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Volume 792, November 5 – November 9, 1944
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Volume 792, November 5 – November 9, 1944
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Henry Morgenthau, Jr. Papers
Diaries of Henry Morgenthau, Jr.
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DIARY
Book 792
November 5-9, 1944
Regraded Unclassified
- A -
Book Page
Aarons, Lehman 0.
See France
. United Kingdom
- B -
Bretton Woods Conference
See Post-War Planning
British Dominions
See Lend-Lease: United Kingdom (Phase 2)
Business Conditions
Hans memorandum on situation, week ending November 8, 1944 -
11/9/44
792
182
- C -
China
Financial report from American Embasay, Chungking -
11/7/44
134,288
Political and military situation reported discouragingly
by Friedman - 11/9/44
251
- D -
Democratic Campaign of 1944
FDR's Dutchess County itinerary - 11/6/44
21
a) Speech at Wappinger's Falls
24
b)
-
# Hyde Park
27
After FIR's re-election, HMJr talks to Treasury group
from farm - 11/8/44
137
- F -
Financing, Government
Security markets (high-grade) - recent developments in;
new British 1-3/4% bond - Hass memorandum - 11/9/44
196
Fort Ontario - Oswego, New York
College Students: See War Refugee Board
France
Treasury representative Aarons reports on visit to
Paris - 11/9/44
265
Treasury representative Hoffman reports from Paris,
November 1944
269
(See also Book 793, page 263; Book 799,
page 224; and Book 801, page 276)
Treasury representative Saxon reports from Paris:
See Book 795. page 317
French Financial Representative, London,-Treasury
representative conversation: Book 799. page 141
Regraded Unclassified
- I - (Continued)
Book
Page
France (Continued)
Treasury letter to Var Department concerning
investigations of activities of French branches during
period of German occupation - 11/16/44: See Book 795.
page 321
Treasury representative Snider reports from Paris -
11/21/44: Book 801. page 173
- G -
Germany
See Post-War Planning
- H -
Hoffman, Michael L.
See France
- L -
Lend-Lease
Executive Reports as of
September 30, 1944 - 11/6/44
792
34
October 31, 1944 - 12/5/44: See Book 801. page 76
Weekly report - 11/8/44
168
.
.
as of November 15 - 11/22/44: Book 798.
is
page 110
Weekly report as of November 22 - 11/29/44: Book 800.
page 104
United Kingdom
Lumber and wood products for Great Britain - dollar
value of - 11/6/44
47
Phase 2
British requirements in first year of Stage II -
second supplement - 11/9/44
205
(For original requirements in three volumes ...
Book 783; for Supplement 1 see Book 788, page 94)
British Dominions
See also Books 787, and 788
Combined Committee meeting on Lend-Lease between
United States, the Dominions, and India - minutes -
11/6/44
38
American delegation confers - 11/10/44:
See Book 793, pages 13.44
a) Dominions situation reviewed by Acheson
Var Department's reaffirmation of agreement on
program - 11/10/44: Book 793, page 42
War Departments later statement on neccessity of
reciprocal aid from the Dominions of the British
Commonwealth of Nations - 11/14/44: Book 794,
page 269
- x -
Book
Page
Morgenthau, Henry, Jr.
After FDR's re-election, HMJr talks to Treasury group
from farm - 11/8/44
792
137
(See also Democratic Campaign of 1944)
- If -
New York Times
See Post-War Planning: Germany (Treasury Plan)
- P -
Post-War Planning
Bretton Woods Conference: British Chancellor of Exchequer's
statement transmitted by Keynes - 11/9/44
226
Germany: Treasury Plan
War Department (Stimson) decides against statement on
stiffening of German resistance at this time -
11/5/44
1,8
a) Again asked for statement on - 11/11/44:
See Book 793. page 246
b) Stimson's statement - 11/25/44: Book 798, page 288
New York Times editorial and follow-up work done by
Gaston and Gamble - 11/7/44
66
(See also Book 793, page 105)
Surplus Property, Disposal of
Justice Department asked for opinion on application of
Section 27 of Act regarding employees whose duties
relate to disposal of surplus property - letter dated
October 4, 1944 and mailed November 7. 1944
79
a) O'Connell reveals informal decision planned by
Justice - 11/10/44: See Book 793. page 10
b) Opinion rendered - O'Connell memorandum -
11/20/44: Book 787, page 124
Special items valued in excess of $50,000,
as of November 6, 1944
87
. #
-
14, 1944: Book 794, page 242
# .
.
