washington
DATED:
September 1, 1944
NUMBER;
5721
SECRET
With reference to my cable 5248, dated August 12, 1944,
Mr. Pilet Golaz informed me, when I conveyed the expression of
appreciation as instructed in your cable 2908, dated August 23, 1944,
that he had requested the Government of Hungary to intercede
with the Government of Germany for permission for individuals in
question to come to this country. Although he had immediately done
so, he has not been able to secure consent from the Germans up to the
present time.
He informed me that permission for German children to
proceed to Switzerlend had been refused by the Germans. Mr. Pilet
is continuing his efforts for Jewish children and children of other
races.
HARRISON
DCR :MED
9/2/44
64
DRAFT OF CABLE TO BERN
Reference is made to Department's telegram No. 2367 Of July 10,
1944, relative to license No. W-2149 issued to Unitarian Service Com-
mittee, Boston. Please advise Mr. Noel Field that Treasury Department
has again amended section 1 of license No. W-2149 so as to permit him
to arrange for operations contemplated therein in enemy and enemy-
occupied territory. In view of such amendment, such operations are ne
lenger limited solely to France. Also, section 2 has been amended to
read as follows:
"The total amount of funds paid out or set up in blocked
accounts or otherwise obligated under the terms of this
license shall not exceed the amount of dollars (or the for-
eign currency equivalent thereof) authorized by specific
Treasury licenses to be used under this license".
The Unitarian Service Committee is remitting under a specific
license the Swiss franc equivalent of $30,000 in connection with the
amendment to license No. W-2149. These operations are approved by the
Department, the War Refugee Board and Treasmry.
2:05 p.m.
Sept. 1, 1944
RBParke:SChurch:jfh 8/29/44
65
COPY NO
NOT TO BE RETRANSMITTED
SECRET
OPTEL No. 285
Information received up to 10 A.M. 1st September 1944.
1. MILITARY
France U.S. armoured units have advanced further eastwards to
ST. DIZIER and VERDUN, Other U.S. forces have taken
LAON whance general line runs through SOISSONS and ST. JUST. U.K
troops have reached AMIENS and are firmly established there while
Canadians have taken ROUEN and are advancing beyond to northeast and
north.
Southern France U.S. forces have reached MEXIMIBUX N.E. of LYON
and are continuing mopping up in the MONTELIMAR
area. French forces have reached BOURG STANDEOS on Western bank of
RHONE,
Italy Heavy fighting is taking place between PESARO and URBINO
northwest of road. Canadians have in one place broken into
the Gothic line and a fierce tank battle is in progress, Germans
being forced back to their Gothic line positions in areas North of
SANSEPOLCRO and N.E. of FLORENCE.
Russia Continued heavy fighting N.E. of WARSAW where the
Russians report slight advance. They have entered
BUCHAREST and made a slight advance inland from CONSTANZA.
2. AIR OPERATIONS
Western Front 31st. 233 aircraft, two missing dropped 910 tons
on coastal batteries on an island off ST. MALO
with excellent results. 444 others, five missing, dropped 2,394
tons on eight flying bomb supply depots in the PAS DE CALAIS; results
reported fair.
31st/lst. Seventy-two Mosquitoes sent out, two missing,
DUSSELDORF 42, COLOGNE 6, other taks 24,
Yugoslavia 30th. Heavy bombers from MEDITERRANEAN bombed a
railway bridge at CUPRIJA, 80 miles S.S.E. BELGRADE
with excellent results.
Rumania 31st. Forty five Mustangs, four missing attacked an
airfield andclaim to have destroyed 55 enemy aircraft
on the ground and nine in the air.
German Activity During 24 hours ending 6 A.M. 1st, 52 flying
bombs plotted.
Regraded Unclassified
BE
September 2, 1944
Stimson's reason for calling me this morning was that he
was worried about the exchange rate. The President wants us to
give each soldier dollars and let him make his own rate, which
is contrary to our plan. I told Stimson that if we went to
the President with an over-all plan I was 75% sure that we
could get him to agree to our original program to use invasion
currency. I told him that I was for using invasion currency.
I also spoke to Hopkins this morning, who said he went to
see Hull after Cabinet last Friday. Hull did not understand
what the President was driving at but when he, Hopkins,
explained it to Hull, Hull was entirely satisfied and appointed
Matthews to represent him. Hopkins said he himself was in
on it unofficially, and my reply was "Unofficially officially,"
and he laughèd. He said he considers this the most important
thing. He said he did not want to ask for an appointment
with Hull until we had gotten together on Monday.
Regraded Unclassified
67
9/2/44
State Dept. document prepared by Matthews
Be
Riddelberger, and submitted at a meeting
held with Harry Hopkins on September 2, 1944,
at which were present the following:
Harry Hopkins, Mr. White, Mr. McCloy,
General Hilldring, Mr. Riddelberger and
Mr. Matthews.
Colite department
68
September 1, 1944
TOP SECRET
AMERICAN POLICY FOR TREATMENT OF GERMANY
AFTER SURRENDER
It is essential that a number of important decisions
be made respecting American policy for the treatment of
Germany after surrender, particularly as certain of these
questions will have to be negotiated with the British and
the Russians. There is accordingly set forth below a
summary of the decisions that have been made to date and
a statement of important problems on which final American
policy has not been formulated.
1. Status of Negotiations
in the EAC
(a) Surrender Terms. The instrument of unconditional
surrender of Germany has been recommended by the European
Advisory Commission and has been formally approved by the
American Government. It is anticipated that British and
Russian approval will be forthcoming. These surrender terms
are the outcome of prolonged negotiations in which consid-
erable differences of opinion had to be ironed out. The
surrender instrument is essentially a military document in
which the German Government and the German High Command
announces Germany's unconditional surrender. The first
eleven articles relate primarily to militery dispositions
and are supplemented by a general clause in which it is
stated that the U.S., the U.K., and the U.S.S.R. will
exercise supreme authority with respect to Germany and will
present additional political, administrative, economic,
financial other. requirements. which the German Govern-
ment, High Command and people will carry out unconditionally.
(b) Zones of Occupation. Tentative, but not formal,
agreement has been reached in the EAC respecting the demar-
cation of three zones of occupation which will be confided
to Russian, British and American troops. The Soviet forces
will occupy the eastern zone, but whether British or American
troops will occupy the northwestern and southern zones is
not as yet decided. The protocol on occupation has there-
fore not been formally recommended by the EAC as the Russians
stated they did not desire to submit a document to Moseow
containing blank spaces. It has been agreed that Austria
will be jointly occupied by the three powers with American
military
69
+
military participation limited to a token force. The area
of Greater Berlin will likewise be subject to tripartite
occupation.
(e) Control Machinery and Military Government. Both
the American and British Governments submitted to the EAC
in March 1944 proposals for control machinery and military
government in Germany. The Ruesian delegates refused to
discuss these proposals in EAC until the surrender terms
had been agreed upon and subsequently refused to discuss
them until the occupation protocols had been finally recom-
mended. After some pressure had been exerted in Moscow,
the Russians have now agreed to discuss control machinery
and have submitted 8 proposal to the EAC. This proposal
has not as yet been received in Washington.
The American proposal for the administration of
Germany contemplates a Supreme Authority consisting of the
three Commanding Generals of the U.S., the U.K., and the
U.S.S.R., which would coordinate Allied activity throughout
Germany and supervise such centralized governmental
functions and economic activities which the three powers
deem essential. A Control Council, composed of representa-
tives in equal numbers from each of the three Allied
Governments, will be established by the Supreme Allied
Authority and will coordinate the administration of mill-
tary government throughout Germany, including detailed
planning for the execution of directives received from the
three governments. The British proposal is not dissimilar
in its broad outline from the American plan.
2. Important Problems for which
High Policy Decisions are
Urgently Required
The fundamental question to be decided is what kind
of a Germany do ve want and what policies should be put
into effect during occupation to attain our objectives,
The most important of these problems are set forth below
with an explanation of the State Department's attitude to
them:
(a) Partition. It must be explained at the outset
that "partition" as used here does not refer to frontier
adjustments or territorial amputations in the outer borders
of
70
of the Reich. For example, the annexation of East Prussia
and Danzig by Poland is not excluded in the recommendations
set forth below on partition. By partition is meant the
division of what is left of Germany into two, three or
more independent states. While it can be argued that parti-
tion is not necessarily an urgent question, it is undoubtedly
true that if partition were decided upon, we might desire
to determine the zones of occupation to conform to & sub-
sequent partition.
The State Department 1s, in general, opposed to the
foreible partition of Germany. An imposed dismemberment
of Germany into two or more separate states has been ad-
vocated as a practicable means of forestalling any renewal
of German aggression. Such a measure, however drastic in
itself, would not obviate the necessity of imposing and
enforcing far-reaching security controls upon Germany for
an indeterminate future, whether Germany is left united
or is divided. Moreover, because of the high degree of
economic, political and cultural integration in Germany,
it must be anticipated that partition would not only have
to be imposed but also maintained by force. The victor
powers, by imposing partition would take on themselves a
burdensome and neverending task of preventing surreptitious
collaboration between the partite states and of restraining
the nationalistic determination to reunite, which would,
in all probability, be the response of the German people.
Finally, the disruption of German economic unity would
carry with it grave dangers for the economic stability of
Europe as a whole, and not merely to Germany. We should
not, however, oppose any spontaneous German movements for
partition.
In place of partition, it is recommended that every
effort be made to promote a federal system of government
in Germany and a division of Prussia into a number of
medium-sized states. Frussia in 1938 included 62% of the
area and two-thirds of the population of Germany and it
may well be that in reaction to Nazi over-centralization
many Germans would want to return to a considerable degree
of federal decentralization, including the breakup of
Prussia.
(b) Dissolution of German Armed Forces. There is
general agreement that the German armed forces and staff
organizations, Nazi military, para-military and police
organizations,
71
organizations, reserve corps, military academies, admin-
istrative agencies performing military functions shall
be dissolved and prohibited. Their members shall be
demobilized and disbanded as soon as practicable. All
German arms, ammunition and implements of var shall be
destroyed or scrapped, except as otherwise agreed, and
the further manufacture in Germany of arms, ammunition
and implements of war shall be prohibited.
(c) Liquidation of the Nazi Party. There is general
agreement that the Nazi Party and all organizations 28000-
inted with it shall be dissolved. The activities of persons
who have been active Nazis shall be restricted. In ef-
fecting the abolition of the Nazi Party, it is contemplated
that it shall be completely destroyed in all of its mani-
festations, including the SA, the ss, Hitler Youth, the
Motor Corps, the Women's League, the Student's League, the
University Teachers and all affiliated organizations such
as the Labor Front, the Association for War Victims, the
Guardians of the Law, the Public Welfare Organization and
special party schools. Party members shall be excluded
from political or civil activity and subjected to a number
of restrictions. Any laws and decrees establishing the
political structure of National Socialism shall be abro-
gated. Political activity shall be prohibited, except as
authorized by the Supreme Allied Authority. All laws
discriminating against persons on grounds of race, color,
creed or political opinion shall be annulled.
(a) War Criminals. There is general agreement that
Adolf Hitler, his chief Nazi associates, officials who
have held ministerial and other important posts, persons
suspected of having committed war crimes, and other persons
designated by the U.S., the U.K. or the U.S.S.R. shall be
arrested and held for subsequent disposition".
(e) Control of Communications. There is general
agreement that all information services (press, radio,
cinema, etc.) and all channels of communication shall be
administered under policies formulated by the Supreme Allied
Authority.
(f) Economic Measures. American economic policy with
respect to Germany envisages the reservation of far-reaching
rights of control over German economy after surrender.
There is no disagreement on this point. However, it is
apparent that considerable differences of opinion have
developed
Regraded Unclassified
72
-5-
developed as to the purpose toward which this control
should be directed. The Department of State has drafted
and approved a statement on the general objectives of
American economic policy and has received the approval
to this document by the Executive Committee on Economic
Foreign Policy. Without attempting to summarize here
all of the reasoning contained in this document, there
is quoted below the four major objectives to be sought:
1. The performance by Germany of acts of resti-
tution and reparation required by the United
Nations.
2. The control of Germany's economic war potential,
by the conversion of German economic capacity
directed to var purposes, and by rendering
vulnerable to outside control the reconversion
of Germany into a war economy able to launch
and sustain a war of aggression.
3. The elimination of German economic domination
in Europe, which Germany achieved by the
systematic exploitation of the so-called "New
Order" in Europe and by a series of other
practices.
4. Effecting a fundamental change in the organi-
zation and conduct of German economic life
to the end that German economy can be integrated
into an inter-dependent world economy.
These statements, together with the justification
thereof, have now baen presented to the Deoretaries of Way
and Navy for their comment.
In the meantime, the State Department has received,
in the course of drafting instruction to its representative
on the RAC, various proposals from the military authorities
which apparently contemplate the dismentlement or destrue-
tion of all German industry capable of producing war
material. Its objection is that such proposals contradiet
the general objectives quoted above, particularly para-
graph 2. They would likewise presumably remove the pos-
sibility of extracting reparation goods from Germany.
T
The problem of German reparations is obviously closely
linked to two others: (a) the level of subsistence which
will be determined for the German people, and (b) the
extent
Regraded Unclassified
73
-6-
extent to which German industry may be dismantled or
destroyed either for the purpose of long-term security or
for short-term reparation payment.
Therefore it seems essential that this Government
should determine its basic policy and should decide at an
early date what kind of economic structure it proposes
to leave to Germany. If a far-reaching program of
industrial destruction or dismantlement is agreed upon,
it is apparent that, if put into effect, it will bring
about extensive and important changes in European economy
as a whole. Germany is a deficit country in foodstuffs
and it is doubtful if a plan of making Garmany predomi-
nantly agricultural can be put into effect without the
liquidation or emigration of X-millions of Germans. Ger-
many is furthermore an important producer of certain raw
materials, namely coal and bauxite, for Europe as a whole,
not to speak of the vast amount of industrial goods which
Germany normally exports. If we advocate a "wreeking
program" as the best means of assuring our security, we may
face considerable European opposition on account of its
effect on European economy, and if we desire continuing
reparations out of Germany, we shall eliminate any such
program by a policy of destruction of German industry.
CE:JwRiddleberger:AMR
74
AT
September 2, 1944
MEMORANDUM FOR THE SECRETARY
For your information
On Tuesday, September August 29, Mr. Bernstein and I had lunch
with Arthur Hays Sulzberger. Also present were Messrs. Merz
(editor), James (managing editor), Hazlitt (editorial writer-
economist) and Russel Porter.
In my opinion our discussions had the following results:
(1) We did not succeed in changing the Times editorial
policy on Bretton woods agreements.
(2) We did succeed in shaking their confidence in the
soundness of their views, and we probably succeeded in bringing
James around to our point of view.
(3) The Times will probably avoid taking an editorial
position on Bretton Woods until its position has been thoroughly
recanvassed.
(4) All of those present are anxious to have further
discussions with us.
Mr. Sulzberger was most cordial and appeared most sincere
in his desire to have the position of Times fully considered.
He urged us to continue our discussions with his starf (who
privately urged the same) and said that he would be glad to
discuss the matter further at any point we thought it might be
helpful.
Later in the week Russel Porter called at my office and again
urged that we continue the discussions and ventured the view that
"Hazlitt was living in an ivory tower". I think ne was prompted
to come by either James or Sulzberger.
We, of course, plan to continue our discussions.
ADL
Regraded Unclassified
75
Regraded Unclassified
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
American Babassy, Lenden
TO:
Secretary of State, Washington
DATED:
September 2, 1944
NUMBER:
7191
SECRET
THE following 18 for WRB and Department
The Babasay has been requested by Poles to furnish
additional data in connection with license W-2258 which, in line with
Department's cable of August 10, No. 6324, was forwarded to Stancsyk
on August 11.
To are informed by Peles that Adamosyk (when in
Washington a short time age) was advised that $125,000 were to be
transferred to Bank of England by United States Treasury on August 27
for subsequent payment to Polish Government here in sterling, and was
given authority to use dellare currency in Poland in following action
contemplated by license, Peles have requested information as to when
they may look for transfer to be made, as neither they nor Embassy
have received notice that this transfer has been effected.
Clarification and immediate directions (if any steps
on our part are necessary in connection with release of these funds
to Polish Government from Bank of England) would be appreciated by
Embassy. Use of dollar currency is an acceptable way of implementing
third method specified in license W-2258, Habansy assumes.
WINANT
DCR:GPW
9/4/44
78
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
American Delegate, Rome
TO:
Secretary of State, Washington
DATED:
September 2, 1944
NUMBER: 282
CONFIDENTIAL
Reference is made herewith to your cable of August 30,
no. 114, to American Delegate.
Taylor's no. 295.
Today we have renewed our request of the Pope to press the
appeal already made to him to the German authorities to release
all those refugees north of the battle line in Italy and assur-
ance has been given that they would find refuge in liberated
Italy or elsewhere. His Holiness milde the approach to the Ger-
man representatives at the time of our previous advices. We
have received no answere. The renewal of the request will now
be undertaken promptly.
KIRK
DCR:FAG
9/5/44
77
ORIGINAL TEXT OF TELEGRAM SENT
FROM:
Secretary of State, Washington
TO:
American Legation, Tangier
DATED:
September 2, 1944
NUMBER:
125
SECRET
Please inform Renee Reichman, 25 Rue Moliere, Tangier,
that Vaad Hahataala Emergency Committee has been licensed by
Treasury Department to pay Jacob S. Cohen, New York City, $5,000
for account of Aaron S. Cohen, Calle Tetuan 17, Tangier, against
which payment Aaron S. Cohen is to pay the local currency equiva-
lent to Renee Reichman for purchase of food packages for Jewish
refugees in camps in Czechoslovakia. In this connection,
reference is made to the Department's telegram No. 38 of March 30,
1944, concerning an identical transaction.
HULL
Regraded Unclassified
78
DRAFT OF CABLE TO AMERICAN LEGATION. TANGIER
Please inform Rence Reichman, 25 Rue Moliere, Tangier, that
Vaad Hahatzala Emergency Committee has been licensed by Treasury De-
partment to pay Jacob S. Cohen, New York City, $5,000 for account of
Aaron S. Cohen, Calle Tetuan 17, Tangier, against which payment Aaron
S. Cohen is to pay the local currency equivalent to Renee Reichman
for purchase of food packages for Jewish refugees in camps in Czecholovakia.
In this connection, reference is made to the Department's telegram
no. 38 of March 30, 1944, concerning an identical transaction.
9:30 a.m.
September 2, 1944
RBParke:jfh 9-1-44
79
EOC - 238
Lisbon
This telegram must be
paraphrased before being
Dated September 2, 1944
communicated to anyone
other than a Government
Rec'd 11 a.m.
Agency. (RESTRICTED)
Secretary of State,
Washington.
2707, September 2, noon.
WRB 173. JDC 61. FOR LEAVITT FROM PILPEL
Gurevitach, 08E, Geneva cables:
"Have met our French employees who came to Geneva
to confer. Work in France has continued 80 far on same
lines but not undertaking steps to reopen our former
institutions according elaborated plan in liberated
parts of country, particularly homes for abandoned
children. Address our Paris representative, Doctor
Minkovski, 130 Boulevard Mont Parnasse."
NORWEB
Regraded Unclassified
60
CABLE TO MINISTER HARRISON FOR OLSEN. STOCKHOLM, SWEDEN
1. The President's War Relief Control Board requests WRB's advice on
whether it would be appropriate for Latvian Relief, Inc., to seek to provide
$10,000 for recent arrivals from Latvia to Sweden in which case Latvian Re-
lief, Inc., might be certified as participating agency in the National War
Fund. The original request for funds came from Svensk Lettiska Hjaelpkommitten,
Kungagatan 70, to the Latvian Minister in Washington who transmitted #:to
Latvian Relief. Inc. It is understood that Hjaelpkemm8tten has also cabled
for assistance to former Latvian Minister in London.
In the light of your A-721 of August 14, 3275 of August 24, your ad-
vice is requested.
Particular attention should be given to the question whether the persons
concerned come within the category of persons intended to be aided under the
Executive Order establishing the Board.
2. WRB understands that Adler Rudel proceeds shortly from England to
Sweden on behalf of Jewish Agency for Palestine in connection with rescue
projects for Hungarian Jews. You may extend to him all appropriate assistance.
3. Reference your 3199 of August 19, your 754 to WRB. In vie@ of
military situation and personal considerations indicated by you to Pehle
under date of August 10. it is the considered judgment here that at appropriate
time you should dispose of vessels rather than continue them in present status.
Disposition togroups who would undertake sea-borne evacuation from Norway
would be entirely acceptable here. The Board would appreciate more detailed
information concerning Baltic evacuees and particularly a break-down into the
various categories in which such refugees fall, such as Allied sympathizers
and Jews. We assume that you are continuing totake every precaution to see
to it that your Baltic operations do not (repeat not) benefit persons other
than victime of enemy persecution.
THIS VS WRB STOCKHOLM CABLE NO. 80
10:15 a.m.
September 2, 1944
BAkzin:
LSLesser:tmh 8-31-44
A1
CABLE TO MINISTER HARRISON, BERN, FOR MCCLELLAND FROM WAR REFUGEE BOARD.
Please deliver the following message to Rene Bertholet, Waserstrasse 14,
Zurich, from the International Rescue and Relief Committee:
QUOTE RECEIVED YOUR MESSAGE OF AUGUST 23 EXPECT YOU DO EVERYTHING
FOR DANNY STOP YOUR PLAN OPENING OFFICE IN FRANCE SHORTLY HAS
OUR BACKING STOP WHAT WILL BE LOCATION QUERY WOULD LIKE SOME
FORMER MEMBERS OF STAFF ESPECIALLY PAUL IF AVAILABLE STOP WHOM
ELSE DO YOU SUGGEST QUERY ARE YOU IN CONTACT WITH ENTR'AIDE QUERY
WE PLANNING SEND AMERICAN COWORKERS OF FRENCH DESCENT AS SOON AS
POSSIBLE STOP KEEP US INFORMED DEVELOPMENT YOUR PROJECT STOP
DO YOU HAVE LAST KNOWN ADDRESSES OF ALL PROTEGES FRANCE OR DO YOU
NEED LISTS QUERY TRY TO LOCATE AS MANY AS POSSIBLE AND REPORT
REGULARLY WHEREABOUTS AND NEEDS STOP JEWISH LABOR COMMITTEE ASKS
YOU CONTACT THEIR FRIENDS FRANCE AND SEND THEM ANY JEWISH LABOR
COMMITTEE MONEY AVAILABLE ALSO CABLE FURTHER NEEDS RELIEF THEIR
CASES FRANCE STOP SEND NAMES LAST KNOWN ADDRESSES OF ALL PERSONS
KNOWN TO HE IN ENEMY OR ENEMY OCCUPIED TERRITORY AND WHO ARE ONE
HUSBANDS WIVES PARENTS OR MINOR UNMARRIED CHILDREN OF AMERICAN
CITIZENS TWO WIVES AND MINOR CHILDREN OF ALIENS PERMANENTLY
ADMITTED TO THE UNITED STATES STOP ALSO SEND AMERICAN ADDRESSES
OF SUCH RELATIVES STOP EFFORTS UNDER WAY FOR RESCUE OF SUCH
PERSONS UNQUOTE
THIS IS WRB CABLE TO BERN NO. 157
4115 p.m
September 2, 1944
RDrury 9/1/44
92
PARAPHRASE OF TELEGRAM SENT
FROM:
State Department, Washington
TO:
American Legation, Bern
DATED:
September 2, 1944
NUMBER:
3026
SECRET
The following message with reference to Honduran interests
in Hungary is submitted.
There was received from the Embassy at Tegucigalpa, in its
measage dated August 14, 1944, Number A-268, a translation of Note
Number 253, dated August 10, 1944, from the Foreign Affairs Minister
of Honduras, as follows:
I ask that the Government of the Swiss Confederation,
if it is pleased to do so, take charge of interests of
Honduras within Hungary in the same manner in which it
has taken charge of interests in countries occupied by
Germany and within Germany itself, and I make this request
very attentively and through the worthy medium of Your
Excellency.
For the manner in which the Government of Switzerland
is representing the interests of Honduras within the
countries above referredto, I again take this opportunity
to thank the Government of Switzerland.
Your Excellency is assured of a renewel of my highest
and most distinguished regard.
It is requested that you inform the Foreign Office that
the Government of the United States will be glad to act as channel
of communications; also it is requested that you furnish the
Foreign Office with the text of the preceding message.
In connection with the above, please refer to your message
dated July 14, 1944, Number 4518.
HULL
SWP:ABC:HH
PARAPHRASED:
DCR:LCW:CR
9-5-44
Regraded Unclassified
83
CORRECTED COPY
ORIGINAL THAT OF TELEGRAM SENT
FROM:
Secretary of State, Washington
TO:
American Legation. Bera
DATED:
September 2. 1944
NUMBER: 3027
SECRET
FOR MCCLELLAND.
The fellowing message dated August 22 has been
received from Anembassy, Caracas:
QUOTE I have just been informed by the Foreign
Office that the Vanequelan Government has requested the
Swies Federal Political Department to extend the protection
of Venezuelan interests to Hungarism territory and other
countries of Central and Eastern Europe, for the purpose of
siding the bearers of Veneguelan passports in these regiens.
UNQUOTE THIS IS WRS CABLE TO BERN NO. 156.
HULL
Foregeing nessage transmitted to you en September 5 as
No. 3227.
Regraded Unclassified
84
ORIGINAL TEXT OF TELEGRAM SENT
mang
FROM:
Secretary of State, Washington
TO:
American Legation, Bern
DATED:
September 2, 1944
NUMBER:
3030
SECRET
From War Refugee Board to Harrison.
Please deliver the following message to Bishop Marius Besson,
Fribourg, from Monignor O'Boyle, Executive Director of the War
Relief Services - National Catholic Welfare Conference:
"KINDLY FURNISH US MORE DETAIL ON NEEDS POLISH REFUGEES
HUNGARY AND FRANCE ESPECIALLY FUNDS REQUIRED PER MONTH. ALSO
IDENTIFY JANUSKOWSKI IN RELATION TO REFUGEES AND HIS COOPERA*
TION WITH SWISS CATHOLIC MISSION. RESPECTS."
This is WRB cable to Bern No. 155.
HULL
Regraded Unclassified
P5
ORIGINAL TEXT OF TELEGRAM SENT
FROM:
Secretary of State, Washington
TO:
American Legation, Bern
DATED:
September 2, 1944
NUMBER:
3040
SECRET
FROM THE DEPARTMENT, THE WAR REFUGEE BOARD AND THE FOREISN
ECONOMIC ADMINISTRATION TO MINISTER HARRISON AND MCCLELLAND, BERN.
Please refer to your No. 4874 of July 29 concerning Sternbuch
scheme. As clearly indicated in Department's No. 2656 of August 2
(WRB No. 106) and for the reasons indicated therein we concur in
your view that it is not (repeat not) feasible to undertake the
transaction in question at this time.
However, in view of the comments contained in paragraph four
of your cable it is feared that you may be under a misapprehension
as to the policy of the Government of the United States concern-
ing the licensing of financial operations in and communications
with enemy territory for refugee rescue a nd relief purposes. It
is to be emphasized that the decision not to undertake the Stern-
buch proposal does not (repeat not) in any way change or derogate
from the licensing policy which has been in effect since prior to
the establishment of the War Refugee Board in January of this year.
For your information and guidance the following is a statement of
this Government's policy regarding licenses for rescue and relief
purposes which was communicated several months ago to the British
Government and which has been explained in person and detail to
Mr. Dingle Foot of the MEW.
QUOTE The United States Government, with the approval
of the Department of State, the Treasury Department, and the
War Refugee Board, has issued a number of licenses to private
organizations authorizing such organizations to finance
operations in and communicate with enemy territory in an
effort to save the lives of oppressed peoples. The British
Government has already been advised of the basic previsions
of these licenses. As the British Government knows, such
licenses permit the acquisition of the necessary local funds,
goods or services from persons in enemy or enemy occupied
territory against payment in free exchange or free currency
notes only if it is not feasible to obtain the local funds
by the other methods which are prescribed.
The United States Government has concluded, in issuing
these licenses, that any danger involved in permitting the
enemy to acquire relatively insubstantial quantities of
foreign
Regraded Unclassified
06
-2- #3040
foreign exchange is far outwreighed by the saving of lives.
Experience has shown that the use of money is in many cases
the only means by which refugees can be assisted to escape or
otherwise save their lives, and it is felt that every effort
should be made to see that adequate funds are available for
this purpose.
The United States Government is convinced of the need
for operations of this character, in addition to those to be
undertaken by the Intergovernmental Committee in extension
of credit operations hitherto conducted by private organizations.
The United States Government, motivated by humanitarian
considerations, intends to continue to follow the policy
which it has been pursuing now for several months in con-
nection with the issuance of licenses to private organiza-
tions. It is most anxious that its efforts in this regard
should not be unilateral, and that the two governments will
be able to follow a common line so that there may be full
cooperation in this matter as well as in the case of operations
through the Intergovernmental Committee.
Accordingly, the United States Government hopes that the
Bribish Government will decide to adopt a similar policy in
connection with authorizing and encouraging the sending of
funds by private organizations to neutral countries for the
relief and rescue of victims of enemy oppression. In this
way, the two governments will be able most effectively to
carry out the policy heretofore agreed upon to take all pos-
sible measures, consistent with the successful prosecution
of the war, for the speedy rescue and relief of the oppressed
minorities of Europe. UNQUOTE
It is important that in centinuing and intensifying our
humanitarian efforts to rescue the victims of enemy oppression,
you be guided by the policy indicated. In this connection, your
attention is further directed to the Department's cable of
March 15, 1944, No. 856.
We know
97
-3- #3040
We know adequate care is being taken not to make available
free exchange or free currency except where it is not feasible
to use the other prescribed methods of precuring local funds and,
from reports we have received, we are not disturbed about the
amount of free exchange and free currency being obtained. Further-
more, these activities are not regarded by us as conflicting with
the various negotiations now being conducted by this government
with Swiss banks and Swiss Government to deny to the enemy Swiss
francs to the greatest possible extent and especially to prevent
a last minute flight of capital into Switzerland, trying to
avoid United Nations' economic and military control.
THIS IS WRB CABLE TO BERN NO. 109.
HULL
88
ORIGINAL TEXT OF TELEGRAM SENT
FROM:
Secretary of State, Washington
TO:
American Legation, Bern
DATED:
September 2, 1944
NUMBER: 3227
SECRET
FOR MCCLELLAND.
