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Volume 776, September 27 – September 28, 1944
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Volume 776, September 27 – September 28, 1944
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Henry Morgenthau, Jr. Papers
Diaries of Henry Morgenthau, Jr.
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DIARY
Book 776
September 27-28, 1944
Regraded Unclassified
- B - -
Book Page
Batt, William L.
Cox (Oscar)-HMJr conversation concerning possibility
of job with Surplus Property - 9/27/44
776
65
- C -
Constitution of the United States
See Library of Congress
- D - -
Declaration of Independence
See Library of Congress
- 1 - -
Financing, Government
War Finance: World War I - effect on bond prices of
exemption of Government bond interest from normal
tax although subject to surtax - 9/27/44
85
War Savings Bonds
6th War Loan Drive: Conference to decide on timing:
present: HMJr, Bell, Gamble, Murphy, Smith, Haas,
Lindow, and Barth; Tickton present at second
conference - 9/27/44, 9/28/44
1,135
a) Expenditures after X-Day discussed
1) Tables: "Assumed Cutbacks in Munitions
Production after German Defeat," etc
163
b) Elmer Davis-HMJr conversation 9/28/44
159
- G - -
Germany
See Post-War. Planning
- K -
Krock, Arthur (New York Times)
Crider (John) tells HMJr Krock is "very, very close to
Hull, doesn't know Stimson, but is 'on very intimate
terms with McCloy'" - 9/27/44
73
- L -
Lend-Lease
United Kingdom: Federal Reserve Bank of New York
statement showing dollar disbursements, week ending
September 20, 1944 9/28/44
202
United Nations Relief and Rehabilitation Administration:
First Lend-Lease requirements - - 9/27/44
118
Regraded Unclassified
- L - - (Continued)
Book Page
Library of Congress
MacLeish thanks HMJr for safe custody of Constitution
and Declaration of Independence, etc., at Fort Knox,
Kentucky - 9/27/44
776
84
- M - -
MacLeish, Archibald
Thanks HMJr for safe custody of Constitution and
Declaration of Independence, etc., at Fort Knox,
Kentucky - 9/27/44
84
Montreal Conference
See United Nations Relief and Rehabilitation Administration
- P -
Patterson, Robert P.
See Post-War Planning: Germany
Post-War Planning
Germany: Patterson-HMJr conference described for White
and Gaston - 9/27/44
33
a) Patterson ignorant of events at Quebec
b) High Commissionership discussed
34
(See also Book 769)
c) Quebec Agreement shown to Patterson
- S -
Stimson, Henry L. (Secretary of War)
Reparations stand in World War I discussed by HMJr, White,
and Gaston - 9/27/44
77
- U - -
United Nations Relief and Rehabilitation Administration
Montreal conference, September 15-26, 1944, outlined in
Glasser memorandum to HMJr - 9/27/44
89
First Lend-Lease requirements - 9/27/44
118
- W -
War Finance
See Financing, Government
War Refugee Board
Weisgal, Meyer W. (Jewish Agency for Palestine), on
Palestine trip with Weimmann offers assistance to
Board - 9/28/44
207
Regraded Unclassified
- W - (Continued)
Book Page
Weisgal, Meyer W. (Jewish Agency for Palestine)
See War Refugee Board
World War I
Stimson stand on reparations discussed by HMJr, White,
and Gaston - 9/27/44
776
77
Effect on bond prices of exemption of Government bond
interest from normal tax although subject to surtax -
9/27/44
85
Regraded Unclassified
1
September 27, 1944
11:20 a.m.
SIXTH WAR LOAN DRIVE
Present: Mr. D.W. Bell
Mr. Gamble
Mr. Murphy
Mr. Smith
Mr. Haas
Mr. Lindow
Mr. Barth
Mrs. Klotz
H.M.JR: Now, the purpose of this meeting is, I take
it, to decide when we are going to have a War Loan; is
that right?
MR. GAMBLE: That is right.
H.M.JR: I didn't want to do anything without consult-
ing everybody. I thought the suggestions that Gamble's
State Chairmen made were all right. I got the same sugges-
tion on my recent trip last week - from the 20th of
November to the 16th of December. I wondered what you
thought about it.
MR. BELL: I don't have any great objections to it.
I was hoping it would be a little earlier because our
balance is going to be pretty low on November 30. I
didn't think that the ten days was long enough before the
payment date to get started, really, on the individuals, but
I don't object strenuously to it.
H.M.JR: I can't start it before then. I don't think
I told you (Gamble) that the down-State Chairman in Illinois
said he had fourteen county chairmen working under him.
They served notice on him that if Roosevelt was re-elected
ten out of the fourteen would resign. He said, "If I have
a little time, I am sure none of them will resign."
Regraded Unclassified
2
- 2 -
So I said, "Are you worried?" I kidded him. He
kind of let it slip. They all laughed. He thought he would
get it over. We had a little fun. But he said out of four-
teen, ten had served notice. I think we need all the time
we can have. I think the 20th should be the earliest.
MR. BELL: Ten had served notice they would resign?
H.M.JR: Ten out of the fourteen.
MR. BELL: If Roosevelt was re-elected?
H.M.JR: Yes. This is down-State Illinois. And
Pulliam more or less said the same thing.
MR. GAMBLE: Yes, he said in two weeks he would have
his people in shape.
H.M.JR: It is going to take two weeks for the country
to recover if Roosevelt is re-elected. So, unless sômebody
here has some idea, the 20th is all right with me--
MR. GAMBLE: That is a Monday.
MR. BELL: I don't have any real objection to it.
H.M.JR: What about the financing?
MR. BELL: That is a question we ought to discuss, as
to what we are going to do.
H.M.JR: It isn't a diversion. It is a thing where
Gamble and I are going to come in on a collision and one
of us will have to be boss. I am not saying who. Like
this fellow at the luncheon yesterday - this State Chair-
man - something came up and I said, "Well, you have to do
President.' something on account of my neighbor who is running for
President." So he said, "You have two neighbors running for
Regraded Unclassified
3
- 3 -
I said, "But I am non-partisan. I just said my
neighbor." (Laughter)
I am perfectly willing to start to give credit for
E Bonds beginning with the first of November, but I don't
want to give any credit for is Bonds after the closing day
of the Drive.
In other words, any sale made up to and including
- the 16th, did we say?
MR. GAMBLE: Yes.
H.M.JR: the 16th of December will be credited, but
not after that. I have been all through this thing; no
one is interested in what happens when you tell them the
middle of January. I don't know for whose sake you are
doing it. The money is still there. These people in
Chicago wanted to make it over the first of January. They
wanted to run it through until the 15th of January so you
could get part of next year's business.
This thing last time - we sucked in every bond, with
the result we got very bad publicity on the redemptions;
they were running practically equal to the sales the month
following the drive.
MR. GAMBLE: That is always true, drive periods or
no drive periods.
H.M.JR: All right, but you are not going to do it for
me.
MR. GAMBLE: We aren't going to put on a drive and
settle it on the 16th of December, Mr. Secretary, because
we can't do it. The problem is not so simple. It is very
involved, and we have been working on it for three years
and there is no other answer to it, Mr. Secretary.
We are going to have drives in two hundred and eighty
thousand plants. If we could get every one of those plants
to start on the first day of November making their deduc-
tions, and get every one to close the books on the 16th day
Regraded Unclassified
4
- 4 -
of December and send their report to the Federal Reserve
Bank, we could conduct such a drive, but there are seventy-
five thousand issuing agencies involved in addition, and it
takes them two weeks' time to clean up that job. Many plants,
Mr. Secretary, will not start their drive until the 20th
of November even though we try to get them started.
H.M.JR: I tell you why, because they know they have
room--
MR. GAMBLE: Let me explain a little further. Many
plants only pay once a month. They will get one pay de-
duction on the one pay period in December and that may be
the 25th of December or it may be the 27th of December,
or the 31st of December.
H.M.JR: Look, Ted, if you tell your people that the
drive is over on the 16th of December and they know it now,
and then instead of this thing - it takes them two or three
weeks to get blocks organized, two or three weeks to do
this and that - let them get organized and begin to do
business when the drive opens.
MR. GAMBLE: Mr. Secretary, it is a mechanical problem
that you can't solve.
H.M.JR: It is up here. (Indicates head)
MR. GAMBLE: No, it isn't up here. There are seventy-
two million bonds sold and issued and delivered; you can't
deliver them in that period of time.
H.M.JR: You don't have to.
MR. GAMBLE: Under your plan you have to have them
delivered by the 16th of December.
H.M.JR: Do you?
MR. BELL: You have to have them in the till.
MR. GAMBLE: It isn't physically possible.
Regraded Unclassified
5
- 5 -
H.M.JR: Then we will just cut down the amount.
Look, Ted, you don't take it; I take it and I am not
going to take it again.
MR. GAMBLE: The last time it was bad because we ran
the three weeks after the end of the drive.
H.M.JR: It is always bad. I can get the papers -
clipping after clipping, "Morgenthau fails" - this is
wrong. It is always me. And, moreover, even giving this
thing as long as you are going to take, look at all the
places that don't make their E-Bond quotas working under
this plan.
MR. GAMBLE: There aren't many, Mr. Secretary.
H.M.JR: Excuse me. When I go out in the field they
tell me. They gave me some very interesting figures in
Chicago where they subtracted the bank loans; and after
they subtract the bank loans - it may have been Boston -
and they subtract what the insurance companies buy - this
is particularly Boston, because they had very little bank
loans - but they take away what the people borrow from
the banks in order to buy this stuff - which is no good
from our standpoint - and you get some very interesting
figures left.
Then look at all the States that didn't. make. the E-
Bond quota.
MR. GAMBLE: We know exactly, Mr. Secretary.
H.M.JR: How many States did not make the E-Bond
quota?
MR. GAMBLE: Thirty-odd made their E-Bond quotas.
H.M.JR: Then eighteen didn't.
MR. GAMBLE: The only trouble with this job, too many
people don't realize what a hell of & task it is.
Regraded Unclassified
6
- 6 -
H.M.JR: Are you applying it to me?
MR. GAMBLE: I don't think it applies to you, but they
don't have a full comprehension of the mechanical jobs
involved.
H.M.JR: You have a very simple answer to me, see,
which you are not giving me. You should say, .Morgenthau,
how many do you want to sell?" And if I, as the president
of this company said to my national sales director, "I am
going to cut you down on the time, but I want the same
results," then you could say, "Mr. Morgenthau, that is im-
possible."
But if I say to you, as president of this company,
"I want to have this cut-off date, but being a reasonable
person, I will make the necessary adjustment SO that you
can get them and get it so that the States like New York
and these other States, for the first time, will make their
E-Bond quota."
Now, I am sick and tired, as Secretary of the Treasury,
of taking this thing on the chin, and I am not going to
take it in the New York papers again. Let me finish,
please. You have asked for this. For three weeks to pick
up the New York Times every single day and see I didn't
make it - I am not going to do it again. It is always
Morgenthau, and always Morgenthau that fails.
MR. GAMBLE: Mr. Secretary, here was the point I was
making: Regardless of what you make the quota, your people
have to work full steam up to the 16th of December. Now,
you are never going to make them work that way if, in their
minds, two-thirds of what they are selling in those closing
weeks they will never get credit for.
MR. BELL: They are going to quit a week before the
16th of December, I am afraid, Mr. Secretary. If they
think they are not going to get credit for the bonds they
sell on the 14th and 15th of December, they are not going
to sell them.
H.M.JR: Pomebody in Chicago had some plan--
Regraded Unclassified
7
- 7 -
MR. HAAS: That is to close it on the 31st.
MR. GAMBLE: Because of its being a year-end problem
with many corporations closing their annual books.
H.M.JR: What would be a reasonable time to close it
on the 16th - how many days should they need to get credit?
MR. BELL: I don't think two weeks is bad, with all
the agents you have got out. I think three weeks is a
little long and it dragged.
MR. GAMBLE: I think, more important, Mr. Secretary,
we felt the publicity of needling the people about individual
sales lagging was more harmful than the actual publicity
attendant to the delay of reporting.
MR. BELL: There wasn't a lot of criticism, was there?
There was a little in New York.
H.M.JR: No, it is sickening.
MR. BELL: If you make it perfectly plain - every
time you went into a drive you announced--
H.M.JR: You say that every time, and every time they
won't wait for the final cl osing. They will wait two or
three days and then they expect the figures because each
Federal Reserve District gives the figures out and they
know this is so much, and as soon as the Federal Reserve
District has cleared, it gives the figures through our
State Chairmen, and your State Chairmen are always crowd-
ing us. Then this constant publicity that the drive is a
failure - I had three weeks of unfriendly publicity on the
last drive because we hadn't made the individual quota.
And I haven't been able to get it over yet that we made it
by twenty-five million dollars, or whatever it was.
MR. GAMBLE: I recognize that problem, Mr. Secretary,
and I think we have to move aggressively to deal with it.
We have had meetings with Bailey and UP and AP and INS to
talk to them. We had newspaper people study that problem.
Regraded Unclassified
8
- 8 -
They made this suggestion, that instead of getting
out a press release, we announce the dates and quotas,
and so forth, then they made this commitment to us, that
if you will call the press conference and explain to the
men in a press conference about this problem of reporting
and the mechanical difficulties, the heads of the wire
services have taken the responsibility for seeing that that
is given good press coverage throughout the U.S., and we
haven't gotten the message over effectively enough with
problems attendant to this kind of operation.
H.M.JR: The last time you were going to have me do a
wind-up; I take it that it would be silly to do a wind-up,
so we never did a wind-up. The only one came out in the
Treasury bulletin.
MR. GAMBLE: Mr. Secretary, you went to rance, that
was the reason.
H.M.JR: You were going to have me do it from there.
MR. GAMBLE: Let me remind you of what happened. You
were to let me know the date that would be satisfactory to
you and the next information I had on it was that you were
going to broadcast from England.
H.M.JR: Listen, Ted, when you want something, and you
want me to do something, do you wait around to hear from me?
Do you put me on the calendar, or do you wait to hear from
me?
MR. GAMBLE: Well, I wouldn't make any comment on that!
H.M.JR: when you want me--
MR. GAMBLE: I will tell you about the problems I had
with the press release on the last day of the drive. I
couldn't get any agreement from anyone as to what ought to
be in that press release. It went out of here the day we
got the final figures on it.
Regraded Unclassified
9
- 9 -
I don't mind saying that I was slightly irritated by
it because I thought a hell of a job had been done, and I
think we can convince anyone who wants to take enough time
to go through our problems of selling three billion dollars'
worth of E Bonds, that it is a fantastic accomplishment,
Mr. Secretary.
H.M.JR: Well, who is criticizing?
MR. GAMBLE: Well, this comment just made about the
amount of switching - we know how much free riding there
was - eight hundred million dollars' worth in the whole U.S.
Everybody has agreed that switching is perfectly natural.
H.M.JR: More than eight hundred million dollars.
MR. HAAS: That is all on free riding, but--
H.M. JR: How much money was borrowed from the banks ?
MR. LINDOW: I think what you are referring to is we
sold twenty and a half billion dollars in the War Loan.
The banks absorbed securities during June and July and made
loans equivalent to about a little over eight billion, al-
together, so that we got net money, outside of the banks,
of a little over twelve billion.
Now, of that eight. billion, we. need to break it down
to analyze what it is; something around a billion or less was
free riding, which means that the new securities in the
drive were bought by individuals and then sold to the banks
shortly after the drive, and they took a profit. Most of it
was the selling of old securities from the Third and Fourth
Loans by corporations to the banks, which is a reshuffling
of portfolios and doesn't involve that same profit.
H.M.JR: Using the figures that you have, the net
that we took out of consumption, so to speak, was twelve
billion.
MR. LINDOW: That is right - a billion dollars more
than the time before.
Regraded Unclassified
10
- 10 -
H.M.JR: This is a good time to review the thing, and
not to kid ourselves.
MR. GAMBLE: Iagree with that, Mr. Secretary.
H.M.JR: There is no reason for you to take umbrage
because certainly, publicly and privately, nobody has been
more complimentary and appreciative than I have of the
work you have done.
MR. GAMBLE: That is true.
H.M.JR: But publicly, when the thing goes wrong, I
take it and you don't, and I am going to, with the assis-
tance of everybody in the room, look after Morgenthau's
interests.
MR. GAMBLE: I think part of looking after your interests
is getting the money - I mean, in the final analysis.
H.M.JR: Yes, but if you get it so that by the time you
get it everybody has discredited what you have done, and for
three weeks write a story about the failure, and so forth
and so on - even as fine a job as you and your organization
have done, in the minds of the financial community, the
thing is a failure.
MR. GAMBLE: ¹hat is the thing we should correct,
Mr. Secretary, and not at the expense of raising the money.
H.M.JR: Dut I don't think you can do the thing with
a press conference because you can't control these columnists;
you can't control the financial writers. If you have this
long gap from the 16th until the stuff comes in - they will
wait a few days--
MR. GAMBLE: They will wait until the 3lst.
H.M.JR: I don't think they will.
MR. GAMBLE: May I make one more observation; as long as
we have mentioned the money, about the eight billion dollars
Regraded Unclassified
11
- 11 -
flowing into the banks, corporations may have ten months
on certificates and they sell those certificates that have
two months left on them, and they buy new securities in the
drive. Now, the banks would hold those certificates for a
couple of months. -hat is a good deal the kind of money
that we are talking about in that bank financing.
We got, Mr. Secretary, of all the new money the corpora-
tions had in the country during the period of the drive,
about seventy-five percent of it.
MR. LINDOW: hat is correct.
MR. GAMBLE: Of all the new money they had - absorbed
seventy-five percent. You have to do eight billion dollars'
worth of that to pick up that money. Everybody, bankers,
our own people, the Treasury, everybody who understands,
agrees that it is a very proper procedure in raising the
funds, and perhaps the only way you would do it.
H.M.JR: Now, you sat down and figured yesterday how
much individual sales were?
MR. GAMBLE: Five billion dollars.
H.M.JR: Two and a half of each. Now, supposing we
said that the drive closed on the 16th and everything
that had a mail postmark of the 23rd - anything mailed up
and through "aturday the 23rd - Christmas is on the 25th -
that that is the last day you could buy. Can you still
buy on the 23rd?
MR. GAMBLE: Very little. It is not the buying,
Mr. Secretary; it is the bookkeeping problem of the plants.
H.M.JR: I mean, would you stop buying on the 16th
or could you buy up to the 23rd?
MR. GAMBLE: You would stop buying on the 16th.
Regraded Unclassified
12
- 12 -
MR. BELL: But there may be a savings bond that is
being paid for in the last pay-day that comes between the
16th and the 31st; he has made three payments on it, say,
in November and December, and the fourth comes - it
wouldn't be a lot of money, but--
H.M.JR: I don't care about squeezing the last drop
out of the thing. The thing I would like to do this time
is to set the quota at a figure that the State of New York
will meet. I'm using that as the worst. That is the most
difficulty, isn't it? I want to set it 80 that they can
get it comfortably, see, Ted? I don't know when they
have got it, or if they ever made their E-Bond quota.
After all, if we do this thing and do it my way, it is
going to be ten times easier on you, or 1 am completely
wrong, and if 1 am wrong, 1 will admit it. Now, I am not in
accord with what these people say is the total amount of
money they want to raise. I think we are too ambitious.
Let's just stick to the individual and figure that first.
Supposing we say it closes on the 16th, Dan, and I say the
staff has to have everything up to and including the 23rd.
How much, from your experience, of E Bonds would we lose?
They know about this thing and they have a month. They can
start selling on the first of November.
MR. BELL: As I recall, the peak was reached on July 8
on the daily reports. We were getting around ninety or a
hundred million dollars a day around the 8th.
H.M.JR: When did the drive close?
MR. BELL: July 8. And that kept up, as I recall, a
week, and then it began to drop off and it got down to the
last week of the month to around forty or fifty million
dollars a day, so the end of the month you were getting pretty
big daily payments.
MR. LINDOW: A special kick on the last day. I can get
the Beam Chart (Mr. Lindow leaves the conference temporarily).
MR. GAMBLE: While we are waiting, Mr. Secretary, of the
three billion, thirty-six million dollars raised in the Fifth
War Loan, one billion, six hundred and fifty million came
out of Payroll Savings.
Regraded Unclassified
13
- 13 -
H.M.JR: That is very good.
MR. BELL: As I recall, almost half of the E bond
sales came in after the close of the drive. That was the
reporting on it.
MR. GAMBLE: And the big problem, Mr. Secretary, is
not how much money you want and when you want to cut it
off, but the idea you are going to get the people to do
the job through pay periods and then not get credit. They
just won't do it.
H.M.JR: But supposing we recognize the fact that we
don't expect--Ted, you can carry this thing on forever.
You have, one, two, three, four, five, six, seven Saturdays
in this period.
MR. GAMBLE: But you still may have fifty percent of
many people's pay rolls that won't close out until the last
week basis-- of December, because the people who pay on that monthly
H.M.JR: Then, let's make the adjustment.
MR. GAMBLE: It isn't the adjustment, it is the fact
that you can't explain what you are trying to do to every
worker in every plant in America.
H.M.JR: But the Payroll Plan is supposed to go
MR. GAMBLE: The extra bond paying.
H.M.JR: But Henry Murphy has raised an important
question, if the war should stop on the 1st of November,
whether we will go after the one hundred dollar bond.
MR. MURPHY: I don't think I would apply it that soon,
Mr. Secretary. I think I would have a considerable lag
between the time the war stopped and I stopped going after
it.
H.M.JR: I don't know how the American public is going
to react. I would like to cut this E bond quota down. You
have got it at two and & half.
Regraded Unclassified
h-2
14
- 14 -
MR. GAMBLE: That is correct, sir.
H.M.JR: I would like to put it at two.
MR. GAMBLE: You still don't help us, putting it at
two, with this plan.
H.M.JR: The people somewhere want me to get the
January pay roll, somebody else the February.
MR. GAMBLE: No, Mr. Secretary, we have learned from
experience how long it takes to do this kind of job and
how long it takes to get plans operating in the plant.
If you are going to have any enthusiasm, Mr. Secretary,
in these war plants, you have to give them adequate pay
periods to make the deductions.
H.M.JR: Isn't seven weeks long enough?
MR. GAMBLE: No, because they can't accommodate themselves
to your calendar. We have to accommodate ourselves to theirs.
Their calendar is a month, and you have to accommodate
yourself to the very pay period within that month.
H.M.JR: Why not have a drive for two months?
MR. GAMBLE: We have learned, Mr. Secretary, from
experience in three years how best to do this job; I grant
everything you have said, and if I had a solution to it,
I would like to lay it on your desk.
H.M.JR: All right. You say you want two periods and
two months. I doubt very much if many plants--
MR. GAMBLE: They pay at varying times in the month.
H.M.JR: But you have here seven Saturdays.
MR. GAMBLE: Mr. Secretary, why do you suppose these
chairmen sat here for two days and then recommended this? Why
do you suppose the American Bankers Association recommended
in their report it would require two months to do this job?
Regraded Unclassified
h-3
15
- 15 -
H.M.JR: I can't help it, Ted, I know this will
hurt you, but States like New York never made their E
bond quota.
MR. GAMBLE: Do you know how much they missed it?
H.M.JR: They have never made it.
MR. GAMBLE: They missed about thirty million dollars
out of three hundred and sixty-five million.
H.M.JR: That is ten percent. I know the point you
are trying to make, but I can't make it.
(Mr. Lindow enters the conference.)
H.M.JR: Look, Ted, if it is a mechanical problem,
let's shove the thing back.
MR. BELL: Is it the two months that is worrying you?
How about starting the accounting period on the 15th of
November and going to the 31st of December?
MR. GAMBLE: You are talking about the 15th of October?
MR. BELL: No, November 15, starting your accounting
period.
MR. GAMBLE: He is worrying about the period after the
close of the drive.
H.M.JR: I will tell you what worries me, I want this
drive of all drives to be a howling success. It may be my
last drive. It is going to be the most difficult one
because I think it is certainly better than a fifty-fifty
chance that the war in Germany will be over, and I am not
going to let anybody influence me as to what we can get or
what we can't get, because the old Morgenthau elbow is
going to rule, and you know you can't argue with that elbow.
It is purely intuition.
Now, to answer your perfectly good question and
where Ted and I can't get together because I say slide this
period--I want to be able to announce the final results of
Regraded Unclassified
10
- 16 -
this drive in not less than seven days from the day it is
closed. Let me do that, and I will be perfectly happy.
MR. BELL: Of course, you say this is going to be
one of the hardest, and you want to go over with a bang;
you are putting the very restriction on that might keep
it from going over.
H.M.JR: No, because I am going to cut the amount
down. But I can't get it through my head what Ted says,
that he wants two full months pay periods. Then let's
shove it back.
MR. GAMBLE: We could have done that if we had made
that decision three weeks ago, Mr. Secretary.
H.M.JR: Ted, the thing that I want is the final
figures seven days after whatever the closing of the drive
is. I mean, if the drive is three weeks--I want it one
week--I will be back in a minute.
(The Secretary leaves the conference temporarily.)
(Mrs. Klotz enters the conference.)
H.M.JR: Do you have it solved?
MR. GAMBLE: We haven't it solved, Mr. Secretary.
Frankly, I don't think there is a solution to it in the
direction you want to move. The point was made when you
were out of the room that one thing we must give consider-
ation to is that if we set these quotas too low, the unfavor-
able publicity resulting from it will be much worse than
any criticism of the drive. It is my opinion and that of
the chairmen that the reason they didn't want a twelve
billion dollar quota is because they recognize the size of
the job they have to do, and if they set the quota too low,
people are not going into the drive stirred up to raise
that much money, even twelve billion dollars. Alan and
Fred were talking about it as public relations counselors,
and you would get worse publicity from the financial writers
on the establishment of low quotas, and you would have a
more difficult time explaining that than you would have
Regraded Unclassified
h-5
17
- 17 -
trying to explain this problem that we have not successfully
explained in three drives. I think we can make progress
in it from the work we have already done in this next
drive. I don't like to be placed in the position of argu-
ing here for this, because it is not to make our job any
easier, Mr. Secretary, it is to make it possible.
H.M.JR: Ted, I am in a very good humor; I am very
serious. I like to be serious and in a good humor, too.
MR. GAMBIE : Then we can get some good work done.
H.M.JR: We are getting some work done. I am perfectly
honest. The thing that my brain is on, and all of my
sleeping and waking hours is on, is this question of what
is the future of Germany, and I can't get it out of my
head. That was a call from Harry Hopkins. He wanted to
know where the thing was that I promised him last night.
That is where my brain is. And I think I am making a real
contribution for your children and grandchildren. You can
come back and say, "Well, this Treasury business comes
first." It does, but as long as the President wants me to
help him on this other thing, that is where my brain is,
and that is why we are having this thing now instead of
last week or the week before. I don't want you people to
think that I am just sitting around picking apples. I am
working day and night on this thing, and the time Barth
came here he could sit here with me usually for an hour,
and I had to jump up three or four times. But, that is
where my brain is, and has been ever since I have gone to
England for whatever brain and heart I have.
MR. BELL: We had a billion, three hundred million in
E bonds after the eighth.
MR. LINDOW: Here is a chart. (Hands Beam Chart to
the Secretary.)
H.M.JR: How long did we keep it open?
MR. BELL: They came in at the rate of about sixty-five
to seventy million dollars a day up until about the 19th.
Regraded Unclassified
6
18
- 18 -
H.M.JR: Give me the number of days.
MR. BELL: Up until about the 16th, and then they
began to drop to fifty and down to thirty-five in that
period.
H.M.JR: Is that in days?
MR. BELL: Yes, but it isn't very well arranged.
H.M.JR: But how many days after the drive closed
did the money come in at the rate of eighty or ninety?
MR. BELL: Seventy-five million dollars a day up to
about the 17th.
H.M.JR: Did the drive close on the 1st?
MR. BELL: Eighth. That was nine days.
MR. GAMBLE: Then there was a bulging at the end.
MR. BELL: One hundred and seventy million dollars
on the last day.
H.M.JR: Are you against me, too?
MR. BELL: I am against you on this, but I am with
you on too long an accounting period. I think it is the
wrong time to put the restrictions on; I really do. I
think we may hurt ourselves in the end.
MR. GAMBLE: Look at it this way, Mr. Secretary, in
that period normally we get two hundred million dollars of
normal sales, maybe two hundred and fifty. And this extra
billion dollars we got was all money that these people
had sold on the eighth, coming in after the eighth. Any
cutting of that period is going to deny them credit for
some portion of that billion dollars. So I don't care
what the quotas are, you have to give them time to get
the credit for the job they have done. It is much more
important in my opinion to the success of the job than
trying to counteract the bad publicity.
Regraded Unclassified
19
- 19 -
H.M.JR: How many days did we keep it open last time?
MR. LINDOW: Eighteen business days.
MR. BELL: Three weeks, twenty-three days.
MR. GAMBLE: That was too long.
MR. BELL: I think it was too long last time.
H.M.JR: You mean, you can't sell during that period?
MR. GAMBLE: The normal sales--
H.M.JR: E bond sales?
MR. GAMBLE: Yes. This would be fourteen days.
H.M.JR: What is this?
MR. LINDOW: This chart splits E bonds between sales
before the drive formally opened. The last time there
was about three hundred millions there. During the formal
selling part of the drive we sold a billion, four in E
bonds or credited--from June 12 to July 8.
Then after July 8 to the end of July there was a
billion three. There is almost as much money credited
afterwards as there was during the formal part of the
drive, and there was five hundred million dollars in the
last week of this period, the last week in July.
H.M.JR: Yes, but it is like this dumb story. The
fellow says, I don't want to ride in the last car of the
train because that is where all the collisions take place.
So it will always be the last week. I mean, instead of
having the last week, three weeks, you now say we will make
the last week the end of two weeks, and I am saying we
will make the last week the last week.
MR. GAMBLE: If it were the thirty-first of the month,
I would agree with you, but we studied the problem of maybe
Regraded Unclassified
8
20
- 20 -
running this drive 8 week later in December, but because
it is only nine days ahead of the Christmas holidays, we
were afraid to do it.
H.M.JR: Of course, one of the best drives we ever
had was the one where we went to the 19th.
MR. GAMBLE: That would be ideal, if you didn't have
Christmas in there, to start the drive about the 25th of
November, running until the 23rd or 25th of the month, and
close it on the 3lst. But you have the Christmas holidays
which eliminates that.
H.M.JR: You mean on account of the workers?
MR. GAMBLE: On account of the workers, and on account
of the whole problem of merchandising in connection with
Christmas.
H.M.JR: Now, I asked your moving picture fellow in
Boston this question, and he said the time to have your
drive is the time when people come to town with money in
their pockets to spend, the inference being you have it
during Christmas.
MR. GAMBLE: Unfortunately he only speaks for three
percent of our sales. He is right about the traffic
part of it.
H.M.JR: I thought you might be influenced by that.
MR. GAMBLE: I am only influenced by the total job.
I am influenced by that fifty-seven percent we took off
of flat pay rolls.
H.M.JR: It wouldn't help you any to keep the drive
open until the 23rd?
MR. GAMBLE: It wouldn't help us, Mr. Secretary, and
I am afraid it would be wearisome.
H.M.JR: Open it a week later; start the drive on
the 27th.
Regraded Unclassified
9
21
- 21 -
When is Thanksgiving Day?
MR. GAMBLE: The 23rd.
H.M.JR: Open it on Thanksgiving Day.
MR. BELL: No, it is the 24th.
H.M.JR: The 23rd is Thursday.
MR. BELL: Oh, I see.
MRS. KLOTZ: Is that November you are looking at?
MR. GAMBLE: The problem there, Mr. Secretary, is
getting too close to the Christmas holidays.
H.M.JR: Does anybody around here agree with me?
(No reply)
MR. HAAS: I see your problem, but I am afraid in fixing
up your problem you may get yourself into a more serious one.
MR. MURPHY: The unfavorable publicity that might come
from setting a very low quota would come at a time when
editors are likely to be far more captious and in a critical
mood, and it would be at the time the late returns would
be coming in.
MR. HAAS: Which late returns?
MR. MURPHY: I had in mind the returns from the drive.
MR. LINDOW: Ted, judging from the comments I read
about the last drive, it looked as though the papers were
being prodded into that unfavorable attitude by the State
chairmen.
MR. GAMBLE: A good deal of it is our own fault, the
idea it was psychologically advantageous to keep prodding
the people. We incurred fifty percent of it ourselves by
Regraded Unclassified
10
22
- 22 -
instructing State chairmen what they were to do about
publicity in connection with individual sales. They
thought it was good salesmanship to keep talking about
individuals having to do more. It has grown into some very
bad publicity which you speak of. I recognize it, and our
people recognize it.
MR. BELL: Was it the Third or Second where we only
had a week?
MR. LINDOW: We had a week in the Third.
MR. BELL: And the chairmen just raised the deuce
about it. They didn't get credit for all their work, even
though we made the quotas.
MR. LINDOW. We cut it off in the middle of October.
