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Volume 790, November 1 – November 2, 1944
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Volume 790, November 1 – November 2, 1944
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Henry Morgenthau, Jr. Papers
Diaries of Henry Morgenthau, Jr.
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DIARY
Book 790
November 1-2, 1944
- C - -
Book Page
Cartels
Interdepartmental Executive Committee on Economic
Foreign Policy report sent to HMJr by Acheson -
11/2/44
790 243
Christian Science Monitor
See Post-War Planning: Germany (Treasury Plan)
- D -
Deposits, Division of
See Treasury Department (Reorganisation)
- 1 -
Fisher, Irving
Decides to vote for FDR; Fisher-HMJr correspondence - -
11/2/44
236
Foley, Edward H., Jr. - Colonel
Replacement in Italian theatre discussed in McCloy-HMJr
correspondence - 11/1/44
77
(See also Book 793, page 218 - 11/11/44)
Foreign Funds Control
See also Treasury Department: Reorganization
France
Exchange of communications permitted - 11/2/44
133
Bank of France - making funds available to Provisional
Government discussed in O'Connell memorandum -
11/29/44: See Book 800, page 134
a) French Government communication
France
See Foreign Funds Control
- G -
Germany
See Post-War Planning
- I -
Internal Revenue, Bureau of
See Treasury Department (Reorganisation)
- X -
Krock, Arthur (New York Times)
See Post-War Planning: Germany (Treasury Plan)
Regraded Unclassified
- L -
Book Page
Landon, Alf A.
See Post-War Planning: Germany (Treasury Plan)
Legislative Counsel
See Treasury Department (Reorganization)
Lend-Lease
United Kingdom
Phase 2
Air items of equipment during first year of
Phase 2 outlined - 11/2/44
790
211
a) Sir Robert Sinclair's later recommendations
accepted - 11/6/44: See Book 792, page 153
b) Gates reviews situation for American
delegation - 11/10/44: Book 793, page 27
Navy Department attitude toward:
a) Keynes letter to HMJr - 11/2/44
199
b) Forrestal-EMJr conversation - 11/2/44
201
c) Navy letter to Treasury - 11/2/44
204
d) Conference; present: Keynes, Sinclair, Lee;
HMJr, Coe, and Casaday - 11/3/44: Book 791,
page 29, and Book 792, page 146
e) American delegation confers - 11/3/44: Book 791.
pages 46,48
1) Agenda: Book 791, page 76
2) U.K. members of Combined Committee note:
Book 791, page 77
f) Combined U.S. and U.K. Committee meeting -
11/3/44: Book 791, pages 78,81
(See also Book 791, page 279 - 11/4/44)
g) Navy Department decision on British requirements -
11/8/44: Book 793. page 151
h) Admiral McCormick reviews "agreement signed and
sent to British few minutes ago" - 11/10/44:
Book 793, page 20
Phase 3: Cherwell advises delay in discussions until
Phase 2 is settled - 11/1/44
10
Aircraft despatched, weeks ending October 13 and
October 20 - British Air Commission report - - 11/2/44
254
Federal Reserve Bank of New York statement showing
dollar disbursements, week ending October 25, 1944
257
- If -
Havy Department
See Lend-Lease: United Kingdom (Phase 2)
- o -
Olrich, Ernest L.
Patton-Treasury correspondence: See Post-War Planning
(Surplus Property, Disposal of)
Regraded Unclassified
- P -
Book
Page
Patton, James G. (President, Farmers Educational and
Cooperative Union of America)
See Post-War Planning: Surplus Property, Disposal of
Post-War Planning
Germany
Handbook (British Draft of Policy Directive): Treasury
Analysis of
Cherwell, Lord: McCloy asked by HMJr if he may show
analysis - 11/1/44
790
2
a) Actual analysis
5
Stettinius given copy - - 11/3/44: See Book 791, page 113
Conference: present: McCloy, HMJr, Pehle, White. and
Luxford - 11/1/44
11
a) McCloy memorandum on "British draft policy
directives for Germany"
25
b) FDR letter to Hull forbidding discussion of
partition, reparations, industrialisation of
the Ruhr, etc., reported to HMJr by McCloy -
11/1/44
16
1) HMJr asks White House for copy: FDR does
not want it circulated; McCloy's copy
therefore returned to him by HMJr
151
2) Stettinius asked for copy - 11/3/44:
See Book 791, page 18
Cherwell conference with Treasury group reported in
Luxford nemorandum - 11/1/44
36
a) Revised memorandum
38
Treasury Plan
HMJr answers typical soldier mail concerning - - 11/1/44
100
(See also Book 791, page 114)
Landon, Alf M.: Possible reply to discussed by
Treasury group - 11/2/44
122
a) Gaston draft (not sent)
139
Krock (Arthur) account of Quebec Conference and State,
War, and Foreign Economic Administration reaction to
Treasury plan discussed by Treasury group - 11/3/44:
See Book 791, page 5
1) United Kingdom support indicated because
(a) "Germany de-industrialised will improve
British prospects" and (b) liberalised Lend-Lease:
Book 791, page 22
2) Stettinius denies any State Department connection -
11/3/44: Book 791. page 16
Christian Science Monitor - Gaston letter correcting
"errors of reporting" - 11/3/44: Book 791, page 122
Surplus Property, Disposal of
See also Treasury Department (Reorganisation)
Patton, James G. (President, Farmers Educational and
Cooperative Union of America)-Treasury correspondence
concerning Olrich - 11/1/44
80
a) Patton reply - - 11/8/44: See Book 792, page 167
Regraded Unclassified
- R - -
Book Page
Reorganisation
See Treasury Department
- 8 -
Surplus Property, Disposal of
See Post-War Planning
. Treasury Department (Reorganisation)
- T -
Tax Legislative Counsel
See Treasury Department (Reorganisation)
Tax Research, Division of
See Treasury Department (Reorganization)
Treasury Department
Reorganisation
Discussed by Treasury group - 11/2/44
790
153
a) Charts
183,etc.
Further discussion - 11/14/44: See Book 794, pages 164,192
a) General Counsel's Office discussed
b) Division of Tax Research
.
c) Legislative Counsel discussed
d) Surplus Property, Disposal of: HMJr does not want
this left under Procurement Division: Book 794,
page 179
o) Division of Deposits: Strengthening of fiscal
control discussed by HMJr, D.W. Bell, C.S. Bell,
Bartelt, and Cake: Book 794, page 192
1) For discussion and charts see page 209
Treasury Department Order No. 54 covering Bureau of
Internal Revenue, Tax Legislative Counsel, and
Division of Tax Research - 11/29/44: Book 800, page 91
Foreign Funds Control transferred from O'Connell to
White - 11/30/44: Book 800, page 247
- U -
United Kingdom
See Lend-Lease
Regraded Unclassified
1
November 1, 1944
At eight forty-five last night I spoke to Mr. Searles
at the White House and told him to tell the President that
Lord Cherwell was leaving Wednesday afternoon and that the
President might want to see Lord Cherwell before he leaves.
I thought that this was a nice thing to do.
At seven minutes to nine Searles called back to say
that the President was very sorry but he was so busy with
his speeches that he couldn't see Cherwell and tell him
that. Cherwell doesn't know that I asked for him to see
the President so unless he raises it, I'm not going to say
anything. It would just make him feel badly.
Regraded Unclassifie
1
November 1, 1944
At eight forty-five last night I spoke to Mr. Searles
at the White House and told him to tell the President that
Lord Cherwell was leaving Wednesday afternoon and that the
President might want to see Lord Cherwell before he leaves.
I thought that this was a nice thing to do.
At seven minutes to nine Searles called back to say
that the President was very sorry but he was so busy with
his speeches that he couldn't see Cherwell and tell him
that. Cherwell doesn't know that I asked for him to see
the President 80 unless he raises it, I'm not going to say
anything. It would just make him feel badly.
Regraded Unclassifie
2
November 1, 1944
9:37 a.m.
HMJr:
Hello.
Operator:
McCloy.
HMJr:
Hello.
John J.
McCloy:
Hello.
HMJr:
Good morning.
M:
How are you?
HMJr:
Fine. Look, Jack, do you remember on October
20th you were kind enough to send me over the
English handbook.
M:
Yes.
HMJr:
Now, we've made an analysis which I am sending
over to you.
M:
Good.
HMJr:
Now, I'd like to do with your permission
....
M:
Yeah.
HMJr:
....
is -- I'm having lunch with Cherwell who
is leaving after lunch for England.
M:
Yes.
HMJr:
I'd like to give him a copy of our comments
if it's agreeable to you.
M:
Well, I think that -- well, the only thing on
that is that I'd like to be sure that your
comments and our comments jibe.
HMJr:
All right.
M:
Because we're -- we've got some thoughts on
the thing too; whereas, if he should take that
back and they should vary from what we'd be
sending over, now, we might get into some
difficulties.
Regraded Unclassified
3
- 2 -
HMJr:
Well ....
M:
If We could clear that -- clear our thought
this morning on it and then you could give it
to him so that we'd be sure that we were -- we
were putting up the same story to him, or at
least letting him know that there was another
story if there were one.
HMJr:
I won't do anything unless it's entirely
agreeable to the War Department.
M:
Yes. Well, I'll tell you, who -- who over there
1s the fellow that knows most about 1t?
HMJr:
Besides me?
M:
Yes.
HMJr:
(Laughs)
M:
Besides you -- I meant to add that. Yes, I meant
to add that.
HMJr:
(Laughs) Well, I can answer your question the
way you asked it, the fellow who knows the most
about it is White.
M:
White. Well, suppose I get a hold of White and
tell White what our thoughts are.
HMJr:
Yes.
M:
And see how they jibe. I would imagine that
they'd be pretty much the same as yours.
HMJr:
Well, let me send this thing over to you.
M:
Yeah. All right.
HMJr:
And you glance at it
....
M:
Yes.
HMJr:
....
and if you'll just
....
M:
Then we'll get in touch with you.
Regraded Unclassified
- 3 -
4
HMJr:
And if it's not agreeable
....
M:
Yes.
HMJr:
....
but I just felt that here's an avenue of
direct approach to the Prime Minister
....
M:
Right.
HMJr:
....
which you might like to
....
M:
It may be very useful.
HMJr:
See?
M:
It might be very useful.
HMJr:
See?
M:
Right. Okay.
HMJr:
Thank you.
M:
You'll get it over right away?
HMJr:
It will be there within twenty minutes.
M:
Fine. Okay.
Regraded Unclassified
rebbon copy to
r
5
MEMORANDUM or THE BRITISH DRAFT OF me mcCloy
POLICY DIRECTIVE FOR GERMANY
11/1/44
1. Examination of the British document suggests that it me
intended as a long range program. If this British group of dir-
ectives was so intended, it does not cover the major questions
involved. If, on the other hand, the British document is only
intended as a interim program it prejudices the leng range de-
cision on important issues. In any event, its 97 pages of de-
tailed instructions, eften en unimportent points, is net a satis-
factory medium for a high level policy determination. The does-
ment confuses principles with details of administration, md thus
does not provide a basis on which decisions ⑉ be readily reached
through the exchange of views.
2. The appropriate document for immediate disenssion is
the Amriem interin directive. This document is to the large part
a statement of principles which after agreement would provide the
basis for the preparation of handbooks containing full details
for administration. The failure of the British Government to
present its views on this document is preventing further progress
of combined discussions on the treatment to be accorded Germany.
We are faced with the danger that the prolongation of the period
in which the military directive operates will seriously projudio
the situation within Germany and limit the effectiveness of
long range pelicies which may be found to be desirable by the
three governments.
Regraded Unclassifie
6
&
s. The following are some of the major policy
issues which the British document fails to deal with
adequately:
(a) The elimination or destruction of
heavy industry in Germany, specifically the
metallurgical, chemical and electrical
industries in Germany.
(b) Future boundaries of Germany.
(c) Partitioning of Germany.
(a) Disposition of the Ruhr through
internationalisation or otherwise.
(e) Restitution.
(f) Reparations, including whether there
will be reparations in the form of recurring
payments.
(g) A comprehensive educational program.
(h) A positive program for political
decentralisation,
(1) The character of controls to be employed
in preventing re-emergence of & powerful
industrial Germany.
Regraded Unclassified
7
n 9 0
(1) Agrarian reform including the breaking
up of the Jumker estates.
(k) The punishment of was crimes and the
apprehension of war criminals.
(1) The pxtradition of war criminals to the
seens of their orines.
w While it is difficult to evaluate the significance
of the detailed policy questions without an understanding of
the underlying objectives, the following comments on the
British group of directives may indicate the difference in
approach:
(a) Administrative convenience is frequently
placed above principle in dualing with problems of
German occupation.
(b) In defining specifically certain of the
powers which the Occupation Consember will have,
the document tends to obseurs the fact that the
Commander-in-Chief will have all the powers of
government and has the power to do whatever is
necessary to carry out the program determined by
the Allies.
Regraded Unclassified
8
- 4 -
(e) In connection with the punishment of
infractions of regulations and instructions of the
occupying forces, there is s. tendency in the
directive to rely on inadequate and indirect
punishments and senctions when there is no
cocasion for avoiding direct penalties.
(a) The Allied commanders are given too much
responsibility for the well functioning of the
German economy.
(e) The list of persons to be detained and
placed under guard for political and security
reasons is totally inadequate and vests too such
discretion in the Allied Communder-in-Chiefe It
gives an appearance of an attempt to shift
responsibility.
(1) There is too much political freedom
given to the Germans.
(g) The program for keeping the German
schools and universities open at any cost ignores
the need for a fundamental recrientation of Germen
educational institutions.
Regraded Unclassified
9
- 5 -
(h) We see no point in giving the Allied
Military Communder discretion in making it possible
for the German "police" to be able to retain tanks
and heavy weapons. This sounds like the beginning
of the rearmant of Germany.
(1) If Austria is to be given substantially
better treatment than Germany, the treatment to be
accorded Austria should be dealt with in a separate
set of directives.
Regraded Unclassified
10
Meeting in the Secretary's Office
November 1, 1944, 10:00 a.m.
Present: Secretary Morgenthau
Lord Keynes
Lord Cherwell
Mr. White
The Secretary stated that he had given thought to the question
that Lord Cherwell had asked the day previously, namely, whether
arrangements for Phase 3 should be taken up together with Phase 2.
He said that in his judgment it would be undesirable to do so;
that it would be preferable for the discussions on Phase 3 to wait.
Cherwell said he hoped that the present committee operating
under the chairmanship of Secretary Morgenthau could be continued
inasmuch as it was very helpful to have one place where problems
relating to lend-lease operations under Phase 2 could be finally
settled if and when they crop up. Also, he hoped that the same
committee could continue to function to take up the problems of
Phase 3. The Secretary indicated that it was his belief that the
present committee was set up as a temporary committee to handle
the immediate problems of lend-lease under Phase 2; that if the
committee were to undertake problems for Phase 3 that the President
would have to indicate that such was his desire. Cherwell thought
it might be helpful if Mr. Churchill, when next he spoke to the
President, would mention the desirability of continuing the com-
mittee.
H. D. White
Regraded Unclassified
11
November 1, 1944
12:15 p.m.
INTERIM DIRECTIVE ON GERMANY
Present: Mr. McCloy
Dr. White
Mr. Pehle
Mr. Luxford
Mrs. Klotz
DR. WHITE: Mr. Secretary, we finished an article
for you in Foreign Affairs. I think now it is a very
dignified and nice general article. When you read it
over there are a couple of paragraphs to note - the
B.I.S.
There will also be another article in that, by me,
which will be on certain technical aspects of it. They
are delighted to have your article in there. It treats
of the general aspects. The boys who did most of the
work on it were Adler and Bernstein.
Would you like to have Mr. Luxford or Mr. Pehle in
this discussion with McCloy, if he is going to discuss
the details?
(Mr. Pehle and Mr. Luxford enter the conference)
MR. PEHLE: Good morning, Mr. Secretary.
H.M.JR: Did you participate in this memorandum?
MR. PEHLE: The one to Cherwell? Yes.
H.M.JR: McCloy is on his way over here.
(Mr. McCloy enters the conference)
Regraded Unclassified
12
- 2 -
MR. McCLOY: I think we feel very much as you do on
this business, from the comments that we have got. In the
first place, the most important thing to us is that, as
you point out, there is 8 little doubt as to what this
really intends to cover whether it is interim or long-
range. If it is long-range - and we don't think it should
be long-range - I think you have a very good reason why
it should not be long-range at this time - it would be
inadequate for the reasons you point out. And as an interim
Directive we feel that it has the wrong philosophy entirely.
In other words, instead of giving the commanders a
constitution under which they can write their statutes,
someone has tried to write out the orders which they
want the commanders to put into effect against the German
people, in haec verba.
We think that is wrong. They are doing, in other
words, down on the staff planning level-they are doing
on the governmental level what should be done on the
staff military level, and there is no reason why you can't
get as much know-how on the staff level as you have on
the upper level.
We understand that there is something of a conflict
between the Foreign Office and the War Office in London
in this very regard, that the War Office has now been
educated to the general principle of having a fundamental
document which they give to the Combined Commander and let
him put into effect. That does not apply to the Foreign
Office, who have had experts working for long periods of
time on detailed matters relating to police education, or
what-not, and they have specified just how they want this
to be treated. And they are very proud of those documents.
They have been working on them for a long time and they
want to have them asserted.
We feel these documents are faulty even in their
interim character, in a number of important respects.
We think that they are apparently, as you do, more con-
cerned about maintaining the body politic than we think
Regraded Unclassified
13
- 3 -
should be our principle when we at least first go into
Germany. We think that they have not done as much in
the way of arrest and detention as should be done. We
think that on the education point, as you do, we should
stop; and the only practical thing to do is to stop all
schools until you can purge, and then start again, rather
than just have a gradual system of purging going on at the
same time the schools are going on.
H.M.JR: May I interrupt you a minute? I want you to
frankly tell me whether you want to use this avenue of
approach to Churchill or not. If you do or don't, I
would like to make a suggestion. But be very frank.
MR. McCLOY: Yes, I will be very frank. I do.
H.M.JR: Now, let me see if I can't get Cherwell,
maybe, to come over a little earlier. We could have some
food brought up.
MR. McCLOY: I am afraid I can't do it. I have a
date that I can't possibly cancel. I tried to before I
came over, but I can't do it. I have to leave here at
twelve-thirty at the latest.
H.M.JR: Well, if Cherwell had time, would you want
him to drop over and see you before he left?
MR. McCLOY: If that were O.K. - but I don't think
it is necessary. We have all worked together on this
thing. You can tell it just as well as I can.
H.M.JR: No, I can't. But do you think it would be
helpful for me to give this thing to him?
MR McCLOY: I get this impression from that first
paragraph of the first page. I think you do not warn him
sufficiently of dealing with long-range problems at the
present time.
In other words, I don't think you make two points
quite as clear as might be made. First, we don't want
Unclassified
14
- 4 -
any long-range discussion at this time, that this docu-
ment we want him to center on is an interim document at
this time. If we get into the long-range business we will
never get the interim, which is what we want. So we want
to exclude the discussion.
MR. WHITE: I think we could redraft this to bring this
out. (Refers to Memorandum on British Draft, attached)
H.M.JR: I only got this this morning. I couldn't
give it to you any earlier.
MR. McCLOY: I understand.
Secondly, we want to emphasize our philosophy, which
has been the thing we have operated on all along, and this
is the same old Foreign Office effort to take the other
line, and that is that we only want to give at that level,
from the Government level, the general constitution, not
the specific order, which the commander is going to follow.
And on the staff level, from there down, they can prepare
the particular directives that deal with the police, that
deal with the education, as long as we have the general
principle clearly stated in the fundamental Directive.
H.M.JR: Let me see if I understand you. I want to
be a hundred percent clear. I felt that this was such a
good avenue. But you are satisfied that I can say to him -
and the boys can change this - can you do this between now
and one o'clock?
MR. PEHLE: Sure.
MR. LUXFORD: Sure.
H.M.JR: that this is emphasizing the thing on the
interim and not on the long-range. And can I be very frank
with him and say that I showed this to you, that it meets
with the War Department's approval, that I show him this
as a Treasury memorandum?
MR. McCLOY: Yes, that is right. O.K., you can say
that.
Regraded Unclassified
15
- 5 -
H.M.JR: But that you are in complete sympathy with
this memorandum. Is that right?
MR. McCLOY: Except for the point that I make.
MR. WHITE: The second one - the first one I see
very clearly.
H.M.JR: But that the Army, of course, will approach
this thing through regular channels, but you were very glad
to have me give him this so it could go directly to
Mr. Churchill.
MR. McCLOY: That is all right.
H.M.JR: Am I going too far?
MR. McCLOY: No, that is all right.
MR. PEHLE: Could we state in here that that is the
view of our War Department?
MR. WHITE: Yes.
MR. PEHIE: Because they are the active agency in this
thing, and it is more important that it is their view.
H.M.JR: I think I had better simply say that verbally.
I want to say this is very informal, I only got this this
morning, and Mr. McCloy only had & very quick glance at it,
but I can quote him as saying it is all right. But of
course you will approach the thing through regular channels.
MR. LUXFORD: We could, Mr. Secretary, I think, cover
the same point Mr. McCloy is making by saying we must
decide at the high level the general principle involved,
and leave for staff work the developing of the application.
MR. McCLOY: And we think they have contravened that
principle in their Directive.
Regraded Unclassified
16
- 6 -
MR. WHITE: Mixed up the Directive with the Handbook.
Now, the Handbook, your authority is, is something that
should be done at the staff level. This is the Directive.
MR. McCLOY: That is right. This is the fundamental
Directive by which we movedinto every country we have gone
into so far. Eisenhower takes that, sends it down to his
staff and says, "Now, you prepare the orders."
MR. WHITE: Yes, but the Handbook also was reviewed
by you.
MR. McCLOY: It happened to be reviewed by us. It
would have been reviewed in ordinary course.
MR. WHITE: Won't it be reviewed in the future?
MR. McCLOY: Yes.
MR. WHITE: Therefore he is confusing the Directive
with the Handbook, but that doesn't mean the Handbook is not
subject to your review.
MR. McCLOY: That doesn't mean we wouldn't get a look
at that Handbook, too.
MR. WHITE: Concentrating on the Directive as some-
thing of high policy.
MR. McCLOY: We looked at the Handbook only with the
idea of seeing that it conforms with the tone of the
Directive. It is very important that we maintain that
line.
Then, in addition to that, and it is also apropos
of your first point, we have gotten from the State Depart-
ment - I don't know whether you have gotten it or not - &
communication from the President to Secretary Hull in which
he makes it very strong that he does not want to go into
these questions now, that he wants to give further thought -
I mean the question of partition, the question of reparations,
the question of the industrialization of the Ruhr. He wants
to hold that out for further thought and doesn't want any
documents written about that.
Regraded Unclassified
17
- 7 -
MR. WHITE: You say the Army got a letter of that
kind?
MR. McCLOY: I have a copy of the letter which the
State Department gave me.
H.M.JR: This was from the President to Hull?
MR. McCLOY: From the President to Hull, and the
whole tone is, "Don't go into that business.
MR. WHITE: Is that a recent letter?
MR. McCLOY: Yes, that is a recent letter. But don't
tell him that.
Now, there are some of these points here that I don't
quite understand what your point is, but I don't know that
it is necessary that I should.
MR. WHITE: Well, we are sticking by the Directive.
MR. McCLOY: That is what we want to do; we want to
stick by 1067.
MR. WHITE: The American Interim Directive, 1067.
MR. McCLOY: Yes. But those are the important points.
MR. WHITE: That is, there is nothing in here that we
don't feel is not in full harmony and does not carry out
the Directive which was agreed upon.
MR. McCLOY: Yes, and of course we are all pointed
toward that Directive; that is fundamental - basic.
Fortunately, we have everybody from the President of the
United States, to Secretary of Treasury, to Secretary of
State and War, Joint Chiefs of Staff, all have put their
hand on that as saying that is the thing. Eisenhower has
come back and said that is just what he wanted.
Regraded Unclassified
18
- 8 -
MR. WHITE: Then why don't they discuss that instead
of this?
MR. McCLOY: Because the Foreign Office is 80 proud
of the research work and stuff they have done.
MR. WHITE: Maybe something like that through to
Churchill might help.
MR. McCLOY: Eden is a very powerful figure in this -
very powerful - more powerful in many respects in this
field, so far as his position with the War Cabinet is
concerned, than Mr. Churchill. I have gotten several
evidences of that.
Now, in some of these - (c), (a), (e), and (f) -
"There is too much political freedom given to the Germans" -
I don't know what you mean by that, particularly. (Refers
to Page 4 of attached memorandum)
MR. PEHLE: The Interim Directive provided it wouldn't
let them organize politically. The British Directive
says they can go right along and start organizing.
MR. McCLOY: That is all right so far as we are
concerned.
MR. WHITE: I think we were careful, Jack, not to have
anything in here that we didn't feel was--
MR. McCLOY: That is right - with the 1067.
Now, there is one other thought that is fundamental
here that we are all fuzzy about. The English definitely
take the line they think they are going into a country
where there will be a government, and they are going to have
control of that government. We have taken, perhaps, too
purely the other line, that there will be no government.
"I am a jealous God and there are no other gods but Me" -
that the military government is the only government that
exists in Germany, and although we can use functionaires
Regraded Unclassifie
19
- 9 -
throughout Germany, they are instruments only, and they
are responsible to the military. Yet we, at the same time,
say to the General, "You are not responsible for the
fundamental economy of the country," and we sort of
recognize that the Germans themselves will have to cover a
certain field there, subject to our stepping in. What is
the actual juridical relationship between the military
government and whatever remains of the German government?
MR. WHITE: I should think the legal theory, the
political theory, behind that would be that the military
government being supreme, carves out an area which it
says, "That is residual, and you can have any powers you
want within that - we may change that residual area, but
you may do anything you want within that area."
MR. McCLOY: That is exactly the simile I used the
other day, like the Interstate Commerce clause.
But his Directives take a different philosophy on that
and we would want to object to their complete acceptance
of the doctrine that there is a government there, that we
would only sit off on the side lines.
MR. PEHLE: And we have limited powers.
MR. McCLOY: In respect to that government - only
such powers as you can prove in a document.
MR. WHITE: Any powers which are not specified revert
to the Federal Government. Did you want that point expanded?
MR. McCLOY: You mentioned it here. I don't know
whether you sharpened it up as well as it might be. Is
that clear?
MR. PEHLE: Sure.
MR. McCLOY: You might read that before your luncheon.
That is a little thing I jotted down. (Hands the Secretary
Memorandum of November 1, attached)
Regraded Unclassified
20
- 10 -
H.M.JR: I will explain it to him that this is some-
thing we have prepared, and that you have read it, and that
in principle you have approved it.
MR. McCLOY: In principle, that is the way we feel.
H.M.JR: Well, thank you very much.
(Mr. McCloy leaves the conference)
H.M.JR: If you fellows (White, Pehle, and Luxford)
will be ready about one-thirty I will have you join us.
Regraded Unclassified
1/1/44
MEMORANDUM ON THE BRITISH DRAFT OF
21
POLICY DIRECTIVE FOR GERMANY
1. Examination of the British document suggests that it was
intended as a leag range program. If this British group of dir-
cetives was so intended, it does not cover the major questions
involved. If, on the other hand, the British document is only
intended as 4a interim program it prejudices the long range de-
cision on important issues. In any event, its 97 pages of de-
tailed instructions, often on unimportent points, is net a satis-
factory medium for & high lovel policy determination. The doeu-
ment confuses principles with details of administration, and thus
does not provide a busis on which decisions can be readily reached
through the exchange of views.
2. The appropriate document for immediate discussion is
the American interim directive. This document is to the large part
a statement of principles which after agreement would provide the
basis for the preparation of handbooks containing full details
for administration, The failure of the British Government to
present its views on this document is preventing further progress
of combined discussions on the treatment to be accorded Germany.
We are faced with the danger that the prolengation of the period
in which the military directive operates will seriously projudice
the situation within Germany and limit the effectiveness of
long range policies which may be found to be desirable by the
three governments.
Regraded Unclassified
22
e
a. The following are some of the major policy
issues which the British document fails to deal with
adequately:
(a) The elimination w destruction of
heavy industry in Ceruary, specifically the
metallurgical, chemical and electrical
industries in Germany.
(b) Future boundaries of Germany.
(e) Partitioning of Germany.
(a) Disposition of the Ruber through
internationalisation or otherwise.
(e) Restitution.
(f) Reparations, including whether there
will be reparations in the form of recurring
payments.
(s) & comprehensive educational program.
(h) & pesitive program for political
decentralisation.
(1) The character of controls to be exployed
in preventing re-emargence of a powerful
industrial Germany.
Regraded Unclassified
23
- 8 -
(1) Agrarian referm including the breaking
up of the Jumker estates.
(k) The punishment of was crime and the
apprehension of war criminals.
(1) The patradition of war criminals to the
scene of their crimes.
4. While it is difficult to evaluate the significance
of the detailed policy questions without an understanding of
the underlying objectives, the following coments on the
British group of directives may indicate the difference in
approach:
(a) Administrative eonvenience is frequently
placed above principle in dealing with problems of
German occupation.
(b) In defining specifically certain of the
powers which the Occupation Commander will have,
the document tends to obseurs the fact that the
Communder-In-Chief will have all the powers of
government and has the power to de whatever is
necessary to carry out the program determined by
the Allies.
Regraded.Unclassified
24
- 4
(e) In connection with the punishment of
infractions of regulations and instructions of the
occupying forces, there is a tendency in the
directive to rely on inadequate and indirect
punishments and sanctions when there is no
occasion for avoiding direct penalties.
(a) The Allied commanders are given too such
responsibility for the well functioning of the
German economy.
(e) The list of persons to be detained and
placed under guard for political and security
reasons is totally inadequate and vests too smoh
discretion in the Allied Commander-in-Chief. It
gives an appearance of an attempt to shift
responsibility.
(f) There is too such political freedom
given to the Germans.
(g) The program for keeping the German
schools and universities open at my cost ignores
the need for a fundamental recrientation of German
educational institutions.
Regraded Unclassified
25
- s -
(h) We see no point in giving the Allied
Military Commander discretion in making it possible
for the German "police" to be able to retain tanks
and heavy weapens. This sounds like the beginning
of the rearmement of Germany.
(1) If Austria is to be given substantially
better treatment than Germany, the treatment to be
accorded Austria should be dealt with in a separate
set of directives.
Regraded Unclassified
TOP SECRET
26
1 November 1944.
MEMORANDUM:
Subject: The British Draft Policy Directives for Germany.
1. Examination of the British document does not disclose whether
it was intended as a long-range program or for the immediate period
after the surrender and occupation of Germany.
2. It is the U. S. view that this is not the moment to discuss a
long-range view. The wishes of other United Nations must be considered
before the long-range policy toward Germany can be crystallized. Until
we have entered a considerable portion of Germany and know the condi-
tions that are existent there, it is impossible to formulate final
policy with respect to the treatment of Germany.
3. Further, the directives as presently written are too detailed
to be considered on a governmental level. As written these directives
would be protocol between the U. S., U. K. and U.S.S.R., and it would
be most difficult to modify, change or vary such agreements as con-
ditions require.
4. The substance of the British directives are matters of detail
primarily to be considered on an operational level such as the Control
Council for Germany or at SCAEF. It is desirable that EAC consideration
should be given on a broad overall level providing guidance to the
military commanders to enable them to formulate detailed plans.
5. The British approach treats Germany on the basis of an
armistice rather than unconditional surrender or complete military defeat,
and retains German administrative structures and organs to an extent
greater than is desired.
6. Conditions throughout Germany may not be uniform and in the
light of this consideration the British document does not insure to the
zone commanders the full freedom of action which in the U. S. view is
essential.
7. It is considered that JCS 1067 is the proper approach to the
immediate requirements in that it will provide the zone commanders with
all the guidance necessary at this time.
Regraded Unclassified
27-
November 1, 1944
12:38 p.m.
HMJr:
Hello.
Operator:
Miss Tully.
HMJr:
Hello.
Miss
Tully:
Hello.
HMJr:
Grace.
T:
Yes, Mr. Secretary.
HMJr:
Good morning.
T:
Good morning, sir.
HMJr:
You most likely are familiar with the fact
that we, in the Treasury, have been working
with State and War on the so-called American
handbook for the Army.
T:
Yes.
HMJr:
That job was finished, you remember I gave ....
T:
Yeah.
HMJr:
... you -- now we're working on one that the
British Army are using.
T:
Uh - huh.
HMJr:
And in discussing it with the Army, they tell
me that the President wrote a letter to Mr.
Hull as to just what he does or doesn't want
taken up at this time.
T:
Uh huh.
HMJr:
And that State furnished Army with a copy and
I'd like to have a copy also.
T:
Uh huh.
HMJr:
So that I can know what is in the President's
mind.
Regraded Unclassifie
28
- 2 -
T:
All right. Fine. When was that sent? Do you
know?
HMJr:
Well, I gathered it was sent quite recently.
T:
Quite recently.
HMJr:
Yes.
T:
Uh huh.
HMJr:
On this very subject.
T:
Yeah, the American handbook.
HMJr:
Well, no, this 1s -- well, now we're working
on the British handbook.
T:
Yeah, the British.
HMJr:
But what the President did or didn't want
included in these matters at this time.
T:
Uh huh. I see. All right, fine, I'll see
if I can check up and see what was sent to them.
HMJr:
Yes, and if I could get it fairly soon ....
T:
Uh huh. All right, sir.
HMJr:
Thank you.
T:
Bye, Mr. Secretary.
Regraded Unclassified
29
November 1, 1944.
"AM
MEMORANDUM
TO: Secretary Morgenthau
FROM: Mr. Gaston
I got Charles Collins on the phone at
Atwater 9-4630, New York, at 12:12 P.M. today
and expressed your regret that you would not be
able to make the speech. He did not question
the decision but said that if you should find
later that you would be able to speak they would
appreciate it if you would let them know.
I
said I would report that to you.
mr
Regraded Unclassified
30
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
Date
November 1, 1944
TO
Herbert Gaston
FROM Secretary Morgenthau.
Would you mind calling Charles Collins in New
York, Atwater 9-4630, and tell him that I'm very sorry
that I will not be able to accept his very kind invita-
tion to speak in New York Sunday afternoon. If he
presses you for a reason, you can give him any good
excuse that comes into your head. I would appreciate
it if you would do this for me.
For your information I have not heard from
Hannegan. I am not following him up again. I'm not
going to make any more effort to give that speech.
I have told Luxford and DuBois to give it to anybody
else they think could make good use of it.
Regraded Unclassified
31
Mr. Luxford
November 1, 1944
Mr. DuBois
Secretary Morgenthau
I want to thank you for all the trouble you have
gone to to prepare that speech. It is a very excellent
speech. Evidently Mr. Hannegan is not interested in my
giving it. Therefore, you are free to give it to anybody
else that you wish. Again thanks, not only for your
efforts but your interest. File
Regraded Unclassified
32
November 1, 1944
3:59 p.m.
Operator:
Operator.
HMJr:
You say Mr. Hannegan wants to talk to me?
Operator:
Yes. He's not on your private wire though.
HMJr:
What wire is he on?
Operator:
He's on Executive 6400. He called on the
regular switchboard.
HMJr:
Well, that's all right.
Operator:
All right. Go ahead.
HMJr:
Hello.
Robert
Hannegan:
Hello. This is Bob Hannegan.
HMJr:
Really?
H:
Yes, sir.
HMJr:
I thought you'd gone to Europe or Russia.
H:
Oh, God, no, but I might as well. I'm running
around like a -- I'm running around like a wild
man.
HMJr:
Well ....
H:
In addition to that I've been going to a doctor
three times a day.
HMJr:
Well, what's the trouble?
H:
Oh, I had a sinus infection and then I went up
in an airplane and it forced it back into my ears.
HMJr:
Well, that's too bad.
H:
And I had that infection in my ears. You know
I -- I got your message about that meeting.
What I did -- I want to report to you that I
immediately contacted Fitzpatrick, the State
Chairman.
Regraded Unclassified
- 2 -
33
HMJr:
Yeah.
H:
And told him that you would be willing to go to
those -- to a meeting.
HMJr:
Yeah.
H:
He said he would let me know if they could arrange
a meeting.
HMJr:
Yeah.
H:
He didn't notify me until this morning that they
didn't have any meeting or they couldn't make
arrangements for a meeting.
HMJr:
I see. Well, I -- I felt very badly because I
called you up Saturday and I thought that the
fact that I was anxious to speak for Roosevelt
I could have had an answer promptly.
H:
Yes.
HMJr:
But that -- that's all right.
H:
Well, you see, I -- I -- that -- I left that up
to the State Committee, you see?
HMJr:
Yeah.
H:
And -- and I -- I -- when I talked with you on
the phone, I went downstairs to the State
Committee within five minutes time
....
HMJr:
Ah ....
H:
....
to Fitzpatrick and Oscar Ewing.
HMJr:
Yeah.
H:
Oscar Ewing who has come here, is working with
him downstairs -- and I went down with him to ask
them about -- I told them that if they could arrange
a meeting that you would be glad to go there.
HMJr:
Well, look, Bob, it's all right but I made the
offer and today's Wednesday afternoon. I called
you Saturday and I just didn't know whether --
where I was at and I was holding the thing open.
Regraded Unclassified
- 3 -
34
H:
Yes.
HMJr:
But that's all right.
H:
Well, I -- I'm sorry about that but I didn't
....
HMJr:
Yeah.
H:
I mean, I'm sorry I didn't get to call you right
back but I stayed after them. I sent down there
to them twice to see if they could arrange a
meeting
HMJr:
Well ....
H:
.... with their plans.
HMJr:
Well, it's ....
H:
I've been running around like a -- a -- a --
running here -- Jesus, I've got -- well, you
know how it is the last week.
HMJr:
Well, I thought I could do some good and --
but evidently they don't and that's that.
H:
Well, no, it's not that but they just don't
have any -- as I gathered, they've got certain
plans for their other meetings
....
HMJr:
Yes.
H:
....
and they wouldn't -- unless they could have
the right kind of a meeting
....
HMJr:
Yes.
H:
....
there, they -- they didn't want to schedule
another one in addition to the ones they had
unless they had the right kind of a meeting there.
Now, you see they've had -- they had a meeting
set up already -- as I understand it, they had
one for Truman and one for Wallace
HMJr:
Yeah.
H:
....
there in Harlem.
HMJr:
Yeah. Okay.
Regraded Unclassified
- 4 -
35
H:
How is everything else? I think -- I think
we're -- I think things are going better.
HMJr:
Well, I hope so.
H:
Yeah.
HMJr:
Take care of yourself.
H:
Okay.
HMJr:
Good bye.
H:
Bye.
Regraded Unclassified
36
SECRET
November 1, 1944.
MEMORANDUM FOR THE SECRETARY'S FILES:
This afternoon, Secretary Morgenthau furnished Lord
Cherwell with a copy of our memorandum on the British draft
of policy directive for Germany. Also present were Messrs.
White, Pehle and Luxford.
The Secretary, in furnishing the memorandum to Lord
Cherwell, stated that it represented the views of the
Treasury. He said that Mr. McCloy, Assistant Secretary of
War, had gone over it and had said that the War Department
would agree fully with the principles set forth in the
memorandum. He also stated that he had spoken to Mr. McCloy
about the desirability of furnishing the memorandum to Lord
Cherwell, and Mr. McCloy had felt that it would be an
excellent thing for this memorandum to go to Mr. Churchill
through Lord Cherwell.
It was explained to Lord Cherwell that we did not
feel that we. were prepared to formulate at this point a long
range program for Germany, and it was important therefore
that we work out an interim program; and that we found it
very difficult to use the lengthy and detailed British
document as the basis for discussing the general principles
involved in formulating an interim program.
Lord Cherwell examined our memorandum. He stated
that he agreed that we should focus on the general principles
involved before attempting discussions on the details which
could be handled at staff level; and that it was his
impression that the United Kingdom military authorities had
started out wrong. He indicated his general approval with
respect to the contents of the memorandum. He said that he
felt that word should be passed down the line that the
United Kingdom policy was in accord with the United States
policy as set forth in the American draft of the interim
Regraded Unclassified
37
- 2 -
directive and that the British should prepare their
papers in accordance with that policy. At this point, it
was suggested that if the British agreed with the policy
as set forth in our interim directive, there was no necessity
for them to write another. Rather, work could be commenced,
at staff level, on a handbook covering the details of
administration. Lord Cherwell stated that he subscribed to
this view.
902
Regraded Unclassified
game ofy ofther to Lad cheerwell 38
with mc clay's Hroval.
NOV 1 1944
MEMORANDUM ON THE BRITISH DRAFT OF
POLICY DIRECTIVE FOR GERMANY*
Revised copy-
1. Examination of the British document suggests
that it was intended as a long range program. We are not
prepared to make decisions on these long range issues at this
time. Moreover, the British document does not cover the major
questions involved. If, on the other hand, the British
document is only intended as an interim program it prejudices
the long range decision on important issues. in any event, its
97 pages of detailed instructions, often on unimportant points,
is not a satisfactory redium for a high level policy determina-
0
tion. The document confuses principles with details of
administration, and thus does not provide a basis on which
decisions can be readily reached through the exchange of views.
We feel strongly that we should confine our discussions now to
the major policy decisions needed for the interim period and
leave the details to be worked out at a staff level.
2. The appropriate document for immediate discussion
is the American interim directive document. This document is
Germany and Austria in the Post-Surrender Period - Sept., 1944
Regraded
Unclassified
39
to the large part a statement of principles which after
agreement would provide the basis for the preparation of
handbooks containing full details for administration. The
failure of the British Government to present its views on this
document is preventing further progress of combined discussions
on the treatment to be accorded Germany. We are faced with the
danger that the prolongation of the period in which the military
directive operates will seriously prejudice the situation within
Germany and limit the effectiveness of long range policies which
may be found to be desirable by the three governments,
3. The following are some of the major policy issues
which the British document fails to deal with adequately and
which must be dealt with in any long range program:
(a) The elimination or destruction of
heavy industry in Germany, specifically the
metallurgical, chemical and electrical
industries in Cermany,
(b) Future boundaries of Germany.
(e) Partitioning of Cermany.
(d) Disposition of the Ruhr through
internationalization or otherwise.
Regraded Unclassified
40
- S -
(a) Restitution.
(f) Reparations, including whether there
will be reparations in the form of recurring
payments.
(g) A comprehensive educational program.
(h) A positive program for political
decentralisation.
(i) The character of controls to be employed
in preventing re-emergence of & powerful industrial
Germany.
(j) Agrarian reform including the breaking
up of the Junker estates.
(k) The punishment of war crimes and the
apprehension of war criminals.
(1) The extradition of war oriminals to the
scene of their crimes,
4. While it is difficult to evaluate the significance
of the detailed policy questions without m understanding of
the underlying objectives, the following comments on the
British group of directives may indicate the difference in
approach:
Regraded Unclassified
41
. 4 -
(a) Administrative convenience is frequently
placed above principle in dealing with problems of
Germen occupation.
(b) In defining specifically certain of the
powers which the Occupation Commander will have,
the document tends to obseure the fact that the
Connender-in-Chief will have all the powers of
government and has the power to do whatever is
necessary to carry out the program determined by
the Allies.
(e) In connection with the punishment of
infractions of regulations and instructions of the
occupying forces, there is a tendency in the
directive to rely on inadequate and indirect
punishments and senstions when there is m
occasion for avoiding direct penalties.
(a) The Allied Commenders Are given too smoh
responsibility for the well functioning of the
German economy.
Regraded Unclassified
42
- 5 -
(e) The list of persons to be detained al
placed under guard for political and security
reasons is totally inadequate and vests too much
discretion in the Allied Communder-in-Chief. It
gives an appearance of an attempt to shift
responsibility.
(f) There is too much political freedom given
to the Germans,
(g) The program for keeping the German
schools and universities open at my cost ignores
the need for a fundamental recrientation of German
educational institutions.
(h) We see no point in giving the Allied
Military Commander discretion in making it possible
for the German "polies" to be able to retain tanks
and heavy weapons. This sounds like the beginning
of the rearmament of Germany.
(1) If Austria is to be given substantially
better treatment than Germany, the treatment to be
accorded Austria should be dealt with in & separate
set of directives,
Regraded Unclassified
TOP SECRET
11/2/14 - capy to 43
WAR DEPARTMENT
OFFICE OF THE UNDER SECRETARY
WASHINGTON, D.C.
raraday to give
to
1 - NOV 1944
MEMORANDUM FOR THE SECRETARY OF THE TREASURY:
Subject: Lend-Lease Requirements for British Dominions
1. The War Department has reviewed the requirements of Australia,
New Zealand and India for food, raw materials and civilian goods under
lend-lease in Stage II as set forth in the document entitled "Amplification
of Material in Chapter 4, Lend-Lease Requirements of Australia, New
Zealand, and India." Such examination has been made with reference to the
probable effect of these requirements upon military programs.
2. In general, the tabled quantities do not represent a sufficiently
large segment of total supply to interfere with meeting our presently
known United States and International Aid military requirements. However
in the case of items in tight supply it is obvious that the acceptance of
these requirements will aggravate the present shortage and will intensify
the conflict between military and civilian demands, thereby endangering
the fulfillment of military programs. Subject to the reservations above
and to the exceptions hereinafter noted it may be said that the items and
quantities referred to can be made available.
3. With respect to the categories of food, raw materials and certain
manufactured items, the following comments are made, and as to items not
commented upon no interference is noted:
a. Food. In the case of India this item is not sufficiently
broken down to permit comment. Any procurement of meat would adversely
affect the short United States civilian supply.
Tobacco. The situation is presently so bad that the lend-lease
shipments have virtually been stopped. It is not believed that VE-Day will
bring much improvement.
Canned Fish. (Australia) Could not be obtained without inter-
ference with military procurement. Inferior grades are now being sent to
military areas in Pacific.
Artificial Sausage Casings. (Australia) This procurement
would adversely affect civilian supplies.
Coca Cola Concentrate. (Australia) Availability depends upon
sugar supply which is expected to be tight in Period I and is at present
rationed.
TOP SECRET
Regraded Unclassified
TOP SECRET
44
- 2 -
b. Raw Materials.
Tin Plate. Should not be approved beyond present supplies
going to these areas, in view of the critical position of our pig tin
supplies.
Metals. Any requirements for wire rope would necessarily
have to be limited, as a continued tightness is anticipated after VE-Day.
Pulp and Paper. Period I requirements for pulp and paper
products total $9,000,000. Current United States shipments to Australia
in 1944 are at annual rate of approximately $6,400,000. Requirements for
first quarter 1945 remain approximately the same as the 1944 annual dollar
value. Of this quantity approximately 12 million dollars a year or 15,000
tons is for pulp. This pulp requirement would normally be satisfied from
Canada. The United States needs for high grade Canadian pulp have resulted
in a switch of lower grade Southern pulp being delivered to Australia in
exchange for high grade Northern pulp for the United States from Canada.
This pulp is used for such items in the United States as wet strength
map paper, and the need for such a requirement from Canada after VE-Day
should drop drastically. Eliminating this consideration after VE-Day
there appears to be no justification for furnishing Australia with almost
90% more pulp and paper products after Period I than is being currently
delivered. The consistent policy of FEA, concurred in by the War Department,
is to have Australia satisfy its requirements from Canada. Australian
domestic paper production has been expanded, and it is contemplated it
will be further expanded. Of all of the requirements listed for Period I,
printing and writing papers remain at the current level of approximately
3$ million dollars annually.
Current 44 - 45 Annual Requirement
Period I
Requirement
Pulp
$1,500,000
$2,000,000
Fine & Ptg. Paper
3,500,000
3,500,000
Wrapping, Tissue & all other
1,500,000
3,500,000
Total
$6,500,000
$9,000,000
It is recommended that increases be given in other grades, and it is
recommended that the $2,000,000 of pulp be denied practically in full.
Not over $5,000,000 worth should be made available in paper and paper
products to Australia.
India is receiving approximately 4 to 5 million dollars per year
of printing papers from the United States currently. It is recommended
that the bulk of its requirement be satisfied from Canada, which appears to
be current FEA policy, and that India not be allowed to switch or add to its
requirements of printing paper so as to obtain packaging and wrapping papers
which will be in desperately short supply during Period I in the United
TOP SECRET
Regraded Unclassified
TOP SECRET
45
- 3 -
States both for military and essential reconversion needs.
Chemicals.
Chrome. Can only be allowed to the extent of $300,000
because of the high military urgency for the uses of these materials in
the United States.
Miscellaneous.
Carbon Black. Because of United States requirements for use
in rubber, it is not believed that more than $750,000 of carbon black can
be provided without interference with military and essential civilian
programs.
C. End Products.
Coal Mining Machinery - Underground. (Australia) Should not
exceed the value or the quantity scheduled for 1943, namely, $300,000.
Textiles. (Australia and India) Cotton and rayon tire cord
and fabric production versus requirements overall will not justify supply-
ing more than the current requirement now going to these countries.
4. Since the requirements have been stated in dollar values by broad
categories and with only general inclusive descriptions, it is impossible to
determine what effect their acceptance would have upon the reconversion of
the individual industrial groups or facilities which would become involved
thereby.
for Under Robert Secretary P. Patterson, of War.
TOP SECRET
Regraded Unclassified
40
TOP SECRET
COPY NO.
AMPLIFICATION OF MATERIAL IN CHAPTER 4
LEND-LEASE REQUIREMENTS OF AUSTRALIA, NEW ZEALAND AND INDIA
1.
As explained in para. 1 of Chapter 4 of the document
relating to British Requirements in the First Year of Stage II,
the programmes submitted by the United Kingdom include
supplies required from the United States by Australia, New
Zealand and India in the field of munitions (except aircraft
and aircraft components), oil and shipping. The following
notes by the Australian, New Zealand and Indian supply
representatives in Washington explain the need of their
respective countries for food, raw materials and civilian
goods under Lend-Lease in Stage II and itemise these
requirements in greater detail. Where the figures given
below differ from those in the earlier document, the previous
estimates should be disregarded.
AUSTRALIA
The Australian War Effort
2.
The Australian war effort is likely to have to
continue at the maximum degree of intensity for 8 longer period
than that of most other members of the United Nations. At
the earliest possible time Australian forces were engaged
in the Mediterranean area and supplies of all kinds were
being sent to that and other theatres of war. When Singapore
fell, Australia was short of men and munitions, because
everything possible had been sent abroad to the actual fields
of action. American forces and American supplies filled the
gap and became the basis for the counter-offensive. The
remnants of the Australian Navy and some of Australia's
experienced jungle troops are now in the Phillipines.
3.
The Australian war effort has strained her resources
and manpower to an extent which 18 hard to measure, because
much of it is in the production of ordinary foods and farm
supplies. But the austerity of civilian life in Australia
has become very pronounced.
4.
Every possible fighting man has been used. Seven
out of every ten males between the ages of 18 and 35 have
Regraded Unclassified
served in the fighting forces. From a total population of about
7t millions, 891,000 males were enlisted and 80,000 have
become casualties. The numbers engaged in fighting and
essential industries exceed the prewar total of the working
population by 170,000 and comprise 71% of the total population
between the ages of 15 and 60.
Reciprocal A1d
5.