20, 1944: Book 796, page 234
# #
.
27, 1944: Book 800, page 111
- R -
Roosevelt, Franklin D.
See Democratic Campaign of 1944
- 8 -
Security Markets
See Financing, Government
Surplus Property, Disposal of
See Post-War Planning
Regraded Unclassified
- T -
Book Page
Taylor, William H.
See United Kingdom
Treasury Department Employees
Pay periods adjusted. - 11/8/44
793
161
a) HMJr agrees - 11/22/44: See Book 798. page 3
- U - -
United Kingdom
See Lend-Lease
- Post-War Planning: Bretton Woods Conference
Treasury representatives Taylor and Aarons report on
confused situation - - 11/9/44
259
- W -
War Department
See Post-War Planning: Treasury Plan
War Refugee Board
Fort Ontario College Students: Mrs. FDR-Pehle
correspondence - 11/7/44
112
Regraded Unclassified
1
November 5, 1944
9:57 a.m.
Operator:
There's Mr. Gaston.
Herbert
Gaston:
Hello.
HMJr:
Herbert.
G:
Yes.
HMJr:
Am I making a record?
G:
I threw the switch and the light is on.
HMJr:
Yeah. I don't know how many cylinders there are.
You haven't got anybody around?
G:
No, nobody at all. I should think Miss Chauncey
would be here pretty soon and Dillon 1s on his
way down, but nobody at all at the moment.
HMJr:
Well, you are a pretty good reporter and you might
make notes as I talk. Will you?
G:
Yes, I will.
HMJr:
Got a pencil?
C:
Yes. I have.
HMJr:
Well, I have just had a forty-five minute talk
with McCloy
G:
Yeah.
HMJr:
....
who had a long talk with Stimson.
G:
Yes.
HMJr:
Stimson did stay up and hear the broadcast last
night.
G:
Yeah.
HMJr:
Which is a phenomenawin itself.
G:
Yes.
Regraded Unclassified
- 2 -
2
HMJr:
And his best political judgment 18 that it would
be a mistake for him or Marshall to say anything
at this time because up to now the War Department
has not been in this political campaign.
G:
Yeah. Yeah.
HMJr:
But that somebody who has been campaigning ....
G:
Uh huh.
HMJr:
might say something because the reasons are
perfectly obvious why the war has been slowed un.
So I said, "Well, who for example?" He said, well,
anybody as long as -- he didn't think either Roosevelt
or Truman.
G:
Uh huh.
HMJr:
That anybody could make a statement. I said,
well, I didn't think that would carry much weight.
G:
Uh huh.
HMJr:
Well, that was Stimson's best judgment.
G:
Uh huh.
HMJr:
He also had been talking with General Surles.
G:
Uh huh.
HMJr:
And that General Surles was inclined to write a
statement, but had not had much success.
G:
Uh huh.
HMJr:
And he felt that if We dió it now it would be a
sort of -- last minute bomb-shell bringing the
War Department into politics.
G:
"h huh. Uh huh.
HMJr:
He said it would accentuate the "Morgenthau Plan"
and would make it almost as important as "Clear
it with Sidney".
G:
Uh huh.
HMJr:
See?
Regraded Unclassified
7
- 3 -
G:
Uh - huh.
HMJr:
That it would accentuate the "Morgenthau Plan"
at this time and he thought it was a mistake.
G:
Uh - huh.
HMJr:
And I said, well, I thought they were wrong. So
he said, well, that was the best judgment of
Stimson and he agreed with Stimson.
G:
Uh - huh. Yes.
HMJr:
Now, the other thing was that -- oh, yes, well,
I said, "Well, after election
If
....
-- oh, yes,
he said they might make something after election
so I said, well, I would be very insistent that
they did say something.
G:
Uh - huh.
HMJr:
Well, they thought that they could but they
wouldn't promise.
G:
Uh - huh. Yeah.
HMJr:
He's going to get in touch with Steve Early
....
G:
Yes.
HMJr:
....
and talk to him and he might call me back
at a quarter of one.
G:
Uh - huh.
HMJr:
They're not going to do anything.
G:
No, I didn't think so and I - I knew the grounds
on which they would put it. That it would be
getting the War -- the War Department into politics.
HMJr:
That's right.
G:
Yeah.
HMJr:
That's it.
G:
Yes.
HMJr:
Now -- what else has happened at your end?