H.M.JR: Well, I don't like it, but if that is the
way you all feel--first I was going to say I would think
about it.
MR. HAAS: This publicity-- I didn't get what you were
talking about, Mr. Secretary. Was it during the drive like
the Washington Post said--
H.M.JR: After the drive.
MR. SMITH: I think it is safe to say that a lot of
the afterwards stuff did come from the previous stuff.
In New York the last couple of weeks they said, "Oh, we
are failing; this is awful." Well, that was our own fault.
MR. BELL: That was done deliberately.
MR. SMITH: And it was strictly stimulated.
MR. GAMBLE: It was overplayed. The Secretary is
right. It got to a point where it was--
MR. SMITH: Then after you are through, the financial
writers pick it up. Well, most of the financial writers
don't like it, anyhow. So you are not going to gain anything.
Regraded Unclassified
11
23
- 23 -
H.M.JR: We will go this far today, I can't go any
further. I am willing to say this much: The drive will
be from the 16th to the 20th, and we will keep it open
for E bonds two weeks afterwards. I am not going into
the quotas today. I will start in the first thing tomorrow
morning.
MR. BELL: It will be from the 20th to the 16th; you
turned it around.
H.M.JR: We will start in at nine-thirty again. Then
we will have another thing, and we will make some more
progress.
MR. GAMBLE: All right, sir.
H.M.JR: It might be simpler for me to just sign the
ticket, but I want to be sold on it, myself.
MR. HAAS: There is one other thing. Isn't it right,
Dan, that the Secretary should make up his mind before
tonight?
MR. BELL: It is a question of whether we are going
into bills or other forms of financing. Our balance is
going to be down on November 30 to probably under three
billion dollars, and that is a little low. We may get
some money in as a result of the drive, and on the other
hand, people may wait until pay day, December 1.
H.M.JR: Why do I have to decide today?
MR. BELL: This is the last day for bills for next
week. We have let it go by one week.
H.M.JR: What are you proposing to do?
MR. BELL: We are proposing to discuss what you want
to do. We have two or three recommendations.
H.M.JR: I can't do it.
MR. BELL: The other thing is, what is your program
next week? Are you out most of the week?
Regraded Unclassified
12
24
- 24 -
H.M.JR: No, I am here all week.
MR. BELL: What are you going to do about discussing
this matter with dealers?
H.M.JR: I am here all week.
MR. BELL: What about the Open Market Committee?
H.M.JR: I will give you all of Tuesday and Wednesday
with interruptions,
MR. BELL: Tuesday morning for dealers?
H.M.JR: Anything you want. Let me give you Wednesday
and Thursday.
MR. BELL: That is all right, Wednesday and Thursday.
If we are going to have bills, we ought to know Wednesday
night.
H.M.JR: Well, make it Tuesday and Wednesday.
MRS. KLOTZ: Morning?
H.M.JR: Yes.
MR. BELL: You won't discuss bills with the dealers,
anyhow.
H.M.JR: Do you want a meeting with the Open Market
Committee Wednesday at eleven?
MR. BELL: Yes.
H.M.JR: You work out a little schedule for me and
send it in to Mrs. Klotz.
MR. BELL: All right.
H.M.JR: I think you ought to have a couple key people
in here like the State chairman for New York and for
Chicago, a half dozen of the key fellows 80 they feel they
are part and parcel of this. Don't you think so, Ted?
Regraded Unclassified
13
25
- 25 -
MR. GAMBLE: Very good.
H.M.JR: Bring back a half dozen of your key fellows
and let them sit around.
MR. GAMBLE: All right, sir.
H.M.JR: Well, you have round one, and I am perfectly
satisfied. There are no bloody noses.
One thing while I have you here--I want the figures
on what the war is going to cost after X Day, and I was
going to ask 80 I can use it while I am out. Do you want
to get that from the Budget, or should I get that directly
from War and Navy?
MR. BELL: Well, there have been a lot of conferences
here of our fellows, Stam, Stacy May and the Budget people,
and there are no official figures at all.
H.M.JR: I want some figures.
MR. BELL: If you use them, I think you will have to
be very careful, because it is the Budget's prerogative
to give out estimates, and the President's.
H.M.JR: I know, I do a lot of things--
MR. BELL: But Wes has charts made up on a good many
of these things.
H.M.JR: Tomorrow morning I want to know after X Day
how much money the Government is going to spend for the
next twelve months waging the war. I want the figures I
can use when I go out in October.
MR. GAMBLE: Wonderful.
MR. HAAS: Mr. Secretary, down to the 1st of July--
H.M.JR: Calendar '45.
MR. BELL: You will have to make assumptions.
Regraded Unclassified
14
26
- 26 -
H.M.JR: That is all right.
MR. BELL: On the war ending--
MR. LINDOW: When do you want to assume Germany goes
out?
MR. HAAS: You can take two, say October, and another
assuming it is in December.
H.M.JR: Let's do it this way, that whenever X Day
is, twelve months following X Day we will spend so much.
Then I don't have to--
MR. LINDOW: All right. That will include the lag
and mopping up some of the German cutbacks, and so forth.
H.M.JR: The twelve months following X Day we will
have to spend so much to wage war--how is that?
MR. GAMBLE: All right.
H.M.JR: Then let everybody make his own guess.
I want to tell these fellows, "This is your job; don't
think the job is over."
MR. GAMBLE: It would be the most helpful thing you
could do.
H.M.JR: I have something else you are going to like,
too.
MR. GAMBLE: Swell, I like the speech.
H.M.JR: That thing I gave yesterday--it is our job,
war bonds, to keep from having another 1919 and '20. Did
you like that?
MR. GAMBLE: Very much.
H.M.JR: Are you going to give me a little radio time
when I go up?
Regraded Unclassified
27
- 27 -
MR. GAMBLE: Yes, sir, in every situation. I am
going to have to take you to Chicago.
H.M.JR: All right.
MR. GAMBLE: We can't get into Indianapolis.
H.M.JR: All right.
MR. GAMBLE: I had this changed for you. (Hands
Secretary war bond poster.)
We made a marine out of this fellow.
H.M.JR: I tell you, I am very low today. I am not
going to argue with you.
MRS. KLOTZ: I think it is marvelous.
MR. GAMBLE: I think it is the best poster we ever
had.
Thank you very much, sir.
H.M.JR: I will see you again this week, if possible,
maybe day after tomorrow.
MR. BARTH: Fine.
H.M.JR: You and Smith arrange it.through Mrs. Klotz.
MR. BARTH: All right.
Regraded Unclassified
28
September 27, 1944
I spoke to Hopkins last night at 7:00 after he had
sent me a copy of his suggestion for the President's
press conference, and I told him that I wasn't entirely
satisfied with it, and I would like to send him a copy
of what we would like the President to say. When he
called me this morning, that is what he was waiting for.
Regraded Unclassified
28
September 27, 1944
I spoke to Hopkins last night at 7:00 after he had
sent me a copy of his suggestion for the President's
press conference, and I told him that I wasn't entirely
satisfied with it, and I would like to send him a copy
of what we would like the President to say. When he
called me this morning, that is what he was waiting for.
Regraded Unclassified
Copies to Messrs. Gaston, White and
29
Smith - 9/26/44
30
THE WHITE HOUSE
WASHINGTON
September 26, 1944
MEMORANDUM FOR MR. E. J. FITZGERALD, TREAS.
Dear Mr. Fitzgerald:
Mr. Hopkins asked me to send
the attached to you for Secretary
Morgenthau.
Juck Secy. to HLH
encl.
Statement re Cabinet Committee
Prepared by Hophins
Copies to Juston 21
September 26, 1944
It hite 7 Smith
Orig. 0/26/49- to Higis house
The President announced today that the Cabinet Committee
which he had appointed some time ago to advise him regarding
certain aspects of the American policy towards Germany after the
collapse or surrender of that country, had completed its responsi-
bility and accomplished its purpose.
In the first place, the Committee has examined and approved
the American recommendation to the Combined Chiefs of Staff on the
post-surrender directive to General Eisenhower, which represents
the American position as to the control of Germany during the period
immediately after the collapse of that country.
Secondly, the members of the Committee have submitted to the
President their respective views relative to the American position
as to what the Allied Powers' long-range policy toward Germany should
be. While there are, naturally, differences of approach to this
complex and important subject, there has been a large measure of
agreement, especially on the fundamental questions of German dis-
armament, control of German industry and utter destruction of the
Nazi Party and all its institutions.
These several memoranda will now receive the consideration of
the President and the Secretary of State, and American representatives
conferring with our allies in respect to the long-range policy, will
be advised of the position of this government at an appropriate date.
Regraded Unclassified
32
September 27, 1944
Hopkins sent me a message at 11:45 that he was
looking for the material I promised to send him this morning
in connection with what he sent over here last night. I
called him back at 11:50 and said, "I just got your message
and we have been working on this. It is just finished now.
If you would like, I will have White bring it over in
person because we feel it is most important and useful
to the President if this War Department Directive would be
given out because this will appeal - what I was trying to
say is that if this goes to the German people it ought to
encourage them to turn on the Gestapo and the Nazis.
This is something the German people will like as against what
some people in Washington are feeding them all the time.
I had Mr. White go over at 12:10.
What Hopkins said to me was, "Can we release this
without clearance from the British?" and I said, "No,"
and he said, "I am afraid it will take quite a while to
get the British to clear it."
Regraded Unclassified
33
September 27, 1944
2:30 p.m.
CONFERENCE WITH SECRETARY PATTERSON
Present: Mr. White
Mr. Gaston
Mrs. Klotz
H.M.JR: Harry, I would like to tell you what
happened at the lunch.
Incidentally, I want Gaston to see all the docu-
ments of Quebec SO he really knows what we are talking
about, plus the "black book" - the whole business, do
you see? - everything that we have done.
MRS. KLOTZ: The original report?
H.M.JR: Everything.
MR. WHITE: The memos that have been written about
the descriptions?
H.M.JR: Yes, so he can study the thing and be help-
ful to us. I want his advice.
Well, I had Mr. Patterson for lunch and he knew
absolutely nothing that had gone on up there. He didn't
even know about this Committee which had been set up on
Lend-Lease, although that is absolutely his responsibility.
Talk about people running their Departments!
MR. GASTON: Who was up there, McCloy?
H.M.JR: No, but McCloy is directly under Stimson.
He always arranges for McCloy, so McCloy will tell Somervell
or Clay and then he (Patterson) hears about it that way. I
gave him a copy of the agreement as to Lend-Lease.
Regraded Unclassified
34
- 2 -
And on this business of dealing with the military,
he is very much interested; he would be very helpful. lie
is going to send for McCloy and talk to him about it and
say he wants to be in on it. He agrees that the English
should have the material they need to wage war successfully
against the Japanese, depending on what their military
strength is going to be. But this was all new to him.
I mean, it is ten days since I gave this to Stimson. It
is unbelievable that here is this fellow in charge of pro-
duction, particularly where Hopkins said they were going
to run out of orders if we didn't give them. some more
orders, and here is Patterson fully responsible for pro-
duction and he hasn't been even consulted.
I said, "Well, Bob, I want to talk to you about a
matter which I am doing wholly on my own initiative and
I am not being sent by anybody to sound you out, so let's
understand each other."
I said, "If you were asked, would you go now as an
assistant to Eisenhower to do the Civil Affairs thing in
Germany, and even have to put on a uniform and subsequently
become High Commissioner, would you be interested?"
"The part of putting on a uniform wouldn't bother me
a bit, 11 he said, "and I would be interested. I owe it to
my wife and children to go and earn a living, but I will be
interested."
I said, "Well, can I, without committing you one way
or the other, back your candidacy to the President?"
He said, "Yes. Understand, I haven't made any commit-
ment, but if it is offered to me, I will give it serious
consideration."
Then I said to him, "Has Mr. Hopkins talked to you
about this?"
He said, "Nobody has talked to me about it. This is
all new."
Regraded Unclassified
35
- 3 -
Hopkins has been telling us right along that this. was
his candidate.
Then I asked would he let me know whether the Munitions
Assignment Board this morning did or did not take up the
question of munitions for the British as of yesterday, on
the number of requests for the British. Hopkins said he
would have them all stricken off. He is going to call me
back in a fewminutes and let me know whether they were or
were not.
I let him read this memorandum -- he did not take it -
on the Quebec agreement on how to treat Germany. There is a
signed agreement. (Refers to Quebec Directive on
Germany)
He said that was all right as far as he was concerned.
Then he said, jokingly, "To degrade Europe by making
Germany an agricultural country, isn't that offensive to
you?"
I said, "Not in the case of Germany."
This is a very good time to stop a minute. but isn't
that encouraging about Bob?
MR. WHITE: I didn't think he would be interested. I
am suprised that he is interested.
H.M.JR: And willing to put on a uniform.
MR. WHITE: He is putting himself under himself!
(The Secretary leaves the conference temporarily)
H.M.JR: Harry, now let's have your piece of the
picture.
MR. WHITE: Mine is very brief. I went over and showed
him the release and the document. He looked at the release
and said he didn't think it quite met the situation.
Regraded Unclassified
36
- 4 -
I pointedout that from our view there were two points
of attack which the President was being subjected to; one,
that there was a split in the Cabinet on a serious matter
and that the President seems to be unable to keep the Cabi-
net working together, and secondly, that the President has
been derelict in not making adequate preparation for the
defeat of Germany.
I said both those points are fully met by that press
release; one statement indicates (a), that preparations
have been going forward, that a document has been completed
upon which there is agreement - an important document - and
(b), that the split in the - the so-called split in the
Cabinet is really a negligible factor.
He thought it over again and he thought that might be
so. Then I turned to the Directive itself and gave him
reasons for feeling that the document would be very effec-
tive political material. Then he becaine quite excited -
or more excited - and he mentioned at one point that he
thinks it is terribly interesting. I think those were
his precise words.
And he asked several questions: First he wanted to
know, wouldn't it be necessary to clear this with England.
I said, possibly, I said I thought you felt so; but on the
other hand, it was an American plan, and I said the first
sentence indicated that this proposal was to be effective
only until the United States, the United Kingdom, and the
U.S.S.R. agreed on policy. And he read that over carefully
again and said, "That is right; that meets that issue."
I said, "But it may take a long time to clear with the
British and with such experience as we have had, it takes
a very long time unless you can really tell them you are
going to is sue it at a certain date, and so forth.
lie said, "I think this will have to be handled
directly with Churchill on a political basis. That is the
only way it can be handled. I think I know how it could
be handled. I think the President could handle this."
Regraded Unclassified
37
- 5 -
Then he asked what would be the effect on many of
the German Nazis and leaders if they knew what was being
contemplated.
He answered his own question by saying, "Yes, I suppose
they all do expect to get arrested, anyhow, and that
wouldn't make any difference."
Then he noted the paragraph which we had deleted and
replaced with the words, "This is deleted for military
reasons," and that seemed to strike him as particularly
effective. He said, "We can go through and take out what-
ever paragraphs or sentences we think might be harmful and
just substitute that phrase." He said, That would be
wonderful."
I then dwelt a little on what I thought would be the
favorable reaction at home, and I said you felt strongly,
and that is the way a couple of other men in the Treasury
with whom we had discussed it, whose opinion we valued,
felt about it.
I said it was unanimous that it would be very helpful
to the President.
He looked things over, and the more he looked them
over, the more enthusiastic he seemed to get about the
effect on the public.
I said, "If one is permitted to intrude such irrele-
vant matters as vote-getting powers--"
He said, "Listen, that is all I am interested in for
the moment.' I said, "That ought to win some support.'
He then said, "I think I can get the President to do
this. The President once told me when I want anything
badly, he will do it and I think I can get him to do this."
He said, "This will be worth a hundred press conferences.
He may have said other things, but that was the general gist.
H.M.JR: He said if he wanted anything badly, the
President would do it?
Regraded Unclassified
h-1
38
- 6 -
MR. WHITE: I wouldn't swear to it, but I think it
was.
MR. GASTON: First I thought it was Hull.
H.M.JR: Who did you first think it was, God?
MR. GASTON: Well, somewhere up in that region. I
was thinking first about Hull.
MR. WHITE: I may be misquoting him, but it was
something in that line.
H.M.JR: That is wonderful.
MR. WHITE: It was the kind of remark that surprised
me a little.
I asked him to read over carefully the document,
having in mind what the response of the public would be to
its publication. He said he would do exactly that right
away. He said, "Why this would be printed in every news-
paper in the world.
I said, "That is what we thought."
He didn't say specifically what he was going to do.
H.M.JR: I would have said, "Mr. Ambassador, I
think you are pretty good."
MR. WHITE: Well, he did most of the generating of
enthusiasm, himself, as he thought more about it and looked
at it.
H.M.JR: Well, I am going to walk across the street
in a few minutes to see Leahy, and when I am over there,
I think I will drop in and see Grace Tully and give her
this little suggestion about Bob Patterson.
MR. GASTON: It is at four o'clock he has a press
conference today, isn't it?
Regraded Unclassified
-2
39
- 7 -
H.M.JR: Oh, has he?
MRS. KLOTZ: I thought you said there wasn't any.
MR. GASTON: He hasn't called it off, has he?
MR. WHITE: You are going to tell him that Hopkins
is in favor of it, too--I think it would be kind of
curious if you did--is in favor of Patterson--since it
was his candidate--I don't know that he thought of it
first; I think it was you who suggested Patterson. I
may be wrong.
H.M. JR: Ha ha ha, you are very funny, Harry. No,
it was something quite different running through Harry's
mind. He was thinking about something entirely different.
As he was thinking, he was talking, and he didn't know
what he was saying.
MR. WHITE: It is called ambidextrous thinking.
H.M.JR: One hand doesn't know about the other.
But it is O.K.; I think this is all right. I think that
is good.
MR. WHITE: Do you have to tell McCloy about the use
of this Army document, or is that Hopkins' or the President's
business? McCloy knows nothing about the suggestion.
H.M.JR: Just sit tight
MR. WHITE: It is better if they don't know. If they
don't know, they will kill it.
H.M.JR: Does McCloy keep us posted blow by blow?
MR. WHITE: Not unless they are above the belt.
H.M.JR: All right, you bring Mr. Gaston up to date.
Thank you.
Regraded Unclassified
9/27/44
40
Mrs. Klotz wanted copy of this Directive;
taken over to Mr. Harry Hopkins today with
press release as per copy appended.
L. Shanahan
/
41
C
0
P
Y
The President announced today that the special Cabinet Committee
advising him on certain aspects of American policy toward Germany,
has formulated an American draft of an interim directive for Germany
covering the period immediately following Germany's collapse or
surrender.
The substance of such interim directive is being released to the
public because it is believed that the public has a right to be
informed on American policy toward Germany to the fullest extent
possible within the limitations of military security.
The President stated that the press and radio discussions regard-
ing the "differences" existing in the Cabinet Committee had been
greatly exaggerated. Actually all of the Committee members agreed
with the provisions of the interim directive. Moreover, all of the
members were in full agreement that strong measures would be required
to insure that Germany was completely disarmed and could not again
become a threat to world peace. The differences in the Committee
were confined to a few of the long range measures necessary in
achieving this objective. These differences, he said, were natural and a
healthy sign since the problem was most difficult and reasonable men
might be expected to disagree from time to time in the course of
developing a workable solution to the problem. The President
expressed the opinion that these differences would probably be
ironed out in the course of further discussions.
9/27/44
Regraded Unclassified
42
AMERICAN DRAFT OF DIRECTIVE FOR GERMANY IN THE
PERIOD IMEDIATEL FOLLOWING THE CESSATION OF
ORGANIZED RESISTANCE.
1. In the event of a collapse in Germany, or in the event
that the German forces are either defeated or surrender before you
have received a directive containing the policies agreed upon by
the three governments of the U.S., the U.K., and the U.S.S.R., you
will be guided by the following policies, principles and instructions.
2. Prior to the defeat or surrender of Germany the primary
objective of your civil affairs administration has been to aid and
support your military objective: the prompt defeat of the enemy.
Your objective now is primarily the occupation and administration
of a conquered country with such military operations as are necess-
ary for the complete elimination of all resistance.
3. Pending the receipt of directives containing long range
policies, your objectives must be of short term and military charac-
ter, in order not to prejudice whatever ultimate policies may be
later determined upon. Germany will not be occupied for the pur-
pose of liberation but as a defeated enemy nation. The clear fact
of German military defeat and the inevitable consequences of age
gression must be appreciated by all levels of the German population.
The German people must be made to understand that all necessary
steps will be taken to guarantee against a third attempt by them
to conquer the world. Your aim is not oppression, but to prevent
Germany from ever again becoming a threat to the peace of the world.
In the accomplishment of this objective the elimination of Naziiam
and militarism in any of their forms and the immediate apprehension
of war criminals for punishment are essential steps.
4. Your occupation and administration will be just, but firm
and distant. You will strongly discourage fratermization between
Allied treops and the Comman efficials ml population.
Yes will establish surerment
Regraded Unclassified
43
- 2 -
6. & By virtue of your position you are clothed with
supreme legislative, executive and judicial authority in the areas
occupied by forces under your command. This authority will be
broadly construed and includes authority to take all measures
deemed by you necessary, desirable or appropriate in relation to
military emigencies and the objectives of a firm military covernment.
b. You are authorized at your discretion to delegate the
authority herein granted to you in whole or in part to members of
your command and further to authorize them at their discretion to
make appropriate sub-delegations,
C. You should take the necessary measures to enforce
the terms of surrender and complete the disarmament of Germany.
d. The Military Government shall be a military adminis-
tration which, until you receive further advices, will show the
characteristics of an Allied undertaking acting in the interests
of the United Nations.
7. 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.
8. Representatives of civilian agencies of the U.S., U.K. and
U.S.S.R. governments shall not participate unless and until you con-
sider such participation desirable. Representatives of the civilian
agencies of other Allied Governments or of UNRRA may participate
only upon your recommendation and the approval of the Combined
Chiefs of Staff.
9. It is contemplated that a tripartite administration by the
U.S., U.K. and U.S.S.R., covering the whole of Germany will be
established. You have previously received advices in this con-
nection.
10, You MAIN to to enter into arrangements
Regraded Unclassified
44
- 3 -
11. Military administration shall be directed toward
the promotion of the decentralization of the political structure
of Germany. In the administration of areas under your command,
all dealings in so far as possible should be with municipal
and provincial government officials rather than with Central
government officials.
0
Regraded Unclassified
45
- 4 -
APPENDIX "A"
POLITICAL DIRECTIVE
1. You will search out, arrest, and hold, pending receipt
by you of further instructions as to their disposition, Adolf
Hitler, his chief Nazi associates, all persons suspected of
having committed war crimes, and all persons who, if permitted to
remain at large, would endanger the accomplishment of your objec-
tâves. The following is a list of the categories of persons to
be arrested in order to carry out this policy. If after you have
entered the country and in the light of conditions which you on-
counter there you do not believe all of these persons should be
subjected immediately to this treatment, you should report back
giving your recommendations and the reasons therefor.
(a) Officials of the Nazi party and of units or
branches of the Nasi party, down to andincluding
the leaders of local party units, as well as
officials of equivalent stature in associations
affiliated with the Nazi party;
(b) All political police, including the Gestapo and
Sicherhaitsdienst der s.s.;
(e) The officers and non-commissioned officers of the
Waffen S.S. and all members of the other branches
of the 3.3.1
(d) All high officials of the police and of the S.A.;
(e) The leading officials of all ministries and other
high political officials of Germany and those
persons who have held high positions, either civil
of
Garman
-
Regraded Unclassified
46
- 5 -
(f) Nasis and Nasi sympathizers holding important
and key positions in (1) National and Gau civic
and economic organizations; (2) corporations and
other organizations in which the government has
a major financial interest; (3) industry; (4)
finance; (5) education; (6) judiciary; (7) the
press, publishing houses and other agencies dis-
seminating news and propaganda. It may generally
be assumed in the absence of evidence to the con-
trary that any persons holding such positions are
Nazis or Nazi sympathizers;
(g) All judges, prosecutors and officials of the People's
Court;
(h) Any national of any of the United Nations who is
believed to have committed offenses against his
national law in support of the German war effort;
(1) Any other person whose name or designation appears
on lists to be submitted to you or whose name may
be notified to you separately.
Of equal, if not greater importance, in the ultimate des-
truction of German Militarism is the elimination of the German
Professional Officer Corps as an institution. All General
Staff Corps officers who are not taken into custody as prisoners
of war should therefore be arrested and hold pending receipt
of further instructions as to their disposition. You will
receive further instructions as to how to deal with other
members of the German Officers Corps.
Regraded Unclassified
47
- 6
2. If in your opinion it would be of aid in earrying out
the above program and the other purposes of your occupation,
you may issue such regulations dealing with the registration
and identification of persons within Germany as you deam advisable.
3. You will issue a proclamation dissolving the Nasi party
and its affiliates. Every possible effort should be made to pre-
vent any attempts to reconstitute them in underground or dis-
guised form. You will abrogate the laws establishing the political
structure of National Socialism and will take all necessary measures
to uproot and discredit Nasi doctrines. No secret organizations
or societies of any kind shall be permitted. Property, real and
personal, of the Nasi party and its affiliates, wherever found,
shall be taken into custody and may be used for such purposes as
you may direct, You may require health or welfare organizations
which were set up by the Party but which are of direct benefit
to the people to transfer their functions and personnel, purged
of Nasi elements and practices, to new organizations formed to
carry out such functions,
4a ***
(This section is deleted for
military reasons)
50 You will take immediate steps to abrogate all laway
decrees, regulations or aspects thereof, which discriminate on
Regraded Unclassified
48
- 7 -
the basis of race, color, creed, or political opinions. All
persons who are detained or placed in custody by the Nasis on
these grounds will be released, subject to the interests of the
individuals concerned. You will take steps to insure that such
people, if not released, are provided with adequate clothing,
food and quarters.
6. 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 deter-
mine, you may permit the courts to resume functioning. You will
retain full power of review and veto of all courts which are
allowed to function. All politically objectionable courts; 0.8.,
People's Courts, will be abolished. Criminal and ordinary police,
and such others as it may be proper to retain, under appropriate
supervision, mustbe purged of Nazi or therwise undesirable
elements, who will also be arrested and held for disposition.
7. No person in Germany, other than United Nations nationals
as authorised by you, shall be permitted to possess arms of my
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.
8. & All members of the Nazi party and ardent supporters
of Nasiism will be removed immediately from all govermment posi-
tions (other than clerks and non-policy making functionaries) and
from all leading positions in industry, banking, education, Judi-
ciary, and other public services. Under no circumstances shall
such persons be retained in such offices for the purpose of ad-
ministrative convenience or expediency.
Regraded Unclassified
49
- 8 -
b. Youwill 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
who h ave been cleared by the security branches of the Allied
armies. Failure by such Germans as are permitted to fill
government posts to conform with Allied directives and instrue-
tions will be cause for removal and such punishment as you may
deem advisable,
9. 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 worship, will be permitted.
Consistent with military necessity, all religious institutions
will be respected and all efforts will be made to preserve his-
torical archives, Classical monuments and fine arts, except that
all archives, monuments and museums of Nazi inception, or which
are devoted to the perpetuation of German militarism shall be
seized, closed and their properties held pending further in-
structions.
10. B+ Prisoners of war belonging to the forces of the
United Nations and associated nations will be freed from confine-
ment and placed under military control or restriction as may be
appropriate pending other disposition.
be All allied nations nationals who h ave b een removed
to Germany under duress to serve in labor battalions, or any other
units organised by the Nasis, after identification will be repatri-
ated in accordance with the regulations to be established after
consultation with the government of the untry concerned. Pending
repatriation, such persons should be adequately taken care of and,
if you doem it advisable, their freedom of movement restricted.
Former prisoners of war released by the Aris may be feaud mong the
50
- 9 -
forced laborers. They should be identified and requests addressed
to their respective military commands for instructions as to their
disposition.
c. All allied civilians resident or interned in Germany
as a result of their presence in that country upon the outbreak
of war shall be identified, examined closely and may, if you deem
it advisable, be placed under restricted residence. These people will
be dealt with in accordance with instructions to be furnished you
by their respective governments. In general, all practical measures
will be taken to insure the health and welfare of United Nations
nationals, including provision for employment as authorized and
practicable, and repatriation should be undertaken as rapidly as
military conditions permit.
d. All Japanese diplomatic and consular officials will
be taken into protective custody and held for further disposition.
All other Japanese nationals will be interned. All nationals of
other countries with which any of the United Nations are or have
been at war (except Germany) will be identified and registered and
may be interned or their activities curtailed as may be necessary
under the circumstances. Diplomatic and consular officials of such
countries will be taken into protective custody and held for further
disposition.
e. All German diplomats 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 will be terminated. All
records and files of these agents and officers will be ordered
51
- 10 -
returned to Germany or otherwise made available for appropriate
inspection.
1. Nationals of neutral countries must register with
the appropriate military authorities. Every facility and encour-
agement will be given these people to return to their home
countries, except those neutrals who have actively participated
in any way in the war against any one of the United Nations in
which event they will be detained, pending receipt by you of
further instructions as to their disposition. Neutral nationals
will be accorded no special privileges of communication or business
relationships with their home countries or people resident outside
Germany. You shall place such restrictions on neutrals entering
Germany as you deem advisable. Diplomatic and consular officials
of neutrals are to be dealt with in accordance with instructions
which will hereafter be issued.
11. 1. Propagation of Nagi doctrines and Nazi propaganda
in any form shall be prohibited. All schools and universities
will be closed. Elementary schools should be reopened as soon as
Nasi personnel have been eliminated and text books and curricula
provided which are free of Nasi or militaristic doctrines. Steps
should be initiated to prepare satisfactory text-books and curricula
and obtain teaching personnel free of any taint of Nasism or mili-
tarism for secondary schools. You should report to the 0.0.8. prior
to reopening secondary schools. Further guidance on German education
and schools will be given to you in a separate directive,
b. No political activities of any kind shall be countenanced
unless authorised by you. No political personalities or organized
political groups shall have any part in determining the policies of
the military administration. It is essential to avoid any counit-
monts to any political elements,
52
- 11 -
0. The publication of all newspapers, magazines
journals and other publications and the operation of all German
radio stations and the dissemination of news or information by
mail, movies, telephone, cable or other means throughout the
area under your command will be suspended. Thereafter, you will
permit the dissemination of news or information subject to such
censorship and control as you consider necessary in the interests
of military security and intelligence and to carry out the prin-
ciples laid down in this directive,
12. No person shall be permitted to leave or enter the
area under your command wi thout your authority.
13. No German parades, military or political, civilian or
sports, shall be permitted anywhere in Germany. No German
military music, or German national or Nazi anthems shall be
placed or sung in public or before any groups or gatherings,
Public display of German national or Nasi flags and other para-
phernalis of Nazi or affiliated organizations shall be prohibited,
All flags, publications, other paraphernalia, records, documents
and publications in the offices of the Nazi party or affiliated
organizations shall be seized and amounts shall be set aside to
distribute to approved foreign museums and the remainder will
be held for disposition under the direction of the Combined
Chiefs of Staffs,
Regraded Unclassified
- 12 -
53
APPENDIX "B"
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 Reichsmark currency and coin
now in circulation in Germany will be legal tender without dis-
tinction and will be interchangeable at a rate of 1 Allied Military
mark for 1 Reichsmark. Records will be kept of the amounts of
the German marks used by the forces of each nation. Reichskredit-
kassenscheine 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 amounts of currencies used by the United States and British
forces.
3. If it is found necessary to use U.S. yellow seal dollars and
BMA notes, the following provisions will apply to such use:
a. 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 will be interchangeable at that rate.
The United States Treasury will make the necessary arrangements
with the British Treasury.
be You will issue a proelamation, if necessary, requiring
all persons to accept U. 8. yellow seal dollars and THA notes
at the decreed rates. Transactions at any other rates will be
prohibited.
1. The issuance of yellow seal dollars and INA notes will
Regraded Unclassified
54
- 18 -
cease and Allied Military mark and/or Reichsmark currency will
be used in their place as soon as available.
d. U. S. yellow seal dollars and BMA notes will be with-
drawn from circulation as soon as such withdrawal can be
satisfactorily accomplished.
e. 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 exclusively for pay of troops
and military accounting purposes will be marks to the dollar and
marks to the pound sterling. A general rate of exchange may
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 BMA notes which will be under the centrol of U.S.
and British forces respectively. It will maintain all the accounts
and records necessary to indicate the supply, control, and movement
of these ourrencies including yellow seal dollars and BMA notes,
and other funds, as well as financial data required for the determina-
tion of expenditures arising out of operations or activities involving
participation of Allied Military forces.
& Insofar as operations relate to the provisions of
surrensies for the pay and other case requirements of military
components of the Allied forees, the Financial Division will
supply Allied Military marks from surrency on hand and will
resord the debit against the military forees conserned at the
rate of exchange prescribed in paragraph 4 above.
Regraded Unclassified
- 14 -
55
b. Insofar as operations relate to the provision of cur-
rencies for civil administration, the Finance Division will
supply Allied Military marks from currency on hand and will
record the debit against the Allied Military Government.