The following message dated August 22 has been received
from Amembassy, Caracas:
QUOTE I have just been informed by the Foreign Office
that the Venezuelan Government has requested the Swiss
Federal Political Department to extend the protection of
Venezuelan interests to Hungarian territory and other countries
of Central and Eastern Europe, for the purpose of aiding
the bearers of Venezuelan passports in those regions. UNQUOTE
THIS IS WRB CABLE TO BERN NO. 156.
HULL
Regraded Unclassified
99
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
American Legation, Bern
TO:
Secretary of State, Washington
DATED:
September 2, 1944
NUMBER:
5754
CONFIDENTIAL
McClelland sends the following for the War Refugee Board:
for Kubowitski of World Jewish Congress for Riegner and Jarblum.
Replying to your cable of August 22, thanks to funds placed
at our disposal by the Congress and Jarblums by Palestine and
Joint, following has been achieved with respect to France; since
October 1943, 1350 children and young people up to 20 years of
age both with and without parents or relatives have reached Swits-
erland; 70 children have reached Spain while some 700 have been
hidden in France. Further some 700 young people have been evacuated
to Spain as well as 200 parents accompanying their children.
Our people in France have aided to hide four to five thousand
adults. Such rescue work is necessarily linked with illegal actw
ivity of all sorts especially the procuration of approximately
5000 false identity and ration and cards, works permits, baptis-
mal and birth certificates monthly. Considerable expenditure
has been necessitated by appropriate equipment for armed convoys
to the frontiers. At the present moment, it is impossible to
separate the rescue of children from that of adults according
various funds used as action was organized as a whole by our peo-
ple using all available means. Our own participation amounted to
more than 18 million French francs. We are awaiting further do-
tailed information from France which shall be comminicated to
you at the earliest possible moment.
HARRISON
90
KHM-219
Bern
This telegram must be
paraphrased before being
Dated September 2, 1944
communicated to anyone
other than a Government
Rec'd 10:08 a.m.
Agency. (RESTRICTED)
Secretary of State,
Washington.
5761, September 2, 2 p.m.
FOR WRB FROM MCCLELLAND
FOR AMERICAN COMMITTEE FOR CHRISTIAN REFUGEES FROM
PRICE WATERHOUSE, ACCOUNTANTS ZURICH:
"Bave examined recorded receipts and payments
ecumenical committee for refugees Geneva for calendar
year 1943. Examination subject to wealmess in
internal control and non-availability of certain
supporting evidence due to precarious situation receivers.
Full report will be sent as seon as mailing facilities
permit".
HARRISON
BB
91
PARAPHRASE OF TELEGRAM SENT
FROM:
American Legation, Bern
TO:
Secretary of State, Washington
DATED:
September 2, 1944
NUMBER:
5762
CONFIDENTIAL
With reference to numbered paragraph two of Department's
cable of June 24, No. 2149 (WRB 36), Swise note of August 30
reports that only one or two internment camps exist in Bul-
garia to the knowledge of the Swiss Legation in Sofia, No
American citizen was ever there. Chile is the only Latin
American country which Switzerland represents in Bulgaria.
No Chileen is now in Bulgaria.
Nevertheless, the question was submitted in principle
to the Bulgarian Foreign Office by the Swiss Legation.
HARRISON
DCR:VAG:MIM
9/4/44
92
FB1(-292
Born
This telegram must be
paraphrased before boing
Dated September 2, 1944
communicated to anyone
other than a Government
Roc'd 1:55 p.m.
Agency. (RESTRICTED)
Secretary of State,
Washington
5764, September 2, 5 p.m.
FOR WRB FRQ: HCCLELLAND.
Departmont's 2198, Juno 28
ICRC just reported United States visit their
Zagrob delogate Schmidlin mado botwoon July 13 and
July 17. Accompanied by Diroctor General Police
Department and Under Secretary for Work Camps in
Ministry of Interipr to camps of Jasonovac,
Jablanac, Stara Gradiska and Grodjani Salas in
Croatia. Conditions those camps on the whole
tolorable though primitivo. Health of interneos
in fair but working hours in shop and field are
long (7 to 12 and 14 to 19) for persons living on
monotonous and ofton insufficient dict consisting
mainly of corn real and vegetablos, Camp house men
and womon (strictly separated) both Christian and
Jewish under strict "ustachi" guard. There is a
urgent and general noed of clothing and shoes in
all of those camps.
H..RRISON
NPL
Miss Chauncey (for the Soc'y), Abrahamson, Akzin, Cohn, DuBois, Drury,
Friedman, Gaston, Hodol, Laughlin, Lusser, Mannon, Marks, McCormack,
Pohlo, Sargoy, Standish, ,/Dinstoin, Cablo Control Files
93
CABLE TO AMERICAN CONSULATE GENERAL, ISTANBUL, TURKEY, FROM WAR REFUGEE BOARD.
Please deliver the following message to Leon P. Dennemberg from the
International Rescue and Relief Committee:
QUOTE SEND NAMES LAST KNOWN ADDRESSES OF ALL PERSONS KNOWN TO
BE IN enemy OR enemy OCCUPIED TERRITORY AND WHO ARE ONE HUSBANDS
WIVES PARENTS OR MINOR UNMARRIED CHILDREN OF AMERICAN CITIZENS
TWO WIVES AND MINOR CHILDREN OF ALIENS PERMANENTLY ADMITTED
TO THE UNITED STATES STOP ALSO SEND AMERICAN ADDRESSES OF SUCH
RELATIVES STOP EFFORTS UNDER WAY FOR RESCUE OF SUCH PERSONS UNQUOTE
4:15 p.m.
September 2, 1944
RDrury 9/1/44
Regraded Unclassified
94
SECRET
A-193
DEPARTMENT OF STATE
10:10AM
SEP 4
Sept. 2, 1944
DIVISION OF
AMEMBASSY,
COMMUNICATIONS & RECORDS
CHUNGKING.
FOR FRIEDMAN FROM THE SECRETARY OF THE TREASURY
The following 18 for Ambeensdor's and your own infor-
mation only:
1. Reference 1s made to your 28 July 1944 memorandum
and to Airgram A-173 of 2 August 1944. Treasury is now
issuing blanket licenses to interested domestic banks
permitting then to effect transfers from a blocked account
of any United States citizen or any partnership, association,
etc., located in China which 16 wholly or substantially owned
by United States citizens to a blocked account with 6
banking institution in the United States of any person
located in Chine, and Treasury 1s now prepared to act
favorably on an individual case basis on applications for
licenses to transfer from the blocked account of any person
located in China funds to be paid to persons within the
United States for the purpose of financing the purchase
within the United States of goods for exportation to China
for the account of the person in China whose account is to
95
changeing A-193 - 3 -
be debited.
2. Treasury has amended blenket license of 5 July
1944 to National City Benk, New York, in respect to the
operation of the account of the United Clearing Board,
Chungking, as quoted in Airgram A-173 of 2 August 1944
by changing the first paragraph of Section 2 to read as
follows:
QUOTE Transfer funds from such account on the
instructions of the United Clearing Board, Chung-
king, to blocked accounts now existing or hereafter
to be opened with domestic banks or reputable business
concerns within the United States, provided such
blocked accounts are maintained in the names of persons
within Free China. UN. JOTE.
Za Treasury and Ver Departments have discussed the
purchase of United Clearing Board checks, etc., by army
personnel. The Wer Department 10 recommending to the
China theatre that expropriate messures be taken within
the theatre to prevent the purchase and transmission by
mail of such checks, etc., by army personnel.
96
chunging A-193 - - 3 - -
4. Treasury will advise United Clearing Board
here that:
(a) its checks, etc., should not be sold to military,
naval, and civilian governmental personnel;
(b) it expects that sales of checks, etc., to meet
necessary, philanthropic, and education requirements
will continue to be mede through the United Clearing
Boerd.
BULL
g1
FMA:GL:HG
8/31/44
Regraded Unclassified
COPY NO
NOT TO BE RE-TRANSMITTED
SECRET
OPTEL No. 286
Information received up to 10 A.M. 2nd September 1944
1. NAVAL
À British Corvette torpedoed and sunk yesterday off Northern
IRELAND. CAEN Canal now open to vessels up to 10 feet draught.
Yestorday a British Battleship bombarded the ILE DE CEZEMBRE off
ST. MALO and damaged battery positions and the barracks area.
Adristic 30th. Two British Destroyers successfully bonbarded
gun positions and transport North of PESARO. Yesterday morning
A Canadian Frigate made e promising attack upon a U-boat off
LAND'S END.
2. MILITARY
France Elements of U.S. third Army are thrusting East of
VERDUN while U.S. First Army has advanced NE to the
general line LA FERE-BAPAUME, latter town. still held by enemy. UK
troops are on the outskirts of ARRAS and are also driving North
from AMEINS. Canadians have entered NEUFCHATEL, DIEPPE and LE
theport. Other U.K. troops are within four miles of LE HAVRE.
Southern France U.S. patrols are trying to regain tough with
enemy East of NICE. The Germans have been
driven from VALENCE. West of the RHONE French troops have occupied
VALLON BARJAC and MONTEELIER. Reconnaissance forces have penetrated
to BEZIERS and NARBONNE,
Italy Continued good progress by 8th Army in both ADRIATIC
and FLORENCE sectors. Patrol clashes have occured in
PESARO whilst further inland heavy fighting is in progress North of
URBINO where Germans are offering strong resistance and mounting
vigorous counter attacks from North of RIVER FOGLIA, North of
FLORENCE town of SESTO has fallen to a British division and Indian
troops are advancing on B commanding feature North of PONTASSIEVE.
On 5th Army front U.S. patrols have crossed the ARNO weat of
FLORENCE while further West armour and infantry are scross the river
at CASTELFRANCO and CESCINA,
Russia Russians report further progress West and South of
PLOESTI and South and East of BUCHAREST. They have
ceptured GUIRGIU on the DANUBE.
3. AIR
Western Front lat. Bomber Command aircraft dropped 482 ton:
on two flying bomb supply depots PAL DE
with good results. U.S. fighters attacked transport in East 7:02-CS
and the Low Countries destroying or damaging over 2020
vehicles, including 125 locomotives. AEAZ medium bombers dropped
804 tons on gun positions and motor transport parts at PREST, 71
on troop concentrations near ABBEVILLE and 81 on fuel dump GIVET.
Fighters destroyed or damaged about 800 vehicles in NE FRANCE include
ing 570 motor vehicles. Two German aircraft destroyed, our losses
one medium bomber, nine fighters.
lst/2nd. 74 Bomber Command aircraft despatched including
25 Mosquitoes BREMEN. All returned. Two German aircraft reporte
crashed in this country, one in NOTTINGHAMSHIRE, the other, a
composite aircraft in KENT.
Italy 31st About 300 medium and light bombers and fighters,
7 missing - attacked communications NORTHERN ITALY. gun
positions Gothic line and shipping GENOA.
Yugoslavia. Heavy bombers from MEDITERRANEAN dropped 282 ton.
on rwilway bridges KRALJEVO and MITROVICA and 133
on NISH airfields.
Hungary Liberators from MEDITERRANEAN dropped 227 tson on rell-
way centres DEBRECEN and SZAKAL, 60 on 3ZOLNOK railway bridge and 97
on objectives at MEZOTUR and NOVI-3AD. 51 Mustanga (two missing attack
DEBRECEN airdield destroying 63 enemy aircraft on the ground,
Regraded Unclassified
98
COPY NO
NOT TO BE RE-TRANSMITTED
SECRET
OPTEL No. 287
Information received up to 10 A.M. 3rd September, 1944,
1. NAVAL
On lst/2nd, 3 groups of German light craft moving from BOULOGNE
to CALAIS were engaged by МТБ' S and by our shore batteries. Many hits
on E-boats and 2 German TLC's sunk and another probably sunk. Shore
betteries claim to havedamaged or sunk 7 vessels. German coastal
batteries replied and damaged ours. One of H.M. trawlers damaged.
On 2nd, cross channel convoys were suspended, owing to had weather,
DIEPPE reported free from shelling. Port installations demolished,
but entrance to harbour only partially blocked. One of H.F. trawlers
damaged, by underwater explosion off NORMANDY. U.S. coastguard
cutter intercepted Garman trawler about 200 miles Northwest of
JAN MAYEN ISLAND: trawler was scuttled and prisoners taken.
2. MILITARY
France U.S. forces have taken VERDUN and SEDAN, while further
North leading: U.S. infantry crussed BELGIUM frontier at
11 AM 2nd U.K. Armour has freed ARRAS, DOUAI, ALBERT, and IENS, while
Canadian armour has crossed the SOMME at ABBEVILLE,
Southern France U.S. forces are now in AMBERIEU area northeast
of LYON. After clearing VALENCE, other U.S.
forces are pushing further northwards up RHONE Valley. French troops
are moving North towards TOURNGN and Northwestwards towards YSSINGEAUX
NE of LE PUY.
Italy 8th Army has continued its advance, and our whole front
for about 20 miles westwards from ADRIATIC coast has moved
forward from 2 to 4 miles against determined resistance. Poles have
captured PESAPO and continued their advance. We have made limited gain:
Northwest of FLORENCE. 5th Army have made furhter poogress across the
ARNO and in some sectors are about 5 miles north of the river.
Russia Russians are now along the DANUBE and Bulgarian frontier
along whole stretch between GIURGIU and the BLACK SEA.
3. AIR OPERATIONS
Western Front.
2nd Bad weather restricted operations.
Lancasters bombed shipping BREST 365 tons.
Fighters over forward areas destroyed 38 MT, 20 horse-drawn vehicles
and 6 gun positions. Coastal command aircraft made 46 attacks on
shipping off BELGIUM, HOLLAND, and FRANCE; 3 E/A boats destroyed and
other promising results.
Yugoslavia 2nd. Liberators bombed railways at KRALJEVO, 260
tons, MITROVICA 175 and NISH 430. Fighters attacked
communications between BELGRADE and NISH.
Regraded Unclassified
99
BE=624
Caserta
Distribution of true
reading only by special
Dated September 3, 1944
arrangements. (SECRET F)
Rec'd 1 a.m., 4th
Secretary of State
Washington
272, September 3, 9 p.m.
FOR WAR REFUGEE BOARD
In absence of Ackermann who left this morning on
a trip to Northern Italy and Southern France and will
be out of touch with us for four or five days, I an
telegraphing you urgently to inform you of a situation
which perhaps should receive your immediate attention.
A report has just been received at AFHQ from an
American member of 0SS now in Rumania to the effect
that there are several hundred refugees from Poland
and Hungary in Bucharest who are in dire straits and
need immediate assistance. 088 report requested
this office to communicate this information immediately
to Acketmann with recommendation that $5000 should be
sent at once to Bucharest for alleviating the tragic
situation of these unfortunates. At my suggestion
Colonel Early of 0SS office at AFHQ is sending 5000
yellow seal dollars with another 038 representative
who 1s flying to Bucharest tomorrow morning with
instructions to hold this money and not disburse it
until authorization is received from him.
Please telegraph what decision you wish the
to communicate to Colonel Early.
OFFIE
WSB
Unclassified
100
SFG=544
Stockholm
Distribution of true
reading only by special
Dated September 3, 1944
arrangement. (SECRET w)
Rec'd 12 p.m.
Secretary of State
Washington
3456, September 3, Noon
While Swedish Government is anxious to do every-
thing possible to rescue Hungarian children, (Department's
1739, August 30, 6 p.m.) it cannot (repeat not) according
to Grafstrom arrange to have a Swedish ship call at a
German port to pick up these children since making any
exception to the rule of refusing insurance to Swedish
ships proceeding to German ports would upset the
foundation on which Sweden's policy towards Germany now
rests. Hungarian children who may be evacuated will
be brought into Sweden via the ferries from Denmark.
Swedish Foreign Office is notifying Swedish
Consular Offices concerned regarding substance of
paragraph No. 2 of Department's telegram under reference.
JOHNSON
WB NPL
101
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
American Legation, Bern
TO:
Secretary of State, Washington
DATED:
September 3, 1944
NUMBER: 5796
CONFIDENTIAL
Reference is made herewith to your cable of August 19, no.
2863, WRB's 130.
It is stated in Intercross response of August 31 that the
Committee is continuing to oppose the deportation of Jews from
Hungary by every means in their power.
Their wish to refrain from any share in the deportations,
if only to obtain more tolerable means of transportation, is in-
dicated by the desire that their attitude shall not be inter-
preted to mean participation in or approval of deportations.
A fresh proposal has just been submitted by the Committee
to the Hungarian Government and Jewish Senate Budapest in an
effort to find means of extending the Committee's protection to
Jews confined in camps or houses in Hungary. We will communi-
cate the result promptly.
HARRISON
DCR:VAG 9/5/44
102
September 4, 1944
10:19 a.m.
HMJr:
Hello.
Operator:
Harry Hop -- Mr. Hopkins.
HMJr:
All right.
Operator:
Go ahead.
HMJr:
Hello, Harry.
Harry
Hopkins:
Oh, hello, Henry.
HMJr:
How are you?
H:
Fine. Henry.
HMJr:
Yeah.
H:
I wonder if I can get out of the dinner
tonight.
HMJr:
Surely.
H:
Because I thought we'd probably get most of
it done at lunch as far as anything I've got
to say to you.
HMJr:
Good.
H:
And you to me -- because the President has
dropped in my lap a "hot potato" about the
C.I.O.
HMJr:
I see.
H:
....
that I ought to work on tonight.
HMJr:
Well, we'll miss your company but
H:
We'll get it done this noon, and
HMJr:
Yeah, and I thought it would just be you and
me at noon today.
H:
All right. Fine.
Unclassified
103
a I I
HMJr:
Because I want to
....
H:
All right.
HMJr:
I thought we might talk completely frankly.
H:
Yeah. All right, Henry.
HMJr:
Is that about one o'clock?
H:
Fine. I'll be there.
HMJr:
Thank you.
H:
Fine.
Unclassified
104
\
September 4, 1944
10:55 a.m.
DISARMAMENT OF GERMANY
Present: Mr. D.W. Bell
Mr. White
Mr. Gaston
Mr. Peble
Mr. O'Connell
Mr. McConnell
Mrs. Klotz
H.M.JR: Mr. O'Connell, here is a bit of business
for you and Mr. Lynch - some charges by "hizzoner" the
Mayor. You let Olrich know that I have asked you and
Lynch - Lynch works on this, doesn't he?
MR. O'CORNELL: Yes. Olrich is out of town this
week.
H.M.JR: I can't wait that long. (The Secretary
hands Mr. O'Connell a letter from the Mayor of New
York, dated August 29, 1944)
not
Will you handle that fairly promptly?
Mac. O'CONNELL: Yes.
MRS. KLOTZ: I haven't acknowledged it, either.
MR. O'CONNELL: O.K.
H.V.JR: Now, this memorandum which White sent up
to me just barely got under the wire. I gave it to the
President with explanations, but it didn't go far enough
to suit me.
The two places it didn't go far enough were: One,
the complete closing down of the Muhr; and two, the treating
105
- 2 -
of the present Mazis from sixteen to forty and their
children.
Now, the President is entirely agreeable to the
suggestion of closing the Ruhr, and I want something on
that, do you see? I have told some of this to White -
the map business, the Folish thing, and certain things
at Teheran which I don't know about. You haven't got
the boundary just right. Then north of the Kiel, if
I remember - he put that into an international boundary -
from north of the Kiel up to Denmark, including the Kiel.
And the Saar was thrown into an international organiza-
tion.
But there is no doubt that Isaiah Bowman has this
thing, and the President says we could see it Wednesday,
but I would ask Dr. Matthews to get it, see? I would
like to have it.
MR. WHITE: From the white House? lle is going to
look in the State Department.
H.M. JR: No, no, it is in the State Department file.
It is there. This is the group that went to England
under Stettinius.
M.C. WHITE: He said he was going to look.
H.M. JR: And would you make a note, Harry - I
would like to know the exact technical status, today, of
Robert Murphy and Mr. heber - I think that is his name.
The President is under the impression that Mr. Robert
Murphy is to be appointed as a member of the European
Advisory Committee, and Mr. Reber as political adviser
to Eisenhower. I said, "If that is so, every newspaper
waswrong."
MR. W.ITE: We have one member of the European
Advisory Committee - all v.e are entitled to - Winant.
H.M.JR: I know. I am just quoting the Commander in
Chief. So let's get it correct, see?
106
- 3 -
Non, where do we go from here in the way of the
memorandum? what more do you people have?
MR. WHITE: Well, we were trying to resolve those
points which you have raised, and also we agreed that
the thing that needs to be done in addition to the
memorandum is a directive that they are working on now,
which will be in force at the moment major hostilities
in Germany cease.
The directive which the Army has now, which has
been cleared by the Combined Chiefs of Staff, will go
into force the moment they get into Germany. Now, it
may be that they will get in and put that thing into
force before the President has a chance to see Churchill
and change. 30 we can't rewrite that, though we may be
successful in taking out some of the paragraphs.
R.M.JR: we are getting a copy. The President has
written a letter to Stimson, based entirely on the memo-
randum which I gave him on this handbook, telling them
that they cannot put the handbook into force, and they
have to rewrite the whole thing.
MIC WHITE: They have already withdrawn it. That
is the handbook.
JR: But.I.mean, did you hear about his letter
to them?
..WHITE: No, but the Army told us they had with-
drawn it.
H. JR: And there is an introductory paragraph
and then came your memorandum, verbatim, the President
said.
MR. WHITE: That will take care of the handbook,
but it doesn't take care of the directive, SO they will
either have to write another handbook, which We thought
we could help them do, or write another directive for the
period, which we could regard as more important, because
107
- 4 -
what they do on this actual fighting isn't very important,
it is what happens the moment the fighting ceases.
Now, their present directive seems to cover that
period also, so that when we were talking with McCloy
Saturday we told him that if they would regard any
directive which they would issue - either the one they
have or a modified one - as applying only until hostili-
ites cease, then we would prepare another directive
covering phase two. That would 6° a long way, perhaps,
toward alleviating the present situation. They agreed
completely with that, so what the boys are now doing is
trying to prepare a directive which would begin when.
hostilities cease.
Now, SO far as the major memorandum that you are
referring to is concerned, you raised several points. we
thought of some more things which we added, ard took
care of the points which you suggested, with the excep-
tion of Three, which we were in the process of discussing,
and we haven't arrived at any conclusion, so we don't even
know what to put in the memorandum, yet. One was what
to do with the children under six, and what to do with
the fourteen to twenty. So far me have arrived at nothing.
H.: JR: You mean fourteen to forty?
MR. WLITE: Was that it?
H.V.JR: Yes, he has been in since--
MR. PENLE: Since 1933.
MR. WHITE: Well, I confess, aside from the treat-
ment of special troops - which are the SS and the Gestapo
and some portions of the other groups - the leading
officials - which I have here - we haven't been able to
approach any solution that seems at all feasible or
plausible to us with respect to the children under six.
Any suggestion that is thrown out is thrown down on this
or that adequate grounds. So we haven't got anywhere,
and that needs to be discussed, because we haven't any
idea how to handle that problem.
Regraded Unclassified
108
- 5 -
H.M.JR: Now, these people - these Germans that
you have pulled in, are they coming down tomorrow?
MR. WHITE: Yes, tomorrow.
H.M.JR: I want to get hold of McCloy a minute.
(The Secretary places a call to Mr. McCloy)
H.M.JR: Now, these are three things the President
wants. He is going to ask for them the first time he
sees the memorandum. The Germans should be allowed no
aircraft--
MR. WHITE: That is in the terms of surrender and
will be repeated.
H.M.JR: Nobody in uniform--
MR. WHITE: That we are adding.
E.M.JR: And no marching.
MR. WHITE: That we are adding.
H.M.JR: lie wants that, so it can't do any harm.
MR. WHITE: We are adding that to the memorandum.
we are also adding something that he had in first and
then took out because there was some question of its
legality, and now we are sticking it back, and that is
that no one shall wear any insignia of rank or medals,
or anything of that sort. The uniform is going to be
troublesome because probably five million people have
nothing else to wear. But if you treat it as a uniform -
so they don't weer the whole thing, I think you can en-
force it. These men who came down particularly empha-
sized not to have, or to start, anything that you can't
effectively administer. They thought that was terribly
bad. We are working out something on all those points
and it will be added to the memorandum.
109
- 6 -
Then they also have a memorandum on the special
groups, prepared yesterday, which needs some modification.
H.M.JR: Harry, could you give me a little memoran-
dum this afternoon - who these three Germans are who are
coming down, so I could read it?
MR. WHITE: Yes, I will do that.
MR. McCOINELL: There is some application on the
industrial angle here, Mr. Secretary, that I have the
preliminary memorandum on, but haven't had time to 80
over with Harry. I think it fits in very well here and
there is only one new angle to the industrial application
of that first paragraph of the Ruhr area - the third
paragraph. I think perhaps I had better go over that
with Harry first.
MR. WHITE: It is not necessary. I think we will
want to discuss it in general before we come to that,
because that is supplementary -not supplementary in the
sense it is less important, but supplementary in the
sense it probably fits in.
H.M.JR: Harry would like to run through his thing
first, I think.
MR. WHITE: Yes, just a couple more points.
There is this punishment of war criminals which
would probably fit in with what you said. That needs
to be revised and shortened, but there was one suggestion
made by General Hilldring at the meeting yesterday that
seems good. He said that if you could draw up a list of
people to present to the Commanding Officer, and the
Commanding Officer has to apprehend them and identify
they by some responsible authority, and that those people
are immediately shot, that there is not a question of
discretion by the military. lie has his orders. They
didn't know how long that list could be. Hilldring men-
tioned about twenty-five hundred, whether it was in
connection with that or not, I don't know. But what we
110
7 -
are trying to do is to state that problem and meet it.
That is one thing he would have added. How many people
you could get on the list - who is to decide who is to
go on that list - I don't know. But DuBois, who has talked
to Pell in Angland about the war criminals, concluded
that they have done next to nothing.
H.M.JR: I got that from Pell and then asked DuBois
to see Pell.
MR. WHITE: I see. I didn't know that was the origin.
H.M.JR: The origin was with me.
MR. WHITE: I didn't know that. Hopkins asked Matthews
and McCloy what this Criminal Commission has done. Matthews
said he didn't know, and no one there knew. I didn't know
at the time, and I didn't comment, either. But if that
Commission has done nothing, then they have no list.
That is one of the problems which they were thinking
about, and one of the ways of meeting it which everybody
thought would be an excellent method. American soldiers
wouldn't shoot them, somebody else would, probably, but
the Commanding Officer would not have to decide whether
or not they are to be shot, but rather merely to identify
them.
JR: I have heard it put a little differently,
and I think this is Churchill's idea, and Churchill told
me this when he was over here - I am almost positive
it goes back that far - Churchill said the way he would
do it is that there would be this list in existence, and
the orders would be that any soldier meeting this parti-
cular person on this list, that his orders were to shoot
him on sight.
MR. WHITE: The only difference is that I think this
other required an identification by a responsible officer.
H. JR: Churchill didn't go that far. He said that
any soldier meeting any of these people, their orders
were to shoot them on sight.
111
- B -
MR. BELL: And identify them afterwards.
MR. GASTON: None of these people should be shot
more than three times, Dan.
H.M.JR: If they shoot them at the rate they shot
them in Italy - all they do there is to put them back
in the house and set them up in fine style. Just to
give you an example, we landed in Sardinia and this
Brigidier General - English General - said, "I never
thought I would live to remove a Lieutenant General,
but there are two hundred and fifty thousand troops
here, and I removed the Italian Lieutenant General in
charge because he V.B.S a Pascist."
I said, "What did you do, shoot him?" The man said,
"Oh, no."
I said, "Where is he?"
"He is over with the King at Bari."
(To White) Do you remember?
MR. WHITE: Yes.
H.M.JR: So, I mean, the shooting wasn't very good
over there.
MR. WRITE: Joe has read some documents - I think
some memoranda have been prepared for your office.
MR. PEHLE: We had a study made when you came back
and Joe reported to us what you had gotten him into on
the criminals thing. We had a study made of what happened
during the last war and of course it is an abominable
situation. In other words, we had a list then, and we
were going to apprehend these people, and the Germans
said, "Let us apprehend them. So they apprehended them,
tried them and sentenced them, and all but about three
escaped. But it was delayed so long that the heat went
out of the thing. If anything is done it has to be done
right away or nothing will be done.
Regraded Unclassified
112
- J -
H.M.JR: Or sooner.
MR. WHITE: The third point that--
MR. PEHLE: But on the list - I think if there is
to be a list prepared of people that everyone agrees are
to be shot, it has got to be within a limited number in
character. You can't take one of these things of any
little evidence of some name and out it on the list. It
has to be a list of names about which there would be no
question. The :rest would be subject to trial.
H.N.JR: Stalin has a list with fifty thousand.
MR. PEHLE: But we wouldn't get that, I don't think.
H.M.JR: (To Mr. White) Go ahead.
MR. WHITE: The third point that gives us a good deal
of trouble is the luhr. It is your view that it should
be locked up or wiped out, and it is what to do with the
population. That is a troublesome point.
E.M.JR: Excuse me. The President is in complete
accord on this, and the thing that he likes particularly
about it is the idea that this would help put England
back on its feet.
Mr. WHITE: Well, I think that somebody is going to
be confronted with what to do with fifteen million people.
H.M.JR: I spoke to him about it, and the President
said what he proposes to do with a lot of these people is
to give them - to just feed them out of the "merican Army's
soup kitchens.
MR. PEHLE: How long is that going to last? This is
a problem of five years from nov.
H.M.JR: He isn't going to worry very much.
34... PEHLE: He is not going to be able to sell that
kind of program.
Regraded Unclassified
113
- 10 -
MR. GASTON: You can't put a fence around the Muhr
and keep all the people out. What you will have to do,
if it is to be practical, is to select some industries
that are to be put out of business.
MR. WHITE: The only alternative that seems feasible
to us - of these two, both have advantages and disadvan-
tages - but you might think of the alternative, a very
different one, of making the Ruhr an industrial area
under international control which will produce reparations
for twenty years.
H.M.JR: Harry, you can't sell it to me at all. I
have read Welles' book on the thing. I have been reading
up. You just can't sell it to me, because you have it
there only so many years and you have an anschluss and
the Germans go in and take it.
The only thing you can sellme, or I will have any
part of, is the complete shut-down of the huhr.
MR. GASTON: You mean vacating the whole thing? Driv-
ing the population out?
H.M.JR: Just strip it. I don't care what happens
to the population.