Regraded Unclassified
- 4 -
G:
There's nothing happened at my end. I have just
been looking over my clippings and waiting to hear.
I haven't yet talked to Luxford, because I didn't
want to miss any call from you. I -- I will talk
to Luxford and find out whether this man has called
him -- Hall, Drew Pearson's man -- no, not Hall but
Carr. He was to call Luxford this morning and
Luxford was going to turn him over to me, and the
best I can give him at the moment is that for him
to, on his own authority -- well, first for him to
say that the two leading Democratic -- Republican
newspapers, supporters of Dewey, have both repudi-
ated this idea and then to talk a little on his
own responsibility of the common sense of the thing
as to what has actually happened.
HMJr:
Well -- you -- I don't know how you feel. How
do you feel about anything coming out over my
name?
G:
Uh -- I -- uh -- am a little doubtful of any value
to it. Uh -- a statement can be written.
HMJr:
Well, my own feeling 1s, I don't -- I don't think
that anything over my name at this time is going
to help correct it.
& G:
The only difficulty with it
HMJr:
Elinor agrees with me.
G:
Well, as I said before, when we were discussing
this other thing the other day, it 1s hard to
separate the two considerations. I would like
to say some vigorous things which would help you,
but I don't know that they will helo the election.
HMJr:
Well, Elinor -- (Aside: he said
)
--
wait
a minute. (Aside: Yes) Well, Elinor says that
in view of the War Department's attitude she doesn't
see how I could say anything alone.
G:
Well, since the President has turned you down, this
has got up on to a high enough level 80 that it's
his responsibility and Hannegan's responsibility.
HMJr:
Hannegan.
G:
It's his and Hannegan's, yes. And Paul Porter's
Regraded Unclassified
5
5 I 1
HMJr:
Yeah.
G:
and it's -- they know that we are standing by
and can help. I think that if we -- think if we
try to do something through Drew Pearson on our
own, that's about as far as we can go.
HMJr:
Do you think it would be any use to try to call
up Hannegan?
G:
Hello. Hello.
(Interruption on wire)
Operator:
You have been cut off. Just a second, Mr. Gaston.
G:
All right.
Operator:
Go ahead.
G:
Hello.
HMJr:
Elinor was saying that if I say this thing alone
without any support from the War Department, I
draw the whole thing on myself.
G:
Yes, that's right. That's right.
HMJr:
And I think the thing to do is -- what's his name
now -- McCloy is going to talk to Early.
G:
Yeah.
HMJr:
And I think that we will just let them sweat a
little bit. They're not going to sweat much
....
G:
Uh - huh.
HMJr:
and if they don't do anything, we'll just
have to keep quiet.
G:
Uh - huh. All right. Well, then -- then I'll --
we'll talk to Drew Pearson. His judgment is
pretty good. He can -- he can say what he wants
to say. I'll tell him about these two stories
in the two Republican newspapers. The rest -- I
can't find anything else that's any good. While
there are a good many editorials favorable to your
plan, none of the others say flatly that this is
nonsense; that it's affected the course of the war.
Regraded Unclassified
6
- 6 -
HMJr:
In my course of conversation with
G:
With McCloy.
HMJr:
he said he'd seen Pearson last week.
G:
Yes.
HMJr:
The question came up where did the stories come
from that Pearson had written, with regards to
the pamphlet. See?
G:
Yes.
HMJr:
Sohe said they did not come from the Treasury.
It came from somebody in the State Department
who was friendly with the Treasury.
G:
Yes.
HMJr:
So I said I would like to meet that person.
G:
Uh - huh. Well, there are.
HMJr:
What?
G:
There are.
HMJr:
Are there?
G:
Yeah.
HMJr:
Well, anyway, that's that. And I got three hours'
sleep last night and I'm going up and go to bed.
G:
Well, I am terribly -- terribly sorry. I don't
blame you. I want to say a file of words that --
I would like to say something to the effect that
if anybody -- if anybody had thought that --
cherished the idea before Dewey spoke last night
that he had some shreds of decency and honor in
his make-up that they must have dropped that
thought after hearing him last night.
HMJr:
I see. Well, thanks. And I think that if we can
get something from Pearson that would help a little
bit.
G:
Yeah. Right.
Regraded Unclassified
7
- 7 -
HMJr:
Thank you, Herbert.
G:
Right. Good-bye.
Regraded Unclassified
4,
8
November 5, 1944
(Dictated by Mr. Gaston/
The Secretary called me a little before eleven.
he said he had just had a forty-five minute talk with
McCloy who had previously had a long talk with Stimson.