0. If found practicable and desirable, you will designate,
under direct military control and supervision, the Reichsbank,
or any branch thereof, or any other bank satisfactory to you,
as agent for the Financial Division of the Civil Affairs
Section. 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. It is not anticipated that you will make credits
available to the Reichsbank or any other bank. However, if in
your opinion, such action becomes essential, you should report
the facts to the C.C.S. for further instructions.
d. The records of the Financial Division of the Civil
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 steps and will put into effect
only such further financial measures as you may deem to be necessary
from a strictly military occupation standpoint:
a. Banks should be placed under such control as deemed
necessary by you in order that adequate facilities for mili-
tary needs may be provided and to insure that instructions
and regulations issued by military authorities will be fully
complied with, Banks should be elened only leng enough to
introduce anticfactory control, to remove Basi elements and
other shjectionable personnel, and to issue instructions
Regraded Unclassified
56
- 15 -
for the determination of accounts to be blocked under para-
graph s below.
b. You may at your discretion close all stock e xchanges
and similar financial institutions` for such period as you may
deem desirable.
c. Pending determination of future disposition, all
gold, foreign ourrencies, foreign securities, accounts in
financial institutions, credits, valuable papers and all
similar assets 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 issue:
(1) German national, state, provincial, and local
governments, and agencies and instrumentalities
thereof.
(2) Other enemy governments, the agencies and
instrumentalities thereof and their Nationals.
(3) Owners and holders, including neutral and
United Nations Governments or national authorities,
absent from the areas of Germany under your control.
(4) Nasi party organizations, including the
party formations, affiliates, and supervised associa-
tions, and the officials thereof and key figures in public
or party life who actively supported Nasiism.
(5) Persons under detention or other types of
ematedy by Allied Military authorities and other
persons where heatile to the interests
Regraded Unclassified
57
- 16 -
d. No governmental or private bank or agency will be
authorized to issue banknotes or currency except that, if
found practicable and desirable, you may 80 authorize the
Reichsbank and the Rentenbank when they are under adequate
military control and supervision.
e. You may, at your discretion, issue a proclamation
prohibiting or prescribing regulations r egarding transfers
of or other dealings in private or public securities.
7. All dealings in gold and foreign exchange and all foreign
financial and foreign trade transactions of any kind, including
all exports and imports of currency, will be prohibited except as
permitted under such F egulations as you may issue relative thereto.
Except as you may otherwise authorize, local banks will be permit-
ted to open and operate only mark accounts, but if yellow seal
dollars and BMA note are legal tender, they may be accepted at
the decreed general P ate of exchange and will be turned in as
directed by you in exchange for mark currency at the decreed
general rate of exchange.
8. 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 those notes except as you may so authorize. U. S. Army and
Navy Finance Officers and British Paymasters may, however, be
authorized to accept non-yellow seal U. S. dollar notes and
regular British pound motes from United States and British MILLS
tary sratherised personnel for conversion Late silied
mark w Belchmark currenty of the dearesh general rate
Regraded Unclassified
58
0
- 17 -
after satisfying themselves as to the source of the notes.
9. No military pensions (except for physical disability
limiting the pensioner's ability to work) shall be paid. Nor
shall any pensions or other emoluments be paid for membership
in or services to the Nazi party or affiliated organizations.
10, The railways, postal, telegraph and telephone service,
radio and all government monopolies will be placed under your
control and their revenues made available to the military govern-
ment,
11. Taxes discriminating on the basis of race, color, creed,
or political opinions shall be abolished,
Regraded Unclassified
59
- 18 -
APPENDIX "0"
ECONOMIC DIRECTIVE
1. You shall assume such control of existing German
industrial, agricultural, utility, communication and trans-
portation facilities, supplies, and services, as are necessary
for the following purposes:
1. Assuring the immediate cessation of the produc-
tion, acquisition or development of implements of war;
b. Assuring, to the extent that it is feasible, the
production and maintenance of goods and services essential
(1) for the prevention or alleviation of epidemic or
serious disease and serious civil unrest and disorder
which would endanger the occupying forces and the accom-
plishment of the objectives of the occupation; and (2)
for the prosecution of the war against Japan (but only to
the extent that specific directives of higher authority
call for such goods or services.)
e. Preventing the dissipation or sabotage of German
resources and equipment which may be required for relief,
restitution, or reparation to any of the allied countries,
pending a decision by the appropriate Allied governments
whether and to what extent German resources or equipment
will be used for such purposes.
Except for the purposes specified above, you will take no
stops looking toward the economic rehabilitation of Germany nor
designed to maintain or strengthen the German economy, Except
to the extent necessary to accemplish the purposes set out above,
requiribility for min esenento problems M price
Regraded Unclassified
60
- 19 -
2. You will make a survey to determine the extent to
which local productive capacity and local supplies are or can
be made available for export for relief and rehabilitation in
the devastated areas of Europe or for such other purposes as
may later be determined,
3. You will take such steps as are necessary to protect
from destruction by the Germans, and maintain for such ultimate
disposition as you may be directed to make by the Combined
Chiefs of Staff, all plants, property, patents and equipment
and 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 German economy. In this connection,
you will pay particular attention to research and experimental
establishments of such concerns,
4, You should take measures to prevent transfers of title
of real and personal property intended to defeat, evade or avoid
the orders, proclamations or decrees of the military goverment
or the decision of the courts established by it.
5, Substantial amounts of private and public property of
various categories have been seised, looted or otherwise improperly
acquired by various Rasi officials and organizations. While
it 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 as to property of the kind
and to preserve any such property found in the area under your
centrol.
6. 1. All-property in the German territory belonging
to any centry with which my of the United Nations are,
Regraded Unclassified
61
- 20 -
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 steps necessary to preserve
and to protect such property.
62
-21 -
APPENDIX "D"
RELIEF DIRECTIVE
1. You will be responsible for the provision and
distribution of supplies for civilian relief only to the
extent necessary to prevent disease and such disorder as
might endanger or impede military occupation. For this
purpose 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.
German import requirements shall be strictly limited to
minimum quotas of critical items and shall not, in any
instance, take precedence over fulfillment of the supply
requirements of my liberated territory.
2, German food and other agricultural supplies will
be utilised for the German population. However, it will
be necessary to hold German consumption to a minimum so as
to increase to the maximum the surplus of agricultural pro-
dusts which can 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,
3+ You will permit the German authorities to maintain
or reestablish such health services and facilities as may be
available to them under the circumstances. In the event that
disease. and epidemies should threaten the safety of Allied
troops or endanger or impede military occupation, you shall
take such stops as you doem necessary to protect the health
of
contenination.
Regraded Unclassified
63
September 27, 1944
4:23 p.m.
HMJr:
Hello.
Operator:
Mr. Lynch.
HMJr:
Lynch.
Thomas J.
Lynch:
Yes.
HMJr:
I don't know whether you've sent me a report
of your conversation with Justice Byrnes but
I haven't got it.
L:
Oh, I did not and I should have.
HMJr:
Well, that's part of the job.
L:
Yes, I should have.
HMJr:
Yeah, right -- well, what happened?
L:
He seemed to think that a pretty reasonable
conception could be made which would let us --
allow our people to stay.
HMJr:
Yeah.
L:
And he called Hugh Cox who handles such matters
on behalf of the Attorney General.
HMJr:
Yes.
L:
And it was agreed then that -- that the Attorney
General would give his construction in writing --''
give us a letter.
HMJr:
Yeah.
L:
And it was left that way. Justice Byrnes was
very optimistic that what was intended to -- was
just to keep sharp-shooters from offering their
special services as the agency in dealing with
surplus property organizations.
HMJr:
Well, is -- the thing is in the works?
L:
It's in the works.
Regraded Unclassified
64
- 2 -
HMJr:
And these twelve men have not yet resigned?
L:
They have not resigned yet.
HMJr:
And Mr. Olrich has been advised?
L:
He has been advised.
HMJr:
Well ...
L:
And it depends -- and we don't know what
action the Attorney General will take.
HMJr:
Well, you'd better take my advice and call
up Hugh Cox every day.
L:
I have been. I've talked to him about three
times today on it.
HMJr:
Fine.
L:
And several times yesterday.
HMJr:
Keep me advised too.
L:
I will.
HMJr:
Thank you.
Regraded Unclassified
65
September 27, 1944
4:33 p.m.
HMJr:
Oscar.
Oscar
Cox:
Yes.
HMJr:
I've heard from several sources, plus Marquis
Childs' column, that you people are thinking
of sending Batt overseas.
C:
No, that was -- there was -- he's under con-
sideration for a job here in connection with
surplus property.
HMJr:
In Europe?
C:
To be disposed of in Europe.
HMJr:
Yes. Well, do you want to know anything about
him?
C:
Yes, sir.
HMJr:
Well, don't you know plenty?
C:
Well, we know some and we're gathering more
every day.
HMJr:
My God, how much more do you want to know about
him?
C:
Well, I think we probably know about enough now.
HMJr:
Well, look, if you're really considering him
carefully and you want to know anything about
him, talk to either Pehle or White.
C:
All right.
HMJr:
We've got a whole dossier on him.
C:
Yeah. All right, I'll talk to them.
HMJr:
What?
C:
I'll get hold of them.
HMJr:
And if it gets down to really a question, then
I would like to have a chance to talk to Crowley
because I'd like to strongly recommend against
his appointment.
Regraded Unclassified
66
- 2 -
C:
All right.
HMJr:
I mean I -- we've got enough around here to --
to ....
C:
I know.
HMJr:
We have plenty. So I mean if Mr. Crowley is
seriously thinking of appointing him, then I'd
like to talk to him myself.
C:
Right.
HMJr:
I think it's a grave error.
C:
Oh, all right. I called you the other day to
say you did a good job at that Cherwell meeting.
HMJr:
Oh.
C:
I think you did very well.
HMJr:
(Laughs) I got your message.
C:
Yeah.
HMJr:
And I also talked to Leo yesterday and asked
him to be sure not to do any business with the
English on Phase Two now until they got all
their stuff in.
C:
Yeah. We got the message on that. You know
that it's all to their interest to take plenty
of time, because
....
HMJr:
No.
C:
What?
HMJr:
No.
C:
Well, there's a directive outstanding from the
President saying, "Don't make any changes on a
unilateral basis."
HMJr:
Yeah.
C:
And some of the changes obviously ought to be
made quite aside from Phase Two.
Regraded Unclassified
67
- 3 -
HMJr:
Well, what he's done is -- and I -- what I
told Crowley -- I guess he repeated it -- he's
told the British Army they must have their
figures in by the fourteenth.
C:
Right.
HMJr:
See?
C :
Yeah.
HMJr:
And Harry Hopkins yesterday said he's not going
to let anything go through the Combined what-do-
you-call-it
....
C:
Munitions Assignment Board.
HMJr:
Yeah. I don't know whether you've heard that.
C:
Yeah.
HMJr:
Had you heard that?
C:
Yeah.
HMJr:
And I -- I gather he went through on that,
didn't he?
C:
I think 80.
HMJr:
What?
C:
I think so but I'm not sure.
HMJr:
Did Harry tell you?
C:
No, I got it indirectly from some of the
people over there.
HMJr:
I see. But I think that the whole play is to
make them put all their cards on the table at
one time.
C:
Oh, I think you're definitely right on that.
HMJr:
Do you agree with me?
C:
Oh, yes.
HMJr:
Right.
Regraded Unclassified
- 4 -
68
C:
A hundred percent.
HMJr:
Then I'm encouraged.
C:
Right.
HMJr:
Now, on this Batt thing, I'll leave it to you --
if there's any thought of really appointing him
I'll have a chance to talk to Crowley.
C:
Yes, that's positive.
HMJr:
Right.
C:
I don't think you'll have to though.
HMJr:
Thank you.
C:
Bye.
HMJr:
Bye.
Regraded Unclassified
69
September 27, 1944
4:45 p.m.
Operator:
Judge Patterson.
HMJr:
Hello.
Robert
Patterson:
Henry?
HMJr:
Yes, Bob.
P:
This is Bob. Only routine business at the
Munitions Assignment Board today.
HMJr:
Good.
P:
Of course, they don't take British requirements.
HMJr:
They don't?
P:
No. All they do is assign out of October
production.
HMJr:
Yes.
P:
And they made the regular routine assignments
of aircraft to the British and aviation gasoline
and things like that
HMJr:
I see.
P:
in the regular routine way.
HMJr:
In the regular routine way?
P:
Yep. Yep.
HMJr:
Oh ....
P:
They -- they would -- the requirements on any
new program would not come into the Munitions
Assignment Board at all. It goes to the War
Department for munitions.
HMJr:
Well, I didn't understand that.
P:
They only -- they only transfer out after the
stuff is produced.
HMJr:
Well, I don't know -- all I know is what I've
told you that that gentleman said there was a
lot of stuff on the agenda for today for England.
Regraded Unclassified
70
- 2 -
P:
Yep.
HMJr:
And he'd have it all taken off.
P:
Well, I don't know what he meant by that
really.
HMJr:
I don't either.
P:
Because they they only pass on production
for the current month.
HMJr:
Well, isn't that
....
P:
Like October they indicate that two hundred
of these planes indicated for Britain should
actually be delivered to them
HMJr:
Yes.
P:
....
for immediate action in October.
HMJr:
So stuff for Phase Two wouldn't come there
until it had been decided on all at the War
Department?
P:
Right.
HMJr:
And then after it's been produced, then they
decide how to distribute it, 18
....
P:
Yeah.
HMJr:
....
that it?
P:
Yep. And I don't think they can conflict with
your Committee.
HMJr:
You don't?
P:
I don't think they can, no.
HMJr:
Well, I got the impression otherwise, but I can
see from what you tell me that they couldn't.
P:
I don't think so.
HMJr:
Well, I'll keep you posted.
P:
All right. Thank you.
Regraded Unclassified
71
- 3 -
HMJr:
Bye.
P:
Bye.
.
.....
"
...
Regraded Unclassified
72
September 27, 1944
5:10 p.m.
GERMAN REPARATIONS
Present: Mr. Gaston
Dr. White
Mrs. Klotz
H.M.JR: Just so that you boys won't think I am talk-
ing out of turn, a letter which Mrs. Klotz got from--
MRS. KLOTZ: Mr. Crider.
H.M.JR: Incidentally, he said the person who turned
him down when he insisted he should see me was Smith.
He asked Smith insistently, and Smith said I wouldn't see
him.
MRS. KLOTZ: Oh, Harry had said he had tried to reach
you.
DR. WHITE: He told me he tried to see you, but you
wouldn't see him.
MRS. KLOTZ: You were right, but he had been trying it
through Smith.
Actual
H.M.JR: The point is he came in and I said, "I'm
Anexating
afraid you're not going to strike pay dirt." And I asked
him if he would tell me--I knew it was trade--which
Department was talking.
Well, he said he could get it from a lot of Depart-
ments.
"And how did Flynn of the Wall Street Journal see this
thing, this plan of ours, being shown to a number of people?"
So then he said, "There is a new man in the Times
bureau who just went on an entirely new angle in this thing."
Regraded Unclassified
73
- 2 -
He said, "If you would confirm this, this would clear
up a lot, because you were sent to come to Quebec in
regard to economic and Lend-Lease matters, and after you
got there Mr. Churchill said he would like to discuss with
you Germany and would like to have you discuss it with
Lord Cherwell. Is that story correct? If you would say
that was correct, then that would show you didn't ride
rough-shod over Mr. Hull and fix a lot of things to show
Krock's story wasn't right."
I said, "John, the answer is neither yes nor no."
That was number one.
Then number two, well, the fact he wanted me to say
there really wasn't any disagreement among the Cabinet
members, that we were approaching this thing more or less
with a sympathetic attitude, that the only difference is
on minor details.
So I said, "Well, I can't answer that one. What I can
tell you is that I have scrupulously supplied the members
of the Committee"-I didn't say who; they don't know Hopkins
is a member--with copies of everything that I have been
working on with them and with the President.'
I said, "I have a completely clear conscience--maybe
too clear, because I gave them too much."
'Have you been furnished with everything they have?"
I said, "I don't know. What do you think?"
He said, "Well, I doubt it!"
So then I said, "Well, after all, as to whether we
are in agreement or disagreement, Mr. Krock, I know, is
an intimate friend of Mr. Hull's, because I saw them at
dinner with their arms around each other."
He said, "Yes, they are very, very close."
I said he could get this much better right from
Mr. Hull.
Regraded Unclassified
74
- 3 -
I said, "I take it that he knows Mr. Stimson"--
this is the choice bit out of the whole thing.
"Oh, no," he said, "he doe'sn't know Stimson, but he is
on very intimate terms with McCloy!"
So I think I won on this thing.
So he said, "Well, it is all over town."
I said, "I know it is. Now, do we understand each
other? I have said neither yes nor no on any of your
questions."
He said, "Yes."
I. said, "Properly, the work that we have done has been
given to the President of the United States, and it is his
property. I can't discuss it, but you might be interested
in knowing that out of twenty-five letters we got only
five which are unfavorable, of which two are anonymous; so
I think we are going to ride out the storm."
He said, "I think you are, too; I think you are going
to win."
Oh, yes, he said, "Is it true that Churchill is favor-
able to your plan?"
I said, "I.can't answer that."
He said, "We understand he is."
But you see, somebody is beginning to go one step
further now.
McCloy was at that meeting, you see, this economic
business and the German thing--Lend-Lease. They don't know
yet there is a Lend-Lease Committee.
DR. WHITE: Little by little they are getting more and
more.
Regraded Unclassified
75
- 4 -
H.M.JR: So I thought I would tell you.
DR. WHITE: He got nothing I could see that--
H.M.JR: The danger is that he'll say, "Mr. Morgenthau
told you this. Well, hell, if Morgenthau is talking, why
can't I talk?"
MR. GASTON: I've already met him, but he just said,
"Hello" and shook hands.
H.M.JR: But the interesting thing is he doesn't know
Stimson, but he is a very, very good friend of Mr. McCloy's!
I think that is a choice bit.
MR. GASTON: The Eaton European letter, out today,
says there was agreement on a program at Quebec. He called
me up and said he was going to write something, but he did
not get that information from me.
H.M.JR: Well, he said, "Every Department has been
talking except the Treasury."
DR. WHITE: I mentioned to you--Herbert might be
interested--Graham Swing said that parts of the Secretary's
recommendations and reports were read to him in the
State Department.
MR. GASTON: He didn't say that over the radio!
DR. WHITE: No, he told me that this afternoon.
MR. GASTON: I would hope he might say it over the
radio!
H.M.JR: I don't know whether I reported my conver-
sation with Eugene Meyer, in which he said, "You must
promise not to say that I am not in agreement with my board.
You must promise not to tell my editorial board."
I said, "Yes." Then he went on to agree with me.
I said, "Well, Eugene, you sound just as fever-brained
Regraded Unclassified
76
- 5 -
and cracked-pot as I do - but, Eugene, you must promise
not to repeat that!"
But he has no sense of humor about himself.
But I just was afraid that this fellow might go down
the hall and say--have you had any chance to talk with
Professor Goodhart today?
DR. WHITE: I had lunch with him. He was tied up with
John Pehle all this morning. I have received his memor-
andum, had some copies made, and sent them around to the
boys. We talked to him about it. I think that he has some
interesting and effective method of approach; I think it
has some shortcomings, too, but apparently he makes some
cogent points there and we certainly could use some of that
material if we were writing the defense of our position.
I was flirting with the idea--in anticipation of what
will come out in the future, probably--of writing a de-
fensive article--not a defensive article, but an article
in defense-end which we could have somebody put out under
his name or give it to somebody who could re-write or re-
shape it.
Eliot
H.M.JR: George Fielding Elliott, Mrs. Morgenthau
says, is very good.
DR. WHITE: I read one thing he had day before
yesterday. I thought he was quite good, and there was one
phrase in his memorandum--Goodhart's memorandum--that kind
of stuck with me. He said, "If I were a German and håd
suffered the defeat"--that was implied--"I would always
want revenge and try it again."
I was trying to think of what the specific psychology
of the German with respect to that point would be, and it
occurs to me that certainly the only thing he would be
thinking of would be to wipe out that stain of defeat.
It isn't as though we demonstrated to him the foolhardiness
of that resort. If anything, the events of the past war
have demonstrated the possibilities in that approach, and
I can't see how those people will be thinking of anything
Regraded Unclassified
77
- 6 -
else but trying it again as soon as it is propitious.
H.M.JR: Well, I have been trying to say to you,
through no fault of your own, but only through mine, I
want you to put some of your boys to work to study Stimson's
record on German reparations when Stimson was Secretary of
State.
Now, just put them on what he has said publicly and
what he has written. I know he went and visited with
Mussolini. I think he spent a week with him, or something.
Somebody said to me, "You ought to look up Stimson's record
on reparations, and you will find how bad he was, and he
hasn't changed any since then."
DR. WHITE: We could easily do that.
H.M.JR: The point is, you could say to the President,
"Look, Mr. President, this is where Mr. Stimson stood with
Herbert Hoover in 1922 or 1923 on reparations, and the man
hasn't changed since. What he is doing is defending his
position then.'
That is maybe what he is doing, Harry.
DR. WHITE: I'll have somebody do that.
H.M.JR: We may have been very dumb on this thing. He
may have written or published something he feels he has to
defend.
DR. WHITE: He talked just that way in 1919.
H.M.JR: I have been trying to say this to you, through
no fault of your own, for two days. You know how these
people are, if they have written something. I want to see
when he was Secretary of State. (Refers to Who's Who)
This is triple confidential, what I am going to say
now, because you can see how he can't get mad at the
President, but how he can get mad at me. The first he
knew about this Joint Statement of Roosevelt and Churchill
Regraded Unclassified
78
- 7 -
on Italy was when he saw it in the newspapers, I under-
stand.
DR. WHITE: Who?
H.M.JR: Hull.
DR. WHITE: About the Joint Statement in regard to
Italy?
H.M.JR: Yes. They were told that once it got over
to the press room and Steve Early, he was to see it. But
he didn't see it until it got to the press room. He claims
he didn't see it at all.
MR. GASTON: When was that?
H.M.JR: It is in the morning papers. And he is just
fit to be tied.
DR. WHITE: I don't understand the man, because he has
all the cards in his hands--Hull has. He could go to the
President and say, "I want this and that and the other
thing," and he'd get it like that! All he has to do is to
threaten to resign, and he can get anything. He has
threatened to on smaller and more unimportant things.
MRS. KLOTZ: I think he enjoys griping.
DR. WHITE: Oh, no, I don't think a man can enjoy what
he has had to experience that I know of in the last month.
MR. GASTON: He doesn't know how to assert himself.
DR. WHITE: He has in the past, Herbert.
H.M.JR: Mr. Stimson was Secretary of State with
President Hoover from 1929 to 1933.
DR. WHITE: Well, there was a good deal of discussion
during those years on the cancellation of reparations.
He may have written earlier.
Regraded Unclassified
79
- 8 -
H.M.JR: It is very easy to go through the thing.
Now, there may be something that he has written on this
thing that he is sticking to.
DR. WHITE: All we need is one paragraph, more or
less.
H.M.JR: If we could just slip a good one to the
President and say, "Sure, this is why Stimson is against
this!"
DR. WHITE: I think we have got to take the position,
wherever we can with these columnists and what-not, that
what you are recommending is not a complete reversion to
an agricultural community; but one of being directed toward
a predominantly agricultural community as against a pre-
dominantly industrial country to get them away from the
notion that you are going to eliminate every factory and
every shop; that it is a question as to where the emphasis
remains, rather than the extreme. I know that seems to make
quite a difference.
MR. GASTON: I said to one of these people--I have
talked to two people, one was Ernest Lindley and one Harry
Eaton--the question was, shall We use the instrument of
economic repression effectively to stop Germany from re-
arming for the foreseeable future. I said that is the
question. Well, Eaton said, "Everybody agrees to that,
don't they?"
I said, "Oh, no, by no means. There is an organized
propaganda in favor of not meddling with the German
economic machine, because if you do that, it will disturb
the economic set-up throughout all of Europe."
H.M.JR: Have you had a chance to read Stimson's
memorandum on that?
MR. GASTON: No.
DR. WHITE: I don't think Stimson's memorandum was in
there.
Regraded Unclassified
80
- 9 -
H.M.JR: You furnish Herbert with everything, will
you?
MR. GASTON: Did Fadiman come down here?
H.M.JR: He'll be here tomorrow morning.
DR. WHITE: Is he coming alone or with a group?
(Secretary holds telephone conversation with
Mr. Hopkins, as follows:)
Regraded Unclassified
81
September 27, 1944
5:25 p.m.
HMJr:
Okay.
Operator:
Go ahead.
HMJr:
Hello.
White House
Operator:
Just a minute, Mr. Secretary.
HMJr:
Hello.
Operator:
All right, Mr. Secretary.
HMJr:
Hello, Harry.
Harry
Hopkins:
Hello, Henry.
HMJr:
Morgen ....
H:
Say, I talked to the President about that
business that White and I talked about.
HMJr:
Yes.
H:
He likes it.
HMJr:
Good!
H:
Now, I've got to do some business in England,
you see?
HMJr:
Yes.
H:
I've got to get this cleared with the P.M.
HMJr:
Yeah.
H:
And I'm going to work on it -- I'm going right
at it in the next half hour.
HMJr:
Wonderful.
H:
In the meantime, I think it had better be kept
very confidential as to what he's intending to
do.
HMJr:
Listen, old man, there are no leaks out of here.
Regraded Unclassified
82
- 2 -
H:
No. Well, I ....
HMJr:
There are plenty -- if you -- if you confine
it to the White House and the Treasury ....
H:
It will be all right.
HMJr:
it will be all right. But if you tell
....
....
H:
Let's keep it there.
HMJr:
If you're going to tell
....
H:
No, I'm not. I'm not.
HMJr:
Well, it's all right here.
H:
All. right, old boy. I thought you'd be
interested.
HMJr:
I -- I'm -- I'm very -- I'm more than that.
I'm very happy.
H:
Yeah. All right, Henry.
HMJr:
Right.
H:
Bye.
HMJr:
Thank you.
Regraded Unclassified
83
- 10 -
MR. GASTON: Did he say he was going right on it, or
right out?
H.M.JR: On it.
DR. WHITE: It is funny, if he gets the PM to accept,
he'll be a better man than I think he is!
H.M.JR: He has direct methods of communication
DR. WHITE: Even so, I mean I can't see the Prime
Minister--he may not even have a copy of this document. I
am not sure of that. Maybe I'm wrong.
MRS. KLOTZ: Do you want that out?
H.M.JR: Mrs. Dickinson, this has to wait until you
can type it yourself--anything on Germany.
DR. WHITE: I hope Hopkins doesn't think that para-
graph has been cleared in the State Department, because
we have not yet received Hull's letter. That is something
they can worry about after it is printed.
Regraded Unclassified
LIBRARY OF CONGRESS
WASHINGTON
OFFICE OF THE LIBRARIAN
September 27, 1944
Dear Henry:
AS you are very well aware, you have been the custodian of
the Constitution of the United States and the Declaration of Independ-
ence, and five or six more of the most valuable possessions of the
people of the United States, for better than two and & half years. Now
that these treasures have been returned to the Library of Congress, I
want to present to you, and through you to members of your staff, the
Library's appreciation and my own personal gratitude.
The Bureau of the Mint, which has had immediate custody of
these treasures of incalculable value, has done everything within its
power to assure their security and care. Not only Mrs. Ross and Mr.
Van Horne, the local custodian, but many other members of the mint Ser-
vice, have gone to unusual lengths far beyond the ordinary call of duty
to fulfil the responsibilities they so generously assumed.
You were also, moreover, the custodian of the great Documents
in their travels to and from the Bullion Depository at Fort Knox. Here
the responsibility was borne by the United States Secret Service. It
was a responsibility which weighed heavily on my soul while the journeys
were in progress, and I can imagine how anxiously it must have weighed
upon Mr. Wilson and his aids. All of them did their duties, and more
than their duties, in exemplary and distinguished fashion. I should
like to mention particularly Mr. Harry E. Neal of Mr. Wilson's immediate
office, and Mr. Alonzo A. Andrews, the Supervising Agent of the 7th
Secret Service District. If you would be good enough to convey to these
various members of your staff, and to all others concerned, the official
and personal thanks of the Library and the Librarian of Congress, you
would be doing me an additional favor, which I should deeply appreciate.
Faithfully yours,
anche machan
The Honorable
Archibald MacLeish
Henry Morgenthau, Jr.
Secretary of the Treasury
Washington, D. C.
Regraded Unclassified
85
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE SEP 27 1944
TO
Secretary Morgenthau
FROM
Mr. MurphyNeM
During the course of the meeting in your room in
Chicago last week, you requested me to look up the
Treasury's position with respect to the effect on bond
prices during and after World War I of the exemption
of Government bond interest from normal tax.
The interest on most of the bonds sold during World
War I was exempt from the normal tax, but was subject to
the surtax. It was the Treasury's position that 1f the
normal tax had been higher and the surtax lower -- as it
had anticipated would be the case -- the bonds would have
held up better in the market. This view is best ex-
pressed in the following statement made by Assistant
Secretary Leffingwell in an address before the Academy
of Political Science on April 30, 1920, summing up the
Treasury's experience with war finance:
"The departure from the Treasury's views
concerning surtaxes and normal taxes has
seriously impaired the market value of Liberty
bonds, which are exempt from the normal taxes
but, within certain limitations, subject to
surtaxes. It 18 within the power of Congress,
by reducing surtaxes and increasing normal
taxes, to lift Liberty bonds to practically
any market level it chooses."
At the time Mr. Leffingwell spoke, Fourth Liberty
bonds were selling at just under 86.
Regraded Unclassified
86
MEMORANDUM FOR THE SECRETARY.
September 27, 1944.
Today's receipts, including the early afternoon
mail, totalled 30 letters in regard to the statement
about Germany.
Of these, 25 were favorable and 5 unfavorable.
Of the unfavorable ones, 2 were anonymous abusive
-- 1 of the President and 1 of the Secretary. These
were both on postal cards, and though apparently signed,
the names were illegible.
G.E. Forbuch
lyk.P.
Regraded Unclassified
87
TREASURY DEPARTMENT
AA
INTER OFFICE COMMUNICATION
DATE
TO
Secretary Morgenthau
SEP 27 1944
FROM
Mr. Lynch
For your information
This is a report as to the situation under the
new surplus property legislation which threatens the loss
of Mr. Olrich and his key supervisory staff.
Following your call Monday to Justice Byrnes,
Mr. Charles Bell and I went immediately to see him. He
expressed belief that the statute should be construed
merely so as to prohibit Procurement employees from ob-
taining special employment in representing persons dealing
with the Procurement Division. In that way it would not
handicap our people in returning to their former positions
with established businesses.
Justice Byrnes then called Mr. Hugh Cox, Assistant
Solicitor General, who acts for the Attorney General in
such matters, as a result of which it was agreed that an
Attorney General's Opinion would be issued.
Mr. Olrich advises that our people concerned will
continue with us on a day to day basis pending issuance
of the Attorney General's Opinion.
The Attorney General has already agreed that he will
not consider the statute as effective until the Surplus
Property Board created by the new legislation has been
appointed and assumed its duties. This should give us
more time than we had expected to work out the problem.
Based upon my daily talks with Mr. Cox, I am not too
optimistic that the Attorney General's conclusions will
satisfy our people. Mr. Cox has not yet indicated his
conclusion, but the tentative views of the staff at the
Department of Justice are narrower than those of Justice
Byrnes and less liberal than we had hoped for. A satis-
factory solution that will keep the present staff is not
yet indicated.
Alynch
Regraded Unclassified
88
PUBLIC OPINION NEWS SERVICE
For Release Wednesday, Sept. 27, 1944
F.D.R. Holds Edge Over Dewey
Among 'Independent' Voters,
Survey Of That Group Reveals
Dewey Trip May Win
Him New Votes Among
The Independent Bloc
By GEORGE GALLUP
Director, American Institute of Public Opinion
would pick if the election were
PRINCETON, N. J., Sept. 26. - The group which
being held today.
In the survey to learn the size of
holds the balance of power in the coming elections
the independent vote, field report-
is the so-called "independent" voters - those who do
ers for the Gallup Poll asked vot-
not vote a "regular" party ticket.
ers across the country this qués-
This group holds the balance of
tion:
While President Roosevelt now
power because of its size. Institute
holds the advantage over Gover-
"In politics as of today,
estimates, based on a survey re-
do you consider yourself a
nor Dewey among this group of
cently completed,
Republican, a Democrat,
civilian voters, the G.O.P. candi-
put this group at
Socialist, or Independent?"
date's campaign tour may do
20 per cent of the
much to, overgome this advantage.