MR. GASTON: But there is some intermediate thing
between those two things. I don't understand--
H.M.JR: I would take every mine, every mill and
factory, and wreck it.
MR. GASTON: Of every kind?
H.M.JR: Steel, coal, everything. Just close it down.
MR. BELL: You wouldn't close the mines, would you?
H.M.JR: Sure.
MR. GASTON: You would leave agriculture?
114
- 11 -
H. .JR: Yes.
MR. WHITE: Leave it in international hands.
H.M.JR: Yes.
MR. WHITE: Of course, you wouldn't have to do a
great deal of destruction if that were the policy. If
you told the various Allies that you are going to do that
and they can come in and strip it, they will take a good
deal of it away. But they would have to do some destruc-
tion. The problem is not the destruction; the problem is
population.
H.M.JR: I am for destroying it first and we will
worry about the population second.
MR. McCONNELL: That food tonnage would be enormous.
MR. WHITE: They raise something there themselves.
MR. PELLE: In that area - not much.
MR. WHITE: Yes, there is some.
MR. McCONNELL: The soup kitchens to feed fifteen
million people just wouldn't be adequate.
H.M.JR: That is the place where war can spring
from, and that is the place that closeddown the steel mills
in Birmingham, the coal mines in Angland, that has caused
the misery and the low standard of living in England - the
higher standards of these places undercut the English
and Belgians.
MR. WHITE: It has contributed to it.
MR. McCONNELL: The capacity of steel production
in the kuhr is fifty percent of England's.
H.M.JR: but it is the competition.
Regraded Unclassified
115
- 12 -
MR. McCONNELL: Twelve million out of forty-two
million total in Europe.
H.M.JR: If this thing was closed down, would
England have to worry for the next twenty years on unem-
ployment?
MR. WHITE: I think she still would, but it would
be a great help to her.
MR. GAST IN : Aren't you really just suggesting
the closing of the mines and the steel mills in the Ruhr?
The coal mines, iron mills, and the chemicals?
H.M.JR: Yes.
MR. GASTON: That would be covered in any program
of war.
MR. O'CONNELL: You would close down the mines and
chemicals.
H.M.JR: Coal, steel, and chemicals. You get your
chemicals from your coal by-products, don't you?
MR. McCONNELL: A great many.
H.M.JR: I would close down those things tight.
There is nothing left.
MR. GASTON: Oh, there is a great deal of subsidiary
manufacturing in the luhr.
MR. WHITE: They would die off.
MR. GASTON: Not if they can buy their steel. They
have lots of stuff there that doesn't take great quanti-
ties of steel.
MR. BELL: Haven't they folded up, anyway, during
this war?
115
- 13 -
NSW: WHITE: No, but I think such places, for example, as
are making cutlery - but I don't think you will find them
in the Ruhr.
MR. McCONNELL: Well, now, if you consider an inter-
mediate step, Mr. Secretary, reduce that twelve million to
seven, take out all the war plants - the principal factor
controlling the standard of living - you have about cut
their standard of living in half, or come pretty close to
it, by that contraction of steel. Now, if you go to
nothing, the standard of living would come close to zero
in that area, and it is either starvation or some kind of
relief kitchens.
H.K.JR: Well, that doesn't bother me, because the
people haven't thought about this thing. They have to think
about it differently. If they don't, the first thing you
will have is factories there; then somebody will open a
coal mine, or a steel mill, and the first thing
you know you will have a full-blown war field.
MR. WILITE: I don't agree on these half-way marks.
E.M. JR: These people are smart. I have seen the thing.
This is the caldron which gives forth war, and I don't
know any other way to stop them from making war other than
to shut down this area completely.
MR. McCONNELL: And keep it shut? You would have to
police it.
H.M.JR: No, because the Germans - they will find some
way within five or ten years to win these people over.
They will have a revolution; they will have an anschluss
and the thing will be in the hards of the German war people.
All the war has sprung from that area. They can't make
war if that area is shut down.
MR. McCONNELL: That is true.
H.M.JR: They cannot make war. Now, my whole interest
is this: I want to see as good a job done as I can on the
117
-14-
war criminals, but over and above that, my interest is
the future. I don't know of anything that I have read or
anybody has told me, looking to the future peace of this
world in the European hemisphere - the only way I know is
to shut that thing down.
I don't know how much the Saar has or how much their
production is; if necessary, shut that down or give it to
France. But certainly if that area is made non-productive,
stripped of its machinery, the mines flooded - dynamited -
wrecked - it would make them impotent to wage future wars.
That place has to be closed down.
Now, as soon as you start arguing with me, and I begin
to give way, let this in or that in, or let that area or
that population continue their skills, they will do just
what they do in the hills of Pennsylvania - they will mine
bootleg coal. You can't stop it. It runs into big figures,
doesn't it?
MR. McCONNELL: Yes.
H.W.JR: A fellow will have a coal mine in his basement,
and those fellows are SO clever and such devils that before
you know it they have got a marching army.
MR. McCONNELL: The objective is just the same. What
bothers me is whether you can create a. vacuum in the luihr
area and leave the vacuum. I think in ten or fifteen years
or so they would be back with modern improved apparatus.
MR. WHITE: Not if you have it under international
control. I think there is no doubt - let's assume for a
moment you could get rid of the population satisfactorily,
or ninety or seventy-five percent of them - just have an
agrarian populace - an international organization could
very easily be perpetuated to see that nothing is done
there because they are confronted with minor problems;
then it is a policing job under international law which
you can carry on indefinitely.
118
- 15 -
But I don't think it is possible to pursue that if
you have them produce some things and not others, or
if you have them cut down on their production, because
it is merely a case of expansion.
But if you can solve, or if you are ready to accept
the consequences of that degree of shift of population,
that is the price; if you are willing to pay that price
now, then I think the Secretary is wholly right.
Then you have the problem solved at a terrific price,
that is all.
H.M.JR: I am not going to budge an inch. I find the
President is adamant on this thing.
Sure it is a terrific problem. Let the Germans
solve it. Why the hell should I worry about what happens
to their people?
MIL. PERLE: In an international zone, that problem
will be--
MR. GASTON: You would have to have international
policing, wouldn't you?
MR. WHITE: Yes, you will have to have international
control.
Regraded Unclassified
H-1
119
- 16 -
H.M.JR: Look, I gave you people an example which I
lived through in the eyes of my father. One morning the
Turks woke up and said, "We don't want a Greek in Turkey."
They didn't worry about what the Greeks were going to do with
them. They moved one million people out. They said to the
Greeks, "You take care of them." They went to the League
of Nations, and so forth; they said, "We don't want any more
Greeks in Turkey."
Now, whether it is one million, ten million, or twenty
million, it has been done; a whole population was moved.
The people lived. They got re-established in no time.
They moved them.
If you can move a million, you can move twenty million;
and you can move twenty million. It is just a question;
nobody has thought about it. It seems a terrific task; it
seems inhuman; it seems cruel. We didn't ask for this war;
we didn't put millions of people through gas chambers. We
didn't do any of these things. They have asked for it.
Now, what I say is, for the future of my children and
grandchildren I don't want these beasts to wage war. I
don't know any other way than to go to the heart of the thing,
which is the Ruhr, and I am not going to be budged. I can
be over-ruled by the President, but nobody else is going to
over-rule me; I am not going to VO rry what happens to them,
and nobody is going to over-rule me, except the President.
I had the President quietly and uninterrupted and he
liked it, and so did Mrs. Roosevelt, who was a great pacifist
before this. It doesn't bother her at all. She said, "Put
the thing under lock and key and shut it down completely."
Now, I have had plenty of time over the week end. Let the
Germans worry about it. My worry is to keep them from waging
future wars.
MR. PEHLE: That is everybody's worry. And a lot
depends on whether people like you and the President will
say they are willing to take this extreme measure and stick
by it, because it will take some real battling.
h-2
120
- 17 -
MR. GASTON: The thing is to find out just exactly
what you want to do, and I am not quite sure about that.
MR. McCONNELL: Forced emigration can be accomplished
by that procedure or by constricting the industry.
MR. WHITE: Shutting it down-if there is no way for
them to make a living they will move out. If you are willing
to accept the consequences of an act of that kind, which
will show itself in the following fashion, there will be
great unemployment in the Ruhr, tremendous unemployment,
there will be breadlines. Now, there are two ways of
meeting it, either you can prevent starvation by providing
a minimum amount of food so they can stay in breadlines
as long as they can stand it, and when they can't, they
will go somewhere else where the lines are shorter. You
don't have to drive them out. I don't think you want to
say that anybody found in this area after such and such a
time will be moved bodily. You provide some kind of trans-
portation to get them out; you provide a certain amount of
bread rationing to keep them alive, and you close down
the means of livelihood. That is all you have to do. I
say that is all. I mean, that is a ruthless decision, but
it is not physically impossible or economically impossible;
and if it is decided to do so, it is not politically impos-
sible.
MR. GASTON: I think under any plan that can be con-
sidered about the Ruhr, 8.5 practical, to achieve the object
you have to shut down a large part of the Ruhr industry.
You don't want this huge excess steel production that has
been going to war users, or the huge excess chemical pro-
duction.
MR. WHITE: The moment war stops 8. good many of those
plants will shut down.
MR. GASTON: Are you going to drive people out, or
let nature take its course by killing industry? What
industries? It becomes a complicated problem as to how
far you will go.
h-3
121
- 18 -
MR. WHITE: The establishment of the principle is not
a complicated problem. If you decide what you are going to
do is stop the industry, you destroy the big industries and
move gradually down the line when you are on the job, and
the population gradually moves out.
H.M.JR: Did I gather when you first started that you
were sort of leaning towards the internationalization of
this thing and would handle the thing through 8--
MR. WHITE: Yes, gradually, having it international.
What we said was that it is something close to it, but not
of the same pattern. We said we would put it under inter-
national control and then let the foreign governments
strip it of any machinery that they want. That would leave
something there. That wasn't very adequate as B. solution
of it, because if you put an international controlling group
in an area like that and you make them responsible for it,
even if you give them some part, it will be their inevitable
development that they will want to solve some of their
problems by building up, even though you limit them. Concededly
you can limit them to certain tonnage, but they would build
it up to that tonnage in & couple of years and you still
would have that as & danger. I am afraid you are being o
some degree ruthless without accomplishing what you want.
It is that kind of half-way measure that never pleased
or satisfied us. We are suggesting something else because
we didn't like the half way process. What we are suggesting
is the opposite of what you had. But I say that we are
suggesting the opposite because we were not satisfied with
the half way process. The opposite was to build it up as
a reparation producing area.
If that is out, I am afraid I am wholly in agreement
with you that the only thing to do is to root it out,
provided you think you can get away with it politically.
MR. PEHLE: That is the real problem.
H.M.JR: Do you mean at home?
MR. WHITE: Yes, or in other countries.
Regraded Unclassified
h-4
122
- 19 -
MR. PEHLE: With the British. The British will be
adamant, I suspect.
MR. WHITE: Russia may want reparations.
H.M.JR: I have it in mind--if you look at my broad-
cast which I gave from London--that we have to continue
to make sacrifices, and so forth, and 50 on. We talked
about that there. I mean, the American businessman is going
to have to look to a little smaller market. He can't look
to the German market. And the English can't look. Maybe
our export business will be cut by that amount, but it is
a very little price to pay for security.
MR. PEHLE: Sure. People can be faced up to the problem.
H.M.JR: I have yet to find anybody--I am amazed at
how little hard thinking has been done on this thing.
Everybody is toying with the thing, and here we are with
one toe in Germany and just starting on it. I mean, he
just hasn't thought about this thing, and there is a
tremendous job of education to do in all United Nations
on this thing.
Now, I am going to stick by my position as long as
the President is behind me, which he is. To be practical,
if a directive was written to repair no factories which
had been damaged, no coal mines or steel mines or chemical
plants and dismantle. those which are there n.d then wade
into this other thing about the population--let them stew
in their own juice and let the thing work itself out. But
that would accomplish the thing at the beginning. And I
think, personally, whatever is going to be done has to be
done the first six months, because I think at the end of
six months the people are going to get soft.
Now, if 8 directive was written that the American
Engineers should go in to every steel mill, every coal
mine, every chemical plant, every synthetic gas business,
or whatever there is, and put dynamite in and open the
water valves and flood and dynamite that, then the great
humanitarians could sit back and decide about the population
afterwards.
Regraded Unclassified
h-5
123
- 20 -
MR. McCONNELL: There is huge production of all of
those requirements throughout the Balkans and Germany,
true; perhaps half of it is in the Ruhr, but there should
still be a control. The means is exactly the same to
produce that industrial manpower in Germany by immigration,
and that can be done by edict or by contraction of the
economy.
H.M.JR: That is all right. But go along with me and
make the Ruhr look like some of the silver mines in Nevada.
MR. BELL: Sherman's march to the sea.
H.M.JR: No, some of these ghost towns; make this a
ghost area.
MR. PEHLE: In other words, you are talking about not
only dismantling everything that has to do with war or
which could do with war, but also preventing those industries
from growing which will use skilled labor that later could
be used for war, even though they are working on things
which in themselves are harmless. It seems to me that is
the real issue, because everybody admits you should do away
with the munitions industry and the supporting industries
to the munitions industry; a lot of people admit that.
The question is, do you do away with people who want to
make watches, precision instruments?
MR. WHITE: Let's not confuse the issue that way.
In the first place there are two separate parts; one is
Germany, and the other is the Ruhr. You are going to
internationalize the Ruhr and put in any German plants
you are suggesting. Sure, there is some production in
Germany; you can handle it as you think best. But you
take the Ruhr and you destroy what you call heavy industry
and go down the line. You start out with the objective of
destroying everything. That doesn't mean that there aren't
farms left or small shops left. It does mean that the
terrific unemployment which will exist anyhow, and already
exists in the Ruhr and which will exist much more in a
month because these plants that are producing armaments
will stop, is extended into the steel-making industry and
the iron industry, chemical industry, and 50 forth. There
Regraded Unclassified
b-6
124
- 21 -
are about five million workers in the Ruhr, SO you will
have four million unemployed; the other million will get
busy in one way or another. The four million won't have
a source of income; therefore, they quickly get on relief
some way or another. That will be particularly true if
you have it as an international zone in which Germany as
such cannot trade with that area. Now the point is the
four million people and their families--how long are they
going to stay in Germany, I mean, in that area? Only as
long as they are certain that it won't become more attractive
than other areas. Well, if this is destroyed and they see
there is no future for them, as they quickly will see,
they will seek means of getting out. But while that is
happening, there is no food.
The assumption is that the Germans will supplement
it by what you do provide, breadlines, because you will
have to provide that probably in Germany, I an not sure.
Now, if you do that under conditions which are so unattractive
either because the breadlines are long or the amount of
food is short, the families will get out. They will go to
areas which will be attractive only because the Ruhr is
less attractive.
Now, to say that you would permit industries that do
not lend themselves to armament industries to exist, it
seems to me they miss the point completely, because there
isn't any industry that doesn't become an armament in time
of war one way or another.
H.M.JR: May I just stop a minute? I have brought
back the message to you as to where the President stands
and where I stand. Why don't you go to work on it, see?
MR. BELL: What is the status on this memorandum,
Mr. Secretary?
H.M.JR: Which one?
MR. BELL: The one that Harry sent you.
H.M.JR: The President has it, and it has to be
fixed up. It has to be brought up to date. He knows it
h-7
125
- 22 -
is & rought draft, but I had to have that for & basis of
discussion to say to the President, "This is the way we
are working. Now, a re we working along the right lines?
Are we going too far, or not far enough?"
I old him that as fer as I was concerned the memorandum
didn't 60 far enough. He is willing to go 8.S far as I am,
or he is willing to go farther than I am. Now, the man
is hungry, crazy to get some stuff to work with. When he
saw what we were talking about he said, "I don't know how
far I will get with Churchill on this.
I said, "I think Eden will go along with you.
He said, "It will be tough sledding with Churchill."
But he is very, very anxious to get something down
in black and white on this thing. He hasn't given it
much thought. He just sat around a table at Teheran and
discussed it, and most of the time I take it he discussed
where the Polish Border was going to be. The Russians were
so much interested in that.
MR. BELL: Did he say anything about giving a directive
or anything to the State Department on it? After all, they
are not in this corner.
H.M.JR: Yes, Hull is. What Hull told me, himself,
was that--he said, "The reason I got along so well with
the Russians was, when I went to Moscow the first thing
I told them I would do was to bring up all of these people
before a drumhead court-martial and I would shoot them before
sunset, and from that day on I got along with the Russians
beautifully.'
MR. WHITE: That is a far cry from the Ruhr.
H.M.JR: You know what happened at Cabinet? When the
President talked about this committee, Hull mentioned
Pasvolsky and all that.
I said, "Now look, Cordell, I read Pasvolsky's memorandum
of July 30, and that is justas far from you 85 the North
and South Poles." I exaggerated a little bit. That kind of
floored him.
Regraded Unclassified
h-8
126
- 23 -
Stimson told me subsequently, "I am awfully glad you
did that, because Hull has been throwing that stuff at me
now for months.'
So you don't have to start with Hull. You have to
start with the people down below. Hull is prepared to do
just what I said.
MR. BELL: I should think maybe you ought to start
with Hull and leave it there.
H.M.JR: Where is this appointment with Hull for tomorrow?
Do we have an appointment?
MR. WHITE: We are supposed to.
Well, the thing for us to do is to take that as the
instructions and work out the best plan we can to meet
them. Then you can have another memorandum setting an
alternative which you can use only if you are not satisfied
that this particular method is either politically or some
other way practicable.
MR. McCONNELL: When you get outside of the Ruhr you
have a great many problems in war production.
MR. WHITE: There is no reason why you can't go ahead
with your program there.
H.M.JR: That is all right to do this supervising and
all that, but if you put the Ruhr under lock and key and
make it a ghost area, the Germans cannot wage war with what
they have left.
MR. McCONNELL: About forty percent, roughly, of their
armament production is in the Ruhr.
H.M.JR: Then you take the Saar away. I would like
to see a map showing this production and where it is.
MR. McCONNELL: I have it. Military Intelligence--
MR. BELL: What do you contemplate doing with the
natural resources of this area, let them lie dormant?
Regraded Unclassified
h-9
127
- 24 -
MR. McCONNELL: Coal and iron.
MR. BELL: That is conserving the natural resources
of this area, and they will be strong still in the future.
H.M.JR: Well, we have this big crop of German
children coming up, leave something for them. As a con-
servationist I am worried about what they are going to
have.
MR. WHITE: It fits in with the President's conserva-
tion program.
H.M.JR: Sure. These little unborn children are going
to be democrats.
MR. WHITE: Still going to vote for Roosevelt?
MR. McCONNELL: The principal reason for the Ruhr is
transportation and coal. There is very little iron.
MR. BELL: Where is the iron?
MR. McCONNELL: In Sweden, Norway--
H.M.JR: I would love to see a map showing that.
MR. WHITE: It seems to me if you are going to do
this particularly it would mitigate your problem if the
Saar went to France.
(The Secretary held a telephone conversation with Mr.
McCloy as follows:)
Regraded Unclassified
128
September 4, 1944
12:45 p.m.
John
McCloy:
Yeah.
HMJr:
I'm sorry to have bothered you with Stimson but
this is on the same thing.
M:
Yeah. We -- I got the date, by-the-way.
HMJr:
What?
M:
I've got the date fixed.
HMJr:
Oh, have you? When?
M:
Ten o'clock.
HMJr:
Ten o'clock
....
M:
Yeah.
HMJr:
....
tomorrow at Mr. Hull's office.
M:
That's right.
HMJr:
All right.
M:
Right.
HMJr:
Now, Brand just phoned; he wants to see me.
M:
Yes.
HMJr:
Now, I wanted to be able to say this to them --
of course, this isn't what the President wants
but if
....
M:
Yes.
HMJr:
....
the Presidents change, the Administration
would take 8$ -- "X" cents for the mark, see?
M:
"X" cents?
HMJr:
Well, I'm saying "X".
M:
"X", yes. Right.
Regraded Unclassified
129
- 2 -
HMJr:
What would you fellows settle for?
M:
Oh, we'd take
....
HMJr:
Would you settle for ten cents?
M:
Yes. Yes.
HMJr:
Would you take ten cents?
M:
Yes.
HMJr:
What?
M:
Yes. I think that generally our fellows would --
would probably go -- well, go a little higher
than that, but I think ten is about the reasonable
one.
HMJr:
Ten?
M:
Yes, considering all the "pulls" and "hauls" on
both sides.
HMJr:
Pardon?
M:
I think the "pulls" and "hauls" on both sides --
if you could settle for that, that would be much
better than
....
HMJr:
Well, I mean, so we had -- I'm going to tell him
when we see the President
....
M:
Right.
HMJr:
.... Wednesday ....
M:
Right.
HMJr:
....
as an alternative, we've got to have a fixed
rate as between England and ourselves.
M:
Right.
HMJr:
See?
M:
Right. I understand.
Regraded Unclassified
130
- 3 -
HMJr:
Now, one other thing.
M:
Yeah.
HMJr:
Have you got in the Army a map which shows the
industrial resources of Germany, where the coal
and iron and the factories are -- a map?
M:
Oh, sure. Sure.
HMJr:
Could you rush that -- have somebody bring that
over to me right after lunch?
M:
Okay. Right.
HMJr:
A map showing that.
M:
Right. Okay.
HMJr:
With an officer to explain it.
M:
All right. I'll do just that.
HMJr:
Thank you.
M:
All right. Fine.
Regraded Unclassified
h-10
131
- 25 -
H.M.JR: If I could, I would like this afternoon,
maybe, to go in my chart room and take 8. look at the natural
resources of Germany.
MR. McCONNELL: I have them in figures, Mr. Secretary;
they are not up on a chart, but each tonnage is put down
for each little town.
H.M.JR: I will look at it. I am going to stop now,
and we can start again at three, the same group.
MR. WHITE: There is a tremendous amount of memoranda
in the State Department, British documents and American
documents.
H.M.JR: I wish you could get hold of Matthews and
see if what's-his-name hasn't this all mapped. I bet they
have maps and everything.
MR. GASTON: Maybe the War Department has.
MR. McCONNELL: The War Department has. I suppose we
could get them.
H.M.JR: Through McCloy's office. What about the
eighty men and one horse at Leo Crowley's office?
MR. WHITE: They stand ready to work with us when we
get something to work on, but they would have a tremendous
amount of information on this point, I know. I know they
have on the question of where the resources are.
MR. PEHLE: I would wait until the policy was set
before I would take any large group in on it.
MR. WHITE: But I will call up and find out what they
have on that particular point. I am sure they have at
least one man, head of a section, that has been working
exclusively on that question of resources.
Regraded Unclassified
132
9/4/44
Biographies
Friedrich Wilhelm Foerster, Professor of Education and
Philosophy; father was director of Berlin observatory
and bitter foe of Bismarck; descendant of Moltke.
Fought against German nationalism all his life. In
1895, as a man of about 25 years, sentenced to 3
months imprisonment because of an article which was
very critical of a speech by William II made in
celebration of the battle of Sedan. Academic career
in Germany impossible because of his political ideas.
Fought against government during first World War.
Has lived since about 1924 outside of Germany. Author
of books and many articles exposing German nationalism.
Kurt Goldstein, Professor of Neurology, Medical School,
Tufts College, and instructor of Psychology, Harvard
University. Became famous during last war by his
pioneering work concerning the treatment and
rehabilitation of brain-injured soldiers. Director
of Neurological Institute at the University of
Frankfurt (Main) and of Neurological Hospital of
Berlin. Came to the U.S. in 1933. 1934-40, Professor
of Neurology and Psychiatry, Columbia University, and
lecturer in abnormal Psychology, Department of
Psychology, Columbia University.
Hans Kohn, Professor of Modern European History, Smith
College. Born in Prague, Czechoslovakia. Was
correspondent of the Frankfurter Zeitung' in Near
East for about 15 years. Came to the United States
for permanent residence in 1934. Lecturer and
author of various books and many articles.
Regraded Unclassified
133
September 4, 1944
At lunch with Hopkins, we got on the German question,
and he said he thought 70% of the question was to put a
strong man under Eisenhower to really run German economy, and
eventually put the man in charge and let him run the country.
I said, "I understand from people in the War Dept. that you
want to go yourself." He brushed that aside and said, "Well,
what I wanted to do was sort of go on a roving mission as
Ambassador. So I said, "Well, Harry just what is your
interest in this thing, and do you want to go?" He said,
"Stimson asked me that same question," and finally after
several questions he said, "I will be completely frank
with you and tell you what I have in mind. I have had several
discussions with the President, and I have made up my mind
that when the war is over there is nothing here for me in
Washington. I have devoted all of my time to the war. I
have paid no attention to trivial matters, and it would be
a terrific anti-climax for me to stay around after the war in
Germany is over. " He said, "There are several very important
jobs to be filled by the President, and one is Jimmy Byrnes'
job and the other one is who is going to go to Germany."
Hopkins said, "I have talked to the President, and the
President is in sympathy with my going abroad, but he thought
I ought to do something which wouldn't take too much time.
Then he said, "Of course, for the next four or five months they
need somebody very badly in France to watch DeGaulle." Then
he said, "Of course this job in Germany I only would take
if I could pick 12 or 15 people to assist me.
Hopkins then asked me what I thought about McCloy, and I
told him I thought he would be all right.
Regraded Unclassified
134
September 4, 1944
3:25 p.m.
DISARMAMENT OF GERMANY
Present: Mr. D.W. Bell
Mr. Gaston
Mr. White
Mr. Pehle
Mr. O'Connell
Mr. McConnell
Mrs. Klotz
H.M.JR: Where are we now?
MR. WHITE: I don't know. I didn't know this
meeting was called for anything special. Had you an-
nounced this morning you were going to have it?
MR. BELL: Yes.
MR. WHITE: I guess it escaped me completely. We
are reworking the document in the light of your instructions
this morning. I don't think it is ready now, but it will
be ready.
Did you ask to have that ready by three?
H.M.JR: Yes.
MIL BELL: You asked to have a continuation of this
morning's meeting, and do what you could between this
morning and this afternoon.
MR. WHITE: I see. Well, we spent most of the time
talking about what to do. But it will be ready very
shortly. I will tell you what it will contain that is
different from what you have already seen. It will in-
clude the three points you mentioned and it replaces the
paragraph on the Rulir by stating very definitely that
Regraded Unclassified
135
- 2 -
everything shall be moved or destroyed except homes and
farms. Those are the main differences. We still have
nothing on what to do with the children. We don't even
have any ideas on the subject, let alone anything to write
down. We have talked some more about it, but haven't got
anywhere on it.
There are some memoranda over in the State Department
on education - we are sending for them - British memoranda
on re-education in Germany.
H. JR: The map didn't come through from McCloy?
He was going to give me a map.
MR. WHITE: I didn't receive it. A big map is being
prepared upstairs on Vermany. It ought to be through this
evening and then Bob is going to put on the data. McConnell
has a book with all the details and he is going to put
them on the map.
MR. McCONNELL: The Air Corps has a map of German
industries and capacities marked on it, especially the
iron, steel, coke, and soft chemical capacities. They are
sending that over. That won't be over for an hour.
Now, I have these figures, and a map of the Ruhr area,
showing the location of the deposits there but I haven't
the whole Germany map yet.
H.M. JR: Let's see that a minute. (Mr. McConnell hands
the Secretary map of Ruhr area.)
MR. WHITE: Some of the boys raised the point that
there is a terrific coal shortage and that you might want
to consider merely permitting the Ruhr coal mines just to
produce coal.
MR. McCONNELL: The green or blue is the coal area.
That is the Saar Valley and that is the iron in France
(indicating), and this is the Ruhr Valley.
Regraded Unclassified
136
- 3 -
MR. GASTON: That coal shortage won't last long after
the war, will it, Harry?
MR. WHITE: They think it will last longer. I don't
know enough about it, but they think there will be a short-
age for at least a year or longer.
H.M.JR: I would like to keep this (referring to the
map).
MR. McCONNELL: May I get a copy of that for you,
please?
H.M.JR: I want it at supper time, if Harry will
bring it to the house.
MR. WHITE: Yes.
I.M.JR: Don't forget it, Harry.
MR. WHITE: All right. Does that have marked on it
what you want?
MR. McCONNELL: It hasn't got the production on it,
Harry. Now, here is May, 1944 \referring to statistical
data on German industries)
MR. WHITE: We have a very big map on which we were
going to mark the data he has in the book, the production
and the location of all important industry.
K.M.JR: This map helps. I want this one tonight.
MR. WHITE: All right, and we will try to have the
other one done.
MR. McCONNELL: Here is every steel plant, its capacity
and location. That capacity will be located on this large
map.
H.M.JR: To answer you as to letting them produce coal,
Regraded Unclassified
137
- 4 -
that doesn't answer what I have in mind. I started out with
Hopkins, who had been pretty much sold on this international
idea of letting them produce some. When we got through
lunch he liked this thought very much - much simpler, much
easier to sell. It isn't important whether they have an
international zone or not just as long as they have a strong
police force. He thinks it will be much easier to main-
tain - just a special police force.
All of these people, like the President and Hopkins,
as soon as you speak to them about what it means to the
future of England, immediately they catch the thing. That
appeals to them right away.
MR. WHITE: I think if it is still German - you have
a police force - the Germans will always regard it as theirs
and just have the police force removed. I suppose they will
regard it as theirs even in an international zone. It
would be a little easier to perpetuate it as an international
zone.
H.M.JR: But when he left he was thoroughly sold on
the ghost-town idea.
MR. WHITE: There are a great many foreign workers
in the Ruhr. There has been a substitution, apparently,
for a lot of German workers of foreign workers, so that
would render the problem a little less difficult.
H.M.JR: When you talk about letting them produce coal -
after all, coal is the whole basis for their whole chemical
industry.
MR. McCONNELL: That is right.
MR. GASTON: And their steel industry.
MR. PEHLE: Mr. Secretary, the coal is there, anyhow.
If you use up their resources, that is all to the good.
H.M. JR: Listen, you people aren't going to be able to
budge me. I could be run over and destroyed, but I am not
going to give in while I have got breath.
Regraded Unclassified
138
- 5 -
MR. McCONNELL: I think we ought to go much further,
sir. Just take direct metallurgy--
H.M.JR: That is all right. You start where I am
starting; take this coal basin, and these three or four
important areas, and just flood them.
MR. GASTON: You mean flood the mines?
H.M.JR: Yes.
MR. McCONNELL: That is very easily pumped out.