Comparisons with other countries are not really
practicable even if they were desirable. It may be of interest
to note that one fifth of the total war expenditure in
Australia is for reciprocal aid to the U.S.A. forces. The
dollar value of this aid, so far as it can be measured at all,
is of course incomplete. But to the end of June 1944, the
value was estimated at a total of $570 millions. The dollar
measure understates the Australian contribution in terms of
manpower and of real effort, because the rate of exchange
which must be used to convert Australian currency into dollar
values does not correspond to real values.
6.
Reciprocal Aid to the U.S.A. forces commenced long
before there was any formal agreement on the subject. It
commenced with food sent to Bataan. The Australian people
have given unstintingly and have gone without normal
necessities in co-operation with their Government in the
provision of requirements for the American forces. The needs
of these forces have been given a high priority in Australian
production and have indeed required many adjustments of the
Australian production programmes.
Lend-Lease Requirements in 1945.
7.
The attached figures are estimates of Lend-Lease
requirements for delivery in Australia during the calendar
year 1945. They divide the programme into categories which
include "non-munitions" items. But it must be emphasized
that the so-called non-munitions programme is very largely
made up of military requirements, direct or indirect. For
instance, the food requirements are largely for the use of the
armed forces; the timber is required almost entirely for
war purposes, inasmuch as general building construction has
Regraded Unclassified
been rigorously controlled; the synthetic rubber is needed
for the manufacture of military and essential war service
vehicles; agricultural implements are needed for the Food
Programme designed to meet the requirements of the armed
forces and United Kingdom needs, and so one could go on through
each item on the list. These are cited by way of example.
8.
It may be observed that the non-munitions require-
ments for 1945 (exclusive of Petroleum and Shipping Freights
included in the United Kingdom pregramme) total $102 millions,
By way of comparison, expenditure in Australia upon non-
munitions items provided under Reciprocal Aid has been at
the rate of $360 millions per annum. It is submitted that
continuance of a substantial measure of Lend-Lease, without
continual scaling down on questions of eligibility, civilian
end-use, etc., is necessary to enable the maintenance of a
reasonably balanced economy.
Australia's Need for some Relief of War Strain
9.
As prospects are at present, there is in sight no
relief for Australia of her present war strain until the war
in the Pacific is ended. Indeed as operations in that vast
area are accelerated the strain could become so intense as to
pass the limits of tolerance, having regard to the five years
already suffered. There are no prospects of converting war
production to peace production, nor any diversions of effort
such as are contemplated elsewhere. This prospect has now
become serious in view of the almost desperate shortage of
housing and of other elementary necessities of normal civil
life. In our transport and our farm and industrial equipment,
the wear and tear of the war effort has reached far beyond
normal limits of tolorance.
10.
There is an expectation that some general
relaxation of effort on a substantial scale, both in the
United States and in the United Kingdom, is to follow the end
of the war in Europe. Since Australia will remain in the area
of hostilities, it is most unlikely that comparable relaxations
or demobilisations from the war effort will be possible for
Regraded Unclassified
her. For this reason, Australia considers it reasonable that
such steps as are practicable shall be taken to allow her such
relief as is possible, and she hopes that, in consideration
of the present problems, this aspect will not be overlooked.
11.
The Australian Agencies in Washington stand ready
to furnish any further information which may be required, to
supply further substantiation on any point which may be in
doubt and to represent the Australian case in any manner which
may be deemed to be desirable or helpful.
50
LEND-LEASE REQUIREMENTS OF AUSTRALIA IN STAGE II
NON-MUNITIONS BREAKDOWN
EXCLUDING PETROLEUM AND SHIPPING FREIGHTS
(all figures in millions of dollars)
Description
Value
Remarks
(a) Food
Tobacco - Leaf
3.1
Military requirements
only. An additional
$82 millions required
for civilian purposes.
Tobacco - Native Twist
.9
Used for payment of native
porters in forward
battle areas.
Canned Fish - Salmon
1,4
For requirement of armed
- Pilchards
.6
forces only. Civilian
use prohibited
Seeds - Vegetable
.6
Australian food programme
for allied forces,
Sausage casings
.1
Australian food programme
- artificial
for allied forces.
Coca Cola Concentrate
& misc.
.3
Coca Cola Concentrate in
amount of $275,000
7.0
entirely for U.S. Forces.
--
(b) Raw Materials
Tinplate
14.0
95% for use in canning
programme for allied
forces
Metals - Carbon Steel
1.2
Various industrial
- Alloy Steel
1.0
purposes directly
- Non-Ferrous
.8
connected with munitions
programme.
Timber - Soft Wood
2.4
Military and war product=
- Hard wood
1,4
ion and construction.
- Plywood
.2
Civilian construction
prohibited.
Pulp & Paper - Woodpulp
2.0
To augment Australian
- Fine Paper
3.5
production which is in-
- Wrapping
adequate for war
Paper
1.8
purposes -- paper usage
- Sanitary &
all under strict and
Tissue
1.0
rigid control.
- All Other
Paper
.7
Raw Cotton incl. Linters
- Raw
2.8
Military textiles,
- Linters
.2
surgical dressings etc.
Synthetic Rubber - GRS
6.0
Largely for use in
military tire programmes-
supply under instruct-
ions of Combined Boards.
Regraded Unclassified
Description
Value
Remarks
(b) Raw Materials (Cont'd)
Carried forward
39.0
Chemicals - Phosphate
Rock
2.1
Required in connection
with food programme,
- Insecticides
1,8
Required in connection
with food programme.
- Sulphur
.5
Required in munitions
programme,
- Photographic
.6
Required for indirect
military uses,
- Alcohols
.6
Industrial alcohols
required for munitions
programme
- Chrome
.6
For tanning and textile
industry - producing
direct military require-
ments,
- Miscellaneous
1.8
Miscellaneous
- Abrasive Grains
.6
General war production
usage.
- Carbon Black
1,2
Tire programme.
- Plastics
1.5
General war production
usage.
- Miscellaneous
,7 51.0
(c) End Products
Automotive - Vehicles
7.0
Essential civilian war-
- Spares
2.5
time transport and
agricultural transport-
civilian gasoline
rationing extremely
rigid.
- Stationary
Engines
.5
Required for insorporat-
ion in mobile welding
sets, pumping units,
etc. required by armed
forces.
Argricultural Implements
- Tractors
5.5
Required for food
- Spares
1.1
programme.
- Miscellaneous
2.4
Coal Mining Machinery
(Underground)
.5
Bearings
.5
Required for maintenance
of armed services'
equipment performed by
civilians. An addition-
al $1,000,000 required
for general industrial
purposes related
directly to the war
effort.
Medical Supplies
For use in Australian
- X-Ray
,8
hospitals at the service
- Surgical
.3
of Allied forces.
- Drugs
1,1
- Proprietary
.2
- Miscellaneous
.6
Description
Value
Remarks
(c) End Products (Cont'd)
Carried forward
23.0
Textiles - Belting Duck
.5
General industrial war
production use.
- Cotton Tyre Cord 4.6
Military tyre programme
- Rayon Tyre Cord 2.1
Military tyre programme
- Rayon Tyre
Fabric
2.8
Military tyre programme
Silver-Bullion/Coinage
5.0
Returnable in kind under
special agreement.
Miscellaneous . Film
.2
Entertainment of armed
forces.
- Photographic .2
Entertainment of armed
forces.
- Business
Machines
.5
To be used directly by
armed forces.
- Hand Tools 2.0
General war production
use.
- Elec.
Equipment 1.9
General war production
use.
- Industrial
Eqpt.
1.2
General war production
use,
44.0
GRAND TOTAL $102.0
NEW ZEALAND
The New Zealand War Effort.
12.
New Realand approaches Stage II after over five years
of war - five years of unromitting and undeviating endeavour to
apply the full manpower and the full economy of the Dominion
to the common end,
13.
During the period when it was necessary to prepare
against the possibility of actual invasion 190,000 mon of a
total of 355,000 of military age (18 to 45 years) wore takon
into the armed forces. Stronuous and successful efforts wore
made to meet this diminution of productive power and by the
extension of working hours over a wide field of industry, by
substantial overtime, by the compulsory recruitment of large
numbers of women into industry, by compulsory limitation of
the production of unessential goods, and by compulsory
diversion of labour from unessential to essential industries
it wrs nossiple on the whole to maintain production and in
most fields to increase it.
14,
The fighting record of Now Zealand during the
war has, it is felt, beon fully worthy of the Dominion.
More than 100,000 men, the equivalent of one in every 3t mon
os litary age in the total population, have been despatched
abroad to the fighting fronts in Europe and in the Pacific,
and-the casualties have been grievous. The total New
Zealand casualties up to the middle of this year have
exceeded 30,000 - the equivalent of 1 in 55 of the total
population of the country, or one in every three and a half
of those despatched abroad. These figures will bear the
closest comparison with those of any other allied combatant.
15.
While the actual combatant functions of the Dominion
in Stage II have yet finally to be decided in cooperation
with the United States and the United Kingdom and while there
will no doubt be some necessary adjustment between the
proportions of the New Zealand population ongaged in a
combatant capacity and those engaged in the equally essential
functions of war production services, it is nevertheless clear
that the total war effort of New Zealand in Stage II will be
no less than in Stage I.
16.
Clearly, the capacity of New Zealand to continue her
contribution to the total war effort of the Allies must depond
to a substantial extent upon the Dominion's boing provided in
turn with the supplies necessary to maintain its people at a
minimum standard of health and well-boing, as well as for the
production of those Now Zoaland commodities which are specifi-
cally required for war purposes.
New Zcaland's Spocial Economic Position.
17.
During the war years New Zealand has become
progressively impoverishod. This is due partly to the fact
that her basic industry is farming and that heavy industry
is not developed, but it is also due to New Zealand's substantial
contribution to the war in mannower, to the lack of maintenance
of equipment usually imported, and to New Zealand's individual
economic position.
18.
New Zoaland's farm lands have suffered particularly
because of fertiliser deficiency and also because of lack of
maintenance. New Zealand's farm production is falling because
of these factors and in successive years it is likoly to fall
further because annual maintenance, so necessary in New Zealand,
has not been carried out. Labour has been directed rather into
increasing production than into maintaining the land. New
Zealand's railways have not been adequately maintained: the
road-beds, the bridges and viaducts, signalling apparatus,
locomotives, rolling stock, and workshops machinery are all
below standard, and a substantial proportion of it has
deteriorated to the stage of obsolescence, New Zealand's roads
also have deteriorated because of lack of upkeep due to shortage
of manpower and to lack of earth-moving machinery. In this
respect it should be noted that New Zoeland's earth-moving
machinery is required for all types of developmental and public
works and a substantial proportion of it was sent to Malaya, to
the Middle East, and to the Pacific Islands. New Zealand's
power industry has also suffered because of lack of normal
maintenance; for example, the hydro-electric system has been
able to maintain only 2/5ths of its normal annual necessary
maintenance. Factories in New Zealand have been operating for
ruch longer hours than formerly and in many cases have not
Regraded Unclassified
received normal replacements of equipment. Many machines over
a wide sector of New Zoaland's economy are completely obsolescent.
New Zealand's timber stocks have boon rapidly depleted because
of the vast building programmo necessary for Now Zealand's
defence, for United States troops and for buildings in the
South Pacific and other war areas. Some of this capital loss
is irreplaceable.
19.
Not only did New Zoaland enter the war with depleted
stocks, much below normal requirements, but during the war the
Dominion has been living on a hand to nouth basis, consuming
its industrial capital. Unlike other countries which are in a
position to replace worn out equipment to a large extent from
their own enhanced industrial and skillod labour capacity and
from basic materials within the country itself, New Zealand
must continue for a long time to come to be a specialised
agricultural country unable to provide herself with machinery
and other equipment from her own resources.
Effects on Civilian Economy of Rationing and Austerity
Programmes and Manpower Shortages.
20.
New Zealand is predominantly an agricultural and
pastoral country with manufacturing industries capable of
catering for only a small porition of local requirements. The
impact of the war with shipping difficulties and losses,
coupled with production shortages overseas, had a most
immediate effect on the availability of practically all consumer
goods in New Zealand except locally produced foodstuffs. The
only action possible was the quick and immediate imposition
of a very strict rationing system.
21.
All cotton and woollen textiles were severely
rationed; these included not only wearing apparel, but house-
hold linon, such as blankets, sheets, towels, etc. Imported
foodstuffs such as tea and sugar were rationed and the require-
ments of the United Kingdom, and Reciprocal Aid to the United
States, lod to the subsequent rationing of meat, butter and
cream. Many articles were prohibited from importation to
conserve shipping space and some items, while not rationed,
virtually disappeared from the market; such items are canned
fish, citrus fruit, canned fruit, eggs, pork and bacon.
Gasoline was severely rationed and the prosent-day allowance
Regraded Unclassified
is 1 gallon a month for small cars and not more than 2 gallons
a month, irrespective of the sizo of the car.
22.
As one contribution to the war effort New Zealand
voluntarily imposed controls, generally more rigid than in most
countries not actually in the front line of battle. Manpower
was brought under most rigid control; both mon and women were
directed under Manpower regulations into specific jobs in
essential industry and those already in such industries were
frozen in their jobs. It is expected that these controls will
remain in force until after the defeat of Japan.
23.
The guiding principle was the desire of the whole
country to devoto all its energies to the waging of war and
to the production of essential war materials with particular
omphasis on New Zealand's role in the production of foodstuffs
for the Armed Services, for the United Kingdom, and for United
States forces in the South Pacific. The standard of living has
been drastically cut to provide for increased production for
these purposes.
Reciprocal Aid to the U.S. Forcos.
24.
Thore is no need to elaborate on New Zealand's
Reciprocal Aid contribution to the U.S. Up to April 30th, 1944,
the following foodstuffs had been delivered:
Lbs,
Butter
26,098,439
Cheese
8,043,615
Bacon and Ham
27,269,438
Meat, fresh
131,109,717
Meat, canned
42,945,982
Milk, evaporated
18,242,168
Sugar
40,265,729
Tea
595,525
Vegetables, canned
13,169,559
Potatoes
48,049,741
Other fresh vegetables
45,283,694
Apples, fresh
18,457,010
57
25.
In addition to the above are camps, hospitals,
landing barges, mine sweepers and other ships, footwear,
uniforms, and countless other items. The estimated value for
1944 is 1 N.Z. 24 millions ($78 millions) equivalent to some
20% of New Zealand's total war expenditure. In Stage II New
Zealand expects that it will be necessary to maintain the
present level of Reciprocal Aid; in fact, programmes already
submitted by United States Services are at least one-tenth
larger than for the current year.
Requirements and Justifications in Stage II.
26.
The principal items required during Stage II (other
than petroleum and shipping) are as follows (all figures in
dollars) :-
Raw Materials
Steel
3,500,000
Tinplate
2,000,000
5,500,000
Phosphates
240,000
Sulphur
760,000
Miscellaneous
fertilizer and
chemicals
450,000
Naval stores 250,000
Miscellaneous
Raw
Materials
250,000
1,950,000
7,450,000
Tobacco
1,250,000
Manufactured Items
Trucks
1,000,000
Automotive
Parts
1,000,000
Agricultural
Implements
including
Tractors
3,000,000
Hand Tools 700,000
Miscellaneous
Items
375,000
6,075,000
GRAND TOTAL
$14,775,000
27.
Dealing with each item in turn, the following will
indicate its relationship and essentiality to the war effort:-
Regraded Unclassified
58
Steel ($3,500,000) This requirement consists not only of needs
for direct munitions and war production but also for the
maintenance of New Zealand's economy on a basis to continue
maximum war production. While these end uses might seem to be
"normal civilian", in the case of New Zealand the general
civilian economy has been short for such a long period that a
failure in supply now can result only in a diminution of the
war effort. New Zealand has no steel industry.
Tinplate ($2,000,000). This is needed for the packing of
foodstuffs for supply to American and other military forces
overseas, to the United Kingdom, and to a very limited extent
to New Zealand of those articles which can be packed only in
tinplate containers. Full details are available to show that
the use of tinplate is strictly controlled - certainly to an
extent no less strict than with the other United Nations.
Phosphates ($240,000) and Sulphur ($760,000). These items
are required for the manufacture of phosphatic fertilisers.
These are essential for the maintenance of food production in
New Zealand. Information has already been transmitted through
the appropriate channels to the effect that the land in New
Zealand is suffering serious deficiencies through the shortage
of fertilizer over a number of years. It has been agreed that
food production is vital to the war effort and increased out-
put in the Dominion is directly related to the availability
of phosphatic fertilizer. An overwhelming proportion of
production is for export for war purposes and the small
residual is itself fundamental to the maintenance of the
civilian population which is in turn vital to the maintenance
of all production. The high percentage of export is shown in
the following cases:-
Butter
81% of production exported.
Lamb
96% of production exported.
Cheese
98% of production exported.
Miscellaneous Fertilizer and Chemicals ($450,000) Naval Stores
(Resin, etc.) ($250,000) Miscellaneous Raw Materials ($250,000).
Directly or indirectly the supply of these materials is vital,
particularly to the maintenance of food production - fertilizer
for the land, materials for sheep dip, weed-killer, insecticides,
etc.
Regraded Unclassified
53
Tobacco ($1,250,000). This requirement is calculated to cover
only the proportional requirements of military forces, prisoner
of war shipments, and other supplies related to military needs.
Without question, tobacco is necessary to maintain the morale
of the fighting forces.
Trucks ($1,000,000) Automotive Parts ($1,000,000). It is
obvious that a factor essential to the maintenance of the war
effort, the shipment of foodstuffs, and the movement of raw
materials and military goods, etc., is transport. All transport
is strictly controlled. Gasoline is rationed on a strict
basis as previously outlined. These transport needs are vital
and any "civilian" proportion is itself necessary to the
functioning of the whole effort.
Agricultural Implements ($3,000,000). The necessity for these
is obvious and the role of foodstuffs as a war factor has been
referred to above,
Hand Tools ($700,000), Miscellaneous Manufactured Items($375,000)
It is apparent that the general industrial war effort of New
Zealand needs maintenance attention in the form of miscellaneous
hand tools, equipment, etc., in a situation aggravated by a
long period of shortage of manpower for maintenance purposes,
lack of importation of capital equipment, and over-working of
existing plant. In many cases, since the equipment must go
into stock for call as needed, it is impossible to pre-
identify war uses, but, nevertheless, essentiality remains,
Petroleum and Shipping.
28,
This submission does not cover our requirements
under the heading of Petroleum and Shipping since these
categories are being discussed in a global sense in the United
Kingdom presentation. The requirements under these headings,
however, are at least of equal importance to New Zealand as
those categories of goods dealt with in this submission. It
is requested, therefore, that no action be taken to disturb
present policy relating to petroleum or shipping.
Regraded Unclassified
60
Diversions
29.
It is submitted that particular consideration
should be accorded to New Zealand owing to the special position
in which New Zealand was placed at the outbreak of the
Japanese war. Materials imported (not manufactured in New
Zealand) for essential national purposes were placed at the
disposal of the Armed Services. For example, tractors were
withdrawn from maintenance of roads, forestry operations, etc.,
and despatched to the Pacific Islands to construct aerodromes.
Stocks of materials that would normally have been used for
maintenance of industry were utilized for emergency construction
of military camps, hospitals, and other facilities for the
large number of American forces that arrived at short notice
in New Zealand, In this connection, it will no doubt be
borne in mind that while a large proportion of New Zealand's
Reciprocal Aid has necessarily taken the form of consumable
goods the Lend-Lease assistance it has received has been
predominantly non-consumable goods used for the most part
solely for war purposes.
30..
A limited quantity of Lend-Lease goods already in
New Zealand is not now required for its original purpose but
is urgently needed in New Zealand for essential civilian
requirements including, for example, rural housing, necessary
for the continued production of foodstuffs, and an expeditious
procedure is necessary in regard to the diversion to essential
civilian use of goods originally supplied through Lend-Lease
for other purposes.
Civilian Proportions,
31.
There has been an increasing tendency to exclude
proportions of requirements because they are "civilian", even
though these requirements have been endorsed both by the
Foreign Economic Mission and the representative of Comsopac
in New Zealand as being necessary to the Dominion's war effort.
The war effort of New Zealand is the maximum the country can
undertake. This war effort is dependent on the maintenance
of a minimum economy and thus these "civilian" requirements are
Regraded Unclassified
61
just as essential as direct military materials. It is
submitted, therefore, that this form of differentiation with
a view to the exclusion of "civilian" proportions should be
discontinued because failing the supply of these goods the
New Zealand war effort must decline. This situation is
peculiarly applicable to New Zealand because of the
specialisation of its economy, its dependence on imports,
the mixed nature of its war production, its distance from
supply sources, and thus the necessity for the holding of
advance stocks, the comparative lack of direct military
manufactures and the long-maintained drain on civilian
facilities. For these reasons it is submitted that the
maintenance of essential civilian activity is itself essential
to a continued and sustained war effort and that no distinc-
tion should properly be drawn for Lend-Lease purposes.
Final Observations
32.
It is desired to emphasise that the predominant
purpose of the New Zealand Government in expressing these
views on Lend-Lease in Stage II, so far as it applies to
New Zealand, is to enable the Dominion to continue in the
future the policy adopted in the past of endeavouring to
carry out to its fullest capacity any war measure it is
requested to undertake.
Regraded Unclassified
62
INDIA
33.
The attached statement gives a more detailed breakdown
of the non-munitions requirements of India during Stage II
(1945).
34.
In putting forward this statement it is desired to
emphasise (a) that India has received comparatively little
Lend Lease aid for her non-military needs, and (b) that her
military needs are not confined to munitions. For example, steel
supplied on Lend Lease is mainly for military requirements; and
this is more or less true of the remainder of the programme of
Lend Lease requirements in the non-munitions field.
35.
The difficulty of distinguishing between strictly
military and general requirements is well illustrated by the
application for locomotives and freight cars on Lend Lease
specified below. This was originally included in the military
requirements, but has been referred back by the U.S. "ar
Department for inclusion in the non-munitions programme. From
the strictly military point of view, if the U.S. supplies are
treated as marginal to the corresponding orders for
locomotives from the U.K. and Canada already under contract,
they are not considered of the first order of priority. The
freight wagons, on the other hand, are considered by the
British and Indian military authorities as indispensible for
war purposes, and will probably have to be purchased for
cash in the United States if the application for supply on
Lend Lease is not agreed. Quite apart, however, from the views
of the military authorities, this rolling stock is unquestionably
of the highest significance for the maintenance of the Indian
civilian population in conditions where they are able to put
forth their best efforts for the war. The recent famine in
Bengal was greatly aggravated by lack of rolling stock. Bengal
is always a deficiency food area, and the loss of rice from
Burma has greatly increased the transport problem. The
following is an extract from a telegram just received from the
Government of India:-
"The decisions of Quebec are serious in their effect on
Regraded Unclassified
63
port capacity and transport facilities in India. The
satisfaction of the additional military requirements will
put a strain mainly on the railways, which will necessitate
a reduction of civilian traffic of from 8 to 12%. At the
peak of the military movement, not only passenger traffic
but also industrial production, military works services and
possibly food, will have to be curtailed for a considerable
time. This strain can be considerably relieved by the
provision of more coastal shipping and by expediting the
delivery of railway rolling stock from the United States".
A refusal to supply the additional rolling stock will be
taking the responsibility of allowing no margin to meet such
contingencies as food difficulties or famine in any part of
India. It would be impossible for the U.K. to produce the
locomotives and wagons by the time that they will be needed,
because manufacture could not commence until at least six
months after it could be put in hand in the United States.
36.
The estimates given in the statement below were
framed prior to the decisions reached at the Quebec Conference.
The increased burden which will be placed on India as a result of
the Cuebec decisions is not yet ascertainable. Present indications
are, however, that the additional burden will be substantial.
The effect of any such increase on the already strained
resources of India is giving very serious anxiety to the
Government of India, who have recently submitted representations
to the United Kingdom Government in the matter.
37.
India's war effort has been all-embracing. The best
available statistics suggest that nearly a quarter of the n
national income of British India is being absorbed by the war
effort in the form of direct military expenditure in India,
the production of militory stores and net exports of raw
materials for use elsewhere. Disbursements in India for
defence purposes are in fact seventeen times the pre-war figure,
which itself was high in relation to the resources of the country.
38.
This contribution must not be judged by direct comparison
with the corresponding figures for highly industrialised economies,
Regraded Unclassified
64
with comfortable standards of living, where a substantial
margin existed on which, in emergency, drafts could be made.
It has been wrung from a country where, though there are a few
very high incomes, the great majority are so near the very
border-line of subsistence that the average income comes down
to the equivalent of about $40 a year. Nowhere, except perhaps
in China, has the human cost of the war behind the lines been
higher. The large numbers who have perished from famine and
disease are only the most outstanding and measurable illustration
of this.
39.
In the view of the Government of India the peak of
national effort has been reached: hence their enxiety as to the
effect on the national economy of any further burden arising from
the Quebec decisions. Substantial and increased aid from
outside is essential to maintain India's war effort and her in-
ternal economy.
Regraded Unclassified
65
INDIAN REQUIREMENTS UNDER LEND LPASE IN STAGE II
(excluding military requirements, oil and shipping)
REQUIREMENTS
REMARKS
1. Steel
$23,000,000
Includes -
(a) wire rope for collieries,
shipping operations, rail-
ways, harbours, etc.;
(b) mill rolls for steel rolling
mills;
(c) boiler tubos, reils, wheels,
tyres and axles etc. for
railways;
(d) tinplate fro foods and med-
icines for the armed forces;
(e) bolts and nuts for use in
munitions production, ship
repair, construction of
rolling stock, military
vehicles, crmy bridges, docks,
etc.
(f) hoop and strip for baling jute,
cotton etc.
2. Other raw
materials
$13,000,000
Includes -
(a) carbon blacks required for
paint for military and
camouflage purposes; for
cable manufacture; indust-
rial hose, gas masks, army
footwear, etc.
(b) tyre manufacturing materials
required for manufacture of
military and aircraft tyres.
(c) rayon and nylon used in the
production of U.S.A.A.F.
aircraft tyres.
(d) sulphur, mainly required for
production of sulphuric acid
for war industries.
(e) abrasives for the manufacture
of grinding wheels used in
the manufacture of rifles,
machine guns and other
ordnance.
(f) battery materials for use in
two Indian factories whose
output is mainly for
military use.
(g) mosonite for construction of
bodies and radio boxes for
for military vehicles, combat
and cargo vessels, pontoons,
instrument panels for
aircraft, etc,
(h) paper for militory and
government use.
(1) timber for construction of
harbour lighters and small
craft and for ship repair
generally.
(j) ferro alloys for use in the
manufacture of mill rolls and
high speed tool steels.
Regraded Unclassified
66
3.
Miscellaneous
$12,000,000
Includes
manufactured
(a) woodworking tools.
goods
(b) metal cutting tools and files
and rasps for the manufacture
and maintenance of equip-
ment in ordnance factories,
shipyards, railway shops, etc.
(c) spares for pneumatic tools
required for use by rail-
way shops, mica mining,
ship repair shops, etc.
(d) farm tractors.
(e) lamp batteries and cells for
flashlights for the armed
forces and for maintenance
of signalling and other
operational uses on rail-
ways, etc.
(f) typewriters for use in
Government offices and
ordnance factories.
(g) miscelleneous engineering items.
4. Tobacco
$3,000,000
Required for incorporation
with Indian tobacco in the
manufacture of cigarettes and
pipe tobacco for the armed
forces.
5. Food for Indian $3,000,000
The Indian canteen services
Canteon
operate solely to meet the
Services
need of the Allied armies
within the borders of India.
The canteen service is under
the control of the Cuarter-
master General in India.
All canteen stores are issued
by the canteen services in
accordance with a basic scale
determined by the military
authorities. Distribution is
effected only through install-
ations under the control of the
Quartermaster General in India.
6. Locomotives
$30,000,000
Referred back by U.S. War
and wagons
Department for inclusion in
non-munitions programme -
see para. 35 above. Comprises
60 broad gauge locomotives,
128 metre gauge locomotives,
6,000 broad gauge wagons and
1,717 metre gauge wagons.
GRAND TOTAL
$84,000,000
Regraded Unclassified
67
November 1, 1944.
My dear Mr. Liebson:
I want to congratulate you and others of
Business Men for Roosevelt, Inc., on the success
of the dinner last Friday evening at which I had
the privilege of speaking as well as of listening
to the President's broadcast under the most favor-
able and inspiring circumstances.
It was a great and sympathetic audience that
you provided. The audience testified pretty
thoroughly, I thought, both to the standing and
the sincerity of the men who organized the event.
Personally I hope that Business Men for
Roosevelt, Inc. may continue after this successful
political campaign to carry on the extremely valu-
able function of ral lying the support of all the
people behind the President's leadership in the
difficult days that still lie ahead of us.
Sincerely,
(Signed) H. Morgenthau, Jr.
Beeretary of the Treasury.
Mr. Laurence S. Liebson
Executive Secretary
Business Men for Recaevelt, Inc.
Hotel Delmonico, 502 Park Avenue
New York 22, New York
n°?
HEG/mah
Regraded Unclassified
68
BUSINESS MEN for ROOSEVELT INC.
HOTEL DELMONICO
502 PARK AVENUE, NEW YORK 22, N.Y.
ANDREW J. HIGGINS
Honorary President
anm
VOlunteer 5-2500-Extension 305
D. LOUIS REYNOLDS
October 29, 1944
Chairman, Executive Council
ADVISORY EXECUTIVE COUNCIL
Stanton Avery
Cyril Bath
Leonard T. Beacher
Otto Bremer
W. A. Brooks, Jr.
Honorable Henry Morgenthau, Jr.
Robert Red Brown
Secretary of The Treasury
George Buechal
E. E. Compbell
Washington, D.C.
Harry Cooper
D. Davis
Menry 5. Dennison
Dear Mr. Morgenthau:
1. E. Dulaney
Mark Eisner
Mark F. Ethridge
Mon. Howard Findlay
May I add my personal
vancis T. Findlay
thanks to those of every member of Business
for L. Foreman
win Friend
Men For Roosevelt, Inc., for your very fine
Varren B, Goger
address at The Waldorf-Astoria. Not only
don. James W. Gerard
iveratt S. Glegron
for your speech, but also for your great en-
Harry Golden
Goldfarb
thusiasm and cooperation which assured the
V.L Gregory
success of that event.
thur Garlield Hays
Hanry Hoke
Arthur Homblow, Jr.
We had anticipated from
Percival E. Jackson
A. Keleher
400 to 450 guests, but the last-minute rush
win Kuh, Jr.
increased that to well over 500. As you
Victor Lebow
Harold Litton
observed, those present were responsible,
so J. Linder
intelligent persons who approved completely
Innet J. McCormack
tank H. McCulloch
the context of your speech and its delivery.
com H. McGill
i. B. McGimey
ohn F. McNamare
Our work shall continue:
Archibald McNeil
industriously and wisely in the cause of the
Villiam L. Maa
lieve Manteris
President and his administration -- even long
Lifred L. Marston
past his re-election.
Willion Morris. Jr.
Illiam P. Nail
chard Neutro
I should like very much
J. Novick
homen F. O'Connor
to receive a letter from you expressing your
innings Perry
personal opinion of your reception and the
Col. W. H. Rankin
Harry Rapf
dinner. Also regarding our organization, as
lobert Rou
far as your own knowledge or information
dolph Reutlinger
Louis Reynolds
permits.
allino L. Robertson
Irrison M. Robertson
Samuel Rubin
Very sincerely yours
Morris 5. Rosenthal
darry Rudolph
Villiam C. Safford
Darke Salmon
ohn A. Sorgent
Laurence S. Liebson
Charles W. Schwafel
lacob R. Schill
Executive Secretary.
David A. Schulte
William Singer
Nathon Strous
Mandel Terman
LSL-rc.
hold Trent
to E. Tromblev
fred R. Tuerk
Walter Wanger
Joseph L. Wainer
lobert M. Warblow
Hillip E. Wilcox
N PROCESS OF FORMATION
"WE BELIEVE THAT FRANKLIN DELANO ROOSEVELT PROVIDES THE BEST ASSURANCE FOR THE CONTINUATION OF THE FREE ENTERPRISE SYSTEM"
Regraded Unclassified
69
The
DISPENSABLE
man
We're not going to vote for you, Tom Dewey.
big issues, until you see the results of public opinion polls.
The people, Tom, don't want a follower right now. They
We thought you might like to know why
want a leader.
It's not that we're straight-ticket Democrats Some of us,
We have yet to hear a good reason for voting for you,
in fact, are Republicans who'll be voting for a Democrat
young man. You attack the President in every speech but
for the first time.
when you finally do come out in favor of some things, they
But we all agree on one thing: we don't think you have
turn out to be collective bargaining, social security and
what it takes to be President of the United States. Not these
other benefits Roosevelt gave this country years ago.
days, anyhow.
No, we haven't found any substance in your campaign.
Most of us have watched you come along politically,
Certainly not in your many attempts to convince us that
under the forced draft of your party's elders, and wondered
the President is a Communist, or a tool of the Communists.
whether you'd let yourself be talked into running in '44.
(Your brain trust slipped, there, son. Nobody believes that
We're sorry you accepted. After all, you've been an execu-
kind of wild talk any more.) And we're disturbed at the
tive a total of only two years. If we as business men were
Hooverism in your philosophy which impelled you to term
hiring someone for the Presidency, we'd certainly demand
our lend-lease program "an end to free government in the
more executive experience than that.
U.S." and to call the President's 50,000 plane goal for 1942
"a publicity stunt." (Did you know we turned out 47,873
And since you were nominated, we've listened to you
that year-and 85,946 in '43?)
most carefully from Philadelphia, Hollywood, Oklahoma
City-and we're forced to conclude that you don't seem to
No, Tom Dewey, the next four years are going to take a
have the stature for the biggest job of them all.
man in the White House. We've got a man now and we
think we'd better keep him. What's more, we think he's a
We've yet to see you come forward with a single working
great man.
program for handling the country's toughest problems of
Franklin Delano Roosevelt is the kind of a man school
the next four years. Where is your plan for reconversion of
industry to the products of peace? Where are your pro-
children a hundred years from now will learn about with
awe-and reverence.
posals for expanding our international trade? What will you
do about assuring full production and full employment?
We hope, for the sake of the country, that you turn out
Everyone says you wait, before making up your mind on
to be that kind of man yourself, some day
Sympathetic business men are urged to support
our newspaper and radio campaign In key states.
BUSINESS MEN for ROOSEVELT, INC.
Time is short. Send your check today-now.
BUSINESS MEN FOR ROOSEVELT, INC.
ANDREW J. HIGGINS,
J. LOUIS REYNOLDS,
502 Park Avenue, New York 22, N.Y.
Honorary President
Chairman, Executive Council
Here's my check for $
to help your campaign.
HOTEL DELMONICO, 502 PARK AVENUE
NAME
PLaza 8-2463
COMPANY
NEW YORK 22, NEW YORK
ADDRESS
(Contributions are neither solicited nor accepted
from corporations or government employees.)
Prepared by
GREEN-BRODIE, Advertising
420 Madison Ave,
179
New York 17, N.Y.
Regraded Unclassified
70
November 1, 1944
my dear mr. Decretary,
get used to the real would after
alan and I are just beginning to
our wonderful weekend in new York.
I think it was the most Jun we
ever had. In addition to the good-
time (and food!) aspects of the ex.
pedition, there was the great pride we
and had in being with you at such a time,
our pleasure in your gracious
.
hospitality was so warm, careful, and
thoughtfulness in arranging it Your
complete that "Thank you seems an
inadequate about it. expression of our feelings
We not were sony that has margenthou
hope she is better now. It is a pity she
was well enough to make the Tip, and
missed anything so pleasant,
It was all indeed lovely. We send our
warmest thanks and regards and hope
more than ever that you will come
to share with no in your earlier bourty.
Sincerely yours,
adrisme mayer Barth
Regraded Unclas
71
Ltr to heads of all banking
institutions in the United States
mm
72
November 1, 1944
25
Gentlemen:
On November 20, 1944, the Treasury will
open the Sixth War Loan Drive. The goal for
this drive will be $14 billion, of which $5
billion is to come from the sale of securities
to individuals.
Since January 1, 1944, the direct costs of
the war have exceeded $69 billion. The critical
phases of the war are still ahead of us and for
that reason we can not expect any material reduo-
tion in expenditures during the next several
months. The $14 billion is, therefore, urgently
needed.
As in the last three War Loans, sales will
be confined to investors other than commercial
banks. It is our wish, in this connection, to
eliminate from the drive as far as possible those
subscriptions which are speculative in character.
You will remember that I included the following
statement in the formal announcement of the drive
on October sixth:
"In order to help in achieving its
objective of selling as many securities
as possible outside of the banking system,
the Treasury requests the cooperation of
all banking institutions in declining to
make speculative loans for the purchase
of Government securities. The Treasury
is in favor of the banks making loans to
facilitate permanent investment in Govern-
ment securities provided such loans are
made in accord with the joint statement
issued by the National and State Bank
Supervisory Authorities on November 23,
1942. However, the Treasury requests the
banks not to make loans for the purpose
of acquiring the drive securities later
for their own account."
Regraded Unclassified
73
- 2 -
Loans to facilitate investment in Government
securities are a proper part of the financing
mechanism when they are in accordance with the
joint statement referred to above. This statement,
you will recall, was in part as follows:
"...subsoribers relying upon anticipated
income may wish to augment their sub-
scriptions by temporary borrowings from
banks. Such loans will not be subject
to criticism but should be on a short
term or amortization basis fully repay-
able within periods not exceeding six
months."
In this connection it will be appreciated if
you will examine the subscriptions for marketable
issues presented through your bank to see if the
amounts thereof are in excess of the ability of the
subscribers to pay. If in your opinion such sub-
scriptions are in excess of ability to pay or appear
to have been submitted for the purpose of acquiring
the securities for resale shortly after the drive,
you will please submit the circumstances and all
available information to the Federal Reserve Bank of
your district, as fiscal agent of the United States,
from which you will receive instructions as to the
disposition to be made of each case.
Another matter with respect to which I should
also appreciate your continued cooperation is that
of the transfer of funds for the purchase of Govern-
ment securities. There has been a great improvement
on this account since the Third War Loan. Over
10,000 banks have qualified to pay for customers'
bond purchases by credit to & War Loan Deposit account,
and if all the banks will urge clients to place orders
for Government securities where funds are on deposit--
making allocation of statistical credit when desired--
transfers of funds can be continued at & satisfactory
low level during the Sixth War Loan.
May I take this opportunity to express my
deep appreciation of the great help you and other
Regraded Unclassified
74
0
- 3 -
bankers have given the Treasury in promoting
the sale of securities, in acting as sales
agencies in the continuous sale of savings bonds,
and in connection with its other war financing
operations. We in the Treasury are looking forward
to your continued cooperation in the task ahead
of us.
Sincerely,
Secretary of the Treasury
October 16, 1944
DWB:NLE
Regraded Unclassified
75
THE WHITE HOUSE
WASHINGTON
November 1, 1944.
For:
SECRETARY MORGENTHAU
From:
MRS. ROOSEVELT.
200
ИОЛ 5 WI 8.39
CE 18892001
OFFICE
C.
o
76
P
5712 Kenwood Avenue, Apt. 2
I
Chicago (37), Illinois.
October 29, 1944.
Mrs. Eleanor Roosevelt,
The White House,
Washington, D. C.
Dear Mrs. Roosevelt:
I am writing this letter as a citizen who,
along with many thousands of Americans, listened
last evening to the Chicago address delivered by
the President at Soldier's Field. Shile unable
to gain admission to the field proper we stood
outside and were warmed by the re-affirming of
those basic principles we all believe in, and were
greatly heartened by the constructive program outlined.
Last evening's meeting was particular interest
to me coming as it did just twenty-four hours after
my parents in Montreal had been notified by our Navy
Department that my brother, Richard, was "missing
in action". The shock of the news along with the
seeming confusion and anguish so plainly discernable
during wartime was at furst almost overwhelming. That
was why it was so heartening to hear the President's
reassuring and courageous program outlined in his
speech. Our boys will not have died in vain if such
a program is carried out. He must not fail this time
to enforce our rights and see to it that economic se-
curity is for all.
I know how very busy you and the President are
just now, but I did want to write and let you know
just how keenly I personally feel toward the main-
tenance of those principles for which our boys are
fighting and which were outlined last evening by the
President here in Chicago.
For myself I do not know what my next step will
be, but I shall probably once again try to enlist.
Perhaps my heart nurmer is healed
Wishing you and the President every success and
happiness, I am
Sincerely,
DONALD C. DELVIN.
s
77
NOV 1 1944
Dear M. Necley:
By Desr Jach
With further reference to a replacement on
Ed Foley and your memorandum of October 19th, I still
have this matter under consideration and an endeaver-
ing to locate within the Treasury a suitable candidate.
I hope to be in a position to advise you definitely
in about another week.
Sincerely,
(Signed) H. Morgenthau, Jr.
Henorable John J. NeCley,
Assistant Secretary of War,
Waf Department,
Washington, D. 0.
CSB:em
Regraded Unclassified
note w. up T. 110 78
Hartnes to to the
Murp and was CHARLES Unitil S. BELL Auga "mell
TELEPHONE 332
ROOM 3424
79
19 October 1944
MINORANDUM FOR n. NORGENTHAU:
As I telephoned you the other day. n Foley is leaving the
Army to take a job with the Contracts Termination Commission. headed
by Risekley.
We have noon the Theater Commander's approval to his relief
but only on the condition that we give him a replacement. The man
he has there, be thinks. is not familiar enough with financial and
economic problems to undertake the directorship of the Subsommission
dealing with the matter. According to the cable we have received
from the Theater they feel that a considerable reorganisation of the
financial and fiscal procedures of the existing Italian Government
the due and they want a nan of considerable capacity and experience
to handle the job. is things are going now I think he would not
have to be in uniform.
Before leaking on the outside for such a man, I wonder whether
you could give no any suggestions as to whom we might take on. I all
avare that you have already aided us materially and that you are
protty this for help yourself but I would appreciate any suggestions
you could give no.
J.J.MoC.
Unclassified
80
November 1, 1944.
Dear Mr. Patton:
I have given thoughtful attention to your
letter of October 25 and have also read a newspaper
clipping in which you refer to Treasury surplus-
disposal policy.
You are in my opinion much too critical of Mr.
Olrich, whom I believe to be sincerely endeavoring
to serve the public interest. What he has said
in the two addresses you mention seems to me to be
entirely consistent with what the President wrote
in signing the surplus disposal act (H.R. 5125).
I quote from the President's statement:
"It is with considerable relustance
that I have decided to sign this bill.
While I an in full accord with the declared
objectives of the bill which are to aid re-
conversion from a war to a peace economy
and to facilitate the orderly disposal of
surplus property, I have considerable doubt
whether many provisions of the bill will
not make extremely difficult the accomplish-
ment of its objectives. There is danger
that the confused methods of disposition and
the elaborate restrictions imposed by the
bill will in many instances delay rather than
expedite reconversion and recupleyment. Our
surplus property should speedily be placed
into channels of disposition which should
provide the most jobs and the greatest good
for the greatest number.
I deubt that you can have fully appraised the
difficulties that we shall face in attempting to apply
the previsions of the bill with respect to the proferred
81
- 2 -
classes named in it or the delays and uncertainties
that these provisions will cause.
I don't think any system which would disorganize
markets for any considerable time could be other than
injurious to all sections of the public.
The procedure. now being followed in surplus
disposal by Treasury Procurement have had my approval.
Thinking you may not have had access to the
complete text of the speeches by Mr. Olrich to which
you referred, I an enclosing copies.
Sincerely,
(Signed) H. Morgenthau, Jr.
Secretary of the Treasury.
P. S. Please remember you have an invitation to come
and see me anytime.
Mr. James G. Patton
President, Farmers Educational and Cooperative Union
480 Munsey Building
Washington 4, D. C.
0
Regraded Unclassified
DIVISION
82
PRESS INTELLIGENCE
O.W.I.
1194 - Soc. Sec. Bldg.
Y
PH.
SY.
ITT
X
P.M.
New York City
DATE
P.
OCT 221944
Patton Defends
Surplus Disposal
PM's Bureau
WASHINGTON, Oct. 21.-James
G. Patton, president of the Na-
tional Farmers' Union, today de-
nounced what he called an unjusti-
fied attack on the Surplus Property
Act by E. L. Olrich, assistant to the
Secretary of the Treasury.
Patton said Olrich was a promi-
nent underwear manufacturer and
that his complaint was that the law
"provides special opportunities for
acquiring Government property to
farmers, veterans, small business
men, co-operative organizations,
political subdivisions, and charitable
and educational institutions."
"Mr. Olrich's idea of what would
be good for the country," Patton
said, "is, obviously, to open the sur-
plus stores of Government material
to wholesale raids by those big
business enterprisers who are able
to buy in huge quantities at
prices and to resell at which
traffic will bear."
83
n
October m, 1944.
Dear Mr. Patten:
Year letter of October 25, regarding
resent speechee made w Mr. Girich, of the
Presurement Division, Inc been received in
this office during the Secretary's absence.
Reverer, I shall be very glad to bring your
communication to Mr. Morgentham's attention
just as - as he is again at Me deek.
Sincerely years,
/
(Signed) H.S. Klots
H. s. note,
Private Secretary.
Mr. Same e. Patten,
President, Paymers Educational and
Corporative Union of America,
489 Number Building,
Vashington 4, n. 0.
GEF/dbs
Regraded Unclassifie d
FARMERS EDUCATIONAL AND COOPERATIVE
O hish
of America
pe-n-E
MATIONAL OFFICE
2601 E. 40TH AVE.
October 25. 1944
ADDRESS REPLY TO
DENVER 16, COLO.
WASHINGTON
430 MUNDEY BLDG.
WASHINGTON 4.0.C.
The Honorable Henry Morgenthau,
Secretary of the Treasury,
Treasury Department,
Washington, D.C.
Dear Mr. Secretary:
In the past week, Mr. E. L. Olrich, one of your
assistants, has made two speeches that are deeply distur-
bing to those of us who hope to see this country make a
smooth transition from a war-time to a peace-time economy.
Specifically, members of the National Farmers Union are deeply
concerned over Mr. Olrich's position and fear that it repre-
sents the position of the Treasury Department. This I am
unwilling to believe, hence am writing you in the hope that
you will clarify the matter.
Mr. Olrich's speeches in Boston and New York are alike
in tenor and there is no necessity to go into detail about
what he said, The two principal points of concern are (1)
his assertion that the Treasury, in effect, is going to do
just about what business interests tell it to do in the dis-
posal of surplus property (2) his attacks on the preferences
required by the law for farmers, veterans, small business,
cooperatives, agencies of local government and educational
and charitable institutions.
I do not believe that you agree with Mr. Olrich in his
intemperate criticisms of the Surplus Property Act and his
obvious refusal to accept any other than the generally dis-
credited big business view of what is in the public interest,
and should appreciate your informing me as to the considered
position of the Treasury in this matter.
Sincerely,
Jamests James President G. Patton Oatton
JGP/mlb
CC: President Roosevelt
Regraded Un
85
OFFICE
OF
FORVICTORY
TREASURY DEPARTMENT
BUY
UNITED
STATES
WAR
WASHINGTON 25
BONDS
AND
THE
SECRETARY
STAMPS
October 28, 1944
Mrs. H. S. Klotz
Private Secretary
to Secretary of Treasury
Treasury Department
Washington 25, D. C.
Dear Mrs. Klotz:
I have sent over the copy of the speech
that I made for the New York Chamber of Commerce,
and I have underscored items pertaining to the
small business and the consumer in it. I have
also underscored in my Boston speech the items
that deal with the farmer and the consumer.
I think you will agree with me that there
is nothing in either of these talks, which in any
way is detrimental to the interest of the farmer,
and I think my objections to the Board are not
as severe as those of the President in vetoing the
Bill.
Sincerely yours,
80ml E. L. Olrich
Assistant to the Secretary
Regraded Unclassified
86
POLYICTORY
TREASURY DEPARTMENT
BUY
UNITED
STATES
WAS
PROCUREMENT DIVISION
DONDS
SLUMPS
IN REPLY
WASHINGTON (25)
REFER TO FILE NO.
FOR INFORMATION OF THE EDITOR
RELEASE NO. 10-161
Please release after 2 Pallo - October 23, 1944.
Disposal of Government Surplus Property - The Government's Position
Ernest L. Olrich
U. S. Chamber of Commerce - Marketing Conference
New York City - October 23, 1944.
Waldorf-Astoria Hotel
The Government's point of view with regard to the disposal of surplus prop-
erty can perhaps be best conveyed to you by & review of some of the policies which
have been established to date and some pertinent comment on these policies. While
I am familiar with the thinking of the Surplus War Property Administration and am
acquainted in a general way with the activities of the other disposal agencies, I
want to make clear at the outset that I speak officially only for the Office of
Surplus Property of the Treasury Procurement Division which is responsible for the
disposition of consumer goods.
Before discussing our policies directly, I shall describe the principal
objectives which have been our guides during the few months of our existence.
Policies are right or wrong, good or bad, only as they aid or hinder the attain-
ment of predetermined objectives.
Our chief objectives have been;
1. To avoid introducing any serious dislocations into the national economy.
2. To promote production and employment of labor.
3. To effect 8. broad and equitable distribution of surpluses.
4. To see that small and large businesses have an equal opportunity to buy
from us.
5. To see that the government obtains a fair return from the sale of property.
You will note that I have mentioned last the subject of income from the sale
of property. This is to emphasize the fact that we do not have as our major objec-
tive the largest total number dollars we can obtain from our selling activities.
To be sure, we are well aware that the property placed in our care belongs to
all the citizens of the country. But we believe that these citizens would prefer
to have us sacrifice some income, if in so doing, we prevent harmful effects in
trade and employment. We shall do everything we can to maximize income from our
activities, consistent with the first two objectives I have just stated.
We look upon our tasks as one not of recovering all we can out of this huge
war production but ratheras one of recovering all we can, compatible with the public
good.
The goods which are being, and will be, turned over to us were produced
for one purpose -- to aid in winning the war. If every last item of these goods
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87
were to be destroyed in the process of winning the war, no one would think twice
about it. In other words, no one would complain about the cost to the government
of all this property if it were entirely used for its original military purpose.
It is important that we carry over this thought in connection with the dis-
posal of those goods which for one good reason or another prove to be surplus to
the needs of the military services and are not required for their original purpose.
We should not worry about their cost to the government to the point where, in
trying to recover large sums in the disposal of the goods, we incur what are
actually greater costs through introducing instability and unemployment into our
industrial system. Any revenue which must be sacrificed because the disposal of
the property involved would cause undesirable economic dislocation should be
accepted as EL cost of war. We do not believe in adopting EL disposal policy, pro-
cedure 'or practice which results in an increase in unemployment and a decrease in
purchasing power.
You can see that to us the problem resolves itself into one of minimizing,
if not entirely eliminating, the conflict between the product of wartime labor
hours and the product of postwar, or peacetime labor hours. We consider the war-
time labor hours to be "ghost" hours which must not be allowed to haunt the
economic and business scene, with the coming of peace.