The replies:
voting popula-
In this respect, it should be
Republican
39%
tion, or, in other
noted that in the present survey
Democrat
41
words, at about
about one-fifth among the indepen-
Independent
20
one in every five
dent voters questioned still prefer
Socialist
voters.
not to say which candidate they
The indepen-
Less than one percent.
dent voting bloc
is important in
SWEDISH GALLUP POLL
another respect. Since it is made
up of voters who presumably study
ACCURATE IN FORECAST
both candidates and issues before
deciding how they will vote, its
One of the most accurate election forecasts in the history of polling
support can be won by either party
was achieved by the Svenska Gallup Institutet (Swedish Gallup Poll)
in predicting the outcome of the Swedish general
right up to election day.
election held Sept. 17.
As of today, President Roose-
The forecast, published Sept. 12 in "Dagens
velt holds the greater share of sup-
Nycheter" and other Swedish dailles underwriting.
the poll, showed an average error of less than one-
port among this group, as is
half of one per cent when compared to election
shown by replies to the following
results.
question:
Poll
Election
"If the presidential elec-
Forecast
Result
Error
Conservatives
16.3%
15.4%
0.9
tion were being held today,
Liberals
12.7
12.9
0.2
how would you vote - for
Agrarians
13.4
13.8
0.4
Roosevelt or for Dewey?"
Social Democrata
46.7
46.8
0.1
Blomquist
Communists
9.8
10.4
0.6
The results among those willing
Other Parties
1.1
0.7
0.4
to state a preference today:
The Bwedlish pell, affiliated with the American Gallap Poll, was
15
6
W
26
d39
For Roosevelt
55%
organized in 1948, and is under the direction of Sven 0. Blemquist,
For Dewey
45
Stockholm research export.
ETARY OF TREASURY
301440
Regraded Unclassified
Treasury Department
Division of Monetary Research
€ )
Date 9/27/44 19
To: Secretary Morgenthau
From: Mr. White HDW
You may be interested in this
report on the UNRRA Council Meeting
in Montreal just ended.
:
Please tree
SO
TREASURY DEPARTMENT
All
INTER OFFICE COMMUNICATION
DATE Sept. 27, 1944
TO
Mr. White
FROM Mr. Glasser
Subject: The UNRRA Conference at Montreal, Sept. 15-26, 1944.
There were only two major issues at the UNRRA Conference:
1. Authorizing aid to Italy limited to $50 million.
Acheson received direct instructions from the President
to push this program with the greatest vigor. He did, and
successfully 'lined up" all the delegations before the vote.
2. Authorizing UNRRA to give aid to the persecuted
groups, particularly Jews, in enemy or ex-enemy
areas.
The British attempted to obstruct this program. Acheson
was magnificent in breaking down the opposition and pushing it
through. His speech in defense of the program was a master-
piece in handling the political issues involved, and stating
the humanitarian and ethical aspects of assisting those who
had been persecuted by the Nazis. He successfully prevented
any discussion except on the real merits and since there could
be no discussion. on the real merits, the program was put over
unanimously.
I suggest that Secretary Morgenthau or t he War Refugee
Board may wish to commend Mr. Acheson for his efforts.
Of general interest:
1. There was a feeling amongst all the delegations that
UNRRA was not moving with sufficient vigor and pessimism was
widespread as to what could be expected of the organization.
This was brought out on the floor in Mr. Acheson's forceful
speech urging UNRRA to get started without further delay to do
its job.
Regraded Unclassified
91
Division of Monetary
- 2 -
Research
Sir Arthur Salter, the Deputy Director General under
Governor Lehman, is resigning. They are searching for a man
to take his place who will provide vigor and enthusiasm for
the job as this seems to be the only hope that UNRRA can be
successful.
2. The Russians felt that they were badly treated.
Their complaint was that they are not consulted on policy
matters and that they were being isolated, with their sug-
gestions voted down by votes of 42 to 2 (the voting partner of
Russia was Czechoslovakia with Iran sometimes joining in).
Acheson made a real effort during the latter stages of the
conference to help the Russians and the conference ended with
a greatly improved atmosphere between the U. S. and t he
Soviet Delegations.
Regraded Unclassified
92
SEP 27 1944
Dear Mr. Crowley:
In response to your request of September 21, 1944 I
enclose herewith a Copy of Lord Cherwell's letter to me
of September 16 on the question of the interpretation of
the words "sold for profit". Also enclosed is a copy
of my reply to Lord Cheraell's inquiry.
I at sware that this phrase has been subject to
careful interpretation both in negotiations and in
practice over a Long period. in view of this we
should be glad to have the detailed memerandum on
the subject which you have kindly offered to prepare.
I an sure such a memorandum would prove very helpful
to the American Committee.
Sincerely yours,
(Signed) II. Morgenthan. Jr.
Secretary of the Treasury.
Mr. Leo 7. Crealey, Administrator,
Foreign Menomie Administration,
Washington 25, D.C.
Inclesures
INSUL 9/26/44
Regraded Unclassified
FOREIGN ECONOMIC ADMINISTRATION
WASHINGTON 25, D. C.
September 21, 1944
Dear Secretary Morgenthau:
I would greatly appreciate it if you could send me a copy
of Lord Cherwell's letter of September 16 which you referred to
yesterday afternoon on the question of interpreting the words
"sold for profit."
As you are doubtless aware, these words have a fairly long
history. The first basic distinction between the handling by Britain
of lend-lease goods for export and the separable case of goods sold
in the United Kingdom without profit was made in the discussion and
negotiations leading up to the Eden White Paper of September 10, 1941.
This White Paper embodies the distinction and makes quite clear that
the reference to goods sold for profit does not relate to export but
relates solely to lend-lease supplies distributed in the United King-
dom. Since then there has been an interpretation of the White Paper
in practice.
If it will aid the American Committee, I can have prepared
a detailed memorandum on this subject.
Sincerely yours,
For Leo T. Crowley, Creenly
Administrator.
The Honorable Henry Morgenthau, Jr.
The Secretary of the Treasury.
Regraded Unclassified
94
c
o
P
SEP 20 1944
I
Dear Lord Cherwell:
This is in reply to your letter of September 16,
1944 concerning clarification of the phrase "or sold
for profit" as it appears in your notes of the conver-
sation between the President and the Prime Minister
on September 14th.
Without attempting & precise restatement, I have
assumed that the agreed principles which have heretofore
governed the sale or other disposition of Lond-Lease
goods in the United Kingdom would be retained unless
changed circumstances should make resonsideration do-
sirable. In the latter event the subject could be
reopened for discussion between our two Governments.
Your kind personal message is very much
appreciated.
Very sincerely yours,
(Signed) M. Merganthan, wa.
Secretary of the Treasury.
Right Honourable Frederick Cherwell,
British Embassy,
3100 Massachusetts Avenue, N.W.,
Mashington, D.C.
Regraded Unclassified
95
c
o
At Chatesu Frontenane,
P
Quebee.
Y
16th September 1944
Dear Mr. Secretary,
As you suggested, I an sending this note 80 as to clarify the
meaning of the phrase "or sold for profit* in the record of the con-
versation between the President and the Prime Minister on September 14th.
According to my recollection, you explained that it merely meant
that our Government should not sell Lend/Lease goods for more than the
price at which they are entered in your books plus a reasonable
allowance for transport and similar charges. I should be grateful
if you could let me know whether this is correct.
Though I do not know whether no are informed about the price
at which Lend/Lease goods stand in your books, - thanks to your
generous desire to keep the dollar sign out of Lend/Lease, - I feel
sure that we habitually keep well within this limit and that we' shall
therefore find no difficulty in meeting the President's wishes in this
respect.
May I also take this opportunity of telling you how much I enjoyed
seeing you at Quebee and how very grateful I am for all the kindness
you showed in your dealings with such a novice as
Yours very sincerely
/=/
Cherwell.
Mr. Secretary Morgenthau
Regraded Unclassified
IC-5 20M 9/43
Copy to mr White 96 9/25/14
THE BRITISH SUPPLY COUNCIL IN NORTH AMERICA
Box 680
TELEPHONE EXECUTIVE 2020
BENJAMIN FRANKLIN STATION
WASHINGTON 4. D. C.
27th September 1944
Dear 164 Secretary,
I am starting this morning for Boston where I plan to spend some
days, but I shall return on Sunday BO 8.8 to see Keynes and impress upon him that
everything must be ready for you when you return from your tour. Those concerned
have been told that you wish. to have the munitions figures in as much detail as
possible - at the very least a breakdown giving several dozene of the principal
the
items; further, that you wish to non-munitions figures to be broken down as for 88
possible, and a detailed statement to be prepared of our general economic case.
I hope this covers what you saked for. If not, of course, we shall have to add
anything further you would like.
I hope to start on my more extensive western tour on Tuesday, but I
shall make a point of being back by the week-end of the 15th, 80 that you can have
the statements as early as you like thereafter.
Meanwhile may I thank you for an extraordinarily pleasant and interesting
evening.
yours very sincerely
Cherwell
Mr Secretary Morgenthau,
The Treasury,
Washington.
P.S. I am also sending a revise of the transcript which you kindly let me have.
The trivial alterations in my remarks do not affect the substance anywhere, but
I think they make sense of one or two sentences where I appear to have been inaudible
if not incoherent.
97
September 20, 1944
3:00 p.m.
CONFERENCE WITH THE BRITISH - LEND-LEASE
Present: Lord Halifax
Lord Cherwell
Mr. Brand
Mr. Opie
Sir Henry Self
Mr. Hugh Weeks
Mr. Crowley
Mr. McCloy
Mr. Taft
Mr. Cox
Mr. Currie
Mr. White
Mrs. Klotz
H.M.JR: Have you as many on your team as we have
on ours?
LORD HALIFAX: I tried to get an even number. I
produced six, and you have seven.
H.M.JR: Who is going to pitch for you?
LORD HALIFAX: I think we will have to make Lord
Cherwell do quite a bit of that.
H.M.JR: He has done very well.
In the very little time I have had, I have been
trying to tell these gentlemen what has happened. I
don't know how much time you have had to talk things over,
but, as you see, we are ready to start. I don't know how
far you are, but if you care, whoever is going to speak--
LORD CHERWELL: I only got here last night, but I
think there are some things we might get done, or at any
rate we can find out what has to be done. We can decide
what decisions this committee may have to make. If we
can't make them, we might decide what they are.
98
- 2 -
Now, I take it we are here to implement the Quebec
arrangements, to find out the details, or to work out in a
little more detail how that is to be done. And it seems to
me that the simplest way is for me to start with the
non-munitions side.
It was agreed, I think, that Lend-Lease is to continue,
and, therefore, it is only a matter of how much we need in
non-munitions. Broadly speaking, they consist of food, oil,
which is to a large extent self-balancing owing to reverse
lend-lease, shipping, a certain amount of raw materials, and
a small amount of miscellaneous items. And they add up,
as far as we can see, for the first year of stage two
to about three billion dollars.
Well now, it seems to me that these figures could be
agreed very easily. If your people and our people got
together and we had, say, a committee on non-munitions,
they could agree whether that was a reasonable figure,
whether it was right. I think we could persuade you
that that was all right.
H.M.JR: Now, before I answer you, may I ask a question?
Jack, how pressing are the requests of the British for
munitions? I mean, is that a very pressing one?
MR. McCloy: It is pressing from this point of view
because if, say, the Germans should collapse next week,
we would have to know how much. to cut back. We would
have to know how much of our production we would have to
shift, and we have a plan now which was based on some
estimates that we had which would be upped considerably if
we took your figures, rather than our figures. And that
rather depends upon Hitler.
LORD HALIFAX: You are talking about munitions?
MR. McCLOY: Yes.
99
- 3 -
LORD CHERWELL: I was talking about the non-munitions.
H.M.JR: I know, but before I answer your questions,
I wanted to ask Mr. McCloy how pressing the question of
munitions is from the standpoint of the War Department.
That was the purport of my question, and he was speaking
on that.
Mh. McCLOY: We have a rather definite program under-
way, an understanding with our manufacturers whereby we
will cut back to a certain degree if and when there is a
German collapse. We would like to crystallize that as
quickly as we can.
LORD CHERWELL: Yes, that, of course, is most important,
and that is, of course, one of the reasons we were rather
anxious to urge that this should be settled on the munitions
side so that you shouldn't cut back, and then afterwards
we should all say that it is a pity we couldn't get this
or that,
MR. McCLOY: That is right. That is fairly pressing.
MR. TAFT: Mr. Secretary, does this include the U.K.
and the Dominions, or is it only the U.K. the figure that
you have given?
LORD CHERWELL: It is roughly the whole Empire. But
the committee would have to go into that; there are certain
complications. But, broadly, I think you could say that
the three billion ought to cover the Empire.
MR. COX: Mr. Secretary, it is going to be quite
difficult on the non-munitions program to make up your
mind until you know what the munitions program is, because
a large part of this is war production materials.
LORD CHERWELL: I am hoping that things will go in
parallel, but I was mentioning the non-munitions first
because I thought they were the easier of the two.
MR. COX: But you have to know your postulate or
assumption before you proceed.
100
- 4 -
LORD CHERWELL: Yes.
H.M.JR: In the light of what these gentlemen say,
would it be agreeable if we go forward with both munitions
and non-munitions simultaneously? I gather there is only
so much in the pot, and the figure that will have to be
fixed first, I take it, Mr. Crowley, is the munitions
figure.
MR. CROWLEY: That is right.
MR. TAFT: That represents our feeling about it.
H.M.JR: So you would like to see them go forward
together?
MR. TAFT: As a criterion for the others.
H.M.JR: In the light of that, would you be willing
to approach the thing, the whole matter, simultaneously,
rather than advancing the non-munitions first?
LORD CHERWELL: We would prefer that, yes. I perhaps
ought not to have put it in front in talking, but we want
them to go together.
H.M.JR: Then I don't see any reason from our side
why we couldn't approach the whole problem at once.
LORD CHERWELL: Yes.
Well, there is a certain difference between the two
that I can explain, I think. The thing is this: There is
no question that on the non-munitions side we just can't
do anything much ourselves. We can't grow more food than
we are growing, and we must have a certain amount of food
to live. We are down already to eighty percent of pre-war,
and we can't go much lower. In fact, we want to go higher,
because the people have had four or five years of it, and
they will expect some relaxation. So with the non-munitions,
I don't think there is any difficult question, except ques-
tions of quantity.
The munitionsare, perhaps, rather more difficult,
because--at any rate, the President first agreed that
Regraded Unclassified
101
- 5 -
broadly speaking we should get a sort of proportion to
what we have been getting heretofore. But you said that
that was not much good to the Treasury, "We want to know
to how many dollars and to how many things we are committed."
We then said we had worked it out and that instead of
getting five point six billion dollars as we had in 144
in munitions, we thought we would be able to manage with
three point four billion dollars in the first year of
stage two. That figure was tentatively regarded as
reasonable. Now, if that figure could be accepted, though
it will have to be varied in the light of the decisions
at Quebec, and may, I should think, very possibly be
diminished--if that figure could be regarded as an upper
limit, and the service and supply people could begin
discussing exactly what proportion of the various munitions
were wanted, and so forth, then I think we could go ahead
with the munitions just the same as with the non-munitions.
H.M.JR: Well, as far as we are concerned, from what
these gentlemen advise me, I think we could get ahead
faster if we could approach the whole problem at one time,
and I think that each person has his own problems. The
fact that your people aren't getting enough to eat, which,
of course, is an extremely pressing problem, and one that
should be given very prompt consideration--but we have
ours, which is in terms of human values not so pressing,
and that is the one of cancellation of Government contracts.
But we take the question of the Combined Chiefs of
Staff--I don't know how many days it will take to answer,
but from previous experience, if you get anything under a
month from the Combined Chiefs of Staff you are lucky.
He isn't a member, so he doesn't mind my saying that.
MR. McCLOY: It goes right over my head.
Regraded Unclassified
102
- 6 -
H.M.JR: He doesn't mind my saying that. Is that
right?
MR. McCLOY: That is right, right over my head.
LORD HALIFAX: Mr. Secretary, may I interject one
word in what you have just said, that you felt it would
be helpful if what you call the whole problem--and you
made a reference to the civilian condition in England--
did you mean by that that it would be helpful if at this
stage of the game Lord Cherwell gave a brief general
picture of what the angle is from which we approach this
general question, namely the position of our population
in all sorts of civilian directions, and so forth, which
imposes this necessity of coming to you upon us? I am
sure that he would be happy to do that.
H.M.JR: Yes--well, the whole thing. I mean, it
gets back to even a bigger program than that, Lord Halifax.
It goes back to my conversation with both the Prime Minister
and Sir John Anderson in England, and that is, you people
have certain objectives in connection with re-establishing
and regaining your world trade and your exports, and this
is part of that picture. And to satisfy me, as one member
of the American Committee, I am going to have to get all
the information that bears on your economic picture. I
want it all.
Now, talking for myself, as one member of the Committee,
we can weigh this thing intelligently. It isn't only the
food requirement, but it is the whole picture, food,
munitions, ships, and whatever--
MR. BRAND: Exports.
H.M.JR: Your whole economic program.
Regraded Unclassified
103
- 7 -
MR. TAFT: I was going to make one suggestion in
Lord Cherwell's presentation. There has been some
difficulty on our side where we have been talking figures,
percentages, and absolute and relative amounts to adjust
the figures that we have been talking about to the ones
that have been mentioned up to date. The difference
may be in taking a gross figure less reverse lend-lease,
or it may be on some other basis. When you said three
and a half billion on munitions, we couldn't fit it into
anything. When you related it to a prior figure of five
point six, we might not be able to figure out where you
got the five point six, but at least it gave us some
basis of deduction; and I think if you could indicate
when you get to that point what the reduction is, as
well as the absolute figures, then I think perhans we
can relate it to the figures we have been getting, even
if they are a little bit different from yours.
LOLD CHERWELL: Yes.
H.M.JR: You remember, we were talking both gross
and net figures up there.
LORD CHERWELL: Yes, but, of course, gross and net
only comes in really on non-munitions, bécause there is
no reverse in munitions to speak of.
But as far as the munitions go, it comes to some-
thing like sixty percent of what we got last year that
we want in the first year of stage two. We call stage
two the Japanese war.
MR. TAFT: The same with us.
104
- 8 -
LORD CHERWELL: And, of course, as I say, there might
be people in America who say, "That wants justifying, be-
cause if you want less, as you obviously do, why can't you
make it all yourself and not come to us?"
But I think you recognized in Quebec that the British
public would not stand for it - we can't do it; it is
politically not possible. AS a matter of fact, our Service
people originally wanted more and the War Cabinet decided
they could not force the British public to do quite so
much and they had to cut it back. They could not compel our
people to maintain this war effort at the present rate. The
civilian consumption is about eighty percent, over-all,
of what it has been - what it was before the war. The average
figure is seventy-nine, as a matter of fact. And, of course
in many things - most of the things that people nótice - it is
a good deal worse than that. The reason it appears not to
be so bad is because food is such a big item, and food
people just have to have. They can't live without it. So
we have not been able to cut that so very much. I think food
is cut to eighty-five percent.
But take, for instance, building. Normally we build
three hundred thousand housés a year. Now, for four years,
we have built practically none -- no dwelling houses. If
these figures are to be ouoted, I would rather give them in
writing to be sure they are all right, because I am now giving
only broad figures. Now, we have had completely destroyed,
irreparably damaged by bombs, on the order of three or four
hundred thousand houses - absolutely dead out which have to be
rebuilt. Then for two years there have been practically no
repairs - very, very little in the way of repairs. Any
repair facilities, any labor we could spare at all was used
for repairing minor bomb damage. But minor damage, of
course, goes into millions of houses. And, of course, our
building labor has been enormously drawn upon for the
services. Good strong men have been called up and put into
the army. Numbers have dropped - it depends on whether
you count the engineers or not - but they have dropped to
something like half.
105
- 9 -
Well, now, we must build. We can't let the soldiers
come home to find they haven't got any houses. If they have
no place to live there will be a riot. We have got to do
something about that.
Then, take clothing. We are running at about fifty-
eight percent of normal and we have been running on that
for three years - a little over half the normal amount.
Well, a good many people had some clothes in stock, but
the poorer people hadn't much stock and what they had is all
getting worn out. You can't go on like that for very
long.
Then take household goods - they are down to about
thirty-two percent. We are getting one-third of the
normal. I believe you haven't really lost much of those two,
so far - your clothing and household goods. You are pretty
well up.
Of course; gasoline is an absurd case because if you
exclude the people like doctors and professional men we
only have one and a half percent of the gasoline we had
before. All the people who live in the country have to
have a permit to use it at all.
Broadly speaking, our civilians have been very
hard pressed. They have been hard pressed for a long time.
Now, when we get the people back from the war we won't
have the same power of directing labor that we had before.
At present a man is told, "You go up and do this," but
when you demobilize a soldier you can't tell him he has
got to go and work in this or that factory. I don't think
that would be feasible; it just wouldn't be practical
politics. He expects to do what he wants to do.
I think it is permissible in this circle - it is
not published yet - to say a word about our plan for
demobilization. It is this: People with a certain number
of years - three or four years' service - are to have
priority in demobilization according to age and marriage, etc.
The key men that we want to have taken out of the army before
their turn, are to be subject to direction so they can
be directed into this or that or the other place and told,
105
- 10 -
"You will have to go and work here and do that job; if
you don't like it you can go back to the army, but if you
are demobilized you will have to do this." But the
greater proportion of people we demobilize will be people
with three or four years' service and we will not be
able to direct them. So we will lose a lot of effective
labor on that. I mean, we won't just be able to use any labor
set free for munitions, should we want to.
Then a lot of women have come in for patriotic motives,
doing half-time work, many will certainly give it up when
their husbands come home. They will want to look after
their homes. We reckon there will be a loss of something
like eight hundred thousand women on that count alone.
They will drift out. And it is very difficult to direct or
force married women, especially those over thirty, to go and
work when they don't want to - when their husbands are home.
I don't think it is practicable. Then there is normal
wastage in one way or another. We reckon that we will be
very lucky, if we can continue to make something of the
order of sixty percent of the munitions that we were
making before. That is the absolute maximum we can
hope to get. Well, if the figures that are being worked
out are right, that will mean that we shall have to get
from elsewhere something like three point four million
dollars' worth of munitions.
Oh, the exports I have left out. That is for us most
important, though it isn't the most important in numbers,
by any means. Our exports have dropped to thirty percent,
of what they were before in volume and the manpower working
on them. And if you take value - fifty percent. Of course,
that doesn't mean very much because we have to pay fifty
percent or more for what we get, so really we are down
below one-third.
Even if we get the three billion dollars in non-munitions
and three point four billion dollars in munitions, we will
still be piling up debts in the first year of Stage 2 at
a rate of three billion dollars a year.
107
- 11 -
MR. BRAND: External debt.
LORD CHERWELL: What we want to do is to put our
civilian consumption back about half way to where it was.
We want to get up to ninety percent from eighty.
We won't get enough houses even to replace the ones
that were wrecked by the bombing; as to household goods -
that would go about half way to normal. The exports we
are aiming to get up to something like eighty or ninety
percent of pre-war at the end of the year.
Well, now, when we remember that owing to the loss
of our foreign income and our external liabilities, we have
got to get a considerable increase on pre-war - something
like fifty percent - if we are to pay our way, we aren't
going there very fast. And I think it was arguments of that
type that persuaded you and the President - we didn't go
into them in detail because they were more or less common
ground - that it was right not to raise the point - "Well,
you ought to be making more if you are going to need less
for the Japanese war, you can do it all yourselves, " but
to say, "We will give you roughly the same proportion you
have been getting heretofore. We will let you raise your
civilian standard a little bit."
Now if you like we could give you something rather more
detailed in writing giving some of these figures. It is
difficult 'to give them very accurately, but you can get
them with reasonable accuracy.
H.M.JR: If I may say this - you and I are very frank
with each other and the others will have to get used to it -
from what you have said today, it doesn't allow me to go
forward any in my thinking from anything you told me at
Quebec, because you are still using the same figures.
LORD CHERWELL: They are right. We can't change them.
(Laughter)
108
- 12 -
H.M.JR: You are right in your belief but you have
done nothing to justify those figures, do you see? So I
am just where I was at Quebec. You remember that in the
memorandum we said we took them as your figures; I said
I didn't have our figures. Things were moving so fast that
if I started to call up people and try to get our figures -
I just didn't have time.
Now, I would very much, for myself and I imagine for
my associates, like to have the break-down as to these
three billion three on munitions.
LORD CHERWELL: That could be done.
H.M.JR: I would like to have that very much because
then I would feel I am beginning to make a little progress.
MR. CURRIE: May we have the same, also, for the non-
munitions?
LORD CHERWELL: Yes, surely, in broad categories.
H.M. JR: And then if we want to we will break them
down into further segments. But if we could have those in
writing - well, start and give us as much more as you can;
then as each one of these people want more they will ask
for more.
MR. TAFT: .I wonder if it wouldn't be helpful if you
pointed out our difficulty. We said before, the figures
just don't jibe with the ones that I, as an outsider, have
been given by those people who are supposed to know what
the figures are. The over-all figure on Lend-Lease to
the British Empire I had understood was seven and a half
billion, not nine and a half billion.
H.M.JR: Now, don't talk of yourself as an outsider.
Where did you get the figures?
MR. TAFT: I got those figures both from Lend-Lease
and the Army.
109
- 13 -
H.M.JR: But not from the British.
MR. TAFT: No. There is, however, one set of British
figures which has been reported to me as having been given
to our Army which is almost a billion out from three point
four that you have given as the desired amount on munitions.
That is why I think the Secretary's request for a break-down
is extremely important, because the proportion is something
that doesn't startle me at all.
The amounts are so far out from the figures we have
been talking about that there must be some explanation that
I think you had better get into your document in order to
help us in advance.
LORD CHERWELL: Exactly. That, I think, would have
to be done on a Committee of some sort, but I think probably
the difficulty is - I have these sorts of troubles in England,
often, - that on one occasion you are counting only the
United Kingdom and on the other occasion you have the
Reverse Lend-Lease put in or not out in.
MR. TAFT: That is why a break-down is very essential
at this stage.
MR. WEEKS: I would very much like to do that, because
we have compiled our figures from the information we have.
On some things, we do know.
The further point I might add is that our figure -
what we sort of call the starting-point figure, you see -
of five point six for munitions is the 1944 figure; that is
for the whole year.
MR. TAFT: The figure we had is four point five.
MR. WEEKS: It is what we understand to be the value
of the accepted program in 1944.
H.M.JR: You see, Mr. Taft is quoting figures furnished
him by people of the United States, and, after all, you are
ouoting your own; so there might perfectly well be a difference.
Regraded Unclassified
110
- 14 -
MR. TAFT: All I was suggesting was if you could get
some explanation of what the difference is in your first
document we would move much further.
MR. WEEKS: The important thing is the relative figures.
MR. TAFT: I didn't say that. I said I wasn't shocked
by the relative figure, whereas the other was so far out
I was rather disturbed.
LORD CHERWELL: That WE ought to get absolutely straight.
H.M.JR: The net result is that we all want some facts
and figures. It really gets down to just how fast you
people can furnish them. Any assistance which can be given
by us - we are all available.
MR. WHITE: Mr. Secretary, at Quebec in the discussion
I had with Mr. Weeks - I am not sure whether you were
present - I indicated a number of items that the answers
to which would be very helpful in expediting a decision.
I don't know whether Mr. Weeks remembers the items I men-
tioned. I would be glad to supply them in writing. He
thought that he could, given a little time, supply suffi-
ciently rough answers - because the nature of some of the
questions weren't sufficiently accurate.
MR. WEEKS: You mean--
MR. WHITE: The extent of your increase in peace-time
goods, the extent of the increase in exports, increased
employment, and things of that character.
Mh. TAFT: The net transfer of employable persons from
war production to civilian production.
MR. WHITE: There are about a dozen of those key
questions.
LORD HALIFAX: Mr. Secretary, following what Dr. White
has said, it would perhaps be helpful to us, if it was not
112
- 15 -
out of harmony with your thought, if, pursuing your
express desire for more information, you could have told us
exactly what the points were that you would like elucidated.
H.M.JR: No, definitely not. I would like to approach
it from the angle Lord Cherwell started. He said he was
going to give us some information and then give us his first
memorandum. If in that memorandum it doesn't cover the
whole field, then we will give him additional information.
I would like the English memorandum to come from you, 1f
you don't mind my using the word, justifying or explaining
these over-all figures. I feel quite emphatic about that.
LORD CHERWELL: One would be giving the break-down
of the non-munitions, roughly, and the other would be the
munitions. That we can get easily.
H.M.JR: And the minute we have it we will sit down and
go over it ourselves, and then any information that is
lacking we will give you partly in writing - additional
information.
MR. CURRIE: It would also be helpful, Mr. Secretary,
if we had some estimates of the probable exports and of
non-Lend-Lease imports as part of the general economic
picture.
LORD CHERWELL: Yes, well, that depends on who will
buy the stuff. But the number of people whom we hope
to get onto the export trade again, that we can get.
And, of course, if we can sell it all we will be very
pleased. All these things are what we aim at, but, of
course, in the first year we shan't get an awful lot.
MR. COX: Mr. Secretary, there is one major thing
which I think will condition all these figures, and that is
the estimated percentage of Britain's expenditures on the
part of its economy that is put into the war. For example,
if fifteen percent of their economy is in the war, and
thirty percent of ours is in the war, there are certain
things you can't do practically.
112
- 16 -
H.M.JR: You don't mean those as figures today!
MR. COX: No, but as a central backbone that shows up
in manpower, national government expenditures for war,
and so forth. But I think you have to know their estimated
proportion that is going into the war effort in Stage 2,
based on whatever evidence you have on the thing.
LORD CHERWELL: I think we can get an idea, but it is
very difficult to do anything comparative because so much
depends on statistical categories. I think we reckon that
we have got - certainly more than forty percent - I think it
is nearer fifty, but I wouldn't like to say, offhand.
MR. SELF: The important part, I think you might say -
would you regard repairing war damage as part of the war
effort? It is an important point, because otherwise you
get misleading comparisons.
MR. COX: It is perfectly obvious, as I understand the
figures now, that roughly over fifty percent of your effort,
without any quibble on statistics, has gone into the war.
That is on terms of national expenditures for production
of munitions - people that work in producing munitions and
other things directly related to war in the same way as
we figure our budget. Obviously both countries are going
to reduce for the Japanese war the amount of their expendi-
ture for directly connected war programs, but if you get
two divergent things, irrelevant in your judgment, as to what
munitions mean and what non-munitions mean - because you
see the practical problem if you get a wide differentiation.
MR. SELF: You know that we have for twelve months,
under the Combined Board, been trying to get a comparative
picture of that sort. You also know that it has broken
down every time because, if I may say so, frankly, sir, the
comparison was so unfavorable to the U.S. that you didn't
find a possibility of striking a comparable basis. My
only point is that now Mr. Cox thinks he may have a point
of operating the other way, and I think I am entitled to
113
- 17 -
plead there is a difficulty of finding a comparable basis.
What do you account the war damage is? In point of fact,
with the small number of workers we released - say two or
three million workers released - we have to switch a
million onto war damages.
LORD CHERWELL: If you take the direct effort in Phase 2;
it will be between sixty and sixty-five percent of what
it is in Stage 1. That is to say, if it is fifty percent
now, it will be thirty percent then. I think it is much
the same as you plan.
MR. TAFT: I don't see that you need to fear the com-
parison just because it is Stage 2 instead of Stage 1.
MR. WHITE: I don't see the need of making a comparison.
All we need is your figures. We will make our own for our-
selves.
MR. TAFT: I think it can't be anything but helpful
to your side.
H.M.JR: The trouble with our side, we have not all
been together. Now, thanks to this meeting in Quebec, you
can deal with the American Government as one, and if you will
deal with us as one and not as individual Departments, I
think we will get ahead very fast. I have assured
Mr. Churchill and Lord Cherwell we will only keep him
here a couple of weeks to get the thing through and get
him home. It is sort of a fresh approach, but if you will
deal with us as one, and I think you know what I mean, we
will get along very well.
LORD CHERWELL: I am sure we got the impression at
Quebec you were only out to help us and you wanted to have
the case reasonably presented so that if you were questioned
you would have your answers.
H.M.JR: That is right. I haven't changed one iota.
But I need some fresh information. Now, when do you think
reasonably that could be produced?
114
- 18 -
MR. WEEKS: A break-down in munitions we could give you
straight away, of course. But we think it will take two
or three weeks before we shall get here the result of the
working out in London of those decisions. There will be
some substantial changes in requirements which will arise.
We should, I think, when we get down to detailed presenta-
tion prefer to put the new figures in rather than confuse
the matter with the old figures. It was nart of the dis-
cussion, I think, that we should present the new figures.
MR. McCLOY: Would you think those figures would be
greater or less than the figures you now have available?
MR. WEEKS: I think they will be less.
MR. SELF: Am I not correct in saying that so far
you have only had ASP figures for the Army? You haven't
had the air figures and the Navy figures.
MR. McCLOY: Haven't we had the Navy figures?
MR. TAFT: You have had Navy and Air according to my
understanding.
MR. McCLOY: I understand exclusive of Air, but I
thought inclusive of everything else.