H.M.JR: Then take a little dynamite.
MR. McCONNELL: You have got to sit there and watch
them, I mean. I think the police force is almost essential.
H.M.JR: That is right. But you can do this in three
months - you can do it in thirty days and then explain it
afterwards.
MR. GASTON: My trouble is not with your idea, but
just the mechanics - how you do it.
H.M.JR: You do it, that is all. The Combined Chiefs
of Staff just tell the Army to do it - just to destroy
them.
MR. GASTON: Oh, destroy the mines; that is just one
phase of it. The other proposition is how you keep them
destroyed, and what you do to the population. I should
think it would call for international control over the
area.
H.M.JR: The way Hopkins put it, you set this thing
up to destroy, and then he says let the people argue
about putting it back into production, but first destroy
the area. Then the burden of proof is on the other
fellow. With all the labor in America, and labor in
England - why, this would solve all the troubles in
Pennsylvania and West Virginia, and everywhere else.
Regraded Unclassified
139
- 6 -
MR. WHITE: I don't think - not as much as that.
H.M.JR: You are wrong. You go back thirty years
when we used to export coal from Norfork.
MR. PEHLE: We are exporting it now to Italy.
H.M.JR: It is the ten percent on top, you know that.
MR. McCONNELL: Six hundred million tons could come
out of that area.
H.M.JR: But I am just saying a ten-percent extra
on top of the normal production makes it a bargaining power
for the buyer.
MR. McCONNELL: Yes, fifty percent difference in the
price.
H.M.JR: But a surplus of ten percent puts the product
in the hands of the buyer instead of the seller.
MR McCONNELL: That is right, sir. It must not be
forgotten, sir, that there is coal all over Germany.
H.M.JR: We will pursue the thing. I have another
little idea and I am going to stick with it. I have
the President, I have Mrs. Roosevelt, and I have Hopkins
on my side. I didn't have that much when we did the
volunteer plan; I only had the President and Mrs. Roosevelt.
MR. PEHLE: Mr. Secretary, I don't think the idea is
to destroy everything in the Ruhr. That means you have to
say that isn't any good, because you can't destroy every-
thing all over Germany.
H.M.JR: The interesting thing - Hopkins says, "We
will have to meet with Roosevelt quick, before somebody
else changes his mind."
MR. WHITE: There is much to be said, actually - if
you are going to take it, take it right away.
Regraded Unclassified
140
- 7 -
H.M.JR: Hopkins is 80 keen about it. We are going
to talk to Hull. He doesn't want to let more than twenty-
four hours elapse.
MR. WHITE: The happiest man in the Treasury will be
Orvis Schmidt. He was fighting tooth and nail for that
position of destroying everything, but we shouted him down
last week.
John thought the Army ought to destroy that stuff as
soon as they go in, because that is when it would be
possible. Glasser was talking of the splendid job which
the German engineers did in the destruction of all indus-
trial plants in Naples. The American Army engineers said
it was the best job of a highly skilled technical destruc-
tion that they have ever seen. So it does require engineers
of a high order to do it, and they could do it then. But
the part that gave us pause was we thought that the machinery
that was in the factories ought to be removed.
MR. PEHLE: Once we start on the program of saying
that everybody can get what they want out of Germany, I
am afraid there will be months and months of delay, and delay
in this program means a great difficulty in ever carrying
it out.
H.L.JR: If the Combined Chiefs of Staff, with the
cooperation of the Russians, agree to this thing - that it
should be done as they sweep through--
MR. PEHLE: That is right, even if they destroy some
machinery that somebody else wants.
MR. BELL: Cause less fighting.
H.M.JR: They have gone through Brussels, did you
know that?
MR. WHITE: I assume they are probably pulling out of
Belgium into Holland.
H.M.JR: I mean our troops are through Brussels and
on the outskirts of Antwerp.
Regraded Unclassified
141
- 8 -
MR. GASTON: Did they enter Brussels at all?
Mr. McCONNELL: We went into the city and through it.
H.M.JR: I mean, we are talking about something--
MR. BELL:
that is around the corner. If they
are going to destroy as they go in, they had better have a
decision made this week.
MR. GASTON: They haven't a Siegfried Line up at the
West wall, have they - on the Dutch border? It runs up to
Cologne, doesn't it?
H. JR: You say Schmidt is for this?
MR. PEHLE: Yes, sir. He certainly is.
H.M.JR: Who else is for it?
MR. PEHLE: I think we are all for it, now.
MR. GASTON: I don't now what it is yet. I am for
stopping the heavy production of the kuhr by any means to
do it - of eliminating the heavy wartime production of the
Ruhr - but I still don't know just what your plan for
accomplishing that is. I think it has to be done by inter-
national occupation and deliberate closing up of those
industries, and continued international occupation. I
don't know that the blowing up has much importance at all.
It may help.
MR. PEHLE: Boy! I do. I think it is the only way
you can keep them from operating two years hence. Blow
them up now and blow them up as close to the fighting
period as possible. I mean, psychologically, for us to go
in and blow up a lot of fine machinery is going to hurt
a lot of people's senses, but if we do it at the time of
the demolition of Germany, I think the public would take it
without any trouble whatsoever.
MR. GASTON: I think SO.
142
- 9 -
MR. BELL: You would never do it after two years.
MR. GASTON: If the sentiment is going to change in
two years, all of these plans are hopeless. If sentiment
is going to change so you say, "Oh, let Germany come back" -
I don't think it is going to change.
H.M.JR: Last week Schmidt and Abramson were for this?
MR. WHITE: Yes - well, the history was, they were on
the other side of the fence and they claim I tried to sell
them the idea of why Germany had to be made a fourth great
power. So they said that I convinced them so thoroughly,
that they wanted to be consistent with my view, and the only
position that was consistent was the complete destruction
of the nuhr and the moving out of the people.
At first I thought they were kidding me. They were
very serious indeed and they pushed us around a great deal,
Schmidt and Abramson insisting that was the only reasonable
position, a complete destruction of the Ruhr, and let the
people be moved out. Schmidt thinks it is entirely possible
and so does Abramson. As I say, they lost out finally, but--
MR. McCONNELL:
won again.
MR. WHITE: They won out where it matters now.
MR. McCONNELL: The direct parallel would be the
destruction of Pittsburgh, down to Detroit and Chicago and
St. Louis and Cleveland. Eighty percent of the industry
of this country, outside of the food processing--
MR. GASTON: It means they have to buy steel supplies
from somewhere else, doesn't it?
MR. McCONNELL: It would be uneconomical. Automobile
plants probably could not produce anything.
MR. WHITE: Why not?
MR. GASTON: Can't they get their steel from Lorraine?
Regraded Unclassified
143
- 10 -
MR. McCONNELL: I doubt that without steel from Pitts-
burgh or the interior here that Detroit could produce any
automobiles.
MR. WHITE: You mean they couldn't produce cheaply
enough.
MR. McCONNELL: In competition with anybody else.
MR. WHITE: There won't be any competition. They
won't be able to buy.
M.M.JR: But isn't it a fact that the Germans
own Opel and they went there because they could pay the labor
less? They went there because they thought they could
produce stuff there and their main market was to compete
with us in South America.
MR. McCONNELL: No, I didn't think that was so, sir.
The German automobile is a very small low-horsepower thing.
H.M.JR: Didn't they meet us mainly in South America,
the Opel?
MR. McCONNELL: I think they are making the little
European car.
H.M.JR: The small car was made by the Fiat - a low
gas-consuming car.
MR. McCONNELL: Yes, down in Italy.
MR. GASTON: All European cars are--
H.M.JR: Well, do you have some more maps? I like
maps.
Where are Schmidt and Abramson?
MR. PEHLE: I can get Schmidt.
H.M.JR: Well, I have to stop at four o'clock.
Regraded Unclassified
144
- 11 -
M. McCONNELL: These are sectionalized maps of
Germany with the terrain, and so forth.
H.M.JR: Look, anything you can get to White SO he
can bring it to the house to me tonight, I would like to
have.
This is helpful. If I haven't gone far enough,
Mr. McConnell, let's go a little further.
MR. McCONNELL: Well, I would like to point out just
one development which might occur within five years after the
razing of the kuhr, and that is direct metallurgy with gas
from brown coal and low-grade iron ores. That is right
on the doorstep, almost. Not to discuss the question of
the Ruhr, but I just want to point out that isn't the
entire answer to the steel industry in Germany. It would
be temporary. Those plants would be out, but it is not at
all sure that steel can't be produced all over Germany where
brown steel occurs. There are a lot of deposits in Germany.
This idea of direct metal from the ore with gas production
from brown coal is receiving a lot of attention. AS a matter
of fact, they are doing it down in Duisberg, now; we have
some fairly large commercial plants working here on direct
metallurgy.
H.M.JR: Well, look, what I am trying to do is to get
ready a picture for the President. I am repeating myself,
but I am going to keep repeating myself until he tells me
to stop. I want to make Germany so impotent that she can-
not forge the tools of war - another world War. Now, I
could repeat myself and repeat myself, but that is what I
want to accomplish.
MR. McCONNELL: This is one of the means to that end,
but there are other necessary essential steps.
H. JR: Let's have them. We have to move awfully
fast.
Regraded Unclassified
145
- 12 -
MR. WHITE: What Mr. McConnell is suggesting is that
there shall be a control exercised on the plants that are
left within the part of Germany that you are going to
leave as Germany - north and south Germany - and that that
control shall be imposed to eliminate some plants entirely,
to curtail the output of other plants, and subject it to
the kind of control which would prevent those plants which
are left from producing large enough quantities to give
rise to a military potential of any significance.
MR. McCONNELL: Plus quarantine which will prevent im-
portations of any war materials. That involves policing.
MR. WHITE: That applies to the part of Germany which
is left after you take away the Ruhr and those other
sections.
H.M.JR: Harry, you bring me everything you can get,
and a memorandum which I hope we can work from when we see
Hull.
Regraded Unclassified
146
Meeting in Secretary Morgenthau's Office
Monday, September 4, 1944, 4:00 p.m.
Present: Secretary Morgenthau
Mr. D. If. Bell
Mr. White
Mr. Brand, British Treasury
The conference was requested by Mr. Brand.
Mr. Brand stated that he had received a message from the Chancellor
of the Exchequer with respect to the possible use of yellow seal dollars
for pay of American troops in Germany. He gave a copy of the message to
the Secretary. A copy is appended.
Secretary Morgenthau's first comment was that no decision had been
made with respect to the use of dollars. Mr. Bell said that he had been
given to understand that a decision had been made on that matter but
that subsequently he learned that the decision was not final and so had
informed the British not to send a message until the matter were further
explored here. Mr. Brand stated that apparently a brief message had gone
to his Government on Saturday and that he had amplified the message on
Monday after talking with me. Mr. Bell and I explained that it had been
decided to inform the British that the President wanted to use dollars
for pay of American troops in Germany. I had also explained to Brand
when Brand called on me that the decision may not be final but any modi-
fication of that decision rested with higher authorities. Mr. Brand
asked if the delay in arriving at the rate was responsible for the de-
cision to use the dollars.
The Secretary replied that the delay might have contributed to the
decision. The Secretary stated that his view was that the rate should
not be higher than 10 cents and that he was not going to recommend to
the President any other rate than 10 cents. He said he didn't know
whether the President would listen to any rate inasmuch as the President
had indicated he wished to have dollars used in payment of troops in
Cermany. Dr. Brand stated that a 10 cent rate would give rise to a lot
of trouble, that his own people thought that the rate ought to be 20 cents
but that they were willing to consider a lower rate than that, probably
6 or 7 to the dollar. Mr. Brand also said that he thought we had already
agreed to a rate of 12 1/2 cents and had so informed the Russians. I re-
minded him that the cable which we had written had stated that the British
wanted the rate to be 6 to the dollar and we wanted the rate to be 10 to
the dollar but it might be possible that we might compromise at 12 1/2
cents. I said I had used the word "might" because we had not gotten the
approval of the Secretary on anything higher than 10 cents.
Regraded Unclassified
147
- 2 -
The Secretary pointed out that he had earlier recommended a 5 cent
rate to the President but was now willing in view of the circumstance
to recommend a 10 cent rate but that he was not going to horse trade on
the matter. Mr. Brand said that "So 10 cents is an ultimatum." The
Secretary quickly objected to that characterization of his remarks and
said that he wanted it clearly understood that he was not in any sense
giving any ultimatum, that he was merely expressing the view that he
would recommend a 10 cent rate and that it was up to the President to
decide. Mr. Brand wanted to know whether it wouldn't be all right for
Churchill to cable the President directly. Secretary Morgenthau replied
that the Prime Minister had done 80 a number of times before. Mr. Brand
said he would inform his Chancellor at once of the Secretary's views.
H. D. White
Regraded Unclassified
148
COPY
Message from the Chancellor of the Exchequer to Mr. Morgenthau
From London, September 4, 1944:
"1. I have learned that a decision has been taken to use yellow seal dollars
for pay of the American troops in Germany. I think I can understand the grounds
for such a decision but close study has convinced no that for technical reasons
the probable consequences would be so disturbing that I earnestly hope you may
be able to secure reconsideration of the matter. I have therefore asked Brand
to convey this personal message urgently to you.
2. You will know that after careful consideration an agreement was reached
between your Treasury and ours, and with the Soviet authorities, that an allied
military mark should be used for all purposes and for all allied troops. This
agreement seemed to the Treasury here entirely right in the circumstances and
we assumed that in any event it would not be altered without the consultation
and agreement of all three governments.
3. Technical reasons to which I have referred are briefly as follows. Although
yellow seal dollars are to be confined to pay of troops it is likely that in the
early period the mumber of American troops in Gemany will be very large and
therefore this dollar will be & currency in wide use. For obvious reasons it
is a currency that will be much more sought after than allied military marks or
others, and these therefore are certain to lose value sharply in relation to
yellow seal dollars. This situation is bound in the first place to cause con-
siderable difficulties for our troops and those of the other allies who may be in
Germany and who will be using military marks. The British military authority
note, for example, does not correspond to your yellow seal dollar because it is
not legal tender in the U.K. and thus has no intrinsic value unless We consent
to redeem it, which of course we should certainly not do in Germany. The pro-
149
-2 -
bable effect on good relations between troops would indicate the desir-
ability of consulting Combined Chiefs of Staff if change is still con-
templated despite the considerations I an putting before you. There is
another point. As allied military marks and Redchamarks lose value, as
they must, in relation to yellow seal dollars, it cannot be long before
price and wage structure in Germany collapses. I certainly would not
worry about the consequences for the Germans. If financial ruin is part
of the price that leading persons in Germany pay for their wickedness
so be it. But what about the immediate consequences of a collapse upon
the commanders of occupation troops? I am assuming that whatever else
happens in Germany immediately upon its occupation we should wish to make
such civil administration as may be found to exist in Germany work on our
behalf, and especially to make it take responsibility for maintaining such
production as is necessary for the requirements of the occupying armies and
the minimum essentials of life of the German people. Otherwise this res-
ponsibility will be laid at the door of the commanders of the occupying
armies and add seriously to their anxieties, Neither of us can wish that
the allied armies should have among their first tasks the restoration of the
economy of Germany.
4. All my advisers are in agreement that the fears I have expressed are not
begeys. These general arguments were all discussed with your people in
connection with the earlier decision to use allied military marks and it is
in the light of these broad issues of policy that I ask you to reconsider
the matter."
150
gave
to
Hyer 9/4/14-
Message from the Chancellor of the Exchequer to Mr. Morgenthau
From London, September 4, 1944:
"1. I have learned that a decision has been taken to use yellow seal
dollars for pay of the American troops in Germany. I think I can under-
stand the grounds for such a decision but close study has convinced
me that for technical reasons the probable consequences would be so
disturbing that I earnestly hope you may be able to secure reconsideration
of the matter. I have therefore asked Brand to convay this personal
message urgently to you.
2. You will know that after careful consideration an agreement was reached
between your Treasury and ours, and with the Soviet authorities, that
an allied military mark should be used for all purposes and for all allied
troops. This agreement seemed to the Treasury here entirely right in the
circumstances and we assumed that in any event it would not be altered
without the consultation and agreement of all three governments.
3. Technical reasons to which I have referred are briefly as follows.
Although yellow seal dollars are to be confined to pay of troops it is
likely that in the early period the number of American troops in Germany will
be very large and therefore this dollar will be a currency in wide use.
For obvious reasons it is a currency that will be much more sought after
than allied military marks or others, and these therefore are certain to
lose value sharply in relation to yellow seal dollars. This situation is
bound in the first place to cause considerable difficulties for our troops
and those of the other allies who may be in Germany and who will be using
military marks. The British military authority note, for example, does not
correspond to your yellow seal dollar because it is not legal tender in the
U.K. and thus has no intrinsic value unless we consent to redeem it, which
of course we should certainly not do in Germany. The probable effect on good
relations between troops would indicate the desirability of consulting
Combined Chiefs of Staff if change is still contemplated despite the consider-
ations I am putting before you. There is another point. As allied military
marks and Reichsmarke lose value, as they must, in relation to yellow seal
dollars, it cannot be long before price and wage structure in Germany
collapses. I certainly would not worry about the consequences for the
Germans. If financial ruin is part of the price that leading persons in
Regraded Unclassified
151
Mr. Morgenthau
-2-
Germany pay for their wickedness BO be it. But what about the immediate
consequences of a collapse upon the commanders of occupation troops? I am
assuming that whatever else happens in Germany immediately upon its occupation
we should wish to make such civil administration as may be found to exist in
Germany work on our behalf, and especially to make it take responsibility for
maintaining such production as is necessary for the requirements of the
occupying armies and the minimum essentials of life of the German people.
Otherwise this responsibility will be laid at the door of the commanders of the
occupying armies and add seriously to their anxieties. Neither of us can
wish that the allied armies should have among their first tasks the restoration
of the economy of Germany.
4. All my advisers are in agreement that the fears I have expressed are not
bogeys. These general arguments were all discussed with your people in
connection with the earlier decision to use allied military marks and it 1a
in the light of these broad issues of policy that I ask you to reconsider
the matter."
Regraded Unclassified
152
September 4, 1944
4:33 p.m.
HMJr:
Hello.
Admiral
Leahy:
Admiral Leahy.
HMJr:
Morgenthau.
L:
Hello, Mr. Secretary.
HMJr:
How are you?
L:
Fine, thank you.
HMJr:
Look, Admiral, just so that you know what I've
been doing in case it should come through. You
know I've been to the President twice, now, to
get him to agree to let us fix a rate on this
military currency for Germany.
L:
Yes.
HMJr:
And he doesn't want no part of it, and he wants
to -- to use American dollars.
L:
Yeah.
HMJr:
Well, we've been trying to convince him that
they shouldn't and I believe the Combined Chiefs
of Staff have already passed on that but that --
the President still didn't like it. Now, the
representative of the British Treasury was just
in here and I told him, because they've never
agreed with us, if they would agree on a mark
being worth ten cents; instead of twenty cents,
the way they want it
L:
Yes.
HMJr:
that I would go back once more to the
President and try to get him to agree to it.
L:
Yeah.
HMJr:
And that -- but I wouldn't go back to him again
while we were still trying to horse-trade with
the English.
153
2 I I
L:
Yeah, I see.
HMJr:
And that this was -- would be ten cents as far as
I was concerned, or I would not go back. So the
last thing they said, "Well, supposing Mr. Churchill
should cable directly to Mr. Roosevelt?" I said,
"Well, that's his privilege. He's done it before."
L:
Yeah, he does it every day.
HMJr:
(Laughs) So, I thought you might know about it
and if something came through, I'd like to be the
second fellow to know it.
L:
Yes, I'll let you know if anything comes. The Boss
will be back day after tomorrow morning, I think.
HMJr:
I know. Well, I've told them -- the English to try
to give me an answer tomorrow.
L:
Uh huh.
HMJr:
But I'm holding out for ten cents and I don't
want the President to give them fifteen.
L:
Well, if I -- if I get any message, I'll let you
know -- if I get it -- as soon as he gets it, or
before, if I have a chance.
HMJr:
Yeah. And, of course, Eisenhower has been calling
up both Stimson and McCloy and begging them to
make a rate.
L:
Yeah.
HMJr:
And we've got to do something pretty soon.
L:
Well, your ten-cent rate is all right, 18 it?
HMJr:
Yes, the English want twenty.
L:
I see.
HMJr:
So, don't -- and I went to the President originally
and wanted a five-cent rate.
L:
That would be better than ten, wouldn't it?
HMJr:
It would have. Now -- but I couldn't get either
the State Department or the War Department to go
along with me.
Regraded Unclassified
154
- 3 -
0
L:
Uh huh.
HMJr:
The best they would do was ten cents.
L:
Yeah.
HMJr:
So, I say ten cents because that makes a united
front here at home.
L:
Yeah. Well, tell me one thing, what has the --
what has the military got to do with 1t? What
difference does it make to us whether it's ten
cents or one cent?
HMJr:
Well, it's really a matter of bookkeeping. We've
got to put on the books an amount. You see -- to
account for it?
L:
But I mean from the military point of view, I don't
see why we should be interested in it. Is there any
reason?
HMJr:
Well, only from the standpoint -- when the soldiers
begin to buy something in Germany, what are they
going to get?
L:
Yeah.
HMJr:
See?
L:
Yeah, well, it ought to be low if that's the point.
HMJr:
That's the point. Now, the English want twenty;
we, here in the Treasury, wanted five.
L:
Yes.
HMJr:
The State and War wouldn't go down below ten.
L:
Uh huh.
HMJr:
So we've come up and we -- I now have told the
English it will be ten or nothing.
L:
Good. Well, that's fine. I'll see that you get --
if I get the news
HMJr:
Yes.
155
- 4 -
L:
I'll see that you get it right away, Mr.
Secretary.
HMJr:
I thank you.
L:
Fine. Good bye.
156
Dinner at the Secretary's Home
September 4, 1944
Present: Secretary Morgenthau
Secretary Stimson
Mr. McCloy
Mr. White
The Secretary had called the conference to discuss proposed
recommendations for a program on Germany.
The Secretary read aloud part of the memorandum which had been
prepared in the Treasury on a program for Germany. Secretary Stimson
appeared to be most interested in the question of punishment of German
war criminals. He expressed his view that it would be undesirable for
either military or any other authority to impose sentences without
giving the accused an opportunity for a hearing and for counsel. It
was important, he felt, that they be given a fair trial though not
necessarily a public trial.
The question of partitioning of Germany into Northern and Southern
areas was also discussed. Secretary Stimson and McCloy said that they
were not convinced of the need for such partitioning but wanted to give
the matter further consideration. Mr. McCloy said he was moving toward
the view that it would probably be a good thing to divide Germany. He
emphasized the desirability of eliminating Berlin as the main city and
moving the center of government activity to some other spot, possibly
Frankfurt.
Mr. Stimson doubted the wisdom of destroying the Ruhr. He stressed
the fact that to destroy much of the German industry would be to force
30 million people into starvation. In answer to an inquiry as to how he
arrived at 30 million, he said that that was the difference in the popu-
lation of Cermany before it was industrialized in the middle of the 19th
century and its present population. Mr. Stimson said that he favored
slicing off Silesia and a part of Last Prussia and that he also desired
a rigorous prosecution of war criminals. However, he did not believe
that the proper way to treat the Germans and to prevent future war was
to destroy German industry.
H. D. White
9/4/44
157
reasury draft document to be presented to
the Secretary for his review prior to submis-
sion to the President.
159
TOP SECRET
Suggested Post-Surrender Program for Germany
It is suggested that the position of the United States should
be determined on the basis of the following principles:
1. Demilitarization of Germany.
It should be the aim of the Allied Forces to accomplish the
complete demilitarization of Germany in the shortest possible
period of time after surrender. This means completely disarming
the German Army and people (including the removal or destruction
of all war material), the total destruction of the whole German
armament industry, and the removal or destruction of other key
industries which are basic to military strength.
2. Partitioning of Germany.
(a) Poland should get that part of East Prussia which doesn't
go to the U.S.S.R. and the southern portion of Silesia as indicated
on the attached map, (Appendix A).
(b) France should get the Saar and the adjacent territories
bounded by the Rhine and the Moselle Rivers.
(o) As indicated in part 3 an International Zone should be
created containing the Ruhr and the surrounding industrial areas.
(a) The remaining portion of Germany should be divided into
two autonomous, independent states, (1) a South German state com-
prising Bavaria, Wuerttemberg, Baden and some smaller areas and
(2) a North German state comprising a large part of the old state
of Prussia, Saxony, Thuringia and several smaller states.
There shall be 8. custom union between the new South German
state and Austria, which will be restored to her pre-1938 political
borders.
3. The Ruhr Area. (The Ruhr, surrounding industrial areas, as
shown on the attached map, including the Rhineland all German
territory north of the Keil Canal.)
Here lies the heart of German industrial power, the
caldron of wars. This area should not only be stripped of all
presently existing industries but so weakened that it can never
again become an industrial area. The following steps will accomplish
this:
(a) Within a short period, if possible not longer than 6 months
after the cessation of hostilities, all industrial plants and equip-
ment not destroyed by military action shall either be completely
dismantled and removed from the area or completely destroyed. All
equipment shall be removed from the mines and all possible steps
shall be taken to make it as difficult as possible ever to return
the mines to operation.
It is anticipated that the stripping of this area would
Regraded Unclassified
159
- 2 -
be accomplished in two stages (aside from the destruction that
will occur as a result of military operations):
(i) Removal of plants and equipment by members of the
United Nations as restitution and reparation (Paragraph 4).
(ii) All equipment not removed within a stated period
of time, say 6 months, will be completely destroyed or reduced
to scrap and allocated to the United Nations.
(b) All people within the area should be made to understand
that this area will never again be allowed to become an industrial
area. Accordingly, all people and their families within the area
having special skills or technical training should be encouraged
to migrate permanently from the area and should be as widely
dispersed as possible. Steps will be taken to assure subsistence
to the people pending their migration out of the area, or transfer
to new occupations having no military potential.
(c) The area should be made an international zone to be
governed by an international security organization to be established
by the United Nations. In governing the area the international
organization should take all possible steps and be guided by
policies designed to further the above stated objectives.
4. Restitution and Reparation.
Reparations, in the form of recurrent payments and deliveries,
should not be demanded. Restitution and reparation shall be effected
by the transfer of existing German resources and territories, e.g.,
(a) by restitution of property looted by the Germans in
territories occupied by them;
(b) by transfer of German territory and German private rights
in industrial property situated in such territory to invaded
countries and the international organization under the program
of partition;
(c) by the removal and distribution among devastated countries
of industrial plants and equipment situated within the International
Zone and the North and South German states delimited in the section
on partition;
(d) by forced German labor outside Germany; and
(e) by confiscation of all German assets of any character
whatsoever outside of Germany.
5. Education and Propaganda.
(a) All schools and universities will be closed until an Allied
Commission of Education has formulated an effective reorganization
Regraded Unclassified
160
- 3 -
program. It is contemplated thet it may require a considerable
period of time before any institutions of higher education are
reopened. Meanwhile the education of German students in foreign
universities will not be prohibited. Elementary schools will be
reopened as quickly as appropriate teachers and textbooks are
available.
(b) All German newspapers, magazines, weeklies, etc., will
cease publication immediately and shall not resume publication
until so directed.
(c) All German radio stations will be discontinued immediately
and shall not be permitted to resume operations until so directed.
6. Political Decentralization.
The military administration in Germany in the initial period
should be carried out with a view toward the eventual partitioning
of Germany into three states. To facilitate partitioning and to
assure its permanence the military authorities should be guided
by the following principles:
(a) Dismiss all policy-making officials of the Reich government
and deal primarily with local governments.
(b) Encourage the reestablishment of state governments in each
of the states (Lander) corresponding to 18 states into which Germany
is presently divided and in addition make the Prussian provinces
separate states.
(c) Upon the partition of Germany, the various state governments
should be encouraged to organize a federal government for each of
the newly partitioned areas. Such new governments should be in the
form of a loose confederation of states, with emphasis on states'
rights and a large degree of local autonomy. Eventually such
confederacies would assume sovereign functions, including separate
currency and postal systems, powers of foreign representation and
negotiation, etc.
7. Responsibility of Military for Local German Economy.
The sole purpose of the military in control of the German economy
shall be to facilitate military operations and military occupation.
The Allied Military Government shall not assume responsibility for
such economic problems as price controls, rationing, unemployment,
production, reconstruction, distribution, consumption, housing, or
transportation, or take any measures designed to maintain or
strengthen the German economy, except those which are essential
to military operations. The responsibility for sustaining the
German economy and people rests with the German people with such
facilities as may be available under the circumstances.
8. Controls over Development of German Economy.
During the period of 10 years after surrender controls shall
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be maintained by the United Nations designed to prevent in the
newly established states:
(a) The establishment of key industries basic to military
potential.
(b) The development beyond 8 predetermined level of other
key industries.
Among other things, controls should be exercised over foreign
trade and capital imports into these states should be greatly
restricted.
9. Punishment of War Crimes and Treatment of Special Groups.
There is attached (Appendix B) a program for the punishment
of certain war crimes and for the treatment of Nazi organizations
and other special groups.
10. Wearing of Insignia and Uniforms.
(a) No person in Germany (except members of the United Nations
and neutral countries) shall be permitted to wear any military
insignia of rank or branch of service, service ribbons or militery
medals.
(b) No such person shall be permitted to wear, after
months
from the cessation of hostilities any military uniform or any
uniform of any quasi military organizations.
11. Prohibition on Parades, Nazi Flags, etc.
(a) No parades (military, political, civilian or sports)
shall be permitted anywhere in Germany. All military bands should
be disbanded and no band shall be permitted to march on the streets
of Germany.
(b) All flags and other paraphenalia of the Nazi organizations
shall be collected. A portion shall be set aside to distribute to
foreign museums and the remainder shall be destroyed.
12. Airplanes
All airplanes and gliders, whether military or commercial, will
be confiscated for later disposition. No German shall be permitted
to operate or to help operate such planes and gliders, including
those owned by foreign interests.
13. United States Responsibility.
(a) The responsibility for the execution of the post-surrender
program for Germany set forth in this memorandum is the joint
responsibility of the United Nations. The execution of the joint
policy agreed upon should therefore eventually be entrusted to the
international body which emerges from United Nations discussions.
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Consideration of the specific measures to be taken in carrying
out the joint program suggests the desirability of separating the
task to be performed during the initial period of military
occupation from those which will require a much longer period of
execution. While the U.S., U.K. and U.S.S.R., will, for practical
reasons, play the major role (of course aided by the military
forces of other United Nations) in demilitarizing Germany (point 1)
the detailed execution of other parts of the program can best be
handled by Germany's continental neighbors.