Actually up to the present time, we have had to give little thought to the
first two objectives. We have not as yet had enough surplus property declared
to us, either in total or in particular fields, 50 that our methods of disposal
would be likely to introduce any serious economic dislocations or interfere with
production and the employment of labor.
The time will come, however, when we will receive quantities 80 large that
careless disposition can produce very harmful effects on the commercial structure
and system of the country. We intend to protect you as business men, and to
protect citizens generally, from any calamity of this sort, in three chief ways,
1. By continuing to make studies which will provide the data necessary
to guide the responsible officials in the right direction as regards
disposal policies and procedures.
2. By retaining (if we are able) as the responsible officials the
broadly-experienced men from the active business world who are now so
ably carrying on in our Washington office and in our regional offices.
3. By calling on such business executives as you for advice whenever
we have surplus inventories in dangerously large lots,
You should not infer from my statements about large quantities of surplus
property that we know even approximately, except incertain narrow fields, what
the volume of these surpluses 18 to be. I regret that I cannot give you a few
figures which would have some meaning but to do 60 is absolutely impossible.
Some forcasts as to the total volume of surplus property have been made by
others. We have made no forecusts because we think there are too many question
marks in the situation, particularly with regard to consumer goods. For example,
how long 1s the war in Europe to continue? In the Pacific? How much property
will be manufactured for the military services before the end of the war? How
much will be destroyed? How large reserves of supplies will the military ser-
vices retain after the war for their own use? Questions such as these must be
77j20-58411
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-3-
be unswered before one can feel competent to predict the size of surplus inven-
tories, except in the case of such property as manufacturing plants.
Regardless of how large the inventories of surplus property may be and of
what their composition may be, we shall endeavor to dispose of them with the
public good upper-most in our mind. We shall attempt to 808 that our activities
are for the benefit of the nation as B. whole, insofar as we are permitted to do 80.
I have digressed for too long a time already but before taking up the subject
of policies, I want to assure you that we are going about our work with due humil-
ity. As if we were not ourselves aware of the difficulties confronting us in
trying to attain the goals I have been describing, we receive communications from
time to time whose purpose is to keep our ego and confidence within proper limits.
One friendly soul, for example, recently wrote to me as follows, "You may have
had considerable experience with large corporations like Marshall Field's and
Munsingwear, Inc., but it 1s quite evident that you have had no experience in the
kind of job you are attempting to do at this time, When you make a statement that
you and your organization contemplate disposal of this surplus material with regard
for the interest of the taxpayer, the manufacturer, the merchant and the employee
you make yourself appear as silly as & pimple on the end of your nose. It is im-
possible to do business in public office as you would in private business and you
do not have to take my word for it because there is already too much evidence
already on the books.
Now let me turn to some of the policies we have been attempting to follow up
to the present time. These policies are not one hundred per cent effective yet
because perfection in operating a nation-wide selling organization cannot be
attained in B. matter of three or four months. Vie believe, however, our mistakes
are getting to be fewer and fewer in spite of the constantly increasing volume of
transactions we are hundling.
A major policy of the Office of Surplus Property is to sell through regular
trade channels except in those instances when non-regular channels will pay B.
higher price for the merchandise. By a regular trade channel is meant one which
regularly handles the merchandise in question. To the extent that we price our
merchandise correctly and advertise it effectively to regular dealers in that
merchandise these dealers should be expected to absorb most, if not all, of it.
So-called speculators as a rule, like to buy below the market and make extraordi--
nary profits. We do not consider EL non-regular dealer EL speculator if he is
willing to pay as much as or more than a regular dealer for the same merchandise.
You will agree with me, I think, that it is not a simple matter to define
a speculator, if the definition is to be used as a guide in determining whom not
to sell to. Actually, the individual who buys at a lower than fair-market price
is not speculating nearly 50 much as the dealer who pays the going price. He
reduces the risk in his purchase by buying at the lower price.
Up to this time we have not sold direct to consumers. It has been our
thought that any attempt to set the government up in the retail business on a.
national scale would be inefficient and uneconomical. We have believed that corl-
sumers can best be served by purchasing from their regular retail sources of
supply and that our energies should be devoted to seeing to it that retail souroes
o
of supply have access to our merchandise either directly or through the medium
of their wholesalers.
77320-58411
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Our policy with regard to the level of trade to approach is to sell to that
level (manufacturer, wholesalar, or retailer) or combination of levels which will
result in (1) most equitable distribution geographically and according to need,
(2) speediest distribution to the extent that speed is important, (3) greatest
protection of trade-mark value for the manufacturer, (4) highest return to the
Government considering other pertinent factors, and (5) most sutisfuctory service
to the consuming public.
Our pricing policy is like that of other sellers of comparable types of
merchandise. We test markets carefully in order to establish a fair price for
our offerings, considering the level of trade to which we are selling. Our
prices are competitive. We do not attempt to offer bargains. It is surprising
(or isn't it) how many concerns think that they ought to be able to buy from the
Government at a lower price than they must pay to private sources of supply. We
try to set our prices in such B. way that all types of outlets - wholesalers,
mailorder houses, chain stores and large retailers will be able to buy from us
and resell in competition with one another.
We have attempted to encourage the purticipation of small business concerns
in the disposal of surplus property. We fix our lot sizes with this end in view.
Our pricing is scrutinized carefully in an attempt to insure that small businesses
are not handicapped by this factor. We advertise to small concerns. We have
considered that we are on the road to performing our duty satisfactorily if we
enable the small manufacturer and the small wholesaler to buy from us. In other
words, we cannot reach the small retailer directly. In the intorest of efficioncy
and economy of operation, we reach him through the wholesaler and jobber - his
normal source of supply. The latter can be served properly if we attain good
distribution among wholesalers, large and small.
As to methods of sale, WG employ four, - the auction, sealed-bid, negotiation
and fixed-price. The auction method is used where it is the typical method for
the property involved. For example, horses are sold in this way. The sealed-bid
method has been used by us to a considerable extent but the trend has been toward
the negotiation and fixed-price methods. The sealed-bid method has appealed
because it has seemed to be the "sufe" one to use. Presumably everybody has B.
chance to buy and the winning bids represent the highest price that can be obtained
for the goods. Much time is consumed by this method, however, and for various
other reasons as well, it is attractive neither to us us sellers nor to many
business concerns 8.6 buyers.
Currently, greater emphasis is being placed on sale by negotiation and by
the fixed-price method. In the case of small lots of property the wide selling
and advertising of which would be wasteful, we approach several prospective
buyers in order to determine what a reasonable price is then proceed to sell at
that price. While this method would seem to lay us open to the charge of favor-
itiam toward a few concerns, it can be defended on the grounds of efficiency and
economy. If the property involved is not in short supply and the market is tested
adequately before we sell, there seems to be little ground for criticizing it.
The fixed-price method is the typical method of most vendors of merchandise.
Like them, we endeavor to place a fair price on our merchandise and then advertise
it appealingly to all prospective purchasers. As merchandise is declared to us
in larger and larger quantities we shall make more and more use of this method.
I hope that these remarks have given you an adequate idea of our philosophy
and general point of view in approaching the tremendous problems which face us.
77j20-58411
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so
And may I omphasize to you at this point that those problems are quite different
from those which must be solved by any manufacturer, Wholesaler or retailer. They
make the job more than ordinarily difficult and at the same time more than ordina-
rily interesting.
Imagine yourself in the position of having no control over the kind of mer-
chandise stocked on your shelves and counters, in forward stock und in reserve.
And no control over tho amount of merchundise! And no control over the timo whan
merchandise moves into your store! And no net profit figures, nor even gross
profit figures, to use as is guide to your merchandising activities! That is exact-
ly the position we are in.
In the Office of Surplus Property, we have no control over what types of mer-
chandise we are required to sell nor over the quantities. The cannot be regarded
by prospective buyers as a regular resource for spucific items, for we may have
large quantities of un item today and none tomorrow. We have merchandise for which
there is a ready market, merchandise for which there is Д. small or doubtful market
and merchandise for which there is simply no market at all. Let me list a few
examples in the latter two categories - diso wheels for gun carriages, ice
grousers to be attached to special rubber tired treads of high-spood military
tractors, bolo scabbards, smoke generators, and World War I spurs. Ingenuity now
and then tukes an item out of the "no market" classification, as for example in
the sale of the spurs for use 6.8 a premium on a kids' radio program. Numerous are
the items, however, which no amount of ingenuity can move out of our hunds. On
top of all this we have to act within the limits of certain government restrictions.
I hasten to add that I am not unaware that now and then you too must heed govern-
ment regulations.
In closing I want to Buy 14 word or two about the Surplus Property Act of 1944
recently passed by Congress and signed by the President. In my opinion, there
are certain features of this bill which may prove to be undesirable. One oun
readily infer that this may be true by reading the twenty objectives in Section 2
at the beginning of the Aot. In such it lons list, it is not surprising to find
considerable duplication und not is little contradiction.
The provisions of the billare such, I believe, that it may be impossible to
carry on the orderly disposal of property which we have attempted up to date. It
may be impossible to do the clean job of merchandising and selling which is nec-
essary if we are to encourage such people as you to go ahoud courageously with
your plans and thus produce and ¿1vo emoloyment to the maximum degree.
The President himself in signing the bill said, in part,
"There is danger that the confused methods of disposition and the elaborate
restrictions imposed by the bill will in many instances delay rather than expedite
reconversions and unemployment. Our surplus proporty should speedily be placed
into channels of disposition which should provide the most jobs and the greatest
good for the greatest number.
"But we must be in IL position to get on with the organization of our plans
for the disposition of surplus war property. I havo, thorefore, concluded that
it would be best to let the bill become law in the hope that after the Surplus
Property Board provided for the bill has had some experience in operating under
et, the Congress will givo caroful consideration to needed changes which may be
suggested by the Board."
77j21-58411
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The President, in these words, has taken a very realistic view of the
situation. Just as soon as any weaknesses in the Act hecome evident, the nec-
essary amendments should be passed at the earliest opportunity.
Whatever the authority may be under which we are operating, I can assure
you that each member of the disposal organization will give one hundred per
cent of his effort to the job at hand. We ask your cooperation!
77j21-58411
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92
POBLYCTORY
TREASURY DEPARTMENT
BUY
UNITED
STATES
PROCUREMENT DIVISION
WAR
BOMDS
OFFICE OF
WASHINGTON (25)
SURPLUS PROPERTY
RELEASE NO. 10-155
FOR INFORMATION OF THE EDITOR:
This becomes official on October 16, 1944 after 2 P.M.
Disposal of Surplus Consumer Goods
Ernest L. Olrich
Boston Conference on Distribution - October 16, 1944
Statler Hotel - Boston, Mass.
For several years I have had the pleasure of attending the Boston Conference
on Distribution and have derived a great deal of benefit from the discussions
carried on at these sessions, Knowing as I do the significance of this annual
gathering, I am very happy to participate in this program at this time.
I assume that this group is more interested in the broader phases and in-
plications of our activities than in such narrower subjects as our organization
and procedures. There is a strong temptation to talk about the latter, for we
have had a very exciting and interesting time these past few months attempting
to build the Office of Surplus Property of the Treasury Procurement Division in
a way that would reflect credit on the government and make us favorably known and
respected among such people as you,
However, I will merely say that up to this time we have succeeded in as-
sembling an organisation of business men and in establishing policies and pro-
cedures which place us in & position today to carry the current load in an ef-
ficient manner. We know that much spade work still remains to be done but we
are confident that we shall be capable of carrying the load in the future as it
becomes progressively greater and more difficult,
As leading business executives of the country, you are naturally interested
in being informed as to what effect the disposal of surplus war property is
likely to have on our economy as a whole. Unfortunately, there are 60 many
variables in the picture that one cannot forecast with satisfactory accuracy just
how great an influence our disposal activities will have during the reconversion
period and the years following, However, it may be helpful to indicate to you
some of our thoughts on this subject. Please bear in mind that I am speaking for
only one of the disposal agencies and that my concern is largely with surplus
consumer goods.
And may I emphasize at this point that I am making my remarks in all humil-
ity. Even if I were not naturally humble, I could not be entirely lacking in
this quality, for I am reminded from time to time that I an not going to perform
miracles. One kindly soul, for example, recently wrote to me as follows:
"You may have had considerable experience with large corporations like
Marshall Field's and Munsingwear, Inc,, but it is quite evident that
you have had no experience in the kind of job you are attempting to do
at this time. When you make a statement that you and your organization
Regraded-Unelasified
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83
contemplate disposal of this surplus material with regard for the in-
terest of the taxpayer, the manufacturer, the merchant and the employee
you make yourself appear as silly as a pimple on the end of your nose.
"It is impossible to do business in public office as you would in private
business and you do not have to take my word for it because there is
already too much evidence already on the books."
Size of Surpluses
The extent of the impact of surplus property disposal on the economy obvious-
ly hinges in large part on the size of the surpluses and their nature. We are
seriously handicapped in maiding predictions as to the economic repercussions of
our activities because we have no way of knowing how large the surpluses will be
and what sort of property they will include. Others have forecast totals ranging
from a few billion dollars to a hundred billion. We have made no such forecasts
because we think there are too many question marks in the situation, particularly
with regard to consumer goods, For example, how long is the war in Europe to con
tinue? In the Pacific? How much property will be manufactured for the military
services before the end of the war? How much will be destroyed? How large re-
serves of supplies will the military services retain after the war for their own
use? Questions such as these must be answered before one can feel competent to
predict the size of surplus inventories, except in the case of such property as
manufacturing plants.
Nature of Surpluses
What types of goods will make up the surplus inventories is another impor-
tant question to consider in trying to measure the probable effects of disposal
activities on general business conditions. If most of the goods are of such a
nature that there .ill be neither industrial nor consumer demand for them, they
will have little or no effect on the economy. If on the other hand, the goods
are of a type which is readily marketable, their disposal can have decided ef-
fects, good or bad, on the health of the economy. Here again we cannot at this
time make a reasonable forecast as to what types of consumer goods will be turned
over to us. We are, therefore, again handicapped in predicting what the effect
of our activities on the economy will be.
I do not want you to infer that we have adopted a "nothing can be done
about it" attitude with regard to planning future disposals and that, therefore,
we may fail to give adequate consideration to the undesirable economic effects
of our activities. On the contrary, we are gathering together in advance all
the data we can which will help us in making wise decisions when the large sur-
pluses are actually placed in our hands. Although we cannot tell you exactly
how we shall proceed in specific cases as regards disposal of surplus consumer
goods, we can assure you that uppermost in our minds will be the avoidance of
serious dislocations in our domestic economy.
"Public Good" the guide
We look upon our task as one not of recovering all we can out of this huge
war production but rather as one of recovering all we can, compatible with the
public good. In our opinion, that qualification "compatible with the public
good" is very important. Let me explain.
5313-58212
34
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There are many people who believe that the success of our disposal activities
should be measured in terms of the total financial return we can realize for the
government, They believe we should dispose of the goods at the highest price
possible and as quickly as possible. Another group of critics believes that we
should not be concerned with the total financial return but rather should dispose
of some, if not all, of the goods either by outright donation or by selling at
bargain prices. Those who want us to give surplus goods away are for the most part
motivated by humanitarian impulses, Those who believe the property should be sold
at bargain prices hold to the view that the taxpayer has already paid for the
goods once and therefore is entitled to purchase them when surplus at B. low cost.
On the surface the points of view of both these groups are sound. That is,
seemingly strong arguments can be raised in their favor. However, both of them,
it seems to me, can be questioned from the standpoint of their compatibility with
the public good. Surplus property which reaches the hands of consumers, regardless
of the method by which it gets there, may take away the market from some other
source of supply. As markets for other goods are decreased, fewer goods are manu-
factured and unemployment is increased. Unemployment means loss of purchasing
power and further loss of markets. It is because we are thinking along these lines
that we define our objective as recovering all we can out of the disposal of sur-
plus property, compatible with the public good.
The goods which are being, and will be, turned over to us were produced for
one purpose - to aid in winning the war. If every last item of these goods were
to be destroyed in the process of winning the war, no one would think twice about
it. In other words, no one would complain about the cost to the government of all
this property if it were entirely used for its original military purpose.
It is important that we carry over this thought in connection with the dis-
posal of those goods which for one good reason or another prove to be surplus to
the needs of the military services and are not required for their original purpose.
We should not worry about their cost to the government to the point where, in try-
ing to recover large sums in the disposal of the goods, we incur what are actually
greater costs through introducing instability and unemployment into our industrial
system. Any revenue which must be sacrificed because the disposal of the property
involved would cause undesirable economic dislocation should be accepted as a
cost of war, We do not believe in adopting a disposal policy, procedure or prac-
tice which results in an increase in unemployment and a decrease in purchasing
power.
You can 600 that to us the problem resolves itself into one of minimizing,
if not entirely eliminating, the conflict between the product of wartime labor
hours and the product of postwar, or peacetime labor hours. We consider the war-
time labor hours to be "ghost" hours which must not be allowed to haunt the economic
and business scene, with the soming of peace.
Our nice-sounding intentions are easier to utter than to live up to. We have
most difficult problems to solve. Strong as may be our desire not to harm the
economy, it 16 quite another thing actually to make the decisions which will pro-
duce this result. We are not naive enough to believe, nor do we intend to imply,
that we shall not compete to some extent with other sellers, It is impossible for
us to make sales without in some degree interfering with the sales of others.
Even some of our current sales of short-supply items will result in a deferment of
future purchases by the buyers. What we went to avoid 1s policies which will
5J13-58212
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result in serious and dangerous dislocations of the economy. With this objective
in mind, we must strive to make our offerings in the right amounts, at the right
time, to the right markets and at the right price. No have already initiated
studies which should be useful to us in arriving at sound decisions. For example,
we have surveyed the surgical instrument, farm machinery. automotive and other
fields. We ask that other government agencies and business concerns cooperate and
be patient with us as we try to work out the policies which will be most satisfac-
tory to all concerned.
Although I am speaking somewhat in generalities, I hope I am giving you an
adequate idea of our basic philosophy with regard to the disposal problem. We
have nothing to conceal from you. We want you to know how we are thinking just
as we want to know how you business leaders are thinking. Only as complete infor-
mation moves in both directions can we attain our common goal.
Policies followed to date
You may be interested in learning of some of the policies we have been at-
tempting to follow up to the present time. These policies are not one hundred
per cent effective yet because perfection in operating & nation-wide selling or-
ganization cannot be attained in a matter of three or four months. We believe
our mistakes are getting to be fewer and fewer in spite of the constantly increas-
ing volume of transactions we are handling.
A major policy of the Office of Surplus Property 18 to sell through regular
trade channels except in those instances when non-regular channels will pay a
higher price for the merchandise. By a regular trade channel 1s meant one which
regularly handles the merchandise in question. To the extent that we price our
merchandise correctly and advertise it effectively to regular dealers in that mer-
chandise these dealers should be expected to absorb most, if not all, of it. So-
called speculators 8,8 8. rule, like to buy below the market and make extraordinary
profits. We do not consider a non-regular dealer a speculator if he 1s willing
to pay as much as or more than a regular dealer for the same merchandise.
Up to this time we have not sold direct to consumers. It has been our
thought that any attempt to set the government up in the retail business on a
national scale would be inefficient and uneconomical, We have believed that con-
sumers can best be served by purchasing from their regular retail sources of sup-
ply and that our energies should be devoted to seeing to it that retail sources
of supply have access to our merchandise either directly or through the medium
of their wholesalers.
Our policy with regard to the level of trade to approach is to sell to that
level (manufacturer, wholesaler, or retailer) or combination of levels which will
result in (1) most equitable distribution geographically and according to need,
(2) speediest distribution to the extent that speed is important, (3) greatest
protection of trade-mark value for the manufacturer, (4) highest return to the
Government considering other pertinent factors, and (5) most satisfactory service
to the consuming public.
Our pricing policy is like that of other sellers of comparable types of mer-
chandise, We test markets carefully in order to establish a fair price for our
offerings, considering the level of trade to which we are selling, Our prices
are competitive, We do not attempt to offer bargains. It is surprising (or
5113-58212
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06
isn't it) how many concerns think that they ought to be able to buy from the Gov-
ernment at & lower price than they must pay to private sources of supply. We
try to set our prices in such a way that all types of outlets -- wholesalers, mail-
order houses, chain stores and large retailers will be able to buy from us and re-
sell in competition with one another.
We have attempted to encourage the participation of small business concerns in
the disposal of surplus property. We fix our lot sizes with this end in view. Our
pricing is scrutinized carefully in an attempt to insure that small businesses are'
not handicapped by this factor. We advertise to small concerns. We have consid-
ered that we are on the road to performing our duty satisfactorily if we enable the
small manufacturer and the small wholesaler to buy from us. In other words, We can-
not reach the small retailer directly. In the interest of efficiency and economy
of operation, we reach him through the wholesaler and jobber -- his normal source
of supply. The latter can be served properly if we attain good distribution
among wholesalers, large and small.
As to methods of sale, we employ four: - the auction, sealed-bid, negotiation
and fixed-price. The auction method is used where it is the typical method for
the property involved. For example, horses are sold in this way. The sealed-bid
method has been used by us to a considerable extent but the trend has been toward
the negotiation and fixed-price methods. The sealed-bid method has appealed be-
cause it has seemed to be the "safe" one to use. Presumably everybody has a chance
to buy and the winning bids represent the highest price that can be obtained for
the goods. Much time is consumed by this method, however, and for various other
reasons as well, it 18 attractive neither to us as sellers nor to many business
concerns as buyers.
Currently. greater emphasis is being placed on sale by negotiation and by the
fixed-price method. In the case of small lots of property the wide selling and
advertising of which would be wasteful, WG approach several prospective buyers in
order to determine what a reasonable price is and then proceed to sell at that
price. While this method would seem to lay us open to the charge of favoritism
toward a few concerns, it can be defended on the grounds of efficiency and economy.
If the property involved is not in short supply and the market 10 tested adequately
before we sell, there seems to be little ground for criticizing it. The fixed-price
method is the typical method of most vendors of merchandise. Like them, we endeav
or to place a fair price on our merchandise and then advertise it appealingly to
all prospective purchasers. As merchandise is declared to us in larger and larger
quantities we shall make more and more use of this method.
Complexity of problem
Without intending to complain, we believe our problems have to date been and
will continue to be more complex than those of most private concerns. Think of
the situation in which we find ourselves, We have nothing to say about what mer-
chandize we receive for disposal, how much of it We shall receive, when we shall
receive it, where it 18 located, or whether it 1a new or used, We do not obtain
merchandise to fill existing market needs, Rather we must try to find market needs
for the merchandise we obtain. Most of the property placed in our hands has been
designed for purposes of waging war and has no equivalent civilian use, Much of
it has been superseded by improved designs. A large proportion of our inventories
is composed of used goods, the marketing of which obviously presents special prob-
lems,
5J13-58212
Regraded Unclassified
- o -
97
If our problems have been plentiful to date, they are certain to be more
plentiful in the future. I do not refer alone to the ordinary difficulties which
will be present in attempting to carry on our disposal activities without causing
dislocations in the peacetime economy. New difficulties will be presented when we
endeavor to carry out the provisions of the Surplus Proporty Act of 1944 which be-
came law early this month.
We shall, of course, do our best in carrying out these provisions. However,
I must confess to you frankly that I believe the Act, unless amended, may inter-
fere seriously with the disposal of surplus property for the maximum benefit of
the nation as a whole. Although the extent of interference will depend upon the
nature of the regulations established by the Surplus Property Board, at best it
will be too great. I should like to devote my closing remarks to some comments
on the bill and some of the reasons why I think its provisions may be impractical
and harmful.
The objectives of the Act are twenty in number. In such a long list, it is
not surprising to find considerable duplication and not a little contradiction.
As I have said, we have up to this time thought in terms of the welfare of the
whole nation rather than of particular groups. We have had as our criteria for
making decisions the probable effects of those decisions on markets and jobs, or
employment. The Act provides special opportunities for acquiring government sur-
pluses for farmers, veterans, for small business men, for cooperative organizations,
for political subdivisions, and for charitable and educational institutions. It 18
difficult to reconcile these special opportunities for these groups with the wel-
fare of the country as a whole and with several of the objectives of the Act.
No one is more sympathetic than I with the needa of tax-supported and non-
profit charitable institutions, farmers, veterans, and small business concerns but
1 believe that their needs should be given consideration along with the needs of
all other groups. If in catering to the needs of these groups, the economy A.0 a
whole is disturbed, these groups may themselves be hurt more than they are helped,
It would be far better to permit the administration charged with responsibility for
disposing of surplus property -- whether an individual or a board - to make its
own decisions as to who should receive property and under what conditions, using
as its principal guide the standard of compatibility with the public good.
Several objectives of the Act call for disposal policies which will maintain
and encourage private industry and individual initiative. The opportunities ex-
tended to special groups. just mentioned, interfere with the attainment of these
objectives. * very great deterrent to a confident private enterprise would 10 the
holding by government of large quantities of commodities, which, 80 long as they
are held, are a weight hanging over the market. Yet the Act provides for the hold-
ing of large stocks of commodities and by its provisions retards the disposal of
others.
It seems to us that it is desirable to restore civilian industry and employment
at the earliest opportunity. Yet, here again the Act may interfere with such a
goal. In the case of a particular type of property, it may be determined that the
quickest and most satisfactory procedure would be to sell to the original manufac-
turers. However, if hundreds of thousands of veterans decide to set themselves up
in business to handle that type of product they can, as veterans and small busi-
nesses, buy on at least equal terms with large, established buyers and they may be
financed in addition by the Smaller War Plants Corporation. Thus we might with
5J14-58212
Regraded Unclassified
- 7 -
38
the one hand be trying to sell quickly through very large buyers and with the other
be taking away their market from them and upsetting their dealer organizations,
According to the Act, a Board of three is given general supervision and direc-
tion of the care, handling and disposition of surplus property and the transfer of
surplus property between Government agencies. It is difficult to see how & Board
of this sort can carry on these supervisory and directing duties any more effective-
ly than a single administrator, if indeed it can do so as effectively. But that
is their problem. Certainly surplus property disposal activities have thus far
been very ably directed by one man, Other successful war agencies too have been
administered by one man.
The Board may, if it wiehes, prescribe regulations which would relieve the dis-
posal agencies of almost all necessity for making decisions as to how disposal of
property should be effected. In my opinion, only broad rules should be laid down
at the top and the more specific decisions affecting particular lots and types of
merchandise should be made as they are now by executives in the disposal agencies
who are experienced in the marketing of the goods placed in their charge. What
action the Board may take under this provision cannot be predicted at this time.
There is no question, however, that it will be subject to great pressure from many
groups seeking to further their own selfish aims.
Another particularly unfortunate provision of the Act states that a person
employed by any disposal agency shall not during the time of such employment or for
two years thereafter act as counsel, attorney or agent, or be employed as represen-
tative by any business, in connection with any matter involving the disposition
of surplus property by the agency in which such person was employed, if this person
during his employment with such agency ratified, approved or authorised the disposi-
tion of any surplus property. The apparent intent of this section is commendable.
How the courts will interpret it cannot be anticipated. But its practical result
may be to force the resignation of most of the business men who have at considerable
sacrifice been willing to help in disposing of surpluses in a business-like way and
in a way which has redounded to the benefit of the taxpayer. Likewise it is my
considered opinion that it will deter business men from taking on any such respon-
sibility in the future. Since practically all business concerns are likely to feel
that they may want to buy surplus property in the next few years, they may be un-
willing to permit their executives to work for the disposal agencies in Washington
or elsewhere.
I dislike concluding this talk on this sour note. Frankly, however, I would
be doing less than my duty if I were not to warn you of some of the complications
which it seems fair to state will affect the officient disposal of surplus property
and thus the total economy of which your businesses are a part. Let me repeat a
portion of the statement made by President Roosevelt at the time he signed the
Surplus Property Disposal Act, "It is with considerable reluctance that I have de-
cided to sign this bill, While I am in full accord with the declared objectives
of the bill which are to aid reconversion from a war to B. peace economy and to fa-
cilitate the orderly disposal of surplus property. I have considerable doubt whether
many provisions of the bill will not make extremely difficult the accomplishment of
its objectives. There is danger that the confused methods of disposition and the
elaborate restrictions imposed by the bill will in many instances delay rather than
expedite reconversion and reemployment. Our surplus property should speedily be
placed into channels of disposition which should provide the most jobs and the
greatest good for the greatest number.
5114-58212
Regraded Unclassified
- 8 -
09
"But we must be in a position to get on with the organization of our plans
for the disposition of surplus war property. I have, therefore, concluded that
it would be best to let the bill become law in the hope that after the Surplus
Property Board provided for in the bill has had some experience in operating
under it, the Congress will give careful consideration to needed changes which
may be suggested by the Board."
I hope that the Surplus Property Board will be able to resist selfish pres-
sures from without, which we have already experienced in a small way, and estab-
lish regulations as flexible and wise as those in effect to date have, in my opin-
ion, been. In any event I can promise you that my staff and I will endeavor to do
everything in our power to see that our activities are consonant with the best
interests of all the citizens of the nation, Thank you.
31114-56212
Regraded Unclassified
100
NOV 1 1944
My dear Lieutenant Heitkamp:
I thank you for your letter of October 4.
Having one boy in the Army in Europe and
another in the Navy I am certainly not going to
do anything to make it tougher for them if I can
help it.
I have not been able to find out who it is
that has been publicizing (incorrectly) the
"Morgenthau plan.' I have not given out anything,
nor made any statements. In so far as I have made
any recommendations they have been made to my
superior officer, your Commander-in-Chief.
I am very much censerned, however, lest the
fruits of your victory be thrown away through a
desire to reconstruct business as usual.
Sincerely,
3igned) Henry Morgenthau, Jr.
Secretary of the Treasury.
Lieutenant R. L. Heitkamp, 6465933
A-22nd F.A.B.U.
A.P.O. 254, c/o Postmaster
New York, New York
Regraded Unclassified
From
Octo lei
(First day of
Would Sever!)
Henry Marganthean
Secretary of the Leasure
Washing then, D.C.
Dear Sir:
For Tod's sake quit giving
the germany people an incentive
to fight!
Unconditional surrender is a
hard enough bargain to strike
without such promises as your
plan for Germany I agree with
your plan unt why publicize it,
Imagine how hard the Lexam
would fight if the other faity
seven states tried to take their
state nights away. - - so it is
with gumany.
jumany lill has a lot of
Regraded Uncla ssified
you people with
wa Jermany, demobiling ation,
do not make it
mmang is essential but the
is unessential
with me a little longer
will he all over -
tinly me do not give
what happens to
after we defeat them an /
back home but quick /
attlifield so long as me
any a toughier nut to erach."
our point ? Don't make
Sincerely yours
K.L. Heitk amp
1st Lt FA
Regraded Uncl assified
103
NOV 1 1944
My dear Captain Markoff:
I have had many letters on the subject of
dealing with Germany, but none that I read more
appreciatively than yours.
The publication of the so-called "Morgenthau
plan" was not my doing and I have issued no state-
ment on the matter.
However, I have made no secret of the fact
that I believe in using all humane and practical
means to prevent Germany's making war on us again.
It is my hope that the wide discussion of
"plans" attributed to me may have the good result
of clarifying American thinking on the subject.
Sincerely,
(Signed) Henry Morgenthau, Jr.
Secretary of the Treasury.
Captain Benjamin Markoff, 0-1576334
4268 Q.M. Bn.
A.P.O. 511, c/o Postmaster
New York, New York
HEG/mah
Regraded Unclassified
Markoff
42 68 Qm. 3M04
O-1576334 APO.511
c/o Postmaster. N.Y.
APO 511, P/M
c/o wafite House
Henry margenthere
October 16, '4.4
Wash. D.C.
STAND BY YOUR GUNS
HENRY!
Dear sir :
I am sure that you have been
delaged with numerons letters from all over
to make Germany an agricultural country
the world regarding the practical stand
as an officer of the mited close State
to four years in the service I am
army serving 15 months oversine and not
will air cumst ances permit me,
in at position to be active politically not nor
my energies to believe remonstrate in "educate"
from my varied duties - to dedicate all
after the was I should like to remind those am-
those who ! a strong Germany
ericans at home with all the comforts of
modern science and all money
can buy even now, when blood
that I do not want my children or even
flows so freely wherever the sun sets;
my grand children to little to fight our
NAZI Germany again
cline that can potentially produce
To prevent the recurrence, every ms me-
of war must be transferred on a fuota basis?
to ravished those countries who liave been greatly
by the HUNS.
for years after Are armistic signed
great Democratic Germany know that even
Dr the exponoments of a new
the organde MR
on germ
mysortant to the of French Germany Industry?
Dutch, Belgian Danish, nonwyian, polise
ezeck, Greek, Italian, on Russian for
that matter? Each of Invertagement these countries
cation of Their local resources
would benefit more greatly from intensific
fast, but the most potential argument of
all - our powerful practical ally
Russia Regardless what the rest of
the wish world ful thinking desire the by Russians means of are
little energy in note- getting -histriouses
a very progratical people and waste
tolerate another your with Germany
and tirades. They are not young to
ever! When Russian soldiers are
killed while hid policing occupied treat
will they use glove
preventing repetitions T NO!
main tained her powerful industries she
w heress it is true that it Germany
of inter national book beeping by
could pay reparations : That farce
which we paid two dollars in
cash reparations for dollar paid on account
of : will not americans be
out of jobs by the millions, if Germans produce
manufactured products to "pay reparations
will not millions of Britist French and
internal industrial activity and a balanced
all run allies lose earning capacity for
I remaria martially yours
OFFICE OF
THE SECRETARY OF THE TREASURY
November 1, 1944
LOSSES OF U. S. NAVAL AIRCRAFT IN THE PACIFIC
THEATER DURING THE MONTHS OF SEPTEMBER & OCT.:
300 planes, approximately
LOSSES OF ENEMY AIRCRAFT IN PACIFIC THEATER
DURING THE MONTHS OF SEPTEMBER AND OCTOBER:
2,594 planes destroyed
PLANE LOSSES (U.S.A.A.F.) SINCE PEARL HARBOR:
(Up to October 2, 1944)
14,600 planes lost on combat missions
9,900 planes lost overseas from other than
combat causes
17,500 planes lost in continental U.S.
(11,000 lost in wrecks; 2,500 no
longer fit for flying, but useful
in various phases of ground instruction
4,000 worn out from use for training
purposes)
ENEMY PLANE LOSSES SINCE PEARL HARBOR:
(Up to October 2, 1944; these figures apply
to enemy losses inflicted by the U.S.A.A.F.
only)
27,000 planes definitely destroyed
6,000 probably destroyed
10,000 damaged
P.B.M.
106
SECRET
A-500
11:05 a.m.
Nov. 1, 1944.
AMEMBASSY
UITO
Information contained in your 1015 of October 20 is
appreciated.
Amlegation Bern reports that a communication dated
August 30 conveying Equadoran request that bearers of
Bouadoran papers in Hungary be protected by Switzerland has
been received by Swiss Government from cuadoran consulate,
but that Swise reply stated that since Ecuadoran interests
are not represented in Hungary by Switzerlend, they could
not consider this request.
As you note from foregoing, it is essential that, in
addition to the specific request to protect persons with
Ecuadoran passports, Ecuador requests Switzerland generally
to secure the representation of Seuadoran interests in
Hungary. Please cable as soon as such request will have been
cabled from Quito to Switzerland.
Stettinius
Acting
10/27/44
Miss Chauncey (for the Sec'y) Abrahamson, Ackermann, Akzin, Cohn, Drury,
DuBois, Friedman, Gaston, Hodel, Lesser, Marks, Mennon, McCormack,
Pehle, Files.
Regraded Unclassified
107
AM
CABLE TO /EMBASSY LONDON FOR MANN
The following mesnage under date of October 30 has been received
from Kataki:
QUOTE The Jewish Agency Istanbul 1s in receipt of
a telegram via Geneva dated October 25 from the Jewish
Agency representative Krausz in Budapest stating that
exit permits for the first group of 2,000 Palestine
certificate holders in Hungary will be secured. Krausz
states that the projected route of travel is through
Switzerland to Portugal. He requests the aid of the
WRB in obtaining the necessary transit visas. We
suggest that you verify Krauez's report with McClelland
in Switzerland, Information received in Istanbul con-
concerning the Jawa in Hungary is meager and general, but
unconfirmed Turkish newspaper reports that evacuation
of Hungary may be in contemplation. Future developments
may make advisable renewed inquiry at this time regard-
ing possibilities for emigration from Hungary.
QUOTE According to Jewish Agency the 2,000 certi-
ficate holders are etill in Budapest and they are in
possession of passports. UNQUOTE
The substance of the message has been cabled to Harrison and McClelland
with the following instruction:
QUOTE Please verify above information and, if correct,
please take all necessary steps to ensure speedy Swise action
to enable the certificate holders from Hungary to reach Switser-
land without delay. You may assure Swies authorities that this
Government will use its best efforts to secure the unimpeded
progress of the certificate holders to Palestine. UNQUOTE
Please represent to British authorities the Board's view that this un-
expected chance to rescue some of the doomed Jews in Budspest, if verified, con-
fronts Great Britain and United States with an opportunity that may not be al-
lowed to end in failure by reason of any hesitation or delay on the part of
either of our two governments. This Government is determined to spare no effort
in interceding with Swiss, French, Spanish, and Portuguese officials in the
interest of securing speedy transportation of the certificate holders in ac-
cordance with the suggested routing and is prepared to recommend to the Allied
military and shipping authorities to make possible their speedy transportation
by rail and by boat.
It is earnestly hoped that British authorities will view the situation
in an identical light and will take similar steps to make possible the early de-
parture of the certificate holders for Palestine.
Please advise Department and Board of British reaction.
This IS WRB LONDON CABLE NO. 19
5:25 p.m.
November 1, 1944
Miss Chauncey (for the Sec'y) Abrahamson, Ackermann,
****, Cohn, DuBois, Friedman, Hodel, Lesser, Mannon
BAksin:tmk 11-1-44
McCormack, Files.
Regraded Unclassified
108
EJF-251
London
Distribution of true
reading only by special
Dated November 1, 1944
arrangement. (SECRET w)
Rec'd 9:50 a.m., 2nd
Secretary of State
Washington
9440, November 1, 5 p.m.
FOR PEHLE FROM MANN
Governor Dewey's statement of October 19 is being broadcast
in German by the ABSIE. The statement is being used principally
in connection with the President's warning of March 24 and Secretary
Hull's warning of October 10. It is also being given to the BBC for
its overseas service and to the British press. Due to overwork in
the code room the circular telegram containing the statement was re-
ceived here on October 25 but decoded and delivered to ne on October
30. Accordingly there has been some difficulty in getting full
publicity. Hereafter messages to be publicized should be sent US
URGENT as it is extremely difficult to get them publicized after they
have lost news value. Local office of OWI has been very cooperative.
GALLMAN
MSB
Regraded Unclassified
109
PLAIN
Lisbon
Dated November lg 1944
Rec'd 4:41 c.m., 2nd.
Secretary of State,
Washington.
3825, November 1, 5 p.m.
FOR LEAVITT FROM PILPEL JDC 110 WRB 244.
War Refugee Board Stockholm telegram 96
to Washington repeats Laura Margolis October 30
to United States. Please consult and advise
us what answer we should send Margolis reference
OSE matter.
NORVEB
WSB
Miss Chauncey (for the Sec'y) Abrahamson, Ackermann, Akain, Cohn, Drury,
Pehle, Files.
DuBois, Friedman, Gaston, Hodel, Lesser, Marks, Mannon, McCormack,
Regraded Unclassified
110
RA-209
PLAIN
Lisbon
Dated November 1, 1944
Rec'd 4138 a.m., 2nd
Secretary of State
Washington
3826, November 1, 5 p.m.
FOR LEAVITT FROM PILPEL JDC 109 WRB 243.
Consulate here again cabled State Department
requesting Reuben Resnik's validation North Africa
and Italy basis military authorization "esnik holds to
Mediterrunean theater Greenleigh urges Resnik's soonest
arrival Home.
NORWER
WSB
Miss Chauncey (for the Sec'y) Abrahamson, Ackermann, Aksin, Colm, Drury,
Pehle, Files.
DuBois, Friedman, Gaston, Hodel, Leaser, Marks, Mannon, McCormack,
Regraded Unclassified
111
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
American Legation, Stockholm
TO:
Secretary of State, Washington
DATE:
November 1, 1944
NUMBER: 4455
CONFIDENTIAL
Advice has been received from Boheman that Madame Kollontay has
informed him privately that her government is concerned as to what
Americans are doing and might do with regard to Baltic peoples, with
particular reference here to WRB activities.
We assumed, in reference to current messages concerning American
Red Cross Latvian refugee project, as mentioned in our 4395 of October 28,
and WRB interest in Lithuanian refugee relief (Department's 2069, October 14)
that Treasury license will not be issued without clear agreement on political
implications and that close attention is being given to the policy considera-
tions involved. In this connection ne refer to Moscow's 4020, October 21 and
our 42, October 23, to Moscow, transmitted to the Department as our 4314, of
October 23.
An investigation of the refugee situation here gives ground for the
belief that there is some anti-Soviet agitation there among Estonians and
anti-Soviet feeling is common. It is not open to doubt that within the
Latvian refugee group there are Nazi sympathizers and collaborators.
JOHNSON
CR:MAS:EFR 11/4/44
Regraded Unclassified
112
RB-33
Stockholm
Distribution of true
reading only by special
Dated November 1, 1944
arrangement. (Secret -W)
Rec'd 6:55 p.m.
Secretary of State,
Washington.
4457, November 1, 9 p.m.
New Hungarian Foreign Minister has given
formal assurances to the Swedish Minister in
Budapest (Legation's 4426 October 31, 1 p.m.) that
Swedish protective papers issued to Hungarian
Jews will be respected and that the new Hungarian
Government recognizes and will continue the
policies of the previous government with respect
to the treatment of such Hungarian Jews. This
is our number 1014 WRB. Such assurances were
given in response to recent intervention of
Swedish King.
JOHNSON
JMS
Regraded Unclassified
113
CABLE TO MINISTER HARRISON AND MCCLELLAND, BERN, SWITZERLAND
The following is the substance of a message received from WHB'S
representative in Ankara under date of October 30:
QUOTE The Jewish Agency Istanbul is in receipt of
a telegram via Geneva dated October 25 from the Jewish
Agency representative Krausz in Budapest stating that
exit permits for the first group of 2,000 Palestine
certificate holders in Hungary will be secured. Krausz
states that the projected route of travel is through
Switzerland and Portugal. He requests the aid of the
WHB in obtaining the necessary transit visas. We
suggest that you verify Krausz's report with McClelland
in Switzerland. Information received in Istanbul con-
cerning the Jews in Hungary is meager and general, but
unconfirmed Turkish newspaper reports that evacuation
of Hungary may be in contemplation. Future developments
may make advisable renewed inquiry at this time regard-
ing possibilities for emigration from Hungary.
QUOTE According to Jewish Agency the 2,000 certi-
ficate holders are still in Budapest and they are in
possession of passports. UNQUOTE
Please verify above information if correct, please take all
necessary steps to ensure speedy Swiss action to enable the certificate holders
from Hungury to reach Switzerland without delay. You may assure Swiss author-
ities that this Government will use its best efforts to secure the unimpeded
progress of the certificate holders to Palestine.
Please advise Department und Board of correctness of Ankara report
and of steps undertaken by you in this matter.
THIS IS WHB BERN CABLE NO.
255
.
5:25 p.m.
November 1, 1944
BAkzin:tmh 11-1-44
Regraded Unclassified
114
EK-82
Bern
This telegram must be
paraghrased before being
Dated November 1, 1944
communicated to anyone
other than & Government
Rec'd 7:19 p.m.
Agency. (RESTRICTED)
Secretary of State,
Washington.
7268, November 1, 6 p.m.
FOR WRB FROM McCLELLAND FOR WORLD JEWISH CONGRESS
FROM ABRAHAM SILBERSCHEIN.
"Received American visa today. View lack of time
and traffic difficulties via Spain arrival on time
only possible via Paris. Cable if you booked air place
for me. If not, book immediately and confirm. Also
please cable exact date opening and duration conference
because rumors here of prorogation." 17.30
HARRISON
RB
Regraded Unclassified
115
PARAPHRASE OF TELEGRAMES RECEIVED
FROM:
American Legation, Bern
TO:
Secretary of State, Washington
DATED:
November 1, 1944
NUMBER:
7269
SECRET
The following message from McClelland for WRB is
transmitted.
The Swiss received a message from their Legation in
Budapest on the 27th of October which stated that an agreement
had been arrived at between the Governments of Germany and
Hungary according to which the emigration of about 8,000 Jews
from Hungary would soon be authorized and that by the 15th of
November this would have to be carried out. Means of trans-
portation to the frontier of Switzerland would be furnished by the
Germans and the Hungarians.
The Swiss Political Department on the 31st of Oct-
ober instructed its legation in Budapest that these refugees
would be received in Switzerland, this instruction following
approval by Federal Council and in order to offset any possible
use by the Germans or the Hungarians of lack of readiness on the
part of the 3wiss as an excuse not to allow these people to depart.
The decision was in line with assurances which in August were
given to us (see message dated August 12 from the Legation,
Number 5248).
All pertinent information with regard to
documentation, composition, and ultimate destination of the group
was requested urgently by wire of the Swiss Legation in Buda-
pest on the 28th of October and again on the 1st of November,
since it is not clear whether all of the 8,000 are holders of
Palestine certificates, or whether only a part of them hold such
certificates.
November 1 conversations with Chief of Federal
Police and with representative for relief and refugee affairs of
the Political Department reveal that the Swiss are concerned
seriously regarding the practical difficulties which are in-
volved in receiving and housing a group of this size, even
temporarily, at such short notice. Switzerland has received more
than 25,000 new refugees during the past six weeks, they pointed
out, (chiefly women and children from Valdossola in Italy and from
the combat zones in France) while, on the other hand, only 6,000
Regraded Unclassified
116
- 2 -
people have deported:-. 2000 French civilians and 6000 military
escapees. It would be difficult to Dolve the problem of fuel,
blankets, and housing sifficient to properly take care of 8,000
people in winter; in addition, many of the refugees may be clothed
inadequately. Accordingly, the Swiss are andous that steps be taken
as soon as possible for the evacuation of such Hungarian refugees.
The practicability of furnishing Swiss trains for the transporta-
tion at once to Marseilles or to BOME other French seaport of all
those who are eligible for omigration to Palestine is being looked
into by the 3wiss. Therefore, it would be wise 1f the board at once
could study the problem of obtaining one or more ships for
Palestine; in addition, the Swiss would appreciate any efforts
which could be made toward evacuation to North Africa or some
other territory of Allied choice of all or - part of those who
are not destined for Palestine.
Radio Budapest, evidently reversing the decision
which was reported in Paragraph 1 of October 24 telegram from
the Legation, Number 7049, repeated several times during the
evening of the 29th of October and the morning of the 30th of
October, instructions addressed to all Hungarian authorities,
the army, and the police, to the effect that protective documents
or foreign passports should be respected and that future
Jewish holders of such documents should not be sent to com-
pulsory labor service; and, in addition, that rights of eco-
traterritoriality should be enjoyed by foreign Consulates,
Legations, and premises of ICHC.
Now it seems probable that the majority of the
50,000 male Jews reported as being deported as labor (see
message from the Legation dated October 25, Number 7088) are
being sent to western Hungary for work along the Austro-Hungarian
border, on fortifications there.
It is very difficult to believe that the release
of 8,000 Jens has suddenly been decided upon in view of the re-
cent intinsified anti-Jewish stand taken by the Smalassy regime
as well as the consistent refusal of the Germans to allow the
departure of even the initial group of 2,000 holders of
Palestine certificates.
We will keep you informed with reference to this
matter.
11-3-44
DCR:LCW:CR
HARRISON
Regraded Unclassified
117
DCG-147
Ankara
This telegram must be
paraphrased before being
Dated November 1, 1944
communicated to anyone
other than & Government
Rec'd 10:27
Agency. (RESTRICTED)
Secretary of State,
Washington.
2101, November 1, 8 p.m.
FROM KATZKI TO PEALE WAR REFUGEE BOARD. ANKARA's No. 176.
Pursuant to the understanding between Ambassador Steinhardt
and the Turkish authorities a special railread train was made
available for the transportation to the Syrian border of the pas-
sengers of the vessel SALAHATTIN (see Ankara's 175, October 30) and
the entire group departed from Istanbul for Palestine on October 31.
STEINHARDT
EEC
M
Regraded Unclassified
118
NOT TO BE RE-TRANSMITTED
COPY NO.
11
SECRET
OPTEL No. 355
Information received up to 10 a.m., 1st November, 1944.
1. NAVAL
One of H.M. Frigates torpedoed off N.W. Ireland (r)
this morning whilst escorting homeward convoy.
2. MILITARY
WESTERN EUROPE. Second Army troops have made good
progress on wide front to line of Dintel Mark Canal west of
Oosterhout, Canadians have captured the causeway to Walcheren
from South Beveland. South of Scheldt Canadians have reached
eastern outskirts Knocke. On eastern flank Nijmegen salient U.K.
troops have retaken Liesel and repulsed further German counter-
attacks.
ITALY. Further crossings of Ronco have been made
S.E. of Forli.
RUSSIA. JI Northern Hungary Russians have captured
several towns and localities N.W. of Debrecen and in Southern
Hungary have captured Froshemet and two ether places S.S.E. Buda-
pest.
3. AIP
WESTERN FRONT. 30th/31st, Cologne. 3,937 tons in-
cluding about 600 incendiary.
31st, 101 escorted Lancasters (1 missing) dropped
531 tons through cloud on synthetic oil plant Bottrop. Bombing
believed accurate. 24 escorted Mosquitoes (1 missing) dropped
11 tons on Gestapo Headquarters Aarhus, Denmark, practically
demolishing building, and 43 Thurderbolts attacked a supply dump
N.E. of Sairburg with excellent results. 194 aircraft (1 missing)
carried out offensive patrols over N.W. Germany.
31st/lst. Bomber Command sent out 651 aircraft:
Cologne
508 (2 missing)
Hamburg
49 (1 missing)
Bomber support,
etc.
94
Thick cloud over Cologne. Sky markers well placed, and bombing
believed concentrated. Extensive fire glow visible through cloud.
MEDITERRANEAN. 30th. Bad weather seriously curtailed
operations. 189 fighter bombers and fighters attacked communica-
tions battle area Italy, while other fighters attacked objectives
Albania and Yugoslavia. 4 aircraft missing.
4. HOME SECURITY
31st. During the morning 11 flying bombs plotted.
Two and at least one Heinkel destroyed.
Regraded Unclassified
119
November 2, 1944
8:57 a.m.
HMJr:
Hello.
James
Townsend:
Hello.
HMJr:
Jim?
T:
Yes.
HMJr:
Henry Morgenthau.
T:
Yes, Mr. Secretary.
HMJr:
How are you?
T:
Fine.
HMJr:
I just called up to see how things are for
Monday.
T:
They're coming along very nicely.
HMJr:
Yeah.
T: =
Now, there will be some details, I presume,
that the Secret Service will -- will look
over when they get here.
HMJr:
Yeah.
T:
We have gone -- on the lighting situation
....
HMJr:
Yeah.
T:
we're -- we've just finished up on that
work yesterday.