MR. SELF: The Air is important.
MR. TAFT: The figure is two and a half billion in-
cluding Air, Navy, and Army, which corresponds to a billion,
seven, roughly, which Mr. McCloy has been talking about for
the Army alone. I think that is right.
MR. WEEKS: This was what?
MR. TAFT: Requirements presented by your Army people
to our Army people.
MR. WEEKS: I don't think we have ever put our figures
in; I am quite sure they haven't been put in.
115
- 19 -
MR. McCLOY: I have no record of any Air figures.
MR. WEEKS: The Army figures have been put in.
MR. TAFT: I tried to get them before this meeting
and wasn't able.
MR. WEEKS: Our present position is that we put new
detailed figures in on October 15; that is for the usual
Air expenditures discussion. We should hope, on the more
important things, to have them before the 15th.
LORD CHERWELL: I wonder whether, since this causes a
big delay, - we could go on on the figures before the
Quebec Conference? Then they could be altered in a fort-
night or so probably by relatively small amounts.
H.M.JR: That would give us a start.
MR. WEEKS: Could we find, sir, whether the changes
are going to be considerable? Because I think if there is
going to be a considerable change it would cloud the
issue; it would give the wrong atmosphere to the discussion.
H.M.JR: Are you asking me? I don't know.
MR. McCLOY: I haven't been able to interpret the deci-
sion at Quebec in terms of any lesser or greater program.
I haven't been able to figure out from what was decided
there.
LORD CHERWELL: For instance, these B-29's - I don't
know about them. That is a big amount.
Mh. McCLOY: I think that was left in the air!
(Laughter)
H.M.JR: Have we gone about as far as we can today?
LORD HALIFAX: What would your thought be on this
last point? In the interest of time saving, would it be
helpful if we gave you the fullest information that we
116
- 20 -
could on the munitions as it stands, always with the
proviso that revision will be necessary, perhaps, in the
light of Quebec, and that we at the same time on our side
try to hurry them up in London on what will be the prin-
cipal points of difference. We could be doing that with-
out prejudice to the other.
H.M.JR: I can't answer you. It might be a billion
dollars, it might be two billion dollars apart. I am
completely in the dark. I don't know. And if the figures
that you give us are very large, then we get off to a bad
start as far as non-munitions are concerned.
LORD CHERWELL: Yes.
LORD HALIFAX: We better have a look at that, I
should think. If we can give you anything that we feel
reasonably sure of, we will, and if we can't, we won't.
And we will have to examine it further.
H.M.JR: I think the closer we can get to actualities
on this thing, the better.
LORD HALIFAX: But we could, in any case, no doubt, I
should imagine - I speak subject to the direction of others
here - we could send you a good deal of the information of
the sort you want about exports and the general civilian
figures on which we have worked - and those are not affected,
I imagine, by Quebec - those I think probably we could get
ahead with, and also, generally, the background picture
against which this is all seen - all that we can be doing,
and I should hope we could let you have that in three or
four days.
MR. WEEKS: I should think so, yes - a few days' time.
LORD CHERWELL: How about the non-munitions break-
down?
MR. WEEKS: With the exception of shipping which,
again, is affected. But we may well have the effect of the
new distribution within two or three days' time.
117
- 21 -
LORD HALIFAX: Perhaps the picture we might leave with
you, Mr. Secretary, would be that we would hope to give you
a good deal of stuff that was not affected by Quebec in
the course of three or four days, and the stuff that is
affected by Quebec we will get to you subsequently.
H.M.JR: Always keeping in mind that until we have
all the pictures of the jigsaw it is very hard to put to-
gether. I mean, the last piece might be the most difficult.
LORD HALIFAX: The slowest ship slows up the convoy.
MR. TAFT: I am not sure we agree with Mr. Weeks
that it would be confusing to give us the figures that have
been discussed - the break-down of those figures. I think
that is important because then we will begin to get a
comparable basis of discussion. When you are a billion
out, it is just so far - as Mr. McCloy said, you don't
know what your proposal is.
H.M.JR: You are trying to get something to hang
the War Department with.
MR. TAFT: Exactly - well, I don't care whether I hang
the War Department or hang the British, but I do want to
get the figures together. If you are talking about a total
of five, six, and we are talking about four, five, there is
something wrong.
MR. WEEKS: That part I have no doubt about.
MR. TAFT: All right, let's get that going. That is
the heart of this thing, really.
H.M.JR: Well, are we all right? If you (Lord Cherwell)
have a little time to stay behind to chat, I will appreciate
it.
LORD CHERWELL: Very well, sir.
118
FORVICTORY
BUY
TREASURY department
UNITED
STATES
WAR
BONDS
PROCUREMENT DIVISION
AND
STAMPS
WASHINGTON 25
OFFICE
SECRET
September 27, 1944
MEMORANDUM TO THE SECRETARY:
There is submitted herewith the weekly report of
Lend-Lease purchases.
We have just received the first UNRRA requirements
involving 14,000,000 yards of Woolen Fabric for women's
coats, skirts, dresses and blouses; also, men's garments
and trousers, together with a special requirement amount-
ing to $484,684.00 for the UNRRA Relief Camp at
Phillipville, North Africa for the purchase of textiles,
clothing, shoes, and miscellaneous items.
Clifton E. Mack
Director of Procurement
4)
Attachment
Regraded Unclassified
SECRET
119
LEND-LEASE
TREASURY DEPARTMENT, PROCUREMENT DIVISION
STATEMENT OF ALLOCATIONS, OBLIGATIONS (PURCHASES) AND
DELIVERIES TO FOREIGN GOVERNMENTS AT U. S. PORTS
AS OF SEPTEMBER 20, 1944
(In Millions of Dollars)
SECRET
Administrative
Miscellaneous &
Total
U. K.
Russia
China
Expenses
Undistributed
Allocations
$5547.5
$2627.1
$2257.3
$133.9
$15.9
$513.3
(5522.4)
(2627.1)
(2257.3)
(133.9)
(15.9)
(488.2)
Requisitions
$ 163.7
$ 30.9
$ 58.1
$ 2.4
-
$ 72.3
in Purchase
( 161.2)
( 36.9)
( 57.5)
( 2.4)
-
( 64.4)
Requisitions not
$ 117.8
$ 27.6
$ 80.1
$ .1
-
$ 10.0
Cleared by W.P.B.
( 100.4)
( 27.2)
( 65.4)
( .1)
-
( 7.7)
Obligations
$4033.1
$1997.3
$1660.1
$ 62.6
$13.9
$299.2
(Purchases)
(4010.7)
(1992.8)
(1647.2)
( 62.6)
(13.9)
(294.2)
Deliveries to Foreign
$2404.8
$1465.0
$ 864.5
$ 24.6
-
$ 50.7
Governments at U. S.
(2383.4)
(1452.6)
( 855.7)
( 24.5)
-
( 50.6)
Ports*
*Deliveries to foreign governments at U. S. Ports do not include the tonnage that is
either in storage, "in-transit" storage, or in the port area for which actual receipts
have not been received from the foreign governments.
Note: Figures in parentheses are those shown on report of September 13, 1944.
Regraded Unclassified
120
Near the Czecheslevak Government,
LONDON, September 27, 1944.
No. 186
UNRESTRICTED
SUBJECT: Transmitting request of
Czechoslovak Government for
assistance in releasing Jews
from confinement in Czecho-
slovakia.
The Honorable
The Secretary of State,
Washington, D. C.
Sir:
1/
I have the honor to transmit herewith a copy of
a letter of September 21, 1944 from Jan MASARYK,
Czechoslovak Minister of Foreign Affairs, inquiring
whether the American Government could assist in
obtaining the release by exchange or otherwise of even
a small number of Jews who are now confined in Czecho-
slovakia, a similar inquiry having been addressed at
the same time to the British Government.
This Mission has supplied a copy of Mr. Masaryk's
letter to Mr. James H. Mann of the War Refugee Board
who is now in London.
Respectfully yours,
Rudulf B. Schoenfeld
Charge d'Affaires ad interim
JRB:TK
Original a hectograph
Enclosure:
1/ as stated.
1000 Characop the So
Regraded Unclassified
121
Enclosure No. 1 to despatch No. 186, dated
September 27, 1944, Czechoslovak Series,
Embassy, London.
THE CZECHOSLOVAK
FOREIGN SECRETARY.
No. 6688/conf/44
September 21st, 1944.
My dear Schoenfeld:
May I approach you in the following matter:
The Czechosloval authorities understand that the
Dutch Government has drawn up a list of a considerable
number of Dutch Jews who are in German concentration
camps, and has handed this list to the International Red
Cross, offering to exchange for these Dutch citizens a
corresponding number of German civilians who were interned
in the Dutch colonies and are now held by the Dutch Govern-
ment. It seems that the Germans have, for the time being,
agreed to exchange about 100 persons, who have been
enabled to proceed to Palestine by means of immigration
certificates granted to them by the Palestinian authori-
ties, while those who may be exchanged at a later period
are already now being separated from the rest and thus
saved from forced deportation and possible death.
In this connection the Czechoslovak Government is
seriously considering the possibility of securing the re-
lease, under conditions similar to the Dutch scheme, of a
certain number of Czechoslovak Jews interned at Terezin /
in Czechoslovakia / or in other places, and thus saving at
least a small number of lives while there is still time.
According to the information which the Czechoslovak Govern-
ment has received the Palestinian authorities have already
granted a greater number of entry certificates to Czecho-
slovak Jews who are interned in Terezin and have close
relatives in Palestine. A list of the first names, com-
prising about 250 persons, is already available at the
Loddon office of the Jewish Agency.
The settlement of this problem, however, is consider-
ably complicated by the fact that the Czechoslovak Govern-
ment does not hold any German subjects whom it could offer
in exchange for the Czechoslovak citizens interned at
Terezin or elsewhere. Nevertheless, it considers that
this obstacle might perhaps be overcome if one of the
Allied Governments, on whose territory German civilians
are interned, were willing to exchange a definite number
of them - up to the present moment about 250 persons would
be involved -
His Excellency
Monsieur Rudolf B. Schoenfeld,
etc.
etc.
etc.
Regraded Unclassified
122
- 2 -
be involved - for the Czechoslovakecitizens who are
interned.
I therefore venture to ask whether the United
States authorities could see their way clear to consider
an exchange of a certain number of German civilians in-
terned on territory under their jurisdiction for a
corresponding number of Czechoslovak citizens interned
in Terezin or elsewhere, who in this way would be able
to utilise the entry certificates for Palestine which
the Palestinian authorities are willing to let them have.
Should such a scheme be workable, it would mean rescuing
atleast a small number of our citizens from the inhuman
conditions under which they are living.
I shall be extremely grateful if you would kindly
let me know at an early date what steps, if any, can be
taken in this matter.
I am writing a similar note to Mr. Nichols asking
him to bring this matter to the attention of the British
Government.
Sincerely yours,
/sgd/ Jan Masaryk
Regraded Unclassified
123
CABLE TO AMBASSADOR WINANT, LONDON, FROM WAR REFUGEE BOARD.
Please deliver the following message to Joseph Linton, Jewish
Agency, 77 Great Russell Street, London, from Joseph Schwartz,
American Jewish Joint Distribution Committee:
QUOTE OUR REPRESENTATIVE ITALY ADVISES arrangEments BEING
MADE EVACUATE APPROXIMATELY 650 JEWS FROM YUGOSLAVIA TO ITALY
STOP GROUP COMPOSED OF 519 YUGOSLAVS, 16 POLES, 77 AUSTRIANS,
9 CZECHS, 14 HUNGARIANS, BALANCE MISCELLANEOUS, AND INCLUDES
ABOUT 150 ORPHAN CHILDREN STOP VIEW FACT THESE PEOPLE FALL
CATEGORY PERSONS RESCUED FROM OCCUPIED TERRITORY CAN YOU
ARRANGE MAKE AVAILABLE PALESTINIAN CERTIFICATES FOR THEM STOP
PLEASE ADVISE UNQUOTE
Following for Mann from War Refugee Board.
Please discuss foregoing with Linton and give all possible
support to JDC request.
THIS IS WHB CABLE TO LONDON NO. 5
10:40 a.m.
September 27, 1944
EDrury 9/25/44
Regraded Unclassified
124
PARAPHRASE (F TELEGRAM SENT
To:
London
From:
Secretary of State
Dated:
September 27, 1944
Number: 7881
SECRET
This nessage from FEA and Department.
We do not object to shipment of supplies 17 manner
described in Stockholm's 1145, September 25 to London,
repeated as 3866, September 25 to Department. You may
so inform Stockholm if MEW concurs.
In connection with the omward shipment of prisoner
of war supplies now in Coteborg, Department would be
interested in knowing by what means shipment is to be
accomplished of Polish relief supplies from Sweden.
HULL
8600.48/9-2544
Regraded Unclassified
125
CABLE TO AMERICAN POLITICAL ADVISOR, CASERTA, FOR ACKERMANN FROM
WAR REFUGEE BOARD.
For your information Perlmann has cabled JDC here that he is
arranging evacuation approximately 650 Jews from Yugoslavia and that
he is attempting to arrange evacuation further groups. Palestine
certificates are being requested for the 650. Please lend every
assistance to Perlmann in ths project and keep Board advised of any
difficulties encountered.
THIS IS WRB CABLE NO. 50
10:40 a.m.
September 27, 1944
FH:hd 9/26/44
Regraded Unclassified
126
WAR REFUGEE BOARD
KEM
September 27, 1944
Distribution of true
reading only by special
8 p.m.
arrangement. (SECRET W)
ampolad
CASERTA
181
The following for Ackermann is WRB 50.
For your information Perlmann has cabled JDC here
that he is arranging evacuation approximately 650 Jews
from Yugoslavia and that he is attempting to arrange
evacuation further groups. Palesitne certificates are
being requested for the 650. Please lend every assist-
ance to Perlmann in this project and keep Board advised
of any difficulties encountered.
HULL
(MMV)
WRB:MMV:KG
9/27/44
Regraded Unclassified
127
CABLE TO NORWEB, LISBON, FROM WAR REFUGEE BOARD.
Please deliver the following message to Elisabeth Dexter,
111 Rua Marquez de Fronteira, Lisbon, from Edward A. Cahill,
Unitarian Service Committee:
QUOTE PLAN FOR SENDING CHAMPSAUR PARIS APPROVED PLEASE
COORDINATE WITH FIELDS PLAN FOR PARIS STOP SEPTEMBER
FIFTEEN RECOMMENDATION FROM FIELD RECEIVED STOP WE
DEEPLY REGRET RECOMMENDATION NUMBER ONE UNACCEPTABLE
FOR THE PRESENT SINCE FUNDS ARE EXCLUSIVELY FOR REFUGEES
WILL TRY SECURE OTHER FUNDS BUT PROGRAM MUST WAIT THERE-
FORE WITH EXCEPTION OF REFUGEES STOP RESOURCES CANNOT
SUPPORT ANNUAL FRENCH BUDGET 120000 DOLLARS STOP EMPHASIZE
THAT RECOMMENDATION NUMBER TWO APPROVED WITHIN AVAILABLE
RESOURCES STOP RECOMMENDATION NUMBER THREE POSSIBLE ONLY
IF OUTSIDE FUNDS ARE FOUND STOP EMERGENCY MONEY FROM
NATIONAL WAR FUND POSSIBLE BUT DOUBTFUL ONLY ON BASIS OF
URGENT REFUGEE NEEDS IN FRANCE ASK FIELD FOR IMMEDIATE
REPORT AND RECOMMENDATION UNQUOTE
THIS IS WRB CABLE TO LISBON NO. 99
10:40 a.m.
September 27, 1944
R Drury 9/26/44
Regraded Unclassifie
128
LFG-993
Stockholm
Distribution of true
reading only by special
Dated
September 27, 1944
arraggement. (SECRET W)
Rec'd
3:13 p.m.
Secretary of State,
Washington.
3902, September 27, 3 p.m.
THIS IS OUR 85 FOR WRB
McClelland has asked Olsen to supply details
regarding any discussions with Germans in Sweden on
the possibility of rescuing Jews in Europe. In view
of our lack of code communication with Bern please
repeat in safe code to McClelland our 41,43,52, and
80 for WRB (Legation's 2362, June 28, 2419, July 3,
2621, July 15 and 3605, September 11 respectively).
Kleist is expected back here in a week or so being
presently in Berlin. While he has stated that he expects
to be in a position to advance concrete proposals we are
not at all optimistic that the will have anything practicable
or acceptable to offer.
JOHNSON
JMS NPL
Regraded Unclassified
129
BJR - 113
Stockholm
Distribution of true
reading only by special
Dated September 27, 1944
arrangement. (SECRET w)
Rec'd 7:50 p.m.
Secretary of State
Washington
3926, September 27, Midnight
This is our number 86 for WRB.
Please advise seen as possible whether payment of
$14860.40 for Bardal and mentioned in your WRB 89
(Department's 1925, September 26, 5 p.m.) is errer in
transmission or simply all of total claim of 99158
krenor 68 are that VRB is willing to pay. Swedish
Foreign Office is pressing on behalf of ship owners
for immediate payment is full and Olsen has at his
disposal sufficient funds from amount transferred
under VRB 41, July 28 (Department's 1502 to make full
payment if VRB se instructs.
JOHNSON
WSS
Hise Channesy (For the See'y) Abrahamson, Aksin, Cohn, Drury.
DuBeie, Friedman, Gasten, Hodel, Laughlin, Lesser, Hannen.
Marks. Pehle, Gable Centrol Files.
Regraded Unclassified
130
PARAPHRASE OF TELEGRAM SENT
FROM:
Secretary of State, Washington
TO:
American Legation, Bern
DATE:
September 27, 1944
NUMBER: 3332
CONFIDENTIAL
Reference is made herewith to your August 31 cable No.
5707 (form McClelland for "ar Refugee Board).
This is to advise you that we have not transmitted to
London the message contained in reference cable.
The Department understands that under the agreement between
the Royal Yugoslav Government in Exile and the Committee of
National Liberation the earlier frictions should have been
removed now and that authorization has been given to the Government
to perform all acts concerning foreign representation, also for
the Committee of National Liberation. Messages of this nature
therefore need not be transmitted through channels of the
United States Government and it is suggested that Cukovac and
Bojanio be advised to communicate through the Yugoslav
Legation with General Velebit directly.
HULL
SE:TJH:LIM
Paraphrase: DCR:EBH:MEM 10/2/44
Regraded Unclassified
131
ORIGNIAL TEXT OF TELEGRAM SENT
FROM:
Secretary of State, Washington
TO:
American Legation, Bern
DATE:
September 27, 1944
NUMBER: 3333
SECRET
For McClelland from War Refugee Board.
Please deliver the following message to Saly Mayer from
M. A. Leavitt of the American Jewish Joint Distribution Committee:
QUOTE HAVE RECEIVED INFORMATION URGENT NECESSITY
IMMEDIATE FUNDS REQUIRED FOR RELIEF AND RESCUE NORTHERN
ITALY. KNOW YOU HAVE BEEN MAKING AVAILABLE THIS AREA BUT
WOULD URGE IN VIEW THIS NEW INFORMATION YOU MAKE EVERY
EFFORT ADDITIONAL AMOUNTS IMMEDIATELY THIS SECTION.
SUGGEST YOU DISCUSS THIS WITH MC CLELLAND AND TAKE ALL
NECESSARY STEPS BEST WISHES HAPPY NEW YEAR UNQUOTE
THIS IS WRB CABLE TO BERN NO. 184.
HULL
Regraded Unclassified
132
BJR 160
Askera
This telegram must be
paraphrased before being
Dated September 27, 1944
communicated to anyone
other than a Gevernment
Ree'd 10:44 p.m.
Agency. (RESTRICTED)
Secretary of State,
Washington.
1838, September 27, 1 p.m.
Please transmit following message for VRB from Leen Denemberg to
Frank Kingdom Shebastrunsky International Resoue and Relief Committee, 103
Park Avenue New York City.
I have sent you two cables, one through MY the other in clear ase
plaining the situation here also a report which I submitted to Hirschmann
and other material through friends. IRRC Committee comprising the best pro-
democratic refugees in this part of the world is functioning well and will
extend its activities to the Balkans and southeastern Hurope. 1 have trans-
ferred $5,000 to Prefesser Alexander Rustew Vice Chairman and Treasurer of
the Committee with the approval of Ambassader Steinhardt and Hirschmenn.
Relief to Austrian, Caech, and Germen anti-Nasis who are new in Turkish in-
termsent camps has already been extended by the Committee. The Osesh nember
of the Consittee and Balkan correspendent of the BASLER NATIONAL ZNITUNG
Reuter's and SVENSKA DAGELADET Welfgang Brothels has departed for Bulgaria
also with instructions to extend aid to demecratic elements. He will
report upon his return.
Tegether with Gilbert (1) of the International Red Cress I have given
to the Free French representative your list of non-Jevish Mungarians who are
not entitled to Falestine certificates, in order that they may obtain Hyrian
visas. French representative premised to (7). Hewever the situation is hope-
less since all communications with Hungary have been out. Yes Refuges Beard
has been informed by Hirschmann by telegram regarding the IRRB Committee in
Turkey. I plan to leave Turkey in two weeks.
Please telegraph information concerning your arrangements with UNRRA
at once in care of American Robassy Ankara.
JMS:NPL
STEINHARDT
Regraded Unclassified
132
NJR - 160
Askara
This telegram must be
paraphrased before being
Dated September 27, 1944
consunicated to anyone
other than a Government
Rec'd 10:44 p.m.
Agency. (RESTRICTED)
Secretary of State,
Washington.
1838, September 27. 1 p.m.
Please transmit following message for WRB from Leen Denemberg to
Frank Kingdom Shebastrunsky International Resoue and Relief Committee. 103
Park Avenue New York City.
1 have sent you two cables. one through KY the other in clear are
plaining the situation here also a report which I submitted to Hirschmann
and other material through friends. IRRC Committee comprising the best proo
demecratic refugees in this part of the world is functioning well and will
extend its activities to the Balkans and seutheastern Hurope. I have trans-
ferred $5,000 to Professer Alexander Rustew Vice Chairman and Treasurer of
the Committee with the approval of Ambassader Steinhardt and Kirechmann.
Relief to Austrian, Caech, and Germen anti-Nasis who are new in Turkish in
termsent camps has already been extended by the Connittee. The Oseak member
of the Consittee and Balkan correspondent of the BASLER NATIONAL ZAITURE
Reuter's and SVENSEA DAGELADET Welfgang Brothels has departed for Bulgaria
also with instructions to extend aid to democratic elements. He will
report upon his return.
Tegether with Gilbert (1) of the International Red Cross I have given
to the Free French representative your list of non-Javish Hungarians who are
not entitled to Palestine certificates, in order that they may obtain Syrica
visas. French representative premised to (1). Hewever the situation to hope-
less since all communications with Hungary have been out. Yes Refugee Beard
has been informed by Hirschmann w telegram regarding the IRRN Committee in
Turkey. I plan to leave Turkey in two weeks.
Please telegruph information concerning your arrangements with UNRRA
at case in care of American Rubassy Ankara.
JMS:HPL
STRINHARDT
Regraded Unclassified
133
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
American Embassy, Moscow
TO:
Secretary of State, Washington
DATED:
September 27, 1944
NUMBER: 3690
CONFIDENTIAL
Reference is made herewith to Department's cable of Septem-
ber 23, no. 2276.
Today I have expressed to the Foreign Office the War
Refugee Board's concern for the safety of the Jews reported
to survive in Lodz. I have asked the Foreign Office to keep
us informed of any information that they may acquire on this
matter.
HARRIMAN
DCR:VAG 9/28/44
Regraded Unclassified
134
NOT TO BE RE-TRANSMITTED
COPY NO. 11
SECRET
OPTEL No. 315
Information received up to 10 a.m,, 27th September,
1944.
1. NAVAL
A U.S. Minelayer was mined off entrance to HAVRE
25th. One of H.M. Aircraft Target Ships mined early this morning
off ABERDEEN.
OSTEND, The first two cargo ships entered with
stores on 25th.
One of H.M. Submarines probably sunk escorted ship
1350 tons, Gulf of Salonika last night. Two of H.M. Destroyers
sank convoy of five craft near SCARPANTO (DODECANESE) on 24th/25th.
2. MILITARY
WESTERN EUROPE. Base of ARNHEM corridor widened
and strengthened, Airborne troops withdrawn south of Lower Rhine
at ARNHEM . Assault on CALAIS continues. On 24th U.S. troops
advanced several miles northeast from EPINAL and 1st French Corps
attacked eastwards about 16 miles north BELFORT.
ITALY. Heavy fighting on both Army fronts. 8th
Army troops have secured bridgeheads across RUBICON which have
since been extended. U.S. Forces have made some slight gains
against stiff opposition.
RUSSIA. Russians are now about 40 miles from RIGA
on northeast and east. They have also gained some ground south
of PRZEMYSL.
3. AIR OPERATIONS
WESTERN FRONT. 26th. 516 Bomber Command aircraft
dropped 2775 tons on German defences Gris Nez and 825 Calais.
Weather good, marking good. 2 bombers missing. U.S. heavy
bombers attacked railway centres OSNABRUCK - 850 tons, HAMM - 735,
and also dropped 920 on aircraft components factory BREMEN. Enemy
casualties 32, 1, 8. Ours - 9 bombers, 3 fighters missing, Medium
bombers released 200 tons on strong point BRESKENS, northwest of
TERNEUZEN and on road and railway junctions CLEVE. Troops and
supplies were taken to Holland and Belgium by 351 aircraft.
26th/27th. Aircraft despatched: KARLSRUHE - 237;
FRANKFURT and HOMBERG - 56 Mosquitoes; Bomber Support - 66. 2
aircraft missing, 1 crashed.
MEDITERRANEAN. 25th, 600 light bombers and
fighters (6 missing) attacked communications and positions Northern
Italy.
4, HOME SECURITY
26th. About 50 shells on DOVER.
26th/27th. 6 flying bombs plotted.
135
September 28, 1944
9:30 a.m.
SIXTH WAR LOAN DRIVE
Present: Mr. D.W. Bell
Mr. Gamble
Mr. Smith
Mr. Murphy
Mr. Haas
Mr. Tickton
Mr. Lindow
Mrs. Klotz
H.M.JR: Where are we now? What is cooking, Dan?
MR. BELL: You said you wanted to continue the dis-
cussion. We have a Treasury bill matter to discuss, and
I understood you wanted to discuss expenditures after
X-Day.
H.M.JR: So far it hasn't been a discussion; it is
just one-way traffic. We were to go into bills?
MR. BELL: That was one subject we wanted to discuss.
Which do you want to take up first, the expenditures
after X-Day, or the bills?
H.MJR: I am interested in expenditures.
MR. BELL: I thought you would be.
H.M.JR: Incidentally, I asked you to get the OWI
release which may bear on this subject.
MR. SMITH: It is on the way over. I have sent a
messenger for it.
H.M.JR: Go on, please.
Regraded Unclassified
136
- 2 -
MR. LINDOW: These are the cut-backs which we used on
munitions, thirty percent in two months after X-Day.
This is production, not expenditures, forty percent
in six months and then we ran it up to fifty percent by
the twelfth month. (Refers to Chart A, attached)
WPB has told us they think forty percent is the best
guess now, but that it is their honest opinion that it
will go on after maybe six months, that it will gradually
increase. Therefore we pushed it up to fifty percent.
Now, those cuts vary quite a lot by munitions lines;
aircraft, you notice - in two months aircraft would be
down twenty percent, ground army down fifty percent, Navy
ships, ten, merchant ships, twenty, and other items, con-
struction and industrial lend-lease, would be down sixty-
five percent.
They would go up in different amounts, too; aircraft
would go up slowly to twenty-five, ground army a little
more - to sixty, Navy ships to twenty-five - that is a
slower cut, altogether - merchant ships to fifty, and the
lend-lease and construction items to eighty.
Now, if we apply those to the expenditures we get a
picture like this. (Refers to Chart B, attached)
I have three columns here; the present level, the
twelfth month after the Werman defeat, and the first full
year after the German defeat. Munitions are now running
at a level of sixty; the twelfth month after the German
defeat they would be thirty, and for the full year they
would be thirty-six. There is a lag, then, in the Treasury
expenditures which would raise that thirty-six to forty;
so you would have in the Treasury expenditures on munitions,
forty, as compared with sixty at the present time.
Pay and subsistence of armed forces would be down
from twenty-two to twenty, which assumes a two million man-
drop in the armed forces.
Regraded Unclassified
137
- 3 -
Other war expenditures would be about the same,
at eleven billion, as termination payments and mustering-
out pay came into that group. So total war expenditures
for the first full year wóuld be seventy-one. Adding
nine billion, the present rate for non-war and interest
would give you eighty billion, the figure you asked for,
as against a hundred and two level now. The annual
rate in the twelfth month, however, would be sixty-six;
it is averaging down.
Now, the application of some of these figures to the
details are in these other tables. (Hands Secretary Charts
C,D,E,F, and G, attached)
H.M.JR: No, I think if we are going to use them, I
think we ought to use the figure eighty billion and not give
the people the break-down. On that basis they would let us
get away with it. You have got to use net figures.
MR. LINDOW: Let me take the last statement - you
mean after receipts.
H.M.JR: Yes.
MR. LINDOW: Expenditures eighty, less receipts of
about forty gives you a deficit of forty, and redemptions
and maturities would run about twenty, which would give
you a financial outlay of sixty. Your borrowing program
would have to be something like sixty unless you drew down
the cash balances.
H.M.JR: Sixty, as against what?
MR. LINDOW: For this fiscal year we are talking about
slightly over sixty. Receipts go down as your expenditures
go down, and redemptions go up as your expenditures go
down, because you are assuming to get into some unemploy-
ment; so you don't gain very much on the borrowing program
in this first year.
H.M.JR: I am now talking, Fred, particularly down
your alley. What I would like to get over are two things:
Regraded Unclassified
133
- 4 -
First, the thing which I am going out to talk about, and
that is using these figures without analyzing them or
questioning them. I take it that George knows his work -
he ought to by now - I take it that you have shown this to
somebody else.
MR. HAAS: We checked all around town, except Lubin.
What do you think? He is usually--
H.M.JR: I was thinking this, that the best estimate
that we can give you is that this war is going to last for
two years - that is why I want to see the OWI thing - after
fighting stops in Japan, and forthe first twelve months
after X-Day, we will have to spend eighty billion dollars
on the war as against a rate of a hundred billion. Now,
I don't think I will give the sixty figure.
MR. BELL: You wouldn't give the sixty?
H.M.JR: I think it would scare them.
MR. BELL: I think that is the most important figure
of the lot. Whatever happens on the European front, for
twelve months after what happens, you are going to have to
borrow about the same amount of money as you would if the
war continued?
H.M.JR: Anybody in this room voting for Dewey? If
they are, I will ask them to step out a minute!
MR. BELL: You want to make a statement?
H.M.JR: Yes.
MR. HAAS: Non-political speech.
H.M.JR: That comes perfectly within the Hatch Act,
I hope!
Well, to be completely frank with you, and I have to
be, in this talk, I was thinking last night, if in the
many, many things which I am trying to get over as part of
the thing, I can get over that we still have a two-year
Regraded Unclassified
139
- 5 -
war, and it is still going to cost a hell of a lot of money,
that is good for Roosevelt. Let's be very honest. I was
trying to think whether it is good or bad for Roosevelt.
When I got all through, it seemed to me that to talk about
the war going on for two years, and we need this man who
has had the experience of waging a successful war - I mean,
I am not going to say that, but the net result is, we still
have a two-year war, and we still have a damned expensive
war. What do you think, Fred?
MR. SMITH: I think you should say it. Obviously it
will be good for Mr. Roosevelt because all the figures on
the fall of Paris show that. He lost ground when Paris
fell; we know that from the polls.
But aside from that, I think the fact that it is going
to cost as much money to keep the war going in Japan as
it is costing right now is something that ought to be told.
I am inclined to a ree with Danny that you ought to point
that out above everything else. If you say it is costing
a hundred billion dollars now, and it is going to cost
eighty billion dollars afterwards, the conclusion is it
will only cost eight-tenths as much and only be eight-
tenths as much borrowing. -hat is the quick assumption
the newspaper editors will take - that you are going to
cut down. The fact that you can't cut down is news.
If you have a legitimate reason for not cutting down,
which you have--
H.M.JR: We don't have a legitimate reason - I mean,
we have the facts.
MR. SMITH: I mean, it isn't so you can maintain the
War Production Board and the OPA, and all the Government
agencies; it isn't because you are reluctant to let the
Government go down to normal again; it is just because of
the way the war will go on. It is all war costs.
H.M.J.: I was very much interested in picking up
this OWI release - which, incidentally, only PM picked up--
MR. GAMBLE: The Post had it this morning.
Regraded Unclassified
140
- 6 -
H.M.JR: Did they? And thinking about it, it seemed
to me that if in this speech - of course, I wouldn't do
it for politics unless it made sense, and also, when I
get through, Gamble has to say, as my Sales Director,
Is this going to help me sell bonds?" See? We have
got to cross that hurdle.