(b) When Germany has been completely demilitarized there
would be the following distribution of duties in carrying out
the German program:
(i) The U.S1 would have military and civilian representa-
tion on whatever international commission or commissions may be
established for the execution of the whole German program and such
representatives should have adequate U.S. staffs.
(ii) The primary responsibility for the policing of
Germany and for civil administration in Germany would be assumed
by the military forces of Germany's continental neighbors. Speci-
fically, these should include Russian, French, Polish, Czech,
Greek, Yugoslav, Norwegian, Dutch and Belgian soldiers.
(c) Under this program United States troops could be withdrawn
within & relatively short time. Actual withdrawal of United States
troops should not precede agreement with the U.S.S.R. and the U.K.
on the principles set forth in this memorandum.
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Punishment of Certain War Crimes and Treatment of Special Groups.
A. Punishment of Certain War Criminals.
(1) Arch-oriminals.
A list of the arch criminals of this war whose obvious
guilt has generally been recognized by the United Nations
shall be drawn up as soon as possible and transmitted to
the appropriate military authorities. The military authorities
shall be instructed with respect to all persons who are on
such list as follows:
(a) They shall be apprehended as soon as possible
and identified as soon as possible after apprehension,
the identification to be approved by an officer of the
General rank.
(b) When such identification has been made the person
identified shall be put to death forthwith by firing
squads made up of soldiers of the United Nations.
(2) Certain Other War Criminals.
(a) Military commissions shall be established by the
Allied Military Government for the trial of certain
crimes which have been committed against civilization
during this war. As soon as practicable, representatives
of the liberated countries of Europe shall be included
on such commissions. These crimes shall include those
crimes covered by the following section and such other
crimes as. such military commissions may be ordered to
try from time to time.
(b) Any person who is suspected of being responsible for
(through the issuance of orders or otherwise), or having
participated in, causing the death of any human being in
the following situations shall be arrested and tried
promptly by such military commissions, unless prior to
trial one of the United Nations has requested that such
person be placed in its custody for trial on similar
charges for acts committed within its territory:
(i) The death was caused by action in violation
of the rules of war.
(ii) The victim was killed as 8. hostage in reprisal
for the deeds of other persons.
(iii) The victim met death because of his nationality,
race, color, creed, or political conviction.
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(c) Any person who is convicted by the military
commissions of the crimes specified in paragraph (b)
shall be sentenced to death, unless the military
commissions, in exceptional cases, determine that there
are extenuating circumstances, in which case other punish-
ment may be meted out, including deportation to a penal
colony outside of Germany. Upon conviction, the sentence
shall be carried out immediately.
B. Detention of Certain War Criminals.
(1) All members of the following groups should be detained
until the extent of the guilt of each individual is determined:
(a) The S.S.
(b) The Gestapo.
(c) All high officials of the police, S.A. and other
security organizations.
(a) All high Government and Nazi party officials.
(e) All leading public figures closely identified
with Nazism.
C. Registration of Certain Groups.
(1) A Proclamation shall be issued as soon as possible
requiring the following persons to register before designated
officials of the Allied Military Government:
(a) All members of the Nazi party, the Gestapo, S.S.,
S.A., and Kraft Korps.
(b) Officials, and anyone occupying a position for
which remuneration is received, in the Labor Front,
Strength-through-Joy, Hitler Youth, and Todt.
(2) The registration shall be on e form and in 8 manner
to be prescribed by the military authorities.
(3) Failure to register or the making of B. false registration
shall be made an offense triable by military commissions under
the Allied Military Government, and heavy penalties shall be
prescribed, including death.
D. Labor Battalions.
Apart from the question of established guilt for special
crimes, mere membership in the S.S., the Gestapo and similar
groups will constitute the basis for inclusion into compulsory
labor battalion to serve outside Germany for reconstruction
purposes.
E. Dissolution of Nazi Organizations.
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The Nazi Party and all affiliated organizations such as
the Labor Front, The Hitler Youth, The Strength-through-Joy,
etc., should be dissolved and their properties and records
confiscated. Every possible effort should be made to prevent
any attempts to reconstitute them in underground or disguised
form.
F. Prohibition on Exercise of Certain Privileges.
All members of the following groups should be dismissed
from public office, disenfranchised and disqualified to hold
any public office or to engage in journalist, teaching, and
legal professions, or, in any managerial capacity in banking,
manufacturing or trade:
(1) The Nazi Party.
(2) Nazi sympathizers who by their words or deeds materially
aided or abetted the Nazi program.
(3) The Junkers.
(4) Military and Naval officers.
G. Junker Estates.
All Junker estates should be broken up and divided among
the peasants and the system of primogeniture and entail should
be abolished.
H. Prohibition on Emigration.
(1) A Proclamation shall be issued prohibiting any person
resident in Germany from leaving or attempting to leave Germany,
except with permission from the Allied Military Government.
(2) Violation of this Proclamation shall be an offense triable
by military commissions of the Allied Military Government and
heavy penalties shall be prescribed, including death.
(3) All possible steps shall be taken by the military
authorities to prevent any such person from leaving (without
permission).
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War Department Draft of Directive for 166
Period immediately following cessation
of organized resistance. Discussed with
McCloy 9/4/44
DHET
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167
INTERIM DIRECTIVE TO SCARP REGARDING THE MILITARY GOVERNMENT OF GERMANY IN THE
PERIOD IMMEDIATELY FOLLOWING THE CESSATION OF ORGANIZED RESISTANCE (POST-DEFEAT)
1. In the event that RANKIN "0" conditions obtain in Germany or that the
German forces are either defeated or surrender before you have received a dir-
ective containing pelicies agreed upon by the three governments of the U.S.,
U.K. and U.S.S.R., you will be guided by the following policies, principles
and instructions.
2. Your primary objectives are of short term and military character rather
than of a long view governmental policy type. Germany will not be occupied for
the purpose of liberation but as a defeated enemy nation. The clear fact of German
military defeat and the undesirability of the results of aggression must be
appreciated by all levels of the German population. The German people must bear
the inevitable consequences of their own note. Your occupation and administration
will be just but firm and distant. You will strongly discourage fraternization
between Allied troops and the German officials and population.
3. Military government will be established and will extend over all parts
of Germany under your commend. Your rights, powers and status in Germany are
based upon the unconditional currender or the complete defeat of Germany.
4. & " virtue of your position you are clothed with suprese legislative,
executive and judicial authority and power in the areas compled w forces
under your commend. This authority will be breadly construed and includes
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authority to take all neasures deemed by you necessary. desirable or
appropriate in relation to military exigencies and the objectives of a
firm military government.
2. You are authorised at your discretion to delegate the authority
herein granted to you in whole or in part to nowbers of your command and
further to authorise them at their discretion to make appropriate sub-
delegations.
2. You should take the necessary measures to enforce the terms of
surrender and complete the disarmament of Germany.
s. The military government shall be a military administration which,
until you receive further advices, will show the characteristics of an
Allied undertaking acting in the interests of the United Nations.
5. The administrative policies shall be uniform throughout those parts of
Germany occupied by forces under your command subject to any special requirements
due to local circumstances.
6. Representatives of civilian agencies of the U.S. or U.K. Governments or
of UNRRA shall not participate unless and until you consider such participation
desirable when 19 will be subject, as to time and extent, to decision by the
Combined Chiefe of Staff on your recommendation.
9. 20 is contemplated that a tripartite administration w the U.S., U.E.
and U.S.S.R. covering the whole of Germany will be ostablished. You have previously
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received advices in this connection.
8. You are authorised as SCANP to enter into arrangements with the U.S.S.R.
military commanders as my be necessary for the occupation of Germany by the three
powere.
9. Appendix "A", Political Directive; Appendix "2", Financial Directive;
Appendix "0", Beenomic Directive; and Appendix "D", Relief Directive, are attached
hereto. M Appendix " there is a chart suggestive of the tripartite form which
military government for Germany night take. M Appendix age there is attached the
draft instrument of unconditional surrender for Germany.
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APPENDIX DAS
POLITICAL DIRECTIVE
1. The following persons will be arrested and held, pending receipt by
you of further inspructions as to their disposition:
(a) Adolf Hitler, his chief Nasi associates, and Nasi officials down
to and including the secretaries of local party units.
(b) All persons suspected of having committed war crimes.
(e) The leading officials of all ministries and other high political
officials of Germany and those persons who have held high position, either
civil or military, in the adminis ration of German occupied countries.
(d) Prominent Nazio holding important and key positions in (1) National
and Gau civic and economic organisations, (2) corporations and other organi-
sations in which the government has a major financial interest, (3) indus-
try, (4) finance, (5) education, (6) the judiciary. (7) the press and
other agencies disseminating neve and prepaganda.
(e) All judges. prosecutors and officials of the People's Court.
(f) Any national of any of the United Nations who 10 believed to
have committed offenses against his national law in support of the German
war effort.
2. You vill issue a proclamation dissolving the Nasi party and its
affiliates throughout Germany. You will take all practicable measures to up-
root and discredit Nast doctrines. No secret organisations 02 societies of any
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171
kind shall be permitted. Property, real and personal. of the Nast party and
its affiliates, wherever found, will be regarded as public property.
3. You will make special efforte to preserve all records and plans of the
(a) The German government
(b) German military organisations
(c) All organizations engaged in military research
(4) The Nasi party and affiliated organizations
(e) Security, criminal and ordinary police
(f) Nasi economic organisations and industrial establishments
(s) Institutes and special bureaus established in Germany, devoting
themselves to race, political, or similar research.
4. You will take immediate steps to abrogate all laws, decrees, regula-
tione or aspects thereof. which discriminate on the basis of race, color, creed,
or political opinions. All persons who are detained or placed in custody by
the Nazis on these grounds will be released, subject to requirements of security
and interests of the individuals concerned.
5. The criminal and civil courts of Germany will be closed. After the
elimination of all Nasi elements, at such time and under such regulations,
supervision and control as you may determine, you may permit the courts to
resume functioning. All politically objectionable course, 9.6.1 People's
Course, vill be abolished. All security and political police, excluding
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criminal and order police. but including the Gestape and Sicherheitsdienst der
S.S., will be disbanded. arrested and their members disarsed and held for
disposition. Criminal and ordinary police. and such others as it may be proper
to retain, must be purged of Nasi or otherwise undesirable elements, who will
also be arrested and held for disposition. It 16 imporative to arrest and hold
all high police presidents and leaders.
6. No person in Germany. other than United Nations nationals as authorized
by you, shall be permitted to possess arms of any character except that such
local police as you may utilize to maintain order may be armed with such law
enforcement weapons as you may deem appropriate.
7. You will decide whether the objectives of military government are better
served by the appointment of officers of the occupation forces or by the use
of the services of Germans. It shall be made claar to all other government
officials and employees that their continued employment 10 solely on the basis
of cooperation, performance and behavior satisfactory to you. The replacement
of any local government officials who may be removed will rest with you. In
general, the entire Nasi leadership shall be removed from all poste of authority
and no person who was a member of the German General Staff or Supreme Command
or the Nasi Hierarchy will eccupy any important governmental or civilian position.
Under no circumstances shall active Nasis or ardent sympathisers be retained
is office for the purpose of administrative convenience or expediency.
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8. Subject to the provisions of paragraph 11 and to the extent that
military interests are not prejudiced, freedom of speech and press, and of
religious vership will be permitted. Consistent with military necessity, all
religious institutions will be respected and all efforte will be made to preserve
historical archives, classical monumento and fine arts.
9. 4. Diplomatic and consular officials of countries at var with any
of the United Nations will be taken into protective custody and hold for
1-1
further disposition. Diplomatic and consular officials of neutrals will
be dealt with in accordance with instructions to be issued by the Combined
Chiefe of staff.
3. All German diplomate and consular officials and other agents will
be recalled. If their recall cannot be effected or if their recall is not
practicable by reasons of nationality, their authority as agents for Germany
vill be terminated. All records and files of these agents and officers
will be ordered returned to Germany or otherwise madewailable for approp-
riate inspection.
10. s. All practical neasures will be taken to insure the health and
welfare of United Nations nationals and neutral interness, including
provision of employment as practicable, and repatriation should be under-
taken as rapidly as military conditions permit, It shall be within your
discretion to determine whether such persons should or should not be
allowed to disperse, pending the completion of plans for their employment
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or other disposition.
2. Nationals of countries with which any of the United Nations are
or have been at war (except Germany) will be identified and registered,
and those whose freedom of movement would endanger the security of the
grand forees or be otherwise undesirable will be interned or their activities
curtailed as my be necessary under the circumstances.
11. & Propagation of Nasi doctrines and Nasi propaganda in any form shall
be prohibited. All schools and universities will be closed. Elementary
schools only will be reopened as soon as possible after Nasi personnel has
been eliminated and text books and curricula provided which are free of Nasi
doctrines. Further guidance on German education and schools will be given
to you in a separate directive.
2. No political activities of any kind shall be countenanced unless
authorised by you. Unless you deem otherwise, no political personalities
or organised political groups shall have any part in determining the policies
of the military administration. It is essential to avoid any commitments
to or negotiations with any political elements.
2. The publication of all nevepapers, magasines, weeklies and other
publications and the operation of all German radio stations throughout the
area under year command will be surponded. Thereafter 700 will permit the
dissemination of news or information subject to such consorship and centrol
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as you consider necessary in the interests of military security and
intelligence and to carry out the principles laid down in this directive.
12. no persons shall be permitted to leave or enter the area under your commend
without your authority.
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APPENDIX "
FINANCIAL DIRECTIVE
1. United States, British and other Allied forces will use Allied Military
marks and Reichsmark currency or coins in their possession. Allied Military marks
and Reichemark currency and coin now in circulation in Germany will be legal tender
without distinction and will be interchangeable at a rate of 1 Allied Military mark
for 1 Reichemark. Records will be kept of the amounts of the German marks used w
the forces of each nation. Reichskreditkassenscheine and other German Military
currency will not be legal tender in Germany.
2. In the event, however, that for any reason adequate supplies of Allied
Military marks and/or Reichsmarks are not available, the United States forces will
use yellow seal dollars and regular United States coins and the British forces will
use British Military authority notes and regular British coins. Records will be
kept of the emounts of currencies used by the United States and Iritish forces.
3. If it is found necessary to use U.S. yellow seal dollars and INA notes, the
following provisions will apply to such use:
s The rate of exchange between the U.S. yellow seal dollar and the
BMA notes will be 4.035 dollars to one pound, and the two currencies vill
be interchangeable at that rate. The United States Treasury will make the
necessary arrangements with the British freasury.
À
You will Lease a proclamation, if necessary, requiring all persons
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to accept U.S. yellow seal dollars and BMA notes at the decreed rates.
Transactions at any other rates will be prohibited.
2. The issuance of yellow seal dollars and BKA notes will coase and
Allied Military mark and/or Reichsmark currency will be used in their place
as soon as available.
4. U.S. yellow seal dollars and BMA notes will be vithdrawn from eir-
culation as soon as such vithdraval can be satisfactorily accomplished.
s Records will be kept of the amounts of such currencies used by the
United States, British and other Allied forces.
4. The rate of exchange to be used only for the purpose of paying personnel
of the armed forces vill be
marks to the dellar and
marks to the pound
sterling. A general rate of exchange my be furnished to you later. Holders of
mark currency or deposits will not be entitled to purchase foreign exchange without
special permission. They will obtain dollars or pounds, or any other foreign
currency or foreign exchange credits, only in accordance with exchange regulations
issued by you.
5. The Financial Division of the Civil Affairs Section for Germany will
include in its functions the control of all funds to be used by the Allied Military
forces within the area, except yellow seal dollars and BIKA notes which will be under
the centrol of U.S. and British forces respectively. 20 will mintain all the
consults and records necessary to indicate the supply. centrol, and movement of
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these currencies including yellow seal dollars and BMA notes, and other funds,
as well as financial data required for the determination of expenditures arising
out of operations or activities involving participation of Allied Military forces.
& Insofar as operations relate to the provisions of currencies for the
pay and other cash requirements of military components of the Allied forces,
the Financial Division will supply Allied Military marks from currency on hand
and will record the debit against the military force concerned at the rate
of exchange prescribed in paragraph 4 above.
2. Insofer as operations relate to the provision of currencies for civil
administration, the Finance Division vill supply Allied Military marks from
currency on hand and will record the debit against the Allied Military
Government.
a If found practicable and desirable, you will designate, under direct
military control and supervision, the Reichebank, or any branch thereof, or
any other bank satisfactory to you, as agent for the Financial Division of
the Givil Affaire Section. When satisfied that the Reichebank, or any branch
thereof, or other designated bank, is under adequate military control and
supervision. you my use that bank for official business, and, if necessary,
by making credite available, place such bank or banks in a position to finance
other basics and branches thereof, for the contract of their business as
approved w the Allied Military authorities.
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s.
The records of the Financial Division of the Givil Affairs Section
established within the area will indicate in all cases in what currency
receipts were obtained or disbursements made by the Financial Division.
6. You will take the following stops and will put into offect only such
further financial measures as you may deen to be necessary from a strictly
military standpoint:
À
Tou will declare a general or limited moratorium if you deen such
neasure to be necessary. In particular, 10 my prove desirable to prevent
foreclosures of nortgages and the exercise of similar remedies by creditors
against individuals and small business enterprises.
D. Banks should be placed under such control as deemed necessary by
you in order that adequate facilities for military needs my be provided and
to insure that instructions and regulations issued by military authorities
will be fully complied with. Banks should be closed only long enough to
introduce satisfactory control, to remove Nasi elements and other objectionsble
personnel, and to issue instructions for the determination of accounts to be
blocked under paragraph 2 below. is soon as practicable, banks should be
required to file reports listing assets, liabilities, and all accounts in
excess of 25,000 marks.
+
You will issue regulations prescribing the purposes for which credit
my be extended and the terms and conditions governing the extension of credit.
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If beaking facilities are not available you my establish euch credits or make
such loans as you deem necessary for covential economic activities. These will
be restricted to mark credits and loans.
s
You will close all stock exchanges and similar financial institutions
for such period as you deem desirable.
+
Pending determination of future disposition, all gold, foreign
currencies, foreign securities, accounts in financial institutions, credite,
valuable papers and all similar assote held by or on behalf of the following.
will be iMpounded or blocked and will be used or otherwise dealt with only as
permitted under licenses or other instructions which you may issues
(1) German national, state, provincial, and local governments, and
agencies and instrumentalities thereof.
(2) Other enemey governments, the agencies and instrumentalities
thereof and their Nationals.
(3) Owners and holders, including neutral and United Nations Govern-
ments or national authorities, about from the areas of Germany under
your control.
(6) Nast party organizations, including the party formations,
affilitates, and supervised associations, and the efficials, leading
mambers, and supportors thereof.
(8) Persons under detention or other types of custedy w Allied
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Military authorities and other persons whose activities are hostile to
the interests of the military government.
& No governmental or private bank or agency will be authorised to issue
banknotes or currency except that, if found practicable and desirable. you my
80 authorise the Reichsbank and the Rentenbank when they are under adoquate
military control and supervision.
& You will issue imediately a proclamation prohibiting all transfers
of or other dealings in securities, other than central government securities
for such period as you my deen desirable. You my, however, prehibit or
limit dealings in central government securities, but only pending resumption
of service on the public debt.
7. All dealings in gold and foreign exchange and all foreign financial and
foreign trade transactions of any kind, including all exporte and importe of
currency, will be prohibited except as permitted under such regulations as you my
issue relative thereto. Except as you my otherwise authorise, local banks will
be permitted to open and operate only mark accounts, but if yellow seal dollars
and BMA notes are legal tender, they my be accepted at the decreed general rate
of exchange and will be turned is as directed by you in exchange for mark currency
at the decreed general rate of exchange.
8, Non-yellow seal V.S. dollar metes and regular Brittsh pound natice will not
be legal tender. No person, egency or bank engaged in the exchange of may will
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acquire or otherwise deal in these notes except as you my 80 authorise. U.S. Army
and Havy Finance Officers and British Paymenters my, hovever, be authorized to
accept non-yellow seal U.S. dollar notes and regular British pound notes from
United States and British Military or authorised personnel for conversion into
Allied Military mark or Reichemark currency at the decreed general rate of exchange,
after satisfying themselves at to the source of the notes.
9. All bons fide government pensions, allowances, and social security payments
will continue to be paid, but steps will be taken as soon as practicable for 8
study of pensioners' records with a view to nullifying all unnesessary and undecirable
pensions and bonuses of Nasi inception.
10. The railways, postal, telegraph and telephone service, radio and all
government menopolies will be placed under your control and their revenues made
available to the military government.
11. You will, consistent with international custom and usage, mintain existing
tax laws, except that discriminatory taxes introduced under the Nasi regine will
be abolished. Prompt action should be taken to mintain the inflew of revenue at
the highest possible level. You will resume service on the public debt as BOOR
as military and financial conditions permit.
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APPENDIX "ge
ECONOMIC DIRECTIVE
1. You will assume control of existing German industrial, agricultural,
utility, communication and transportation facilities, supplies and services,
and of German domestic and foreign trade, for the purposes of
a Assuring the immediate cessation of the production, acquisition
or development of implements of var.
D. Assuring the production and maintonance of goods and services
essential
(1) to prevent or alleviate epidemic or serious disease and
serious civil unrest and disorder which would endanger the occupying
forces and the accomplishment of the objectives of the occupation.
(2) to the prosecution of the var against Japan (but only to
the extent that specific directives of higher authority call for
such goods or services) and
(3) to the provision of relief and rehabilitation supplies to
the Allied nations and to the performance by Germany of such further
acts of restitution as may be determined w the Allied governments.
2. You may impose such other economic measures as you deen necessary be
prevent serious civil warest and disorder which would endanger the coorpying
forces and the a0c0mplishment of the objectives of the occupation.
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s. A plan should be prepared by you to provent transfers of title of
real and personal property intended to defent, ovado or aroid the orders,
proclemations or decrees of the military government or the decision of the courts
established w 11.
4. Substantial amounts of private property of various categories has been
seiged, looted or otherwise improperly acquired by various Nasi officials. while
19 is contemplated that a suitable commission will ultimately doal with this
problem, you should take such steps as may be practicable to collect any
available information and to preserve any property of this kind found in the area
under your control.
8. a All property in the German territory belonging to any country with
which any of the United Nations are, or have been, at var my be controlled,
subject to such use thereof as you my direct.
1 Your responsibility for the property of the United Nations, other
than U.K. and U.S. and their nationals, in areas occupied by Allied forces
shall be the same as for the property of U.K. and U.S. and their nationals,
except where a distinction is expressly provided by treaty or agreement.
Within such limits as are imposed by the military situation you should
take all reasonable stops necessary to preserve and protect such property.
6. You will permit the formation of democratic labor unions and other form
of free economic association, exercising safeguards assessary to eliminate Nast
-18-
TOP SECRET
Unclassified
TOP SECRET
185
labor institutions and to prevent or eradicate underground, corret, or subversive
activities or organizations.
JOP SECRET
Rearaded
186
TOP, SECRET
APPENDIX "D"
RELIEF
1. You will be responsible for the provision and distribution of supplies
for civilian relief, to the extent defined below, in all areas of Germany under
your command. In connection with this responsibility, you will make maximum use
of supplies, stockpiles and resources available within Germany in order to limit
the extent to which imports, if any, will be required.
2. The scale of relief to be provided will in no event exceed the sinimus
quantity of food, fuel, medical, sanitary and agreed essential supplies necessary
to maintain the health and working capacity of the civilian population, to preserve
public order, to develop local resources in order to lighten the burden on the
Allied armies, and to accomplish the objectives of the occupation.
3. You will provide for importation of civilian supplies into Germany only
to the extent that critical shortages of any essential items threaten clear and
invisent interference with the policies not forth in paragraph 8 of this directive.
4. You will undertake measures necessary for the control, prevention and
treatment of epidemic and other diseases and the promulgation of such medical
and massures, including energency shelter. as will preserve the state
of public health and protest the compying forces.
TOP SECRET
187
SECRET
September 4, 1944
SUGGESTED POST-SURRENDER U.S. PROGRAM FOR GERMANY
1. Demilitarisation of Germany.
It should be the aim of the Allied Forces to accomplish the complete
demilitarisation of Germany in the shortest possible period of time after
surrender. This means completely disarming the German Army and people
(including the withdrawal or destruction of all war material) and the total
destruction of the whole German armament industry as well as those parts of
supporting industries having no other justification. This will include the
following:
(a) Demolition of synthetic oil plants.
(b) Removal of surplus nitrogen plants.
(c) Removal of surplus sulphurio aoid plants.
(d) Scrap heavy steel armament plants.
(a) Removal of electric furnaces.
(f) Removal of high alloy steel works.
(g) Scrap airplane plants and prohibit construction or operation
of airplanes by Germans.
(h) Scrap aluminum, alumina and all light metal plants.
(1) Demolition of all powder plants.
2. Partitioning of Germany.
(a) To U.S.S.R. and Poland, northern Silesia and that territory
east of the Oder River.
(b) To France, the territory west of the Rhine and south of Coblens.
(o) To Belgium and The Netherlands, portions of the northern
Rhine Valley.
(d) To Demmark, the area north of the Kiel Canal.
(a) As indicated in Part 3, an international, mandated area created
by the Allied Nations to be placed under the control of the U.S.,
U.K. and U.S.S.R., comprising the Ruhr, the water shed east of
the Rhine and the channel coast to the Kiel Canal.
(f) The remaining portion of Germany to be divided into two (or three)
autonomous, independent states, (1) A South Germany state compris-
ing the water shed of the Danube to the Austrian border and (11) a
North Germany state bounded by the Oder River, Csechoslovakia on
the east, the Danube divide on the south and the mandated area on
the west.
Regraded Unclassified
198
- 2 -
3. The Ruhr - East Rhine.
(a) An International Zone mandated to Anglo-Amerioan-Russian control
should be created containing the Ruhr and the surrounding industrial
areas. Included in the Zone should be the Kiel Canal and the
Rhineland. The Zone should be governed and controlled by 022
Anglo-American security organisation, the mandate and provisions
for which to be established by the United Nations.
(b) The mandate shall require: (i) total destruction of all
industry in the Ruhr, (11) restitution and reparations,
including removal and distribution of all industrial plants
and equipment.
(o) Ownership and control, subject to mandate provisions, shall be
transferred to the U.K. and U.S.
(d) The natural resources of the Ruhr area shall not be used or
developed so as to contribute in any way to the industrial or
military potential of Germany or the Ruhr area.
(e) The Zone will be a free trade area.
4. Quarantine.
An Allied Nations tariff and foreign exchange commission with full
power to control all imports or exports and to collect tariffs thereon.
The commission to be comprised of U.S., U.K. and U.S.S.R., each with 20
votes and the border nations collectively with 40 votes.
The power of the commission to extend around and between the North
and South German states, the Rhine-Ruhr mandate area, Austria, Hungary,
Rumania, and Bulgaria. To control trade and collect tariffs as may be
determined from time to time for the purposes of,
(a) Exclusion of all raw materials useful for war purposes other
than those amounts necessary for normal peacetime inventories
in order to prohibit stookpiling of war materials such as
oil, nitrates, pyrites or brinstone, iron ore, pig iron, all
alloy metals, manganese, chrome ore, oopper, nickel, aluminum,
magnesium, tin, lead, sine, etc.
(b) To collect tariffs:
(1) To defray the cost of policing on land or coa.
(11) Pay the cost of occupation, relief, rehabilitation.
(111) Reparation.
5. Restitution and Reparation.
Restitution shall be effected by the transfer of existing German
resources and territories, *.8.,
(a) by restitution of property looted by the Germans in territories
occupied by them.
Regraded Unclassified
189
- 3 -
(b) by transfer of German territory and German private rights in
industrial property situated in such territory to invaded
countries and the international organization under the program
of partition.
(o) by the removal and distribution among devastated countries of
industrial plants and equipment situated within the International
Zone and the North and South German states delimited in the
section on partition.
(d) by foreed German labor outside Germany.
(.) by confiscation of all German assets of any character whatsoever
outside of Germany.
6. Treatment of Special Groups.
7. There should be abrogated and declared mull and void all pre-surrender
laws, decrees, regulations or aspects of the same which disoriminate
on the basis of race, color, creed or political opinions.
8. Education and Propaganda.
9. Political Decentralisation.
10. German Economy.
11. United States Responsibility.
Regraded Unclassified
Draft prepared in state
11
Dept y give a See Hull 190 E
SECRET
Sec. m
September 4, 1944
SUGGESTED RECOMMENDATIONS ON TREATMENT OF GERMANY
FROM THE CABINET COMMITTEE FOR THE PRESIDENT
1. Appointment of an American
High Commissioner
It has become urgent that an American High Commissioner
for Germany bei appointed. Immediately upon occupation of
Germany many important problems will have to be decided on
a tripartite basis between the U.S., the.U.K., and the
U.S.S.R. These problems will have not only important mili-
tary aspects but will require the working out of a common
policy in the political and economic fields as well. The
American High Commissioner should be an official of high
political ability and considerable prestige who can speak
with authority for this Government in all matters where a
common polloy must be worked out with the U.K. and the
U.S.S.R. The appointment should be made as soon as possible.
2. American Policy for the
Treatment of Germany
The following policies for the treatment of Germany
are recommended as the objectives of the United States,
and for which we should seek agreement with the U.K. and the
U.S.S.R.:
191
- 2 -
(a) Demilitarization of Germany, including the complete
dissolution of all German armed forces and all Nasi military,
para-military and police organizations, and the destruction
or scrapping of all arms, ammunition and implements of war.
Further manufacture in Germany of arms, ammunition and
implements of war should be prohibited.
(b) Dissolution of the Nasi Party and all affiliated
organizations. Large groups of particularly objectionable
elements, especially the SS and the Gestape, should be
arrested and interned and war criminals should be tried and
executed. Party members should be excluded from political
or civil activity and subject to a number of restrictions.
All laws discriminating against persons on grounds of race,
color, creed or political opinion should be annulled.
(e) Extensive controls should be maintained over commu-
nications, press and propaganda for the purpose of eliminating
Nazi doctrines or similar teachings.
(d) Extensive controls over German educational system
should be established for the purpose of eliminating all
Nazi influence and propaganda.