HMJr:
Yeah.
T:
And that was to be sure that if We needed lights,
we'd a sufficient number and strength. We've got
six thousand watt bulbs as they come around the
circles there and then we have two flood lights
of a thousand watts which will take care of
everything.
HMJr:
Well, the principal thing that I was interested
in: has there been publicity in each of these
towns?
Regraded Unclassified
100
- 2 -
T:
There's been publicity in the papers fairly well.
We are putting in a -- I think we're going to try
to finance a page ad in the evening paper which
reaches practically every home in the county.
HMJr:
I see.
T:
Now that would be a full page ad which would --
will give pretty -- plenty -- much of publicity
to it. But it 1s well advertised already over
the radio and one thing another.
HMJr:
How about Beacon and Newburgh and Kingston?
T:
I -- I've been in touch with them and asked them
to give it publicity. Mr. Hatch -- uh -- Bill
called me the other day and said that we could
turn it loose several days ago. He wanted me to
notify them.
HMJr:
I know.
T:
I mean, the hour and so on.
HMJr:
Well, would you mind giving those fellows a ring?
T:
I'll do that.
HMJr:
And make sure that -- well, not later than
Saturday, that they have some publicity.
T:
Yeah, I'll do that. I -- I'm quite sure that
they are getting it in Kingston but I wouldn't know
about Newburgh but I will -- I mean Orange County --
but I will do that.
HMJr:
I mean, I think it's important.
T:
Yeah. That's fine and I'll see that that's done.
HMJr:
Right.
T:
How are you?
HMJr:
Fine. I'll be home Friday night.
T:
Yeah, you will? Well, I'll tell you we're -- on
Saturday if it's easier, maybe you can give me a
ring because you're out quite a bit.
Regraded Unclassified
121
- 3 -
HMJr:
Yes.
T:
I'll be in Saturday ....
HMJr:
All right.
T:
from -- well, we're distributing -- making
a little distribution -- I might be out a little
bit early in the morning to the bank, but after
that I'll be home -- back.
HMJr:
I'll -- I'll give you a call.
T:
Thank you.
HMJr:
Bye.
T:-
Good bye.
Regraded Unclassified
122
November 2, 1944
9:30 a.m.
GROUP
Present: Mr. Blough
Mr. Pehle
Mr. Gaston
Mr. O'Connell
Mr. C.S. Bell
Mr. Luxford
Mrs. Klotz
H.M.JR: Mr. Gaston?
MR. GASTON: I noticed an article - a quotation
from Alf Landon in the paper yesterday. I suppose
you saw that thing?
H.M.JR: Yes.
MR. GASTON: I wrote out a telegram to him just for
purposes of examination, but I am inclined to think that
it wouldn't do any good.
H.M.JR: Well, it pleases me that you just thought.
about it, Herbert, because I was thinking about it all
night.
MR. GASTON: Well, I was, too. (Hands the Secretary
draft of proposed telegram)
H.M.JR: Is this Harrisburg, Illinois?
MR. GASTON: Yes.
H.M.JR: I like it. Now, I would go one step further.
Didn't he say something about soldiers dying?
Regraded Unclassified
123
- 2 -
MR. GASTON: Oh, yes, he said that.
H.M.JR: If we are going to do this, I would say,
"By what military authority do you quote that one single
soldier died on account of this misrepresentation, not only
by you, but by other people?"
MR. PHELE: They will pick up a story that came back
from Europe.
H.M.JR: United Press didn't quote any military authority
MR. PEHLE: I think it is very much a mistake to respond
and dignify Alf Landon.
H.M.JR: I don't agree with you at all.
MR. GASTON: I am not certain, Mr. Secretary.
H.M.JR: You fellows are perfectly willing to pour
this stuff on and have me be the mouth-piece.
MR. PEHLE: Mr. Secretary, that isn't fair. It just
is not fair. There is nobody who would like to see your
position protected any more than I would, but I don't think
it tends to protect your situation.
H.M.JR: This is the first suggestion that has come to
me to protect me.
MR. PEHLE: The issue is whether it does serve to pro-
tect you, Mr. Secretary. In my view it does not.
H.M.JR: But this is the first time that anybody has
given me a suggestion to handle the situation.
MR. GASTON: It is a very difficult situation. I
don't know whether it is possible to do anything. It is
a very difficult situation because these fellows put you
in a terrible hole. Of course, he can very well answer that
if you didn't say this, then you are very negligent in not
having denied it heretofore, because, while it wasn't
Regraded Unclassified
124
- 3 -
stated in just this way, in substance it has been printed
in the newspapers all over the country.
MR. O'CONNELL: It existed long before the statement
of yesterday. I had thought, after we had thought it all
over, that you had come to the conclusion that there was no
way in which you could meet that sort of stuff by making a
public statement, or doing anything about it, that it had
been decided that there was nothing to do. I saw a draft
of a statement which was prepared by Joe DuBois and Harry
White and those people several weeks ago.
It was my understanding that because of the unfortunate
way the thing had developed, the Secretary was in the
position of not being effectively able to defend himself
other than by keeping quiet. There is nothing new about
the fact that Mr. Landon has put, in & different type of
phrase, a statement that has been made by a lot of other
people for the past several weeks.
MR. GASTON: Of course, he makes it in 8 way that it
is possible to deny. That is, he puts it as if the
Secretary had made a public statement. Of course, it is
possible to deny that. His obvious come-back would be to
say that this has been printed in every medium in the
country, practically, and had never hitherto been denied, and
he has a right to accept it as true. You could come back
then and say, "Yes, it is true it as been printed, and
if any damage has been done it has been done by those
people, including Mr. Landon, who have been circulating it."
H.M.JR: Why is my statement unfair?
MR. PEHLE: Because as I understood your statement
you gave the impression that people were urging you to
stick your neck out and then when it got out that they
didn't want to see you protected.
H.M.JR: I repeat myself. You people put words in
my mouth and this is the first suggestion that has been
given to me how to answer some of this criticism.
Regraded Unclassified
125
- 4 -
MR. PEHLE: I beg your pardon. I understood from your
statement that you had said that people had urged you to
make that kind of statement and then--
H.M.JR: No, no, no.
MR PEHLE: Then I misunderstood you, Mr. Secretary.
The reason I object to that statement being made is
that I don't think it will serve to protect you; I think
it will hurt. Landon is in a position to come back - and
Dewey will pick it up - saying, "Why didn't you deny
that a long time ago?" - because this has been in the papers
and Dewey has mentioned it, and everything, for months.
H.M.JR: I will tell you why I am interested in this.
I will take all the time necessary. I will get the other
two hoys in who have been working on it. I read Dewey's
statement two or three times and he slurred over the
thing SO that there just wasn't anything - and ne hooked
up the President and me 30 you couldn't say anything, do
you see?
Now, what I have been thinking sort of subconsciously
is that maybe if we gave these people enough rope they
would become so wild in their statements that there would
be something you could answer, see? If you read what
Dewey said - the thing is blurred.
MR. PEHLE: Intentionally.
H.M. JR: Yes. And I never felt that Dewey would ever
attack me on account of the relationships that I had with
him when he was District Attorney. I mean, where I helped
him when he needed help. But that might not count in the
next few days.
Now, the President told me that when he was running
for Vice President Harding made a statement about him which
was untrue; he telegraphed Harding and Harding retracted it.
Regraded Unclassified
126
- 5 -
MR. GASTON: Yes. Of course, Harding is a different
animal from this organization. This might open up a chance
to bring to these people that if any damage has been done,
that it has been done by those who have been circulating the
statement, knowing or stating that it was causing damage and
causing the deaths of people. Here is Landon saying this
is causing the deaths of thousands of soldiers. Then he
convicts himself of participating in something which is
causing the death of American soldiers by continuing to
put forward the statement.
MR. PEHLE: I think that is better, but I still think
you come back to the proposition that if the newspaper
reports didn't represent the Administration or Mr. Morgenthau's
point of view, and there was some possibility of their doing
damage, that the Republicans will say they should have been
denied a long time ago.
H.M. JR: Let these two boys come in cold. I would
like to hear them.
Mr. GASTON: If the statements didn't have any truth
in them we could present a regular reason for not having
denied them.
MR. PEHLE: But they do have a grain of truth.
MR. GASTON: That, of course, is the prime difficulty.
But the secondary purpose of a thing like this would be to
have them make a statement on which you could base the
reply that the damage was done by those who are repeating
it, and some of them are deliberately doing it after claim-
ing that it does do damage.
(Mr. Luxford enters the conference)
H.M. JR: Luxford, Mr. Gaston has given me that as &
suggested statement, and without telling you where anybody
else stands, if you don't mind, I would like to read this
to you. This is to Landon: "Associated Press dispatch
dated November 1 attributed to you the following sentence
Regraded Unclassified
127
- 6 -
as part of an address: "I refer to that statement made by
Secretary Morgenthau, virtually from the White House steps,
when he proposed that Germany be reduced to Eighteenth
Century agriculture. That would mean starvation for
twenty-five or thirty million Germans.'"
I am supposed to say that would mean that?
MR. GASTON: No, that is inside the quote.
H.M.JR: (Continuing) "I made no such statement from
the White House steps or any such time or place and I
shall expect you to correct your misrepresentation without
delay."
MR. LUXFORD: I don't think he is worthy of a reply.
MR. GASTON: That ducks the question, Lux. This thing
is being used by people all over the country. Landon has
stated it in a manner which is more susceptible of reply
than most others.
MR. LUXFORD: Mr. Secretary, I am afraid the President
is conscious of the fact that you have been criticised for
weeks on this subject and has apparently wished to avoid
further discussion of it. He is taking it on the chin.
H.M.JR: Who is?
MR. LUXFORD: I say he is taking it on the chin in the
sense that he won't allow a reply to go out on the merits.
MR. GASTON: You mean he is taking it on the Secretary's
chin!
MR. LUXFORD: In any event, it is on a political chin.
MRS. KLOTZ: I heard what he said, but, after all, you
are in his Cabinet.
MR. GASTON: Of course, it is entirely obvious that
the weak point of making any such challenge is that the
Regraded
Unclassified
128
- 7 -
stories generally printed do fairly closely summarize what
was circulated in confidential channels.
MR. LUXFORD: It is like "Clear it with Sidney," that
Arthur Krock published. No matter how much you deny it,
it will be used constantly.
MR. GASTON: That is getting off the track.
H.M.JR: They have denied that.
MR. LUXFORD: Hannegan denied it and it didn't do a
bit of good.
MR. GASTON: That is just saying that denials don't
do any good, but let's stick to cases somewhat comparable
to this. They are accusing us of making a public statement.
Now, it wasn't made in a public statement, but the general
statement that they are han ing on the Secretary is pretty
close to the confidential thing that was circulated.
Now, this sort of a statement might check some of their
more reckless statements, and it might give you an oppor-
tunity to say - sticking to the fact that no public state-
ment was made - to say, first, that the two leading Republi-
can papers in the U.S. say that no such damage was done
as these fellows are claiming - that the story is silly. -
that it is doing damage. Both the Herald Tribune and the
Chicago News said that. And then you can say that if
damage was done, it is being done by men like Landon who
are engaged in disseminating that statement.
MRS. KLOTZ: If this does nothing else, it will open
the thing for discussion. Then you will have to answer
others, you see.
MR. LUXFORD: That is what worries me about it. This
isn't going to be the end of it.
MR. GASTON: The real question is that by stirring
this thing up you do get damage to the campaign. You
stir up a chorus. You get the dogs to howling when you
Regraded Unclassified
129
- 8 -
make 8 challenge like this which is, on its face, accurate.
Now, is that going to do good or do damage? One thing to do
is to ignore the thing during the campaign and then to go
as far as we can to tell the truth in a subsequent speech, and
I called the Secretary's attention to a spot in which that
could be done, which is at Cincinnati on November 17. I
don't know whether you saw my memorandum or not.
H.M. JR: No, I didn't t, herbert.
MR. GASTON: Well, the Cincinnati Foreign Affairs
group, a branch of this organization before which the
President spoke in New York, is having a two-day insti-
tute sponsored also by the Crosley station, WLW of Cincinnati,
and the Cincinnati Inquirer. They offer you full time on
WLW for anything that you may say, and they want to have
you the principal speaker at the evening session opening
this two-day institute on November 17.
Now, it would be possible then, the campaign being
over, to refer to this whole thing and to say you have
kept silence under these statements because you did not
want to do what they claimed that you were doing - inter-
fere with the war effort.
MR. LUXFORD: Mr. Secretary, what worries me about this
is your denial, unaccompanied by what you did say, and what
you do think isn't going to be very meaningful. People
are going to say, "Well, certainly this thing wasn't cooked
up out of nothing" - that you must have said something -
why don't you tell us what you said?" And you are in no
position to do that.
I also have a feeling, and I know a number of other
people have, that Dewey is still going to try to pull this
Election out of the fire by any desperate means he can
find. He tried it last night on the Communist issue. If
you start this thing going again on the German issue, some-
body may leak the Quebec agreement. That may be leaked
before this Alection is over, and it could be used, I think,
to injure us.
Regraded Unclassified
130
- 9 -
H.M.JR: Well, the worst thing that he did last
night - let's digress a minute. You remember when he used
the word "Dubinsky" they started to boo, thinking he was
going to quote him unfavorably, and he has got them so
any Jewish name he mentions now, they boo.
M.. LUXFORD: Sure. I am afraid that some of the boys
will leak the Quebec agreement if this thing gets hot again -
hot by your denying it or doing anything else - because
that is the kind of a thing that Dewey can play up - secret
diplomacy, and not coming out with all that has happened.
I think the Democrats are afraid of it, too. You probably
heard Quentin Reynolds last night. He, in effect, predicted
a political Reichstag feier.
He said that Dewey is desperate and that he will stop
at nothing between now and the close of the campaign.
MR. GASTON: I am very certain that I could handle
this thing in such a way, using tnis as an opener, as to
help the Secretary's position substantially. I am very
sure of that. But I am not 80 sure about the campaign,
and I am just a little bit afraid that it is going to
hurt the campaign. I know, using this as an opener, that
I can make a come-back that will help you very substan-
tially. It will put your position, as it is, before the
public. But I am just afraid that it is not going to
help the campaign. That is my doubt.
MRS. KLOTZ: You just have & few more days. You can
do it right afterwards.
H.M.JR: Well, whatever I did, I wouldn't do it with-
out consulting Steve Early.
MR. GASTON: Oh, I think that is right. I thought
of that. You see, the purpose of this would be, when they
come back and say, "Why didn't you deny it before, that
this has done these things," then you can tell them who
has done the damage, if a damage nas been done; first, that
these two great Republican newspapers say there hasn't been
Regraded Unclassified
177
- 10 -
any damage done, "But if there has been damage done, it has
been done by the people who are circulating it; and you,
Landon, have spread this thing believing, as you say, that
it is doing damage and it is sacrificing the lives of
soldiers."
"In other words, whether it is a fact or not that you
have cost the lives of American soldiers, you have intended
to do that. You have convicted yourself of that.'
MR. LUXFORD: Herbert, it was a Democratic Administra-
tion that leaked the story; that is perfectly clear. That
whole thing, as Dewey would say, sprung from the "tired old
men" working in Roosevelt's Cabinet. What Landon was say-
ing was only repeating what had been said by high Cabinet
officials.
MRS. KLOTZ: Let the President know that during the
campaign you took this by not letting it out, but he should
do something about, it; that you have taken this, this, and
this during the campaign, but he has got to do something
right after. It will be a whole lot more effective.
MR. LUXFORD: Have a press conference after it is all
over.
MR. GASTON: Why did Landon make this speech in
Harrisburg, Illinois? He is speaking to Germans!
H.M.JR: Have you expressed yourself, Joe?
MR. O'CONNELL: I thought 1 did. I thought that the
telegram should not be sent because I felt it would invite
an answer which we are not in a position to make, or which
we should probably have made, if at all, several weeks
ago. And I thought the decision was made then to sit
tight and take it. I just don't see the second chapter
of this thing that way, that it would be helpful, particu-
larly between now and the Election.
H.M.JR: The objective is to re-elect Roosevelt, and
I don't think this telegram is going to help him.
Regraded Unclassified
132
- 11 -
MR. O'CONNELL: And it might possibly hurt.
H.M.JR: So I appreciate, Herbert, very, very much
your thinking of me, but I have got from now until
Tuesday only to think of the President. I don't think
this will help him.
MR. GASTON: I think you are right. I brought it up
only because I thought we ought to examine the question
of what we can do. I think there is something we can do
right after the Election.
H.M.JR: I am not sure of that, but that we will talk
about after Elections. The President isn't going to let
me talk about the Quebec agreement.
MRS. KLOTZ: No, but you can at least get over to the
people that you didn't say that.
MR. GASTON: We can say some things without telling--
H.M.JR: The thing that I think I must do is what
is in preparation, to steel myself to take this thing until
the day Germany collapses; then the day Germany collapses,
that is the day I am going to talk.
MR. LUXFORD: I was hoping you could have a book
ready that would justify it and there would be no if's,
and's, and but's about it.
H.M.JR: When can I have a look at that?
MR. LUXFORD: when we quit writing speeches.
H.M.JR: Haven't you got anything on it?
MR. LUXFORD: Yes, we are working on it, but it isn't
in form yet.
H.M.JR: O.K. Many thanks, Herbert.
(Mr. Luxford leaves the conference)
Regraded Inclassified
123
- 12 -
MR. 0' CONNELL: I have two or three small items.
We are removing France from the category of enemy for
purposes of permitting exchange of communications, as of
this Saturday, by agreement with the British and others.
All it really means is the present existing prohibition
on communications between here and France will have been
lifted on Saturday.
It does not change the status of blocked accounts
or frozen funds, but it is a relaxation of the existing
controls. we had contemplated permitting France access -
or indicated that we would license such transactions as
powers of attorney, and things of that sort, but we were
advised yesterday from the field that the French have
no existing controls which would permit us to go that far.
That is our information from France, so our action will
merely permit communications; it won't permit any transac-
tions at all.
Another thing I might mention, the President has to
decide by the first of December whether or not to extend
the operation of the famous renegotiation statute for six
months. Under existing law it terminates on the first of
January next year unless by the first of December the
President decides that competitive conditions have not been
restored, in which event he can extend it six months.
The consensus of view among the agencies which have
the authority to renegotiate is that he should extend it,
and if you agree - and I see no reason why we wouldn't -
we are in the process of preparing a joint memorandum from
all the renegotiating agents to the President, with a
proclamation for him to sign, maybe about the middle of
this month.
I am informed by Schmidt that Lazard Freres are
probably going to go ahead on that change in their partner-
ship in spite of what we told them. We have not gotten an
application for a license, but it looks as though--
h.m.jr: You told them what I suggested?
Regraded Unclassified
134
- 13 -
MR. O'CONNELL: It was told in no uncertain terms both
to their attorney and one of the partners who came down
afterwards, Andre Meyer.
H.M.JR: You told them we thought it was a mistake?
MR. O'CONNELL: Very definitely. And while they
didn't say so in so many words, the clear implication
was that they had, to all intents and purposes, completed
arrangements subject to our license, and that they are
probably going to go ahead. So I have a little short
memo on it, but there is no need to give it to you.
The only other thing I might mention, I had a call
from Colonel Foley yesterday, from Mr. Hinckley's office, the
Office of Contract Settlement, and I gathered from that that
he is working for Hinckley. I haven't seen him for six weeks.
H.M.JR: I haven't seen him at all, but Mr. McCloy
phoned me several times and told me, in connection with
getting somebody to take Foley's place in Italy. I
gathered he has been de-commissioned or discharged from the
Army.
MR. O'CONNELL: That I don't know. I didn't know
whether he had been detailed over there or put on inactive
duty.
H.M.JR: Taken out of uniform.
MR. BELL: The memo said he would be relieved when he
got a replacement.
MR. O'CONNELL: I haven't seen him, I guess, for six
weeks. He called because he was looking for some suggestions
as to a man to help them set up an organization to handle
the review of the appeals from contract settlement cases.
They have a tremendous problem there.
H.M.JR: Don't let them take anybody from Treasury.
Regraded Unclassified
135
- 14 -
MR. 0' CONNELL: No, sir. ue was suggesting that, and
I didn't suggest anyone to him. lie had been groping for a
man. In fact, he asked me whether I thought Randolph Paul
would be interested in the assignment. I told him I doubted
very much if he would, but he could ask him.
The job is to set up an organization which would be
comparable to the Board of Tax Appeals, because under the
legislation you have to set up a complete system, semi-
judicial, of appeal boards to hear appeals of contractors.
We opposed that provision in the legislation, but it is
in the legislation.
I wasn't attempting to give you Foley's problem, but
from the standpoint of contract settlement, it is one of
the many messes that will be involved in termination of
war contracts which might have been avoided if the legis-
lation had been better. It will bog down the whole opera-
tion. It is too bad.
That is all I have. I have talked too long.
MR. PEHLE: with regard to Germany, I gave Mrs. Klotz
last night - I don't know whether you read that stuff--
MRS. KLOTZ: Sure, I didn't sleep.
MR. PEHLE: ...two reports that came to us through
official channels about what is going on - extermination.
They are very well done - very restrained language - and
they are done by people who were there, who know. Now,
we are going to, in any event, make those public. But
the question is whether there is any possibility of getting
the "Book of the Month" who put out that lousy Moulton book
to sort of clear the air by putting this out as a pamphiet,
because this ought to be required reading for the people
of the United States. I think it would do an awful lot of
good. Don't you think so? (To Mrs. Klotz)
MRS. KLOTZ: Oh, yes. These people were there.
Regraded Unclassified
136
- 15 -
H.M.JR: I haven't seen the thing, but I gather that
Harry Scherman was quite upset at the criticism I made.
Do you know him?
MR. PEHLE: Yes, I do. I don't know whether you will
look at this stuff, but Mrs. Klotz has it. I would like
your reaction, because I think it is very powerful,
Mr. Secretary, and I think it would do an awful lot of
good if we can get it out. If you agree, I will take it
up with Harry Scherman.
MR. GASTON: lle does quite a bit of pamphleteering at
the expense of the Book of the Month Club. I think it is
quite likely he would handle it that way.
H.M.JR: Do you mind if I correct you - at the expense
of the Treasury?
MR. GASTON: Both, yes.
H.M.JR: How is the forgotten man?
MR. BLOUGH: I feel quite forgotten, Mr. Secretary.
Dan Bell has set up a committee of Mr. Gaston, Mr. O'Connell,
Mr. Sullivan, and other top people around. We have had
one session; we are having another tomorrow. In the mean-
time - yesterday we met with Stam, my group, and today we
are meeting again with him. I think we are going to get
along all right for awhile, again. We sort of keep putting
off the evil day.
Our first report will probably be an economic report
to the Joint Committee in that it will go into not what
should taxes be, but what is the budget likely to look
like, what are the factors and the economic conditions or
situations after the war, and what is the revenue picture
likely to look like under the present tax law at different
levels of national income. We will give them that to chew
on and hope they will really chew it over, because if they
understand that, they will be in a much better position to
go into any tax studies.
Regraded Unclassified
107
- 16 -
I think in connection with amount, with the Committee,
we ought to hold off on any tax suggestions or program until
the Joint Committee has looked into this other material and
then asks for some help. I don't know - of course, you
never know when it is going to blow up, but I think things
are going all right. The more time we can get with you to
go into the matter, the better we like it. Of course, I
know how much you love taxes!
H.M.JR: If it hadn't been for that break-down we
would have talked all day to Los Angeles.
MR. BLOUGH: I am sure of that, sir!
H.M.JR: That doesn't mean 1 love you any the less.
MR. BLOUGH: Thank you, sir.
H.M.JR: Charles?
MR. BELL: The Chicago Defender has requested OWI for
information on colored people working for the Government.
OWI has asked us for a statement of colored people here and
part of their work, some sketches on some outstanding ones.
H.M.JR: Is the Defender a Negro paper?
MR. BELL: Yes. I have cleared it with Charlie Shaeffer.
If you have no objection, I will let it go, possibly for
political purposes.
H.M.JR: Let it go.
want him?
MR. BELL: Bersinger is a captain in the Army. Did you
H.M.JR: Yes.
MR. BELL: He is about ready to come over.
H.M.JR: He is for Ted Gamble, but I would like to
see him in the first instance and introduce him around to
the girls.
Regraded Unclassified
138
- 17 -
MRS. KLOTZ: He is very handsome.
MR. BELL: Charlie Adams' brother died this week in
battle. I thought you might want to send a little note
to him. (Secretary signs letter to Mr. Charles Adams)
The Procurement picture doesn't improve any. In view
of this Section 27, the field offices are getting a little
bit worked up now, and many of the men in the sales
organization are thinking about resigning before the Board
is appointed. I don't think Joe has been able to get any-
thing out of Biddle's outfit yet.
MR. O'CONNELL: Not up to yesterday. Of course, I
still have the letter you signed, Mr. Secretary, because
our understanding with the Attorney General's office is
we won't send it to them until we know we can get the
right answer.
H.M.JR: I asked three times if I could get in on this
thing and they said no, they were not ready.
MR. O'CONNELL: We are not. The situation looks better
in terms of getting the right answer out of it.
MR. BELL: Well, Duncan was over yesterday. ne is the
main fellow down there in the absence of Olrich, and he
is very much exercised over the whole thing.
Mr. Secretary, there is a general feeling that Wales
in the Tax Legislative Counsel's office should be promoted
to stanley Surrey's office.
H.M.JR: I can't do that on the run. I need Dan Bell's
presence.
MR. BELL: Danny is for that.
Regraded Unclassified
11/2/44-Mat sent 1:3 -
Press Release
stat
Secretary Morgenthau today made public the follow-
ing telegram sent by him to a Republican campaign speaker:
"Alfred M. Landon
C/o Republican National Committee
Irefer 40 I an Associated Press despatch
dated November 1 which attributes to you the
following sentences as part of an address said
to have been delivered at Harrisburg, Ill.:
Myon
'I refer to that statement made by Secretary
Morgenthau virtually from the White House steps
when he proposed that Germany be reduced to
18th Century agriculture. That would mean
starvation for 25 or 30 million Germans.' I
have made no such statement either from the
White House steps or at any other time or place
and I shall expect you to correct your mis-
representation without delay.
Henry Morgenthau, Jr.
Secretary of the Treasury."
Regraded Unclassified
11/3/44-Mot sent
139 -
Press Release
Keep
Secretary Morgenthau today made public the follow-
ing telegram sent by him to a Republican campaign speaker:
"Alfred M. Landon
C/o Republican National Committee
Trefer by I an Associated Press despatch
dated November 1 which attributes to you the
following sentences as part of an address said
to have been delivered at Harrisburg, Ill.:
Kyon
'I refer to that statement made by Secretary
Morgenthau virtually from the White House steps
when he proposed that Germany be reduced to
18th Century agriculture. That would mean
starvation for 25 or 30 million Germans. I
have made no such statement either from the
White House steps or at any other time or place
and I shall expect you to correct your mis-
representation without delay.
Henry Morgenthau, Jr.
Secretary of the Treasury."
Regraded Unclassified
140
November 3, 1944
10:31 a.m.
HMJr:
Yes.
E. R.
Stettinius: I'm sending you by special messenger now
HMJr:
Yes.
S:
....
the German treatment memorandum
....
HMJr:
Fine.
S:
the President's memorandum to us
....
HMJr:
Yeah.
S:
....
of October the 20th.
HMJr:
I see.
S:
Now, with that I'm taking the responsibility
on my own, now, of sending you a copy of our
memorandum to the President
....
HMJr:
Fine.
S:
which this answers.
HMJr:
I see.
S:
But I am doing that with your understanding
that that's something Mr. Hull took up with
the President privately on a Sunday morning.
HMJr:
I understand.
S:
You know?
HMJr:
I understand.
S:
And I'm talking to you cryptically because I'm
not authorized -- I'm -- I just wanted you to
receive it on that basis. You see?
HMJr:
Well, what you're saying to me is that you're
giving me this on your own
S:
On my own authority.
Regraded Unclassified
- 2 -
141
HMJr:
On your own authority and
....
S:
But I'm giving you the -- yeah, you see what
I mean?
HMJr:
And I'm to
....
S:
You aren't to -- you aren't to use it unless
we have another talk, huh?
HMJr:
No, you have my word.
S:
Right, old boy. Thank you, Henry.
HMJr:
Thank you.
Regraded Unclassified
142
November 2, 1944
10:52 a.m.
HMJr:
Hello.
Operator:
Mr. Stettinius is out of his office for a few
minutes.
HMJr:
All right. See if Miss Tully 1s available.
Operator:
Right.
10:53 a.m.
HMJr:
Hello.
Operator:
Miss Tully is not there but Mrs. Brady is on
the wire.
HMJr:
Uh -- no -- well, I'll speak to Mrs. Brady
but it's
....
Operator:
All right.
White House
Operator:
Mrs. Brady.
Dorothy
Brady:
Hello.
HMJr:
Good morning.
B:
Good morning, Mr. Secretary.
HMJr:
This is a follow-up on Grace. I asked her
yesterday about a letter that the President
sent to Mr. Hull that had to do with, as I
understood it, something that -- on the Army
....
B:
Oh, yes, she had us look that up and didn't
she get a chance to call you back?
HMJr:
No.
B:
Well, things were pretty hectic, but we don't
have anything on it. That was about those
British handbooks, wasn't it?
HMJr:
Well, it was something the President wrote to
Mr. Hull about the treatment of Germany.
Regraded Unclassified
143
- 2 -
B:
About what?
HMJr:
As I gathered, he wrote recently B. letter to Mr.
Hull in which he said that immediate objectives
in treating Germany -- nothing to do with the
British handbook.
B:
Oh, well, that isn't what you told her, is it?
HMJr:
No, I said -- yes -- and I told her I was working
on the British handbook and I wanted a copy of
what he sent Mr. Hull, I gathered, during the
last week.
B:
Oh, on the treatment of Germany?
HMJr:
Yeah.
B:
Well, that's a different thing.
HMJr:
No, and I was working on the British handbook --
British Army handbook, you see?
B:
Uh huh.
HMJr:
Anything that he -- and the State Department had
sent the Army a copy, you see?
B:
Uh huh.
HMJr:
In regard to this, and it came up in connection
with my working on a British handbook.
B:
Yes. Well, you don't know what date it would be,
do you?
HMJr:
It must have been within the last week or ten
days.
B:
Within the last week or ten days -- well, we'll
make another look on that angle.
HMJr:
No, it's something to do, which I gathered he said
that -- about treatment of Germany immediately and
in the future -- more distant.
B:
All right. We'll take a look.
HMJr:
You see?
Regraded Unclassified
- 3 -
144
B:
Yes, sir. I have it.
HMJr:
Does that make it more clear?
B:
Well, yes. That puts a different light on it.
HMJr:
Well, he can't have written 80 many letters to Mr.
Hull in the last week or ten days.
B:
Well, I know, but we -- that didn't have anything
to do with what we were looking up.
HMJr:
No - no, but it was what I Was working on
....
B:
Yes, I know, but I mean we were looking up something
that had to do about British handbooks.
HMJr:
No, no.
B:
Okay.
HMJr:
Got it?
B:
Yep.
HMJr:
Thank you.
B:
All right.
Regraded Unclassified
145
November 2, 1944
12:40 p.m.
Edward R.
Stettinius: Hello, Henry.
HMJr:
Ed, did you and Harry get together?
S:
We -- Harry and I had a date
....
HMJr:
Yeah.
S:
and then we had to call it off. It was
left that he was to call me at the latter part
of the week
HMJr:
Oh.
S:
and set his own time.
HMJr:
Oh, well, I wanted to know how it went. Do you
remember when we were talking, I asked you on
that Wall Street Journal story.
S:
Yeah. I got the answer on Flynn and there was --
I've investigated that and there have been no
conversations here with him.
HMJr:
There has not been?
S:
None.
HMJr:
Okay.
S:
I have just left a press conference in which
I said that the country needed the wise and
experienced leadership of the President
HMJr:
Good.
S:
for an early peace -- for an early victory
and a sound peace.
HMJr:
Fine. I'm delighted. I'm sure that will be
helpful.
S:
Well, I don't know that it will help but I'm
delighted that it's done.
HMJr:
Pardon?
Regraded Unclassified
- 2 -
146
S:
I'm -- -- I say I was very happy and took great
pride in doing it.
HMJr:
Yeah. Well, I'm awfully glad.
S:
All right, old boy.
HMJr:
I'll be seeing you.
S:
Thank you, Henry.
HMJr:
Bye.
Regraded Unclassified
147
November 2, 1944
2:25 p.m.
HMJr:
I, through Mrs. Klotz, have been talking with
the War Department about arranging for you to
go on a steamer.
Lord
Keynes:
Oh, that's awfully good of you.
HMJr:
Now, the first thing they want to know is have
you approached the State Department?
K:
Not yet.
HMJr:
Not yet. So we're starting, so to speak, with
a clean
K:
Yes, I haven't spoken to anybody except you at
the moment.
HMJr:
Well, then we will take it uo with the State
Department, you see, but we wanted to be sure
because the War Department already is getting
quite fussy about it.
K:
I see.
HMJr:
But we'll start with the State Department.
K:
Probably I ought to let them know before long
the sort of date and then they can know what
is available.
HMJr:
Well, would you do that?
K:
What -- it's a little difficult -- I mean, in a
week's time it will be easier.
HMJr:
Well, I don't
K:
I'd say somewhere about November 27th is
probably the sort of date.
HMJr:
I don't think the date makes much difference.
K:
I see.
HMJr:
Ah
K:
If it is agreed in principle, we can fix the
date later.
Regraded Unclassified
148
- 2 -
HMJr:
Ah -- I'll tell you what might help -- hello?
K:
Yes.
HMJr:
As long as -- if Lord Halifax would mention it
to Stettinius
....
K:
Yes.
HMJr:
.... then I will follow up with Stettinius and
with the War Department.
K:
I'll get him to do that. I'm going to tea with
him today.
HMJr:
Well, supposing you ask him to mention it to
Stettinius and then after he's done that, if
you'd have somebody in your office call Mrs.
Klotz.
K:
I will.
HMJr:
And then she'll follow up, but we've located
the right people in the War Department.
K:
Yes.
HMJr:
And they will be friendly about it.
K:
Yes. Thank you very much.
HMJr:
And then -- well, we'll leave it that way.
K:
I've just written you a letter.
HMJr:
Right.
K:
I needn't bother you with that on the telephone,
which shall come along to you in the course of
today. Am I right in thinking you are going
away tomorrow until after the election?
HMJr:
That's right.
K:
That's right?
HMJr:
That's right.
K:
That's what I was working on.
Regraded Unclassified
149
- 3 -
HMJr:
Now, I'm sorry because I can't go to Mr.
Brand's party because I'm going to stay up
in the country until the President comes back.
K:
Which day will that be? You mean not until
about Friday?
HMJr:
I don't think it will be until Friday.
K:
I see.
HMJr:
Yes.
K:
So there won't be another meeting of your
committee before Friday?
HMJr:
Not if I'm to be there.
K:
Yes.
HMJr:
But I'm here all day tomorrow.
K:
Yes. I don't think anything's ready tomorrow.
HMJr:
I see.
K:
If there 1s, I'll find out from Sinclair. I -- I
haven't anything ready. It's only on the other
side -- on the munitions side.
HMJr:
Right.
K:
But I'll send you my letter along and then you --
you'll see how things stand with us.
HMJr:
Thank you.
K:
There's this little point about the Navy that
Cherwell mentioned.
HMJr:
Well ....
K:
That's in my letter.
HMJr:
Right.
K:
Right.
Regraded Unclassified
150
- 4 -
HMJr:
Thank you.
K:
Thanks very much.
HMJr:
Bye.
K:
Bye.
Regraded Unclassified
151
November 3, 1944
2:52 p.m.
HMJr:
Hello.
Operator:
Mr. Stettinius.
HMJr:
Hello.
Edward R.
Stettinius:
Yes, Henry.
HMJr:
Ed, I -- does anybody listen on your wire?
S:
Let me -- let me be sure, now. All clear.
HMJr:
You know this morning when I asked you for a
certain document, I told you that I had asked
Miss Tully for it.
S:
Yes.
HMJr:
Well, I just got word -- just now -- that the
President did not want this circulated. See?
S:
Yes.
HMJr:
So I am putting it in an envelope and sending
it back to you.
S:
All right.
HMJr:
And nobody knows I have it.
S:
That is, both
....
HMJr:
Both.
S:
Both of them?
HMJr:
Both of them.
S:
All right, old boy.
HMJr:
And after election I'm going to have a heart-to-
heart talk with the President on it.
S:
Right.
HMJr:
And a lot of other things.
Regraded Unclassified
152
- 2 -
S:
Right, sir.
HMJr:
And if he has a Cabinet Committee, either he has
to have confidence in us or we shouldn't be around.
S:
All right, sir.
HMJr:
But I do appreciate very much your having confidence
in me to send it over.
S:
Well, I've got all the confidence.
HMJr:
And I assure you that your confidence will not be
misplaced.
S:
Thank you, Henry.
HMJr:
Right.
S:
Right, old boy.
Regraded Unclassified
153
November 2, 1944
3:10 p.m.
TREASURY DEPARTMENT REORGANIZATION
Present: Mr. D.W. Bell
Mr. C.S. Bell
Mr. Gaston
Mr. O'Connell
Mr. Bartelt
Mr. Schoeneman
Mr. Cake
Mrs. Klotz
Mr. Pehle
MR. D.W. BELL: Mr. Secretary, this is more for the
purpose of getting some instructions as to how far we ought
to go. There are a number of statements of the agencies
that have fiscal functions, in whole or in part. (Hands
copy of proposed reorganization chart to the Secretary)
The first general group you will find are supervisory
agencies like the Board of Governors of the Federal Reserve
System. The question is whether or not anything should be
done there, whether you would like to be a member of the
Board of Governors again. That is something we should get
at this time.
The same thing is true of the Open Market Committee.
You may recall that Walter Stewart suggested two or three
years ago that the Treasury really ought to be the Federal
Open Market Committee - it concerns the market of Govern-
ment securities - that we ought to have control of it.
The Bureau of the Budget is next, and the one you
mentioned, which ought to be in the Treasury. Now, the
Bureau of the Budget has two main functions--
Regraded Unclassified
154
- 2 -
H.M.JR: Do you mind if I go along each one at 8. time?
At this stage I have no interest in the Board of Governors.
MR. D.W. BELL: Then that would be true of the Open
Market, because they pretty well go together. Some day
I should think that the Secretary of the Treasury ought
to be back on the Board.
H.M.JR: You do think so?
MR. D.W. BELL: I do, very strongly. They are dealing
with our problem more than any other problem in the economy,
and I think you not only ought to be on the Board, but
have authority to appoint an alternate so we will know
what is going on at all times. But I think you will have a
lot of difficulty getting there.
H.M.JR: I think approaching this from the theoretically
ideal approach, I guess we should be.
MR. D.W. BELL: The ideal Treasury setup - there isn't
a doubt in my mind.
H.M.JR: All right. This Open Market Committee - I
don't know.
MR. D.W. BELL: I think if you are on the Board you
know what is going on on the Committee. The chances are
that if you are on the Board you will be a member of the
Committee.
H.M.JR: Why not let's shoot for the ideal, then if
we get twenty-five percent, that is good government.
MR. GASTON: That is one of the alternative courses.
One is to shoot for a broad program hoping you will get
some part of it; the other is to cut your program way down
in the hopes you can get what you ask for.
H.M.JR: I would rather shoot for the ideal.
Regraded Unclassified
155
- 3 -
MR. D.W. BELL: Of course, if you shoot for the big
program they will probably accuse you of grabbing for
power.
H.M.JR: No, it isn't personal; it is for whoever sits
in this chair.
MR. D.W. BELL: I appreciate that, but that wouldn't
be the charge on the Hill.
H.M.JR: That doesn't make any difference. I would
much rather shoot for the ideal rather than have somebody
like Ruml come along and say, "Well, your program is in-
complete; you didn't have this or that," or have somebody
from this group out at the University of Chicago say,
"Well, why didn't he put this in?" - you know.
MR. D.W. BELL: There have been several suggestions
lately, one in the Fortune article and another one - a
local group.
MR. BARTELT: Yes, the National Citizens Committee,
as I recall it.
MR. D.W. BELL: They made suggestions that we have a
strong Treasury; one went so far as to put the Board of
Governors, the Federal Reserve System in the Treasury, and
the whole Bureau of the Budget.
MR. GASTON: Yes, that was really an impressive
article.
H.M.JR: I don't think I saw that.
MR. D.W. BELL: We have it, if you would like to read
it.
MR. GASTON: It made the Treasury Department strictly
the number-one domestic department. It was a sort of
super-advisory department over all domestic functions.
Regraded Unclassified
156
- 4 -
MR. D.W. BELL: That is right. It had two super
departments; one was the State Department over all foreign
economy, and the Treasury Department was the second, over
all domestic economy, making them the two strongest
departments in the Cabinet.
H.M.JR: That is Bernard Baruch's strong opinion.
Mr. GASTON: It made the Secretaries of State and
Treasury really Assistant Presidents. It put them in an
entirely different class from all other members of the
Cabinet.
H.M.JR: Baruch did say that he thought State and
Treasury should from now on constantly grow in power. I
think he helped on the Hill.
MR. D.W. BELL: You would be interested in that
article. It was very well written.
H.M.JR: Well, let's shoot for the ideal.
MR. D.W. BELL: Now, the Bureau of the Budget has
two functions, mainly; one is preparing the budget esti-
mates for the various departments, and getting up the
budget for the President. The other is a sort of manage-
ment program that they have undertaken as an arm of the
President. They send people into the various departments
to investigate what they are doing with a view to improving
administrative procedure - with a view to economy. I
don't know that there has been much economy along that
line. There is a question here of whether, if you take
it over, you should take over the whole organization, or
whether you just take over strictly the fiscal end. I
would be inclined to take over the whole thing and then
economize by eliminating the management arm; take over
the whole Bureau of the budget and economize by eliminat-
ing entirely the management arm. I think it will be
eventually just like the General Accounting Office. The
departments don't want to see an agent of the Dureau of
the Budget come in their doors. They are always telling them
how to run their business. They are not inviting any more
because everything they touch is sacred.
Regraded Unclassified
157
- 5 -
H.M.JR: Where does this leave you - taking over
the whole Bureau?
MR. D.W. BELL: If you are going to take anything, I
would suggest that you recommend that the whole Bureau of
the Budget be transferred to Treasury.
MR. C.S. BELL: You will possibly have a much easier
time if you just take over the estimates and leave the
organizational work where it is. It was created within the
last three or four years and it would be an awful headache
to get rid of it.
MR.GASTON: I think it would be extremely illogical
to try to split it up that way.
MR. C.S. BELL: It wouldn't necessarily have to be
called the Bureau of the Budget - that part left in there.
MR. GASTON: I think the whole idea of taking it over
is to put that function of general supervision over fiscal
matters and economy in the Treasury.
MR. PEHLE: Wouldn't you have just as big a fight
trying to take over part of it, Charlie?
MR. C.S. BELL: When we had it before it was only
estimates. This is something that has grown up largely
through this Brownlow group - Chicago ClearingHouse.
MR. GASTON: It should be swallowed or cleared, in my
opinion.
MR. SCHOENEMAN: What would be advice to the President
on proposed legislation - non-fiscal?
H.M.JR: I don't see any rhyme or reason for its
going through the Pureau of the Budget. I think the
President should have a Legislative Counsel.
MR. O'CONNELL: That is really the function of the
named. Bureau of the Budget in this field. It may not be properly
Regraded Unclassified
158
- 6 -
H.M.JR: The way Rosenman was to him in Albany. His
Legislative Counsel should advise him on those things.
MR. D.W. BELL: I don't quite agree with that, be-
cause I think you find ninety-nine and four-tenths percent
of the legisiation involves the expenditure of money and
some of it very important fiscal problems - most of it very
important fiscal problems - and I think whoever passes on
the budget estimates ought to pass on the legislation.
H.M.JR: I don't agree with you. I think the
President should have a Legislative Counsel.
MR. D.W. BELL: Then there should be a liaison between
because otherwise you will get what went on last week on
the two billion dollar farm program. You never heard of
it until it hit the press.
MR. GASTON: Under your new system anything fiscal
ought to come to the Treasury Budget for comment; it
ought to come to the Treasury, in any event.
MR. O'CONNELL: There is no inconsistency between
doing what Dan wants to do and also having a Legislative
Counsel for the President, because there is a lot of legis-
lation, certainly, which has to be coordinated as far as
the over-all Government is concerned and is not necessarily
fiscal. I agree there should be some organization in the
office of the President to act as a clearinghouse for all
legislation; and on fiscal things - of course, they should
also be coordinated and cleared with the Treasury.
MR. GASTON: Whether the Budget is over here or not.
MR. D.W. BELL: I don't think we should go back to the
old scheme of allowing every department head to go to Con-
gress without clearing it and tying it in with the Adminis-
tration program.
H.M.JR: But why don't they clear it through a Legis-
lative Counsel? Look, Dan, as a matter of fact, how many
times does the Bureau of the Budget really influence
legislation?
Regraded Unclassified
159
- 7 -
MR. D.W. BELL: Oh, Mr. Secretary, not an awful lot.
I know when I was there we had many conferences with the
departments and got them to take bad provisions out of the
bills, and cut down many of the appropriation requirements
through our efforts. And we coordinated it with other
departments, and many times the legislation was killed
because it conflicted with something somebody else was
doing.
H.M.JR: Well, may I say, for the benefit of these
gentlemen here, SO they don't misunderstand, and they
get it directly from the horse's mouth - I have only one
thing in mind, see, for whoever is here, and that is this:
I am impressed with the fact that this Government has to
borrow about five billion dollars a month for twelve months
after the fighting stops in Europe.
Now, whoever is going to do that is going to have one
hell of a time, and hehas got to have both feet on the
ground and a solid foundation underneath, and he can't be
worrying. And in order to impress the public with the
authority of his position and his sincerity, he has to
hold the purse strings. He really has to be the watch-
dog. And you cannot, I cannot, whoever is here cannot,
go to the public time after time when the patriotic motive
of War Bonds no longer exists and have somebody in the
audience get up and say, "Mr. Morgenthau, what about this
boondoggling, and this and that?"and simply say, "I am sorry,
I don't control it."
Now, I didn't talk to Keynes on this, but I have been
talking to them about the British expenditures and they
say they have lost complete control of it - they just
don't know. I said, "Well, we have here, too." He says
it is going to be very gradual to get the thing back.
He said, "On the boat I have written a very, very strong
memorandum to Sir John Anderson pointing out why he must
get these things back. So, 1 mean, the Treasury in
any country that has been through war is no different, and
I think this is part of the road back to peace and
prosperity."
Regraded Unclassified
160
- 8 -
I want to approach it on that basis and not on the
basis of more power. But I think - and I am thinking out
loud - that the position of the Secretary of the Treasury
is far stronger if he goes to Congress and says, "I am
giving you a complete program and in order to borrow this
money successfully, I, the Secretary of the Treasury, have
to be in the position to say, before the request goes to
Congress". - no, I was thinking of this stupid article -
they blame me for the deaths. - it is so stupid. But for
the administrative end, somebody has to be able to do it.
Don't let anybody tell you the Secretary of the
Treasury is grasping for power, but I don't need some
outsider to tell this group what we have to do. Now we
were prepared for War Bonds several years in advance, and
we ought to be prepared in part for the road back to
peace - to lay this thing before the President and the
Congress. And I think we need a lot of backing from
some conservative people like Mr. Baruch. Don't misunder-
stand me, I don't want more work, personally - but just
so you understand me, see? If anybody tells me I am
grabbing for it, I will spit in his eye.
MR. D.W. BELL: I think this is the charge that will
come out of it on the Hill.
MR. GASTON: Well, maybe the way to do this is not
to have the Treasury propose it, but to have some outside
organization come in with it.
H.M.JR: They have.
MR. D.W. BELL: That would help, probably. I don't
know though. how they would get it on the Floor of the Congress,
MR. GASTON: Go to the President with it.
H.M.JR: The Secretary of the Treasury ought to be
surrounded with sufficiently intelligent people to make
his recommendations, have enough foresight to see this
thing. Anyway, I just wanted you to get it from me.
Regraded Unclassified
161
- 9 -
Now, what about the General Accounting Office?
MR.D.W. BELL: Well, that is something that has been
a little difficult to touch all along. Here for the
record, they have the function of prescribing an accounting
system throughout the Government, and of course, that
doesn't belong with the auditor at all. It ought to be
in the fiscal office. They also have the authority to
settle all claims for and against the United States.
Under the present procedure they can authorize the payment
of millions of dollars of money out of the Treasury with-
out administrative audit or subsequent audit. That is
wrong in principle. I doubt if you can do anything with
the General Accounting Office.
H.M.JR: Under a complete program would it be in?
MR. D.W. BELL: It ought to be in.
MR. GASTON: Yes, it violates the principle of the
separation of functions under the constitution. It is an
administrative function.
MR. D.W. BELL: But the minute you touch the General
Accounting Office in any recommendation of this kind it
raises a red flag immediately on the Hill.
Now, the Bureau, Comptroller of Currency, has to do
with national banks. We have two other agencies, one the
Board of Governors of the Federal Reserve System, and the
FDIC, all of which examines banks. There is complete
coordination of their functions, and not any duplications.
Some day, it seems to me, there ought to be a complete
study of the banking systems that are controlled in
Washington. It doesn't only mean the commercial banks,
but I should think it ought to include the banks we have
under the Farm Credit Administration as well as the Federal
Savings and Loan Associations, the nome Loan Banks, and
so forth, which ought to be brought into some coordination
here in Washington. I don't say, necessarily, that the
banking belongs in the Treasury as a supervisory agency.
Regraded Unclassified
162
- 10 -
It has been suggested that the Comptroller of the
Currency take over the examination functions of the Federal
Reserve Board and the FDIC. It has also been suggested
that the FDIC is a corporation which does very little
now other than collect the money and pay out a few banks.
It ought to be in the Treasury.
H.M.JR: I think there should be one agency and I
think it should be the Comptroller of the Currency in the
Treasury.
MR. D.W. BELL: I don't see why the Federal Reserve
Board needs to examine banks. Of course, what we ought to
have, discussing banks, we ought to have one banking system,
in my opinion - all Federalized. It should have been done
in '33 when we had the opportunity, but politics got into
it them.
H.M.JR: This thing will end up like a report on the
reorganization of the fiscal functions of the Government.
MR. D.W. BELL: would you like to include all of the
banking in one paragraph?
H.M.JR: Yes, sir.
MR. D.W. BELL: Securities and Exchange Commission:
When we discussed this with you last week you suggested
that the Securities and Exchange Commission also be
brought into the Treasury. I think that might very well
go to the rederal Reserve Board. They already have
margin requirements, and they have the Open Market
Committee. Why not give them all of the money market,
capital market, and everything? I should think that might
very well--
MR. PEHLE: Is the Board of Directors directly respon-
sible to Congress?
MR. D.W. BELL: It is independent.
MR. PEHLE: why should a Governmental function like
Regraded Unclassified
163
- 11 -
the SEC be performed outside the Federal Government
system?