But I should think from Roosevelt's standpoint in
the campaign, if I pointed out at this time that this war
is going to run another two years and it is going to cost
the Treasury just as much - what?
MR. GAMBLE: I think, Mr. Secretary--
H.M.JR: I mean we will have to borrow as much.
MR. GAMBLE: Yes, or nearly as much. I think if
you said "as much" that you weaken it.
H.M.JR: We will give them the figures.
MR. GAMBLE: It isn't quite as much.
MR. BELL: I think that sixty billion is a little
high, but there is a margin of error here which you can't
get around.
H.M.JR: It would sound more realistic if it were a
little bit less.
MR. GAMBLE: It is going to be within five billion
dollars.
H.M.JR: Does this surprise you?
MR. GAMBLE: Doesn't surprise me.
H.M.JR: Did you know that?
MR. GAMBLE: Yes, sir, I knew part of it.
H.M.JR: It has been said?
Regraded Unclassified
141
- 7 -
MR. GAMBLE: No, no, no, it hasn't been said at all.
The reason I knew part of this, Mr. Secretary, is because
you gave me this information from the Army. That jibes
with this. The Navy isn't going to cut. I had seen the
OWI release three weeks ago.
H.M.JR: Is that the one you had something to do with?
MR. GAMBLE: Yes.
H.M.JR: But the thing that bothers me is the twenty
billion dollars. I mean, if we talk about twenty billion
dollars in redemptions I think you scare people.
MR. LINDOW: It will be misinterpreted.
MR. BELL: I am a little afraid of the whole picture,
myself, because you are going to be asked a lot of questions.
How could you possibly have to borrow sixty billion dollars
when you have cut your expenditures over twenty. You have
got to break it down before it is over with. You say
twenty billion dollars of redemptions in there; they will
say you are getting a little scared about your demand
obligations.
MR. GAMBLE: You have to say a good part of that is
maturities, too, not redemptions.
MR. LINDOW: Refinancing.
MR. HAAS: Refunding.
MR. BELL: Five billion dollars in savings bonds and
ten billion in savings notes, which is fifteen billion
dollars of the picture.
MR. GAMBLE: Isn't it, in the commonly accepted sense,
a refunding?
MR. MURPHY: If you use the word refunding, the figure
runs up tremendously, but you have your whole maturities
and certificates and bills--
Regraded Unclassified
142
- 8 -
H.M.JR: Excuse me, Henry. Were you at my press
conference in Chicago?
MR. MURPHY: No, sir. I didn't see the editorial. I
read the New York Times press account.
H.M.JR: Get it and read it.
MR. MURPHY: I shall.
H.M.JR: You have got to keep up on these things.
You ought to all read it to get the background. The whole
point is we are going to have this terrific refunding
because I borrowed on such a short-term basis, and then I
come out and talk about this big redemption, and everything
else - the Tribune says, "We told you SO. He saves four
billion dollars interest, but he has to do the whole thing
over again and will have to borrow at higher rates."
MR. MURPHY: They should read Dewey's speech, then the
rates will continue low!
MR. BELL: Would you consider doing this for six months,
June 30, 1945, and not dwelling so much on figures?
H.M.JR: How would that look?
MR. BELL: Well, there would be very little change in
your picture on all fronts.
H.M.JR: what are you afraid of?
MR. BELL: I'm afraid of redemptions, that you will be
forced, sooner or later, to break down the sixty - then
your redemption figure will show up.,
H.M.JR: I agree with you.
MR. GAMBLE: May I make a statement about it? The
Army, Mr. Secretary, is going to come out and make a
statement immediately on the heels of the collapse of
Germany, as you know, and it is going to be in the direc-
tion of how much money the Army has saved in the cost of
the war.
Regraded Unclassified
143
- 9 -
The American public is going to be given the impres-
sion that fifteen or twenty billion dollars has been cut
off of their expenses like that. These war production
statements are about forty percent cut-backs; everybody
makes all their own statements independent of the Treasury
Department. They don't concern themselves with your
problems.
I think, sooner or later - I agree with this statement
about the sixty billion, but sooner or later you are going
to have to say that all this conversation doesn't make
our job any easier, and the public is being misled, in
a sense.
H.M.JR: Yes, well, what is going through my head is,
I wonder if I wouldn't be on safer ground - I know I asked
for this - if I simply said that - make some official state-
ment that the best estimate is that the war is going to last
for two years. Of course, their estimate now is eighteen
months, that is the new estimate - after X-Day. "And it
is going to be a very expensive war, period. Do you see?
Then when I begin actually to talk, around the 20th of
November, I can pour the thing on and give them the facts.
What do you think, Fred?
MR. SMITH: It might be better. You would be on
safer ground.
H.M. JR: Because you just don't know what these damned
Republicans·will do with what you say now, or how they will
twist it.
MR. SMITH: On top of that, your VE-Day may be a long
way off yet, in November. Did you see Churchill's state-
ment this morning? The German war is going to go well
into 1945.
MR. BELL: It just came over the ticker. They have
got it outside.
(Mrs. Mannen brings in Churchill's statement)
Regraded Unclassified
144
- 10 -
H.M.JR: (Reading) "Prime Minister Churchill suggests
the war in Purope may continue well into 1945 and deprecated
people being carried away in premature expectation of early
cessation of fighting.'
Well, he is trying to be helpful, too.
MR. SMITH: That is what the wrong people are going to
think!
MR. HAAS: Well, the talk about all the mud over there,
and so forth, leads to the conclusion-
H.M.JR: Not all the mud is over there!
I think the safest thing is for me to talk about a
two-year war - expensive, and so forth, and then say, "You
people can use your own imagination as to what it is going
to cost. Your guess is as good as anybody else's. The
answer is, we are going to need a hell of a lot of money; we
will need a better war bond organization because instead of
having a two-front war, we are only going to have a one-
front war, and with all the problems that go with it - so
you fellows have to be better than you have ever been before."
How is that?
MR. GAMBLE: I think you could add to that if you only
make it six months - that the demands on the Treasury, re-
gardless of talk about cut-backs, regardless of savings
and appropriations, our job in the next six months is equal
to any six-months period that we have had.
H.M.JR: I will tell you why that isn't good. I
slipped a little bit in Chicago. They asked me about taxes.
I said, "Sure, taxes are going to get a little less," you
know - trying to be helpful!
MR. BELL: That didn't help any!
MR. HAAS: That was Boston, wasn't it?
Regraded Unclassified
145
- 11 -
MR. BELL: Yes, it was Boston.
H.M.JR: Just trying to be helpful. So, do you mind?
(Laughter) I don't want to sort of infer that taxes may be
a little bit less, 30 let's just leave it and talk about the
length of the war. I don't want to leave these notes to my
successor.
MR. BELL: I suppose you are going to leave all these
notes to your successor.
H.M.JR: Oh, yes!
Well, is that all right? What do you think, Mrs.Klotz?
Do you have anything?
MRS. KLOTZ: No.
H.M.JR: All right, we will talk about the length of
the war, and we will take a look and see how far OWI went
overboard.
MR. SMITH: All right.
H.M.JR: That is all right with you, Mr. Man?
MR. GAMBLE: Yes, sir.
H.M.JR: What is the next thing, Mr. Bell? These
things aren't easy to study.
MR. BELL: Certainly aren't. The next thing is whether
or not we are going to have any bank financing before the
drive. We will go into November, if we maintain the present
rate of expenditure, with about eight billion dollars; and
we may go out of November, unless we are able to get some
money in the drive, between the 20th and the 30th, with
about three billion.
H.M.JR: Start over again, please.
MR. BELL: We will go into November with about eight
billion dollars in the balance. Now, your drive doesn't
Regraded Unclassified
146
- 12 -
start until November 20, and the statement date would
likely be December 1. Now, we won't get very much money
in between the 20th and the 1st, so our balance on the
30th would probably be down to three billion dollars, and
maybe lower. Now, that is pretty low, and if something
should happen in the meantime, and your drive wasn't a
success, you might be just a little too low, and we think
we ought to have some interim financing. George has recom-
mended in his memorandum he submitted to you that we start
Treasury bills. Às a matter of fact, he recommended we
start them on the 16th of September, I think, but that has
passed. And he recommended we start two hundred million
dollars a week and run them right through, even through the
drive and through next year.
H.M.JR: What are they, a hundred now?
MR. BELL: A billion, two, is the amount each week,
and there is no new money.
H.M.JR: What is the amount each week?
MR. BELL: A billion, two, each week.
H.M.JR: No!
MR. BELL: That is right.
MR. MURPHY: So smooth you can't hear them drop!
MR. BELL: We have got two hundred million dollars a
week additional beginning, I think, May 3, and then after
we ran the cycle, why we stopped. So now we are just
rolling over a billion, two. The Federal recommends no
bills except in cases where you actually need new money to
replenish your balances, and they are not in favor of new
bills at this time because of the strength in the market.
The bankers recommended a hundred million dollars addi-
tional a week for eight weeks, with a two billion dollar
one and a quarter percent note November 1, and the Federal
would like to have a two or a three billion dollar one and
a quarter percent note or one and a half percent note.
Regraded Unclassified
H-1
3
147
- 13 -
H.M.JR: When?
MR. BELL: Around November 1.
H.M.JR: Oh, hell. (Laughter)
MR. MURPHY: You might be able to hear that drop!
H.M.JR: Isn't it amazing how people get in a channel
and they are just always consistent and say the same thing.
I suppose they say the same thing of us.
MR. BELL: Would you be afraid of a financing just
before election?
H.M.JR: I wouldn't consider it. I would do it now,
do it tomorrow.
MR. BELL: October 1?
MR. GAMBLE: Isn't there some danger to that, the size
of the Treasury balance, the same criticism?
MR. BELL: The Treasury balance will be about thirteen
billion dollars going into October. Will you be afraid of
& three billion dollar balance going into December if you
don't get any payments on war loans before that?
H.M.JR: Well, if you do the hundred million a week,
how much would that be?
MR. BELL: A hundred million a week for eight weeks
is eight hundred million.
H.M.JR: You can't do two hundred a week?
MR. BELL: Yes, that would be a billion, six. That
would be over four billion.
H.M.JR: Talk about that a minute, will you please?
I wouldn't do this on the 1st of November. I planned for
three years this would come just before November.
Regraded Unclassified
h-2
148
- 14 -
(The Secretary leaves the conference temporarily.)
H.M.JR: What did you boys decide? I am kind of low
this morning. I don't know whether you will recognize it.
MR. BELL: I think we ought to discuss with the Open
Market Committee what there is left of it, the matter of
beginning next week with two hundred million dollars.
H.M.JR: I like that.
MR. BELL: We can say at least during the period up
to November 23, which would be three days after the drive
starts, and we may want to take another look at it then.
That would give you a billion six additional, and make
your balance around four and a half, possibly, and that
would probably be all right.
H.M.JR: Boys?
(General agreement)
H.M.JR: That would fall gently, wouldn't it?
MR. MURPHY: It would, Mr. Secretary.
MR. GAMBLE: If there is any additional bank financing
contemplated during this period, I think it would be wise
not to even mention it until just before the start of the
drive, which will be after election, and then suggèst that
some issues will be offered to the banks, not even stating
the quantity before the drive actually starts.
MR. HAAS: I don't think you have to make that announce-
ment.
H.M.JR: This would be done; nobody pays any attention
to it.
MR. GAMBLE: But my point is, it should not be done
before November 15.
H.M.JR: The two hundred million a week?
Regraded Unclassified
h-3
149
- 15 -
MR. GAMBLE: No, I am talking about the additional.
Mr. Bell has a program which calls for financing over and
above the bill program.
MR. BELL: The billion, six, I think, will put our
balance over.
MR. GAMBLE: But you are talking about three billion.
MR. BELL: We just bring our balances down a billion,
four.
MR. GAMBLE: And you won't have any announcement
during that period.
H.M.JR: The answer is no. This would take care of it.
MR. BELL: There has been a suggestion that we have
bank financing right after the drive, and we announce it
as we go into the drive in order to keep the banks out of
it. I don't think we ought to have bank financing after
the drive. Our balances will be way up, and I don't
think it will look very good. If you have bank financing
along in February or March, it will be all right.
MR. GAMBLE: I agree. I just wanted to put a stopper
on it as to the announcement.
H.M.JR: All right. What is the effect on excess
reserves, leaving the bill thing out, if we draw our
balances down ten billion dollars?
MR. MURPHY: Since you are drawing down balances in
commercial banks rather than in the Federal Reserve Bank,
the only effect on reserves is that the accounts are trans-
ferred from you to private parties, and they come to have
a reserve requirement equal to about fifteen cents on the
dollar, so that every dollar of money that you draw down
increases reserve requirements about fifteen cents, and
the Fed has to buy fifteen cents worth of Government bonds
in order to replace those reserves.
H.M.JR: So they will be buying the bills?
Regraded Unclassified
4
150
- 16 -
MR. MURPHY: Yes.
H.M.JR: They really need the bills?
MR. MURPHY: That is right.
H.M.JR: Because we will be drawing our balances
very sharply.
MR. MURPHY: And currency will be going up fairly
sharply during this period, too, so the Fed will have to
buy a dollar in Federal securities for every increase in
currency.
H.M.JR: So the increase to two hundred million makes
sense.
MR. MURPHY: Very much SO.
H.M.JR: Well, I think you ought to take that up promptly.
MR. BELL: Well, we have a meeting next Wednesday.
H.M.JR: But you might prepare them for this.
MR. BELL: I told Rouse yesterday that one of the
things we wanted to discuss with him was additional bills,
possibly two hundred million a week. Well, he doesn't
like it, of course, but Eccles and Sproul won't be here.
So we will have Ronald Ransom.
H.M.JR: I am satisfied. I hate to have a bank financing,
either just before or around the 1st of November, or right
after. I don't think it is good either way.
MR. GAMBLE: Do you want to discuss the quota, Mr.
Secretary?
H.M.JR: Just a moment. You remind me of Mr.
Churchill. He came up there with just one thing in mind.
No matter what came up, he was interested in just one thing.
Regraded Unclassified
5
151
- 17 -
MR. BELL: There is one thing here I might call to
your attention. This came to my attention yesterday from
Wallace Fulton, who is head of the Securities Association.
He said that SEC had sent out a number of letters to
institutions such as his and the New York Stock Exchange
and every little exchange in the country; even the Washington
exchange here got a letter to send a representative to
Philadelphia next Monday, I think it is, to discuss what
kind of an educational campaign can be put on to protect
the little investor, principally the savings bond investor.
I think that is a very inopportune date, to be right on the
day that we put out this new redemption procedure to
commercial banks. I think they will get the wrong impres-
sion, that maybe we are scared about redemptions. I don't
know why they would do it without consulting the Treasury.
The newspaper comment on it won't give you enough to indicate
what it is, but Wallace Fulton let me read the letter.
I wonder if you thought we ought to call up Ganson
Purcell.
H.M.JR: Can you do it with a roughness in your voice?
MR. BELL: I can do it. I don't know whether we can
call it off, because it went all over the country, and
people are on their way.
H.M.JR: I would call him up and tell him when it comes
to discussing that thing, we feel that when we want his help
we will ask him for it.
MR. BELL: I think he should have consulted the Treasury.
H.M.JR: Can you be a little rough?
MR. BELL: Yes, and it worried Fulton, because we talked
about it before as to what the security dealers could do
to keep the people from turning in their bonds for rotten
securities.
H.M.JR: All these little independent agencies all
over with no boss all the time--
Regraded Unclassified
6
152
- 18 -
MR. HAAS: And with nothing to do--that is the
trouble.
MR. BELL: I will call him.
H.M.JR: Be a little rough if you know how.
MR. BELL: That is hard.
MRS. KLOTZ: He doesn't know how.
MR. GAMBLE: We have discussed two quotas, Mr. Secretary,
the twelve and fourteen billion dollars. Most of our
people feel that there aren't any problems that are going
to arise that won't make a twelve billion dollar goal just
as much of a chore for them as the fourteen billion. They
think fourteen billion dollars psychologically is much
better because the need for the money is great. The Treasury
wants sixteen billion dollars. The establishment of quotas
on fourteen billion dollars, they think, will give their
people a more realistic understanding of the job ahead of
them. They are fearful that if we cut to twelve billion
dollars, after the sixteen in the last drive, that they
won't get as good a job done as they would with a fourteen
billion dollar goal. It was recommended that the five
billion dollars is a sizeable chore.
H.M.JR: The five compared with what?
MR. GAM BLE: Five and nine against six and ten.
H.M.JR: And of the five, how much would be E's?
MR. GAMBLE: Two and a half as against three.
H.M.JR: Well, of course, I have changed over night
now that I have seen these figures and Smith and Alan Barth
yesterday; I could see them nodding their heads back and
forth and up and down as though they were in pain about
the idea of the effect on the public if we asked for too
little if we needed so much. Is that a correct interpretation?
MR. SMITH: It is good enough for commercial purposes.
Regraded Unclassified
7
153
- 19 -
H.M.JR: For commercial purposes? You mean you sing
the song and I do the commercials? (Laughter)
Incidentally, I ran into David Levy last night. He
is in the Navy.
I said, "I suppose you are doing anything but radio
work."
He said, "Well, I have up to now, I have been doing
moving pictures, but the Navy has put me in charge of
radio in Chicago."
MR. GAMBLE: I think just for this big show the Navy
is putting on with us in Chicago. The Navy is putting on
a quarter of a million dollar show.
H.M.JR: He evidently is running it.
MR. GAMBLE: He has been working on movies for us,
Levy has. Dave is making four pictures for us to dis-
tribute in factories during the 6th War Loan.
MR. SMITH: Is he any good?
MR. GAMBLE: He is very good in connection with
scripts, particularly the use of some people like Nimitz
and Halsey in connection with the pictures and the pre-
paration of their speech material, and that sort of thing,
the smoothness of it.
H.M.JR: What is this I hear, that OWI wants me to
go to the Pacific?
MR. GAMBLE: They made the suggestion--in the first
place they are up against this problem: Radio networks do
not want us, as you know--they told us before the Fifth--
to repeat the same kind of an opening operation as we have
had in the past two drives. We have told them that wasn't
their prerogative in the last drive, but we did infer we
would discuss with them what kind of an opening broadcast
we would have and have them identified with it. They have
Regraded Unclassified
8
154
- 20 -
come up with a recommendation that all four networks do a
half-hour show and one follow the other for two hours on
the air, each network identifying itself as being a part
of the two-hour Treasury broadcast, and after these two-
hour shows have been completed that we have just the
President of the United States introduced by yourself on
the program, after two hours of buildup, and that that would'
be the opening broadcast.
Then OWI--they knew we would be thinking in terms of
trying to do a more comprehensive job, and they came up
with the suggestion that they would like to see you, instead
of making speeches from Texarkana or some place else,
they thought it would be helpful if you could get tied with
Nimitz and a couple of his people on a broadcast from
Honolulu, MacArthur from some place in the South Pacific,
and a couple of his soldiers, and taking GI Joes--
H.M.JR: Could I do this by remote control?
MR. GAMBLE: You could, but you might also want to
do it by going out there.
MR. BELL: He won't want to do that!
H.M.JR: No.
MR. GAMBLE: As a matter of fact, their suggestion was
it be done on the spot. They are working on quite a program,
Mr. Secretary, of which this release is a part. They have
a big Navy program of advertising and promotion. It is
just breaking, and we have tied it into some of our material.
They think we have the biggest chore of the war in the
next three months to sell the people on the size of the war
out there.
H.M.JR: Anyway, I have been thinking a lot about
this thing, and I think one of the troubles is that we
didn't take Elmer Davis in at the beginning. I was thinking
I might either call him up on the phone or ask if he would
come over to see me to talk about the quota and let him feel
that he is a part of this thing. Do you see? We have never
Regraded Unclassified
9
155
- 21 -
consulted him in advance. There can't be any harm. What
do you think?
MR. GAMBLE: I think it would be a waste of time, but--
Elmer Davis is about as close to the Office of War Information
as he is Chiang Kai-shek's general staff.
H.M.JR: I know, but he does an awful lot of blowing
over there.
MR. GAMBLE: He hasn't lately, Mr. Secretary.
H.M.JR: What is the harm of that?
MR. GAMBLE: I wasn't thinking of the harm, I was
thinking of the use of your time and the fact it wouldn't
result in anything. Elmer is still up in that tower. He
has never come down.
H.M.JR: I still think that maybe some of this stuff
has been our fault. He feels that he is coordinating the
thing, and we make these decisions and he hears about them.
Nobody has been talking to me. I am personally about ready.
to say fourteen. Where are you?
MR. BELL: Fourteen.
H.M.JR: Where is everybody else?
MR. LINDOW: Fourteen.
H.M.JR: God, what a job has been done on me this time!
MR. BELL: I am the original fourteen.
MR. HAAS: We were for twelve, Mr. Secretary.
H.M.JR: How much money is there to be gotten?
MR. HAAS: Sixteen.
MR. GAMBLE: There is more money available than there
was in the last drive. Now, the only contraction of that
Regraded Unclassified
10
156
- 22 -
would be some corporation fund if Germany collapsed
tomorrow and they started cutting back, but I don't think--
H.M.JR: Well, the people seem to think that even if
the thing happened almost right away no corporation would
need any money the rest of the year.
I haven't this thing, but I will give it to George to
read, and I am anxious to have it back, George. We were
talking about that, and they dug up a couple of bulletins,
and they want them back. You might see if there is anything
in there that you knew. (Secretary hands Mr. Haas envelope
containing the following pamphlets: "Finance," August 25,
1944, "Conference Board Business Record," March, 1944.)
MR. HAAS: McNutt replied in pretty good shape to
your letter about employment by States and what would
happen on X-Day.
H.M.JR: Why don't we leave it this way? If Davis
can't come this afternoon, I won't pospone it, but I will
let you know, and I will have Bell and Gamble and Smith
sit in with me when he is here, and we will have a little
talk.
MR. GAMBLE: You might suggest he bring Ed Klauber,
his assistant. He is this CBS radio executive that really
is running that part of OWI.
(The Secretary leaves the office temporarily.)
H.M.JR: That was Clifton Fadiman of the War Writers
Board. He wants to help us on this thing on Germany.
Well, I have this call in for Mr. Davis. Does this
clear up everything now?
MR. BELL: To this point, yes. Next week we will have
some more.
H.M.JR: Well, let's not prolong the agony.
Regraded Unclassified
LL
157
- 23 -
MR. GAMBLE: Do you think it would be wise if you
make that decision today to have a press conference later
this afternoon on the quota and the date?
H.M.JR: I don't want to see the press, because they
will go into these other things.
MR. GAMBLE: You wouldn't be opposed to releasing
the information?
H.M.JR: No, no, I wouldn't mind its going out.
MR. GAMBLE: On those two things, Mr. Bell, there is
a very bad story this morning in the Times Herald.
H.M.JR: What does it say?
MR. BELL: You mean the date and the amounts?
MR. GAMBLE: They got this information from a couple
of bankers, and the bankers had this and that to say,
and so forth. I don't think it is true. I think somebody
found something.
MR. BELL: What do you mean, you think it isn't true?
H.M.JR: Here it says the 6th War Loan date is on
November 20, and the goal is fourteen billion dollars.
This is the New York Herald Tribune. Then you people come
in here and ask me to make up my mind.
MR. SMITH: Nobody has a nything to worry about. It
came out all right.
MR. GAMBIE: The details were agreed on in a closed
session of the Treasury attended by bankers and leading
fiscal experts.
H.M.JR: Here it says that the Treasury has tentatively
set November 5, the beginning of Thanksgiving week is the
start of it--I mean November 20. Mr. Gamble feels that
this is the approximate date on which to start the drive.
Regraded Unclassified
12
158
- 24 -
MR. GAMBLE: My point was that I thought that so long
as it is liable to get out that you ought to release the
complete statement on it and get it out as quickly as
possible.
H.M.JR: I still think, though, it can't do any harm
to go through the motions of asking Elmer Davis. It can
all be written and prepared, and I am going to ask him to
come over at three o'clock, and we hope to release it by
four.
When I go to these meetings on this trip, is there
going to be any music?
MR. GAMBLE: If you want it.
(The Secretary holds a telephone conversation with
Mr. Elmer Davis, as follows:)
Regraded Unclassified
159
September 28, 1944
10:42 a.m.
HMJr:
Hello.
Operator:
Go ahead.
HMJr:
Hello. Hello.
Operator:
Hello, Mr. Davis? Hello?
Elmer
Davis:
Hello.
Operator:
There you are.
HMJr:
Elmer Davis?
D:
Yes, Henry.
HMJr:
Morgenthau.
D:
Yeah.
HMJr:
How are you?
D:
Oh, pretty fair.
HMJr:
Look, we're in the process of making up our
minds today as to the size of the Sixth War
Loan.
D:
Yeah.
HMJr:
And it's a question of public reaction whether
we should make it twelve or whether we should
thake it fourteen, and if you had the time and
if you were interested I'd be delighted if you'd
drop over with one or two of your people and
talk about it.
D:
Ah -- what time?
HMJr:
How's three o'clock?
D:
Three o'clock?
HMJr:
Yes.
D:
Your office?
Regraded Unclassified
160
- 2 -
HMJr:
Yes, sir.
D:
All right. I'll -- I think I can be there myself
and if not, I will have George Healy . -- you know
him, of course.
HMJr:
No, it's no use -- if you can't come, I -- I don't
want to bother.
D:
Well, Healy -- Healy's outfit is the one that will
have charge of any participation we have.
HMJr:
No, I wanted
....
D:
I'll be there myself
....
HMJr:
I wanted your own advice.
D:
Well, I'll be there then.
HMJr:
And ....
D:
For whatever it's worth if you want it.
HMJr:
Yeah. And, I mean, frankly, I wanted your own
opinion and not somebody else's.
D:
All right, I shall be there. Do you want me to
bring anybody else along?
HMJr:
Bring anybody you feel like.
D:
Okay.
HMJr:
I think Klauber is interested in this.
D:
Yeah. He'll be in by that time.
HMJr:
Right.
D:
Shall I bring him over?
HMJr:
If you would.
D:
All right. First rate.
HMJr:
Thank you.
D:
Three o'clock at your office.
Regraded Unclassified
161
- 3 -
HMJr:
Right.
D:
All right.
HMJr:
Thank you.
Regraded Unclassified
13
162
- 25 -
MR. GAMBLE: Healy is going home the 15th of November.
H.M.JR: Well, look, I am trying to use a little
honey.
MR. GAMBLE: There is no harm in it. I have a great
deal of respect for Elmer Davis' opinion. I think he would
be a good fellow to get a reaction from.
H.M.JR: You do, or don't?
MR. GAMBLE: I do.
H.M.JR: Then it will be Bell, haas, Fredrik W. Smith,
Theodore Roosevelt Gamble.
MR. SMITH: When do you want to talk about your speech
again?
MRS. KLOTZ: Tomorrow at nine-thirty.
H.M.JR: And have you seen this release? (Hands Mr. Smith
OWI release of September 28 on the length of Japanese war.)
MR. SMITH: No, it just came in.
H.M.JR: Well, I can't read it between now and twelve.
MR. SMITH: I will.
H.M.JR: But get it back personally to Mrs. Klotz, if
you please.
Regraded Unclassified
A163
A
Assumed Cutbacks in Munitions Production
after German Defeat
:
Cumulative cutback
:
Month
(percent)
:
Aircraft
:
Ground: Navy :Merchant: Other : Total
:
: army :ships: ships :
1/
:
X + 2
20%
50%
10%
20%
65%
30%
X + 6
25
60
25
50
80
40
X + 12
40
65
40
60
90
50
Office of the Secretary of the Treasury, September 27, 1944.
Division of Research and Statistics.
1/ Construction and industrial lend-lease.
Regraded Unclassified
B
164
Annual Rates of Federal Expenditures at
Selected Periods
(In billions of dollars)
:
:12th month:First full
: Present: after year after
: level : German : German
:
:
defeat
:
defeat
Munitions:
Production:
Aircraft
20
12
14
Ground army
18
6
7
Navy ships
16
10
12
Merchant ships
5
2
3
Other
1
-
-
Total
60
30
36
Plus: Lag in Treasury
expenditures
-
1
4
Equals: Treasury expenditures
60
31
40
Pay and subsistence 3/
22
18
20
Other war expenditures
11
60
11
Total war expenditures
93
57
71
Nonwar and interest
9
9
9
Total Federal expenditur
102
66
80
Office of the Secretary of the Treasury,
Sept. 27, 1944.
Division of Research and Statistics.
Construction and industrial lend-lease.
Treasury expenditures for munitions are estimated to be
1-1/2 months behind actual munitions production.
3/
Armed forces are estimated to be reduced from 11-1/2
million men (present level) to 9-1/2 million by end
of first year.
4
Estimate for fiscal year 1945 released in Budget Summary
of August 1, 1944.
Regraded Unclassified
165
Annual Rates of Munitions Production
after German Defeat
(In billions of dollars)
:
:
:
:
:
:
Ground:
Month
Navy
: Merchant Other:
Aircraft
army
:
ships
ships
1/
Total
:
:
:
:
:
:
:
:
:
Present level
20
18
16
5
1
60
X + 1
17
12
15
4
-
48
X + 2
16
9
14
4
-
42
X + 3
15
OR
14
3
-
40
+ 4
15
OR
13
3
-
39
+
+ 5
15
7
13
2
-
37
X X X X X X X X
15
7
12
2
-
36
+ 7
14
7
12
2
-
35
+ 8
14
6
12
2
-
34
X + 9
13
6
12
2
-
33
+ 10
13
6
11
2
-
32
+ 11
12
6
11
2
-
31
+ 12
12
6
10
2
-
30
Full year
14
7
12
3
-
36
Office of the Secretary of the Treasury,
September 27, 1944.
Division of Research and Statistics.
1/
Construction and industrial lend-lease.
Regraded Unclassified
166
Pay and Subsistence of Armed Forces
after German Defeat
:
Number in
:
Annual
:
armed
:
rate of
Month
:
services
: expenditures
: (Millions
: (Billions of
:
of men)
:
dollars)
Present level
11-1/2
22
X + 1
22
X + 2
22
X + 3
11 1/
21
X + 4
21
X + 5
20
X + 6
10 2/
19
X + 7
19
X + 8
19
X + 9
9-3/4 3/
19
X + 10
19
X + 11
19
X + 12
9-1/2 3/
18
Full year
20
Office of the Secretary of the
September 27, 1944.
Treasury,
Division of Research and Statistics.
Rate of 167,000 men per month demobilized net.
Rate of 333,000 men per month demobilized net.
/
Rate of 83,000 men per month demobilized net.
Regraded Unclassified
167
Annual Rates of Other War Expenditures
after German Defeat
(In billions of dollars)
: Civilian: Agricultural
Miscel-
:
:
:
: pay in : lend-lease
:
laneous
Mustering-
:
Termination
Total
:
war :and foreign
:
:agencies: relief
:
1/
:
out pay
:
costs
:
:
:
:
Present level
3
2
6
-
-
11
X + 12
2
2
3
1/2
1/2
OR
Full year
2-1/2
2
4-1/2
1
1
11
Office of the Secretary of the Treasury,
September 27, 1944.
Division of Research and Statistics.
1/ Public utilities, public transportation, subsidies, stockpiles,
overseas construction and munitions, etc.
Regraded Unclassified
F
168
Federal Expenditures in the First Full Year
After German Defeat
(In billions of dollars)
Munitions:
Production
36
Lag in Treasury expenditures 1/
4
Total Treasury expenditures
40
Pay and subsistence
20
Other war expenditures
11
Total war expenditures
71
Nonwar and interest 2/
9
Total expenditures.
80
II
Office of the Secretary of the
September 27, 1944.
Treasury,
Division of Research and Statistics.
1
Estimated at 1-1/2 months' production.
2
Estimate for fiscal year 1945 released in the Budget
Summary of August 1, 1944.
Regraded Unclassified
G
169
Federal Financial Outlays in the First Full Year
After German Defeat
(In billions of dollars)
Expenditures
80
Less: Receipts
40
Equals: Deficit
40
Plus: Redemptions and cash maturities
20 1/
Equals: Financial outlays
60
Office of the Secretary of the
September 27, 1944.
Treasury,
Division of Research and Statistics.
1/ Comprising approximately $5 billions for savings bond
redemptions, $10 billions for savings note redemptions
(for taxes and cash), and $5 billions cash maturities
of marketable securities.
Regraded Unclassified
170
September 28, 1944
General Marshall had lunch with me today, and I showed
him in secrecy the memorandum of the so-called Quebec Agreement on
the treatment of Germany. He said he had not seen it although
he had seen two letters of Stimson's that bore on this subject,
and he wanted to know from me if there were any more. I said
that I didn't think so.
Marshall's first reaction was, "Well, we have got loud
speakers on the German lines telling them to surrender, and
this doesn't help one bit," meaning the publicity in the papers.