Stimson said that his best political juagment was that
it would be a mistake for him or Marshall or anybody in
the War Department to say anything about Dewey's charge
that the war had been lengthened by publication of the
Morgenthau plan. he said that up to this time the War
Department had kept strictly out of the political cam-
paign and he thought it would be a great mistake to get
in at this time. ne thought that if somebody who has
been campaigning politically were willing, he could
probably make a statement to the effect that this thing
had not prolonged the war and he said he had been talk-
ing to General Surles and Surles was trying to write
something which they might give out, but without much
success. he repeated that he thought it would be a
mistake to bring the war Department into politics in
the way this would do it and he thought it would not
do any good so far as the campaign was concerned because
it would accentuate and attract more attention to the
Morgenthau plan and make it as important an issue for
the Republicans as "Clear it with Sidney". ne said,
however, that they might be able to do something after
election and Secretary Morgenthau said to McCloy that
he very much hoped that they would do something. McCloy
said they would get in touch with Steve Early to clear
the thing with him, but they thought his opinion would
be the same.
The Secretary then asked me whether he thought
there would be any use in our getting out a release of
our own. I told him that was a very hard question to
decide; that his own interests got a little mixed in
my mind with the campaign and it was a little difficult
to separate them, but my best judgment was that while
he, personally, might be helped by a statement that it
would not help the campaign. The Secretary told me
Regraded Unclassified
-2-
that was Mrs. Morgenthau's judgment and his own.
1
said that the one thing we might do is to try to get
Drew Pearson to use something and he agreed to that.
Shortly after I returned to the office, I called
Drew Pearson at his home and Drew said he would try to
work out something. ne asked me what he might be able
to say and I told him that the one thing might be to say
that the two leading Republican newspapers in the East
and in the Middle West, which are reputable and are sup-
porters of Dewey, had both characterized the Dewey thesis
as nonsense and I read extracts to him of the editorial
from the nerald Tribune, of October 1, and that of the
Chicago News, of October 17. I also said that it should
be common knowledge and certainly was among military men
that the delay was largely one of logistics, that is, of
supply; that it was due to lack of ports and to the dif-
ficulty of reorganizing the longer lines of transport
plus the fact that the Germans were behind good defenses
on their own soil.
he said he thought I ought to know and that the
Secretary ought to know that a high official in the War:
Department, not on the military level but on the Cabinet
level, had told him that it was his belief that the pub-
lication of the Morgenthau plan had definitely lengthened
the war. I remarked to Pearson that there was a question
of interest there and Drew agreed that there was. 1 said
that so far as the Secretary was concerned it was a telling
point that it was not he that was responsible for the so-
called Morgenthau plan but the newspapers and that of course
he, Drew, knew that the story did not come out of the Treas-
ury. Drew said that he did know that; that he knew where
it came from, and that that was a point in the cretary's
defense, but he agreed with me that it had no value SO far
as the campaign was concerned.
he said that he would try to work out something to
use on his broadcast tonight. he doubted that he could
use the stuff about the two newspapers, because, he said,
Regraded Unclassified
10
-3-
the program supervisors in the chains are constantly
checking nim up and making him cut out political stuff,
but he will do the very best he can. I told him that
we felt sure that he would do that and thanked him for
his help.
Mr
σ0o-o0o-o0o
Regraded Unclassified
Excerpt from Drew Pearson's broadcast, November 5, 1944
11
London - The German Army in East Prussia is fighting so
fiercely that there will be no need to transplant the
population of East Prussia after the war. It will be all
wiped out. Reason is that the Nazis are now fighting on
German soil. The American Army has experienced the same
thing on the Western front. War Department officials tell
me it is not Mr. Morgenthau's plan for the future partition-
ing of Germany, as some politicians charge, but the fact
that German scil is considered Holy soil. Dr. Goebbels has
been preaching this for weeks, has been hammering home,
long before the Morgenthau plan, that the Germans will be
tortured, their homes taken away, their fields burned,
and that only relentless opposition to the enemy invader
can save them. Before this we have been fighting on
French, Polish, Greek or Rumanian soil where the local
people were friendly to us. Now it is just the opposite.
Regraded Unclassified
12 4.
EXECUTIVE YUAN
NATIONAL GOVERNMENT OF CHINA
non
November 5, 1944.
Honorable Henry Morgenthau, Jr.
Secretary of Treasury
Washington, D.C.