(e) No decision should be taken on the possible partition
of Germany (as distinguished from territorial amputations)
until we see what the internal situation is and what is the
192
- 3 -
attitude of our principal Allies on this question. We
should encourage a decentralization of the German governmental
structure and if any tendencies toward spontaneous partition
of Germany arise they should not be discouraged.
(f) The American Government has no direct interest in
obtaining reporations from Germany and consequently no
interest in building up German economy in order to collect
continuing reparations. However, the U.K. and the U.S.S.R.,
together with a number of smaller states which have been
victims of German exploitation, may have claims on German
production which they will require for purposes of rehabilita-
tion and reconstruction. Consequently, we should not take
a fixed position on reparations at this time but should await
the views of governments which have a more direct interest.
(g) As the great Junker estates have provided the
economic basis for the military caste in Germany, these
estates should be broken up and the holdings distributed
to tenants.
(h) The primary objectives of our economic policy are:
(1) the standard of living of the German population shall
be held down to subsistence levels; (2) German economic
position of power in Europe must be eliminated; (3) German
economic capacity must be converted in such manner that
it will be so dependent on imports and exports that Germany
cannot by its own devices reconvert to war production.
Regraded Unclassified
butts rins- Hopes 193
meeting mith Hull 9/5/44.
SECRET
September 4, 1944
SUGGESTED RECOMMENDATIONS ON TREATMENT OF GERMANY
FROM THE CABINET COMMITTEE FOR THE PRESIDENT
1. Appointment of an American
High Commissioner
It has become urgent that an American High Commissioner
for Germany be appointed. Immediately upon occupation of
Germany many important problems will have to be decided on
a tripartite basis between the U.S., the U.K., and the
U.S.S.R. These problems will have not only important mili-
tary aspects but will require the working out of a common
OK.
policy in the political and economic fields as well. The
American High Commissioner should be an official of high
political ability and considerable prestige who can speak
with authority for this Government in all matters where a
common policy must be worked out with the U.K. and the
U.S.S.R. The appointment should be made as soon as possible.
2. American Policy for the
Treatment of Germany
The following policies for the treatment of Germany
are recommended as the objectives of the United States,
and for which we should seek agreement with the U.K. and the
U.S.S.R.:
(a) Demilitarization of Germany, including the complete
dissolution of all German armed forces and all Nazi military,
para-military and police organizations, and the destruction
or scrapping of all arms, ammunition and implements of war.
Further manufacture in Germany of arms, ammunition and
implements of war should be prohibited.
(b) Dissolution
Regraded Unclassified
194
-2-
(b) Dissolution of the Nazi Party and all affiliated
organizations. Large groups of particularly objectionable
elements, especially the SS and the Gestapo, should be
arrested and interned and war criminals should be tried and
executed. Party members should be excluded from political
or civil activity and subject to a number of restrictions.
All laws discriminating against persons on grounds of race,
color, creed or political opinion should be annulled.
(c) Extensive controls should be maintained over commu-
nications. press and propaganda for the purpose of eliminating
Nazi doctrines or similar teachings.
(a) Extensive controls over German educational system
should be established for the purpose of eliminating all
Nazi influence and propaganda.
(e) No decision should be taken on the possible partition
Isady
of Germany (as distinguished from territorial amputations)
until we see what the internal situation is and what is the
house
attitude of our principal Allies on this question. We
should encourage a decentralization of the German governmental
structure and if any tendencies toward spontaneous partition
for
of Germany arise they should not be discouraged.
(f) The American Government has no direct interest in
obtaining reparations from Germany and consequently no
interest in building up German economy in order to collect
continuing reparations. However, the U.K. and the U.S.S.R.,
together with a number of smaller states which have been
viotims of German exploitation, may have claims on German
production which they will require for purposes of rehabilita-
tion and reconstruction. Consequently, we should not take
Regraded Unclassified
195
-3-
a fixed position on reparations at this time but should
await the views of governments which have a more direct
interest.
(g) As the great Junker estates have provided the
economic basis for the military caste in Germany, these
estates should be broken up and the holdings distributed
to tenants.
3
(h) The primary objectives of our economic policy are:
(1) the standard of living of the German population shall
be held down to subsistence levels; (2) German economic
position of power in Europe must be eliminated; (3) German
economic capacity must be converted in such manner that
it will be so dependent on imports and exports that Germany
cannot by its own devices reconvert to war production.
Regraded Unclassified
196
WAR DEPARTMENT
file
OFFICE OF THE UNDER SECRETARY
WASHINGTON, D.C
SECRET
September 4th, 1944.
Honorable Henry Morgenthau, Jr.,
Secretary of the Treasury,
Washington, D. C.
Dear Henry:
I am enclosing a copy of the memorandum from
General Greenbaum on the subject of industrial demobilization
problems following the defeat of Germany. This is the paper
that you looked at this morning.
I am also enclosing a copy of Colonel Gow's memo-
randum on the same topic.
RUPP# Sincerel yours,
Robert P. Patterson,
rpp:lm
Under Secretary of War.
enc.
SECRET
197
September 4th, 1944.
Honorable Henry Morgenthau, Jr.,
Secretary of the Treasury,
Washington, D. C.
Dear Henry:
I an enclosing a copy of the memorandum from
General Greenbaum on the subject of industrial demobilization
problems following the defeat of Germany. This is the paper
that you looked at this morning.
I am also enclosing & copy of Colonel Gow's memo-
randum on the same topic.
Sincerely yours,
(Signed) ROBERT 2,
Robert P. Patterson,
rpptlm
Under Secretary of War.
enc.
SECRET
Regraded Unclassified
CONFIDENTIAL
198
1 September 1944
MEMORANIKE FOR GENERAL GREENDAUM
Subjects Upon the Defeat of Germany
1. In accordance with your request, the attached material outlines
Army public relations proposals to take effect subsequent to and following
the defeat of Gurmany.
2. This program can be summarised as follows:
as A fully developed plan to rededicate America to the big job
of defeating Japen.
be A plan to explain the Areg's progrem on industrial demobili-
sation to the American public.
a 2 plan to explain the Anny's program on military demobilize-
tion to the American public.
Underlying these objectives are three fundamentals that is in believed
should govern all thinking and planning.
2) The Army conos to the American public with & great SUCCESS
story.
The defeat of Cermany will represent en unpresedented
VICTORY. Fart of the resards of this victory is the up-
portunity to cancel a portice of var production. Let
this story be kept triusphant and en the positive side
where it belongs.
a) The Army comes to the American public with a groat CONSERVATION
The public naturally wants war expenditures to be reduced.
Everybody wants to return to normalay. Let cutbacks be
explained - not spelogised for. The Army 1a conserving
manyorer, asteriels and money in not continuing to produce
what 11 does not needs
3) The Har in't over yet.
He still have to defeat Japan. The quicker the victory,
the quicker all America can return to pence+tine living
and working.
CONFIDEN IAL
CONFIDENTIAL
199
suggested PROGRAM
Mentings A series of seall informal mestings, called by top officials
of the WAS Department, to be held successively with Pentagen Reporters, pub-
lishers and heads of Radio Networks, labor leaders, leaders In advertising,
aditorial writers - columnists - radio commentators, trade press, heads of
various business groups and associations.
Redies A series of half-hour radio programs, shortly after the defeat
of Certany, which would reveal the skillful strategy and planning on part of
Army. First progrem aight feature the inside story of the great campaige
just completed as told by General Marshall and Mr. Petterson, the second by
General Eicenhower and General Bradley, the third by Generals Clark, Patten
and Fatch, and the fourth by General MecArthur. Other radio programs are
suggested such as a rededication perwary, a program ained at the peoples of
Japan, as well as as immediate Jepaness emphasis on all Army radio programs.
Moving Picturest In addition to the moving picture on additary dew
mobilization the possibilities of osso OR industrial desobilization are being
considered. Six shorts OR Japan for theatrical distribution are also being
worked a.
Insudiately - Note Emphanis OG Jonens In all carevan shows, plant
rallies and other assemblies.
Impodiately - Strengthening of Speakers' Burnetts Efforts are already
undersuy to secure men with Pecific Crean experience.
Progres to Stimulete Wessains Articles: Efforts will be made to get
articles written on ell phases of industrial desobilization and the problems
shead in defeating Japen.
Fress Releases: A series of press releases should be initiated which
would explain the whole Fax Department policy on industrial and military
demobilization.
Geoseration of Advertisers A complete program will be suggested so
the Far Advertising Council and their full cooperation requested in earrying
it out.
Statement from Mr. Pattersons This statement would congratulate the war
workers of America on a job well done and tell them that the For Department
is going to waste no time in releasing as sany plants as possible for civilian
production.
General Hereball Newsreels A statement sovering our needs to defeat
Jayan, both soldiers and SaF workers, to be shown in every theater in the
country following the defeat of Germany.
Generals Series of posters on Japan. Special press releases. Special
newspaper releases. Letters to Technical Services and Service Consends. In-
couragement of community parades. Possible return of a S-29 that raided Japan.
RALPE F. GON
Colonel, 6. 5. c.
CONFIDEN FIAT-
Industrial Services Division
Page 2
Regraded Unclassified
200
SECRET
1 September 1944
RANDUM TO: The Under Secretary
Subject: Industrial Demobilization Problems Facing the War
Department Immediately Following the Defeat of
Germany.
In accordance with your instructions the subject has been
studied and this memorandum is submitted as an outline of con-
clusions and suggestions for action.
Discussion is limited to the period immediately follow-
ing the "defeat of Germany." It is assumed that defeat may not
occur on any one day but may be gradual or piecemeal. Just as no
"M Day" actually occurred under the Industrial Mobilization Plan,
no "X Day" may occur here. The timing and contents of any plan
must, therefore, be sufficiently flexible to adjust to the course
of events.
The magnitude of the problem is obvious. The experience
following the defeat of Germany in World War I is a lesson on the
consequences of unpreparedness for the event. This time the con-
sequences have, to a considerable degree, been anticipated. The
War Department has carefully developed basic plans for its part in
demobilization. But it is essential that its action upon these
plans give actual evidence of such anticipation. What it does --
or fails to do - at the very first stages of demobilization may,
to a large extent, determine the public's confidence in the War
Department's ability to carry through. A bad start may jeopardize
the success of sound overall plans.
The subject will be discussed under two headings, "Public
Relations," and "Demobilization Plans." Since the public relations
problem is of most immediately pressing importance, it is here
discussed in advance of a general description of overall planning.
Public Relations
It is paramount that the War Department adopt an affirmative
position, not an apologetic or defensive one. The War Department's
strength will lie in the fact that the Army will stand before the
American Public at the height of its triumph. But public confidence
and approbation will be sharply diminished as the demobilization
plan is put into effect, however justified its character and in-
escapable its consequences.
SECRET
Regraded Unclassified
SECRET
201
- 2 -
The mainstay of the Ner Department's position must be that
the fight against Germany has been won; that huge expenditures of
money, required for that purpose need no longer be made, must now
be eliminated, end will be eliminated, as a result of industriel
demobilization; that the Army has no right to buy and will not buy
what it no longer needs; that as & direct result of this policy, labor,
materials, and facilities will speedily be made available for the
process of reconversion and for normal civilian activities. The
War Department must further take the position that its conduct is
the only one open to an honest and efficient public servant.
There will be no escaping the obvious fact that, at least for
the time being, millions of people will be put out of work and
thousands of plants closed. Criticism and complaints from various
sources similar o-hittene leveled against the War Department's
procurement progrem during the past four years may be concentrated
against its demobilization program, in heightened form, during 6.
period of four weeks. In dealing with this situation, the War
Department must be realistic and candid. It must show that the main
responsibility for cushioning the shock of these events lies with
other agencies and with Congress, but that by the conscientious
execution of its plans, by the criteria it has adopted for cutbacks,
the period of unemployment will be shortened and the transition to
normal activities fecilitated.
Throughout there must be repeated stress of the fact that the
war is not over, that the big job of defeating Japan is still
shead, and that the problems of trensition must in no my be per-
witted to interfere with achievement of final victory. It must be
pointed out that the sins, policies and plans on industrial do-
mobilization are those best suited to achieve the ultimate
victory while simultaneously promoting economic stability and the
resumption of civilian production at home.
General Surles 1s fully in accord with the necessity of con-
vincing the American public that the Army has planned its
Industrial Demobilisation Program with the same care as it planned
its Military Program, now crowned with success. After
After this office had reised the problem with General Surles
he brought it up before the General Council. This appears in the
minutes of the Council meeting of 14 August. After report of the
discussion of the matter, the following appears:
"General Mexwell commented that the G-4 Division had
been informed that the Under Secretary of Far was setting up
6. committee to work in this field. General Surles replied
that he believed that this was in response to his request.
There had been many interested parties making their own plans
without much coordination, and the Army Service Forces was
SECRET
Regraded Unclassified
- 3 -
SECRET
202
asked to coordinate AST material so that it would be
channeled through one medium in order to consolidate and
coordinate the plans and projects of the ASF in the fields
of supply and materiel."
The Committee referred to is a group appointed by this office on
11 August to study this problem. It includes representatives from
General Tompkins' office, from BPR, G-4, AAP, ASP Control Division,
Readjustment Division, Industrial Personnel Division and this office.
The information herein presented was collected largely as & result of
the work of this Committee.
Colonel Gow has been designated by General Surles to handle
the public relations program for demobilisation and is Chairman of
the Committee.
Attached is a mesorandum from Colonel Gow indicating some of
the steps to be token to accomplish the public relations program.
(Tab A) While it will require changes and revisions, its present
form will indicate the general character of action to be taken. You
will note that it entails certain preparatory action before X-Day
and steps to be taken thereafter. The plan includes broadcasts by
Gen. Marshall and a series of broadcasts on successive days by Gen.
Eisenhower, Gen. Bredley, Gen. Patton and other overseas commanders.
Final broadcast is to be made by Gen. MacArthur. There are
envisaged a series of seetings with small selected groups of nevs-
papermen, publishers, business loaders and labor representatives.
At these meetings the War Department will announce its plans and
invite questions, suggestions and criticisms. The program includes
the preparation of posters, ready for distribution after I-day to
war plants throughout the country. An excellent poster by James
Montgomery Flagg stresses the slogan "Japan you are next -
We'll finish the job 1"
The program will make full use of radio, newspapers, groups
of individuals, advertising councils and every other kind of
publicity apparatus for disseminating the Har Department's plans
and thoughts. Whatever will serve to both clarify the Har
Department's position and reawaken and rededicate America to the
task of defeating Japan will be utilised.
At the same time that the War Department is engaged upon its
program of industrial demobilisation it will embark upon its
program of military demobilisation. This will also involve a
number of extremely difficult problems on the Public Relations side.
It will be a bitter disappointment to sany soldiers and their
families to realize that they are not coming home at once and many
who are in this country will not be discharged.
SECRET
Regraded Unclassified
SECRET
203
- 4 -
General Tompkins is fully aware of the difficulties of the
Public Relations Program for this side of demobilization. He has
asked General Surles to have it developed and General Surles has
detailed Colonel Gow and his staff to work on it. A technicolor
motion picture is being prepared by Walt Disney end Col. Frank
Capra and it is expected that it will be ready by the 2nd of
October. The message which is part of the picture is given by
General Marshall.
The Mar Department will, therefore, assume the responsibility
for two unpopular trains of events. It must deny discharge to
millions of soldiers while granting it to others; its cutbacks while
satisfactory to seny business men will be unsatisfactory to others
and generally unsatisfactory to labor. In developing e Public
Relations Progrem to meet the criticism and animosity steaming from
both of these actions, it is essential that the interrelatedness
of military and industrial demobilization be recognised and
reflected.
Demobilisation Plans
The public relations aspect of the problem is, of course,
merely one phase of it. Its success is entirely dependent upon
the soundness of the demobilization plans and the War Department's
ability to execute it.
Status of demobilisation planning. The Mar Department has
devoted & great deal of time to detailed studies since the form-
ation of the Special Planning Division, War Department General
Staff, in May 1943. A careful and extresely able job has been
done. The steps taken by the Viar Department in regard to indus-
trial demobilisation are outlined in a memorandum sent to Mr.
Justice Byrnes 23 August 1944 (Tab B). The documents which form
the basis of industrial demobilization planning are listed and
described in Tab C.
War Department Policy. The besic War Department policy was
approved by you on 21 April 1944 (War Department Policies on
Industrial Demobilisation, dated 24 April 1944; revised 30 June 19443
approved by Under Secretary of war, 11 July 1944 - (Tab c). This
policy provides for "innediate termination of the maximum quantity
of war production consistent with military requirements and with
due regard to sound economic practices". Privately-owned plants
not normally munitions producers are, where possible, to be released
first, contractor's wishes are to be considered; competing units
are to be released simultaneously, where possible, and "consider-
ation is to be given to cushioning the shock of unesployment".
The policy was described by you to the Senate Military Affairs
Committee on 12 July 1944. (Hearings are attached on Tab D).
SECRET
Regraded Unclassified
- 5 -
204
SECRET
This policy is obviously going to be extremely difficult to
administer. While the plane of both ASF and MP include instructions
Regraded Unclassified
which insofer as possible are adequate, individual decisions must
govern in the borderline cases and it will often be impossible to
satisfy all parties interested. It is here that criticism is bound
to be leveled against the War Department for hewing too close to
the line of economy, or for boondoggling, or for taking any number
of conceivable actions displessing to labor, capital, or to Congress.
Efforts will be made to show that the War Department's opposition
to reconversion, while the European war was at its height, made the
country unprepared to convert after the defeat of Germany. The was
Department will be charged with having caused unemployment and
economic dislocation and having prevented an orderly reconversion.
Unexployment Which will Follow Cutbacks. Anticipated cuts in
the Army Supply Program resulting from action to be taken on "2"
Day are as follows:
Annual Rate Before
Annual Rate After Percentage
# Day
aya Day
Cut
(Billions of 6)
(Billions of $)
AAF
17,045
12,893
24.3%
ASF
21,038
11,660
45%
Total
38,083
24,550
35%
These figures are subject to revision and only approximate.
No accurate figures are obtainable as to unesployment which will
result. far Manpower Commission, War Production Board, and other
agencies are preparing estimates. Mar Production Board's present
estimates indicate total labor forces in war production at present
at 9,400,000, end assumes 4 proportional cut in employment. It
estimates that 3,300,000 will be put out of war work when these
outs are put in effect. Two-thirds of the outbacks (and therefore,
roughly, 2,200,000 of the total labor forces disemployed) will be
on Tar Department contracts. At the end of the last war, peak
unexployment was not for in excess of 360,000, but the seriousness
of the situation and the bitter criticism leveled against the Was
Department would he hard to overestimate.
SECRET
205
- 6 -
SECRET
4. Rate of Discuployment. The attached charts (Tab F) show
the rate at which NP and 138 will cut back. (while based as
estimated figures which may have to be substantially changed, they
are probably sufficiently accurate to show the general trend ex-
pacted). It will be seen that in the AAF cutbacks will be far
more gradually spread over the yearly period estimated to be required
for the defeat of Japan than in the case of ASF, which expects to
put through the largest proportion of its cutbacks in the first
month following "X" Day. Unnecessery procurement must be cut entirely;
and in many cases involving needed items it will be necessary to
average monthly procurement required for the year instead of to
out down gradually.
be Geographic Distribution of unexployment. The
Technical Services and Army Air Foress have been instructed to
out back wherever practicable in places where the displaced
labor can be re-smployed. There is no indication at this time
as to how they will be able to comply with these instructions.
An indication of how the outbacks may be distributed is shown in
Tab o (taken from the 31 May 1944 Analysis Progress Report).
It will be seen that cutbacks vary from 6% reduction in Buffalo
to 100% reduction in Genesee County, Michigan. In other words,
the unemployment will be concentrated in certain sreas, many of
which may be totally unable to take care of the situation arising.
SECRET
20.
SECRET
The Special Army Supply Processe The Special Army Supply
Program scheduled for issumes today is the basis an which cuts and
Regraded Unclassified
terminations are to be made upon the defeat of Cermany. It is the
result of months of study and gives the Army's needs for the period
following the defeat of Cermany. Prime contractors have already been
confidentially advised of how these cuts will affect them. It is call-
templated that the Services will send notices to them within 24 hours
after the plan becomes affective.
Recently 0-6 has raised the fundamental question as to whether
the outbacks should be accomplished through a series of changes in the
present Amay Supply Program rather than by the issuance of Special Army
Supply Program. Because the Special Any Supply Program in the very
foundation of industrial demobilisation planning, it is essential that
this matter be resolved at once. Gen. Clay has been in conference with
0-4 for this purpose and it is hoped that the matter will be settled
today.
Clearance with P.E.C. The Subcomsittee of P.E.C., set up by Mr.
Justice Byrnes, has been described by you as being the "Federal Agency
charged with" the responsibility "to symehronise and integrate de-
velopments" regarding cutbacks (testimony before Senate Military Affairs
Subsommittee 12 July 1944) (Tab E) On 5 June 1944, after the Brewster
termination, Justice liyrnes wrote a letter to the Secretary stating
that be had requested Mr. Wilson to have PHC "adopt uniform policies
with the future cancellation of contracts, giving reasonable notice
to management and labor of such cancellations". In this letter (Tab II)
the Procurement agencies were "directed to take prompt action, clear
proposed cutbacks and terminations with the Committee not up by Mr.
Wilson and such outbacks and terminations shall not be made effective
until such clearance is obtained".
In compliance with this directive, the War Department has
cleared outbacks and terminations with the PEC Subsommittee. It hes
lospt PLC fully informed as to its plans for the Special Army Supply
Program and has likendse, through the PEC, made these known to the
Mar Manpower Commission and OWL It is not understood that Justice
Byrnes or any one else contempleted that the directive of 5 June
1944 requires clearances of individual outbacks and terminations
when the Special Army Supply Program becames effective. However, it
is felt advisable that & letter be sent clarifying this point to
Justice Byrnes, with & copy to PEC, when the Special Any Supply
Program is forwarded to them.
Notice to Management, Labor and Other Government Agencies, As
indicated above, the Services are giving preliminary notice to prime
contractors as to cancellations contemplated under the Special Army
Supply Program. No such action is being taken with reference to
SECRET
207
- 8 -
subcontractors and there does not appear to be any practical any in
which this can be done. Nor has notification been given to labor,
although Mr. Justice Byrnes had directed that PEC adopt uniform
policies, including giving reasonable notice to management and labor.
Unless labor is given some advance notice as to action contemplated
under Special Army Supply Program, 1t is believed that increased
difficulties will result. At best, labor will not view with
equanimity action resulting in stopping war production in areas where
reemployment will be slow or non-existent but its objections will be
far louder if it has not received advance notification of this, par-
ticularly since the Har Department has referred to labor as being a
"partner" in war production and the other "partner", namely, manage-
sent, has been so informed. It is accordingly recommended that steps
be taken to inform labor leaders on 8 confidential basis of the action
contemplated. This is covered in one of the recommendations in Col.
Gow's program.
Other Government agencies must, of course, be continually ad-
vised, through PEC and otherwise, of the War Department's actions.
Reemployment is not the War Department's job. It is the job of Mar
Menpower Commission end other agencies, but they cannot perform this
job until they know the Her Department's plans. Full information
must be continued to be furnished to all interested agencies at the
earliest possible time. Gen. Clay and Gen. Tompkins are fully aware
of this and should be able to see that it is accomplished.
Effective Carrying Out of War Department Plans. It is obvious
that no matter how good & planning job has been done, its success
will be dependent upon the actual operation of the plan by those
charged with carrying it out. As a step in testing, ASF plans 6
"dry run" next week and AAP is being invited to have representatives
attend. This is the result of 8. suggestion from this office.
Implementation of the public relations program, submitted
herewith, will serve as en additional means of testing the effective-
ness of planning steps. The Committee referred to above will submit
a report to you shortly, including recommendations.
Recommendations. The following recommendations are made:
2. That the Public Relations Program submitted herewith be
approved and authorisation be given to put the plan into
effect.
D. If the Special Army Supply Program is not approved today,
that you confer with G-4 and Gen. Clay in reference to it.
2. If it in approved, that it be transmitted to Mr. Justice
Byrnes with & letter. If you approve this recommendation .
proposed draft will be taken up with Gen. Clay.
EDWARD S. GREENBAUM,
Brig. Gen., U.S.A.,
Executive Officer.
Regraded Unclassified
208
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
CONFIDENTIAL
DATESept. 4, 1944
TO
Secretary Morgenthau
FROM
Mr. Haas
Subject:
The Business Situation,
Week ending September 2, 1944.
Summary
Industrial production: Industrial activity showed a further
slight decline in July, and the FRB adjusted index receded
2 points to 233. This compares with last fall's war-time
peak of 247. Factory employment in July declined for the
eighth consecutive month, and was 7 percent less than a
year earlier.
Reconversion: With rapid Allied advances pointing toward an
early end of the war in Europe, prospects for the recon-
version of industry to the production of civilian goods
remain clouded. Insufficient time has elapsed to gauge
the effectiveness of WPB's recent 4-point program for the
limited reconversion of industry. Meanwhile, final
legislative action remains to be taken on the bills
covering disposal of surplus war property and industrial
reconversion and demobilization, with wide differences
between the Senate and House versions of both bills.
Stock market: Stock prices last week moved in a narrow range
and trading fell off to the lowest levels since May, as
investors and traders withheld commitments pending evalu-
ation of war and reconversion developments. Despite recent
weakness, industrial stock prices in London at the end of
last week were still 43 percent above pre-war levels, as
contrasted with a rise of 9 percent in industrial stocks at
New York.
Commodity prices: Favorable war developments have had a
bearish influence on the commodity markets, particularly
on futures prices. The Dow-Jones futures index declined
1.2 percent in the past two weeks, although the BLS spot
index of 28 basic commodities was off only 0.1 percent.
Food surpluses: The fulfilling of the Government's obligation to
support agricultural prices until two years after the war, in
the face of expected huge surpluses of many farm products, 1s
now causing some concern. While a curtailment of production
from war-expanded levels will be necessary, the price-support
program and other factors will tend to encourage production.
Regraded Unclassified
209
- 2 -
Industrial production continues gradual decline
The gradual decline in industrial activity which has
been under way since the early part of the year continued
in July, with the FRB adjusted index of production showing
a further recession of 2 points to 233. This figure compares
with the war-time peak of 247 attained last fall. Most
industries showed declines in July although the drop in
output in most cases was small. Labor shortages and
oppressive weather caused iron and steel output to decline
moderately, while readjustments in shipbuilding and air-
craft production contributed to a small decrease in activity
in the transportation equipment industries. Nondurable goods
output was slightly lower than in June, while minerals
production in the aggregate fell off moderately, despite a
record output of crude petroleum.
Factory employment lower
The decrease in factory output in July was accompanied
by a further decline of 66,000 in the number of wage earners
employed in manufacturing industries. This was the eighth
consecutive monthly decline, and factory employment and output
in July were 8 percent and 7 percent, respectively, below last
fall's war-time peak. (See Chart 1.) Only a small part of
these declines can be attributed to seasonal influences.
Employment in the durable goods industries in July
showed a drop of nearly 100,000, principally due to decreases
in the aircraft, shipbuilding, automotive and machinery
industries. These declines much more than offset an increase
in employment in the nondurable goods industries, which was due
largely to seasonal expansion in the canning industry.
The steady reduction in factory employment since last fall
has made the level in July 1,000,000 less than a year earlier,
accounting for most of the drop in nonagricultural employment in
the past year. The major portion of this decline probably rep-
resents inductions into the armed forces and withdrawal of women
from the labor force. Total nonagricultural employment in July
was 38.6 millions as compared with 39.9 millions a year earlier,
with manufacturing and construction employment showing the
principal declines.
Divergent tendencies in manpower situation
The manpower situation continues to be characterized by
divergent tendencies, with numerous labor shortages being
reported in particular areas and industries, along with some
evidence of an easier over-all trend. At the beginning of
210
- 3 -
last week it was officially reported that production in
13 key war industries was lagging due to manpower shortages.
Among the industries said to be needing additional workers
were those producing tires, trucks, tanks, signal equip-
ment, heavy guns and shells, and lumber. Subsequently, it
was reported that the cotton textile industry is facing
an acute labor shortage, with & large number of additional
workers needed by November 1.
On the other hand, the number of acute labor shortage
areas as classified by the WMC at the beginning of the
month decreased slightly as a result of removing 5 areas
from the acute shortage classification (Group I) while
adding 4. Moreover, 5 areas were moved from Group III to
Group IV, indicating that a substantial labor surplus has
developed in the areas thus classified. These are Atlanta,
Georgia; Des Moines, Iowa; Kansas City, Missouri; Kingsport-
Bristol, Tennessee; and Newton, Iowa.
Reconversion developments
Although shortages of manpower, materials, and equip-
ment continue to beset some phases of the war production
program, the rapid crumbling of Nazi power in recent weeks
has served to focus intensified interest on the reconversion
problems now emerging. The WPB Chairman last month estimated
that a 40 percent out in war production would be "possible"
when Germany surrenders, and some observers believe that an
even sharper cut 1s likely. While the WPB recently put into
effect a 4-point program designed to achieve a limited
reconversion of industry to civilian goods production, it
remains to be seen how much can be accomplished under this
plan in view of existing manpower restrictions, materials
shortages, price ceilings and other limiting factors. When
the last of the orders covering the program was issued in.
mid-August, the WPB Chairman warned that no large increases
in civilian goods production were anticipated for the time
being.
Meanwhile, final legislative action remains to be taken
on the pending bills covering disposal of surplus war property
and industrial reconversion and demobilization. Both bills
are now in conference, with Senate and House versions in each
case showing wide differences which will have to be ironed
out in conference. The House version of the reconversion and
demobilization bill which was sent to conference near the end
of last week eliminated various salient features of the Senate
bill, considerably narrowing the scope of the measure. Among
Regraded Unclassified
211
- 4 -
the provisions eliminated by the House were those granting
unemployment compensation to Federal civil workers, providing
for transportation of war workers to their homes or new
places of employment, and providing for a retraining program.
Aircraft manufacturers urged to prepare
for cancellations
In view of the phenomenal war-time expansion in air-
craft output, few if any industries will be confronted with
more severe problems at the conclusion of hostilities than
the aircraft industry. In this connection it is of interest
that Army Air Forces procurement officers held a meeting
with more than 2,700 aircraft company officials in New York
last week to outline procedures for easing the shock of
contract cancellations. A ranking War Department official
asserted at the meeting that contractors had not kept pace
with the Department in the speed of handling claims, and in
this connection manufacturers were urged to prepare at once
for the large volume of cancellations that eventually will
be made. Manufacturers were warned that contracts may be
cut by one-third when Germany surrenders. Earlier last
month, Major General Echols of the Army Air Forces stated
that by next July aircraft employment would show a decline
of 294,000 workers, with the drop by the end of this year
approximating 100,000 workers.