MR. D.W. BELL: I don't think it would be. The SEC
is independent and makes report to Congress although the
President appoints the head like the Governors of the
Federal Reserve System.
MR. PEHLE: The people on the Board of Governors
aren't even Federal civil servants.
MR. D.W. BELL: Neither are the Commissioners on the
Exchange Commission.
MR. PEHLE: But I mean the SEC is a regular agency
of the Government, but the Board of Governors is part of
the banking system of the country.
MR. GASTON: They are all appointed by the President,
John.
MR. PEHLE: The board of Governors has always thought
of itself when it was convenient as a non-Governmental
organization - when it wasn't convenient - aren't they
right in between a Governmental and non-Governmental
agency?
MR. GASTON: The Board of Governors, I think, is strictly
a Governmental agency.
MR. D.W. BELL: The only distinction is that they are
paid out of assessments on the banks. You might argue that
for the Comptroller of Currency for about ninety percent
of it - I think it just depends on how much supervision--
H.M.JR: Leave that one in suspense.
MR. D.W. BELL: The President can exercise as much
jurisdiction over the Board as he wants to.
Regraded Unclassified
164
- 12 -
MR. O'CONNELL: Why do you want to decide where it is
to go if it isn't to be in the Treasury? We are only
deciding on the reorganization of functions to go to the
Treasury. We can leave SEC where it is if we don't want
it.
H.M.JR: Well, I would-like to see what you will do
with some of the agricultural lending agencies, and that
sort of thing. What are you going to do with the Office of
Coordinator of Inter-American Affairs?
MR. D.W. BELL: That has fiscal functions. The
next one there is the Foreign Economic Administration.
Now that has - what does that have, John? Lend-Lease
Administration, the Office of Foreign Relief and Re-
habilitation, the Office of Economic Warfare, Office of
Foreign Economic Coordination, former Foreign Procurement
Activity, War Food Administration, Commodity Credit,
Export-Import Bank, Petroleum Reserves, U.S. Commercial -
so you can see what a mess that is.
H.M.JR: What are you suggesting for that?
MR. D.W. BELL: I am not suggesting anything. I
don't know. Certainly you ought to have a lot to say
about Lend-Lease and any activity that the Commodity
Credit or the U.S. Commercial carried on abroad. Some
of that stuff is just economic in character and not
too much fiscal.
H.M.JR: Should I make a suggestion to the President
that we have a sort of board of Directors to aid in foreign
lending in which the Secretary of the Treasury would be
the Chairman?
MR. D.W. BELL: Set up 8. committee composed of three or
four departments of which the Secretary would be Chairman.
H.M.JR: That would satisfy me.
MR. D.W. BELL: That would probably be better and
would fit into some of these other things down here.
Regraded Unclassified
165
- 13 -
MR. GASTON: Well, what I think about the Foreign
Economic Administration is that it is a mess of illogical
hash. Whatever happens, it ought to be abolished, some of its
functions should go back to State, some to Treasury - but it
should not exist, that Foreign Economic Administration.
H.M. JR: May I differ with you to this extent. I would
let it live for another year, and then when its work - or
two years - and then when its work begins to peter out -
but I think it is too early, really. I think the main work
is still ahead of them. I think it is so big--
MR. BARTELT: If the Bureau of the Budget should be
returned to the Treasury it would get certain control, by
that means, over their activities.
MR. PEHLE: That isn't what you want, Mr. Secretary -
a veto power over certain of their fiscal activities such
as Lend-Lease.
H.M.JR: Well, for the moment, I have that. If we
can regularize that - for the moment the President is
doing that with me. If some suggestions through a committee
where these things would clear, and I would have a veto
power on these things, I think that would be good fiscal
practice.
MR. D.W. BELL: I think the committee we suggested
before was good.
H.M.JR: Let's include that. Now,mind you, this is
my first blush. When I say this, it doesn't mean - well,
there will be a half dozen more meetings. But I am pleased
with the method of preparation and presentation. Whoever
is responsible for this, I compliment them.
MR. D.W. BELL: Mr. Cake is the boy who has worked
night and day on that.
H.M.JR: Take a bow, Mr. Cake.
Regraded Unclassified
166
- 14 -
MR. GASTON: I think that committee idea is one that
is very valuable and could be used in several directions.
I think it could be used in connection with the agricultural
lending agencies and with some others. Membership by the
Treasury on a committee which will have to give final
approval to general policies of these fiscal agencies that
are specialized, such as Farm Credit in Agriculture--
MR. D.W. BELL: I think that is right. We can't take
control over all of these fiscal activities throughout
the Government; we have to do it either through committees
or being represented on the Board of Directors.
H.M.JR: Again quoting the British, as near as I can
make out they have Cabinet Committees which function this
way. The President starts these things, and then if the
public doesn't like them they kind of peter out. But I
think there should be Cabinet Committees and where it is
money, I think the Secretary of the Treasury should be
Chairman. The English have a full-time permanent Secretary
of the Cabinet.
MR. D.W. BELL: The Secretary of the Treasury of
England you never hear of. You always hear of the Chancellor.
H.M.JR: But they have a Secretary of the Cabinet who
prepares the agenda.
MR. D.W. BELL: That would be & great improvement here,
if we just had an agenda.
H.M.JR: He keeps a record.
MR. D.W. BELL: This is Office of Coordinator of
Inter-American Affairs. You know what that is, but it has
a number of things under it that you wouldn't think of,
such as the last line there - it has jurisdiction over the
institute of Inter-American Affairs, Inter-American Trans-
portation, Inter-American Educational Foundation, the
Radio Corporation. So there are a number of corporations
there. I don't think we would be too much interested in
that except for the amount of money they got. Any time
they got large sums of money, then we might be interested.
Regraded Unclassified
167
- 15 -
H.M.JR: As Eddy says, if the Budget was over here
we would have a control through that.
Mic. GASTON: That is another agency that shouldn't
exist.
MR. D.W. BELL: That should be part of the State
Department.
MR. GASTON: Sure, so far as their functions are proper.
MR. D.W. BELL: That is right. It should be a
division in the State Department if you are going to have
it at all.
The next is the Office of Economic Affairs, Division of
Financial and Monetary Affairs. Well, you can see what
they do. They have to do with foreign loans and invest-
ments, Alien Property Custodian, property control measures,
certification of disposal of foreign properties, responsible
on matters pertaining to Foreign Funds - I suppose that is
the liaison.
MR. PEHLE: In other words, this is the State Depart-
ment group that handles the liaison with other agencies.
MR. D.W. BELL: this came under Feis before he left,
didn't it?
MR PEHLE: No, I think under Acheson and Meltzer and
that group.
MR. D.W. BELL: I don't think it is anything you are
so much interested in, but if you had something like a
committee up here to handle these things, you would get
part of that.
Now the Home Loan Bank Administration, the Farm Credit
Administration, and the Surplus Property Board: In the first
two you will have others such as the RFC and all of its
subsidiaries and all of the Farm Credit subsidiaries. The
question there is whether - take the RFC, certainly that
Regraded Unclassified
168
- 16 -
shouldn't come under the "Treasury, but should we be repre-
sented on the Board of Directors? You remember, we were
at one time.
H.M.JR: I think that for RFC, the Home Owners Loan,
Farm Credit, any of these lending agencies, there should
be 8 Cabinet Committee which the Secretary of the Treasury
would be Chairman of. Now, look at the way I organized -
you weren't any of you on this thing I am doing on Lend-
Lease for the British - I had Frank Loe appointed as
Secretary for the American side. He runs all of the
thing. He runs it beautifully. lie keeps everybody to-
gether and keeps everybody posted. He is of tremendous
assistance. The Anglish have an opposite number.
Now, what I am thinking about is, supposing we had
all the lending agencies, I would have for myself an
assistant to devote himself to that work, who would keep
me posted and would do nothing else. Again quoting the
English, the Chancellor of the Exchequer had a Parlia-
mentary Secretary who does nothing but contact the Hill.
But 1 would have an assistant to myself who would devote
himself just to the lending agencies.
MR. D.W. BELL: I think it would be very good.
H.M.JR: An Assistant to the Secretary of the Treasury
who would do nothing but devote himself to overseas loans;
one would be domestic loans and the other would be external
loans. And the man would have a full-time job just watching
external. loans and domestic loans. I think that makes
sense.
MR. GASTON: I think that makes decided sense, and as
a supplement to that I would take all of these agencies and
have them, for budget purposes and personnel purposes, and
other routine administrative purposes, have them located
in one of the departments of the Government. Farm Credit
is in Agriculture. I think that is all right.
I would take your Home Loan Bank group and put that in
Interior or Commerce for general administrative and budget
purposes. I would put it in Commerce and have it supervised
by that Cabinet Committee such as the Secretary suggests.
Regraded Unclassified
169
- 17 -
H.M.JR: No, but as Assistant to the Decretary of
the Treasury, he would have a full-time job.
(The Secretary holds telephone conversation with
Dean Acheson, as follows:)
Regraded Unclassified
170-
November 2, 1944
3:39 p.m.
HMJr:
Hello.
Dean
Acheson:
Henry.
HMJr:
Speaking.
A:
This is Dean Acheson. Redvers Opie
HMJr:
Pardon?
A:
Redvers Opie at the British Embassy
HMJr:
Yes.
A:
telephoned me a few moments ago
HMJr:
Yes.
A:
and says that a reporter from the Herald-
Tribune, whose name is Tom Twiddy
....
HMJr:
Twiddy, yes.
A:
has appeared there a short time ago with
a series of questions relating to these Lend-
Lease talks
HMJr:
Yes.
A:
which indicate that he has picked up some
information around town.
HMJr:
Yes.
A:
They have stalled him off on the grounds that
they couldn't find anybody to talk with him
....
HMJr:
Yes.
A:
and he was coming back at four o'clock.
HMJr:
Yeah.
A:
Now, Opie would like very much to say that there
are the perennial talks that occur toward the
beginning of every year about requirements and
that sort of thing going on.
171
2 I I
HMJr:
Yeah.
A:
And that he thinks that it's much better for him
to go and talk to some official in the American
Government, naming someone. He hopes that the
statement that we talked about the other day
would be given out.
HMJr:
Yeah.
A:
Now, I asked Frank Coe the status of that
statement
....
HMJr:
Yes.
A:
....
and he says that it has run into trouble
....
HMJr:
Yes.
A:
....
by reason of various people objecting to
what was said in it.
HMJr:
Yes.
A:
That Herbert Gaston had it and probably it's
about dead now.
HMJr:
Well, we're here on budget matters but Herbert
Gaston is here. Would you hold the wire just a
minute while I repeat what you said? Hello?
A:
Yes, sir.
HMJr:
(Talks aside.) Just a moment, please.
A:
Yes.
HMJr:
You don't want to see him, do you, Dean?
A:
No, I certainly don't.
HMJr:
Well, what you really want -- well, I think -- I
think Opie has got to say something along the lines
that you said.
A:
Yes.
HMJr:
Then the question is who to refer him to.
Regraded Unclassified
172
- 3 -
A:
Yes.
HMJr:
And if it's Lend-Lease, could we refer him to
Crowley?
A:
Well, if we refer him over to Lend-Lease, I
think probably the best fellow to send him to
would be Oscar.
HMJr:
Right.
A:
I think Oscar could handle it
....
HMJr:
Right.
A:
with a little more knowledge of it.
HMJr:
And Oscar has been -- yeah, why not do it that
way and then tell Oscar if he runs into any
trouble on it, that he'd keep Herbert Gaston
posted.
A:
Yes.
HMJr:
See? How's that?
A:
I think -- I think that's the thing to do, Henry,
rather than to get him over here, then we'd get
all
HMJr:
No, I think -- I'd refer him to Oscar and I'll
have Gaston warn our Press Room that there's
something like this may be coming.
A:
Yes.
HMJr:
See?
A:
Now, do you want Oscar to say anything about a
committee or about you or anything like that?
HMJr:
Well, is Twiddy going up to the British Embassy
or is he going to telephone?
A:
No, he was going to go up there to try and see
Opie at four o'clock.
HMJr:
Well, let me get a little -- I'll have Gaston
just see whether he can't clear that there 18
such a committee with Steve Early. Never mind
because we've cleared this thing with State.
Regraded Unclassified
- 4 -
173
A:
That's right.
HMJr:
So if Gaston could clear something with Steve Early
it would be good. Then we'd be prepared to get a
favorable statement out instead of something -- a
political one.
A:
Yeah. All right. Then I'll just tell Opie.
HMJr:
You tell Opie. Put Oscar on notice and Gaston
will contact Oscar just as soon as he can.
A:
All right. Fine.
HMJr:
Does that sound all right to you?
A:
I think that -- I think that's the best way to do
it.
HMJr:
Yes.
A:
First rate.
HMJr:
Because, I mean, I don't want to give out anything
that isn't agreeable to the White House.
A:
Yes.
HMJr:
Well ....
A:
There's -- the release that we got up was quite
agreeable to us but ran into trouble somewhere
else.
HMJr:
Well, I don't know where it ran into trouble
but ....
A:
I think the Army or Navy felt
HMJr:
Army or Navy, yes.
A:
....
that they weren't on the committee and didn't
like what we said about them.
HMJr:
Yeah. Well, thank you so much for calling.
A:
All right, Henry.
HMJr:
Thank you.
Regraded Unclassified
174
- 18 -
H.M.JR: Herbert, I think this thing, if you don't
mind - he likes that statement you wrote. ne didn't say
it, but the idea was to hell with the army and Navy if they
don't like that statement. but he thought we ought to say
there is a Committee.
MR. GASTON: Yes, well, we can say that. There are
two lines of objection. Crowley didn't want to say that
you were presiding. He thought it was better to leave
that out.
H.M.JR: That is strange.
MR. GASTON: Gates, in the Navy, didn't want to be
listed because he said he wasn't a full-time member of
the Committee, that he was just dealing with certain
phases; and the same objection was made by Patterson in
War, that he wasn't a real member of the Committee. He
wanted to get the thing up in a way without saying the
membership of the committee, just saying inter-departmental
discussions between the agencies concerned over Lend-Lease.
H.M.JR: It is unimportant that I am presiding.
Crowley didn't like that?
MR. GASTON: For your own sake he thought we ought to
leave it out.
H.M.JR: I think an inter-departmental committee is
all right. You know Twitty is a man who was up at Bretton
Woods. He is a smart boy.
MR. GASTON: That is Herald Tribune?
H.M.JR: Yes.
MR. D.W. BELL: Why don't you just call it a discussion
going on between the various agencies concerned and the
British?
MR. GASTON: Just inter-agency discussions going on.
Regraded Unclassified
175
- 19 -
H.M.JR: See if you can get Steve. If you can't get
Steve, get Hassett, who is very good. I find massett
gives you yes or no.
Would you mind taking this on?
MR. GASTON: No, not at all.
(Mr. Gaston leaves the conference)
Mr. D.W. BELL: I don't think we are particularly
interested in Surplus Property. They may get some large
receipts and we would be interested from that standpoint,
but I think we have pretty good control over the things
throughout the Government.
MR. O'CONNELL: It is certainly true that while we
don't know what the receipts will be, whatever receipts
there are, are not subject to disposal by Surplus Property.
They do go right into the Treasury.
MR. D.W. BELL: Oh, yes, I think we have the same
liaison, the same control, as over any other receipt that
comes into the Government. They have to come to us for
that.
This is the Banking and Financing Agencies: I think
we can handle Federal Reserve Banks, of course. We have
got as much control there as we want. Under that authority
they do anything we want them to, of a fiscal character.
The Postal Savings Division of the Post Office Depart-
ment has been mentioned a good many times, particularly by
Frank Walker, as not being a postal matter and therefore
should not be under the Post Office Department, but should
be transferred into the Treasury.
It got rumored around last year that there was some
consideration being given to that, but a great many people
on the Hill got disturbed and Frank dropped it, thought
it was politically too hot to recommend to Congress that
it be transferred.
Regraded Unclassified
176
- 20 -
It seems to me that is a function that might very well
be in the Treasury, and sometime we might work it SO we can
have postal savings deposits through the commercial banks
and tie them into savings bonds without issuing the bonds,
but just issuing the pass book. We might even go so far
accounts. as to have their taxes paid through the postal savings
H.M.JR: My God, Dan, we are going back to '33. He
would love that idea - the President would. He always
wanted this Australian system where you pay your taxes and
vote, and do everything on one day. If you don't show up
they charge you two pounds. If you show up you get your
two pounds back. That is the way they get around the head
tax. If you don't show up at the county seat on Election
Day it costs you two pounds. Put you do everything; you
do all your business, including voting, on that one day.
MR. D.W. BELL: I am in favor of that.
Well, that is something that might be included as an
ideal setup.
MR. PEHLE: In an ideal setup why wouldn't the fiscal
functions of the rederal Reserve Banks be in the Treasury
where the money comes from to pay for them?
MR. D.W. BELL: They are in the Treasury.
MR. PEHLE: No, I am talking about all the Federal
Reserve Banks in New York that are filled with employees
paid for by the U.S. Treasury.
H.M.JR: You want to take over the Federal Reserve
Banks.
MR. PEHLE: That might be a good idea, too, but I am
talking about all the work they do for the Treasury
Department. Why don't we do it ourselves?
Regraded Unclassified
177
- 21 -
MR. D.W. BELL: Well, we got rid of the old Sub-
Treasury system in '20. I don't think we ever want to go
back to the Sub-Treasury system. It is too awkward and a
little difficult.
MR. PEHLE: Well, it seems sort of funny to have the
Federal neserve Bank of New York, always on the other side
of questions that come up, staffed with employees who are
all in the Treasury and, in effect, on the Treasury pay
roll.
MR. D.W. BELL: I don't think we have any trouble with
the rederal Reserve Banks as fiscal agents. The trouble
we have with the Federal neserve Banks is outside of the
fiscal agency functions.
MR. BARTELT: They are not on the Treasury pay roll,
they are on the Government pay roll. We reimburse them.
MR. D.W. BELL: NO, we don't reimburse them for any-
thing; only items such as the old Sub-Treasury handled,
such as cashing the checks.
MR. PEHLE: What percentage of employees are, in effect,
paid for by the Treasury?
MR. D.W. BELL: All of those working on Public Debt
issues.
H.M.JR: Seventy-five percent.
MR. D.W. BELL: Probably not that high, but it is
large.
MR. PEHLE: Used to pay Opie's salary out of the
Foreign Funds appropriation.
H.M.JR: Is that what burns you?
MR. PEHLE: Yes.
H.M.JR: Well, I am going to pass that one.
Regraded Unclassified
178
- 22 -
MR. D.W. ELL: Now, the rest down here in this
group are large corporations, including RFC. Then you have
the war, Navy, and U.S. Maritime Commission, guaranteed
loans - the last one.
Now, that is handled by the Federal Reserve Bank, or
the Federal Reserve Board and Banks, as fiscal agents of the
United States. We should, of course, have had a hand in
that and didn't. You remember the Executive Order was
issued without our knowing anything about it when we were
working on another angle and trying to work it out through
the commercial banks. But it was issued and we had nothing
to do with it at all. Putwe should have had. I should
think this whole group might be handled just like you
suggested over here with the committee.
H.M.JR: How far does that take us?
MR. D.W. BELL: Down to three which are lending agencies
and there, again, I think we can do pretty much the same
way.
H.M.JR: I think it is a good time to stop. Don't
let anybody see this until after Elections!
MR. D.W. BELL: No, we won't.
You have the Office of the Alien Property Custodian,
about which we have had a great deal of discussion, War
Reallocation Authority - I assume that will go out;
Maritime Commission has a great many fiscal operations
such as loaning and collecting of interest and principal
on loans, that is 1920. I shouldn't think we want to
get into that. That is pretty well decided by Congress
and we have very good liaison with them.
H.M.JR: I tell you, gentlemen - may I again compli-
ment you on the way this thing has been handled.
MR. D.W. BELL: I will ask you some questions on the
very last page. There are the non-fiscal things of the
Treasury. We might want to do something about them.
Regraded Unclassified
179
- 23 -
One is Procurement, one is Bureau of Narcotics, U.S.
Secret Service, U.S. Coast Guard - of course, they will
come back to the Treasury after the war is over, automati-
cally. Now they are non-fiscal. If we want a strictly
fiscal organization, there is a question whether you would
want any of those departments - possibly Secret Service.
Now, Secret Dervice has a responsibility for the
protection of the President and his family, and also
protection of the White House and the grounds, but in addi-
tion, it has jurisdiction over counterfeiting of our
securities, which is certainly closely related to fiscal.
H.M.JR: I think those agencies which have to do with
the protection of the revenue, we can rightfully say they
belong in the Treasury.
MR. D.W. BELL: That is the Intelligence Section of
the bureau of Internal Revenue and Customs.
H.M.JR: Narcotics, Alcohol Tax--
MR. D.W. BELL: That is part of the Revenue setup.
I should think you ought to leave that. we didn't put
that on here. But the Dureau of Narcotics is an enforce-
ment agency and doesn't have much to do with the Revenue.
H.M.JR: well, I would like to think about that. Of
course, the greatest question of all is the Coast Guard.
I don't know that Coast Guard should. be under the Treasury.
MR. D.W. BELL: I think it has lost its original
purpose of protecting the Revenue. I think it has gotten
into other fields.
H.M.JR: I don't know why it shouldn't stay as part
of the Navy, under the same organizational setup as the
Marines. This Admiral Waesche would kill them!
MR. PERLE: Yes, they want to come back.
Regraded Unclassified
180
- 24 -
MR. D.W. BELL: It is nice to have them in the
Treasury, it is a nice organization. But from an organi-
zational standpoint, 1 agree it certainly doesn't belong
here any more.
H.M.JR: The remarks I made, like about Waesche -
please caution everybody up and down the line that this is
strictly a Treasury matter we are discussing, and I don't
want to see it in Jerry Kluttz' column, or Riley's. So,
please, everybody, caution all the stenographers and
everybody up and down the line, will you, please? but
this is a good start. I am going to take this and study
it some more. Then we will have a look.
This is the approach I like. By discussing this with
you for an hour I understand it better and maybe you people
understand how I feel about it a little bit better.
MR. D.W. BELL: would you like to have us do any work
in drafting anything? If you wan't anything drafted, do you
want it in the form of just a memorandum for the use of
the President, or do you want it in the form of bills, or
Executive Orders?
H.M.JR: I think just as a memorandum to the President.
MR. D.W. BELL: Now, most anything you want done here
can be done under the War Powers Act, but it is only an
emergency transfer and it is good for - what, six months
after the war?
MR. O'CONNELL: Whatever function is transferred will
revert to its former status six months after the war, but
it is a method by which you could do, without legisiation,
almost anything.
H.M.JR: No, I would like to fight this thing through
Congress.
MR. D.W. BELL: 1 tnink that would be the cleanest way.
I think if you do some of these things under the War Powers
Act the question would be raised immediately as to whether
that is what the war Powers Act was intended for.
Regraded Unclassified
181
- 25 -
MR. O'CONNELL: I will say, Mr. Secretary, that
there have been some thirty-one Executive Orders under the
War Powers Act transferring functions. Although they are
relatively small in each case, they go much further than
anything we have discussed here.
H.M.JR: No, I would rather do it through Congress -
fight it through. Another thing, if you fight it through
Congress and these things are done, then these other
agencies can't go back to the President and try to get
him to redraft an Executive Order - which has been done,
too.
MR. PEHLE: I have heard of that!
Mr. Secretary, if this is done by legislation it seems
to me it raises a question about this committee setup. In
other words, if you try to freeze in the legislation
these committees which come and go pretty fast, it is a
question of whether the committee shouldn't be an informal
working arrangement. What you really want is a veto power
on fiscal action. In other words, where you put the power
in the Decretary of the "reasury to veto fiscal action
and don't set up a committee consisting of a lot of dis-
interested people. At least it is worth thinking about.
MR. D.W. BELL: Do you think that power could be put
in the President, authorize the President to set up Cabinet
Committees to control these activities?
MR. PEHLE: He has that power.
H.M.JR: No, I don't agree with you at all. I want
these committees to have a permanency that you can only
get through an Act of Congress. I have been on too many
committees that last from one week to three months.
MR. PEHLE: I agree with that. I think that has
been the history of these committees, that they just don't
keep going. Now, if you can solve that by legislating them
into existence - I don't know.
Regraded Unclassified
182
- 26 -
MR. D.W. BELL: You would like to have a memorandum?
H.M.JR: Definitely.
Everybody who has worked on it, thank you. And mum's
the word; the enemy is listening.
Regraded Unclassified
183
SHEET h
I.
MEMOVAL SUPERVISORY AGENCIES
BABIC
SOURCE of
FARENT
AUTHORITY For
ADMINISTRATIVE
CASANIZATION
FUNCTIONS of FINAL INTEREST
FUNCTIONS
Funce
BORRINING PANER
REGARDS
DEARD OF GIVERNORS,
FEGERAL RESERVE SYSTEM
INDEPENDENT
DETERMINES MEMERA, MUNETARY, CREDIT, AND OPERATING POLICIES For THE SYSTEM AND
FEDERAL RESERVE ACT,
SENT-AINUAL AESEBRMENTS on THE
SEXTS BITH DECRETARY AND OTHER TREASURY
FORMULATES MALES AND REGILATIONS FOR CARRYING OUT PURPOSES OF FEDERAL RESERVE
DECEMBER 13, 1913
FEDERAL RESERVE BANKS IN Ms-
OFFICIALS TO DISCUSE WATTERS OF MITUAL
ACT, AND SUPERVISES FEDERAL RESERVE BANKS AND NEWBER - HAS THE POWER TO
148 U.S.C. 221)
PORTION TO THEIR CAPITAL EFOCK
INTEREST AND MAKER RECOMMENDATION -
EXAMINE MEMBER SAMLE of FEDERAL RESERVE SYSTEM.
AND BURPLVE,
WATTERS OF FISCAL POLICY,
FEDERAL OPEN MARKET COMMITTEE
INDEPENDENT
UNDER REGILATIONS OF THE COMITTEE, FEDERAL RESERVE BANKS ENGAGE IN UPEN
FEDERAL RESERVE ACT,
MEMBERS If COMITTEE ARE MEM-
MEETS - SECRETARY AND OTHER THEASURY
OPERATIONS INVOLVING PURCHASE AND SALE OF OBLIGATIONS OF U. s. AND
DECEMBER 13, 1913
SERS OF Board of GOVERNORS,
OFFICIALS TO DISCUSS WATTERS # MUTUAL
CERTAIN OTHER SECURITIES, AND BILLS OF EXCHANGE AND BANKERS' ACCEPTANCES
(12 U.S.C. 221]
FEDERAL RESERVE
INTEREST - MAKES RECOMENDATED --
BISILE FOR DISCOUNT BY FEDERAL RESERVE SAMIS,
MATTERS of FISCAL POLICY
BUREAU of THE BUDGET
EXECUTIVE OF-
PREPARES AND ADMINISTORS THE meant; STUDIES IMPROVEMENT AND ECONOMY
BUDGET AND ACCOUNTING
APPROPRIATIONS of CONDRESS
LIAIMS WITH TREASURY - MATTERS IF
FICE IF THE
IN ADMINISTRATIVE OF THE GOVERNMENT, COORDINATES -
ACT, -, 1921
LEGIBLATION APPECTION TREASURY -
PRESIDENT
ADVISER PRESIDENT ON PROPOSED LEGISLATION AND EXECUT IVE ORDERS,
DI U.S.C. 11-16)
STUDIES IMPROVEMENT IN STATISTICAL SERVICES AND DOORDINATES - PRO-
TIGNS AND FINANCIAL AND LIAISON -
FINANCIAL REPERTING of GOVERNMENT AS
GRAND or THE EXECUTIVE BRANCH TO AVOID DUPLICATION AND EFFECT ECONOMIER.
A WHILE
GENERAL ACCOUNTING OFFICE
INDEPENDENT
COUNTERSIGN WARRANTS of ACCRETARY of TREASURY; PRESCRIBES EYSTEMS FOR
BUDGET AND ACCOUNTING
APPROPRIATIONS of CONGRESS
COUNTERSIGNATURE OF TREASURY MARANTS;
ADMINISTRATIVE APPROPRIATION AND FUND ACCOUNTING; RENDERS ADVANCE DE-
ACT, -, 1921
AUDIT or TREASURER'S ACCOUNT; AND
CISIONS ON QUESTIONS of APPROPRIATION EXPENDITURES; BETTLES ALL CLAIMS
(3) U.S.C. 41)
LIAISON ON MATTERS of FINANCIAL -
FOR AND AGAINST THE U.S.; RECOVERS UERTS DUE U.S.; AND INVESTIGATED ALL
PORTINE OF GOVERNMENT - A HAVE,
MATTERS INVOLVING RECEIPT, DISBURSEMENT, AND APPLICATION or PUBLIC FUNDS,
TUREAU or COMPTAILLER of
TREASURY
SUPERVISES AND EXAMINES NATIONAL BANKS (INCLUDING ORGANIZATION,
ACT or FEBRUARY 25,
(A) APPROPRIATIONS OF COM-
CURRENCY
DATION, AND ADMINISTRATION OF THOSE THAT PAILI, ALSO SUPERVISES -
1863
- FOR THE COMPTROLLER'S
TRUST COMPANIES, AND BUILDING AND LGAN ASSOCIATIONS NOT CHARTERED UNDER
(12 STAT. 6651
OFFICE,
FEDERAL HOME LOAN BANK Act AND CERTAIN CREDIT UNIONS, HAS RESPONSIBILITY
(a) ASSESSMENTS OM NATIONAL
FOR ISSUE AMO REDEWPTION of FEDERAL RESERVE NOTES AND FEDERAL RESERVE
BANKS FOR EXPENSES OF
BANK NOTES,
EXAMINATIONS,
SECURITIES AND EXCHANGE
INDEPENDENT
SUPERVISES REGISTRATION or SECURITY INVES AND SUPPRESSES FRAUDULENT
SECURITIES EXCHANGE
APPROPRIATIONS OF CONGRESS.
COMMISSION
LIAIMS OR MATTERS - M/TUAL INTEREST,
PRACTICES IN BALE OF DECUMITIES. REGULATES TRADING IN SECURITIES, BITH
ACT or 1934
WITH TREASURY,
on STOCK EXPANSES AND OVER THE COUNTER, REGULATES PUBLIC UTILITY HOLD-
115 U.S.C. 70)
THE COMPANIES. SUPERVISES INDENTURES USED in PUBLIC OFFERING OF NOT
RECURITIES. REGISTERS AND REGULATES INVESTMENT COMPANIES AND ADVISERS,
FOREIGN ECNOMIC ADMIN-
OFFICE FOR
UNIFIES AND CONDILIDATES GOVERNMENTAL ACTIVITIES RELATING TO POREIGN
EXECUTIVE ORDER
APPROPRIATIONS or CONGRESS
LIAISON OM WATTERS of FINANCIAL No.
INTRATION
EMERGENCY
ECONOMIC AFFAIRS, AND OPERATES CLEARING HOUSE FOR REPORTING FOREIGN
NO. 9380 OF
FOR THE UNINCORPORATED
PORTING, AND MATTERS OF COMBIE AND
MANAGEMENT
EXPENDITURES ABROAD. THE ADMINISTRATION ENCOMPASES THE OFFICE OF
SEPTEMBER 15, 1343
AGENCIES.
MONETARY POLICY AFFECTIVE FINANCIAL
LEND-LEASE ADMINISTRATION, THE OFFICE of FOREIGN RELIEF AND N.
TRANSACTIONS WITH TREASURY,
MABILITATION OPERATIONS, THE OFFICE of (CONOMIC BARFARE, FOREIGN
ECONOMIC OPERATIONS of OFFICE OF FOREIGN ECROMIC COORDINATION, AND
FORMER FOREIGN PROCUREMENT ADTIVITIES or THE SAN Fore ADMINISTRATION
AND COMMODITY CREDIT CORPORATION. INCLUDED in THE ADMINISTRATION ARE
ALBO THE EXPORT IMPORT or INSHINGTON, PETROLEUR RESERVED CORPORA.
TIGN, Rubsen DEVELOPMENT CORPORATION AND V. s. COMMERCIAL COMPANY,
OFFICE of CORDINATOR OF
OFFICE FOR
SERVES AN CENTER FOR COORD INATION OF CULTURAL AND COMMERCIAL RELATIONS
EXECUTIVE ORDER
APPROPRIATIONS IF CONGRESS
INTER-AMERICAN AFFAIRS
ENCRGENCY
FOR HENISPHERE DEFENSE, FORMULATES AND EXECUTES PROGRAMS (WITH STATE
NO. 6840 OF
MANAGEMENT
DEPARTMENT) FOR EFFECTIVE use OF FACILITIES IN FIELDS OF ARTS AND
JULY 30, 1941
BEIGNGER, EDUGATION, TRAVEL, MADIO, PRESS AND CINEMA To FIRTHER NATIONAL
DEFENSE IN WESTERN HENT SPHERE, FORMULATE AND EXECUTE PROGRAMS in
COMMERCIAL AND ECONOMIC FIELD TO FURTHER COMMERCIAL WELL REING IN HERI-
SPHERE, ASSISTS LN BAR AND NAVY PROGRAMS TO HELP AMERICAN REPUBLICS TO
INCREASE THEIR MILITARY AND NAVAL ESTABLISMENTS. MAS JURISDICTION OVER
INSTITUTE of INTER-AMERICAN APPAIRS, INSTITUTE of INTER-AMERICAN TRANS-
PORTATION, INTER-AMERICAN NAVISATION CORPORATION, INTER-AMERICAN COUCA-
TIONAL FOUNDATION, INC., AND PRENCIMADIO, INC.
OFFICE of ECONOMIC AFFAIRS,
STATE
INITIATED AND COORDINATES POLICY AND ACTION IN MATTERS PERTAINING TO:
PREDUMABLY SECRE-
APPROPRIATIONS OF CONOMESS
LIAIMS PARTICULARLY WITH TREASURY,
IION If FINANCIAL AND
INTERNATIONAL FINANCIAL AND MONEEARY POLICY, AGREEMENTS, AND ARRANGE-
TARY or STATE
COMMERCE, JUSTICE, AGRICULTURE, FOREIGN
WRITARY AFFAIRS
WENTS; FOREIGN LEANS AND INVESTMENTS PROJECTS AND PROGRAMS FOR FOREIGN
ECONOMIC ADMINISTRATION, ALIEN PROPERTY
INDUSTRIALIZATION AND LONG RANGE ECONOMIC DEVELOPMENT THE ALIEN PROPERTY
CUSTODIAN, EXPORT IMPORT SAME OF MASHINGTON,
CUSTODIAN AND PROPERTY CONTROL MEASURES of THE UNITED NATIONS: CERTIFICATION
OF DISPOSAL of FOREIGN PROPERTIES IN U. S., AL80 CERTAIN RESPONSIBILITIES is
MATTERS PERTAINING TO FOREION FUNDS CONTROL, NAM PRIMARY RESPONSIBILITY FOR
POLICY AND ACTION IN APPLICATION of FOREIGN FUNDS CONTROL MEASURES IN EMEMY
DOCUPIED COUNTRIES AND ITALY; CONTROL OVER IMPORTED REDUMITIES; AND SERVICING
OF DOLLAR BONDS,
Regraded Unclassified
184
I
was SUPERVI DORY AGENCIES (CONTINUED)
SHEET
BARIC
SOURCE OF
PARENT
AUTHORITY For
ADMINISTRATIVE
ORGANIZATION
FUNCTIONS OF FISCAL INTEREST
FUNCTIONS
Fines
- POWER
REMARKS
FEDERAL Hows LOAN
NATIONAL
HOUSENS SUPERVISES THE FEBERAL Hout Leas BANK EVETEN AND FEDERAL Sevent AND LOAN
(A) FEDERAL HOME LOAN
ASSESSMENTS AGAINST FEDERAL
ADMINISTRATION
ASEMCY
ASSOCIATIONS AND ADMINISTERS THE FEDERAL SAVINGS AND LOAN INSURANCE
BANK ACT, JULY 28,1932
HOME LOAN BARKS AND OTHER
CORPORATION AND HOME OWNERS' LOAN CORPORATION (in LIQUIDATION)
05 U.S.C. 602)
AGENCIES UNDER THE ADMINIS-
(a) HowE DINERS' LOAN
TRATION AND CHARGES AGAINST
ACT, JUNE 13, 1933
INSTITUTIONS EXAMINED,
(12 U.S.C. 1461)
(c) TITLE IV NATIONAL
HOUSING ACT, JUNE 17.
1934 (18 U.S.C. 1784)
FARM CREDIT ADMINISTRATION
AGRICULTURE
SUPERVISES THROUGH 12 DISTRICTO THE FARM CREDIT ADMINISTRATION SYSTEM
FEDERAL FARM LOAN ACT
ASSESSMENT AGAINST MEMBER
COMPOSED IF THE it FEDERAL LAND BANKS, THE 12 FEDERAL INTERNEDIATE CREDIT
65 JULY 17,1916
INSTITUTIONS FOR SUPER-
sums, THE 12 PRODUCT ISM CREDIT CORPORATIONS AND LOCAL PRODUCTION CREDIT
(12 U.S.C. 641) AND
VISION AND EXAMINATIONS,
ASSOCIATIONS, THE I CENTRAL AND it DISTRICT BANKETER OBOPERATIVES, THE
VARIOUS SUBSEQUENT
# REGIONAL AGRICOLTURAL CREDIT CORRONATION, AND ACTIVITIES REGARDING LAND
LEGISLATION AND EXECU-
BANK COMMISSION LOANS, EMERGENCY CROP AND FEED LOANS, AND COOPERATIVE
TIVE ORDERS,
RESEMIN AND SERVICE.
HAS EMERAL SUPERVISION AND DIRECTION OVER THE CAR, HANDLING AND 018⑉
SUMPLUS PROPERTY ACT
APPROPRIATIONS of DONGRERS.
PROPERTY BARD
OFFICE OF BAR
MADILIZATION
POSITION of SURPLUB PROPERTY AND THE TRANSFER OF BURFLUB PROPERTY BETWEEN
or 1944 (Pus, 457,
GOVERNMENT ASENCIES. THE BOARD DESIGNATED GOVERNMENT AGENCIES TO ACT AS
78 Come.)
DISPOSAL AGENCIES FOR SURPLUB PROPERTY EXCEPT THAT THE U.S. STATINE
COMMISSION 15 THE SOLE DISPOSAL AGENCY FOR CONVERSION or VESSELS TO
MERCHANT USE. THE DESIGNATED DISPOSAL AGENCIES HAVE RESPONSIBILITY AND
AUTHORITY FOR THE DISPOSITION of PROPERTY DECLARED BURPLUS AND FOR THE
CARE AND HANDLINE of SUCH PROPERTY PENDING ITS DISPOSITION, SUCH PRO-
PERTY WILL CONSIST of VESSELS, PLANTS, ABRICULTURAL COMMODITIES, REAL
ESTATE, CONSUMER GOODS, ETC.
BHEET "
165
MARKING AND FLANKOLNE
BASIC
SOURCE OF
PARENT
AUTHORITY Fee
ADMINISTRATIVE
DESARIZATION
FUNCTIONS of FISCAL INTEREST
FUNCTIONS
FUNDS
- FORER
RESART
FRENDAL RESERVE -
Bean or devenuous,
ACTS AS DEPOSITARIES AND PISCAL AGENTS of THE UNITED STATES; ACTS AB FISCAL
FEDERAL RESERVE ACT,
SUBSCRIPTIONS TO CAPITAL STOCK
FEDERAL RESERVE
AGENTS of THE UNITED STATES in ARRANGING LEANS TO CONTRACTORS, BUSCONTRACTORS,
DECEMBER 13, 1913
BY NEMBER BANKS AND EARNINGS,
OVER
AND OTHER ENSAGED IN BUSINESS DEENED RECEBARY FOR THE PRODUCTION OF THE wa,
(11 U.S.C. an)
UNDER BUARANTEES BY THE MAR DEPARTMENT, NAVY DEPARTMENT, AND MARITIME COM-
MISSION,
FENTAL SAVINGS Division
Post OFFICE
EXAMENT 440 INVESTMENT If POSTAL SAVINGS FUNDS 48 THE ABENT OF THE BOARD
AGT of CONGRESS,
APPROPRIATIONS FREE PESTAL
ESSENTARY or THE TREASURY ARTS All
of TRUSTEES) SUPERVISION of BURINESS TRANSACTED AT POSTOFFICES; ADMINISTRATIVE
JUNE 15, 1910
REVENUER,
- IF THE MARD of INVOICES,
EXAMINATION of ACCOUNTS of POSTWARTERS AND OTHER FISCAL AGENTS of THE STATEN
(36 STAT; "
TREASURER IF Date STATES ass MENT
SUPERVISION of THE MLC OF UNITED STATES SAVINGS serios AND MAR SAVINGS STAMPS
U.S.C. 734,7531
IF Name name, INDESTMENTS, -
AT PRETWFFICER. PROVIDER PACILITIES FOR THE DEPOSIT OF MVIMS AT INTEREST,
DELLATIONAL - with,
BITH THE SECURITY IF THE DATES STATES FOR REPAYMENT ⑉ DESARD.
- Im DESPERATIVES
Fame DEBIT
NO CHEDIT FOR FARMER COOPERATIVES; MY BORROW FROM AND DISCOUNT PAPER
FARM CREDIT ACT OF
INITIAL CAPITAL SUBSCRIBED BY
AUTHORIZED TO - FREE -
ADMINISTRATION,
sire FEDERAL INTERMEDIATE CREDIT SANS, OTHER BANKS FOR CORPERATIVES, on
1933 (40 STAT.
GOVERNOR of FARM CREDIT ADMINIS-
DISCOUNT - REDISCRUNT WITH
DEPARTMENT or
ass, EXTENDS CREDIT TO FARMERS CORPERATIVE ASSOCIATIONS BY
257,261)
TRATION FROM FUNDS AVAILABLE is
ITHER BANKS FOR COMPENATIVES,
ABRIOULTIRE
PURCHASE COMMOITY CREDIT CORPORATION LOAN DOCUMENTS, DRAFTS or OTHER
THE REVELVING FUND AUTHORIZED
FEDERAL INTERNATE MaKa,
INSTRUMENTS,
BY THE AGRICULTURAL MARKETING
AND CORMERCIAL same.
ACT (48 STAT. 257,8641. CAPITAL
AUTHORIZED ED ISSUE sex-
18 ALSO FURNISHED BY BORROWING
TURES, is NOT
ASSOCIATIONS REQUIRED TO sus-
FIXES BUT MAY YART,
SCRIBE TO CAPITAL STOCK OR TO
NAKE PAYMENTS INTO THE QUARANTY
FUND, ADMINISTRATIVE EXPENSES
FROM CARNINES,
FEDERAL INTERMEDIATE
Fina CREDIT
Purchases AND DISCOUNTS ABRICULTURAL PAPER, MAKES LOANS TO COMMERCIAL BANK-
AGRICULTURAL CREDIT
ADMINISTRATIVE FUNDS PROVIDES BY
SUBJECT TO APPREVAL IF FARM
THE APPROVAL of THE DECRETARY of THE
CREDIT Mare
ADMINISTRATION,
FOR PRODUCTION CREDIT ASSOCIATIONS AND BANKS FOR COOPERA-
ALT, MARCH 4, 1923
MARNINGS, ORIGINAL CAPITAL MADE
CREDIT ADMINISTRATION MAY
TREASURY is REQUIRED ON SUSSCRIPTIONS
DEPARTMENT or
TIVES PRODUCTION AND MARKETING BY DISCOUNTING AND
(42 STAT. 1434)
AVAILABLE THROUGH SUBSCRIPTION IF
BORRON FROM ANY SOURCE, MAY
To CAPITAL STOCK Files THE REVILVING
ABRICULTURE
PURCHASING BEASONAL AND SHORT TERM ASRICULTURAL PAPER,
CAPITAL STOCK BY THE TREASURY,
ISSUE AND BELL COLLATERN,
rue,
ADDITIONAL FUNDS PROVIDED BY A
TRUST DESENTURES - OTHER
REVELVING FUND FOR SUBSCRIPTION
SIMILAR COLIGATIONS NOT TO
TO CAPITAL STOCK AND PAID-IN
EXCEED TEN TIMES THE aun-
SURPLUS, PRINCIPAL source, HUM.
PLUB AND PAID-IN CAPITAL.
EVER, 18 FROM SALE OF COLLATERAL
TRUST DESENTURES,
FEDERAL LAB -
FARM CREDIT
NAMES LONG-TERM FIRST WARTGREES, FARM LOANS THROUGH FARM ADMINISTRATION
FEDERAL FARM LOAN
ADMINISTRATIVE FUNDS PROVIDED
LIMITED IN THE SALE - PMM
DECRETARY OF THE TREASURY SUBSCRIBER
ADMINISTRATION,
LOAN ASSOCIATIONS FOR THE PURCHASE OF LAND AND BUILDINGS, FARM OPERATIONS,
ACT, JULY 17,1916
FROM EARNINGS AND FUNDS RECEIVED
LOAN BONDS TO THENTY TIMES
TO CAPITAL STOCK - MID-IN
DEPARTMENT or
AND FOR LIQUIDATION OF
(3) STAT, 362)
ENROUGH SUBSCRIPTION of CAPITAL
THE AMOUNT IF CAPITAL AND
OH BEHALF If THE UNITED DTATES,
ASRICULTURE
STOCK AND PAID-IN EURPLUB BY THE
SURPLUS, - LIMITATION IN
TREASURY, PROCEEDS FROM BALE OF
THEIR SHORT TERM BORROWING
FARM LOAN somes, PROCEEDS FROM
FROM OTHER sounces.
SALE OF SECURITIES HELD FOR -
VESTWENT, PROCEEDS FROM SALE OF
PROPERTY, FUNDS RECEIVED FROM
BORROWERS, AND FUNDS RECEIVED
FROM THE TREASURY THROUGH IN-
TEREST REDUCTIONS,
PRODUCTION DIBIT
FARM CREDIT
PROVIDER FUNDS TO CAPITALIZE INVOICTION CREDIT ASSOCIATIONS,
FARM CREDIT ACT,
ADMINISTRATIVE FUNDS THROUGHT
No PROVIDION FOR -
IMMORATIONS
ADMINISTRATION,
JUNE 16y 1933
EARNINES, SALE or CAPITAL STOCK
AUTHORITY.
DEPARTMENT or
140 STAY,2971
AND INTEREST INCOME - LIVERT-
AMYOULTURE
MENTS, GOVERNOR - THE FARM
CREDIT ADMINISTRATION MAS
AUTHORIZED TO SUBSCRIBE To CAP-
ITAL STOCK OUT OF A REVELVING
FUND (APPROPRIATION) CREATED
FOR THAT PURPOSE.
FEDERAL Howe Less
FEDENAL Heat
PROVIDER SHIRT AND CREDIT TO MEMBER INSTITUTIONS AM
FEDERAL HIME LEAR
ADMINISTRATIVE FUNDS CERIVED
MAY ISSUE DEBENTURES, NOT
APPROVAL OF THE RECRETARY IF THE
I
Loss las Ag-
MARTGAGES; ALSO MAILS LOAND DIRECT TO HAND
- ACT, JULY 22,
FREE EARNINGS, SALE OF CAPITAL
QUARANTEED BY THE UNITED
TREASURY REQUIRED - BIRISAM CAPITAL
MINISTRATION,
1932 (4)
STOCK TO MENSER INSTITUTIONS
STATES, NOT - EXCEED FIVE
of EACH
NATIONAL Reverse
AND To THE SECRETARY OF THE
TIMES THE TOTAL PAID-IN
AGENCY
TREASURY (REGONSTRUCTION
GARIEAL IF ALL - LOAN
FINANCE CORPORATION FUNDS).
BANKE - NOT TO EXCEED
- EQUIVALENT AMOUNT of RFC
TOTAL NATES AND OBLIGATIONS
MITER MERE CANCELLED BY THE
of MEMBER Miss,
SECRETARY OF THE THEASURY.
Regraded
186
II
SANKING AND FINANCING AGENCIES (CONTINUED)
SHIET it
BASIC
BOURCES of
PARENT
AUTHORITY For
ADMINISTRATIVE
ORGANIZATION
FUNCTIONS OF FINAL INTEREST
FUNCTIONS
Funds
BORROWING FOWER
REMARKS
Host CHECKS LOAN CORPORATION
FEDERAL Houst Loke GRANTED EVERGENCY LONG-TERM MONTGAGE LOANS TO DISTRESSES URGAN not
HOME OWNERS LOAN ACT,
ADMINISTRATIVE FUNDS DERIVED
AUTHORIZED TO ISSUE BINDS, SUARANTEED
APPROVAL of THE SECRETARY IF THE
(in LIQUIDATION]
BANK ADMINISTRATION, NOW is LIQUIDATION, BUT HAS BEEN DELEGATED THE ACTUAL OPERATION of THE BAR
JUNE 13, 1933 (48 STAT.
FROM OPERATIONS AND ORIGINAL
BOTH AS TO PRINCIPAL AND INTEREST UP
TREASURY If REQUIRED ON ALL
NATIONAL Housing
ROUSING PROGRAM AND OPERATION of THE CONVERTED DWELLINGS, THE LATTER IN-
128; 12 U.S.C. 1463)
CAPITAL THROUGH SALE IF CAPI-
TO $4,730,000,000.
FINANCING,
AGENCY
VALVES NEGOTIATING LEASES WITH HOME OWNERS, SUPERVISING ALTERATIONS TO
TAL STOCK TO THE SECRETARY of
PROVIDE ADDITIONAL DWELLINGS SPACE, RENTING TO - WORKERS, AND MANAGEMENT
THE TREASURY (FUNDS MADE
of PROPERTIES UNDER LEASE.
AVAILABLE BY RFC: AN EQUIVA-
LENT AMOUNT OF NOTES CANCELLED
BY THE SECRETARY of THE
TREASURY).
FEDERAL NATIONAL NORTGAGE
RECONSTRUCTION
PLACHASES MORTGAGES INSURED BY THE FEDERAL HOUSING ADMINISTRATION; MAKER
TITLE III OF THE
ADMINISTRATIVE FUNDR DERIVED
AUTHORIZED TO ISSUE AND HAVE OUT-
ASSOCIATION
FINANCE CORPORA-
AVAILABLE TO INDIVIDUALS AND INSTITUTIONAL INVESTORS DELIGATIONS ISSUED
NATIONAL HOUSING ACT,
FROM OPERATIONS AND SUBSCRI PTION
STANDING NOTES, DESENTURES, BoHoB,
TION, DEPARTMENT
BY THE ASSOCIATION,
JUNE 27, 1934
TO CAPITAL STOCK AND PAID-IN
OR OTHER BUCH DILIGATIONS NOT TO
of Company
(48 STAT. 1246, 0,847)
SURPLUS BY THE RECONSTRUCTION
EXCEED (1) TRENTY TIMES THE AMOUNT
FINANCE CORPORATION,
of ITS PRID-UP CAPITAL AND BIRPLUS,
AND is NO EVENT TO EXCEED (2) THE
CURRENT UNPAID PRINCIPAL of MORT-
GAGES HELD BY If PLUS THE AMOUNT
of ITS CASH ON HAND AND THE VALUE
OF ITS INVESTMENTS, SUCH 08,164-
TIONS ARE NOT SUARANTEED BY THE
UNITED STATES.