Dear Mr. Morgenthau:
Thank you for your letter of October 20 which I
received upon my return from a delightful but strenuous
trip to Boston and Oberlin. It was good of you to invite
me to resume discussions with you with respect to United
States Army Expenditures in China after my trip.
I had wanted to come here sooner but I was wait-
ing for additional data of the accounts which took sometime
to arrive from China. Furthermore, it was near election time.
Both President Roosevelt and you are very busy 80 I do not
want to bother you.
However, I have some other urgent matters which
require my coming here. I wanted to see you after my arrival,
but, probably due to my strenuous trip last month which weakened
my resistance, I had a recurrent attack of malaria on the night
of my arrival. I am now feeling better and I look forward to the
pl easure of seeing you soon.
With best regards,
Yours sincerely,
H. They H. Kung
Regraded Unclassified
13
CONFIDENTIAL
eceined
WILL THE COMMUNISTS TAKE OVER CHINA?
11/5/47
The Chinese Communists are so strong between the Great Wall
and the Yangtze that they can now look forward to the postwar
control of at least North China. They may also continue to hold
not only those parts of the Yangtze valley which they now dom-
inste but also new areas in Central and South China. The Com-
munists have fallen heir to these new areas by a process, which
has been operating for seven years, whereby Chiang Kai-shek
loses his cities and principal lines of communication to the
Japanese and the countryside to the Communists.
The Communists have survived ten years of civil war and seven
years of Japanese offensives. They have survived not only more
sustained enemy pressure than the Chinese Central Government
forces have been subjected to, but also a servre blookade
imposed by Chiang.
They have survived and they have grown. Communist growth
since 1937 has been almost geometric in progression. From
control of some 100,000 square kilometers with a population of
one million and a half they have expanded to about 850,000 square
kilometers with a population of approximately 90 million.
and they will continue to grow.
The reason for this phenomenal vitality and strength is
0
simple and fundamental. It is mass support, mass participation.
The Communist governments and armies are the first governments
and armies in modern Chinese history to have positive and wide-
spread popular support. They have this support because the gov-
ernments and armies are genuinely of the people.
Only if he is able to enlist foreign intervention on a scale
equal to the Japanese invasion of China will Chieng probably be
able to orush the Communists. But foreign intervention on such
a scale would seem to be unlikely. Relying upon his dispirited
shambling legions, his decadent corrupt bureaucracy, his sterile
political moralisms and such nervous foreign support 8.8 he can
muster, the Generalissimo may nevertheless plunge China into civil
war. He cannot succeed, however, where the Japanese in more than
seven years of determined striving have failed. The Communists are
already too strong for him.
Civil war would probably end in a mutually exhausted stale-
mate. China would be divided into at least two camps with Chiang
reduced to the position of a regional warlord. The possibility
should not be overlooked of the Communists - certainly if they
receive foreign aid - emerging from a civil war swiftly and
decisively victorious, in control of all China.
Since 1937 the Communists have been trying to persuade Chiang
to form 8. democratic coalition government in which they would
participate. Should the Generalissimo accept this compromise
proposal and a coalition government be formed with Chiang at the
head, the Communists may be expected to continue effective
control over the areas which they now hold. They will also
probably extend their political influence throughout the rest
country - for they are the only group in China possessing
to
the
people.
14
CONFIDENTIAL
- 2 -
If the Generalissimo neither precipitates a civil war
nor reaches an understanding with the Communists, he is still
confronted with defeat. Chiang's feudal China can not long
coexist alongside a modern dynamic popular government in North
China.
The Communists are in China to stay. And China's destiny
is not Chiang's but theirs.
John Davies
Yenan
November 7, 1944.
Regraded Unclassified
2
15
CONFIDENTIAL
HOW RED ARE THE CHINESE COMMUNISTST
The Chinese Communists are backsliders. They still
acolain the infellibility of Marxian dogsa and call them-
selves Communists. Bu's they have become indulgent of
human frailty and confess that China's Communist salvation
can be attained only through prolonged evolutionary rather
than immediate revolutionary conversion. Like that other
eminent backslider, Remsay MacDonald, they have come to
accept the inevitability of gradualness.
Yenan is no Marxist New Jeruselem. The saints and
prophets of Chinese communism, living in the austere 00
fort of caves scooped out of looss cliffs, lust after the
strange gods of class compromise and party coalition,
rather shame-facedly worship the Golden Calf of foreign
investments and yearn to be considered respectable by
worldly standards.