Stock prices move in narrow range
After a small advance around the middle of last month,
stock prices have eased slightly, fluctuating narrowly on
reduced trading volume. Apparently the swift pace of
military developments in Europe, and the many complexities
of the forthcoming reconversion period, have caused traders
and investors to restrict. tments pending a. clearer.
evaluation of the outlook. Daily average trading volume
on the New York Stock Exchange last week dropped to around
660,000 shares, the lowest level since the second week in
May. At the close on Friday the Dow-Jones averages were
virtually unchanged from week-earlier levels. (See Chart 2.)
Industrial stock prices in London last week showed
slightly weakening tendencies, although the average level
of prices was higher than a week earlier, when the low point
in the August liquidating movement was reached. (See Chart 3.)
In London as in New York, prospects of an early peace in
212
- 5 -
Europe have revived fears over the problems of the post-war
reconversion period. After equalling the war-time high on
August 8, industrial stock prices in London declined steadily
through August 23, the aggregate decline for the period
amounting to about 4 percent. However, despite the recent
decline, it should be noted that industrial stock prices in
London at the end of last week were still 43 percent above
the levels prevailing on the eve of the outbreak of war 5
years ago, while industrial stock prices in New York were
only 9 percent higher.
Commodity prices lower
The rapid progress of the Allied armies in Europe has
had a bearish influence on commodity prices during the past
two weeks. While spot prices have declined only slightly,
commodity futures, particularly in the more distant months,
have shown noticeable weakness. The Dow-Jones futures
index dropped 1.2 percent in the two-week period, reaching
the lowest level since November 1943. Improved corn crop
prospects resulting from recent rains in the droughty
eastern portion of the Corn Belt have contributed to the
pronounced declines of feed grain futures. December oat
futures have dropped 9 percent in the two weeks.
In this period the BLS spot index of 28 basic commodities
has declined only 0.1 percent. Lower prices for cotton and
rosin were partially offset by higher prices for steers. (See
Chart 4.) It is of interest that federally-inspected cattle
slaughter attained record levels in August, 21 percent greater
than a year ago. The record slaughter was due in part to
heavy marketings of grass-fed cattle.
Although cotton prices declined only 1.8 percent in
the last two weeks, the decline is significant in that it
occurred despite several bullish legislative developments.
A rider was attached to the Senate's surplus property disposal
bill raising the loan rate on cotton from 921 to 95 percent of
parity. Moreover, a provision in both the Senate and House
surplus property bills would, in effect, subsidize exports
by permitting the 000 to sell Government stockpiles of fiber,
food, and feed at the lower world prices. Finally, the CCC
and the OPA have agreed to raise the selling price of
Government-owned cotton to 50 points above parity, as com-
pared with previous selling prices at the parity level.
While the BLS general index of wholesale prices has
moved in a very narrow range in the past three months, following
213
- 6 -
a gradual rise in the early part of the year, successive
declines in the two weeks ended August 26 have brought
the index to the lowest level since March. Lower prices
for fruits and vegetables contributed most to the decline.
At 103.5 percent of the 1926 average, the all-commodity
index 1s only 0.6 percent higher than a year ago, but it
1s 38 percent above the pre-war August 1939 average.
Farm prices in August slightly higher
The index of farm prices rose 1 point in August, but
it continues within the narrow range of the past 17 months.
At 193 percent of the 1910-14 average, the index is only
1 point above that of a year ago. Since the index of
prices paid by farmers (including interest and taxes) showed
no change last month, the parity ratio rose 1 point. Thus
farm prices averaged 114 percent of parity as compared with
113 percent in July and 117 percent in August 1943.
A sharp rise in hog prices last month was the most
important factor in the advance in the farm price index.
Egg prices also showed a sharp rise, and the average price
of whole milk was also noticeably higher. Heavy storage
stocks of eggs, however, have tended to limit the seasonal
rise in prices this summer, and despite the rise last
month, egg prices are still almost 15 percent below those
of a year ago. Partially offsetting the above increases,
prices of fruits and truck crops showed marked declines,
and grain and cotton prices also were significantly lower.
Wheat and cotton are 10 and 4 percent, respectively, below
parity.
Farm prices show somewhat larger rise
in this war than in last war
Although farm prices have been stabilized for almost a
year and a half, they have on the whole shown a somewhat
greater rise than during World War I. It should be noted,
however, that farm prices in World War I, following an 8
percent decline during the closing months of the war and
the first few months of peace, resumed their rise and
reached a peak in May 1920, eighteen months after the end
of the war. (See Chart 5.) Then the farm price structure
collapsed, and by June 1921 most of the war-engendered rise
had evaporated.
Several fundamental differences as between the two
periods will affect the comparative trend of farm prices
Regraded Unclassified
214
- 7 -
after the present war. These include: (1) an increase of
almost 25 percent in farm production from 1939 to 1944, as
compared with the small increase of less than 5 percent from
1914 to 1918, which will necessitate a greater readjustment
of present production to demand after the war; (2) the
continuation of price ceilings may prevent any substantial
rise in farm prices such as occurred after the last war; and
(3) the Government's obligation to support prices of most of
the important agricultural products for at least 2 years
after the war should prevent the drastic decline in farm
prices such as occurred in 1920. Farm prices may decline,
nevertheless, since the Government is not required to
support prices above 90 percent of parity, while farm.
prices now average 114 percent of parity. Moreover, the
parity level itself would be affected by lower prices for
agricultural products as well as for other products bought
by farmers.
Food surpluses may create price support
problem
The problem of successfully carrying out the Government's
obligation to support agricultural prices until two years
after the end of the war, in the face of expected huge
surpluses of many farm products, is now causing some con-
cern. Food Administrator Jones told a special House
Committee on Post-War Economic Development recently that
the immediate post-war farm problem would involve dis-
position of surplus Government-owned food stocks which had
been held in reserve. The Army's policy of maintaining
large reserve food supplies (reportedly 1 year's supply)
for soldiers on foreign duty, and smaller reserves for
soldiers within this country, will tend to create large
food surpluses when hostilities cease, Meanwhile, civilian
demand for foods may be reduced by unemployment during the
reconversion period.
This concern over the post-war outlook for farm products
has had a bearish influence on cotton and grain markets in
recent months. Food wholesalers, according to trade reports,
have adopted a more cautious inventory policy in view of the
recent favorable war developments.
Specifically, the Government 18 committed by the
Stabilization Act of October 2, 1942, and by the recently-
enacted Stabilization Extension Act, to support the prices
of various farm commodities at not less than 90 percent of
parity until 2 years after the January 1 following "the
date upon which the President or the Congress by concurrent
resolution declare that hostilities in the present war are
Regraded Unclassified
215
- 8 -
terminated". The commodities covered by the support
commitments include the basic commodities (corn, cotton,
wheat, rice, tobacco, and peanuts) and those commodities
under the Steagall amendment for which a substantial
increase in wartime production was asked, such as soybeans,
potatoes, egga, chickens, hogs, milk, and various other
products.
Price support problems likely to increase later
While agricultural surpluses may appear with the end
of the European war which would require immediate expansion
of the Government's price support activities, it appears
likely that the problem of supporting agricultural prices
will become greater in the succeeding months. Among the
factors which will tend to increase agricultural surpluses
in the post-war period are: (1) a probable decline in
exports following the rehabilitation of war-torn countries,
particularly in view of the price disadvantage our supported
commodities may face in international competition, (2) a
possible reduction in domestic consumption due to probability
of & lower income level and to the smaller food consumption
of former soldiers in civilian life, and (3) a stimulus toward
greater production as a result of the assurance of supported
prices, together with larger available supplies of farm
machinery, fertilizer, and labor. Food production has
been running about one-third greater than pre-war levels.
Wheat, for example, may again become a surplus problem.
The use of large quantities of wheat for feed and industrial
alcohol, which has been chiefly responsible for the record
disappearance in the last two years, is unlikely to continue
in the post-war period. (See Chart 6.) Although relief
needs immediately after the war will require large quantities
of wheat, our record crop of this year, together with a large
crop in Canada, and an increased acreage in Argentina and
Australia, will result in an export surplus estimated as
equal to more than twice the world's imports during the
twelve months just prior to the war, when Europe was
building up reserves.
In order to carry out price support operations required
by law during the two-year statutory period after the war,
the solicitor of the WFA, Robert H. Shields, stated recently
that greatly increased funds must be supplied by Congress.
Officials of the WFA are reported to be considering the use
of such devices as the food stamp plan, a broadened school
lunch program and other plans for handling extra supplies
until production can be brought into line with peacetime
Regraded Unclassified
216
- 9 -
requirements. To prevent Government-owned food surpluses
from directly depressing prices, a provision banning domestic
sales of any surplus farm products at less than parity or
prevailing market prices, whichever is higher, was written
into the Senate version of the surplus war property disposal
bill.
Cold storage holdings continue high
Reflecting the heavy stocks of food on hand, cold
storage space has continued tight in recent months. Freezer
space occupancy increased 2 points during July to 89 percent
on August 1, as compared with 83 percent a year previous.
At the present level, freezer occupancy is only 1 point
below the 1943 peak which was reached in October of that
year. Although cooler space occupancy at 84 percent on
August 1 was 1 point below that of the month previous, it
was higher than on any other date in at least the past two
years.
Stocks of butter and frozen fruits and vegetables
showed sharp increases during July, while stocks of cheese,
frozen eggs, and frozen poultry registered more moderate
increases. On the other hand, shell eggs, meats, and lard
decreased considerably. (See Table I.) Cold storage holdings
of all items, with the exception of butter, are now greatly
in excess of those on August 1, 1943 and also of the average
for that date for the five years 1939-43.
The capacity of cold storage space is important in the
Government's price support activities. Last spring the
tight storage space situation handicapped the effective
support of egg prices. It is of interest that the WFA
recently leased a limestone mine in Kansas which, when
converted, 18 expected to increase the nation's commercial
cooler storage space by 9 percent.
Department store sales continue active
Prospects of a reduction in the high war-time levels
of employment and payrolls growing out of the rapid march
of events in Europe thus far appear to have had little
restraining effect on the pace of department store sales.
During July, sales showed less than the usual seasonal
decline, and the FRB adjusted index of sales jumped to 194
from 175 in the previous month. Reference to Chart 7 will
disclose that the July figure exceeded by 2 points the
Regraded Unclassified
217
- 10 -
previous record high reached in February 1943. Despite
adverse weather conditions and the loss in sales arising
from the Philadelphia transportation tie-up. early in the
month, the dollar volume of department store sales in
the 4 weeks ended August 26 was 9 percent above year-
earlier levels.
Department store stocks are seriously depleted
in some lines, but seasonally-adjusted stocks at the end
of July stood at the highest level in 11 months. (Refer
to Chart 7.) The war-time shift toward higher-priced
items undoubtedly has tended to sustain the level of
the index despite the prevailing shortage of many types
of merchandise.
218
Table I
Cold storage stocks, August 1, 1944 compared with stocks
July 1, 1944 and August 1, 1943
Percentage change
August 1, 1944 over
July 1,
August 1,
1944
1943
Frozen fruits
t 61
t 28
Frozen vegetables
t 18
+ 35
Butter
t 34
- 34
Cheese
+ 9
+ 21
Eggs, shell
- 14
t 14
Eggs, frozen
t 9
t 10
Frozen poultry
+ 9
/266
Meats
- 18
t 20
Lard and rendered pork fat
- 18
t 43
Source: War Food Administration.
Regraded Unclassified
FACTORY EMPLOYMENT AND OUTPUT
1939 - 100, Unadjusted
PERCENT
PERCENT
240
240
220
220
200
200
Manufacturing Output, F.R.B.
180
180
160
160
140
140
Factory Employment, B.L.S.
120
120
100
100
80
J
M
M
J
S
N
J
M
M
J
S
N
J
M
M
J
S
N
J
80
MMJSNJMMJSNJMM
J
S
N
1939
1940
1941
1942
1943
1944
Chart 1 219
Office of the Secretary of the Treasury
Division of Research and Statistics
Regraded Unclassified
Chart 2
220
STOCK PRICES, DOW-JONES AVERAGES
Dally
1944
MAR.
APR
MAY
JUNE
JULY
AUG
SEPT.
30
7
14
21
26
4
il
IS
25
2
9
16
23
30
6
13
20
27
3
10
17
24
5
12
19
26
2
9
IS
23
DOLLARS
DOLLARS
155
155
30 Industrial Stocks
150
150
145
145
140
140
135
135
130
130
125
125
20 Rallroads
42
42
40
40
38
38
36
36
34
34
28
28
15 Utilities
26
26
24
24
22
22
20
20
SHARES
SHARES
Millions
Millions
Volume of Trading
2
2
I
I
o
o
8
a
19
20
E
D
HI
23
30
7
14
21
20
4
"
is
25
2
9
16
23
30
6
13
20
27
3
10
17
24
MAR.
APR
MAY
JUNE
JUL
AUG
SEPT
1944
Office of the Secretary of the Treasury
P-144-L-1
- - - - -
Regraded Unclassified
INDUSTRIAL STOCK PRICES IN U.S. AND U.K.
August 1936=100
1942
1943
1944
PERCENT
PERCENT
Weekly (Average of Daily)
120
120
115
115
110
110
105
105
100
100
95
95
U.K. 56 Industrial
90
Stocks
90
85
85
80
80
75
U.S. 30 Industrial
75
Stocks (Dow-Jones)
70
70
65
65
60
60
OCT
DEC.
FEB.
APR.
JUNE
AUG.
OCT
DEC.
FEB.
APR.
JUNE
AUG.
OCT.
DEC.
1942
1943
1944
Office of the Secretary of the Treasury
Chart 3 2218
F0-156-CI
Division of Research and Statistics
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 Aug. 18 and Sept. I, 1944
PERCENT
+100
Rosin 85.0%
222
+80
Berley 69.5%
Flazoond 67.3%
+60
Care 56.9%
+40
Hoge 457%
When 33.0%
Steers 32.7%
FLord 200%
Coffee 220%
+20
Butter 18.8%
Print Claim 10.3%
Collenesed Oil are
Segar as%
o
Total Tape 3/%
Mides 0%
Tellow -4/%
-20
Des.6.
Sept. 1,
1941
1944
1944
Office of the Secretary of be Truesury
- 4 - - -
P-202
Regraded.U nolassified
FARM PRICES, 1939 TO DATE COMPARED WITH 1914 TO 1921
July 19:4=100 World War Period: Aug. 1939= 100 Present Period
PERCENT
PERCENT
240
240
1943
1944
220
220
200
200
1942
1919
1918
1920
180
180
160
160
1941
1917
140
140
1921
First Month
120
120
of War
1940
1939
1916
100
100
1914
1915
80
80
N
J
M
M
J
S
N
J
M
M
J
S
N
J
M
M
J
S
N
J
M
M
J
S
N
J
M
M
J
S
N
J
M
M
J
S
N
J
M
M
J
S
N
J
M
M
J
S
Source: Department of Agriculture
Chart 5 22
Office of the Secretary of the Treasury
P-271
Division of Research and Statustics
Regraded Unclassified
WHEAT: DISTRIBUTION OF U.S. SUPPLY, 1930-44
BUSHELS
( MILLIONS)
Stocks, June 30 *
1.500
Other disposition
Total supply
Feed
Food
1,200
900
600
300
o
1930
1932
1934
1936
1938
1940
1942
1944
YEAR BEGINNING JULY
* 1930-37 INCLUDES SOME NEW WHEAT
A PRELIMINARY ESTIMATES
U.S. DEPARTMENT OF AGRICULTURE
NEG. 42548
Chart 6 224
BUREAU OF AGRICULTURAL ECONOMICS
Regraded Unclassified
DEPARTMENT STORE SALES AND STOCKS
Dollar Values, 1935-39=100, Adjusted
PERCENT
PERCENT
210
210
200
200
190
190
180
180
170
170
:
160
160
Sales
150
150
140
140
130
130
120
120
Stocks
110
110
100
100
90
90
80
80
1939
1940
1941
1942
1943
1944
1945
Source: Federal Reserve Board
Chart 7 22
Office of the Secretary of the Treasury
- of Remarch - Statements
C-430-0
Regraded Unclassified
226
SEP - 4 1944
MEMORANDUM FOR THE SECRETARY:
mat
FOR YOUR INFORMATION
In & memorandum of August 17, 1944, you were advised
that the State Department was seriously considering the
application of economic sanctions to Argentina. The State
Department had recommended to Cordell Hull that Argentina
be frozen and FEA had obtained State's approval to the
idea of substantially reducing our imports from Argentina.
Pending the basic decision concerning these matters which
Hull had under consideration, we held up two shipments of
gold that were about to be exported to Argentina.
Schmidt has now been informally advised by Collado of
the following recent developments:
Hull has just conferred with Churchill about Argentina
and it has been decided that there will be a "quiet period"
of indefinite duration during which no action that would
receive publicity will be taken against Argentina. During
this "quiet period" steps that can quietly be taken with
existing administrative machinery to decrease our exports
to or imports from Argentina are to be taken. No new
controls are to be imposed over our imports from Argentina.
The freezing of Argentina is to be "postponed."
The position of Argentine gold in this country was
also discussed with Hull, who decided that no change should
be made in the present policy and Treasury should continue
to prevent its exportation to Argentina.
227
The Secretary decided that this memorandum
rom the President should be filed without
an answer.
Piate
THE WHITE HOUSE
WASHINGTON
September 6, 1944.
MEMORANDUM FOR
THE SECRETARY OF THE TREASURY:
This maybe rather a dead
issue but I would like to know if the
facts are substantially correct, because
I might put it into a short paragraph
as an example of what Dewey might return
us to.
F.D.R.
229
0
SEP 4 1944
MEMORANDUM FOR THE PRESIDENT
I am returning herewith the letter to you from
Ambassador Gerard and the attached memorandum.
I have had the matter which Ambassador Gerard
raises looked into. This appears to be just one of
quite a number of questionable deals in the Twenties
which involved Latin American bonds. The general
subject was aired publicly in the early Thirties and
resulted in the enactment of the Corporation of Foreign
Bondholders Act of 1933 and certain portions of the
Securities Act of 1933. The specific matter referred
to by the Ambassador was, moreover, the subject of
extensive litigation in the New York courts.
This seems to me to be a rather "dead" issue.
(Signed) II. Morgenthan, Jr.
OVP 9/4/44
Haji derided not 230
THE SECRETARY OF THE TREASURY to send. File
WASHINGTON
without answering
MEMORANDUM FOR THE PRESIDENT
Reference is made to your memorandum
of September 6 with further regard to Ambassador
Gerard's suggestion to you.
I have had this matter looked into
further. The litigation dealing with this
situation was decided on jurisdictional grounds
and the facts involved never came to issue.
Without an outside investigation, the
object of which could hardly be concealed, it
is not possible to verify the facts to such an
extent that it would be safe to use them for the
purposes indicated.
FORVICTORY
BUY
UNITED
STATES
WAR
BONDS
AND
STAMPS
231
THE WHITE HOUSE
Pehle=
WASHINGTON
August 21, 1944.
MEMORANDUM FOR
THE SECRETARY OF THE TREASURY:
Will you run this down?
F.D.R.
the monsulth 232
S hring Labe
1014 FIFTH AVENUE
aug. 17"44 2.g.
Lac Franklini
The enclosed, which I am
s use. can be rerified, spring 2 weeks
before election would make victory
Certain
mastle canfully verified
yours ever
James 6. Peras
Some years back, when the buying public was even
more gullible than now, J. P. Morgan & Co. succeeded in peddling
a series of Mexican railway bonds to the suckers. The sale
was accompanied by the usual advertising fanfare, and the name
of Morgan was enough to bring the buyers a-running.
Time passed, and Mexico defaulted on its railway
bonds and other obligations. Then one day in the 1920's, Dwight
Morrow closed up his desk at J. P. Morgan's and went to Mexico
as Ambassador. Sometime thereafter, J. P. Morgan & Co.
unctuously announced that it did, after all, feel an obligation
to those who bought the bonds on its recommendation and would
redeem them in the greatness of its generosity at around $24.
The market price then was in the neighborhood of $14. In the
ensuing rush J. P. & Co. obtained pessession of practically the
entire issue.
This princely gesture was soon followed by announce-
ment that Ambassador Morrow had persuaded the Mexican Govt. to
redeem some of its bonds at $65 on the $100. There was great
applause, but no one seemed to notice that of all the Mexican
bonds in default the only ones to be redeemed were thosewhich
J. P. Morgan & Co. in its honorable generosity had bought back
at $24 each. Profit to J. P. & Co. - $41 the bond.
This story was unearthed and verified at the time
but never published in full form. Occasional sly references
have appeared from time to time in financial gessip columns.
Cynics have suggested that the Morrow appointment as Ambassador
was engineered solely to put the bond deal over,
classified
234
September 7, 1944
r. Bell
r. White
The Secretary would like to have you
:alk with him about this at your first
opportunity.
M.K.McHugh
Bell talked to Hiji 9/9/94-mo 9/8/94 no
action necessary
235
THE WHITE HOUSE
WASHINGTON
September 4, 1944
MEMORANDUM FOR THE SECRETARY OF THE TREASURY:
For your information.
Milliam Hamp WILLIAM D. HASSETT
Secretary to the President
236
C
0
P
Y
THE WHITE HOUSE
WASHINGTON
September 4, 1944
My dear Mr. Secretary:
I have consulted the Secretaries of State and the Treasury
regarding your letter of August 10, 1944 concerning the request of
the Netherlands Minister of Finance for a Reconstruction Finance
Corporation secured credit of up to $300,000,000 for post-war expendi-
tures in this country.
It is their view, in which I concur, that international financing
on reasonable terms through normal banking channels should be en-
couraged, and that governmental agencies participate only when broad
policy considerations make desirable inter-governmental collaboration
in cases in which commercial financing is not available on such terms,
or when some governmental participation is necessary in order to as-
sist private institutions in handling the transaction.
The Netherlands Government has a credit position which should be
attractive to private lenders and the type of credit requested in
this case is particularly suited to their facilities. I feel that
every effort should be made to ascertain definitely the possibility
of a private credit to the Netherlands Government before an agency
of this Government undertakes to handle the loan. In this connection,
I am informed that a consortium of private banks is now prepared to
extend a short-term credit on reasonable terms to the Netherlands
Government.
Irrespective of whether this loan should be made by private
investors or the Reconstruction Finance Corporation, this Government
will not take any action to make legally effective in this country
the Netherlands royal decrees of May 24, 1940 and May 7, 1942, in so
far as these decrees purport to vest in the Netherlands Government
title to the dollar securities in this country privately owned by
residents of the Netherlands.
I suggest that you consult with the State and Treasury Departments
about the manner in which to proceed with the request of the Netherlands
Government.
Sincerely yours,
FRANKLIN D. ROOSEVELT
The Honorable
The Secretary of Commerce,
Washington, D. C.
237
Treasury Department
Division of Monetary Research
Date
9/7
19°
19
To:
Mrs. McHugh
A reply will be prepared in
our Division.
jm
MR. WHITE
Branch 2058 - Room 214}
238
NF 251
SEPTEMBER 4, 1944.
cv/ms
DEAR MR. SECRETARY
THE AGREEMENTS THAT HAVE JUST BEEN SIGNED IN LONDON AND WASHINGTON
PROVIDE THAT PAYMENTS IN DOLLARS MUST BE EFFECTED EITHER BY THE AMERICAN
AUTHORITIES, PARTICULARLY IN REGARD TO THE COUNTER-VALUE OF THE FRANCE
USED FOR THE TROOPS, OR BY THE FRENCH AUTHORITIES FOR THE PAYMENT OF
CERTAIN CIVILIAN SUPPLIES.
ON THE OTHER HAND, IN A LETTER DATED AUGUST 25 TO MR. CROWLEY,
ADMINISTRATOR OF PEA, THE PROVISIONAL GOVERNMENT REAFFIRMED ITS INTENTION
OF COMPLETING AS GOON AS POSSIBLE THE PAYMENTS FOR THE CIVILIAN SUPPLIES
THAT HAVE ALREADY BEEN DELIVERED TO FRENCH NORTH AND WEST AFRICA IN PUR-
SUANCE TO THE MoDUS VIVENOI OF SEPTEMBER 25, 1943, AND OF KEEPING THEN
THENCEPORTH ON A CURRENT DASIS.
ME ARE MOST ANXIOUS TO TAKE THE NECESSARY STEPS IN ORDER TO COMPLY
WITH THESE COMMITMENTS AND PARTICULARLY TO REMIT TO YOU INMEDIATELY THE
FIRST DOLLAR RETURNS DERIVING FROM THE PAY of THE AMERICAN TROOPS.
I WOULD, THEREFORE, BE VERY GRATEFUL IF YOU COULD LET ME KNOW WHAT
VAS AT THE MOST RECENT DATE POSSIBLE THE AMOUNT OF DOLLARS CORRESPONDING
TO THE SUNS PLACED ST THE DISPOSAL OF THE COMMANDER IN CHIEF FOR THE
AMERICAN TROSPS ON BOTH THEATRED 07 OPERATIONS 19. FRANCE.
I M, DEAR MR. SECRETARY,
FAITHFULLY YOURS,
Ur taleuri
CHRISTIAN VALENSI
FINANCIAL ATTACHE
HENRY MORGENTHAN, Ja., EGG.,
SECRETARY OF THE TREASURY,
TREASURY DEPARTMENT,
WASHINGTON, D.C.
Regraded Unclassified
239
AF 251
CV/MJ
2944,
MONSI EUR LE SECRETAIRE AU TREGOR,
LES ACCORDS QUI VIENNENT D'ETRE SIGNES A LONDRES ET A WASHINGTON
PREVOIENT QUE DEB VERSEMENTS IN DOLLARS DOIVENT ETRE FAITS, GOIT PAR LES
AUTORITES AMERICAINES, NOTAMMENT POUR LA CONTRE-VAL.EUR DEB FRANCS UTILISES
A LA PAIE DES TROUPES, 8017 PAR LES AUTORITES FRANCAISES POUR LE PAINT
K CERTAINES FOURNITURES CIVILES,
D'AUTRE PART, PAR LETTRE DU 25 AOUT ADRESSEE A M, CROWLEY, ADMINIS-
TRATEUR DU FEA, LE GOUVERNEMENT PROVISOIRE A REAFFIRME 60M INTENTION X
COMPLETER A BREF DELAI LE PASSENT DES FOURNITURES CIVILES QUI ONT DEJA
ETC LIVREED EN AFRIQUE DU NORD ET EN AFRIQUE OCCIDENTALE PAR APPLICATION
DU MODUS VIVENDI DU 25 SEPTEMBRE 1943, ET DE POURSUIVRE ULTERIEUREMENT
cre PAIEMENTS DE FACON PERIODIQUE.
NOUS COMMES TRES DESIREUX DE PRENDRE D'URGENCE LES DISPOSITIONS
NECESSAIRES POUR METTRE A EXECUTION CEO ENGAGEMENTS ET EN PARTICULIER BE
vous REVERSER IMMEDIATEMENT LES PREMIERS DOLLARS CORRESPONDANT A LA PAIE
DES TROUPES AMERICAINES.
JR. vous GERAIS, EN COMBEQUENSS, TRCE COLIGE BE BIRH WILDER ME FAIRE
SAVOIR QUEL KoT, A LA DATE LA PLUB RECENTE POSSIBLE, LE MONTANT DEB DOLLARS
CORRESPONDANT MM SOMMES MISES A LA DISPOSITION DU COMMANDANT-EX-CHEF POUR
LES TROUPES AMERICAINES DES DEUX THEATRES D'OPERATIONS DI FRANCE.
VEVILLEE AGREER, MONSIEUR LE SECRETAIRE AU TRESOR, LES ASSURANCES
DE MA TRES KWITE CONSIDERATION.
lur baleut
CHRISTIAN VALENGI
ATTACHE FINANCIER
MAITRE DES REQUETES AU CONSEIL D'ETAT
MONGIEUR HENRY MORBENTHAU, m.,
SCORETAIRE AU TRESOR,
WASHINGTON, D.C.
Regraded Unclassifie
241
VICTORY
BUY
EXECUTIVE OFFICE OF THE PRESIDENT
ENITED
STATES
WAR
SONDS
WAR REFUGEE BOARD
ARE
STAMPS
WASHINGTON 25, D.C.
OFFICE OF THE
EXECUTIVE DIRECTOR
SEP 4 1944
My dear Mr. Secretary:
I am pleased to send you herewith a
copy of the report of the War Refugee Board for
the week of August 21 to August 26, 1944.
Very truly yours,
Pehle
Executive Director
The Honorable,
The Secretary of the Treasury.
...
Enclosure.
Regraded Unclassified
242
Report of the War Refugee Board
for the week of Aug. 21-26, 1944.
SITUATION IN HUNGARY
Implementation of Acceptance of Hungarian Offer
An informal conference for discussion of steps to
implement acceptance of the Hungarian offer regarding Jews
was held in London on August 21, attended by the Director
and Vice Director of the Intergovernmental Committee, repre-
sentatives of the British Foreign Office, the Admiralty, and
the Ministry of War Transport, and representatives of the
United States Embassy, Treasury Department, and the War
Refugee Board. Despite our constant realization that the
rapidly changing military and political situation may preclude
the possibility of any large scale rescue operations from
Hungary, the United States Government has already taken
unilaterally most of the steps suggested at the conference
by the Intergovernmental Connittee for action by the British
and American Governments. In this connection, we pointed
out that we have already received confirmation from the
International Red Cross that it is pursuing many of the
suggested lines of activity, both as to relief and rescue.
Moreover, all of the neutrals have been requested by this
Government to communicate to the Hungarian authorities their
willingness to receive refugees from Hungary, and have been
given guarantees of financial aid and prompt evacuation.
Nearly all of the neutrals have indicated to the Hungerians
their willingness to receive refugees. In addition to
making 5,000 children's visas available for children from
Hungary or other European countries, other action concerning
the granting of American visas to Jews in Hungary has been
or is being taken, and the neutral governments as well as
the Hungarians have been so añvised. Mexico has already
indicated to us its willingness to receive refugees for the
duration of the war.
We requested Ambassador Winant to advise the British
Government and the Intergovernmental Committee that, while
we have taken action along the lines indicated above, we
are anxious to cooperate in working out such further measures
as may be deemed necessary 02 advisable and are in general
agreement that such steps be taken under the leadership of
the Intergovernmental Committee.