THE R.F.C. MIRTGAGE COMPANY
RECONSTRUCTION
MAKES LOANS ON INCOME PRODUCING PROPERTIES, EITHER FOR CONSTRUCTION on
Stc. 50 or THE RE-
ADMINISTRATIVE FUNDS DERIVED
No AUTHORITY TO ISSUE GUARANTEED
FINANCE CORPORA-
REFINANCING; PURCHASES MORTGAGES ON PROPERTIES INSURED UNDER TITLES I
CONSTRUCTION FINANCE
FROM OPERATIONS, SALE OF its
OBLIGATIONS,
TION, DEPARTMENT
AND IV OF THE NATIONAL Housing ACT, ALSO MAKES LOANS TO DISTRESSED
CORPORATION ACT,
STOCK AND FROM
OF COMMERCE
HOLDERS IF FIRST MORTGAGE BONDS AND CERTIFICATES,
JANUARY 31, 1935
THE RECONSTRUCTION FINANCE
(49 STAT, 31
CORPORATION,
EXPORT-EMPORT BANK OF
FOREIGN Econ.
ENDASED IN GENERAL BANKING; PURCHASES, SELLS, RENEGOTIATES, AND 018-
EXECUTIVE ORDER 6501,
ADMINISTRATIVE FUNCS DERIVED
AUTHORIZED TO BORROW FROM THE
BORROWINGS ARE BUBJECT TO APPROVAL
EASHINGTON
DUIC ADMINIS-
COUNTS, NOTES, DRAFTS, BILLS OF EXCHANGE, ACCEPTANCES, AND OTHER
FEBRUARY 2, 1934
PROM CARNINGS ON LOANS, FROM
RECONSTRUCTION FINANCE CORPORA-
OF THE SECRETARY OF THE TREASURY,
TRATION
EVIDENCE IF INDESTEDNESS; ISSUES LETTERS of CREDIT AND LENOS MONEY IN
ISSUED UNDER NATIONAL
SALE OF CAPITAL STOCK TO AND
TION BICK REQUESTED BY THE SECRE-
ASSISTING in THE DEVELOPMENT or FOREIGN TRADE; WAKES ADDITIONAL CREDITS
INDUSTRIAL RECEVERY
THROUGH GORROWINGS FROM RE-
TARY of THE TREASURY WITH THE
AVAILABLE TO COUNTRIES of THE WESTERN HENISPHERE FOR THE PRODUCTION OF
ACT JUNE 16, 1933
CONSTRUCTION FINANCE CORPORA.
APPROVAL OF THE PREDIDENT BY
STRATEGIC AND CRITICAL MATERIALS AND TO IMPROVE AND EXTEND TRANSPORTA-
(48 STAT, 195,800,2(a))
TION,
LOANS on SALE OF PREFERRED BTOCK
TION FACILITIES; AND MAKES LOANS TO ASSIST THE STABILIZATION or ECONOMIES
TO AM AMOUNT NOT EXCESSING
OF THE UNITED NATIONS,
$700,000,000.
BAR DEPARTMENT
MAR DEPARTMENT
QUARANTEED LOANS ARRANGED BY FEDERAL RESERVE BANKS TO CONTRACTORS, sue-
AUTHORIZED IN APPROPRIA-
CONTRACTORS, AND OTHERS ENGAGED IN BUSINESS OR OPERATIONS DEEMED TO at
TION ACTS IF DEPARTMENT
MAYY DEPARTMENT
NAVY DEPARTMENT)
NECESSARY, APPROPRIATE, OR CONVENIENT FOR THE PROSECUTION or THE MAR,
OR AGENCY,
UNITED STATES WAITINE
INDEPENDENT
MISSION
187
LENDING AGENCIES
Basic
Source of
Parent
Functions of Fiscal Interest
Authority for
Administrative
Borroning Power
Organisation
Functions
Punis
Commodity Credit Corpora-
Mr. Food M-
Finances the purchase of food, feed and fibers for lend-lease export,
National Intus-
Original capital by allow-
May Lowe bonds, notes, -
Annual appricals of assets made by
tim
ministration,
and helps to finance the dometic production of commodities formarly
trial Recevery
tion from National Infor-
bentares and sizilar obliga-
Secretary of the Treasury under 40%
Agriculture
Laported. Prior to the war use engiged principally in making loans
Act (48 Stat.
trial Bacovery funds. M-
dons within limitation fixed
of March 8, 1938 as basis for ap-
to famore on agricultural comodities stored on farms and in was
195)
ditional capital asheribed
by Act of July 16, 1943. All
propriations to restore capital 1
bosses, to stabilise the price of farm production, being about or-
by Reconstruction Finance
borrowings mibject se ap-
paiment or for return of 010400
derly marketing thereof and accumulate supplies during years of abun-
Corporation for which R.F.
proval of Secretary of the
earnings to Treasury,
danse for see in years of shortage. During the war operations were
c. notes were cancelled.
Treasury. Outranteed by
expended to increase production of food, feed, and fiber for war
Appropriations by Congress
D. a.
needs, loan, purchase, and sales programs are in operation.
for restoration of capital
Agricultural commodities accumulated under loan and purchase programs
inpairment on basis of -
are sold for agricultural and industrial uses, Programs are deter-
mal approisale by Secre-
mined by Mar Food Administrator subject to approval of the President.
tary of the Treasury.
7am Security Administra-
1er Food M-
Makes rehabilitation loans to low income farm families and also loans
Emergency Helief
Appropriations of Congress.
Punde for loans obtained by
Collections deposited in Treasury
tim
ministration,
to cooperatives for relocation corporations. Provides shalter, medi-
Appropriation Ad
advances from R.Y.C. 8
for repayment to N.F.C. with azossa
Agriculture
oal are, and maitary facilities for sigrent workers. Sandles the
of April 5, 1935
notes secured by the assets
reverting to General Fund.
liquidation of resettlement projects started under original program
(49 Stat. 115)
of the Fara Security Main-
of the administration. Makes loans and supplies technical sexis-
and Executive on
istration.
tance to farmers in the wastern states under . water facilities, can-
der 7027 of
version, and utilization program.
April 30, 1935.
Regional Agriculture
Fars Credit Ad-
Formerly in liquidation. One corporation reactivated for DEF ao-
Emergency Relief
Capital and administrative
May discount or borrow with
Credit Corporation
ministration,
tivity in financing production of essential war-time food and fiber.
and Recometruc-
expenses supplies by Be-
the approval of the Governor
Agriculture
Loans are made in certain regions on all crops and in some regions
tion Act of 1932
construction Finance Cor-
of the Farm Credit Address-
8 specified crops upon recomendation of the War Food Administrator.
(12 U.S.C. 1148)
poration for which R.P.C.
tration, from the Becon-
notes are cancelled by
struction Pinance Corpora-
Treasury.
tion or Federal Internadiate
Credit Banks.
Federal Para Mortgage
Agriculture
Makes first and second mortgage loans on farm property up to 75 per
Federal Form
Original subscription of
May issue bonds guaranteed
Secretary of the Treasury or as
Corporation
cent of appeaded normal value. The funds for the land bank comis-
Nortgage Act
capital stock by Recon-
by the United States up to
officer of the Treasury designated
aloner loans are furnished by the corporation and such loans become
(12 U.S.C. 1020)
structi on Finance Corpora-
given lisitation. Such
by his is a under of the Board of
its property. Also assists in financing operations of Federal Land
tion, for which B.F.C.
bonds may be Larged in much
Directors,
Banks.
notes were cancelled by
mmer and sold at much
Treasury.
price an say be prescribed
by the corporation with the
approval of the Secretary
of the Treasury.
Para Credit Addinistra-
Agriculture
Make loans to farmers for the production and orderly marketing of
Act of June 15,
Assessment against member
ties
certain farm products, from the Agrioultural Market Act Revolving
1929 (46 Stat.
institutions of Para Credit
Fund; and makes loans to farmers for any purpose in connection with
14) and Act of
system for supervision and
producing and marketing aropa, from energency crop and feel loan
July 1, 1918
amminations.
appropriations. Also mine Land Bank Commissioner's loans through
(40 Stat, 635)
the Federal Yes Mortgage Corporation.
Rural Electrification
Agriculture
Provides complete financing for rural electric systems determined
Emergency Relief
Annual appropriation of
May borrow under Congres-
Administration
to be sound financial risks. Such loans finance construction and
Appropriation
Congress.
etemal limitation for 11a
operation of distribution lines to reach local populations and may
Act of 1935 (49
landing program. Bach ber-
be made to finance generating plants and transmission lines when
Stat. 114) and
rowings being made mile-
necessary) to provide REA-Clnance distribution system with adequate
Executive Order
ble through loans from the
power at reasonable rates. Such loans are made to persons, public
7037 of May 11,
Reconstruction Finance Cor-
bedies, occoperatives, non-profit and limited-dividend associations.
1935. Statutory
poration upon approval of
Loans may also be made for wiring, appliances and plumbing on pro-
recognition in
the President.
party of rural consumers and to finance purchase and installation
REA Act of May 2,
of electrical and plumbing appliances.
1936 (7 U.S.C.
901)
baster Loan Corpora-
Commiss
Provides loans for rehabilitation of property damaged or destroyed
Act of February Il,
Original subscription to
Board of Directors appointed by the
tim
by floods or other cetastrophes in years 1936 to January 22, 1947.
1937 as mended
capital stock by Becom-
Reconstruction Pinance Corporation.
as U.S.C. 605)
struction Pinance Corpo-
ration for which Becom-
struction Times Curpo-
ration notes was -
called upon transfer and
delivery of stock to
Secretary of the Treasury.
Barnings of corporation.
Regraded Unclassified
a
188
III.
LENDING AGENCIES
Basic
Source of
Parent
Functions of Fiscal Interest
Authority for
Administrative
Borrowing Power
Resario
Organisation
Punctions
Funds
Smaller Mar Plante Corpo-
War Production
Mobilises production espacity of mall business concerns to be used
Act of June 11,
Capital provided by appro-
Board of Directors appointed by Chedr-
ration
Board
effectively to sugart war production. In furtherance of this, takes
1942 (50 U.S.C.
priation of Congress.
- of War Production Board.
prime contracts and sub-contracts, leases machinery, lende money,
1104)
Earnings of corporation.
side in the disposal of surplus asterial and equipment to small busi-
mess, and assiste in the solution of technical and financial prob-
leas. Also arranges for securing of contracts by mall business by
recomendation and assistance in negotiation. Participates with
other agencies in facilitating the prompt and equitable settlement
of claims of mall prime and sub-contractors arising from termina-
tion of var contracts.
Federal Public Housing
National Hous-
Provides housing for persons engaged in war activities in localities
U. 8. Housting
Original subscription to
Within prescribed limite-
Authority
ing Agency
in which the President finds that an acute shortage of housing -
Act of 1927 (42
capital stock by Secre-
tion may issue notes, de-
1ste or impends which would impede war activities, and 10 authorised
U.S.C. 1403)
tary of the Treasury. He-
bentures or other obliga-
to acquire land and to construct and operate projects to provide
ceives appropriations for
tions guaranteed by the
such war housing. In this connection 10 authorised to utilise local
capital loans and annual
United States with appro-
public housing agencies in construction and operation of projecta,
subsidies to leml public
al of the Secretary of
and to revive contracts for financial assistance previously entered
housing agencies. Funds
the Treasury.
into with local public housing agencies in connection with low rent
for administrative ex-
housing and slow clearance projects in areas necessary to provide
panas deposited with
public housing for var workers. Also contracts for financial assis-
Treasury from funds of
tance (in form of capital loans and annual subsidies) to aid local
the corporation.
public housing agencies in development and administration of 100-
rent housing and alum clearance projects of the former U. S. Hous-
ing Authority. Administere non-farm housing projecte developed by
Farm Security Administration for families not deriving principal in-
come from operation of farms. Now performs functions, powers and
duties relating to public housing projects performed by Federal
Works Agencies.
Division of Territories
Interior
Makes adjustments and collections on debte owed by farmers of
Public Resolu-
Appropriations of Congress.
and Island Possessione,
Puerto Rico to the United States.
tione 59 (4/9
Puerto Rico Burricane
Stat. 926) 60
Relief Loan Section
(49 Stat. 928)
August 27, 1935
Office of Indian Af-
Interior
Provides funds for financing Indians in farming, stock raising, and
Appropriations of Congress.
faire
other enterprises, educational purposes and to assist old and indi-
gent Indians who have trust 1and and no other source of liability.
Tynnessee Valley Asso-
Independent
Administers a grant to the State of Ternessee by the Federal Emer-
Capital provided by Fed-
Capital stock owned by United States.
jated Cooperatives,
gency Ralief Administration for use in financing cooperatives in
eral Emergency Relief Ad-
Inc.
Tennessee Valley area.
ministration grant. Earn-
ings of corporation.
183
INSURANCE AGENCIES
Basic
Source of
Parent
Organization
Functions of Fiscal Interest
Authority for
Administrative
Borrowing Power
Unurks
Functions
Punda
Federal Deposit Insurance
Independent
Insures deposite (up to $5,000 for each depositor) of all banks -
Banking Act of
(a) Original subscription to
May 1ssue debentures or
Funda of corporation deposited with
titled to insurance benefits; pays off depositors of insured banks
1933
capital stock by Secre-
other obligations not to
Treasurer of V. 8. Borrowings, if
Company
closed without adequate provision for claims; acts - receiver for
(12 U.S.C.)
tary of Treasury (from
exceed more than , times
required, subject to approval of
muspended national banks and also for etate banks when appointed;
appropriation) and by
amount received in payment
Secretary of Treasury.
and prevente development and continuance of unsafe or unsound bank-
Federal Reserve Banks.
of capital stock and -
1mg practices. May mike loans or purchase somete of insured banks
(b) Assessments against in-
reseauts on banks for the
to facilitate margers or consolidations. Examines insured banks
sured banks and earnings
year 1936. No guarantee
not assibere of Federal Recerve System and national banks or member
of corporation.
by 0. s.
banks of Federal Reserve System by written consent of authorities
having jurisdiction.
Federal Savings and Loan
Federal Home
Quarantees safety of repurchasable (withdrawable) investments and
Title IV of No-
(a) Original subscription to
May 1ssue notes, bonds, or
Funds deposited with Treasurer of
Insurance Corporation
Loan Bank M-
credited earnings up to $5,000 for each investor in insured thrift
tional Housing
capital stock by time.
debentures under each terms
c. 8.
ministration,
and home finanding institutions. All Federal savings and loan M-
Lot, June 27,
Omere Loan Corporation
and conditions 68 the Fed-
National Hous-
sociations are insured, and state chartered building and loan,
1934
(b) Earnings of corporation.
eral Home Loan Bank Commis-
ing Agency
savings and loan, and homestead associations, and cooperative banks
(12 U.S.C.
sicner my determine. No
are eligible for insurance. May naice loans to, med purchase seneta
1724)
guarantee by U. 5.
of, or contribute to insured institutions to prevent default.
Federal Housing Adminis-
National Hous-
Insures lending institutions against losses incurred on two general
National Hous-
The autual mortgage insur-
May Lerus debentures par-
tration
ing Agency
types of loans Those for the repair, alteration, or improvement
ing Act, June 27,
ance fund, the housing in-
anteed by the United States,
of real property which any or any not be secured by collateral
1934, (12 U.S.C.
surance fund, premiums col-
in payment of insured losses
and those secured by mortgages on structures designed primarily
1702)
lected under authority of
there are various limits-
for residential me. The insured institutions are banks, trust
Sec. 2 (f) Title I, of the
time on the amount which
companies, personal finance companies, mortgage companies, build-
national hour ing act, as
can be issued against the
Ing and loan associations, etc. For the duration of the war new
aanded and war housting 10-
various funds.
construction 18 limited to defense areas.
surance funds are available
for administrative expenses
of the Federal Housing M-
admistration.
War Damage Corporation
Reconstru-
Provides, through insurance, reinsurance, or otherwise, reason-
Section 5 (d)
Original subscription to
tim Finance
able protection against loss of or damage to property, real and
of the Recon-
capital stock and paid-in
Corporation
personal, which may result from energy attach, including any so-
struction n-
surplus by Reconstruction
(subsidiary)
tion taken by the military, neval, or air forces of the United
nance Corpora-
Pinance Corporation. Karn-
States in resisting - attack. Utilises facilities of casualty
tion Act, as
ings of corporation.
insurance companies wid ch participate with the corporation in the
emended, and
net operating gain or loss arising from insurance.
5 (g) of the
Reconstruction
Pinance Corpo-
ration Act as
mended.
Federal Crop Insurance
Agriculture
Provides insurance protection to whest and cotton growere against
Federal Crop
Annual appropriation of
Corporation (in liqui-
unavoidable basards
Insurance Act of
Congress. Predus colleo-
dation)
February 16, 1938 tions were calculated to
as amended (7 D. pay indemities.
s.c. 1940)
Veterans Administration
Independent
Administers provisions of Title III of World Mar Veterans Act of
World Mar Vet-
Appropriations of Congress.
Investments of moneys of insurance
1924 relative to insurance of National Service Life Insurance Ast
erans Act, 1924
funda made by the Secretary of the
of 1940, of the Soldiers and Sailors Civil Halief 4dt of 1940
(38 U.S.C. 421)
Treasury.
and the adjudication of claims for benefits therwunder and for
National Service
the issuance of certificates and the preparetion and adjudication
Life Insurance
of all claims for adjusted compensation benefits.
Act of 1930 (30
U.S.C. 801) and
Soldiers and
Sailors Civil No-
lief Lot of 1940
(50 U.S.C. 540)
This agency has insurance functions
Shipping Addinistra-
which are explained with the other
fanctions of agencies under the
beading "Other Agencies."
U. s. Maritime Commission
This spring bas insurance functions
which are explained with the other
functions of agencies under the
heading "Other Agencies."
190
UTILITIES
BASIC
SOURCES OF
AUTHORITY For
ADMINISTRATIVE
FARENT
FUNCTIONS of FISCAL INTEREST
FUNCTIONS
Fues
ORGANIZATION
SURROWING POWER
REMARKS
INLAND WATERMAYS CORPORATION
DEPARTMENT OF
OPERATED GOVERNMENT-OWNED INLAND, CANAL, AND COAST WIDE WATERMAYS EYSTEM AS
ACT OF CONGRESS, JUNE
ADMINISTRATIVE FUNDS PROVIDED
MAY INCUR OBLIGATIONS, BORROW MONEY
COMMERCE
A COMMON CARRIER IN THE TRANSPORTATION OF FREIGHT - THE MISSISSIPPI RIVER;
3, 1924 (4) U.S.C. 1541
BY INCOME FROM OPERATIONS, AND
FOR TEMPORARY PURPOSER, AND ISSUE
ON THE ILLINOIS MATERMAYS) ON THE MISSOURI RIVER; - THE BARRICR RIVER SYSTEM,
43 STAT. 3601
INVESTMENTS,
NOTES - OTHER EVIDENCER of INDEST-
AND IT# SUBSIDIARY, THE MARRIOR RIVER TERMINAL COMPANY AS À BRITCHING FACILITY
COMESS THEREFOR, NOT TO EXCEED
BETWEEN PORT DIRMINSHAM, ALABAMA AND PORT ENGLEY, ALABAMA,
TRENTY-FIVE PERCENTUM of THE ASSETS,
FANAMA RAILROAD COMPANY
INDEPDODIT
OPERATES MAILRIAD, STEAMENT LINES, TERMINALS, HOTELS, ETC,
ACT OF JUNE 28, 1902
ADMINISTRATIVE FUNDS PROVIDED
De STAT, 481)
FROM OPERATING REVENUE. CER-
TAIN ADVANCES WERE MADE FROM
APPROPRIATED FUNDS FOR WHICH
NOTES OF THE COMPANY WERE
GIVEN TO THE UNITED STATES.
TENNESSEE VALLEY AUTHORITY
INDEPENDENT
MAINTAINS AND OPERATER A MERICO OF DAMS; GENERATES AND DISTRIBUTED ELECTRIC
ACT of MAY 18, 1933
ADMINISTRATIVE FUNDS PROVIDED
AUTHORIZATION To save BONCO NOT TO
APPROVAL OF THE SECRETARY of THE
POWER DEVELOPS, MANUFACTURES, AND TESTS FERTILIZER; ENGAGED IN THE MANU-
(48 STAT, 30)
FROM OPERATING INCOME, DIRECT
EXCESS $61,300,000 EXPIRED ON JANU-
TREASURY REQUIRED ON ALL FINANCING,
FACTURE OF BAR MATERIALS, AND WAKES LOANS TO MUNICIPALITIES AND COOPERATIVER.
APPROPRIATIONS, AND ALLOCA-
ARY " 1941 (5) STAT, *005) EXCEPT
TIONS FROM FUNDS APPROPRIATED
FOR REFUNDING PURPOSES OR TO PRO-
TO THE PRESIDENT.
VIDE FUNDS FOR CONTRACTS ENTERED
INTO PRIOR TO JANUARY " 1941.
ALABIA RAILROAD
DIVISION OF
MAINTAINS AND OPERATES RAILROADS, RIVER SOATS, HOTELS, HOSPITALS, AND PRO-
ACT OF MARCH 12, 1914
PROVIDED FROM OPERATING
TERRITORIES AND
MOTER ALABKAN AGRICULTURAL AND INDUSTRIAL DEVELOPMENT.
(30 STAT. 3051
INCOME.
ISLAND Possess-
IONS; DEPARTMENT
OF THE INTERIOR
191
VI
OTHER
BEET is
BABIC
SOURCES OF
AUTHORITY FOR
ADMINISTRATIVE
PARENT
FURCTIONS
Funce
SCRADMING FORER
REMARKS
ORGANIZATION
FUNCTIONS OF FISCAL INTEREST
EXPERIMENTAL DESIGN, ENGINEERING AND CONSTRUCTION IN INTERCRAFT AND AIR-
05 U.S.C. 606s)
ALLOCATIONS FROM LEND-LEASE
DAMAGES, INC.
FOREIGN ECONOMIC
APPROPRIATIONS,
(se LIQUIDATION)
ADMINISTRATION
CRAFT FOR MAR AND COMMERCE.
ACQUIRES RESERVES OF CRUDE PETROLEUM FROM SOURCES OUTSIDE THE UNITED STATES,
SECTION 5 (0)
ORIGINAL SUBSCRIPTION TO
AUTHORIZED TM BORROW FROM RECON-
PETROLEUM RESERVES
FOREIGN Ecunomic
CORPORATION
ADMINISTRATION
INCLUDING THE PURCHASE OF STOCK IN CORPORATIONS OWNING BUCK RESERVES OR
RECONSTRUCTION
CAPITAL STOCK BY RECON-
STRUCTION FINANCE CURPORATION
INTERESTS THEREIN, AND STORES, TRANSPORTS, PRODUCES, MANUFACTURER,
FINANCE CORPORA-
STRUCTION FINANCE CORPORA-
WITHOUT LIMITATION,
M... WARKETS, AND OTHERWISE DISPOSES OF BUCH CRUDE METROLEUM AND PRODUCTS
TION ACT (1) U.S.C.
TION,
DERIVED THEREFROM. ALSO 18 AUTHORIZED TO CONSTRUCT AND OPERATE OUTSIDE THE
606 a)
UNITED STATES BUCH REFINERIED, PIPELINES, STORAGE TANKS AND OTHER FACILITIES
AS ARE NECESSARY UM CONNECTION WITH THE PROGRAM.
CAPITAL SUPPLIED BY RE-
AUTHORIZED to scanse FROM RECON-
Russon DEVELOPMENT
FOREIGN ECONOMIC
CARRIER ON ACTIVITIES RELATING TO EXPLORATION, DEVELOPMENT AND PROCUREMENT
PRIVATELY ORGANIZED
CORPORATION
ADMINISTRATION
IF CRUDE AUBBER, BALATA, CRYPTOSTERIA, QUAYULE, AND OTHER GUMB OF BINILAR
CORPORATION ACQUIRED
CONSTRUCTION FINANCE
STRUCTION FINANCE CORPORATION
UTILITY EN AREAS OUTSIDE THE CONTINENTAL UNITED STATES. ALSO PROCURES
BY THE DEFENSE SUPP.
CORPORATION,
UNDER TERMS AND CONDITIONS DE-
LIQUID LATEX, SCRAP RUBBER AND RUSSER PRODUCTS IN FOREIGN COUNTRIES,
LIEB CORPORATION AND
TERMINED BY DIRECTOR OF BM
TRANSFERRED TO RE-
MOBILIZATION,
CONSTRUCTION FINANCE
CORPORATION, SECTION
5 (D) RECONSTRUCTION
FINANCE CORPORATION
ACT (15 U.S.C. 6060)
UNITED STATES COUNER-
FOREIGN ECONOMIC
SERVES AS CORPORATE AGENT OF FOREIGN ECONOMIC ADMINISTRATION FOR PROCURE-
SECTION , (o)
CAPITAL IMPPLIED BY RE-
UNLIMITED BORRDRING POWER FROM
BIAL COMPANY
ADMINISTRATION
MENT AND DEVELOPMENT OF STRATEGIC MATERIAL AND ESSENTIAL F000 STUFFS OUT-
RECONSTRUCTION
CONSTRUCTION FINANCE
RECONSTRUCTION FINANCE CORPORA-
SIDE THE UNITED STATES. THE OPERATION OF CERTAIN SPECIAL PROJECTS FOR
FINANCE CORPORATION
CORPORATION,
THEN,
THE ARMY AND NAVY IN WAR ZONES, THE EXECUTION or CERTAIN KINDS of ECONOMIC
ACT 115 U.S.C. 606e)
MARFARE AGAINST THE ENEMY AND FACILITATES TRADE WITH AREAS WITH WHICH
DIRECT COMMERCIAL DEALINGS HAVE BEEN CUT OFF OR RESTRICTED BY MAR,
LEND-LEASE ADMINISTRATION
FOREIGN ECONOMIC
CARRIER - PROGRAM RELATING TO MALE, TRANSFER, EXCHANGE, LEASE-LEND, on
LEASE-LEND ACT,
APPROPRIATIONS of Con-
ADMINISTRATION
DISPOSING OTHERWISE TO THE GOVERNMENT If ANY COUNTRY WHOSE DEFENSE THE
(22 U.S.C. 411)
GRESS,
PRESIDENT DEENS VITAL TO THE DEFENSE OF THE UNITED STATES. ANY "BEFENSE
ARTICLET WITHIN THE MEANING or THE LEND-LEASE ACT,
DEFENSE SUPPLIER
RECONSTRUCTION
EMAGES is PRODUCTION AND ACQUISITION OF STRATEGIC AND CRITICAL MATERIAL,
SECTION 3 (a) OF
CAPITAL SUPPLIES BY RE-
UNLIMITED AUTHORITY TO BORROR
CORPORATION
FINANCE CORPORA-
BOTH DOMENTIC AND FOREIGN, MAKES LEANS TO PRIVATE ENTERPRISES TO FINANCE,
RECONSTRUCTION
CONSTRUCTION FINANCE
FROM RECONSTRUCTION FINANCE
TION
DEVELOP, PRODUCE AND TRANSPORT MAR MATERIALS.
FINANCE CORPORATION
CORPORATION.
CORPORATION.
ACT (15 U.S.C 606e)
METALS RESERVE COMPANY
RECONSTRUCTION
ENGAGES IN PRODUCTION, ACQUISITION, STORING, BELLING AND OTHERWISE DEAL-
SECTION 5 (o) of
CAPITAL SUPPLIED BY RE-
UNLIMITED AUTHORITY TO BORROW
FINANCE CORPORA-
INS in STRATEGIC AND CRITICAL MATERIALS (PRIMARILY METALS AND MINEMALS)
RECONSTRUCTION
CONSTRUCTION FINANCE
FROM RECONSTRUCTION FINANCE
TION
NECESSARY in COMMECTION WITH THE MAR PROGRAM.
FINANCE CORPORATION
CORPORATION.
CORPORATION.
ACT (15 U.S.C.606a)
Ruance RESERVE COMPANY
RECONSTRUCTION
ACQUIRES RESERVE STOCKS OF CRUDE RUBBER UNDER CONTRACT in THE MARKET,
SECTION 5 (o) -
CAPITAL SUPPLIED BY RE-
UNLIMITED AUTHORITY TO somez
FINANCE Compons-
EMPORTS cause PUBSER AND ACTS AS DISTRIBUTOR TO THE RUNGER INDUSTRY.
RECONSTRUCTION
CONSTRUCTION FINANCE
FROM RECONSTRUCTION FINANCE
TION
ARRANGES FOR THE CONSTRUCTION of OPENITING AND MANUFACTURING PLANTS
FINANCE COMPORATION
CARPORATION.
CORPORATION.
THROUGH THE MEDICATION OF CONTRACTS AND FINANCING OF EXPENDITURES,
ACT DIE U.S.C. 606m)
PURCHASES, UNDER CONTRACT, BCRAP FOR DISTRIBUTION TO THE RUBSER
REGLAIMING INDUSTRY,
INTER-AMERICAN NAVISATION
OFFICE OF Co-
SUPPLEMENTS EXISTING FACILITIES WITH A. SMALL-CARGO YESIG. PROGRAM BY
ACT of JULY 25,1942
ADMINISTRATIVE FUNDS
ORDINATOR of
MEANS OF CONTRACTS EXECUTED WITH LOCAL SHIPSUILDING AND SHIP REPAIRING
156 STAT. 2077
SUPPLIES FROM SALE of
CORPORATION
(in LIQUISATION)
INTER-AMERICAN
FIRES, Now IN LIQUIDATION.
ETOCK TO THE GIVERN-
MENT AND DORROWINGS
AFFAIRS
FROM THE RECONSTRUCTION
FINANCE CORPORATION.
INSTITUTE IF INTER-
OFFICE of Co-
OPERATES PROJECTS FOR MALARIAL CONTROL, IMPROVEMENT of WATER SUPPLIES,
ACT OF DECEMBER 17,
Fumps SUPPLIED BY
ORDINATOR of
CONSTRUCTION OF SENAGE SYSTEMS, AND OTHER PROJECTS CENTERED ARGUND
1941 (5) STAT. ma)
ALLOGATION Pass THE
AMERICAN AFFAIRS
INTER-AMERICAN
AREAS OF STRATEGIC MILITARY IMPORTANCE IN SOUTH AND CENTRAL AMERICA,
OFFICE OF THE Ca-
ORDINATOR OF INTER-
APPAIRS
AMERICAN AFFAIRS,
192
VI.
OTHER (CONTINUED)
BEST #
BASIC
SOURCES of
PARENT
AUTHORITY For
ADMINISTRATIVE
ORGANIZATION
FUNCTIONS of FISCAL INTEREST
FUNCTIONS
FUNDS
BORROWLED FOWER
REMAND
INSERTUTE IF limit-
OFFICE of Ca-
IN ORDER TO ASSIST AND IMPROVE MEANS AND METHODS or TRANSPORTATION IN THE RESTERN
JUNE 26, 1942
FUNDS ARE PROVIDED BY
ANTRISAN TRANSPORTATION
ORDINATOR OF
HENISPHERE, - POWER TO - use OR CONSTRUCT, PURCHASE, LEASE, CHARTER, SELL,
(56 STAT, 996)
ALLOCATIONS out OF AP+
INTER-AMERICAN
OPERATE, OR DEAL IN MEANS, METHODS, OR AID, of TRANSPORTATION OR CONVEYANCE;
PROPRIATIONS TO THE
AFFAIRS
PARTICULARLY THE REMISILITATION OF THE MEXICAN NATIONAL RAILWAYS,
CORBINATOR AND TO
THE PRESIDENT'S
EMERGENCY FUNDS,
live,
OFFICE of Ca-
ASSISTS IN DISSENINATION AND INTERCHANGE of INFORMATION THROUGH THE DEVELOPMENT
JULY 20, 1942
Funce ARE PROVIDED BY
ORDINATOR of
AND OPERATION of COMMUNICATION FACILITIES IN SOUTH AMERICAN COUNTRIER.
(5) STAT, aig)
ALLOCATIONS OUT OF AP-
INTER-AMERICAN
PROPRIATIONS TO THE Co-
Arrains
ORDINATOR AND TO THE
PRESIDENT'S EMERGENCY
FUNDS,
PUERTO RICAR RECONSTRUCTION
DEPARTMENT OF
INITIATED IMQUECTS FOR BOTH RELIEF AND PERMANENT FINANCES
ACT OF APRIL 8,
Funce PROVIDED BY DIRECT
ADMINISTRATION
THE INTERIOR
BUGAR, WILK, AGRICULTURAL, AND OTHER CROPS, CONSTRUCTS MOADS, COMUNITY CENTERS,
1935 (49 STAT,115)
APPRSPRIATION AND ALLOCA-
BUILDINGS, AND IMPROVEMENTS,
TIONS,
BRIN ISLANDS Country
DEPARTMENT OF
Spenates BUGAR CAME PLANTATIONS, SUGAR FACTORIES AND DISTILLERIES,
ACT of MAY 12, 1933
FUNDS PROVIDED BY ALLOCA-
BAY BORROW or RAISE MONEY FOR ANY
THE INTERIOR
(15 U.S.C. 724)
TIGN AND TRANSFER or AP-
IF THE PURPOSES OF THE CORPORATION
PROPRIATIONS FROM OTHER
WITHOUT LIMIT AS TO AMOUNT. THESE
AGENCIES,
DORROWINGS ARE NOT SUARANTEED BY
THE UNITED STATES.
FEDERAL SUMPLUB COMMODITIES
MAR Food ADMINIS-
CRIGINALLY CONCERNED WITH RELIEF AND I I SPORAL of SURPLUS AGRICULTURAL COMMODITIES, FEDERAL EMERGENCY
ORIGINALLY GRANTS FROM
BORROWINGS HAVE BEEN MADE FROM RE-
CORPORATION
TRATION,
LATTERLY CONCERNED WITH TEXAS TIMER SALVAGE AND A GENERAL COMMUDITY PURCHASE
RELIEF ACT OF 1933
FEDERAL ENERGENCY RE-
CONSTRUCTION FINANCE COMPORATION
AGRICULTURE
PROGRAM FOR LEND-LEASE,
115 U.S.C. 7213
LIEF ADMINISTRATION,
AND DISASTER LOAN COMPORATION.
LATER TRANSFERS OF FUNDS
FROM APPROPRIATIONS
(Sec. 38 OF ACT OF AUG-
UST 24, 19251.
DEFENSE HOUCS CORPORATION
FEDERAL Puedic
ENGAGES IN CONSTRUCTION of require IN SAR PLANT AREAS AND OPERATION of COMPLETED
see. 5 (b) of RE-
CAPITAL FROM APPROPRIATED
CONFINES ITS SUPPORTINGS FROM RE-
HOUSING AUTHORITY,
HOUSING IN A RENTAL BASIS,
CONSTRUCTION Fin-
FUNDS,
CONSTRUCTION FINANCE CORPORATION.
NATIONAL Housing
ANCE CORPORATION
ASENCY
ACT (15 U.S.C.606)
OFFICE of ALIEN PROPERTY
OFFICE FOR
CONTROLS on VENTA FOREIGN ONED PROPERTY AND ONCE VESTED SICH PROPERTY is HELD,
TRADING WITH THE
APPROPRIATIONS OF COMBRESS,
LIAISON WITH TREASURY DEPARTMENT ON
CURTROIAN
EMERGENCY
USED, ADMINISTERED, LIQUIDATED, BOLD IN OTHERWISE DEALT with IN THE INTEREST
ENEWY ACT, AS
WATTERS AFFECTING FOREIGN FUNDS CONTROL.
MANAGEMENT
AND FOR THE BENEFIT OF THE INITED STATES.
AMENDED
CERTIFICATION MADE TO SECRETARY OF
TREASURY AS TO NECESSARY PROPOSED ACTION
IN CASE of BUBLINESS ENTERPRISES OF
FOREIGN NATIONALE.
MAN RELICATION AUTHORITY
OFFICE FOR
PROVIDES FOR REMOVAL FROM DESIGNATED AREAS OF PERSONS WHOLE REMOVAL is NECESSARY
EXECUTIVE ORDER 9102
APPROPRIATIONS OF CONGRESS.
ENGINENCY
IN THE INTEREST OF NATIONAL SECURITY, AND FOR THEIR RELOCATION WAINTENANCE AND
OF MARCH 18, 1942
MANAGEMENT
SUPERVISION. NAME BUCH EXPINDITURES, INCLUDING THE MAKING OF LOANS AND GRANTS
AND THE PURCHASE OF REAL PROPERTY AS MAY IC NECESSARY,
WAR SHIPPING ADMINISTRATION
OFFICE FOR
CONTROLS THE SPERATION, PURCHASE, CHARTER, REQUISITION, AND USE of ALL DOEAN
EXECUTIVE ORDER 9034
CHIEF SOURCE FUNDS APPROPRIA-
COLLABORATES WITH MILITARY, NAVAL
EMERGENCY
VESSELS UNDER CONTROL OF THE UNITED STATES EXCEPT COMBATANT AND AURILLART
ISSUED UNDER FINST
TIONS or CONGRESS,
AND CIVIL DEPARTMENTS of GOVERNMENT
MANAGEMENT
VESSELS, AND EXCEPT VERSELS UNDER CONTROL OF OFFICE or DEFENSE TRANSPORTATION,
HAR POWERS ACT
PERFORMING FUNCTIONS WITH WARTINE
ALLOCATES VESSELS FOR USE BY ARWY, NAVY AND GOVERNMENTS of UNITED NATIONS.
OVERSEAS TRANSPORTATION,
PROVIDER MARINE INSURANCE AND REINSURANCE AGAINST LOSS on DAMAGE OF VESSELS.
REPRESENTS THE UNITED STATES IN DEALINE WITH BRITISH MINISTRY of BAR TAANSFORT
AND SINILAR ASENCIES OF ALLIED NATIONS, VESSELS UNDER CONTROL or THE ADMINIS-
TRATION CONSTITUTE A POOL TO BE ALLOCATED F OR use OF THE ARMY, NAVY AND OTHERS
IM COMPLIANCE WITH STRATEGIC MILITARY REQUIREMENTS.
La. MARITIME COMMISSION
INDEPENDENT
CARRIER OUT . LONG RANGE SHIP CONSTRUCTION PROGRAM SHICH - ACCELERATED BY THE
MERCHANT MARINE ACT
APPROPRIATIONS of CONGRESS,
UNDER LIMITATIONS MAY HOME
CHAIRMAN of THE COMMISSION IN co-
- THE GREAT BULK OF SHIPYARD FACILITIES UTILIZED EM THE MERCHANT SHIP BUILD-
1936 (46 U.S.C.III)
DESENTURES QUARANTEED BY
ORDINATION WITH SECRETARIES OF M
INC PROGRAM WERE CONSTRUCTED UNDER JURISDICTION of AND ARE OWNED BY THE COMMISSION,
UNITED STATES,
AND SAVY 18 AUTHORIZED TO RENEGOTIATE
GRANTS DIFFERENTIAL SUBSIDIES IN CONSTRUCTION AND OPERATION OF VESSELS TO BE
MAR CONTRACTS,
USED IN ESSENTIAL SERVICE ROUTES OR LINES IN FOREIGN COMMERCE of THE UNITED
STATES, TO AVOID HAVING UNICRS PLACED AT SUBSTANTIAL DISADVANTAGE IN COMPETITION
WITH CONSTRUCTION OR OPERATION or FOREIGN VERSELE, INSURER MORTGAGES - ALL
TYPES or PASSENGER AND CARGO VESSELS, TUGS, TONDOATS, BANGES, DREDGES, AND
FISHING VESSELS OWNED BY CITIZENS of THE UNITED STATES.
Regraded Unclassified
193
VI
OTHER (CONTINUED)
SHEET "
BABIC
SOURCES of
PARENT
AUTHORITY For
ADMINISTRATIVE
ORGANIZATION
FUNCTIONS of FISCAL INTEREST
FUNCTIONS
Fues
BORROWING POWER
REMARKS
FEDERAL PAISON
BUREAU If PRISONS,
PROVIDES EMPLOYMENT FOR INMATED of PRISONS INVOLVING THE PRODUCTION of
ACT of JUNE 13, 1934
ORIGINAL CAPITAL CREATED BY
INDUSTRIES, INC.
JUSTICE
ARTICLES FOR CONSUMPTION EM PRIDONE or FOR SALE TO FEDERAL ASENCIES, THIS
(10 U.S.C. 744)
TRANSFER of FUNDS AND ASSETS
INCLUDES MANUFACTURE IF ARTICLES or FORFORMANCE SERVICE FOR THE MAR AND
FROM PRISON INDUSTRIES BORK-
NAVY DEPARTMENTS, MERCHANT MARINE, AND COAST GUARD, SUCH AS OPERATING
INS CAPITAL FUND of INDUSTRIAL
LAUNDRIES, REMITATING MATERIALS, SALVAGING METALS, ETC.
DIVISION of BUREAU of PRISONS,
UNITED STATES Housing
FEDERAL HOME
PROVIDED HOUSING FOR MAR VONKERS IN WORLD MAR 1.
ACT APPROVED MAY
ORIGINAL CAPITAL PROVIDED BY
CORPORATION
LOAN BANK
16, 1918 (40 STAT.
APPROPRIATION OF CONGRESS,
(IN LIQUIDATION]
ADMINISTRATION,
350) AND ACT of
NATIONAL Housing
AND 4, 1918 (40
AGENCY
STAT. 5951
UNITED STATES SPRUCE
MAN DEPARTMENT
ENGAGED IN STIMULATION of SPRUCE PRODUCTION FOR AIRCRAFT PRODUCTION
ACT MAKING APPROP-
CAPITAL PROVIDED BY APPROP-
PRODUCTION CORPORATION
DURING WORLD SAM 1.
RIATIONS FOR SUPPORT
RIATION OF CONGRESS,
(IN LIQUIDATION)
OF THE ARMY (40
STAT. 888)
DEFENSE PLANT CORPORATION
RECONSTRUCTION
ENGAGES IN THE CREATION, EXPANSION, CONVERSION AND INANCING OF PLANTS
SECTION 5 (o) OF
CAPITAL SUPPLIED BY Rt-
UNLIMITED AUTHORITY TO BORROW FROM
FINANCE CORPORA-
AND FACILITIES FOR PRODUCTION AND DISTRIBUTION or WAR MATERIAL AND
RECONSTRUCTION
CONSTRUCTION FINANCE
RECONSTRUCTION FINANCE CORPORATION.
TION
SUPPLIER,
FINANCE CORPORA-
CORPORATION.
TION ACT (15 U.S.C.
606e)
194
VII.
NON-FISCAL TREASURY ACTIVITIES
FUNCTIONS
BASIC AUTHORITY FOR FUNCTIONS
BUREAU on OFFICE
PRODUREMENT DIVISION
DIRECTO THE NEGOTIATION OF CONTRACTS For SUPPLIER AND SERVICES FOR
EXECUTIVE ORDER No. 6:66 of Just 10, 1933,
GENERAL REQUIREMENTS OF THE GOVERNMENT, INCLUDING THE OPERATION IF
PURSUANT TO ACT of BARCH " 1933 (40 U.S.C.
VARIOUS CONTRIBUTING FUNCTIONS BUCH AS FEDERAL STANDARD STOCK CATALOG
270).
ACTIVITY AND FREIGHT RATE - TRAFFIC INFORMATION. SPECIFIES AND
DIRECTS MARCHOUSE ACTIVITIES IN BOTH BASHINGTON AND THE FIELD.
COORDINATES AND SUPERVISES THE DISPOSITION of SURPLUS, MIZED, AND
PARFEITED PROPERTY, PREPARES AND WAINTAINS CURRENT OFFICIAL SPEC-
IFICATIONS FOR REQUIREMENTS of COMMOITIES IN GOVERNMENT
use WHICH ARE MANDATORY FOR OBSERVATION is FEDERAL PROCUREMENT
ACTIVITIES. PROCURES STOCKS IF STRATEGIC AND CRITICAL WATERIAL,
AS BABICALLY APPROVED BY THE ARMY AND NAVY MANITIONS BOARD. Pag.
CURES ASSIGNED CLASSES of MATERIAL, EQUIPMENT AND SUPPLIES REQUIRED
FOR NATIONS ENTITLED TO BENEFITS of LEAGE-LEND ACT. Buys CLOTHING,
MEDICAL AND OTHER SUPPLIES FOR RELIEF of THE DESTITUTE FOR 018-
TRIBUTION BY THE RED Cassa OVERSEAS, REVESOTIATES CONTRACTS CON-
SUMMATED BY THE PROCUREMENT DIVISION IN COOPERATION WITH THE MAR
AND NAVY DEPARTMENTS AND THE UNITED STATES MARITINE COMMISSION.
BUREAU OF MARCOTICS
ENGAGED IN THE INVESTIGATION, DETECTION, AND PREVENTION of VIOLATIONS
ACT of JUNE 14, 1930 0 U.S.C. 182)
OF THE FEDERAL NARCOTIC AND MARIHUANA LAKI, AND THE OPIUM POPPY Con-
TROL ACT of 1942. ISSUES PERMITS TO IMPORT CRUDE NARCOTIC DRUGS AND
TO EXPORT DRUGS FOR PREPARATIONS MANUFACTURED THEREFROM UNDER LAW
AND DETERMINES QUANTITIES or DRUGS TO BE MANUFACTURED FOR MEDICAL
PURPOSES, ISSUES LICENSES FOR PRODUCTION of PEPPIES FOR MANUFACTURE
of OPIUM PRODUCTS INENEVER SUCH PRODUCTION AND MANUFACTURE 18 NECESSARY
FOR MEDICAL AND SCIENTIFIC NEEDS. IN COOPERITION WITH THE PUBLIC
HEALTH SERVICE DETERMINES QUANTITIES or CALICE OPIUM AND COCA LEAVES
TO BE IMPORTED FOR WEDICAL AND OTHER LEGITIMATE USES, CORPERATES WITH
THE DEPARTMENT of STATE IN DISCHARGE of INTERNATIONAL OBLIGATIONS
CONCERNING TRAFFIC IN NARCOTIC DRUGS AND SUPPRESSION OF ABUSE or BUCH
DRUGS,
UNITED STATES SECRET
HAS RESPONSIBILITY FOR PROTECTION of THE PRESIDENT, HIS FAMILY, AND
ACT OF JUNE 23, 1860 (12 STAT 102) AND ACT
SERVICE
THE PRESIDENT-ELECT. WAINTAINS THE PERMANENT POLICE FORCE FOR THE
OF JULY 11, 1852 (12 STAT 5331.
WHITE HOUSE. HAS RESPONSIBILITY FOR THE DETECTION, ARREST AND DE-
LIVERY TO THE PROPER JURISDICTION OF PERSONS ENGAGED IN THE COUNTER-
FEITING, FORGING, - ALTERING OF ANY of THE OBLIGATIONS OR OTHER
SECURITIES, AS WELL AS THE COINS, OF THE UNITED STATES OR OF FOREIGN
GOVERNMENTS. MAINTAINS FORCE FOR SAFEGUARDING THE PAPER CURRENCY
AND OTHER GOVERNMENT SECURITIES AND SELIGATIONS DURING PROCESS OF
MANUFACTURE AT THE BUREAU of ENGRAVING AND PRINTING AND IN DIS-
TRIBUTION TO GOVERNMENT AGENCIES IN MASHINGTON AND IN THE VAULTS OF
THE MONEY HANDLING DIVISIONS of THE TREASURY DEPARTMENT.
UNITED STATES COAST
DURING PEACETIVE IN RESPONSIBLE BROADLY FOR MARITINE LAW ENFORCE-
ACT of JANUARY 28, 1915 (14 U.S.C.I).
GUARD (REVERTS TO
WENT AND ASSISTING, SAVING, AND PROTECTING LIFE AND PROPERTY ON THE
TREASURY FROM NAVY
SEA AND EN NATIONAL EMERGENCIES AND DISASTERS, AND IN WAINTAINING
AFTER CLOSE OF WAR)
A STATE OF PREPAREONESS FOR NATIONAL DEFENSE, AN IMPORTANT FUNCTION
or THE COAST GUARD FROM THE STANDPOINT or THE TREASURY DEPARTMENT 18
THE PROTECTION OF THE GISTOMS REVENUE AND THE PREVENT or BWUGGLING
of NARCOTICS AND OTHER CONTRABAND.
195
November 2, 1944
4:25 p.m.
HMJr:
How are you?
Ambassador
Patterson:
You called me.
HMJr:
Well, the reason I'm calling you is that I'm
not going to have the pleasure of being able
to see you today and I won't be here on the
eighth.
P:
Yes.
HMJr:
So, therefore, I just wanted to call up and say,
"Hello".
P:
Well, that's fine.
HMJr:
And I wanted to wish you good luck.
P:
Oh, that's fine. I'm looking forward to it.
You tell Ellie I'm going across just like a
small boy with a great adventure and I'm all
crammed up. I've been through my basic training
and indoctrination here in office six weeks and
I've been thinking of you a good deal but I
didn't think you would want to call me in but
I just didn't know. I didn't want to leave the
country without reporting to the Secretary of
the Treasury.
HMJr:
Well, now, I don't know. of course, we do have
quite a number of people there with Winant
P:
Yes.
HMJr:
who do look after financial matters.
P:
Yeah.
HMJr:
And they are quite good.
P:
Yeah.
HMJr:
And right now I don't know any particular
financial problem for the country you're
P:
Well, I wasn't thinking about that especially,
Henry. I thought maybe that you might have something
in mind, knowing these thirty years, that you might
want me to do
Regraded Unclassified
196
- 2 -
HMJr:
Well, there may be.
P:
I've worked for you and you know -- you know me
80 well that I thought maybe, well, here's
....
HMJr:
Well, that's very nice and if there is anything,
I won't hesitate to write.
P:
Oh, no.
HMJr:
But we have a small group there in the Embassy
that are very good.
P:
Well, I assumed you had them throughout the world.
HMJr:
No, no, but We do have them in London.
P:
We've got a hot potato there and a lot of dynamite
in Yugoslavia.
HMJr:
That's right.
P:
And -- at least the President says 80 and you
probably know it as well as he does.
HMJr:
Yeah.
P:
And I'm going to give it all I've got.
HMJr:
Yeah. Well, King Peter is not one of my favorite
youths.
P:
(Laughs) I never saw the boy.
HMJr:
Well ....
P:
But my letter of credence is to him.
HMJr:
Well, that much I'll pass on to you.
P:
All right. That's enought for me. How's Ellie?
HMJr:
I'll tell you -- fine -- I'll tell you something
else.
P:
Yes.
HMJr:
The one thing that will make a hit with him --
if you can talk about movie stars -- he's more
interested in that than anything else.
Regraded Unclassified
- 3 -
197
P:
Oh, hell, I can do that.
HMJr:
Yeah, I know you can.
P:
Oh, I can do that....
HMJr:
And ....
P:
You mean that, do you?
HMJr:
Oh, I'm not kidding.
P:
Uh huh.
HMJr:
No, the two things he's interested in: movie
stars and racing.
P:
Well, I don't know about the latter but I'll give
him an earful on movie stars.
HMJr:
Well, you'll get somewhere with that.