All of this is more than scheming commist opportunism.
Whatever the orthodox communist theory may be about rever-
sion from expedient compromise to pristine revolutionary
ardor, the Chinese communist leaders are realistic enough
to recognize that they have now deviated so far to the
right that they will return to the revolution only if driven
to it by overwhelming pressuremfrom domestic and foreign
forces of reaction.
There are several reasons for the moderation of the
Communists:
(1) They are Chinese. Being Chinese, they are, for all
of their early excesses, temperamentally inclined to 000-
promise and harmony in human relationships.
(2) They are realists. They recognize that the Chinese
masses is 90% peasantry; that the peasantry is semi-feudal -
culturally, economically and politically in the middle ages;
that notuntil China has developed through several gener-
ations will it be ready for communism; that the immediate
program must therefore be elementary agrarian reform and
the introduction of political democracy.
(3) They are nationalists, In more than seven years
of bitter fighting against a foreign enemy the primary
emotional and intellectual emphasis has shifted from
internal social revolution to nationalism.
(4) They have begun to come into power. And has been
the experience in virtually all successful revolutionary
movements, accession to power is bringing & sobering
realization of responsibility and a desire to move cautious-
ly and moderately.
Chinese Communist moderation and willingmess to
make concessions must not be confused with softness or
decay. The Communists are the toughest, best organised
and dissiplined group in China. They offer cosporation
se Ching eus of strength, not out of
John Daties
November 70 1044.
Regraded Unclassified
CONFIDENTIAL
16
3
0
THE CHINESE COMMUNISTS AND THE GREAT POWERS
Confident in their own strength, the Communists no longer feel
that their survival or extinction depends upon foreign aid or attack.
Therein they differ from Chiang Kai-shek and his Central Government.
The Communists recognize, of course, that the powers can accelerate
or impede their expansion. It is largely on this basis that they
view the Great Powers.
The Soviet Union has traditionally been friendly to the Chinese
Communists. But the Communists have never received much more than
advice and money from the Russians. And since 1937 the Soviet Union
has scrupulously withheld all aid from the Chinese Communists.
Russian materiel has gone to Chiang and been used exclusively by him -
in part to blockade the Communists.
Possible future Soviet assistance to the Communists is a subject
on which Yenan leaders are uncommunicative. It seems obvious, however,
that they would welcome such aid for what it would mean in extirpation
the Japanese and giving impetus to Communist expansion into Central
and South China.
with all of their strong nationalist spirit, the Chinese Com-
munists do not seem to fear Moscow's political dominance over them
as a result of possible Russian entry into the Pacific War and
invasion of Manchuria and North China. They maintain that the USSR
has no expansionist intentions toward China. To the contrary, they
expect Outer Mongolia to be absorbed within a Chinese federation.
They do not see this or any other issue causing conflict between
Russian and Chinese Communist foreign policy.
Britain, the Chinese Communists believe, is determined to play
its old imperialist game of dividing China into spheres of influence.
They suspect an Anglo-American deal giving Britain a free hand west
of the line Philippines-Formosa. And they fear a marriage of con-
venience between Chiang and the British whereby the Ceneralissimo
would get British support in return for special concessions in
South China.
The United States is the greatest hope and the greatest fear
of the Chinese Communists. They recognize that if they receive
American aid, even if only on an equal basis with Chiang, they can
quickly establish control over most if not all of China, perhaps
without civil war. For most of Chiang's troops and bureaucrats are
opportunists who will desert the Generalissimo if the Communists
appear to be stronger than the Central Government.
We are the greatest fear of the Communists because the more
aid we give Chiang exclusively the greater the likelihood of his
precipitating civil war and the more protracted and costly will be
the Communist unification of China.
So the Chinese Communists watch us with mixed feelings. If we
continue to reject them andx support an unreconstructed Chiang, they
NOR see saly us becoming because their enemy. But they would prefer to be friends.
of
the
help
the
meegalss
awaregle
democratic
I
!
with
John Davise
Yonah
November 7. 1964.
Regraded Unclassified
17
NOT TO BE RE-TRANSMITTED
4
COPY NO.
SECRET
OPTEL No. 359
Information received up to 10 a.m., 5th November, 1944.
1. NAVAL
50 Minesweepers have arrived Terneuzen and small force
Antwerp. On lst/2nd Ostend anchorage attacked by about 7 human tor-
pedces. A trawler and motor tanker sunk,
ADRIATIC. German Hospital Carrier BONN intercepted and
taken into Ancona by one of H.M. Ships.