243
- 2 -
Reports on Conditions in Hungary
Reports reaching our Legation in Stockholm from various
sources make increasingly clear the major part which the
Hungarian police have played in the tragically cruel arrests
and deportations of Jews from Hungary. A detailed account
by a thoroughly reliable eyewitness of deportations conducted
in the vicinity of Budapest indicates active Hungarien par-
ticipation, The informant was particularly impressed by the
ruthlessness of the Hungarian gendarmes, whom he described
8.8 "as bloodthirsty as the Gestapo of Germany." Camps in
provincial Hungary, which were emptied of Jews before deporta-
tions were halted by officials of Hungary, were managed by
Hungarian personnel with the aid of an SS adviser.
Board Representative McClelland advised us from Bern
of reports which he had recently received, and which he is
endeavoring to confirm, that the Gestapo, with the collabora-
tion of the German "Feld Polizei, If has continued to deport
small groups of Hungarian Jews from camps in the provinces,
the numbers involved not known. It was indicated that this
appeared to be purely German action.
We requested Minister Harrison and McClelland to convey
to the Swiss Government for transmission to the Hungarian
authorities the reports of active Hungarian participation
in deportations, with & request for their comment on the
reports, which the United States Government regards as
authentic.
Board Representative Hirschmann advised us of the
receipt from the Apostolic Delegate in Istanbul of a written
summary of the assistance which the latter can give in matters.
relating to Hungary. Principal assistance is in the nature
of courier service, by which several thousand Palestine
immigration certificates authorized by the Jewish Agency for
Jews in Hungary have been transmitted to the Apostolic Nuncio
in Budapest. Hirschmann is attempting to verify reports by
persons from Hungary who recently passed through Istanbul
that deportations have ceased for the present but that there
are few Jews left in Hungary except those in Budapest.
Proposal for Evacuation of Jewish Children to Sweden
The Swedish Minister to Ankara advised our Embassy there
of the Swedish Government's announced readiness to receive
in Sweden Jewish children from Hungary. Accordingly, and in
244
- 3 -
order to forestall any last-minute renewal of deportations
on the excuse that no satisfactory arrangements have been
made for evacuation of Jews from Hungary, we requested
Minister Johnson and Board Representative Olsen to suggest
to the Swedish/Government that it advise German and Hungarian
authorities that it is willing to arrange for a Swedish boat
to call at any German port which they may specify to trans-
port to Sweden Jewish children from Hungary, such sailings
to be repeated as long as necessary. This proposal is
advanced with the thought that obstacles which prevented
making a Swedish boat available for sailings to Haifa might
not apply to the short route between Germany and Sweden.
While it is not anticipated that the number of children
actually evacuated in this manner would be large, this
Government, singly or in cooperation with the British,
would guarantee costs of maintenance of such children in
Sweden and their evacuation from Sweden as soon as possible.
Should the project materialize, it is hoped that evacuation
from Hungary can be supervised by representatives of the
International Red Cross, the Swedish Red Cross, or the
Swedish Government, to ensure proper treatment of the
children en route.
Evacuation of Palestine Certificate Holders to
Switzerland
The Swiss Government recently advised its Minister in
Budapest that Switzerland would be prepared to give temporary
refuge to 8,000 individuals holding Palestine immigration
certificates, in the event they were unable to proceed
eastward. This is in addition to the proposed asylum in
Switzerland for 5,000 expectant mothers and children from
Hungary.
We requested Minister Harrison and McClelland to advise
the Swiss Government of our genuine appreciation of this
action and to suggest informally that a public statement
concerning it would help to prevent the Hungarians and
Germans from pleading that emigration is not feasible, and
would provide an example to other governments.
Spanish Visas for Children
Efforts to provide accommodation in Spanish Morocco
for E. larger number of Hungarian Jewish refugee children
were reported by our Legation in Tangier. We consider the
prospect of increasing the number of children's visas
granted for Spanish Morocco important for the temporary
protection which such visas may give the children involved
Regraded Unclassified
245
- 4 -
and from the standpoint of general alleviation of the
situation in Hungary prior to actual departure of the
visa holders, which may be indefinitely delayed by the
Gestapo. We advised Ambassador Hayes in Madrid of these
views and requested him in his discretion to advise our
Charge d'Affaires in Tangier to support the request for
additional visas without reference to available reception
facilities. We also requested him, if he deems it advisable,
to adopt the same procedure with regard to Spanish visas
in general.
Portuguese Visas
Following our appeal to neutral governments to permit
the entry of Hungarian Jewish refugees reaching their
borders, Ambassador Norweb advised us that the Portuguese
Government has indicated its agreement in principle to
helping these persons and that it has already informed the
Hungarian Government of its interest. Ambassador Norweb
was informed that the Portuguese Government had in fact
issued visas to 8 number of people and had persuaded the
Hungarian Government to issue exit visas, but that the
Germans had until now refused to permit them to leave.
Some of the persons in question have found asylum in the
Portuguese Legation in Hungary.
UNITED STATES VISAS FOR PERSONS IN ENEMY TERRITORY
United States consular officers in Spain, Switzerland,
Sweden, Portugal, and Turkey were authorized to issue
United States immigration visas to certain categories
of close relatives of American citizens and of resident
aliens entitled to nonquota or preference quota immigration
status; the Swiss Government 1s being requested to inform
enemy governments, particularly Germany and Hungary, of such
authorization. At the same time, our Missions in these
five countries were requested to attempt to secure the
prompt agreement of the governments to which they are
accredited to advise enemy governments of their willingness
to permit the entry of persons in the categories described.
With this action, the program formulated by this Government
to give assistance and protection of this nature now provides:
5,000 immigration visas, and such periodic replace
visas as may be necessary, for children up to
16 years of age reaching Switzerland, Spain,
and Portugal from France and Hungary.
246
- 5 -
Replace or new immigration visas for persons for
whom visas were issued or authorized on or
after July 1, 1941, and who have been in enemy
territory since December 8, 1941.
New immigration visas for persons in enemy territory
with nonquota or preference quote status as above
reported.
OWI--INTENSIFICATION OF PSYCHOLOGICAL WARFARE PROGRAM
Reports of the slaughter by the Nazis of thousands of Jews
in the path of their retreat through the Baltic States are
an unhappy portent of the menace of a general Nazi retreat
through France, Poland, and Caechoslovakia to the Jews
remaining in those occupied countries. The high hopes
engendered by the swiftly changing military situation cannot
be free of apprehension that the defeated German army and
the guilt-ridden Gestapo will use their waning power to
consummate Hitler's threat to make Europe "Judenrein."
Psychological warfare appears to be the only means of fore-
stalling these dread possibilities. We have therefore
requested the Office of War Information to intensify the
programs of warnings and appeals to the people in enemy
occupied Europe. We asked that renewed broadcasts of
warnings to the Nazi military authorities remind them of
President Roosevelt's statement that all men who participate
in the murder of Jews will be held accountable for their
crimes, and that the German authorities be informed that
the Government and the people of the United States are
shocked by the brutality of such incidents 8.8 the sinking
of the "Mefkura" and are determined that the captain and
crew of the German warship responsible for the outrage
shall pay the full. penalty. We suggested that appeals be
beamed to the Maquis to make a special effort to protect
the thousande of helpless men, women, and children confined
in concentration camps in France, and that repeated attempts
be made during the next few weeks to speak to partisans in
France, the Low Countries, Czechoslovekia, and Poland, urging
1 them to frustrate the Nazi plan to exterminate their Jewish
compatriots.
SITUATION IN BULGARIA
We learned from Board Representative Hirschmann in Ankara
that Draganov, the Bulgerian Minister of Foreign Affairs
and Cults, in an address to the Bulgarian Parliament on
August 22 concerning immediate removal of anti-Jewish
legislation, stated specifically that his government was
never in accord with the action of the previous Bulgarian
Government on this question. The fact that Draganov is
Regraded Unclassified
247
- 6 -
in 8. position of authority to deal with this question may
be an indication that the Bulgarian Government intends to
act in good faith in this matter.
SITUATION IN RUMANIA
Through our representatives in Stockholm we received infor-
mation from the Rumanian Government that the latter has been
assisting Jews in Hungary with Rumanian passports and has
taken special measures to get them into Rumania. It was
indicated that the Rumanian decree ordering Hungarian Jews
to be shot at the Rumanian border was issued to prevent
mass flights, which it was felt would greatly endanger
their lives. It was stated that border guards have been
privately instructed to shoot no one and that not a single
Jew has been shot fleeing across the border. Approximately
1,000 Rumanian Jews were estimated to have been evacuated
to Palestine in small vessels during April and May, and
approximately 8,000 Hungarian Jews were expected at Constanza
in August for evacuation to Turkey on the SS "Smyrna."
According to information which Hirschmann received from
Istanbul, the past several weeks have seen an increase in
the clandestine movement of Jews from Hungary to Rumania.
Estimates of the number of such refugees in Rumania at the
end of July were from 1,500 to 1,700, compared with an
estimated 3,500 to 4,000 there now. It was reported that,
while the Rumanians condone this movement, persons who are
caught are being held in & camp in Transylvania. Hirschmann
is seeking further information concerning the camp.
EVACUATIONS THROUGH TURKEY
The Secretary General of the Turkish Ministry of Foreign
Affairs advised our Embassy 111 Ankara that the Turkish
Consul in Budapest has been instructed to issue transit
visas to any Jews who apply for them, provided such persons
hold (1) an American immigration visa issued on or after
July 1, 1941, (2) a letter from the Jewish Agency in
Istanbul certifying that the holder has been granted a
Palestine immigration certificate, (3) a certificate issued
by the Jewish Agency ropresentative in Budapest that the
bearer is a Jew, or (4) an appropriate certificate issued
by the Swiss Legation or an endorsement on a child's
passport under the "five thousand" scheme. At the same
time, Turkish consuls at Burgas and Constanza were
authorized to grant up to 400 visas every ten days to
persons in possession of one of these four documents.
248
- 7 -
Hirschmann subsequently reported that the Rumanian Government
has now definitely agreed to provide transit facilities for
refugees from Hungary, and that continued efforts are being
made to secure a similar concession from the Bulgarian
Government. The latter has now offered to permit the "Vita"
and the "Pirin" to be used to transport refugees from Burgas
to Istanbul. Hirschmann expressed the hope that one of these
ships might make = trip every ten days carrying refugees with
transit visas granted by Turkish consuls. At the request of
our Embassy, the Turkish authorities have agreed to facilitate
the movement of the refugees by rail in the event of a delay
in commencing operation of the boats.
Despite the broad scope of these new arrangements, which provide
a basis for substantial rescue operations through Turkey, the
movement of refugees may continue to be delayed. The Inter-
national Red Cross has confirmed to our Embassy in Ankara
that although 2,195 Jews in Hungary have all their visas in
order, including transit visas, the German authorities there
have not yet granted permission for their departure.
EVACUATIONS TO SOUTHERN ITALY
As a result of Board Representative Ackermann's inquiries
regarding possible aid to refugees in Northern Italy, it
was learned that the Office of Strategic Services has
already established good contacts with resistance groups
in that area. 058 representatives indicated their belief
that there is great need for refugee aid there and that
such aid could be effective. It was suggested by OSS that
efforts to effect such a program be directed through them,
rather than through the Italian Government in Rome.
Italian resistance groups are presently receiving some
supplies by plane, but these are hardly sufficient for
effective military aid. Supplies of food and clothing are
an urgent necessity if refugees are to be assisted in
hiding in the mountains, but additional planes for this
purpose can be allocated only by a directive through the
Combined Chiefs of Staff. Ackermann suggested that investiga-
tions be made here to determine the possibility for the
issuance of such a directive while he continues his investiga-
tions to ascertain what other possibilities might exist for
formulating a program of assistance which would not require
the use of planes.
EVACUATIONS FROM NORWAY TO SWEDEN
Minister Johnson cabled us a summary of 8. report on rescue
and relief activities in Norway being conducted under the
249
- B -
supervision of Board Representative Olsen. Approximately
1,000 Norwegians were evacuated to Sweden during the month
of July. An organization is now well established, with
good channels for food and clothing supplies, for the main-
tenance of the 10,000 youths hiding in the Norwegiah forests.
Should their evacuation become necessary, plans are in readi-
ness. Food packages, clothing, shoes, and other critical
items are being sent to families of prisoners, to children,
and to other needy groups in Norway.
In view of military developments, Olsen is considering the
possibility of transferring to Norwegian operations the
vessels which are now being used for rescue activities in
the Baltic.
EVACUATIONS FROM FRANCE TO SPAIN AND PORTUGAL
We advised Ambassador Norweb and Board Representative Dexter
in Lisbon that in view of recent military developments in
France, no further efforts should be made to rescue either
children or adults from France through Spain. The World
Jewish Congress and the American Jewish Joint Distribution
Committee, both of which have participated in such operations,
concurred in the Board's decision to abandon this program.
RECOGNITION OF LATIN AMERICAN PASSPORTS
Acting on the request made by the Board for the protection
of persons holding documents issued in its name, the Govern-
ment of Honduras has asked the Swiss Government to take
charge of Honduran interests in Hungary.
Our Embassy in San Salvador edvised us that the Salvadoran
Government had some time ago requested the Swiss Government
to assume representation of Salvadoran interests in Hungary,
and that it will request the Swiss to make the desired
representations to the Hungarian authorities regarding
persons holding Salvadoran passports and documents.
Pehle
Executive Director
UK-001
UNITED KINGDOM TREASURY DELEGATION
BOX 680
BENJAMIN FRANKLIN STATION
WASHINGTON. D. c.
REFERENCE:
4
TELEPHONE EXECUTIVE
September 4, 1944.
Dr. Harry White,
U.S. Treasury, -
Washington, D.C.
Dear Dr. White,
I write to inform you that the figures for our gold and
dollar holdings in Million Dollars as at July 31, 1944, are as following:-
Gold
1,522
Less Gold Liabilities
327
Net Gold
1,195
Official Dollar Balance
697
Less Dollar Liabilities
214
Net Dollars
483
Net Gold & Dollars
1,678
I have also been advised that the figure of 323 appearing in
Mr. Lee's letter to you of August 1, 1944, in respect of gold liabilities
has been found to be incorrect, and the figure of 313 should be substituted
for it, increasing Net Gold to 1,095 and Net Gold & Dollars to 1,614 as
at June 30.
Yours sincerely,
R.H. Man
R. H. Brand.
RHB;mw
250
AIRGRAM
FROM
Cabberra
Date
September 4, 1944
Reed
September 12, 6 p.m.
Secretary of State,
Mashington
A-34 September 4, 4:10 pass.
With reference to Department's cirucular tele-
gran dated August 12, 1944, 8 p.m., concerning a
haven for children from Hungary there is quoted
below the text of a letter dated August 25, 1944
from Mr. W. D. Foreyth, officer in charge of refuges
questions at the Department of External Affairs:
"With reference to your letter of 18th
August concerning children from Hungary,
the following is the position:
"There is no general undertaking by the
Australian Government to provide asylum for
refuges children. The Australian Government
has so far approved the admission of 300
refugee children from France for whom wel-
fare organisations in Australia have under-
taken responsibility, but it has not been
possible to obtain passages to Australia.
The question of our agreeing to admit children
Data Hungary has been raised with us recently,
but in view of the fact that it has not yet
been possible to arrange transport for the
children from France there is some doubt as
to the utility of approving the admission of
children from Hungary. The propose, however,
to inquire in London whether approval would
serve any useful purpose even if transport
remains unobtainable".
JOHNSON
JRM/VF
Regraded Unclassified
251
AMT-688
Vatican City
This telegram must be
paraphrased before being
Dated
September 4, 1944
communicated to anyone
other than a Government
Rec'd
2 p.m.
Agency. (RESTRICTED)
Secretary of State
Washington.
302, September 4, 5 p.m.
FOR THE SECRETARY FOR WAR REFUGEE BOARD.
In response to your telegram No. 114, dated
August 30, 7 pam., I would advise that I promptly
renewed the approach to the Holy See again supporting
an appeal by His Holiness the Pope to the German
authorities requesting the release from Northern Italy
and the transfer to Southern Italy or elsewhere of about
9000 Jewish refugees. It is my understanding that the
British are again supporting such an appeal.
TAYLOR
LMS
Unclassified
252
Distribution of true
September 4, 1944
reading only by special
arrangement (SECRET W)
4 p.m.
AMEMBASSY,
LISBON
2420
The following War Refugee Board message is for
Dexter.
Dr. Leon Kubowitzki, head of rescue department of
World Jewish Congress, wishes to visit Portugal and
some other European countries on a mission from his
organization connected with refugee matters.
Please lend him all appropriate assistance in his
mission including assistance in obtaining Portuguese
visa for which we understand he is applying.
HULL
(GLW)
WRB:MMV:KG
WE
9/4/44
253
LC-919
Lisbon
Distribution of
true reading only by
Dated
September 4, 1944
special arrangement.
(SECRET w)
Rec'd
9,32 a.m., 5th
Secretary of State,
Washington.
2724, September 4, 3 p.m.
THIS WRB 174 USC 3 FOR RAYMOND BRAGG BOSTON
FROM ELIZABETH DEXTER.
Am forwarding telegram from Field with most
encouraging news of progress. Here this seems best
perhaps only immediate opeining into France. Suggest
someone 6° Geneva from here soonest possibly this
person or Field returning Boston afterward for conference.
Whoever goes should have fullest possible instructions from
committee also considerable latitude for urgent
decisions. Situation crucial fro future working
Europe. Field should have all possible help and
financial backing. Hope you can secure aid for
Yugoslav plans.
NOREEB
BB
Miss Chauncey (for the Sec'y) Abrahamson, Cohn, DuBois,
Friedman, Drury, Gaston, Rodel, Laughlin, Lesser, Mannon,
Marks, McCormack, Pehle, Sargoy, Standish, Weinstein, Files
Regraded Unclassified
254
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
American Embassy. Lisbon
TO:
Secretary of State. Washington
DATED:
September 4, 1944
NUMBER:
2727
CONFIDENTIAL
ELISABETH DEXTER. BEEN STANDS THE FOLLOWING, WRB 175,
FOR RAYMOND BRAGG, BOSTON.
NO. 171 of September 1.
This continues my 170.
You are informed that I an departing this week for nearby
liberated regions with a view to surveying requirements and
recommending action. I have appointed an excellent French
cellaberator prepared to depart at say time. Madame Andre
Phillip. just back from France, advised no that the number
of foreign refugees in the Savoie area is about 12,000
French friends representing various tendencies unanissuely
urge our helping social services of liberation forces and
their families. Upen my return I shall wire a full report.
I have secured 50,000 Swine france from Joint, repayable if
and when possible.
I trust that you approve my assistance effort large number
of Tugeslav adherents to Tite movement here and France to
return home and join the struggle. Ve have also been requested
by representatives of the Tite movement to help some 20 Tuge-
slav interned high school students complete their education
here prier to returning to their country. The cost 10 about
3,000 france per person for the school year. It is urged
that the committee make effort to obtain a special fund. It
is suggested by McOlolland that you appreach the United Tuge-
slav Relief fund which come months age displayed an interest
in Yugeslav refugees is Switserland, but has readered no
practical aid as yet.
NORWEB
DCR:VAG:MIM 9/6/44
255
0J-855
PLAIN
Lisbon
Dated September 4, 1944
Received 2:19 a = 5th
Secretary of State
Washington.
2733, September 4, 7 P. m.
WRB 177 JDC 63 FOR LEAVITY FROM PILPEL
One. Saleymayer inquires for name of
reliable person Sofia.
Two. He without recent news from Rumania.
THREE. He has been approached Abraham
Abramovice who states formerly associated with
JDC Paris. Please advise.
NORWEB
NMB
256
GJ-857
PLAIN
Lisbon
Dated September 4, 1944
Rec'd 2:21 a.m. 5th
Secretary of State,
Washington.
2734, September 4, 7 p.m.
WRB 176 JDC 65 FOR LEAVITT FROM PILPEL.
Saley Mayer advises Shanghai Comdttee assist-
Ang almost 10,000 persons and requires $50,000
September.
NORWEB
WMB
257
HD0-246
This telegram must be
Madrid
paraphrased before being
communicated to anyone
Dated September 4, 1944
other than a Government
Agency. (SECRIT 0)
Rec'd 11:13 p.m. 5th
Secretary of State
Vashington
3028, September 4. 9 P -
Reference your letter August 11 No. 106. USCC
paid from its expense account on August 24 pesetas
4077.60 for account of Var Refuges Beard to defray
part charges in connection with embarkation of
refugees which took place at Cadis on June 21 ex the
SS GOUVERNEUR GENERAL LE PINE.
HAYES
XDA
259
CABLE TO MINISTER HARRISON FOR MCCLELLAND, BERN, SWITZERLAND
Reference is made to your 5579 of August 26, paragraph one. You may
draw attention of Intercross to text of this Government's reply to Inter-
cross of August 11 (see Department's 2657 of August 2) in which it undertook
to arrange for the care of all Jews permitted to leave Hungary under the
present circumstances, who reach neutral or United Nations' territory, and
to find for them temporary havens of refuge. Nothing in that reply implied
limitation to Jews in possession of Palestine certificates or planning to
go to Palestine.
Furthermore, you may draw attention of Intercross to special provisions
made in favor of persons to whom American immigration visas were issued or
authorized after July 1, 1941 (Department's 2605 of August 1); to extension
of children's visa facilities to Jewish children from Hungary (Department's
2877 of August 21); to provisions in favor of close relatives of American
citizens and alien residents (Department's 2918 of August 24); and to
assurances obtained by this Government from Irelend and Honduras in favor
of children from Hungary (Department's
of
, WRB 151 to Bern).
In addition, Nicaragua has agreed to admit 100 children from Hungary, and
Mexico has expressed its willingness to give emergency shelter to refugees
from enemy territory for duration of war.
The cooperation of Switzerland, Sweden, Spain, Portugal, and Turkey
has also been requested by this Government in respect of admission of any
Jown who would be permitted to leave Hungary, and these requests have been
partly successful. Spain alone has authorized 2,000 visas. Sweden is
reported to have agreed to admit children, numerous adults, and persons to
whom American visas were issued or authorized after July 1, 1941. Rumania
1a also cooperating, but current events on Hungarian-Rumanian border pre-
sumably preclude evacuation via Rumanie.
Pointing out the foregoing to Intercross, you may reiterate this Govern-
ment's refusal ever to limit its undertakings with respect to the emigration
of Jews from Hungary to any number or particular category of Jews or to Jews
going to any particular country and its protest against the attempt of
German and Hungarian authorities to introduce such arbitrary limitations.
Recommendation contained in last paragraph of your 5579 is appreciated
and is being acted upon.
THIS IS WRB CABLE TO BERN NO. 158
11:45 a.m.
September 4, 1944
Miss Chauncey (for the Sec'y) Abrahamson, Cohn, DuBois, Friedman, Hodel,
Laughlin, Lesser, Mannon, McCormack, Cable Control Files
BAkzin:er 8/31/44
Regraded Unclassified
259
CABLE TO MINISTER HARRISON AND MCCLELLAND, BERN, SWITZERLAND
Unofficial reports reaching WRB indicate that Intercross believes
Theresienstadt a privileged camp and does not (repeat not) consider
necessary any action calculated to bring its inmates within scope of
Intercross activity.
Please advise Intercross that Board has received repeated reports of
recent deportations from Theresienstadt to extermination camps which, if
true, indicate that its inmates enjoy no security. In addition, well-known
tendencies in certain official circles in Germany to exterminate maximum
number of Jews before end of war make likely sudden deterioration of posi-
tion in Theresienstadt and elsewhere unless adequate precautions are taken
betimes. Board is therefore unable to share moral responsibility for pos-
sible loss of human lives involved in an express or tacit approval of
reported Intercross position. Board is convinced that Intercross too would
not like to bear such responsibility.
Accordingly, Board earnestly hopes that Intercross will extend its
protective activities to Theresienstadt inmates including distribution of
Palestine certificates and other documents entitling them to partial
assimilation with civilian internees, eligibility for exchange and general
Intercrose supervision.
In general, please submit to Intercross the Board's view that in
dealing with Jews in German-controlled territory in the coming critical
weeks, it is not enough to attempt to correct unsatisfactory situations
already in existence. In the light of present circumstances it is urgent
that all measures be taken to beprepared to deà with sudden deterioration.
Therefore, Intereross is earnestly urged to take preventive as well as
corrective action, however much this may go beyond the traditional pattern
of Intercross activities. If this line of action is unprecedented, 80 is
the situation.
If possible, discuss the foregoing points with Huber personally.
THIS IS WRB CABLE TO BERN NO. 159
11:45 a.m.
September 4, 1944
MissChauncey (for the Sec'y), Abrahamson, Cohn, DuBois, Friedman, Hodel,
Laughlin, Lesser, Mannon, McCormack, Cable Control Files.
BAkzin:LSLesser:ar
9/2/44
Regraded Unclassified
260
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
American Legation, Bern
TO:
Secretary of State, Washington
DATED:
September 4, 1944
NUMBER:
XXX
5805
SECRET
McClelland sends following for War Refugee Board.
Reference is made herewith to Department's cable
No. 2899 and to Legation's of August 12, 1944, No. 5233.
Reliable Hungarian reports received recently by
Salymayer, explicitly confirmed by Kasztner, are that under
present circumstances false El Salvador "nationality" docu-
ments give the bearers no protection whatsoever. It is felt
by us to be inadvisable to make use of information contained
in your cable No. 2899, for this reason as well as for reasons
set forth in the penultimate paragraph of cable No. 5233.
As regards official United States presentation to Swiss
Federal Political Department of Salvadoran documents for
delivery to persons in Germany and German occupied territory
other than Hungary who claim Salvador nationality, repeated
attempts have been made by the Legation to secure confirmation
that validity of documents fraudulently issued by the
Salvador Consulate General at Geneva will be recognized by
the Government of El Salvador. To date the Legation has not
felt it advisable to present these documents officially to
Swiss FPD for forwarding, owing to complete absence of any
such confirmation. We should be glad to receive your instruc-
tions in this matter.
HARRISON
DCR:IDB:EFR 9/9/44
261
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
American Ambassy, Changking
20:
Secretary of State, Washington
DATED:
September 4, 1944
NO.:
1499
RECEIVE
The Central News report that Finance, Communications, Economic Affairs
and Foreign Affairs Ministries have jointly drawn up comprehensive plan
for "encouragement" of foreign capital investments and had referred the
plan to Executive Tuan is orally confirmed by the Vice Finance Minister.
While expressing inability to predict if or when the plan will be approved,
or whether it will be materially altered, he states that the eventual
treatment of foreign capital will "undoubtedly be quite liberal" with
adequate provisions for security and reasonable returns. It is stated by
him that the proposed revision of insurance banking laws apparently has
been shelved and officials favoring anti-foreign discrimination have been
forced to give way to officials who favor liberal treatment.
Although these remarks are encouraging and may indicate the growth of
more liberal attitude, pending more concrete evidence that the general
Chinese Government tendency in these matters is changing, the Lubassy
accepts them with considerable reserve.
GAUSS
DOR:VAG:MIM 9/9/44
ef:copy
9-13-44
Regraded Unclassified
COPY NO
262
NOT TO BE RE-TRANSMITTED
SECRET
OPTEL No, 268
Information redeived up to 10 A.M. 4th September 1944.
1. NAVAL
A Small British AA ship, foundered on 2nd in heavy weather
off ARROMANCHES. Unloading CHERBOURG restricted and many sailings
suspended. German hospital ship BORDEAUX (status unrecognized)
intercepted off CHANNEL ISLANDS 1st by U.S. Destroyer
and has been escorted by a British Destroyer into PORTSMOUTH. A
U.S. Destroyer shelled positions near MONACO lst. Two British
Destroyers again shelled batteries and cross roads north of PESARO
on 1st. Aircraft from a British escort carrier and destroyers
escorting a convoy sank a U-boat on 2nd N.W. of TRONDHEIM.
2. MILITARY
France U.S. troops are within 7 miles of the LUXEMBOURG
Frontier. Further north they are on general line
MAUBEUGE-MONS. U.K. Armour has cleared TOURNAI and reached outskirts
of BRUSSELS; another U.K. armoured column has reached ALOST.
Canadians have been considerably delayed in crossing SOMME owing
to destruction all bridges but havenow established two bridgheads
across the river. on left flank U.K. and Canadian forces have
cleared the coast to within 5 miles south of SOMME Estuary. U.K.
forces are closing in on Germans left behind in small area round
LE HAVRE.
Southern France French forces have pushed reconnaissance.
towards SWISS Frontier as far as CHAMOUSSE1
and North and East of THE LAC DU BOURGET. U.S. Forces have main-
tained their positons NE of LYON and are within 3 miles due South :
of the city where they are in contact with the Germans West of
RHONE. Further Wast French reconnaissance elements are on ganeral
line ST. CHAMOND-ST ETIENNE-FIRMINY.
Italy Eighth Army advance in ADRIATIC Sector continues
watisfactorily with stiff fighting. CATTOLICA has beer
captured. German resistance has prevented any further advance in
hills 8 miles NE of Florence. West of FLORENCE Fifth Army advance
over ARNO going well on broad front; latest reports show forward
troops 7 miles South PISTOIA and midway between PISA and LUCCA.
3. AIR OPERATIONS
Western Front. 3rd. 615 escorted bomber command heavies
(2 missing) bombed 6 airfields HOLLAND 3246
tons; most crews bombed visually with good reaults. 393 escorted
U.', Heavies (2 missing) bombed 16 batteries BREST 927. 325
rted U.S. Heavies (one missing) bombed LUDWIGSHAFEN 866 tons,
Supporting fighters shot down 7 German aircraft. 200 other
bonbers (one missing) bombed strong points and bridges BREST 310
to. 8 and 96 fighter bombers attacked similar objectives. Other
fighter bombers destroyed 42 locomotives and 134 motor vehicles in
- LOW COUNTRIES.
Italy and Southern France lst/2nd. Heavy and medium bombers
dropped 160 tons BOLOGNA Railway
Centre. 2nd, About 180 medium andlight bombers (2 missing) and
670 fighters (6 missing) attacked communications etc. Yugoslavia
fighters which attacked communications between BELGRADE and NISH
2nd destroyed or damaged 106 locomotives and nearly 500 motor and
other vehicles.
German Activity About 125 shells from French coast fell
in DOVER Deal Area.
Regraded Unclassified