P:
Henry, I think we're all right, don't you for
next week?
HMJr:
Oh, definitely.
P:
It's just a question of whether the college is a
landslide.
HMJr:
Yes.
P:
Well, give my love to Ellie.
HMJr:
Thank you, and mine to your wife.
P:
I'll do it. Thank you for calling me, Henry.
HMJr:
Good bye.
P:
Bye.
Regraded Unclassified
TO:
198
The Secretary
Steve Early was out.
I talked to Oscar Cox, who was against
11/2/4
a release and said he could and would
handle the thing with Twitty by
telling him this was an old story. We
are again reviewing Len-Lease matters
with the British as has frequently
been done before. All the agencies
affected, including State, Treasury,
FEA, War and Navy, have been in on the
discussions.
I agreed to this plan, which I think
better than to make it appear by a
White House release that something
momentous is on.
19
FROM: MR. GASTON
copy to Mri, 199
UNITED KINGDOM TREASURY BOX 680 DELEGATION Caraday-11/3/43- 11/3/49-
BENJAMIN FRANKLIN STATION
WASHINGTON, D. c.
REFERENCE.
TELEPHONE EXECUTIVE 2020
2nd November 1944.
Dear Mr.Secretary,
Thank you very much for the book; Lydia has sniffed it
and declares it smells good.
I think I mentioned to you last week that I might be
going to Ottawa over the Election. That plan has not come off, since
those dates did not suit the Canadian Treasury. I seem to remember
that you told me that you also were expecting to be away from Washingto
for a few days from tomorrow. Relying on that, I am putting off the
preparation of the material I promised you until the weekend. If that
is all right with you, it would help me to have a short delay. Like
yourself, I am finding that I am basically tired, and there were over a
hundred papers on my desk last night which I had not looked at or
disposed of. So I am spending today quietly working at my hotel on al
sorts of small matters, without going to meetings or attending to any
major questions. So unless I hear from you otherwise, I will not push
myself to have the material ready until you return after the Election.
One matter remains, however, which I may have to raise with
you before you go away. As, I think, Cherwell told you at luncheon
yesterday, we seem to have reached some sort of deadlock with the Navy.
For some days now we have had no contact whatever. They give us to
understand that they are preparing a list of what they propose to do,
unilaterally and without discussion, and then take the result to you
without having given us an opportunity to see it. That does not seem
nearly so satisfactory as the course taken by the War Department. It
Regraded Unclassified
200
- 2 -
would be very kind if you would have a word with Mr.Forrestal on the
matter. May I bring Sir Robert Sinclair round to see you, if nothing
has happened in the meantime to make it unnecessary, tomorrow, Friday,
morning?
Sincerely yours,
Keyns
The Hon.Henry Morgenthau, Jr.
Regraded Unclassifie
201
November 2, 1944
4:33 p.m.
HMJr:
James.
Secretary
Forrestal:
Yes.
HMJr:
Henry, speaking.
F:
Right.
HMJr:
Look, I just have a letter from Lord Keynes
in which he's telling me what he -- writing
me what he's told me now twice. They're
disturbed about how you people in the Navy
are going to proceed in regard to this Lend-
Lease.
F:
Yes.
HMJr:
And their understanding is that you are
forwarding something to me without showing
it to them. Now, I don't know a thing about
it and I'm calling you direct.
F:
Well, I think that's correct. I think we're
sending -- I went over a letter -- I think I
signed a letter yesterday, as a matter of fact,
to you, Henry.
HMJr:
Well, it didn't come. I haven't gotten it.
F:
Uh huh.
HMJr:
But they sort of felt they hadn't had their
day in court.
F:
Well, I think the first -- as I recall -- wait
a minute; I'll get -- ask Horn. Horn -- I went
over it with him. Our thought was we'd send you --
and see whether you approved the procedure that we
were following and then take it up with them.
HMJr:
I see.
F:
(Talking over his inter-office communication
system: I was speaking to Mr. -- to the Secretary
of the Treasury, Admiral. He said that Keynes
had complained to him that We had not shown the
British the letter that we are proposing to send
to Mr. Morgenthau. I don't know why we should,
as a matter of fact. Has that gone to Mr. Morgen-
thau? Answer: I don't know whether you signed
Regraded Unclassified
202
- 2 -
F:
Cont'd.
it or not. F: Yes, I signed it last night.
That -- as I remember it -- in that letter we
outlined what we thought we could do and asked
Mr. Morgenthau if we -- if that procedure was
satisfactory to him before were taking it up
with the British. Answer: That's right.
F: Uh huh.) Henry, I think that letter 1s
probably in your shop and if not, I'll-- I'll
pursue it here and see that you get it this
afternoon.
HMJr:
Well ....
F:
Right.
HMJr:
I mean, it wasn't here up until five minutes
ago. Hello?
F:
Yes.
HMJr:
I'm not -- don't misunderstand me -- I'm not
criticizing how you proceed. I'm just passing
you on what the British said.
F:
Well, I, frankly, don't see why the -- my response
to Lord Keynes is that his understanding is correct
and ....
HMJr:
Yeah.
F:
....
we don't see why the
....
HMJr:
Well, the only thing is that the Army proceeded
differently, but when the thing comes over we'll
have a look at it and then we'll let you know.
F:
All right, Henry.
HMJr:
How's that?
F:
That's okay.
HMJr:
I thank you.
F:
Bye.
Regraded Unclassified
Copy to Dr. White 11/3/44
203
Op-12/bbs
SC)L11-7/EF13
THE SECRETARY OF THE NAVY
Serial 0397712
WASHINGTON
TOP SECRET
2 NOV 1944
TOP SECRET
My dear Mr. Secretary:
The Navy Department is now prepared to inform the
British that, in conformity with the request contained in
paragraph 13, page 12 of "British Requirements for the First
Year of Stage II", due note will be taken of Admiralty require-
ments (less aeronautical, which are handled separately) when
initiating or revising production schedules. In doing so, it
is planned to set forth the general and specific conditions
contained in this letter and its enclosure but not the
financial considerations which I am including herein for
your information. Before our subcommittee replies to the
British I would appreciate your informing me whether this
procedure is satisfactory to you.
The naval requirements of the British (less ship
repair and fleet air arm needs) total $416,000,000. The
ship repair estimate submitted by the British Naval Committee
totals $100,000,000 and in addition there is included an
estimated $50,000,000 for contingent or "spot" requirements
and $5,850,000 for services. In addition there is in the
Army list, but excluded by the War Department from its
estimates because the Navy builds them, a requirement for
LVT's (Amphibious Tractors) at a cost of $32,000,000. Thus
the grand total (less aeronautical material) of the detailed
requirements presented to the Navy Department is $603,850,000.
Aside from certain specific exceptions which will
be noted later, it is planned to condition our reply to the
British as follows:
(a)
The material is to be used in the tasks assigned
to the British at the Quebec Conference.
(b)
The actual assignment of material will be made
exactly as at present through the Munitions Assign-
ment Board machinery wherein the needs of the moment
of all bidders are considered in the light of
approved operations.
OP SECRET
Regraded Unclassified
205
Op-12/bbs
(SC) L11-7/EF13
Serial 0397712
TOP SECRET
TOP SECRET
(c) The requirements as set forth are considered to
supplant or include all previous requirements
submitted for 1945.
The situation with regard to the various British
stated requirements is shown in detail in the enclosure.
It will be seen that, subject to the broad conditions above
and the specific conditions set forth in the enclosure, the
total estimates for U. S. Navy planning purposes total
$371,508,000. It is again emphasized that this excludes
all naval air requirements (including material desired from
the Bureau of Aeronautics) but includes $32,000,000 worth
of LVT's from the British Army requirements.
I assume that I may hear from you in the near
future as to whether the proposed form of the reply to the
British Naval Committee is considered satisfactory by you.
With cordial regards,
Most sincerely,
Foues tal
James Forrestal.
The Honorable Henry Morgenthau, Jr.,
Secretary of the Treasury,
Washington, D. C.
-2-
TOP SECRET
Regraded Unclassified
206
TOP SECRET
TOP SECRET
COMMENTS ON BRITISH NAVAL LEND-LEASE REQUIREMENTS
FOR THE CALENDAR YEAR 1945
1. As a breakdown of the British Naval requirements contained
in "British Requirements for the First Year of Stage II", the
British Navy members of the committee furnished a pamphlet of
requirements dated 11 October 1944. This breakdown, under the
headings used in the above publication, is commented upon as
follows. These comments are in addition to the broad conditions
set forth in the letter of which this is the enclosure.
a. Ships and Craft
Total British Requirement . 177 ships & craft
Value: $157,700,000.00
Comment:
The availability of ships and craft will depend on the
strategic situation and combined operational needs. It
is probable that little of the British requirements in
this category can be met. If the British need eventuates,
it is probable that the following can be furnished:
Value
32 LCI(L)s
$15,800,000.00
100 LCVPs
1,000,000.00
Total
$16,800,000.00
As it may be possible to fill some of the other require-
ments, a total planning figure of $75,000,000 is
suggested.
b. Guns and Mountings
Total British Requirement
$18,900,000.00
Comment:
This includes requirements for 40mm guns amounting to
about $13,000,000. The British requirements for this
equipment are now under study by the Munitions Assignment
Committee (Navy). From present indications production
will fall short of U. S. requirements until at least the
middle of 1945. It is suggested that the planning
figure be reduced by $8,000,000.
TOP SECRET
- 1 -
ENCLOSURE
Regraded Unclassified
207
TOP SECRET
C. Ammunition
Total British Requirement
$50,900,000.00
Comment:
This includes a large number of special type fuses which
probably cannot be furnished in full.
d. Torpedoes
Total British Requirement
$9,000,000.00
Comment:
This requirement is for 720 aircraft torpedoes which
can be used only on U. S. built planes and is, therefore,
dependent on the degree to which the British requirement
for torpedo planes will be met.
e. Depth Charge Stores
Total British Requirement
$1,119,000.00
Comment:
The Mark III Y Guns are out of production. This reduces
the above planning figure by $542,000.
f. Fire Control Equipment
Total British Requirement
$9,800,000.00
Comment:
Mark XIV mod. 2 Sights are out of production. This
reduces the above planning figure by $2,500,000.
8. Engines: Total
Total British Requirement
$6,850,000.00
Comment:
None.
- 2 -
TOP SECRET
ENCLOSURE
Regraded Unclassified
208
TOP SECRET
h. Engine Spares
Total British Requirement
$91,670,000.00
Comment:
Automatic flow of spares for U. S. equipment will be
furnished on the same basis as they are supplied to
U. S. vessels.
1. Radio and Radar
Total British Requirement
$32,000,000.00
Comment:
This equipment is at present in short supply, particularly
the latest types. It is probable that British require-
ments cannot be met in full. This reduces the above
planning figure by about $12,000,000.
j. Naval Stores
Total British Requirement
$ 5,750,000.00
Comment:
Electrical equipment is in short supply. This will
probably reduce the above planning value by about
$750,000.
k. Works and Other Items
Total British Requirement
$ 1,305,000.00
Comment:
None.
1. Victualing Stores
Total British Requirement
$21,000,000.00
Comment:
British Naval Supply Depots will not be stocked in
excess of stocks carried by comparable U. S. Naval
Supply Depots.
TOP SECRET
- 3 -
ENCLOSURE
Regraded Unclassified
209
TOP SECRET
m. Raw Materials
Total British Requirement
$1,000,000.00
Comment:
None.
n. Miscellaneous Bulk Naval Stores
Total BritishmRequirement
$9,000,000.00
Comment:
Same as above for Victualing Stores.
0. Medical and Dental Stores
Total British Requirement
$ 500,000.00
Comment:
None.
2. SHIP REPAIRS The value of ship repairs and services
is not given in the British total requirements. The breakdown
furnished the Navy Department totals $105,850,000.00. No
such drain on our ship repair facilities can be accepted even
for planning purposes. An acceptable planning figure is
considered to be $30,000,000.00. Also, the British breakdown
includes $50,000,000.00 for contingent or spot requirements.
It is considered that this should be eliminated for planning
purposes.
3. AMPHIBIOUS TRACTORS A requirement for $32,000,000.00
worth of amphibious tractors was included by the British in
the Army requirements. As these are procured by the Navy
Department this figure should be added to the planning value
of the Navy Department total.
4. Total requirements (less aeronautical) on the Navy
Department are as follows:
(a) Total from "British Requirement
for the First Year of Stage II"
$416,000,000.
Added for ship repairs
100,000,000.
Added for "spot" requirements
50,000,000.
Added for LVT requirements
32,000,000.
Added for services
5,850,000.
Total
$603,850,000.
- 4 -
ENCLOSURE
TOP SECRET fied
TOP SECRET
210
o
Total
$603,850,000.
(b) Deductions for planning purposes:
Ships and craft
$ 82,700,000.
Guns and mountings
8,000,000.
Y-Guns
542,000.
Fire Control
2,500,000.
Radio and radar
12,000,000.
Electrical equipment
750,000.
Ship repairs and services
75,850,000.
Spot requirements
50,000,000.
Total
$232,342,000.
(c) Total for planning purposes:
$603,850,000.
232,342,000.
Total
$371,508,000.
TOP SECRET
- 5 -
ENCLOSURE
Regraded Unclassified
211
ADDRESS REPLY TO
COMMANDING GENERAL. ARMY AIR FORCES
TOP SECRET
FOR VICTORY
BUY
WASHINGTON 25, D. c.
UNITED
STATES
WAR
BONDS
HEADQUARTERS, ARMY AIR FORCES
-
EXAMPS
ATTENTION:
WASHINGTON
2 November 1944
MEMORANDUM FOR MR. MORGENTHAU:
In conformance with instructions issued by Mr.
Lovett this date, the attached document is forwarded covering
the subject of air items of equipment for the United Kingdom
during the first year of STAGE II,
John G. C. JAMISON,
Incl -
Brigadier General, U. S. A.
as abv
TOP SECRET
TOP SECRET
212
Mr. Henry J. Morgenthau, Jr.
Chairman, British-American Committee on Lend-Lease
Dear Sir:
In accordance with the directions of your Committee in its
meeting on 19 October 1944, we have examined the British requirements
for air items for the first year of STAGE II, assumed to be co-terminous
with the calendar year 1945. Our conclusions are as follows;
1. The Army Air Forces and the U. 8. Navy accept the British
requirements as listed in attached schedules as a production re-
quirement or a requirement from surplus stocks subject to
annotations contained in the schedules and undertake to make
all practicable efforts to provide the specified quantities.
2. In some categories there are included quantities of
material specified only by type and dollar value. This is also
true of the spot items. In accepting these dollar values, it 1a
understood that the ability of the Army Air Forces and the U. S.
Navy to deliver the particular items which will be specified
later, will depend on the production or stock conditions existing
at the time. It ie agreed that the Army Air Forces and the U. 8.
Navy will make diligent effort to deliver the specified items
after the firm requirements have been established to the extent
consistent with overall production possibilities for all purposes
at the time of filing of the firm requirements. It is understood
that acceleration or delay in production (as set out in the
operative version of Joint Aircraft Committee Schedule WX and
corresponding schedules for ancillary equipment) will be shared
proportionately by all Services which share in the allocation
of the item up to the full agreed allocation. It is further
TOP SECRET
Regraded Unclassified
TOP SECRET
213
agreed that the burden of meeting changed commitments which are
later necessitated by strategic considerations, approved by the
Combined Chiefs of Staff and activated by the Combined Munitions
Assignments Board, will be shared proportionately by all Services
which share in the allocation of the item.
3. It 1a understood that the British forces will receive,
in addition to the quantities listed in the attached schedules,
any deficit there may be at the end of 1944 on supplies scheduled
for that year subject to assignment by the Munitions Assignments
Board, provided production permits.
4. There are certain items of U. S. Army type for which
additional production is impracticable within the period and
E
the British do not press for further facilities. Such items have
been accepted by the Army Air Forces and the U. 8. Navy as require-
ments with the understanding that the U. K. must bid for these
items before the Munitions Assignments Board on the basis of
operational urgencies in accordance with eristing procedures.
5. It is agreed that the U. K. will accept combat-
serviceable equipment of the type and kind suitable for re-issue
to the Army Air Forces and the U. S. Navy for use against Japan
with the understanding that spares will be furnished on the same
scale as for the U. S. Services.
6. Subject to the above and the remarks in the attached
schedules, the Army Air Forces and the U. S. Navy agree that
the items in the quantities stated, or in the values indicated
on the attached schedules, are accepted for production or from
stocks concurrently with the requirements of the Army Air Forces
and the U.S. Navy and all other known military requirements at
the time of acceptance.
TOP SECRET
Regraded Unclassified
214
TOP SECRET
7. It is understood that the agreements reached herein,
as far as deliveries are concerned, fall within and are subject
to, the established procedures of the Combined Munitions Assign-
ments Board. It 18 agreed that estimated schedules of deliveries
will, insofar as practicable, be prepared and agreed with the
British as soon as possible.
8. It 18 agreed that the training schools for the Royal
Air Force and Fleet Air Arm provided through the agencies of the
Army Air Forces and the U. S. Navy will continue to operate during
the first year of STAGE II at such a rate as may be shown to be
necessary to provide air crews for use during the war against Japan.
The cost of these services is in addition to the estimated value
of the items in the schedules or otherwise specified.
9. The attached schedules provide for such share of new
developments as might properly be assigned to the British
forces in the first year of STAGE II, and for unforeseen
contingencies and spot items. The British estimate that the
figure of 200 million dollars shown will cover such requirements.
10. In the interest of the most efficient utilization of
shipping at the disposal of the two countries and depending upon
the production or stock position at the time, the U. K. undertakes
to continue to supply air items of reciprocal aid within the
limits prevailing at the time of the defeat of Germany.
11. The U. S. representatives also recommend that as &
condition of the acceptance of the scheduled U. K. requirements
by the U. 8., the U. K. accept the responsibility for furnishing
TOP SECRET
- 3 -
Regraded Unclassified
TOP SECRET
215
reciprocal aid throughout the British Empire and Commonwealth
as required by the common interest.
Respectfully,
UNITED STATES
BRITISH
RLPP
Robert P. Patterson
C. L. Courtney
Undersecretary of War
Air Chief Mershal
Robert A. Lovett
Mary Royal Air Force
Fairey
Assistant Secretary of War for Air
Director General
British Air Commission
F.P.Hillock.
H. H. Arnold
R. P. Willock
General, U. S.A.
Air Vice Marshal
Commanding General, Army Air Forces Acting Head, Royal Air Force Delegation
arteurum L. Gates
G. F. Somewill
G. F. Somerville
Artemus L. Gates
Admiral,
Assistant Secretary of Navy for Air
Head, British Admiralty Delegation
Cambury with
Aubrey W. Fitch
Vice Admiral, U. S. Navy
Deputy Chief of Naval Operations (Air)
The page covering U.S.Navy-cognizance aircraft and necessary corrections
in total dollar value have been inserted with the approval of all signers.
E.M.C. Abel-Smith,
Herbert D. Riley,
Captain, Royal Navy
Commander, U.S. Navy
TOP SECRET
Regraded Unclassified
ALLOCATIONS OF AIR EQUIPMENT
For the First Year of STAGE II
(Co-terminous with the Calendar Year 1945)
TOP SECRET
TOP SECRET
216
Regraded Unclassifie
SUMMARY
Approximate
Dollar Value
AIRCRAFT & NORMAL INITIAL SPARES (A.A.F.)
$496,005,000
AIRCRAFT & NORMAL INITIAL SPARES (U.S.N.)
230,451,185 - 238,580,405
AIRCRAFT SUPPLEMENTARY MAINTENANCE SPARES
100,000,000
RADIO AND RADAR
218,008,001
AIRCRAFT COMPONENTS AND EQUIPMENT
340,000,000
BOMBS
50,927,600
NEW DEVELOPMENTS & SPOT ITEMS
200,000,000
$1,635,391,786 - 1,643,521,006
TOP SECRET
217
Regraded Unclassified
Aircraft
SERIAL NO.
ITEM
QUANTITY
AIRPLANE COST
SPARES COST
TOTAL
REMARKS
1
3-24
100
$ 28,500,000
$ 9,300,000
$ 37,800,000
Attached cost includes airframe, engine, propellor,
GFB, Ordnance, and signal equipment, subject to
2
P-51
1117
82,100,000
39,500,000
121,600,000
change. 1 fixed 10% has been added to cover A.A.F.
costs of handling, transportation in the U.S.,
3
P-47
324
42,200,000
18,100,000
60,300,000
medification, and flight delivery of aircraft.
Spares are figured on the basis of JAC Case 1850
If
0-54
20
7,700,000
3,000,000
10,700,000
with 10% added for delivery costs.
5
0.47
1184
154,000,000
51,200,000
205,200,000
6
va.45
136
9,700,000
4,300,000
14,000,000
7
Gliders, 00-4A
1400
37,500,000
7,700,000
45,200,000
8
09-3
240
350,000
105,000
455,000
9
Link Trainer
150
675,000
75,000
750,000
(AX-P-18)
$362,725,000
$133,280,000
$496,005,000
NOTE: 1. Aircraft requirements of the Royal Air Force and Royal Navy for U. S. Navy type aircraft are listed on the next page.
2. It has been agreed that allocations of Helicopters will be considered March 1, 1945 and that the AAT will take cognisance of British
stated requirements for 200 R-6 and 40 R-5 models in planning 1945 production.
TOP SECRET
218
Regraded Unclassified
AIRCRAFT PRODUCED UNDER COGNIZANCE OF U.S. NAVY
Serial No,
Item
Quantity
Value
Remarks
1.
Corsair (FG)
323-383
$43,762,301 - $51,891,521
Assignment of all items subject to
stipulations of Fitch - Courtney -
2.
Hellcat (y6r)
574
$63,758,772
Abel-Smith Agreement of October 31,
1944.
3.
Wildcat (FM)
240
$17,197,680
Value listed includes airframe,
if
Avenger (TBM)
434
$64,926,834
engine, propeller, on, Ordnance,
radio and radar, subject to change.
5.
Liberator - Carge (RY-3)
111*
$40,805,598
A fixed 10% has been added to cover
U.S.N. costs of handling, trans-
portation in the U.S., modification
$230,451,185 - $238,580,405
and flight delivery of the aircraft.
Spares are figured on the basis of
J.A.C. Case 1850, with 10% added for
delivery costs.
. Including any planes of this type which may be delivered in 1944.
Note by British Representatives: The total quantity of Corsairs and Avengers offered are only some 50% of the stated British
requirements. The Admiralty reluctantly accepts these offers and does so only since the Navy Department reports that further
prevision on British account would immediately have a serious adverse effect on units already in the combat area. The United
Kingdom does not at present, and cannot in the time available, produce comparable types of aircraft. The British may accordingly
wish to tnvoke paragraph 2 of this agreement should the sourse of-operations confirm their view that there may well be a strong
by the Combined Chiefs of Staff.
tastical justification for larger assignments of these TUT types CLUINT and will then put forward a special case for review
219
Regraded Unclassified
AIRCRAFT SUPPLEMENTARY
MAINTENANCE SPARES
ITEM
QUANTITY
VALUE
REMARKS
Supplementary Maintenance Spares
Undetermined
$100,000,000
These spares are over and above spares
supplied with new aircraft and are for
airplanes previously assigned. It does
130035 dUL
not include radio and radar spares which
are handled separately.
TOP SECRET
220
Regraded Unclassified
RADIO AND RADAR
SERIAL NO.
ITEM
QUANTITY
VALUE
REMARKS
1
AN/APN-1
6,400
$ 4,012,800
2
AN/APN-4 or 9
10,500
7,612,500
3
AN/APS-13
6,685
16,712,500
4
AN/APS-15
120
2,058,000
5
AN/APQ-5B
85
425,000
TOP SECRET
6
SCR-718
30
21,000
7
AN/ARR-2
2,600
1,409,200
8
SCR-522
10,510
13,074,440
9
SCR-578
14,610
5,464,140
10
SCR-269G
4,410
5,441,940
Newer model AN/ARN-7
TOP SECRET
furnished.
11
AN/APA-23
30
105,000
12
AN/APQ-9
25
35,625
13
AN/APR-4
700
3,500,000
14
AN/APR-5A
50
75,000
15
AN/APT-4
200
550,000
16
AN/APT-5
200
396,000
17
AM-14/APT
50
42,350
18
AM-18/APT
50
221
42,350
Regraded Unclassified
SERIAL NO.
ITEM
QUANTITY
VALUE
REMARKS
19
AN/APR-2
15
$ 30,000
20
AN/APA-31
85
51,000
21
AN/ARC-5
2,980
6,615,600
VHF Components for this equipment
not in production
22
AN/PPN-2
3,750
1,875,000
23
AN/CPS-1
12
2,296,800
24
TCS
2,000
4,400,000
25
AN/TPS-2
TOP SECRET
50
250,000
26
AN/APN-3
1,000
10,000,000
27
AN/APS-2
200
2,860,000
28
AN/APS-4
2,150
35,475,000
29
AN/APX-1
1,660
1,103,900
TOP SECRET
30
SCR-720
1,500
22,863,000
31
SCR-729
2,760
2,136,240
32
LRTR
1,000
1,500,000
33
AN/ARR-3
1,528
670,792
34
AN/CRT-1
23,674
2,249,030
35
SCS-51:
RC-103
5,400
3,175,200
ANR/5
5,400
9,271,800
RC-193
5,400
259,200
222
Regraded Unclassified
SERIAL NO.
ITEM
QUANTITY
VALUE
REMARKS
36
AN/CPN-2
30prs.
$ 720,000
37
AN/CPN-8
10
119,840
38
SCS-51 (Ground):
MRN-3
45
191,835
CRN-2
45
641,250
39
AN/TPS-1B
50
250,000
TOP SECRET
40
Wire Recorder Model 50
40
32,000
41
Corner Reflectors
137,000
274,000
42
Spares
-
12,000,000)
Overall dollar value appear
)
reasonable. Availability
43
Test Equipment
-
5,000,000)
cannot be determined withou
TOP SECRET
)
detailed breakdown of items
44
Tubes
-
10,000,000)
required.
45
AN/TPS-10
15
900,000
Handling and Delivery Costs
1
19,818,909
Total (Includes Handling & Delivery Costs)..
$218,
008,001
223
Regraded Unclassified
AIRCRAFT COMPONENTS
AND EQUIPMENT
SERIAL NO.
ITEM
QUANTITY
$ VALUE
A. ENGINES
1
Merlin 68,300 & 301
10,630
202,000,000
2
Wright R-2600
531
10,000,000
3
Lycoming 0-290
454
1,000,000
B. ENGINE ACCESSORIES
TOP SECRET
4
No. 9 Carburetor Parts
513
5
PR-78-A2
583
C. CERTAIN MERLIN ENGINE ACCESSORIES
6
I.A.E. Pumps (1H-C Pump)
4,000
7
Heywood Compressors
3,250
TOP SECRET
8
Heywood Compressor Drives
800
9
Lockheed Pump Drives
400
10
Gear Boxes (Pairs)
2,700
11
Radiator Sets (Single Stage)
1,686
12
Complete Circular Power Plant Tanks
6,000
13
Exhaust Manifold Engine Sete
9,500
14
Radiator Flap Rams
11,400
15
Thermostatic Switches
10,200
224
Regraded Unclassified
SERIAL NO.
ITEM
QUANTITY
$ VALUE
C. MERLIN ENGINE ACCESSORIES (Continued)
16
Idler Cut-Off Rems
10,400
17
Worth 011 Dilution Valves
18,240
18
Pressure Maintaining Valves
2,950
D. PROPELLERS AND ACCESSORIES
19
23EX for Lancasters, Lincolns, Tudors
14,250
TOP SECRET
and Mosquitos
20
4G8 Governors (Lancasters, Lincolns,
6,050
Tudors and Mosquitos
21
E.G.R. Governors (Wellington)
350
E.D TURRETS AND GUNS
22
.5 in. Browning Guns
5,400
TOP SECRET
23
Martin 250 CE for Lancasters & Lincolns
790
24
Turrets for Sunderland IV
a. 250 CE 23A
35
b. 250 CH 2B & C
63
F. INSTRUMENT & MISCELLANEOUS EQUIPMENT
25
Bombsight T1 B
3,000
26
Artificial Horizons
18,000
27
Direction Indicators
12,000
225
Regraded Unclassifier
SERIAL NO.
ITEM
QUANTITY
$ VALUE
F. INSTRUMENTS & MISCELLANEOUS EQUIPMENT (Cont*d)
28
Altimeters Mk. XIV A, B and B.P.
18,000
29
Gyro Fluxgate Compase
3,600
30
Gyros for H2S
6,000
31
Horizons & Indicators Al Mk IX
700
32
Engine Speed Indicators
20,500
TOP SECRET
33
Drift Meter Mk. VI and B3
7,720
34
Gyro Gun Sights .5" Control Units
3,000
35
Air Termometers C.13A and C.13B
20,500
G. PHOTOGRAPHIC EQUIPMENT
36
Aircraft Cameras Type K24
6,000
37
Aircraft Cameras Type K20
1,000
TOP SECRET
38
-
#
Type K17
320
39
#
=
Type K22
80
40
Cameras Ground Kodak 35
675
41
G.S.A.P. Cameras
5,400
42
Bromide Paper
12,323
ag N. acf.
43
Panchromatic Film
609,600
TOTAL CLASS "B" THROUGH "G"
-
127,000,000
(including Miscellaneous Accessories, equip-
ment, and raw materials not specified abv)
TOTAL CLASS "A" THROUGH "G"
- 340,000,000
(Includes 10% added for handling and
delivery costs)
226
Regraded Unclassified
BOMBS
SERIAL NO.
ITEM
QUANTITY
VALUE
1.
Tallboy (Medium)
(Number)
700
$ 3,990,000 (est)
2.
1,000 lb. M. C. (GP)
(Number) 120,000
16,987,200
3.
500 lb. M. C. (GP)
(Number) 240,000
19,730,400 *
4.
Oil Bomb
(Long tons) 13,140
10,220,000
(All in first half)
TOP SECRET
TOTAL (Includes 10% added for handling and delivery costs) $50,927,600
*
Due to the anticipated shortage in U. S. production of 500 lb. bombs, the U. S. members consider
TOP SECRET
that capacity British production should be maintained so long as the shortage exists.
227
Regraded Unclassified
NEW DEVELOPMENTS
AND SPOT ITEMS
ITEM
QUANTITY
VALUE
New Developments and Spot Items
Undetermined
$200,000,000
TOP SECRET
TOP SECRET
228
Regraded Unclassified
CCLL
229
u.S.No.23
TOP SECRET
COPY NO. V
LEND LEASE IN STAGE II
AUSTRALIA
At the Combined Committee meeting on the 30th October, it
was arranged that the Australian, New Zealand and Indian
representatives should, if they wished, produce further statements
showing the manner in which their non-munitions requirements
under Lend Lease in the first year of Stage II would be increased
if some relaxation took place in the rules regarding the eligibility
of civilian requirements.
The memo below, by the Commonwealth of Australia, War Supplies
Procurement, furnishes this additional information in respect of
Australia.
(Signed) A.W. Snelling
Washington, D.C.
2nd November, 1944
Regraded Unclassified
230
ADDITIONAL ITEMS FOR AUSTRALIA
Further to the points raised at the meeting at the U.S.
Treasury under the chairmanship of Secretary Morgenthau on 30th
October, 1944, the following is submitted, namely,
1.
Any observations made should not be interpreted as critical
of any American Government instrumentality. It is appreciated
that with demand in excess of supply and having regard to
the prior claims of the military forces of the United States,
adjudications upon urgency of need are necessary. Furthermore.
on questions pertaining to civilian materials, American
domestic political implications, especially in respect of
some items, are understood. Any requests submitted for
re-examination of some aspects of policy and procedure as
regards Stage II of the War are put forward with the idea
that it may be found practicable to remedy some of the lacks
which may have been unavoidable in Stage I. The major
difficulties experienced by Australian instrumentalities
fall into two broad categories - difficulties arising from
the determination of percentages of eligibility and
difficulties in implementing allocations.
2.
Time has been taken up both at the Australian end and in
Washington because of the policy of arriving at determination
of percentage eligibility over a considerable number of
items in the non-munitions field. By way of example it
may be stated that 6% of a requisition for 7,294,000 pounds
of a value of $437,640.00 was reduced to 6,894,000 pounds
of a value of $416,280.00. A requisition for Triethanolamine
for 34,000 lbs. of a value of $5,870.00 was reduced to
25,500 lbs. of a value of $4,335.00. 22%, on the average,
of 5 chemical items required in compounding synthetic rubber,
were eliminated from Lond-Lease, the value not being a
material factor. In the case of gum rosin, there was a
reduction of 8%. In the case of printing and writing paper,
70% was conceded as eligible under Lend-Lease, with 30%
being rejected. Other cases could be cited. The time taken
up in adjudicating percentage determinations in such cases
varies from 3 weeks to 5 months, during which time procure-
ment has been delayed. A further important point is that
where a portion of a given item is excluded from Lend-Lease,
split procurement results, the portion conceded as being
eligible under Lend-Lease being procured by U.S. Treasury
Procurement, the inoligible portion being procured either
by cash purchase on behalf of the Australian Government or
by an issuance of an import license to an Australian import
house. This dual or triple method of procurement applies
even where the one allocation may be made by the War Product-
ion Board. Delays in procurement procedure entailing the
loss of valuable time would be obviated if there could be
an advance determination of eligibility over a broad field
ahead of operations in Stage II of the War. In such advance
determinations, it is asked that regard might be had to the
all-out character of the Australian War effort involving
every section of the community, data respecting which is
set forth in the earlier submission.
3.
The figures of 102 million dollars for non-munitions items
for the calendar year 1945 as included in the earlier
submission were predicated upon the presently accepted
conception of Lend-Lease eligibility. In the event that it
be found practicable for the American authorities to
liberalize this conception and to eliminate differentiation
on a percentage basis as between military, war industrial,
and civilian requirements, the following is a list of the
principal items and the additional money value, (over and
above the 102 million dollar figure) which would be involved.
Regraded Unclassified
231
Item
Value
(In millions of dollars)
Seeds, Essential 0118
& Miscellaneous Food
Products
1.5
Wood Pulp
1.0
Paper
2.4
Raw Cotton, including Linters
.4.
Abrasive Grains & Plastics
2.1
Bearings
1.0
Cotton Piece Goods
4.5
Tobacco
8.6
Business Machines & Office
Equipment
1,2
22.7
By way of comment upon the above figures and those previously
submitted it should be observed that there are many
imponderables in the present strategic position in the
Pacific which might change the overall situation necessitating
an amendment of some of the figures as the pace in Stage
II of the war accelerates.
4.
It would also be greatly appreciated if procedure could
be devised to facilitate the implementation of allocations.
Under present conditions it may be noted that,
(a) Allocations have been made by War Production Board
within the period to which the allocations apply.
(b) Unless contracts are let within the period the
allocation is liable to forfeiture. The time
remaining within the quarterly period is frequently
inadequate.
(c) When a Lend-Lease requisition under an approved
allocation reaches Treasury Procurement Department,
that Department frequently finds difficulty in
inducing manufacturers to accept a contract due to
a combination of factors including competition of
American civilian requirements and/or resistance
of manufacturers to renegotiation.
(d) These difficulties are accentuated where split
procurement as between Lend-Lease orders and
commercial orders is entailed. As the competition
of American civilian demands tends to be accentuated,
steps to assure the implementation of allocations
would be highly advantageous.
November 1st, 1944
- 2 -
Regraded Unclassified
232
NOV 2 1944
My dear Mr. Fahey:
Again the Treasury Department is making a special
appeal to the country for the purpose of financing a
war being waged simultaneously on opposite sides of the
world. The Sixth War Loan, as you know, opens official-
ly on the 20th of November, almost one month to the day
after General MacArthur's forces have returned to even
an old score in the Philippines -- about three weeks
after an overwhelming defeat of the Japanese navy in
their own home waters.
AS in the past, we are again turning to the savings
and loan associations of the country in the firm confidence
that they, like the other issuing agents of the Treasury
Department, will give their wholehearted support in the
sale of obligations of the United States Government to the
public. The achievement of these associations in the past,
and particularly during the previous drives, is convincing
evidence that their country's faith in them is well justi-
fied.
In connection with the Sixth War Loan, the Treasury
Department urges that the Federal Home Loan Bank Admini-
stration bring to the attention of all associations the
need for their unqualified support. I send my personal
congratulations to these organizations on their record of
past performance in this line.
Sincerely yours,
(Signed) H. Morgenthau, Je.
Mr. John H. Fuhey, Commissioner
Federal Home Loan Bank Administration
101 Indiana Avenue, N. We
Washington, D. C.
Regraded Unclassified
233
November 2, 1944.
My dear Mr. Fahey:
I thank you for sending me copies of the
campaign literature put out as a bank letter by
the University Bank of Kansas City.
Sincerely,
(Signed) H. Morgenthau, Je.
Secretary of the Treasury.
The Honorable John H. Fahey
Commissioner, Federal home Loan Bank Administration
101 Indiana Avenue, N. W.
Washington 25, D.C.
HEG/mah
Was
Regraded Unclassified
234
POPYICTORY
NATIONAL HOUSING AGENCY
BUY
ENITED
STATES
FEDERAL HOME LOAN BANK ADMINISTRATION
WAR
SONDS
-
STAMPS
101 INDIANA AVENUE, N. W.
LOAN B.1/W
WASHINGTON 25, D.C.
FEDERAL HOME LOAN BANK SYSTEM
FEDERAL SAVINGS AND LOAN
El * MOLINE K LINES
INSURANCE CORPORATION
gaston
HOME OWNERS LOAN CORPORATION
UNITED STATES HOUSING CORPORATION
OFFICE OF
THE COMMISSIONER
October 31, 1944.
The Honorable
The Secretary of the Treasury,
Washington 25, D.C.
My dear Mr. Secretary:
Here are a couple of photostats of an
alleged Bank Letter being put out by the University
Bank of Kansas City, Missouri.
The statements made in this publication
with reference to Federal Deposit Insurance Cor-
poration and Government bond issues are such that
I certainly feel that this material should be
brought to your personal attention.
Sincerely yours,
Multahip
John H. Fahey,
Commissioner.
Enclosures.
Regraded Unclassified
235
Condensed Statement of
THE UNIVERSITY BANK
A Bank Is No Better
63rd and Brookside, Kansas City, Mo.
At the Close of Business Sept. 30, 1944
Than the Government
RESOURCES
Cash and Due From Banks
$1,199,557.25
U.S. Obligations (par or less)
2,204,050.00
Municipal and Other Bonds
(par or less)
75,755.75
Loans and Discounts
62,166.93
First Mtg. Real Estate Loans
323,684.99
Overdrafts
287.41
The
Furniture and Fixtures
1.00
Total
$3,865,503.33
UNIVERSITY
LIABILITIES
Capital
$ 100,000.00
BANK
Surplus and Undivided Profits
52,503.41
Reserved for Contingencies
13,152.50
63rd and Brookeide
Accrued Interest and Taxes Payable
7,854.09
United States Deposits
61,632.17
Kansas City, Missourt
Other Deposits
3,630,361.16
3,691,993.33
Member Printed Departs I -
Total
$3,865,503.33
The above statement is correct.
LOGAN F. WYRICK,
Vice-Pres. and Cashier.
Save Time, Gos and Tiree
Over 94% of Our Deposits in Cash, Bonds
Bank By Moll
and Due from Banks.
J. R. BREED
LOGAN F. WYRICK
President
Vice-Pras. and Cashier
DIRECTORS
ARTHUR L. LAND
HARVEY s. POSEY
MAX G. MILENS
W. M. HALLIBURTON
P. P. BUSHMEYER
BUY WAR BONDS
The University Bank does not own nor
has it ever made a single FHA Loan.
Regraded Unclassified
Do Men Gather Grapes of Thorns or Figs of Thistles?"
For years this bank has printed on in signament
in times of business depression people become
now, Yes, just 51 sound as the government. The
government, but what successes they mode proves
"A Bank is No Better Than the Government." With
pumicky, and during our last depression the in others
bonken have finile fear about paying their depositors,
beyond doute that they one not all together in the
from filty to seventy-five per cent of the total deposits
they celled upon our banking structure to do the
the Hew Dealers have planty of paper and ink and
wrong, for the reason they have asught their people
in off the banks in the United States now Invested in
impossible, and that wes to turn fifty billien of book
from ped performance have proven they know how
to work, maybe they have had No work too hard, but
government bonds, the people of UVF country should
deposits into currency when there was but live billions
to use A but what kind of money?
- must not forget whatever they accompliated has
realize the truth of this statement.
of currency evailable, 5a for this reason many banks
And you, Mr. Banker evel remember your man-
been done by hard work.
la the coming compuign much will be said by the
failed simply because they could not liquidate their
chandise represents dollars and the value of your
In comparison our New Dealers who are racing
Have Declars how they have mode all our banks
cuets foir enough to repay their withdrowel demands
bank stock is also junior to your depositors' dollars.
farm of government towards paternalism and redel-
sound. Like all the rest of the New Deal's economic
In the depth of the depression our government debt
if every banker in our country had been doing his
ism are promising security to our people with Mile
achemes, the effect of this statement depends upon
was twenty billions it is now wall over two hundred
dury for the post twelve years in educating his
work.
the gullibility of the MOMAL
billions, what government bonds our banks owned of
customers along sound government fiscal policies,
If is indeed a ovel illusion when the mosies of any
I have for years believed the depositor should be
that time were the securities upon a solvent nation
there would be no question about the results in the
notion become the followers of economic promise
guaranteed the return of his deposits, exactly or I
in is true that some of the securities that our banks
coming election, but they have locked the guts to tell
beyond the obility of G nation to pay. For no govern
believe in the sendity of all contracts.
held were slow and some in trouble birt they wire of
the truth for fear of New Deal reprisols, and the
ment can permonently give to its people a bir -
But these Insurance funds cannot be left in the
least honest obligations.
loss of = few customers preferring to take the easy
than the people provide for themselves or - e
hunda of publicions who believe in permanent deficir
So let's compare those conditions with the present
route, for it takes little broins to buy government
nation long survive where a few accept individual
spending. this money spent the all other time money
New Deal's economics, now that our debt is tiver
bonds with which to pay expenses and dividends,
responsibility and the mosses demand from -
with nothing left but the pyromiding of government
Two hundred billions and from hall to three-
then more bonds to pay the interest on the bonds you
government money they do not earn.
bonds. These bonds now held in the depositors Insur-
quarters of all our depositors' money is invested in
already hold, kidding yourselves that real profits
Regardless of who Is sur next President, w the
ones funds only represent money that has already
government bonds.
con come from bookkeeping.
truth of our peace-time future were told if would -
been quent and should the emergency ariva that
The money is gone, scuttered to the four winds of
Our banks are new just os sound as the integrity
anmlogous to Mr. Churchhill's statement during bigi
terricinly does not obvicte the fact that in order to
the earth, much has been looned to foreign countries
and brains of our people. If they are going to con-
land's darkest hour, His only promise - "bload,
make use of these assets, the government will have
who have repudiated millions of their post debts.
tinue their economic delirium thinking clung lines of
resol and tears," for the willful wash and wild
to resort to the printing-press or make additional
This is called "Our good neighber policy."
paying our wor workers thirty five dollars a week
economies of the past twelve years must be poid
For real money, will be required to
Other billions have been squandered in giving
unemployment insurance, most of whom in the post
from the earnings of on industrious and thirty people.
must these Insurance obligations.
union labor monopolistic and coercive powers which
have been receiving three times their worth, and
If It were not 10 vital, the punishment of this calsual
Yes, some will any, but there have been few bank
has increased the cost of our wor and debts tremen-
loaning millions of our ex-service men four or five
task belongs to the New Deol, but for the of
follower and all depositors have been paid. This is e
downly, paying our farmers for crops not rulsed
thousand dollars facing es we are o three hundred
solvency of our nation If con no longer be Tally with
fact, but like all the rest of the New Deal's economics,
establishing collective form projects, building great
billion delit, how will our debts ever be paid and
deficit spenders who have no fear of billions of -
there has been no test period, for they have in the
groups of apartment buildings In some of our clises,
when?
in the coming election the question before the
port Iwelve years been covering their deficits by
socialistic utility, and loan corporations in computi-
Under the cojolery of our New Dealers we have
American people is simple. De they desire therry
confinually salling more bonds, using also their in-
tion with tax-paying private enterprises, W.P.A.
become a nation of Utopian dreamers, believing that
and Freedom of - poternolistic, regimentated, -
awming currencias as e revolving fund for their
P.W.A., C.C.C., closs subsidies, huge bureaucracies
prosperity con be attained with lines work of excrbi-
torial form of government? The former is e government
bond inflation.
employing mostly men who have been business fall-
kent wages. So naturally with each new promise of
that is e servent to in people, the latter is ana afters
The New Declars would lão for you to believe that
ures in the post, filling the office buildings in our
our King Midas we find ourselves deuper and deeper
the people are but sloves to their government, Patrick
during the depression most of our banks were un-
towns and cities. In fact, the New Deal's wante and
in debt.
Henry said, "Give me liberty or give - death," and
sound but under their fiscal policias they ere now
extravagance is beyond comprehension.
The socialistic governments of Russia and Germany
this should be the onewer of the American people,
ell sound.
Yet, say the New Dealers, our banks are all sound
are degrading to individuality, and to our form of
1. MID.
Everything With Sidney"
BROWDER BARB AT DEWEY
la - underpt from - article written by Lovis
An Anti-Communist Cannot Guide European Relations
4a the Selenday Brening Post, Aug. 26, 1944.
He Says.
mail Superient and strategic role of the
National Convention - promoting PAC's
CHICAGO, Sept. 24 (AP).-Earl Browder, president of the
No proved binalf master of the art
Communist Political association, tonight described Gov. Themas
trading and back-room wire-pulling,
E. Dewey os carrying "The flog of anti-communism" and asserted
Democratic - look Mo services. He did not
that President Roosevelt had "built e solid foundation of unit
. resultation for Vice-President Henry A.
with all our Allies."
dates for that office. Bet be was able to
In on address prepared for delivery of e peoples rolly for
of former United States Supreme Court
unity and victory" of the Chicago stadium, Browder and
Syrism, Under of the Office of War Mobiliza-
"Do you think that Mr. Dewey, who carrier the fing of onti-
Chicago exervinced that be had White House
communism, can successfully guide our country's relations with
Yles-Proddivatial nomination, and the Inside track
Europe, in every country of which the Communists will be essen-
beders. After Mr. Hillmon veloed his con-
tial partners in the democratic coalitions forming their govern
took out of the race, saying that he
ments?"
$ the wishes of the President." Senator
"Communists are the leaders of the Soviet Union and the
of Missueri, wes PAC's second choice for Vice-
great Red ormy which gave Hitlerism its mortal blow en the
- PAC delegates of the convention voted for
eastern front
Communists take part in the great Yugeslas
become door that Wellace could not make it.
liberation movement, along with all other democratic porties
other - confection, Mr. HMain pledged to Seno-
Communists are in the new Romanian government, which took
and wholehearted support."
that country out of the wor on Hitler's side, and put it into the
wor on the side of the United Nations"
"If does not appear that Mr. Dewey and Mr. Bricker are
of Feather Flock Together"
nearly so much concerned with the problems of winning the war
os they are with winning the election
to denied that the New Deal has the milltant sup-
Hilliam, the C.I.O. and his political action
you. the Kolley gong, all labor racksteers
with - of the sociolists and com-
How Long Is a Minute? How Big Is o Billion?
These facts alone should be seough to
24 hours in e day
60 minutes in on hour
to be good eltizens in our toming
- by the company they keep."-JRB.
1,440 minutes in a day
365 days in e year
7,200
sees FIFTH COLUMN
8,640
Subtled Link of Communists. New
4,320
1
525,600 minutes in a year
1,944 years since Christ's birth
is New York last night by
2,102,400
loader, arging support of President
2,102,400
MM - described today by AM M. Landon
4,730,400
organized not column in this country."
525,600
Capatalizen nomines, sold the speech
1,021,766,400
the - I any is bacalsary, of the close tieup
- groups end the Reservelt administration.
A little over a billion minutes since the
the esclisated will the veprecadented and
birth of Christ. Promising something for,
be American bistory where . foreign power
nothing is even more poisonous than our
organized alvano in this country is trying to
doctor of - American Prosident."
three hundred billion debt.
Regraded Unclassified
November 2, 1944.
My dear Dr. Fisher:
I was greatly pleased by your letter of October 30.
You can be sure that I always enjoy hearing from you.
The good news that you are going to vote for the
President's re-election naturally gratified me and of
course I approve the grounds on which you reach your de-
cision EE being of first importance.
Yet I think that comparisons on the domestic front
ought to cause you to come to the same conclusion.
There is a segment of business, I know, that always
talks of Franklin Roosevelt as being "hostile to business".
Mainly, I think, that is because his methods are not those
of some groups that claim for themselves the right to
speak for business. You would, I believe, agree with me
that he must reach his own decisions as to what is good
for the American people and the American economy. My own
judgment has been that private enterprise has never had
& better friend in the White house and that often he has
had to mage 8. double warfare, fighting off the foes of
private enterprise on the one hand and its ill-advised
friends on the other.
It seems to ne the record is pretty convincing that
private enterprise has not suffered under him but has
actually been rescued from serious peril.
I think the campaign of education of which you speak
is being carried on pretty effectively. Our people are
rather good judges of men and events.
In all sincerity,
Yours,
(Signed) H. Morgenthau, Jr.
Secretary of the Treasury.
Dr. Irving Fisher
Box 1825
New liaven 8, Connecticut
Regraded Unclassified
Carton
237
PROFESSOR IRVING FISHER
Box 1825
NEW HAVEN 8, CONNECTICUT
PERSONAL
October 30, 1944
Secretary Henry A. Morgenthau
Treasury Department
Washington, D.C.
My dear Secretary Morgenthau:
Reading your speech at the Waldorf gave me a good
deal of comfort.
I had already decided--reluctantly--to vote for Roosevelt,
but almost wholly on the basis of our foreign relations includ-
ing what Nelson well calls his "know-how" for the peace settle-
ment. You know how much this means to me since the days in
1920 (when you trained for your present job by being my
Secretary of the Treasury!).
But I have been most profoundly disturbed by his listen-
ing so much to enemies of our American system of private enter-
prise. You reassure me greatly; for I have faith in your
sincerity when you express such confidence that he favors that
system.
I feel at least sure that, after the war is over, when
there can be no excuse for the present signs of hostility to
business, you will yourself do your best to make good on your
present assurances--not only because you are sincere but as 8
matter of good faith with us voters.
I am confident that several others in the cabinet will
join you in giving pro-private enterprise advice to the
Regraded Unclassified
238
Secretary Morgenthau
-2-
October 30th, 1944
President. Moreover, under the Constitution, the Secretary
of the Treasury is, unlike any other cabinet member, a "little
president" directly responsible in some ways to Congress.
to
If you are right as/the President's own attitude, I must
conclude (as I had fondly hoped might turn out to be the case)
that he has not led his associates but has been led by them
into his apparent hostility to business.
Time was when he sought my advice on the depression and
unemployment. But it soon developed that other "brain-trusters"
led him away toward "the left". Had Professor Rogers lived (I
first suggested him to the President) this might not have
occurred.