AEGEAN. German resistance Milo determined and situation
has become less favourable. One of H.M. Ships sunk a motor launch
and an F-lighter off Piskopi 4th, A 10,200 ton tanker, Abadan to
Brisbane, attacked by U-boat in South Indian Ocean. No further de-
tails received.
2. MILITARY
Slight local gains by 7th U.S. Army east of Bruyeres and
Baccarat. East of Eupen 1st U.S. Army has made local advances
against strong resistance in Foret De Retgen. An attack launched
west of Hertogenbosch has gained about a mile on a 2 mile front.
The bridgeheads over Dintel Mark Canal and Mark River have been
widened; Steenbergen now completely surrounded, Germans still re-
sisting strengly Walcheren Island. Mopping up continuing in Flushing
Over 2,000 prisoners taken on the island so far. Prisoners south of
Scheldt 289 officers, 12,418 other ranks.
ITALY. In noon 4th, Some fall in River Ronco with slight
improvement weather. Activity Adriatic sector confined to bridging
and patrolling on 5th Army front, patrolling and local reliefs.
EASTERN FRONT. Russians report capture of Szolnok and
Czegled, S.E. Budapest.
BURMA, More Japanese positions 8 miles north of Fort
White captured.
3. AIR OPERATIONS
WESTERN FRONT. 4th, 174 Lancasters (4 missing) dropped
946 tons on Solingen through cloud. Bombing somewhat scattered.
1,088 escorted U.S. heavy bombers attacked west and northwest Germany.
#
bombing oil plants Hamburg, Harburg, Neunkirchen, Gelsenkirchen,
Hanover and Bottrop. - total 2,461 tons; also railway centres Saar-
brucken, Hamm and Neunkirchen - total 173tons. Thick cloud over
all objectives. 6 bombers, 7 fighters missing. 218 medium bombers
dropped 310 tons on ordnance and storage depots Trier area and
strong points Eschweiler and 120 others attacked bridges at Venlo.
] bridge pertially destroyed and another damaged.
1,652 fighters (7 missing) operated in battle area and
carried out reconnaissances.
4th/5th. 1,071 Bomber Command aircraft sent out: Bochur
748 (27 missing); Dortmund-Ems Canal 176 (3 missing); Hanover 43,
Serefore 6, and Bomber support 98. Weather clear over Bochum and
the Canal and bombing well concentrated.
MEDITERRANEAN. 3rd. Unfavcurable weather continued to
restrict operations. 46 heavy hombers bombed industrial and railway
objectives Austria and Southern Germany dropping 78 tons by Path-
finder technique. 111 fighter bombers (2 missing) attacked targets
Northern Italy end Yugoslevia.
4. HOME SECURITY
Soon after dark 4th/5th 23 flying bombs plotted.
Regraded Unclassified
Aments
The Hem York Times
Times Square
November 6, 1944.
Dear Mr. Secretary:
Arthur has just told me of your
telephone call to him this morning, and I
am writing this note as a postscript to the
letter I sent you on Saturday. At that time,
of course, I had not seen the text of the
speech which Mr. Dewey was to deliver in
Madison Square Garden Saturday evening.
This morning's editorial was written yester-
day on the basis of that speech.
With best wishes,
Sincerely yours,
Charles Mary.
Mr. Henry Morgenthau, Jr.,
Secretary of the Treasury,
Washington, D. C.
19
November 7, 1944
Dear Mr. Merz:
In the absence of Secre-
tary Morgenthau, 1 am writing to
acknowledge receipt of your letter
to him of November 4. Just as
soon as he returns to the office
I shall bring your letter to his
immediate attention.
Yours sincerely,
H.S. Klotz
Private Secretary
Mr. Charles Merz,
The New York Times,
Times Square,
New York, New York.
Regraded Uncla
The Hem York Times
Times Square
November 4, 1944.
Dear ar. Secretary:
Arthur Sulzberger is in a considerable state of excite-
ment this morning because of the birth of his first grandson (an
event which took place at 6 a. m.) and plans for an immediate de-
parture for a two months' tour of the Pacific battle fronts. For.
this reason he has asked me to answer your letter to him of
November 2nd. He has also asked me to explain that one additional
reason why he has done so is that you may wish to communicate fur-
ther with someone at The Times on the subject of your letter, while
Arthur himself is away, and so he wants me to be informed on the
point you have been discussing.