I said, "Well, General, you don't think this has come out of
the Treasury?" I said, It must come either from War or State."
So he sort of drew himself up and said, "You're not talking
about my Secretary of War, are you?" I said, "The only concrete
evidence I have is that some of it has come out of the State
Department.'
Then he went on for almost a half hour on other matters,
and I tried two or three times to find out how he felt about
this Quebec Agreement. Finally he said, "Well, this is a matter
outside of my line, and then he said, 'We have given General
Eisenhower a lot of things to do that he can't carry out,
and from now on I don't want to give Eisenhower anything to do
that he can't carry out." Then subsequently he told me, to my
amazement, that this directive cleared the Chiefs of Staff
Tuesday, and he is under the impression it is on its way to
Eisenhower. When I told him that we were waiting for some kind
of covering letter from Hull, he seemed quite surprised, and
said, "Does it have to go back to Hull even if we have cleared
it with the General Staffs?" I said that I didn't know but
I said, "McCloy's office handled it for the War Department with
State, but as late as 5:30 last night Hopkins was under the
impression it had not been cleared with the State Department."
He said he would look into it and telephone me. He seemed
quite upset.
Then he said, "Well, going back over history, I feel that
this may react just the opposite from the way you want. In
the Civil War they tried to impeach Lincoln, and after the
Spanish War they had an unfavorable reaction, and as a matter of
fact you just go back over history, and you will find that the
Regraded Unclassified
171
- 2 -
soldiers themselves don't want to treat these people harshly."
He said that right now one of their worst headaches is the fact
that there have been a couple of photographs of American
soldiers fraternizing with the Germans. He said that the
English have just given up any hope of trying to regulate
their soldiers, and when they are through fighting they can do
whatever they want. He said, "In World War I General Pershing
had very strict orders about fraternizing, and the American
soldiers would go in the back door and sit down with the German
families and enjoy themselves." He said, "You will find that the
American soldier doesn't want the Germans treated harshly.
Then Marshall told me a story which I don't think is
generally known. He said, "When the question of the bombing
of Rome came up, nobody wanted it done. Even Roosevelt didn't
want it; Churchill tried his best to stop it, but I won
Churchill over."
I tried to explain to Marshall that my whole idea was
to keep from having another World War, and I said that the
Germans were almost successful in the First World War, had been
even more successful in the Second, and might win in the Third.
I said, "You, as a soldier, know that as soon as this is over,
the German General Staff will immediately plan another war."
Well, he polished that one off, and didn't comment.
The net result of my conversation with him is this - I am
quite confident that he had been reading of the controversy in
the papers; also that he knew about my work on the Directive,
but that he. didn't care very much for this so-called Quebec
Agreement. Of course, it is difficult for me to understand
that Stimson would show him his memorandum answering my memorandum
and not tell him what finally happened.
During my conversation, for the first time it seems to me
that Marshall's mind wasn't as clear as it used to be. I found
him groping for words, and he went into quite a tirade on how
politics were making things difficult for him. Then he said
that he will be 64 on December 31, and if the war is over he
has every intention of resigning. But for the first time, his
mind didn't seem crystal clear the way it has been before.
Going down in the elevator, he said, "It is always so nice to
come over here because it is so peaceful, and I enjoy myself
so much."
Regraded Unclassified
172
- 3 -
He brought over his own personal war map, but there was
nothing in it that Leahy hadn't shown me yesterday. Of course,
their strategy is that they are trying to go around the German
lines through Holland and up through the Ruhr, and if they do
that by the time they get through fighting, there won't be much
to argue about as to what to do with the Ruhr. The bulk
of our supplies are going to the English now, and they are letting
our own troops suffer because we just don't have enough ports to
unload. Also, there are some shortages of heavy ammunition in
this country, a fact I have known right along. As far as the
war itself is concerned, I got the feeling he is generally
optimistic about the conclusion.
Regraded Unclassified
173
September 28, 1944
2:34 p.m.
Operator:
Go ahead.
HMJr:
Hello.
Gen. Geo.
Marshall:
Mr. Secretary, this is General Marshall.
HMJr:
Hello, General.
M:
I have checked into that thing. It has not yet
been forwarded, and has actually not yet been
passed. What has happened is this -- it went
over to the Secretary of State
....
HMJr:
Yes.
M:
the document -- to get his view before we
would act on it.
HMJr:
That's right.
M:
And it has come back from him.
HMJr:
It has come back?
M:
It has come back to the Secretary of War. Mr.
McCloy -- I just got it this minute -- informed
us.
HMJr:
Has it been cleared?
M:
No, it has to go to the Chiefs of Staff.
HMJr:
No, but I mean Mr. Hull cleared it.
M:
It's cleared in this way -- I'll read you exactly
what it says.
HMJr:
Yes.
M:
Admiral Leahy had requested that we defer action
on it until it was forwarded to Mr. Hull for his
formal approval. All right, now -- Mr. McCloy, in
the meantime, received a letter from Mr. Hull to
Mr. Stimson, which Mr. McCloy says did state
State Department approval of the document referred
to. Mr. McCloy, therefore, advised, having talked
to Admiral Leahy, that Admiral Leahy's proposal
to send it to the Secretary was unnecessary,
Regraded Unclassified
174
- 2 -
M: (cont'd) and, therefore, we could go right ahead with
its consideration.
HMJr:
Yes.
M:
Now, Mr. Hull's letter to the Secretary of War
was this: he said, "I understand that representa-
tives of the State, War and Treasury Departments
have been conferring for the purpose of preparing
an interim directive to Eisenhower's Headquarters
in regard to the military government of Germany
for the period immediately following the cessation
of organized resistance, and I further understand
that agreement has been reached on all points
with the sole exception of the final paragraph
of Section One of the Appendix, which 18 the
economic directive. This department is prepared
to agree to Section One as now drafted on the
understanding that the Supreme Commander is
authorized to interpret this section as enabling
him to retain or impose such economic controls
as he may deem essential to the safety and health
of the occupying forces." In other words, they
have apparently left Appendix C final paragraph,
which is the future economic thing, undecided,
with this proviso that the Secretary of State
has put into it.
HMJr:
I see.
M:
Now that is coming to us right now for us to
act on.
HMJr:
I see.
M:
Is that understandable all to you?
HMJr:
It is after I have consulted with Mr. White who
has handled it, and if he doesn't understand it
I will have him telephone McCloy.
M:
Do you want me to read what that final paragraph 1s?
HMJr:
No, I'll tell you -- if he doesn't understand it,
I will tell him to call Mr. McCloy.
M:
All right.
HMJr:
Ever 80 much obliged.
Regraded Unclassified
175
September 28, 1944
2:43 p.m.
John
McCloy:
I just talked to Marshall. He said that you --
(aside: get me that letter from Cordell Hull
addressed to the Secretary of War) -- he said
that you had not heard yet as to what the contents
of that interpretation of the -- that the State
Department made to the economic directive.
HMJr:
That's right.
M:
Now, I gave it to Taylor this morning.
HMJr:
Did you?
M:
Yes. Now, wait a minute -- let me read it to you.
HMJr:
Well, Marshall read it to me over the phone.
M:
Oh, Marshall did?
HMJr:
Yes.
M:
Oh, he did -- he read the letter to you?
HMJr:
Well, I think 80.
M:
Well, this is what the letter says: "My dear
Mr. Secretary" -- I just got it this morning.
HMJr:
Maybe you better read it to me.
M:
All right. "I understand that representatives
of the State, War and Treasury have been con-
ferring for the purpose of preparing an interim
directive. to SHAEF regarding the military govern-
ment of Germany for the period immediately follow-
ing the cessation of organized resistance." That
is the title of the thing. "And I further understand
that agreement has been reached on all points with
the sole exception of the final paragraph of Section
One of Appendix C". That's the economic directive.
"This Department is prepared to agree to Section
One as now drafted on the understanding that the
Supreme Commander is authorized to interpret this
section as enabling him to retain or impose such
economic controls a.s he may deem essential to the
safety and health of his occupying forces." Well,
now if that is just what we say is his mission
and no more than his mission, it is entirely
Regraded Unclassified
176
- 2 -
M: (cont'd) acceptable to us, and 80 far a.s Taylor was
concerned he said it was entirely acceptable
to them. It didn't make any sense because it was
a mere reiteration of what his primary limitation
was. I would take that as complete agreement.
HMJr:
Well, I'll send for Taylor, and if you don't
mind I will talk to him and White.
M:
Oh, by all means.
HMJr:
And if they don't agree with you, I will have
White call you back in the next ten minutes.
M:
Well, okay.
HMJr:
But you think that's complete agreement on the
part of State?
M:
I think it is just a sort of face-saving sort of
little interpretation which doesn't mean anything,
because they know perfectly well that that was
the understanding all along. You can't say that
he can't do anything that is necessary to protect
his own forces, and Taylor says that that is
perfectly okay. But you can check it with White,
and if there is any difficulty, let me know,
because it is now going to the Joint Chiefs of
Staff.
HMJr:
And from there to Eisenhower?
M:
No, then from there to the Combined Chiefs, and
that's with the British, you see? And then from
there to Eisenhower. And, as I told you, sometime
back -- I repeated it in my letter of transmittal
of this letter to Taylor -- as soon às We get to
the British -- we will ask that you give us a
representative to sit down and negotiate with them.
HMJr:
Yes.
M:
Now, let me read you something that just came in
from Bedell.
HMJr:
Yes.
M:
He says: "Just received a copy of this proposed" --
I will paraphrase a little bit because I don't
want to give the code out -- "proposed directive".
That's the one we are talking about. "This is
the II
Regraded Unclassified
177
- 3 -
HMJr:
Pardon me. How did he get that?
M:
I sent it over -- bootlegged it over to him, so
he would know about what our thinking was.
HMJr:
Oh, yes.
M:
But I told him, of course, that it wasn't final.
He said, "This 18 the most encouraging and helpful
document that we have seen for a long period. It
will enormously strengthen our hands if the U. S.
Chiefs of Staff will see it through. In the
meantime I want you to know, etc. -- about how
much he appreciated our getting this thing over
to him. "We're taking a practical view of the
situation as we see it now."
HMJr:
Yes.
M:
So, I am very anxious that we make time on it,
and I think from what Harry tells me that the
President is going to say something about it at
his press conference tomorrow.
HMJr:
Is that what Harry said?
M:
Harry tells me that.
HMJr:
Yes.
M:
Harry told me that he was going to say that the
Treasury and the State and the War Departments
were at agreement on everything that could be
decided now in any event.
HMJr:
Nell; He told me that, but he told me it was a
high secret.
M:
Oh, he did?
HMJr:
Yes.
M:
Well, anyway, Harry called me up and told me that.
HMJr:
Every time I talk about any of these things I look
under the bed to see whether anybody is there.
M:
Well, there has been a helluva hubbub, and a
very deplorable one.
Regraded Unclassified
178
- 4 -
HMJr:
Yes, and I have had to take it on the chin.
M:
Well, I think it has been very unfortunate the
way the thing all came out. I wish we could
find out where this stuff came from.
HMJr:
Yes. Well, I know of one case where a very
reliable radio commentator said where he got
part of it.
M:
Yes.
HMJr:
I think it ie unheard of that documents like
these which are in the possession of the President
of the United States should be brandished all
over Washington.
M:
Hightower must have had a document in front of
him because his was a complete paraphrase,
paragraph by paragraph of the thing.
HMJr:
Not only him, but this fellow in the Wall Street
Journal.
M:
No, I didn't see that one.
HMJr:
Yes. Well, I think we ought to have the law
they have in England that any public document
which is printed is two years in jail.
M:
Well, it should be -- no question about it.
HMJr:
Well, thank you for calling.
M:
Okay. Now, look -- one thing more -- on
Lend/Lease -- have we heard anything from the
British?
HMJr:
They are having trouble with the War Office,
and they will have nothing before the 14th.
M:
14th of October?
HMJr:
Yes.
M:
Oh, God!
HMJr:
And Lord Cherwell has left town to make an
inspection of our different factories, and the
thought is that we would hold the line until
he got back.
Regraded Unclassified
179
- 5 -
M:
That's going to complicate our problem because
we were about to tell some of these manufacturers
about what our cut-back was to be. Remember
that I said that on the munitions business, that
was the only point of
....
HMJr:
I talked with Patterson about it, and I thought
that that more or less comes under him
M:
Well, yes -- that's production, of course.
HMJr:
And, he didn't seem to be worried about it.
M:
Well, Somervell is worried.
HMJr:
Well, Patterson is not.
M:
Well, I'll talk to both of them about it.
HMJr:
I wish you would. But everything is to be held
now until the 14th, and Harry knows about it and
very much wants to hold the whole thing so that
he can present a united front for once to the
British.
M:
Yes, well, there's nothing then that you want
from us.
HMJr:
No, there will be nothing now until the 14th.
M:
Right. And then we'll take it and take a look
at it when they give it to us.
HMJr:
And check with some of your people because Bob
Patterson wasn't worried.
M:
Well, I know Somervell 1s -- very much worried --
but I'll find out.
HMJr:
Right.
M:
So long.
HMJr:
Thank you.
Regraded Unclassified
SECRET
180
STATE STATES OF
THE ASSISTANT SECRETARY OF WAR
WASHINGTON
UFFICE
28 September 1944
Mr. W. H. Taylor
Division of Monetary Research
Department of the Treasury
Washington, D. C.
Dear Mr. Taylor:
I an enclosing herewith copy of letter which
Secretary Hull sent to the Secretary of War in rela-
tion to the post-surrender directive, the contents
of which I read to you over the telephone.
The interim directive is now before the Joint
Chiefs of Staff and I hope will be passed on very
shortly. As soon as the Joint Chiefs of Staff approve
it, it will be referred to the Combined Chiefs of
Staff, and then in deliberation with the British we
will ask that a representative of the Treasury be
present.
Sincerely,
JOHN July J. McCLOY
Assistant Secretary of War
Inc.
Ltr. (SECRET) 23 September 44 Hull to SW
Rec'd/44 10 Am.
we
SECRE
COPY
181
DEPARTMENT OF STATE
WASHINGTON
September 23, 1944
SECRET
My dear Mr. Secretary:
I understand that representatives of the State, War
and Treasury Departments have been conferring for the
purpose of preparing an "Interim Directive to SCAEF re-
garding the Military Government of Germany in the Period
Immediately Following the Cessation of Organized Resist-
ance" and I further understand that agreement has been
reached on all points with the sole exception of the
final paragraph of Section 1 of Appendix C (Economic
Directive).
This Department is prepared to agree to Section 1
as now drafted on the understanding that the Supreme
Commander is authorized to interpret this section as
enabling him to retain or impose such economic controls
as he may deem essential to the safety and health of the
occupying forces.
Sincerely yours,
18/ CORDELL HULL
The Honorable
Henry L. Stimson,
Secretary of War.
Regraded Unclassified
182
September 28, 1944
2:56 p.m.
Charlie
Shaeffer:
My information is that the President allowed
the word to be passed down the line to the
Press Association at the White House that he's
instructed all three principals in this alleged
dispute to keep quiet; that he would shortly
call them together and iron the whole thing
out.
HMJr:
I see. That's a White House leak?
S:
That is a White House leak, yes, sir.
HMJr:
Okay.
S:
Right.
HMJr:
Thank you.
Regraded Unclassified
183
Sept. 28, 1944
Mr. Sheaffer reported to the Secretary
that this was a White house leak.
184
AN AUTHORITATIVE SOURCE PREDICTED THAT ALL CONTROVERSY WITHIN THE
PRESIDENT'S CABINET COMMITTEE ON POSTWAR PEACE POLICY WOULD BE RESOLVED
AT A MEETING WHICH HAS BEEN SCHEDULED FOR THE NEAR FUTURE WITH THE
CHIEF EXECUTIVE.
THE COMMITTEE MEMBERS ARE SECRETARY STIMSON, SECRETARY HULL, AND
SECRETARY MORGENTHAU.
9/28--S1241P
Regraded Unclassified
185
September 28, 1944
3:42 p.m.
Harry
White:
Hello.
Operator:
Mr. White.
HMJr:
Harry.
W:
Yes.
HMJr:
Elmer Davis just left here on War Bonds and he
started in on this business about how to treat
Germany.
W:
Yeah.
HMJr:
What are we going to do with the fifteen million
people? This just means eliminating them from
starvation.
W:
Yeah.
HMJr:
So I said wouldn't he like to see you and he
said he would, and if you'd call him up in the
morning -- I said you'd come over and see him.
W:
Yes.
HMJr:
He'll have a couple -- two of his top people
there.
W:
All right, I'll ....
HMJr:
He's set aside an hour.
W:
All right, I'll do that.
HMJr:
He needs selling very badly.
W:
All right, I'll do that.
HMJr:
And he also says that it's all around Washington
that the leaks on this thing have come from the
Treasury.
W:
That's interesting.
HMJr:
Yeah. I said, "Sure, that's what State has
spread."
Regraded Unclassified
186
- 2 -
W:
Yeah.
HMJr:
Yeah.
W:
Okay.
HMJr:
It's on the ticker and it says, "High authority" --
and we've checked it at the White House -- that
the President said he's going to get the three
of us together and it's all going to be settled
amicably.
W:
Yeah. I see. You haven't heard of the meeting
though?
HMJr:
No.
W:
Yes, sir.
HMJr:
No.
W:
All right.
HMJr:
Thank you.
W:
All right. Bye.
187
September 28, 1944
4:30 p.m.
GERMAN PEACE TERMSPUBLICITY
Present: Mr. Gaston
Dr. White
Mrs. Klotz
H.M.JR: Before I get any further, in this memorandum
which you read did you read this part about the Nazi trials?
It is very important that we get this thing into the
Directive about the trial of the Nazis--the thing that
Goodhart was working on.
DR. WHITE: Oh, yes, all right. We'll go at it right
now.
H.M.JR: That is the result of the conversation I had
with General Marshall.
DR. WHITE: McCloy referred to "Harry" as having told
him. I presume that didn't mean me, because I didn't tell
him.
H.M.JR: No.
DR. WHITE: Charlie Shaeffer called me to say that some
person in New York who runs the Town Meeting of the Air is
going to have a debate on the air next week, and they want
a second person to defend the Morgenthau plan. They have
Rex Stout, and they want to know whom we would recommend as
the second one.
MRS. KLOTZ: You.
MR. GASTON: The lady called me several days ago, and
I told her we couldn't have anything to do with it at all.
DR. WHITE: The only thing, this man Seavey that you
spoke of, I think, would be much better than Major Fielding
Elliott.
Eliot
Regraded Unclassified
188
- 2 -
H.M.JR: Goodhart says he is excellent.
DR. WHITE: I just sent the letter to you. I don't
think you saw it. (Refers to letter from Seavey, Sept. 25)
air
H.M.JR: No, I did not see it. I have not received
it.
14m2.6.4 chammed
DR. WHITE: Well, it was just an hour ago that I saw
it, and I had a copy made before I sent it in.
MRS. KLOTZ: You didn't send it to me.
DR. WHITE: They were making a copy of it, because in
the letter he compliments you on your position, says he is
in agreement but he is troubled by what to do with the
number of persons--oh, he asks the question as to whether
an agricultural Germany can support that many persons and
what would be done with the overflow. So it requires an
answer. And if he is a good speaker and can handle himself
on that, it would be very excellent, I think.
H.M.JR: Why don't you ask Goodhart?
DR. WHITE: Oh, he knows him? I'll ask him. The boys
are checking up on his speaking ability from some of the
Harvard men around here. They would get in touch with him,
although if he were to go I think we would need to discuss
the matter with him.
Do you want to know about this morning's discussion?
In the two hours we spent with Lerner--he is a very
able fellow--well, when we were through I asked him what
his views were of the proposal. He said that in general
he is for it. He says it is a bad situation, but the al-
ternative choice is worse, and he said in general he would
be for it. But he spoke of the fact that there is going to
be a terrific opposition against it on two grounds, one,
that this is a method of increasing the strength of Russia
and the danger from Russia. He thought the Catholic Church,
particularly, would do a good deal in that direction.
189
- 3 -
Secondly, he said there would be the feeling that the
Jews were just trying to be vindictive, because of the fact
they have suffered at Hitler's hands. He says those are the
two attacks that will be presented in subtle form.
Incidentally, the new AP man whom Charlie Shaeffer
brought down and introduced me to told me off the record
there was an off-the-record forum in Washington here which
a number of them attended.
MR. GASTON: Government people?
DR. WHITE: No, I gather they were pre SS people; but I
am not sure; but he was there and others who were not of
the Government. They discussed this proposal. I cite this
because of the following episode which he repeated--
MR. GASTON: He didn't know on the basis of whose
outline?
DR. WHITE: No. A press man got up and made a very
impressive demagogic appeal against the plan on the ground
it was a violation of every moral precept, and so forth.
H.M.JR: I suppose putting a million or two million
people in gas chambers is a godlike action.
DR. WHITE: Well, they were the wrong kind of people!
H.M.JR: Who called this forum?
DR. WHITE: I don't know. I didn't ask him. He didn't
volunteer the information. I didn't want to ask him the
question, because I had not wanted to answer some of his
questions.
But he said he is going to write an article. He asked
if I couldn't give him some background. I told him he can
always come to me if it isn't news business, but just if he
wants an understanding of the problems.
MRS. KLOTZ: That is very good!
Regraded Unclassified
130
- 4 -
DR. WHITE: I didn't talk with him very long--about
fifteen or twenty minutes. He seemed to be quite in
sympathy. He is a bright, able fellow--Max Hall. Do you
know him?
MR. GASTON: No.
DR. WHITE: He now has the Treasury in his international
affairs. He said he would very much like to write an
article; he thinks it is terribly important. Or maybe he
will write a column. I told him I couldn't give him any-
thing of news value. He says he thinks he doesn't need
it.
So he asked me could he write one and show it to me to
see it was all right. I told him it was all right.
MR. GASTON: It would be very desirable if we were to
have more or less extended conversation with him, if we had
time.
DR. WHITE: When he writes the article we will make
whatever suggestions or criticisms which seem to be warranted.
There is no doubt about this thing assuming a terrific
interest everywhere around, and there is every indication
that it will be a bone of contention.
Lerner said this, in response to a question by Pehle--
I had several of the men in, because I wanted to show him
it had a broad basis--he said that in his opinion the bulk
of the people would be in sympathy with what the Secretary's
proposal was. But, he said, eighty percent of the so-called
liberals will be against it on the grounds that it is harsh.
H.M.JR: When you are through I want to make a couple
of comments.
DR. WHITE: That is the gist. I can go into a good
deal of detail, because the discussion took two hours.
H.M.JR: I don't think I shall. I told him quite a
lot when he was here, as you realize.
Regraded Unclassified
191
- 5 -
DR. WHITE: He knows more than anybody else knows,
now. But I think he will use it well, because he repeated
in there that this is the most important thing.
H.M.JR: Elmer Davis told me in here that it is all
over Washington that it is the Treasury that has been
spreading this stuff.
MR. GASTON: I think it is. Harry Eaton told me that.
DR. WHITE: Now, who do you suppose--
H.M.JR: It is just like Hull told me that. I said,
"Look, in strictest confidence Roosevelt and Churchill
happen to agree with what we have suggested. Why the hell
should I be spreading it around?" It doesn't make sense.
I said, "The fellow who is spreading it around is the fellow
who is against this plan, whoever that person is--or people.'
He said, "Well, that makes sense."
DR. WHITE: I think Herbert would be interested in that
comment of McCloy's on the Directive.
H.M.JR: What is that?
DR. WHITE: That a copy had reached Bedell Smith's
hands.
H.M.JR: And Bedell Smith liked it.
DR. WHITE: I thought it was stronger than that. He
said it was the best thing--
MR. GASTON: A copy of this latest Directive--this
interim Directive?
DR. WHITE: That is right.
H.M.JR: Now, the other thing which I don't understand,
which has come over the ticker, is that General Eisenhower
made the statement that we changed. He made the statement
mainly for Germany, "We are coming as conquerors and not as
Regraded Unclassified
192
- 6 -
oppressors."
DR. WHITE: That was in the first one.
H.M.JR: But I thought that was cut out.
DR. WHITE: No, that isn't the part. The part we
wanted to cut out and made some changes in, and which we
don't know whether he has given out or not, was that we
come to liberate Germany as other countries. That is the
part we objected to.
H.M.JR: Oh. Now, did you call back McCloy and say it
was okay to let it go?
DR. WHITE: No, because the statement said if it wasn't
okay I'd call him back, and it is quite all right. There
is no doubt about it.
Can you think of a third alternative in case Seavey
isn't available?
MR. GASTON: No; Miss Marion Carter called me up about
a week ago and wanted us to participate. Somebody repre-
senting the Treasury told her that couldn't be done, that
she'd have to get somebody from the outside. She didn't
ask me for suggestions. Did you suggest Seavey?
DR. WHITE: No, the Secretary suggested him this
morning and one of the boys suggested him.
MR. GASTON: No, I don't know of anybody. We did
discuss Rex Stout.
H.M.JR: Well, as between Fadiman and Rex Stout, they
ought to give us somebody. Fadiman ought to give us
somebody.
MR. GASTON: Yes.
DR. WHITE: Well, they will get in touch, I suppose.
MRS. klotz: They did.
Regraded Unclassified
193
- 7 -
DR. WHITE: No, it was Lerner who knew about it, not
Fadiman. Lerner would be excellent for it. Did he say he
was leaving town?
H.M.JR: I'm not sure.
DR. WHITE: Apparently he wasn't asked or didn't want
it, because he asked for a recommendation.
H.M.JR: I think I'd throw it back on Fadiman and
Rex Stout.
H.M.JR: What else, so we can check up?
MR. GASTON: Did you see the articles in Time and News
Week?
H.M.JR: I saw Time. I didn't see News Week.
MR. GASTON: News Week is the one I talked to. I
think you will find News Week is better than Time.
DR. WHITE: I think Sylvia Porter's article is excellent.
H.M.JR: This is the kind of thing I want Pringle
to do and not bother you so much.
Now, the Post has done a nice job until we get somebody
like Pringle. I'd like for you to write a letter to the
Editor.of.the.Post.over my. signature. saying that. I
appreciate his editorial and the work that Sylvia Porter
has done on this thing.
MR. GASTON: That is the New York Post?
H.M.JR: Yes. I can't think of his name.
MR. GASTON: I know him very well--Ted Thackrey.
DR. WHITE: It was Sylvia Porter who presumably also
held off the previous editorial, and she put in there
almost everything verbatim. She did a good job.
Regraded Unclassified
194
- 8 -
H.M.JR: Well, I think it would be nice to write
Ted Thackrey and Sylvia Porter, both.
DR. WHITE: Yes, and mentioning Sylvia Porter's name
to Ted Thackrey.
You never did hear whether that other thing is going
to be published or not, did you?
H.M.JR: What other thing?
DR. WHITE: That Directive. They can't say now they
haven't got the document over there, because Bedell Smith
can turn it over to them. But more than that, I shouldn't
think that Churchill would want the President to get the
credit for that. I do think it might even come down to
that--why should England be put in the position of saying
they accepted the American plan wholly, that they are
following our procedure, to say nothing of the fact that it
runs against some of their beliefs; so that I think it would
be nothing short of a miracle if Churchill accepted that.
H.M.JR: Do you believe in miracles?
DR. WHITE: No!
H.M.JR: Now, this Blair Bolles article of yesterday's
PM--have you checked up with some of your play-fellows?
DR. WHITE: No. Currie did call me up about that
yesterday, and Frank Coe spoke to me about it. Currie was
disturbed because his name has got in the whole thing. I
don't know how much that reflects his actual views. Some
is a distortion, but it is true that he participated in the
Interdepartmental Committee which made the recommendations
which you read on the plane, and that he was not opposed to
it. He may even have favored it. Now, I think he has
changed his mind since. We have had some chance to talk
it over.
H.M.JR: If you get a breathing spell--I know you have
been very busy today--would you do some detective work on
that tomorrow?
Regraded Unclassified
195
- 9 -
DR. WHITE: Yes. And as far as Oscar is concerned,
Oscar claims he is wholly with us.
H.M.JR: Herbert, do you have any contribution to
make?
MR. GASTON: No. I sent you in one little thing.
H.M.JR: Will you see Pringle tomorrow?
MR. GASTON: Yes, he is going to be here at twelve. I
thought you might be able to see him a minute or two
between twelve and one.
H.M.JR: That is a bad time for me.
MR. GASTON: The question is, what can I say to him?
H.M.JR: It is an awfully bad time.
MR. GASTON: He was very reluctant to come in at all
today or tomorrow, because he said he was terribly busy.
H.M.JR: Give him a quarter of one. The idea is, he
is to come in and help us on all of this stuff, that is all.
DR. WHITE: Of course, in questioning where the leaks
are, we are no longer in the virginal position we were in,
because we have been talking.
H.M.JR: We have been?
DR. WHITE: Sure.
H.M.JR: You were talking?
DR. WHITE: Fadiman, Lerner, Gram Swing, and now
the AP man.
Regraded Unclassified
195
9-28-44
TO:
198
The Secretary
Henry Pringle is moving to a home
he has just bought in Georgetown
and he said it was impossible to
come in today. He suggested late
tomorrow afternoon, but when I said
I thought you would like to see him
and that you would not be available
after 1 p.m. he said he would come in
at 12 noon.
I gave him an idea what it was about
and he didn't reject it as impossible.
He said "Let's talk it over tomorrow."
Mr.
FROM: MR. GASTON
197
EXECUTIVE OFFICE OF THE PRESIDENT
WAR REFUGEE BOARD
INTER-OFFICE COMMUNICATION
DATE Sept. 28,
1944
TO
Secretary Morgenthau
FROM
J. W. Pehle
Re: Possible St. Louis appearance.
Abrahamson has just heard from St. Louis
that both the local War Fund people and the
local Jewish Federation group feel that it
would be inadvisable to try to arrange a meeting
at this late date for October 11.
Just
Regraded Unclassified
198
MEMORANDUM FOR THE SECRETARY.
September 28, 1944.
As of noon today, receipts on statement in
regard to Germany are as follows:
Favorable
15
Unfavorable
4
Uncertain
1
One pamphlet being circulated from Louisiana
about severity and quoting the Biblical analogy of
Saul and the Amalekites.
Regraded Unclassified
199
September 28, 1944
My dear Mr. President:
I thought you would be interested in the
mail I have been receiving in regard to the
treatment of Germany. To date, I have received
90 letters, of which 75 are favorable and only
15 unfavorable.
Sincerely yours,
Henry Morgenthau, Jr.
The President,
The White House.
Emoelope marked "Urgent"
S.S. agent 12:52
Regraded Unclassified
Prepared by Prof. Goodhart -
200
Copies to White & Gaston 9/28/44
201
Germany and Re-education
It has been suggested that after this war Germany can
be re-educated so that the German people will become both
democratic and peace-loving. This 1s based on the idea
that the terrible experience through which they will have
passed will have taught them that war does not pay. This
process of re-education, it is said, can only succeed if
the Germans are left without a feeling of bitterness or
frustration.
I disagree with this view because I do not believe that
the Garmans can be re-educated in one or two generations.
This 1s not based on any racial doctrine implying that the
Germanic people are by nature warlike and brutal. Our
knowledge of the American citizens of German origin disproves
this. But I do believe that a nation resembles a human being
in that its early training and traditions largely condition
all its actions. The psychologists have taught us that it
is the first eight years of a person's life which are the
important ones, because it is then that he acquires those
ideas which consciously or unconsciously affect his future
decisions. The same is true in large part in the case of
nations. No one can understand the United States without
realizing that its emphasis on energy, individual responsi-
bility, and friendliness 1s typical of the pioneer attitude
of thought. Similarly the English emphasis on law and order,
on the value of tradition, on the spirit of compromise is as
old as Magna Carta. To understand Germany it is therefore
essential to realize that the German tradition, and especially
that of Prussia, has for centuries been militaristic with all
that that implies. It is reflected in the philosophy, the
literature, and the art of the nation, and above all in its
history. To attempt to counteract this traditional method
of thought by some scheme of re-education would, I believe,
be futile at the present time. It will take generations to
accomplish this, if it can be accomplished at all, while,
unfortunately, it only takes a single generation to prepare
for war.
Regraded
Unclassified
202
returned
TREASURY DEPARTMENT
OFFICE OF THE SECRETARY
September 28, 1944
CONFIDENTIAL
Received this date from the Federal Reserve Bank
of New York, for the confidential information of the
Secretary of the Treasury, compilation for the week
ended September 20, 1944, showing dollar disbursements
out of the British Empire and French accounts at the
Federal Reserve Bank of New York and the means by which
these expenditures were financed.
EmB
Regraded Unclassified
203
FEDERAL RESERVE BANK
OF NEW YORK
September 27, 1944.
CONFIDENTIAL
Dear Mr. Secretary:
Attention: Mr. H. D. White
I am enclosing our compilation for the week ended
September 20, 1944, showing dollar disbursements out of the
British Empire and French accounts at this bank and the means
by which these expenditures were financed.