You must realize that the great mass of business men most
sincerely and emphatically believe the present administration
is anti-business and that the bureaus in Washington are full
of anti-business officials. The vigorous statements of LaVarre
are not the only evidence which reaches the desks of these business-
ment-and mine.
The tax system is certainly anti-business;and business--
some of it-survives under it chiefly because of the war exigencies
and because of government assistance. This often offsets the
taxes on expansion. But not always. Already, according to the
releases of the Department of Commerce, 8 million small private
businesses have been put out of business. We seem headed toward
State Socialism and the country, including many half-baked
economists and soft-headed Washingtonians are trying to steer
Regraded Unclassified
229
Secretary Morgenthau
-3-
October 30th, 1944
us into State Socialism on the Russian model. They are saying
under their breath, "Roosevelt is only the Kerensky of the
Revolution". And I am not one of those who thinks we cannot
learn anything from Russia. Nor is Eric Johnston.
If every voter had as much confidence in your sincerity and
prognastications as I, the President would be re-elected over-
whelmingly, despite the anti-third term and anti-fourth term -
sentiment which I share.
He will probably be elected anyhow. But I wish there could
be some very definite assurance before the election from the
to
President himself that our private enterprise system is not
go by the board.
When you and Randolph Paul supported the spendings tax
I had high hopes; and had this tax (which, of course, is, in
effect, an income tax with expansion--savings--exempted] been
proposed as a measure in place of and not in addition to existing
income taxes it would have had the support of Senator Taft and
others.
As you yourself are clearly in favor of the continuance of
our American System of Private Enterprise which has made this
country great economically and as you are so close to the
President, I am now beginning to hope that the present anti-
expansion taxation may be abandoned after the war.
In order to preserve our American system of private enterprise
it seems to me we need at least the following four policies
as measures:
Regraded Unclassi
240
Secretary Morgenthau
-4-
October 30th, 1944
(1) Virtual abolition of all income taxes on
corporations (Randolph Paul told me he agreed. So does
Ruml. So does Leon Henderson.)
(2) The spendings tax in place of income taxes--
the rates to be high enough to yield whatever revenue is
needed.
(3) A domestic monetary reform to fit in with the
international monetary measures which will, we hope, grow out
of Bretton Woods-such domestic reform should prevent both
inflation and deflation in the future.
I know no effective way to do this in America
except by adopting "100% Money". (Professor Angell agrees.
So do 400 other economists. So do some bankers such as von
Windegger, President of the Plaza Bank of St. Louis. So do
some important labor leaders. I believe you'd find Eccles
willing. I know Jerry Voorhis in the House would be more than
delighted and would have the following of many congressmen.
The President's adviser Currie-I first recommended him-would
be more than willing.)
In England with her centralized and unified
banking system there are other methods available (though not
so completely effective). Lord Keynes will, I am sure, bring
about monetary stabilization there if you and others bring it
about here and the rest of the world would follow.
Regraded Unclassifie
241
Secretary Morgenthau
-5-
October 30th, 1944
(4) A campaign of education of the masses in America
on the lessons of our own history as to private enterprise and
the dangers of throwing it away in order to imitate Russia
(whose success so far as it exists comes from imitating us!).
I am now working with others to conduct such a campaign of
education and hope later to consult you about it, as well
as about the other three measures, which certainly come within
the scope of your department.
May I add a more personal word before closing? I have
followed, with admiration and pleasure, your splendid career
from the time you made good with me in a very humble capacity.
You have been granted, and have availed yourself of, wonderful
opportunities. I now see Opportunity knocking anew on your
door. For if you can put over sound tax reform and monetary
stabilization, your name will go down in history as having ac-
complished more for your country than any predecessor in your
high office, even Alexander Hamilton.
Finally, if either our anti-expansion taxation is continued
or if another great depression (due to neglect of safeguarding
against deflation by monetary reform) is allowed to occur,
whoever may be most responsible, we shall surely lose most of
our American system of private enterprise. Thousands of our
people seriously fear this calamity and I am one of them.
I hope my deep interest in these--your--problems as well
as in the Peace problem on which we once worked so hard
Regraded Unclassifie
242
Secretary Morgenthau
-6-
October 30th, 1944
together, may be sufficient excuse for so long a letter to
so busy a man.
As ever.
Very sincerely,
Irving Fisher
IF:M
Regraded Uncla
ADDRESS OFFICIAL COMMUNICATIONS TO
ackd by A-Bell 11-8-44
THE SECRETARY OF STATE
WASHINGTON, D. c.
90% to 1000 or who pay the 243
DEPARTMENT OF STATE
there y No be albuld
WASHINGTON
w
m the said white no
In reply refer to
ECA
November 2, 1944
CONFIDENTIAL
My dear Mr. Secretary:
As chairman of the interdepartmental. Executive
Committee on Economic Foreign Policy, I am enclosing
herewith a document outlining the new status and
functions of the Subcommittee on Private Monopolies
and Cartels which has been approved by the Executive
Committee.
It is desired to invite your attention particularly
to the first paragraph on page two, which reads as
follows:
"Agencies of the Government dealing with
various aspects of international cartel problems
should be informed by the Executive Committee
regarding the new status and functions of the
Cartel Committee and, in accordance with the
Bureau of the Budget recommendations approved by
the President, those agencies should be advised
to make available to that Committee such informa-
tion relating to international cartel problems
and policy as may be requested."
It would be very much appreciated if you would
bring this matter to the attention of the appropriate
members of your agency and, in accordance with the
recommendations approved by the President, make
available to the Cartel Committee such information as
may from time to time be requested.
The
The Honorable
Henry Morgenthau, Jr.,
Secretary of the Treasury.
FORVICTORY
BUY
UNITED
STATES
RAVINGS
BONDS
AND
STAMPS
Regraded Unclassified
244
-2-
The Cartel Committee will also be prepared to
consider any question within its jurisdiction which
your agency may desire to refer to it in accordance
with paragraph 2B on page two of the enclosed document.
Sincerely yours,
Azan Chron
Dean Acheson
Assistant Secretary
Enclosure:
Secret document
ECEFP D-52/44
with attachment
Regraded Unclassified
245
CONFIDENTIAL
78
CONFIDENTIAL
ECEFP D-52/44
EXECUTIVE COMMITTEE ON ECONOMIC FOREIGN POLICY
Committee on Private Monopolies and Cartels
STATUS AND FUNCTIONS OF THE CARTEL SUBCOMMITTEE
(As approved by the Executive Committee on
Economic Foreign Policy on September 29,
1944)
Regraded Unclassified
246
ECEFP D-52/44
September 20, 1944
EXECUTIVE COMMITTEE ON ECONOMIC FOREIGN POLICY
Committee on Private Monopolies and Cartels
STATUS AND FUNCTIONE OF THE CARTEL SUBCOMMITTEE
The Executive Committee on Economic Foreign Policy
(ECEFP) has established this Committee as one of its
temporary subcommittees and assigned to it the duty
of preparing a program for international cartel dis-
cussions. Shortly preceding the establishment of ECEFP,
the Bureau of the Budget had submitted to the President
a memorandum of findings and recommendations with respect
to the international cartel work of various agencies.
The recommendations contemplated that this Committee,
as a subcommittee of the then projected Executive Com-
mittee on Economic Foreign Policy should facilitate
consistency of operating decisions with established
cartel policy and that any agency proposing to take
major action involving international cartels should
submit such proposals to the Cartel Committee for inter-
agency consultation and advice to the State Department.
This memorandum was approved by the President. A copy
of the memorandum is attached hereto as Exhibit I.
In view of the differences in scope between the
functions of this Committee as defined by ECEFP and
as envisaged by the Bureau of the Budget, there is set
forth below a description of the status and functions
which appear to the Committee to be involved in these
recommendations:
1. Status of the Committee
A. The Committee should be a permanent
subcommittee of ECEFP. It should main-
tain close contact with agencies deal-
ing with various aspects of international
cartels and keep the Executive Committee
advised regarding important developments
and major action proposed in this field.
B.
Regraded Unclassified
247
-2-
B. Agencies of the Government dealing with
various aspects of international cartel
problems should be informed by the Execu-
tive Committee regarding the new status
and functions of the Cartel Committee
and, in accordance with the Bureau of
the Budget recommendations approved by
the President, those agencies should be
advised to make available to that Com-
mittee such information relating to
international cartel problems and policy
as may be requested.
C. The Committee's membership should con-
tinuo as at present constituted. A
member of the Treasury Department was
recently added pursuant to the recom-
mendation of the Bureau of the Budget.
The Committee should be authorized to
invite the participation of temporary
members or advisors when particular
topics are being considered. In this
manner a representative of the War
Department would be invited to partici-
pate with the Committee in discussions
of particular interest to that Depart-
ment.
2. Functions of the Committee
A. The Committee should continue to perform
its present function of preparing a pro-
gram for international discussion about
cartels and combines, and should make
formal policy recommondation on inter-
national cartols to the Executive Com-
mittoo.
B. Subject to policios approved by the
Executive Committee and to such directions
as it may proscribe, the Committee may
make recommendations to the agencies con-
corned upon matters relating to inter-
national cartels and combines which are
referred to it by the member Departments
or
248
-3-
or considered upon its own motion.
These recommendations should be purely
advisory, the function of the Committee
being to thresh out problems in the
cartel field and arrive at conclusions
which, because agreement has been
reached and because of the quality of
reasoning with which they are supported,
commend thomselves to those who have
administrative responsibility.
C. It is requested that the Exocutive Com-
mittee will i form its other subcom-
mittees of the responsibilities of the
Cartol Committee and will ask their
effective collaboration to insure con-
sistency of policy. To the same end
the Chairman and Secretariat of the
Cartel Committee should be requested
to maintain appropriate liaison with
the Secretariat of the Executive Com-
mittee and with tho Chairmon and
Secrotariats of other subcommittees
of the Executive Committee.
D. The disposal of Government war plants
and other publicly hold proporty may
raise policy issues with rogard to
international cartels in a number of
areas with which the Executive Committee
is concerned. Disposal plans for the
aluminum, magnosium, synthetic rubber,
nitrate, and certain other industries,
are of particular interest to the Cartel
Committee. It is, therefore, requested
that the Cartol Committee be authorized
to submit to the Executive Committee
recommendations concerning tho relation
of proporty disposal policy to cartel
policy for transmission to appropriato
Government agencies.
E. The Committee should prepare for con-
sideration of the Executive Committoe
a suggosted program about the cartel
and
Regraded Unclassified
249
-4-
and combines aspects of policy to be
followed in liberated and enemy areas
both during the period of military occupa-
tion and in the subsequent peace settlemont,
with emphasis on the latter. The primary
purpose of this work should be to widen
the area of agreement about such matters
among interested agencies of the Government.
Regraded Unclassified
250
HDS
EXHIBIT I
ok
FDR
4-19-44
C
EXECUTIVE OFFICE OF THE PRESIDENT
C
O
Bureau of the Budget
0
P
P
Y
Washington, D. C.
Y
April 15, 1944
MEMORANDUM FOR THE PRESIDENT
Subject: Cartel Work of Federal Agencies
At your request ve have had discussions with various
agencies engaged in investigations of cartels. Our find-
ings and recommendations can be stated briefly.
1. Investigation within the U.S. of cartels is now
being carried on predominantly by Justice and the re-
sultant data is available to all interested agencies.
Additional cartel data is accumulated by agencies other
than Justice, largely as a by-product of their normal
operations. The personnel involved is small, however,
and the Attorney General agrees that there 18 no serious
duplication,
The concentration in Justice of the domestic investi-
getion of cartels can be maintained through the appropria-
tion controls. In order that Justice may operate as the
central repository of cartel data within the U. S., all
agencies should transmit such data to Justice.
2, Investigation abroad of cartels will have ex-
pended importance 88 new sources of information are
opened up in liberated and enemy areas. The Foreign
Service of State should be prepared to render investiga-
tory assistance to all agencies concerned.
3. Analysis of data, recommendation of policy, and
operating decisions involving cartels are responsibilities
of several agencies which now, quite appropriately, have
small staffs to utilize pertinent facts in their discharge
of such responsibilities.
4. Recommendations on U. S. foreign policy involv-
ing cartels are now made to State by the Special Committee
on
Regraded Unclassified
251
- 2 -
on Private Monopolies and Cartels which that Department
sponsors. Each agency represented thereon is able to
contribute its own specialized knowledge and opinion.
Because Treasury and War have substantial interests in
cartel matters, it is recommended that they be represented
on this interdepartmental committee.
5. Determination of U. S. foreign policy involving
cartels, made in the light of recommendations by the Special
Committee, is the exclusive responsibility of State. When
present plans of the Department to establish 8 general inter-
agency committee on foreign economic policy mate ialize,
the Special Committee should become a subcommittee of the
new group. This would have the double value of assisting
State in its formulation of policy and of keeping the re-
sponsible agencies currently informed on relevant foreign
policy.
6. Consistency of operating decisions with established
certel policy is not assured by present administrative ar-
rangements. The Special Committee and any general inter-
agency committee on foreign economic policy should facilitate
such consistency, Any agency proposing to take major
ection involving cartels should submit such proposals to
the Special Committee for interagency consultation and
advice to the State Department.
If you concur in these recommendations, I shall sttempt
to work out the appropriate arrangements with the agencies
involved.
/s/ Harold D. Smith
Director
EST: EO
JCM&WCD;mr/cbh
4/4/44
Regraded Unclassified
252
78
Attachment: ECEFP D-52/44
EXECUTIVE COMMITTEE ON ECONOMIC FOREIGN POLICY
New Terms of Reference for the
Committee on Private Monopolies and Cartels
At its meeting on September 27 the Executive Com-
mittee decided that the Committee on Private Monopolies
and Cartels should be continued as a permanent committee
with the following terms of reference:
1. To parform its present function of
preparing a program for international discussion
about cartels and combines, and make formal policy
recommendations on international cartels to the
Executive Committee.
2. To maintain close contact with agencies
dealing with various aspects of international cartels
and to keep the Executive Committee advised regard-
ing important developments and major action proposed
in this field.
3. To make recommendations to the agencies
concerned upon matters relating to international
cartels and combines which are referred to it by
the member departments or considered upon its own
motion, with the qualifications that such recom-
mendations shall be (a) purely advisory, (b) sub-
ject to policies approved by the Executive Com-
mittee and to such directions as it may prescribe,
and (c) transmitted through the Secretariat which
shall be responsible for keeping the Executive Com-
mittee fully informed and referring to it cases
which warrant its attention.
4. To submit to the Executive Committee
recommendations concerning the relation of property
disposal policy to cartel policy for transmission
to appropriate Government agencies.
5. To prepare for consideration of the Execu-
tive Committee a suggested program about the cartel
and combines aspects of policy to be followed in
liberated
Regraded Unclassified
253
- 2 -
libarated and enemy areas both during the period
of military occupation and in the subsequent peace
settlement, with emphasis on the latter. The pri-
mary purpose of this work should be to widen the
area of agreement about such matters among inter-
ested agencies of the Government.
Membership of the Committee shall continue as at
present constituted. The Committee shall be authorized
to invite the participation of temporary members or
advisers when particular topics ar being considered.
Regraded Unclassified
18
254
BRITISH AIR COMMISSION
1785 MASSACHUSETTS AVENUE
WASHINGTON, D. C.
TELEPHONE HOBART 9000
PLEASE QUOTE
EFERENCE NO
With the compliments of British Air Commission
who enclose Statements Nos. 159 and 160 --
Aircraft Despatched -- for the weeks ended
October 13th and October 20th respectively.
The "onourable Henry Morgenthau, Jr.
Secretary of the Treasury
WASHINGTON, D. C.
November 2, 1944.
Regraded Unclassified
255
STATEMENT NO, 159
Aircraft Despatched from the United States
BRITISH/U. S. SECRET
Week Ended October 13, 1944
ASSE) BLY
BY
BY
FLIGHT DELIVERED
TYPE
DESTINATION
POINT
SEA
AIR
FOR USE IN CANADA
CONSOLIDATED
Liberator B VI
India
India
5
Liberator GR VI
India
India
1
Liberator GR VI
U.K.
U.K.
2
Liberator GR VIII
U.K.
U.K.
1
Liberator GR VIII
Behamas
Nassau
1
Catalina IV B
U.K.
U.K.
1
DOUGLAS
Dakota IV
U.K.
U.K.
5
Dakota IV
India
India
6
Dakota IV
S. Africa
S. Africa
2
Boston V
1/. E.
M.E.
31
NORTH AMERICAN
Mitchell II
Canada
Canada
3
Mitchell III
U.K.
U.K.
11
Mitchell III
Bahamas
Nassau
1
Mustang
N.W. Africa
Casablanca
11
GRUMMAN
Avenger
India
Cochin
2
Hellcat
India
Cochin
13
Wildcat
India
Cochin
2
BEECH
Beechcraft UC 45
India
Cochin
2
Beechcraft UC 45
N.W. Africa
Algiers
8
FAIRCHILD
Fairchild UC 61
N.W. Africa
Algièrs
15
STINSON
Reliant
India
Cochin
2
REPUBLIC
Thunderbolt
India
Aarachi
32
CURTISS
Kittyhawk
Australia
Sydney
18
WACO
Glider
India
Calcutta
152
VOUGHT-SIKORSKY
Corsair
India
Cochin
15
Wooden Corsair Replicas
U.K.
U.K.
3
275
67
3
Exported to U.K. on September 26,
Movements Division, British Air Commission
October 19, 1944.
mmh
File V-17
Regraded Unclassified
256
STATEMENT NO. 160
Aircraft Despatched from the United States
BRITISH/U. S. SECRET
Week Ended October 20, 1944
ASSEMBLY
BY
BY
FLIGHT DELIVERED
TYPE
DESTINATION
POINT
SEA
AIR
FOR USE IN CANADA
LOCKHEED
Fortress III
U.K.
U.K.
3
CONSOLIDATED
Liberator GR VIII
Bahamas
Nassau
1
Liberator B VI
India
India
14
Liberator B VI
Canada
Canada
1
Liberator GR VIII
U.K.
U.K.
3
Liberator GR VI
India
India
4
NORTH AMERICAN
Mitchell II
Canada
Canada
7
Mitchell III
U.K.
U.K.
6
Mitchell III
Bahamas
Nassau
2
Mustang
U.K.
U.K.
5
6
Mustang
N.W. Africa
Casablanca
DOUGLAS
Boston V
M.E.
K.E.
23
Dakota IV
U.K.
U.K.
4
Dakota IV
India
India
16
WOUGHT-SIKORSKY
R-4-B Helicopter
U.K.
U.K.
5
GRUMMAN
* Hellcat
U.K.
U.K.
1
* Wildcat
U.K.
U.K.
1
NOORDUYN
Harvard
U.K.
U.K.
5
REPUBLIC
Thunderbolt
India
Karachi
29
BEECH
UC-45 Beechcraft
India
Karachi
4
Total:
56
76
8
-
#
with radio equipment.
:
Movements Freight I
British Air Commission/Rafdel.
October 26, 1944
mmh
File V-17
Regraded Unclassified
257
TREASURY DEPARTMENT
OFFICE OF THE SECRETARY
November 2, 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 October 25, 1944, showing dollar disburse-
ments.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.
Em B
Regraded Unclassified
258
FEDERAL RESERVE BANK
OF NEW YORK
November 1, 1944.
CONFIDENTIAL
Dear Mr. Secretary: Attention: Mr. H. D. White
I am enclosing our compilation for the week ended
October 25, 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/ L. W. Knoke
L. W. Knoke,
Vice President.
The Honorable Henry Morgenthau, Jr.,
Secretary of the Treasury,
Washington 25, D.C.
Enclosure
COPY
Regraded Unclassified
ANALYSIS OF BRITISH AND FRENCH ..CCOUNTS
Strictly
(In Willions of Dollars)
Week Ended October 25. 1944
Confidential
B.NK OF ENGLAND (BRITISH GOVERNMENT)
BANK OF FR/JNCE
DEBITS
CREDITS
Proceeds or
Not Incr.(+)
Net Incr. (+
PERIOD
Gov't
a
Trans ors
Official
Bales of
from
Total
Total
Securities
Official
Other
or Decr.(-)
Total
Total
or Decr. (-)
Expondi-
three
Canadi an
Other
(Official)
Austrolian
Credits
in 8 Funds
Debits
Credits
in & Funds
War Years (s)
Dobits
n
Account
Dobits
Crodits
Gold
(b)
Account
(c)
(d)
(e)
(o)
(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 (r)
1,095.3 60
+ 299.0
Second
2,203.0
1,792,2
3.4
407.4
2,169.8
1,193.7
274.0
16,7
705.4
- 13,2
38.9
8,8
- 30.1
Third
1,235.6
504,8
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
2.7
179.4
280.9
1,072.3
IF
0.5
155,1
916.7
+ 308.3
10.3
1.0
- 9-3
Fifth
1.197-7
300.4
61.4
835.9
1,369.6
-
-
253,0
1,116,6
+ 171,9
-
-
-
1944
September
15160-
19.9
50.4
80.9
56.5
-
-
1.0
55.5
- 94.5
-
-
-
1945
DATE
-
haly
August
Wook Ended
15.4
6.3
9.1
7.9
-
4
1.0
6.9
- 7.5
-
#
-
October 4. 1944
-
305
55.9
10.7
-
-
-
10.7
- 48.7
-
-
-
Ocother 11, 1944
59.4
-
6.3
1.5
2.6
-
-
I
2.6
- 5.2
-
-
-
Centher 18, 1944
7.8
-
October 25. 1944
19.3
4.1
1.6
7.8
29.3 (b)
-
-
-
29.3(b)
+ 10,0
-
-
-
éverage Weekly Expend tures Since Outbrdak of Har
See attached shoot for footnotos.
Franco (through Juno 19, 1940) $19.6 million
England (through Juno 19, 1940) $27.6 million
England (through Juno 20, 1940 to March 12, 1941) 354.9 million
England (sinco Harch 12, 1941) 22.0
million
Regraded Unclassified
(a) Includes payments for account of British Ministry of Supply Mission, British Supply Board, Ninistry of Supply Timber
Control, and Ministry of Shipping.
(b) Estimated figures based on transfers from the New York 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 Horgenthau, total official and private British liquidation
of our securities through December, 1940 amounted to 3334 million.
(c) Includes about 385 million received during October, 1939 from the accounts of British authorised banks with New York banks,
prosumably reflecting the requisitioning of privato dollar balances. Other large transfors from such accounts since October,
1939 apparently represent current acquisitions of proceeds of exports from the storling area and other accruing dollar
receipts. Soe (x) below,
(d) Ruflects net change in all dollar holdings payable on demand or maturing in one year.
(o) For broakdown by types of dobite and crodits 800 tabulations prior to March 10, 1943.
(r) Adjusted to eliminate the effect of $20 million paid out on Juno 26, 1940 and roturned the following day.
(g) For monthly breakdown soc tabulations prior to April 23, 1941; October 8, 1941; October 14, 1942, Soptember 29, 1943, September 6, 1944.
(b) Includes $ 2.0 million apparently representing current and accumulated dollar proceeds of sterling area services and
morchandise exports, and $ 20.0 million in connection with the expenses of our armed forces abroad.
Regraded Unclassified
ANAYLSIS OF CANADIAN AND AUSTRALIAN ACCOUNTS
(In Millions of Dollars)
Strictly
Week Endod October 25. 1944 Confidontial
BANK
OF
CANADA (and Canadian Government)
COMMONWEALTH BANK OF AUSTRILIA (and Australian Government
DEBITS
CREDITS
DEBITS
CREDITS
Transfers
Transfors from Official
Transfers
S
Procoods
Official
British A/C
Net Incr.
to
Proceeds
Net Incr
of
PERIOD
(+) or
Official
of
(+) or
Total
British
Othors
Total
Gold
For Own
For Frunch
Other
Decr. (-)
Total
British
Other
Total
Gold
Other
Docr. (-
War Years (a)
Debits
A/C
Debita
Credits
Sales
A/C
A/C
Crodits
in ?Punds (e)
Debits
a/C
Debits
Credits
Sales
Credite
in $Punds
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
6.1
+ 4.9
Second
660.6
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
1
723.6
958.8
47.1
170.4
-
741.3
+ 235.2
197.0
155.1
41.9
200.4
-
200.4
+ 3.4
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
3944
24-5
0,1
24.4
91.8
-
50.4
-
41.4
+ 67.3
5.8
1.0
4,8
7.3
-
7.3
+ 105
945
Work Ended
October 4. 1944
14.9
-
14.9
16.8
-
-
-
16.8
+ 1.9
3,0
1,0
2.0
0.5
-
0.5
- 205
Outober 11. 1944
5.8
5.8
30.6
30.6
24.8
-
3.)
-
3-1
-
-
-
-
-
I
+ 3el
October 18, 1944
3.1
-
3al
5.2
-
-
-
5.2
+ 2.1
0.2
-
0.2
0.4
-
0,4
+ 0,2
October 25, 1944
9.9(a)
-
7.9
29.4(a)
-
7.4
-
22.0(d)
+ 21.5
0.1
-
0,1
0.8
-
O.E
+ 0.7
Average Weekly expenditures for
, First year of war
6,2 million.
(a) For monthly breakdowns soo tabulations prior to: April 23, 1941; October 8, 194
Second year of war
8.9 million.
October 14, 1942; September 29, 1943; September 6, 1944.
Third year of war
10.1 million.
(b) Roflocts changes in all dollar holdings payable on domand or naturing in one you:
Fourth year of was
13.9 million.
(c) Doos not reflect transactions in short term U. S. socurities.
Fifth year of war
16.1 million.
(d) Includes 3 15.8 million deposited by War Supplies, Ltd.
Stxth year of war (through) October 25, 1944)
7.1 million.
and $ 3.5 million received from Now York accounts of Canndian chartered bank
Regraded Unclassified
LONDON.--A GOVERNMENT SPOKESMAN INDICATED IN COMMONS THAT THE
262
BRITISH GOVERNMENT FAVORS CONFISCATING SOME, IF NOT ALL, OF THE MODERN
EQUIPMENT OF GERMANY'S FACTORIES AFTER THE WAR TO PREVENT THE GERMANS
FROM REARMING FOR ANOTHER CONFLICT.
GEORGE WALL, AN UNDERSECRETARY OF THE FOREIGN OFFICE, SAID THE
EXTENT OF THIS CONFISCATION WOULD DEPEND ON SECURITY FACTORS AS WELL
AS OTHER CONDITIONS PREVAILING AT THE END OF THE WAR. HE EMPNASIZED,
NOVEVER, THAT ANY DECISION ON THE QUESTION WOULD NAVE TO BE TAKEN
BY JOINT AGREEMENT AMONG ALL THE ALLIES.
11/2-=$1243P
11/3/44
Read this clipping to Miss Seavers, Mr. Stettinius' secretary,
and told her the Secretary would like to have Mr. Stettinius
cable and ask for the full text of this statement.
Recd from hu Stellenus
on 11/8/44
Regraded Unclassified
263
November 2, 1944
Dear Arthur:
I want to thank you very much for the
trouble you have gone to in trying to get a
statement from General Eisenhower through Mr.
Daniell and Mr. Middleton.
These gentlemen confirm my own opinion,
namely, that there are many reasons why the
Germans are fighting 80 hard now, and the least
of these is the gossip about the memoranda which
I submitted to the President on the future treat-
ment of Germany.
I have no intention of making any public
statement in the immediate future, but I may wish
to do 80 at some later date. At that time, would
it be agreeable to you if I used all or part of
either Mr. Daniell's statement or Mr. Middleton's
statement?
Sincerely yours,
/Hemy-
Mr. Arthur H. Sulzberger,
Publisher,
New York Times,
New York, New York.
Regraded Unclassified
25%
The Hew York Times
Times Square
ARTHUR HAYS SULZBERGER
PUBLISHER
October 31, 1944
Phomal
Dear Henry:
The enclosed seems to be the
best we can get, but it certainly ought
to be satisfactory from your standpoint.
I don't quite see how we can make a
story out of it as it is sort of thin.
Yours,
am
Hon. Henry Morgenthau, Jr.
Secretary of the Treasury
Washington, D.C.
L
Regraded Unclassified
265
PU3 VIA PREWI NYC149 PARIS 82 RTP 31 1305 PRESS NEWYORK TIMES NY
JAMES SORRY MOVE BEEN so SLOW ANSWERING YOUR INQUIRY REGARDING EFFECT
PUBLICATION MORGENTHAU PLAN FOR GERMANY BUT THAT WAS TOUGH ONE STOP
THERES BEEN GOOD DEAL DEBATE ON POINT YOU RAISED BUT BEST
OPINION SEEMS TO BE THAT NAZI LEADERS ARE FIGHTING FOR THEIR LIVES
ANYWAY THAT GERMAN RESISTANCE WAS BOUND TO STIFFEN AT FRONTIER AND THAT
IT DOESNT MAKE MUCH DIFFERENCE WHATS SAID OUTSIDE REICH STOP ANYWAY
THERES NO WAY OF PROVING EITHER SIDE OF DEBATE
DANIELL... 944A EB
Regraded Unclassified
266
18
PU4 VIA PREVI NYC152 PARIS 85/82 31 1410 PRESS NEWYORK
CITY
PARA SERVICE JAMES DONT THINK MORGENTHAUS PLAN HAD ANY DIRECT AFFECT
ON GERMANS WHOD BEEN TOLD REPEATEDLY BY BERLIN THEYLL HAVE TERRIBLE TIME
IF ALLIES WIN STOP INDIRECTLY STATEMENT MAYVE BEEN USED AS PROOF OF
PREVIOUS STATEMENTS BY GOEBBELS ON ALLIED INTENTIONS GERMANYWARDS STOP
GERRESISTANCE STIFFENED OUR OWN PROGRESS BEEN SLOWER SINCE MIDSEPTEMBER
BUT BELIEVE THIS RESULT TACTICAL LOGISTICAL CONSIDERATIONS AND INTENS-
IFICATION GERPATRIOTISM BECAUSE FIGHTING ON OWN SOIL STOP EISENHOWER
SAYS CANT MAKE STATEMENT ABOUT IT
MIDDLETON
VC 1049AM
267
EXECUTIVE OFFICE OF THE PRESIDENT
WAR REFUGEE BOARD
INTER-OFFICE COMMUNICATION
DATE Nov. 2,
1944
TO
Secretary
FROM
J.W. Pehle
Morgenthau motiond
M
You may be interested in the
attached cable (particularly the first
paragraph) from Myron Taylor at the Vatican
to the President and Secretary Hull.
Just
Attachment
C
O
EXCERPT OF
PARAPHRASE OF TELEGRAM RECEIVED
P
Y
FROM:
American Delegation, Vatican City
TO:
Secretary of State, Washington
DATED:
October 29, 1944
NUMBER: 359
SECRET
Following 18 for the Secretary and the President.
This morning at an audience I reviewed with the Pope the
general war situation with particular reference to Germany.
Like similar audiences in the recent past, I have been conscious
of a growing and developed realization on the part of the Pope
of the cruel and inhuman practices which are now reaching a
climax in various areas toward which the Pope feels that he had
exerted continuing attempts to allay but which he feels are
completely disregarded at this moment. This applies to both
recent cables which you have directly or indirectly sent to me at
the instance of the War Refugee Board (your 55 and 56 of October 25
and 26 respectively). However, the Pope will continue his efforts
in which he displays a very real desire to help.
As 1s our weekly custom, we discussed at some length the
question of relief supplies and activities and relationship
between supply of clothing and food to the political future of
the State. It has always been indicated in my previous cables
that the first step towards stability here was to supply clothing
and food. In any event the failure to supply them will hasten,
if not create of itself consequences of political importance.
The Pope takes obvious satisfaction in the National Committee
for distribution of relief, our first attempts at cooperative
distribution with regard to atebrin (see note) having been most
successul and with the receipt of the first shipments of donated
relief from American Relief from America to put it to a second
and more general test. We are forwarding today, on the basis
of these experiences, a summary that we are making of the
facilities of the three combined agencies for distribution that
we hope of supporting our judgment that the activities of UNRRA
should be administered through the same channels which allow of
adequate supervision by its limited staff of UNRRA representatives
along with those of our other supervisory and contributing groups.
Regraded Unclassified
268
- 2 -
Note: An acute malarial condition which last week was
discovered to prevail to the extent of ninety percent of the
population in the Cassino area. They had not distributed an
adequate supply of atebrin and the death toll was great. We
discovered and obtained one million and a quarter atebrin
tablets and the situation is being dealt with by a medical
group of national committee representative of the Government,
the Vatican and the Italian Red Cross who are already in
the area.
TAYLOR
Regraded Unclassified
269
AIRGRAM TO AMEMBASSY, QUITO, ECUADOR
Reference is made to your 2185 of September 28 and 2192 of
September 30. You may inform Ecuadoran authorities, if you consider it
advisable, that a special procedure has been adopted by this Government
in favor of certain persons in enemy-controlled territory. This procedure
is outlined in Department's instructions to Amlegation Bern substantially
as follows:
QUOTE There are & number of persons in enemy controlled
areas to whom American visas were issued on and after July 1,
1941, the date when present existing procedures and security
checks became effective, who, by reason of transportation dif-
ficulties and the advent of war, were unable to make effective
use of such visas. It is believed that a large proportion of
such persons are among those groups subject to enemy persecu-
tion. In the belief that the availability of new American visas
for such persons may save their lives, please request appropriate
officials of the Swiss Government to advise enemy governments
that American consular officers in neutral countries have been
authorized to issue an immigration visa to any person to whom an
American immigration visa was issued or for whom a visa was auth-
orized on or after July 1, 1941 and who has been in areas con-
trolled by Germany or any of Germany's allies since December 8,
1941, provided that such person presents himself to an American
consular officer in a neutral country and is found not ot have
become disqualified for the issuance of & visa,
QUOTE Accordingly, American consular officers in Switzer-
land are hereby authorised to issue new American immigration visas
to any such person to whom an American visa was issued or for whom
such visa was authorised after July 1, 1941, provided that (a) such
person other than 8 child under 16 years of age is found upon tole-
graphic reference to the Department for security check not to be
the subject of an adverse report dated subsequent to the previous
approval, (b) such person is not affirmatively found by the consul
to be inadmissible into the United States under the law, or (c)
the consul does not consider that the case is one which should be
recommended for consideration under the committee procedure.
QUOTE In advising Swiss officials of the foregoing please
attempt to secure their prompt agreement to advise enemy govern-
ments of Switzerland's willingness to permit the entry into Switzer-
land, with or without transit visas, of all persons to whom American
immigration visas were issued on or subsequent to July 1, 1941. You
may assure such officials that any such persons so admitted will be
adequately maintained and that any who may be found not (repeat not)
to be qualified for the issuance of a visa will be evacuated as
promptly as possible. Detailed instructions in connection with
Regraded Unclassified
- 2 -
270
the issuance of new American immigration visas pursuant to the
foregoing authority will follow promptly. The same request is
being made of Sweden, Turkey, Spain, and Portugal. UNQUOTE
This program has been further extended by a subsequent instruction to
Amlegation Bern substantially as follows:
QUOTE Please request appropriate officials of the Swiss
Government to advise enemy governments, particularly Germany
and Hungary, that American consular officers in neutral coun-
tries have been authorized to issue an immigration visa to the
alien husband, wife, parent, and unmarried minor child of an
American citizen, and the wife and unmarried minor child of
an alien resident of the United States who has been in an
area controlled by Germany or any of Germany's allies, pro-
vided that such person presents himself to an American con-
sular officer and if found not to be disqualified for a visa,
At the same time, please attempt to secure the prempt agree-
ment of the Swiss Government to advise enemy governments of
Switzerland's willingness to permit the entry into Switzer-
land of persons falling within the categories described above.
You may assure Swiss officials that any such persons 80 ad-
mitted will be adequately maintained and that any who may be
found not to be qualified for the issuance of a visa will be
evacuated as promptly as possible. Similar requests are being
made of Sweden, Spain, Turkey, and Partugal.
QUOTE Consular officers in Switserland are hereby auth-
orized to issue immigration visas to any alien who is the hus-
band, wife, parent, or unmarried minor child of an American
citizen and on whose behalf nonquota or first preference status
has been established by the approval of the Department of Justice
of a petition filed by such citizen relative, or who is the wife
or unmarried minor child of an alien lawfully admitted into the
United States for permanent residente and as such is entitled to
second preference immigration status. The issuance of visas is
subject to the provise, however, that (a) such person other than
a child under 16 years of age is found upon telegraphic Reference
to the Department for security check not to be the subject of an
adverse report or to be open to reasonable suspicion because of
the circumstances of the case such as those attending the release
of a male applicant of military age, (b) such person is not affirma-
tively found by the consul to be inadmissible into the United States
under the law, or (c) the consul does not consider that the case
is one which should be recommended for sensideration under the
committee procedure.
QUOTE Appropriate private agencies are being advised of the
foregoing so that the filing of petitions by citizen and resident
Regraded Unclassified
271
- 3 -
alien relatives of victims of persecution may be expedited,
and names of persons whose status within the categories men-
tioned above is established will be cabled to you from time
to time. If any persons within such categories should arrive
in Switzerland after Swiss have advised enemy governments in
accordance with item 3 above, but prior to any notification
to you of the establishment of their status, please advise
Board promptly of their names and of the names and addresses
of relatives claimed in the United States, UNQUOTE
The Department and Board would be heartened if Ecuadoran Government
were to undertake a similar program in the interest of saving lives. Since
there are in enemy-controlled areas probably few or no victims of enemy persecu-
tion with lapsed Ecuadoran visas or who are near relatives of Ecuadoran citizens,
Ecuadoran authorities will undoubtedly desire to extend any program of this
nature which they may adopt to other categories or to a definite number of enemy
victims.
Should Ecuadoran of ficials be disposed to extend such program to Hungary
as well as to Germany, it would appear necessary first to obtain the services of
Switzerland as protecting power for Ecuador in Hungary, as indicated in Depart-
ment's
of
.
3:00 p.m.
November 2, 1944
Miss Chauncey (for the Sec'y) Abrahamson, Ackermann, Cohn, DuBois, Friedman,
Hodel, Lesser, Mannon, McCormack, Files
LSLesser:tmh 11-1-44
Regraded Unclassified
272
PLAIN
JP-313
Lendon
Dated November 2, 1944
Rec'd 12:49 p.m.
Secretary of State
Washington
9483, Second
Finance Officer Intergevernuental Committee
on Refugees requests payment remaining helf United
States share of IGC administrative (repeat adminis-
trative) expenses for 1944 in amount of pounds 1998
reference Embassy's despatch 13250 January 12.
Please authorize payment first installment authorized
by Department's telegram 1814, March 10, which also
covered payment of pounds 50000 toward operational
expenses.
GALLMAN
RR
Regraded Unclassified
273
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
American Embassy, Paris
TO:
Secretary of State, Washington
DATED:
November 2, 1944
NUMBER:
297
SECRET
The message which follows is a jo£nt one, through
the War Refugee Board for Baerwald; it is from Emerson of
the Intergovernmental Committee and Hoyhler of UNRRA: both
of these men are in Paris at the present time.
Start of the message:
1. We deem it to be necessary that the Joint
Distribution Committee should renew monthly remittances
to the office in Paris as soon as possible; the minimum
requirements at the present time are ten million French
francs and this will probably prove to be insufficient.
2. We deem it to be most desirable that Green-
leigh should take over in Paris at as early a date as
possible; we understand that difficulties in the way of
his coming are being removed.
3. lie deem it to be very advisable that Schwarz
should visit Paris at as early a date as is practicable
in order to survey the entire position and make arrangements
accordingly.
CAFFERY.
DCR:LCW 11-3-44
Miss Chauncey (for the Sec'y) Abrahamson, Ackermann, Alcsin, Cohn, Drury,
DuBois, Friedman, Gaston, Hodel, Marks, Mannon, McCormack, Pehle, Files.
Regraded Unclassified
274
CABLE TO NORWEB, LISBON, FOR DEXTER FROM WAR REFUGEE BOARD.
Please furnish us office equipment inventory and approximate
value each item, Also indicate condition of each article. At
proper time, instrutions will be forwarded for disposal of
equipment and accounts.
THIS IS WRB LISBON CABLE NO. 110.
5:15 p.m.
November 2, 1944
DWhite:hmd
11/1/44
Miss Chauncey (for the Sec'y) Abrahamson, Ackermann, Cohn, DuBeis, Friedman,
Hodel, Lesser, Mannon, McCormack, Files.
Regraded Unclassified
275
AIRGRAM
FROM American Embassy
Madrid, Spain
Dated November 2, 1944
Rec'd November 10, 5 p.m.
Secretary of State,
Washington.
A-623, November 2, 1944, 8 p.m.
CONFIDENTIAL For War Refugee Board. Official of Ministry
of Foreign Affairs has orally confirmed that instructions along
lines indicates in the Spanish Ambassader's letter of October 13
quoted in Department's telegram No. 2871 of October 25 have been
sent to Spanish Embassy in Berlin on several escasions. He states,
however, that efforts of latter Mission are being met with
increasing unwillingness on part of German Government to cooperate
in such matters.
HAYES
NEB/jf
Regraded Unclassified
276
CEK-299
Stockholm
Distribution of
true reading
only by special
Dated November 2, 1944
arrangement (SECRET B)
Rec'd 12:40 p.m.
Secretary of State,
Mashington.
4463, November 2, 11 a.m.
Re have discussed with former Lithuanian
Minister to Sweden (Gylys) his financial requirements
of supplying necessary assistance to the 325 Lithuamien
refugees presently in Sweden. This is our 98 for MRB
in reply to ARB 109 (Department's 2069 of October 14,
midnight). Please consult in this connection Legation's
4455, November 1, 8 p.m.
For the time being it would appear that $7500
monthly should be ample to take care of the current
needs of this group. This amount may be decreased
as the refugees get settled down and find employment,
but may be increased if more find their way to Sweden,
which is extremely improbable. With the exception of
36 Lithmanians who were held by the Germans in Finland
for forced labor and who escaped on feet to Sweden
in September, and two Lithuanians who escaped from a
German labor camp in Norway, no Lithuanians have been
able to escape to greden in past 2 or 3 years other
than those brought over through Olsen's arrangements.
As previously reported, these operations were stopped
in September, largely 48 a result of the physical
impossibility of getting - beat anywhere near the
Lithmamian coast.
JOHNSON
KMB
Regraded Unclassified
277
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
American Legation, Stockholm
TO:
Secretary of State, Washington
DATED:
November 2, 1944
NUMBER: 4477
CONFIDENTIAL
Dissident Hungarians here were told by travelers who left
Budapest on October 22 the following: The confusion and dis-
organization in Hungary were indescribable. Food deliveries
to Budapest were upset by disruption of transportation and for
several days they lacked bread completely. Poor people were
almost starving. From southern and eastern Hungary tens of
thousands of refugees streamed to Budapest by train and auto,
and chiefly by horse and wagon in an effort to cross over to
western Hungary. This stream of refugees upset the food supply
and blocked roads. Those refugees who could not be sheltered
camped in fields.
JOHNSON
DCR:VAG 11/3/44
Regraded Unclassified
278
CABLE TO MINISTER HARRISON, BERN, FOR MCCLELLAND, FROM MAR REFUGEE BOARD.
Please deliver the following message to Isaac Sternbuch, St. Gall,
from Rabbi Kalmanowitz of the Vaad Hahatzala Emergency Committee:
QUOTE HAVE CABLED YOU 25,641 SWISS FRANCS THROUGH POLISH
CONSULATE. PLEASE FORWARD TO RABBI SZMULEWICZ TOGETHER WITH
EXACT INSTRUCTIVE MESSAGE AND DETAILS OF DISTRIBUTION. ADVISE
US WHEN RECEIPT CONFIRMED BY SZMULEWICZ. UNQUOTE
THIS IS WRB BERN CABLE NO. 257.
1:45 p.m.
November 2, 1944
RDrury 11/2/44
Regraded Unclassified
279
CABLE TO MINISTER HARRISON AND MCCLELLAND, BERN, SWITZERLAND
Reference is made to your 7163 of October 28. Department and
Board fully agree with action suggested by Grassli. Should you not yet
have done so, you are requested to approach Swiss authorities accordingly
without delayl In connection with claimants to citizenship of United
States and other American Republics, whether with or without documents,
reference is made to Department's 1269 of April 13, 1921 of June 6,
and 2149 of June 24.
THIS IS WRB BERN CABLE NO. 258.
5:15 p.m.
November 2, 1944
Miss Chauncey (cor the Sec'y) Abrahamson, Ackermann, Cohn, DuBois, Friedman, Hodel,
Lesser, Mannen, McCormack, Files
BAkzin;tmh 11-2-44
Regraded Unclassified
280
CEK-401
Bern
This telegram must be
paraphrased before being
Dated November 2, 1944
communicated to anyone
other than a Government
Rec'd 5:15 p.m.
Agency. (RESTRICTED)
Secretary of State,
Washington.
7293, November 2, 4 p.m.
FOR WRB FROM MCCLELLAND
For Weisaman of Self Help from Famy Silber-
schein-Hirsch, Comite Intellectuals:
"Kould appreciate your agreement to further help
for writers, jeurnalists, and refugees in Shanghai.
Also need additional funds to clothe intellectuals
attending universities as sue available for this purpose
inadequate.
Appreciate yeur agreement reestablishment Paris
and Brussels offices." 1680
HARRISON
EMB
Regraded Unclassified
281
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
American Legation, Bern
TO:
Secretary of State, Washington
DATED:
November 2, 1944
NUMBER:
7294
SECRET
US URGENT
The following message with regard to American interests
in Hungary is transmitted,
McClelland has been informed by several Jewish
organizations in Switzerland on the 5th of October that
Jews at Budapest were being massacred according to
information dated about October 17 which has been received
from the United States, TAt once the Legation requested the
Fereign Office to obtain urgently a report from the Swiss
Minister at Budapest at the earliest possible date.
There follows the substance of the Swise note of
November 2:
A message has just been received from the Swiss Legation
at Budapest by the Political Department which reports that
Jews in streets and houses in Budapest have been shot,
on the pretext that the Jews offered opposition, during the
first days which followed the overthrow of the Horthy Government.
The situation has improved since that time, The Swiss Legation
has no information as to further murders of Jews during the
last few days.
In connection with the above message please see my
message of October 24 No, 7049 and previous telegrams.
HARRISON
DCR:LCW:MEM
11/3/44
Regraded Unclassified
282
Bern
Dated November 2, 1944
Rec'd 5:05 p.m.
Secretary of State
Washington
7295, November 2, 6 p.m.
FOR WRB FROM MC CLELLAND
According to the latest information just fur-
nished by Kasztner, who just arrived in Switzerland,
situation and lecation of remaining Hungarien Jews
is as follows:
(One). 25,000 men and boys between ages of
14 and 60 and, (Two). 45,000 women and girls be-
tween ages of 14 and 40 (without small children)
are all employed on fortification work in Hungary.
(Three). 90,000 men are in forced labor camps in
Hungary. (Four). 100,000 children, elderly people
and invalids are being grouped in "Jewish houses"
or ghettos in suburbs of Budapest. (Five). 50,000
persons from categories one and two have been on-
dred to march on feat to Germany via Austria.
Quite possi ble this is group being used "en route"
for fortification work along Austro Hungarian border.
(Six). Some 7,000 Hungarian Jews are located in
the Vienna area. (Seven). Another approximately
17,000 formerly deported from Hungary are in camps
in various parts of Austria as previously reported,
HARRISON
RB
Regraded Unclassified
283
CABLE TO STEINHARDT, ANKARA, FOR KATZKI FROM WAR REFUGEE BOARD
Refernece your No. 2059, October 26, (Ankara's 170). Have
Scheleifer children and Aunt Margaret Neulander left for Jerusalem
or are they still in Istanbul.
Please advise at once.
THIS IS WRB ANKARA CABLE NO. 124.
9:30 a,m,
November 2, 1944
Miss Chauncey (for the Sec'y) Abrahamson, Ackermann, Akzin, Cohn, DuBois,
Friedman, Hodel, Lesser, Mannon, McCormack, Files.
FH:hd 11/1/44
Regraded Unclassified
284
November 2, 1944
6 p.m.
AMEMBASSY
ANKARA
987
The following for Kataki is WRB 124.
Reference your No. 2059, October 26, (Ankara's 170).
Have Scheleifer children and Aunt Margaret Neulander left
for Jerusalem or are they still in Istanbul.
Please advise at once.
STETTINIUS
(Acting)
WRB:MMMV:KG
11/2/44
NE
Miss Chauncey (for the Sec'y) Abrahamson, Ackermann, Aksin, Cohn, Drury,
DuBois, Friedman, Hodel, Gaston, Lesser, Marks, Mannon, McCormack,
Pehle, Files.
Regraded Unclassified
285
NOT TO BE RE-TRANSMITTED
COPY NO.
SECRET
OPTEL No. 356
Information received up to 10 a.m., 2nd November, 1941
1. AMPHIBIOUS OPERATIONS
Early 1st R.M. Commandoes supported by U.K. troops
landed at Flushing and successfully established bridgehead. Three
R.M. Commandoes landed Westkapelle and were strongly opposed,
suffering heavy casualties in raft and men. Low cloud prevented
air support until afternoon when limited air operations were possible
and spotting aircraft cooperated with three of H.M. Warships in
bombarding enemy batteries. Shelling of beaches prevented store
carrying craft from unloading in daylight. By 8:40 p.m. general
progress of operation was reported satisfactory.
2, NAVAL
32st/lst. One of H-M, Destroyers drove off E-boats off
Ostend and sunk one,
MEDITERRANEAN. By 31st party previously landed on
Piskopi had been re-embarked in a Greek Destroyer. German Head-
quarters destroyed during landing.
3. MILITARY
WESTERN EUROPE. Patrols of 2nd Army are held up along
Dentel Mark Canal west of Oosterhout, Canadisn troops have secured
a bridgehad beyond causeway into Walcheren. South of Scheldt
Estuary Canadian troops are fighting in Knocke.
ITALY. Eighth Army troops are advancing towards Forli
after building up strength across River Ronco in Meldola area.
4, AIR OPERATIONS
WESTERN FRONT. 31st/lst. 2,368 tons dropped on Cologne,
1st. 163 escorted heavies Bomber Command (1 missing)
dropped 818 tons on Homberg Synthetic 011 Plant through cloud.
303 escorted U.S. heavies (1 fighter missing) dropped 610 tons on
Gelsenkirchen Symthetic 011 Plants, 113 tons on Coblenz and Hamm
Railway Centres through cloud. 413 fighter bombers and fighters
dropped 147 tons on communications and a pewer plant. 361 others
attacked targets in Holland. 16 loccmotives, 115 railway wagons
and 56 M.T. destroyed or damaged and tracks cut in 24 places.
lst/2nd, Aircraft despatched:-
Oberhausen
288 (7 missing)
Berlin
49
Bomber support
69
Other targets
21
MEDITERRANEAN. 31st. Bad weather restricted operations,
but 674 aircraft successfully attacked communications in Po Valley
and enemy positions in battle area.
1st. 285 escorted heavies dropped 575 tons on Graz,
Vienna Ordnance Depot, Liebach Railway Centre and other targets.
Six bombers, two fighters missing.
Regraded Unclassified