Very truly yours,
/s/ H. L. Sanford
H. L. Sanford,
Assistant Vice President.
The Honorable Henry Morgenthau, Jr.,
Secretary of the Treasury,
Washington 25, D.C.
Enclosure
COPY
Regraded Unclassified
ANALYSIS OF BRITISH AND FRENCH ACCOUNTS
Strictly
(In Millions of Dollars)
Week Ended Sept 20, 1944
Confidential
B.NK OF ENGLIND (BRITISH GOVERNMENT)
BANK OF FRANCE
DEBITS
CREDITS
PERIOD
Gov't
Transfreeto
Proceeds OI
Balos of
Transfers
Not Incr.(+)
Net Incr. (+)
Total
Expendi-
Official
Securities
from
Other
or Decr, (-)
Total
Total
or Decr. (-)
turos
Canadian
Other
Total
Official
Dobits
(Official)
Australian
Credits
in $ Funds
Debits
Credits
in a Funds
War Years (g)
(a)
Account
Dobits
Crodits
Gold
(b)
Account
(c)
(d)
(0)
(c)
(d)
First
1,793.2
605.6
20,9
1,166,7
1,828.2
1,356.1
52.0
3.9
416.2
+ 35.0
866.3 (f)
1,095.3 (f) w
+ 299.0
Second
2,203.0
1,792.2
3.4
407.4
2,189.8
1,193.7
274.0
16.7
705.4
- 13.2
38.9
8,8
- 30.1
Third
1,235.6
904,8
7.7
223.1
1,361.5
21,8
5.5
57.4
1,276,8
+ 125.9
18.5
4.4
- 14.1
Fourth
764.0
322.7
170,4
280.9
1,072.3
-
0.5
155.1
916.7
+ 308.3
10.3
1,0
Fifth
- 9.3
1,197.7
300.4
61.4
835.9
1,369.6
-
-
253.0
1,116.6
+ 171,9
-
-
-
1944
September
October
November
Docember
1945
January
February
March
April
May
June
July
August
Wook Endod
August 30, 1944
4.6
2.8
-
1.8
24.7
-
-
-
24.7
+ 20.1
-
-
-
September 6, 1944
10.3
5.7
-
4.6
5.0
-
-
0.5
4.5
- 5.3
-
-
-
September 13. 1944
6.0
0.6
-
5.4
3.8
-
-
-
3,8
- 2.2
-
-
-
September 20, 1944
65.2
7.9
50.4
6.9
23.4 (h)
-
-
-
23.4(h)
- 41.8
-
-
-
éverage Wookly Expend tures Sinco Outbrdak of liar
Soo attached shoot for footnotes,
Franco (through Juno 19, 1940) $19.6 million
England (through June 19, 1940) 27.6 million
England (through Juno 20, 1940 to March 12, 1941) 354.9 million
England (sinco March 12, 1941) , 21.6 million
Regraded Unclassified
(a) Includes payments for account of British Ministry of Supply Mission, British Supply Board, Ministry of Supply Timber
Control, and Ministry of Shipping.
(b) Estimated figures based on transfers from the New Tork Agency of the Bank of Montreal, which apparently represent the
proceeds of official British sales of American securities, including those effected through direct negotiation. In addition
to the official selling, substantial liquidation of securities for private British account occurred, particularly during the
early months of the war, although the receipt of the proceeds at this Bank cannot be identified with any accuracy. According
to data supplied by the British Treasury and released by Secretary Morgenthau, total official and private British liquidation
of our securities through December, 1940 amounted to $334 million.
(c) Includes about 385 million received during Octobor, 1939 from the accounts of British authorized banks with Now York banks,
prosumably reflecting the requisitioning of privato dollar balances, Other large transfers from such accounts since October,
1939 apparently represent current acquisitions of procoeds of exports from the storling area and other accruing dollar
receipts. Soe (k) below,
(d) Reflects not change in all dollar holdings payable on domand or maturing in one year.
(a) For broakdown by typos of dobits and crodits soo tabulations prior to March 10, 1943.
(f) Adjusted to eliminate the effect of $20 million paid out on June 26, 1940 and roturned the following day.
(g) For monthly broakdown sco tabulations prior to April 23, 1941; October 8, 1941; October 14, 1942; Soptember 29, 1943, Soptember 6, 1944.
(h) Includes $ 2.4 million apparontly representing current and accumulated dollar proceeds of storling aron services and
morchandise exports, and $ 20.0 million in connection with the expenses of our armed forces abroad.
Regraded Unclassified
ANATISIS OF CANADIAN AND AUSTRALIAN ACCOUNTS
(In Hillions of Dollars)
Strictly
Wook Endod Sept. 20, 1944.
Confidential
BANK
OF
CANADA (and Canadian Government)
COMMONWEALTH BANK OF AUSTRALIA (and Australian Covernment)
DEBITS
CREDITS
DEBITS
CREDITS
Transfers
Transfers from Official
Transfere
to
Procoods
British A/C
Net Incr.
$
Proceeds
Net Incr.
Official
of
PERIOD
(+) or
Official
of
(+) or
Total
British
Others
Total
Gold
For Own
For Fronch
Other
Deer. (-)
Total
British
Other
Total
Gold
Other
Docr. (-)
War Years (a)
Debita
A/C
Debits
Credits
Sales
A/C
A/C
Crodits
[ebits
A/C
Debite
Credits
Sales
Credits
in $Pends
First
323.0
16.6
306.4
504.7
412,7
20,9
38.7
32.4
+ 181.7
31.2
3.9
27.3
36.1
30.0
6,2
+ 4,9
Second
460.4
-
460,4
462,0
246.2
3,4
123.9
88,5
+ 1.6
72.2
16.7
55.5
81.2
62.9
18.3
+ 9.0
Third
525.8
0,3
525.5
566.3
198.6
7,7
-
360.0
+ 40.5
107.2
57.4
49.8
112.2
17.2
95.0
- 5.0
Fourth
723.6
-
723.6
958.8
47.1
170.4
-
741.3
+ 235.2
197.0
155.1
41.9
200.4
-
200.4
+ 3.6
Fifth
849.3
1,0
848.3
958.5
38.1
61.4
-
859.0
+ 283.3
298.6
252.5
46.1
287.7
-
287.7
- 10.9
1944
September
October
November
December
1945
January
February
March
-
writ
New
June
July
Book Ended
August 30, 1944
13.8
-
13.8
9.4
-
-
-
9.4
- 4.4
1.4
1.4
0.1
-
0.1
1.3
September 6, 1944
2.2
-
2.2
29.0
-
-
-
29.0
+26.8
3.6
0.5
3,1
3.2
-
3.2
- 0.4
September 13. 1944
3.2
g.l
3.1
5.3
-
-
-
5.3
+ 2.1
0.3
-
0.3
1.3
-
!
+ 1.0
September 20, 1944
2.4(c)
-
2.4
56.8(g)
-
50.4
-
6.4(d)
+ 54.4
0.1
-
0.1
1.1
-
E
+ 1.6
Average Vonkly expenditures for
First year of war
6,2 million.
(a) For monthly broakdowns 800 tabulations prior to: April 23, 1941; October 8, 1941;
Second year of war
8.9 million.
Octobor 14, 1942; Soptember 29, 1943; September 6, 1944.
Third year of war
10.1 million.
(b) Reflects changes in all dollar holdings payable on demand or naturing in one year,
Fourth year of war
13.9 million.
(c) Doos not reflect transactions in short tara U. S. socurition.
Fifth year of war
16.1 million,
(d) Includos 3 2.1 million deposited by War Supplies, Ltd.
Sixth year of war (through) September 20, 1944)
2.6 nillion.
and $ 2.5 million roceived from Now York accounts of Canadian chartered banks,
207
Tuday,
7870 PM7 Arman musion
The Jewish Agency for Palestine
WASHINGTON OFFICE: 1720 SIXTEENTH STREET, N. W.
MICHIGAN 4480
September 28,1944
Mrs. Henrietta S. Klotz
Office of the Secretary of the Treasury
Treasury Building
Washington, D. C.
Dear Mrs. Klotz:
I am writing you with reference to our conversation at lunch
today about my forthcoming trip to Palestine and the Near East. Dr.
weizmann, as you know, has been urging me to come for some time and join
him on his visit to Palestine within the next month. I hesitated a
good deal about going, but in his last letter to me, of September 11, he
made it mondatory. Accordingly, I have made the necessary arrangements
with the British Embassy. In view of Dr. Weizmann's urgent request they
nave offered to fly me.
I shall probably be leaving late in October
or early in November.
One of the reasons Dr. weizmann is so enger to have me be
in Palestine while he is there, is to take up EL number of questions re-
Inting to rescue und rehabilitotionn and related matters. It has
occurred to me that I might be of some use to the War Refugee Board in
gathering data while on the spot, and bringing back with me a comprehensive
report on the whole situation. In any event, I will, of course, be in
contact with those who have been principally engaged in that work during
the wer.
If you think I can be of some service, I hope you will place
the matter before the Secretary or Mr. Pehie. I will be glad to act
according to their wishes in the matter.
With kindest personal greetings, I am
Sincerely yours,
Meyer
Weisgal
208
This telegram must be
September 28, 1944
paraphrased before being
communicated to anyone
4 p.m.
other than a Government
Agency. (SECRET 0)
AMERICAN CONSUL,
ALGIERS (ALGERIA).
FROM CROWLEY, A'HEARN AND COX, FEA, FOR FERGUSON
CONFIDENTIAL. REGARDING PROPOSAL TO TRANSFER 432
SEPHARDIC JEWS FROM NARC TO UNRRA CAMP AT MOSES WELLS,
BECKELMAN IS HEREBY AUTHORIZED, SUBJECT TO YOUR APPROVAL
AND CLEARANCE WITH THE BRITISH, TO ARRANGE FOR SUCH TRANS-
FER AND TO DRAW ON JOINT FUND FOR THE PURPOSE OF DEFRAYING
NECESSARY TRANSPORTATION AND RELATED COSTS. IT IS UNDER-
STOOD THAT ACTUAL TRANSFER OF REFUGEES IS NOT TO BE MADE
UNTIL MATTER OF THEIR ACCEPTANCE BY GREECE IS DETERMINED.
THIS IS CONSISTENT WITH ORIGINAL US - UK AGREEMENT COVERING
ESTABLISHMENT OF NARC WHICH SPECIFICALLY PROVIDED FOR THE
TRANSPORTATION OF REFUGEES FROM NARC TO PLACES OF MORE PER-
MANENT SETTLEMENT AND CONTINUED CARE THEREAFTER PRIOR TO
REHABILITATION. THIS DOES NOT ALTER PREVIOUS INSTRUCTIONS
TO CONTINUE OPERATING NARC.
HULL
DCR:RLH:ATM
(RLH)OCOX
LIAISON:
GC-700-NOSTROFF:HB
9/14/44
Regraded Unclassified
209
EMBASSY OF THE
UNITED STATES OF AMERICA
CONFIDENTIAL
Quito, September 28, 1944
No. 2185
Subject: Efforts of War Refugee Board to Assist Jewish
Refugees to Enter American Countries; Visit
to Quito of Mr. Jacob Landau.
The Honorable
The Secretary of State,
Washington.
Sir:
Referring to the Department's circular airgram of July 13, 1944,
12:30 p.m., in regard to priorities for air travel for Mr. Jacob Landau
in the course of his trip to Letin America as 8. member of the Executive
Committee of the American Jewish Committee, New York, and with reference
also to the Department's circular airgram of January 26, 1944, 7 p.m., I
have the honor to report that Mr. Landau arrived in Quito yesterday and
will depart tomorrow morning.
Shortly after his arrival, Mr. Landau called upon me and explained
his interest in obtaining authorization from the Bcuadoran authorities for
the issue of visas to a number of adult European refugees. He inquired
whether I would present him to the Minister for Foreign Affairs and when
I acceded to his request later the same day, the Minister showed a very
sympathetic attitude in the matter.
This morning Mr. Landau informed me that he had discussed the same
subject with the Minister of Government, who was also sympathetic and
who proposed to introduce him to the President. Mr. Landau asked whether
I would accompany him also to see the President. I stated that I would
be glad to do so, which I did this afternoon, the Minister of Government
being also present. Mr. Landau explained to the President his desire to
obtain Ecuadoran visas for 200 European refugees. He stressed that the
cc: Miss Chauncey (For the Sec'y.) Abrahamson, Akzin, Cohn, Drury, DuBois,
Friedman, Gaston, Hodel, Lesser, Mannon, Marks, McCormack, Pehle.
Regraded Unclassified
210
- 2 -
great majority of these individuals would probably never come to Ecuador,
but that the obtaining of the Ecuadoran visas would serve as a bond or
guarantee which would permit the saving of a number of lives from Nazi
persecution.
President Velasco Ibarra referred to assurances which he had pre-
viously given in public statements that his government was strongly
opposed to any form of racial discrimination. When the President then
asked the Minister of Government whether he saw any objection to Mr.
Landau's proposal, the latter replied in the negative, but added that there
should be an official request from the United States Government. At that
point I stated that my Government was pursuing an energetic and clearly-
defined policy of giving the maximum assistance possible to the victims
of Nazi oppression, I added, however, that before making an official
request to the Ecuadoran Government for visas for a given number of re-
fugees, I would be obliged to ask for instructions, which I would be glad
to do without delay. I should be pleased if the Department would instruct
me in the premises.
In this connection, it may be noted that on various occasions, as
has been reported to the Department, the Ecuadoran Government has indicated
to the Embassy a sympathetic attitude towards the program and work of the
War Refugee Board. However, as was reported in the Embassy's despatches
nos. 1041 of February 7, 1944, and 1219 of March 11, 1944, and airgram
No. A-138 of March 10, 1944, the Foreign Office has stated that it would
welcome receiving a concrete proposal as to the assistance that Ecundor
might extend in the matter. The Embassy has received no instructions in
response to that suggestion.
Respectfully yours,
Copy to the Consulate General, Guayaquil
File No. 840.1
JWG:rbm
Regraded Unclassified
211
AIRGRAM
CONFIDENTIAL
FROM
Tegucigalpa, Honduras
A-319
September 28, 1944
REC'D: October 3, 5 p.m.
Secretary of State,
Washington.
A-319, September 28, 5 p.m.
Reference Department's circular airgram September 19, 1944,
9:10 a.m.
It is believed that Honduras is not a likely country to provide
striking illustrations of the results of the travel grant program.
While I am confident that the recipients return more friendly to
the United States, outstanding results are not believed apt to be
noted in this country in which all progress is on a very slow basis.
ERWIN
842
RNC:mb
Transmitted via courier pouch closing September 29, 1944, 9 a.m.
Regraded Unclassified
212
Regraded Unclassi
CABLE TO AMERICAN LEGATION AT TANGIER, MOROCCO
Information contained in your A-199 of September 12 is thoroughly
appreciated. For your information, the following has been cabled to
Amlegation Bern:
QUOTE Amenbasy Madrid advises that Spanish visas have
been granted to 500 Jewish children and 70 accompanying adults
in Rungary, but that their departure is being held up by re-
fusal of German authorities to grant transit visas. It is
reported that pending departure these persons have been placed
under Intercross supervision. Please verify this report and,
unless confirmed, request Interoross to undertake such super-
vision of these beneficiaries of Spanish visas, to prevent
their deportation or persecution,
You may also inform Intereross that another fifteen
hundred Spanish visas have been authorized for Jews in
Hungary. To ensure their safety, Intercross representation
in Hungary is requested, likewise to assume supervision of
the beneficiaries of these additional visas as soon as feasible.
UNQUOTE
5:15 p.m.
September 28, 1944
213
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
American Embassy, Asuncion
TO:
Secretary of State, Washington
DATE:
September 28, 1944
NUMBER:
549
CONFIDENTIAL
The message given below has been repeated to Madrid for
the information of our Embassy there.
Reference is made herein to the Department's airgram of
September 1 No. 238.
In a note of September 27 numbered 866 relative to the
serious position of individuals in concentration camps holding
Paraguayan passports which are due to expire shortly, the
Paraguayan Ministry of Foreign Relations now states that since
this matter is related to proposed exchange our Madrid Embassy
may advise the Government of Spain that it is authorized here-
with to issue through its Embassy at Berlin new passports to
take the place of those about to expire and which are held by
persons to whom the protection of Paraguay has been extended,
especially those in the Bergen Belsen camp.
BEAULAC
Regraded Unclassified
214
Distribution of true
September 28, 1944
reading only by special
arrangement. (SECRET W)
5 p.m.
AMEMBASSY
LISBON
2626
The cable below is WRB 97.
Please deliver paraphrase of the following message
to Robert Pilpel from M. A. Leavitt, American Jewish Joint
Distribution Committee:
QUOTE Greenleigh advises Jefroykin requesting per-
mission enter Greenleigh's theater and officials inquir-
ing purpose of this visit. Please advise why this appli-
cation made. UNQUOTE.
HULL
(GLW)
WRB:MMV:KG
WE
9/28/44
Regraded Unclassified
215
EMBASSY OF THE
UNITED STATES OF AMERICA
Madrid, Spain, September 28, 1944.
No. 3152
Subject: Information Furnished by Recent Arrival from
Hungary.
CONFIDENTIAL
The Ambassador has the honor to refer to his air-
gram A-531 of September 22, 1944 regarding the arrival
in Spain of Madame Magda de BYCHOWSKY (nee Babor) and
to transmit herewith a summary of information furnished
by the above person regarding treatment of refugees in
Hungary by neutral missions. She states that the Portu-
guese minister gave refuge to approximately 20 persons,
including herself and her parests, in the chateau just
outside of Budapest used as the Portuguese chancery. On
April 28, 1944 she states that the Gestapo attacked that
mission, arrested all the occupants, and made a thorough
search of the premises. Their release was effected by
the Portuguese minister, who indicated that if the Gestapo
were to detain his guests they would be forced to detain
him as well. Secret documents of the Portuguese mission
were hidden in one of the numerous secret compartments
of the chateau and escaped discovery. All articles of
value, according to Madane Bychowsky, were taken by the
Gestapo.
She also indicates that practically all persons who
entered the Portuguese Legation after the above-mentioned
incident were arrested by the Gestapo.
The above information has not been confirmed but is
being submitted as of possible interest to the Department.
Copy of despatch to American Embassy,
Lisbon, Portugal.
Despatch in original (Osalid)
to Department.
File 800-Hungary
DIF/mm
Regraded Unclassifie
216
AB
September 28, 1944
Distribution of true
reading only by special
4 p.m.
arrangement (SECRET W)
AMLEGATION
STOCKHOLM
1941
The cable below is WRB 91.
Please deliver paraphrase of the following message to
Chief Rabbi Marcus Ehrenpreis, Stockholm, from the Vaad
Hahatzala Emergency Committee:
QUOTE Greatly disturbed growing danger to group of
500 rabbis and rabbinical scholars (with alsmost complete
Mirer Rabbinical College) in Shanghai. Have directed
several pleas to Vatican to intervene with Japanese Govern-
ment for unilateral release of entire group. Negotiations
in progress. Respectfully urge you contact Swedish Govern-
ment that presentations be made by Swedish Government and
King to Japanese Government for release of group. Neces-
sary also consult Swedish Government and request make avail-
able ship for transport of group and permit temporary entry
into Sweden. Almost entire group possess final entry visas
to Palestine, Canada, United States and other lands. We
guarantee cost of transport and maintenance while in Sweden.
This group represents the remmant of the great rabbinical
colleges of Poland and Lithuania. Their rescue and rehabilita-
tion would be an historic undertaking. We appeal
to you to consult Rabbi Wolbe and lend your influential
support to our committee in Switzerland. UNQUOTE
HULL
(GLW)
WRB:MMV:KG
NOW
9/28/44
Regraded Unclassifie
217
Distribution of true
September 28, 1944
reading only by
special arrangement.
5 p.m.
(SECRET W)
AMLEGATION
STOCKHOLM
1942
The cable below is WRB 90.
Please deliver paraphrase of the following message to
Rabbi Wilhelm Wolbe, 11 Olefsgottn Strasse, Stockholm, from
the Vaad Hahatzala Emergency Committee:
QUOTE Greatly disturbed growing danger to group of
500 rabbis and rabbinical scholars (with almost complete
Mirer Rabbinical College) in Shanghai. Have directed several
pleas to Vatican to intervene with Japanese Government for
unilateral release of entire group. Negotiations in progress.
Respectfully urge you contact Swedish Government that pre-
sentations be made by Swedish Government and king to Japanese
Government for release of group. Necessary also consult
Swedish Government and request make available ship for trans-
port of group and permit temporary entry into Sweden. Alsmost
entire group possess final entry visas to Palestine, Canada,
United States and other lands. We guarantee cost of trans-
port and maintenance while in Sweden. Contact Dr. Ehrenpreis.
Urge his participation in this vital matter. UNQUOTE
HULL
(GLW)
WRB:MMV:KG
NOE
9/28/44
Regraded Unclassified
218
CABLE TO MINISTER HARRISON, BERN, FOR MC CLELLAND FROM WAR REFUGEE BOARD
Please deliver the following message to Mrs. Fanny Hirsch, Comite
Refugies Intellectuals, 7 Rue Gautier, Geneva, Switzerland, from Fred S.
Weissman, Selfhelp of Emigres from Central Europe, Inc.
QUOTE RECEIVED MESSAGES SEPTEMBER 1, 5 aND 16 STOP WAITING
FOR DETAILED INFORMATION STOP TRANSFERRING $2,000 UNDER
LICENSE W-2137 STOP CONTINUE RESCUE WORK FOR BERGENBELSEN
AND THERESIENSTADT STOP ENLIST COOPERATION MARIUS HESS-LIEBER,
22 WALLSTRASSE, BASEL UNQUOTE
THIS IS WRB CABLE TO BERN NO. 187
2:30 p.m.
September 28, 1944
RDrury 9/27/44
Regraded Unclassified
219
BJR - 266
Born
This Telegram must be
paraphrased before being
Dated September 28, 1944
communicated to anyone
other then a Government
Rec'd 9:23 a.m.
Agency. (SECRET 0)
Secretary of State,
Washington.
6443, September 28, 9 a.m.
FOR VRB FROM MCCLELLAND
Sternbach has given me following names of his
centact men for rescue work in Hungary and Slevakia:
Department's 3152 September 12 and Legation's 6252
September 21. In Budapest: Charles Roth, Sch. B.
Frey and Dr. Reiner; in Bratislava: Rabbi Samuel
David Ungar. Berthold Donnebaum and M. B. Weissman.
HARRISON
CSB
Miss Chauncey (For the Sec'y) Abrahamson, Aksin, Cohn.
Drury, DuBois. Friedman, Gaston, Hodel, Laughlin, Lesser.
Mannen, Marks, McCermack. Pehle, Cable Centrel Files.
Regraded Unclassified
220
FBM-262
Bern
This telegram must be
paraphrased before being
Dated September 28, 1944
communicated to anyone
other than a Government
Rec'd 9:15 a.m.
Agency. (SECRET-O)
Secretary of State
Washington
6445, September 28, 10 a.m.
FOR WRB FROM MCCLELLAND.
Department's 3255 September 21, and 2933 August 23.
With reference to third paragraph your 3255
we should appreciate receiving from person mentioned
in opening sentence your 2933 as precise information
as possible concerning date and place of inhuman
treatment of Hungarian Jews described. Did this occur
after Hungarian Government's official declaration to
ICRC that deportation of all Jews from Hungary had
ceased? With such additional information on hand the
Swiss would undoubtedly be able to appreach Hungarian
Government more effectively. If desired data cannot
be furnished, however, please advise, whereupon we
will again request Swiss to act on basis material available.
HARRISON
MEV
Regraded Unclassified
221
JBN-426
Bern
This telegram must be
paraphrased before being
Dated
September 28, 1944
communicated to anyone
other than a Government
Rec'd 7:23 p.m.
agency. (SECRET 0)
Secretary of State
Washington
6446 September 28, 11 a.m.
FOR WRB FROM MCCLELLAND
I refer to second paragraph your 3255 September
21. On September 22 we once more urged ICRC, with
respect specifically to possible departure from Hun-
gary of Jewish children and accompanying adults for
Spain (Department's 3546 September 20), to frankly
inform us concerning degree of actual supervision
and control ICRC is able to exercise at present
time not only over eventual departure of Jews from
Hungary but over their general security and welfare
while they remained in that country.
As observed in Legation's 6093 September 15
numbered paragraph 2, ICRC control over situation
Jews in Hungary will remain essentially ineffectual
as long as they are physically prevented by refusal
of Germans to grant transit visas from sending in ad-
ditional personnel. We know that they
have wished to increase their delegation in Hungary
for several months (Legations 4896 of July 21 and 3731
June 11), so there is no lack of desire on their
part to assist in mitigating treatment of Jews in
Hungary if only by presence of observers.
ICRC unfortunately have nothing in hand which
they could use as leverage in attempting to move the
Germans to favorable decision in this matter.
HARRISON
JMS NPL
Regraded Unclassified
222
LFG-427
Bern
This telegram must be
paraphrased before being
Dated September 28, 1944
communicated to anyone
other than a Government
Rec'd 7:22 p.m.
Agency. (SECRET 0)
Secretary of State,
Washington.
6447, September 28, noon
FOR WRB FROM MCCLELLAND
Legation's 6093, September 15.
Responsible Jewish organizations in Switzerland
are becoming increasingly anxious regarding announced
intention of present Hungarian Government to move
Jews remaining concentrated in Budapest out of city.
These organizations supported by Dr. Nisonkahan, former
member of Hungarian Jewish Senate (Judenrate) who reached
Switzerland with group of 318 from Bergen Belsen
(Legation's 5517, August 23) regard such a move as
greatly endangering situation of Budapest Jews and
have laid following considerations before me which
I feel should be communicated to WRB.
One. Past experience has demonstrated that pograms
are much more difficult to carry out in capital cities
where public sentiment reacts more energetically,
foreign diplomats are located and government which
will be held directly responsible for such excesses,
has its seat.
Two. In last minute deterioration of Hungary's
military situation it could be far easier for Germans
or certain Hungarian elements to "liquidated" Budapest
Jews if they were scattered throughout provinces and
located in isolated camps rather than in some 2600
separated dwellings in Budapest.
Three. Erection of barracks in camps to house
120,000 Jews would require several hundred railroad
cars of lumber which under present circumstances is not
available. Further financial means which Jewish Committee
in Budapest still possesses would be inadequate to apy
for construction of such camps present Lakatos Governmnet
having made no move to unblock confiseated Jewish funds
for this purpose. As a result of these prospects it is
feared that most Jews whose evacuation from Budapest
Regraded Unclassified
223
-2-#6447, September 28, noon, from Bern
is envisaged would be concentrated in thoroughly primitive
and unhygienic "camps" similar to those used for assembling
Jews in provinces prior to their deportation during
May and June. Such "adhoc" camps were terribly crowded
and afford insufficient shelter.
Four. Task of supplying such camps with food which
would fall to Central Jewish Senate in Budapest would
be exceptionally difficult. Necessary equipment for such
camps (kitchens for instance) is lacking and it is very
hard in provinces to find adequate supplies locally for
large concentrations of persons.
Five. Jews in Budapest despite confiscation and
plundering still possess a minimum of clothing and
household belongings which would undoubtedly have to
be left behind and also be confiscated and stolen.
In view of above pertinent to observations which
have also been brought to attention of ICRC I recommend
that you seriously consider addressing a formal protest
to Hungarian Government against this projected move.
Immediate radio broadcast covering situation might be
considered. Although it si not yet confirmed that
Hungarian Government has begun execution this plan it has
stated that contemplated move is designed to bring Jews
under exclusively Hungarian control and "preserve them
from outside interference".
HARRISON
RB
Regraded Unclassified
224
MS-422
Bern
This telegram must be
paraphrased before being
September 28, 1944
communicated to anyone
other than a Government
Rec'd 6:06 p.m.
agency. (RESTRICTED)
Secretary of State,
Washington.
6460, September 28, 7 p.m.
FOR WRB FROM MCCLELLAND
FOR FEA
Legation's 5718, September 1, 2 p.m.
American Friends Service Committee, Geneva, would
greatly appreciate advice whether authorization purchase
foodstuffs for refugees France outlined in our 5718 can
be granted. Joint Relief Commission is pressing for
an answer stating option on foodstuffs cannot be maintained
much longer. Friends office at Geneva has already
received Swiss franc equivalent $15,000 from
Philadelphia and would like to proceed purchase at
least of foodstuffs of Swiss origin.
HarrHison
WMB
Regraded Unclassified
225
AIRGRAM TO AMEMBASSY, MONTEVIDEO, URUGUAY
The War Refugee Board requests that you deliver the following message
to Rabbi Aaron Milefsky, 896 Sorianno, Montevideo, from Rabbi Abraham Kalmanowitz:
QUOTE As per last alarming infromation received by us the
Germans placed more than one hundred bearers of Paraguayan docu-
ments formerly in Vittel under jurisdiction of Gestapo and probably
deported them to annihilationcamp at Auschwitz. Please arrange
influential delegation to Paraguay and made strong representations
that Paraguayan Government should instruct their ambassador at
Madrid to request good offices of Spain to strongly protect against
evacuation of these people from camp for civilian interness and
energetically demand to grant them the same rights, privileges, and
immunities which Germans expect for their nationals. Paraguay
should make it clear to German that should any harm befall these
persons Germany would be held strictly accountable for every life.
The Paraguayan ambassador at Madrid should diligently and con-
stantly follow up this matter until he will obtain positive results.
For your information United States Government is doing utmost to
save these people, but Paraguay's direct action is vital.
VAAD HAHATZALA EMERGENCY COMMITTEE
RABBI ABRAHAM KALMANOWITZ UNQUOTE
4:30 p.m.
September 28, 1944
BAkzin:LSLesser:tmh 9-26-44
Regraded Unclassified
226
DEPARTMENT
OUTGOING
DIVISION OF
OF
COMMUNICATIONS
STATE
TELEGRAM
AND RECORDS
BS
September 28, 1944
This tolegram must be
paraphrased before being
4 P.M.
communicated to anyone
other than a Government
agency. (RESTRICTED)
DEPARTMENT If STATE
MEMBASSY,
DIVISION OF
CHUNGKING.
TEP 30 1944
1263
COMMUNICATIONS
FOR FRIEDMAN FROM TREASURY
eference your 1596 of September 22.
Permission granted.
HULL
(GL)
FMA:GL:db
9/27/44
Regraded Unclassifie
227
NOT TO BE RE-TRANSMITTED
COPY NO.
"
SECRET
OPTEL No. 316
Information received up to 10 a.m., 28th September,
1944.
1. NAVAL
17 ships can now be berthed alongside at MARSEILLE
and 9 at TOULON.
Between 16th and 23rd landing craft have been trans-
porting commandos and Partisans to Southern Dalmatian Islands.
500 Commandoes also successfully landed on S. Albanian coast 22nd/
23rd.
On 23rd/24th Coastal Forces sank three enemy small
craft off Dalmatia.
Objectives north of RIMINI shelled by one of H.M.
Destroyers on 24th and by another on 25th.
2. MILITARY
WESTERN EUROPE. Attacks by our armour and infantry
during 26th and 27th have extended the flanks of the salient
eastwards in ELST area and westwards towards HERTOGENBOSCH, About
2,800 officers and men were evacuated from the ARNHEM bridgehead.
BURMA. Our advance towards TIDDIM maintained and
our troops are now about 7 miles from the town.
3. AIR OPERATIONS
WESTERN FRONT. 26th/27th. KARLSRUHE - 937 tons
dropped, including 817 incendiary. Thin cloud did not hide
markers which were well placed. Bombing well concentrated on
them. Reconnaissance one hour later reported considerable fires.
27th. 1093 escorted U.S. heavy bombers dropped
1743 tons at COLOGNE, KASSEL, MAINZ, LUDWIGSHAFEN and other
objectives with unobserved results. 323 escorted Bomber Command
aircraft bombed defensive positions CALAIS - 1686 tons, where
bombing very accurate from below clouds, while 264 others dropped
1042 tons on two oil plants in the Ruhr. Much cloud, both
attacks considered scattered. Mitchells and Bostons dropped 65
tens en railway and other objectives Western Germany and 675
fighters flew reconnaissances over the Low Countries. 110 Dakotas
and 72 Halifaxes carried supplies to HOLLAND and BELGIUM. German
casualties 87, 5, 16. Ours - 41 U.S. heavies, 1 Bomber Command
heavy and 23 fighters missing.
27th/28th. Aircraft despatched: KAISERLAUTERN town
172 (2 missing) railway repair shops 55, KASSEL and two other
targets - 58 Mosquitoes, Bomber support - 33.
MEDITERRANEAN. 26th, 315 medium bombers (1 missing)
and 113 Thunderbolts (1 missing) attacked communications, etc.
Northern Italy, while 48 aircraft attacked objectives in Albania
and Corfu,
4. HOME SECURITY
Two enemy aircraft and one flying bomb plotted 27th/
28th, Latter fell in the sea off SUFFOLK,
Regraded Unclassified