It is Arthur's feeling that neither Daniell, writing
from London, nor Middleton, writing from a battle front which has
barely penetrated Germany, is in a position to-make an authori-
tative statement in our news columns regarding the reactions of
the German people. However, in a leading editorial published in
The Times yesterday-a copy of which is enclosed-we pointed out
that it is only natural to expect the Germans to fight "fiercely
and stubbornly" because it is their own soil which is nowbeing
invaded. I think that this is the point which your letter to
Arthur thought should be emphasized.
With all best wishes,
Sincerely yours,
Charles Mers.
Mr. Henry Morgenthau,
Secretary of the Treasury,
Washington, D. C.
Regraded Unclassified
11-6-44
21
Itinerary of Dutchess County trip
with the President
22
James Benson
Dutchess County Chairman
Dover Plains, N. Y.
James Townsend
Thomas J. Cullen
Orange County Chairman
Chester, N. Y.
Joseph Forman
Ulster County Chairman
Kingston, N. Y. (In hospital)
John Brundage
City-Counsel
Beacon, N. Y. (unable to reach)
Appointment arranged for 10:00 A.M.
with Mrs. Roosevelt and Secretary
Morgenthau.
(over)
reane
12:15
Beacan 12.45 P. M.
funy
1.30
ones
youch
murbergh 1.45
Leave //
2.15
an Kingsten 3.15
Leave " 3/45
arrive P.K.
00:01
23
Leave Hyde TELEGRAPH HYDE PARK, POUGHKEEPSIK 745 N.Y
armie Beacon 215
7mg
2.45
annewdy
3.00
hear musbey
3.30
aven Kim
4,15
Learne Knisten
4.45
armin PK
5.30
arive PK.
24
IMMEDIATE RELEASE
FOR THE PRESS
November 6, 1944.
Informal remarks of the President at Weppingers Falls,
N. Y., November 6, 1944.
I remember in 1910 that Wappingers Folla wasn't nearly
BO big when I come down here. I was a candidate in that year,
and spoke from the balcony of the old hotel on the other side
of the Wappingers bridge, when the population was just about
half this size.
It is good to come back here on this little pilgrimage
which I seem to take fairly often. It can't be helped. I on
not immune to what I was reputed to have said four years ago.
I am not doing any prophesying for the future.
It is good to see you all. I hope to be back in Dutches
County more in the next four years. It isn't such a difficult
thing commuting between Washington and Dutchess County -- from
that you can gather that I rather think that I will have to do
it a little bit longer.
I don't know what Dutchess is going to do. I haven't
any idea at all, But I have got some hope that I am not going
to be beaten too badly in Dutchess County. You know, hope
springs eternal in the human breast, Somebody on the trip
yesterday up in New England was telling me that if I decided
to run often enough, I would carry Maino end Vermont. So, as
I say, hope springs eternal.
You know, I have quite a number of new friends down
here, people who have como in during the last ten or twenty
years. I don't know what their first names are, yet I know
many of their faces. There are people who have moved in from
other countries. And one of my jobs in Washington is to look
after those other countries, countries that have been dominated
by the Nazis -- Italy, for instance -- and there are a lot of
now Italians down here -- and one of my Jobs in Washington 1a
to do all I can for the people of those countries -- to rescue
them from the horrors that they have been enduring -- starvation
and everything else -- under Nazi domination. That is one of
the interesting things about being President. We are doing
all we can to get back spirit into those countries -- where
there won't be any more world wars like this one.
I just want to tell you that I am glad to see you, be-
cause I think people in our county feel very much that they are
neighbors -- real neighbors of each other. And that is the
way I feel about Wappingers Falls. I have had relatives living
here up to a few years ago. Wappingers Fells reminds me of
when I was a small boy and we rodo down here to bring cat
back to Hyde Park, and we brought it back in EL basket, with B
rug over it in the bottom of the wagon. And that out stayed
with us just 12 hours and disappeared. The cat liked Wappingers
Falls 30 much that it came back, arriving hero one week later.
Informal remarks of the President at Beacon, N. Y.,
November 6, 1944.
I just wonted to stop on this tour to say "howdy do"
to my neighbors here in Beacon. I have been here off and on for
a very long number of years, and I am back again, still going
strong, and I hope to come back, and I think I am going to, for
an occasional trip from Washington, D. C., for the next four
years.
It has been good to see you, I know that you are doing
pretty well in Beacon, from all the figures I get; and you have
done a good job in this war. We are going to keep on until we
win it, and then we hope to get a peace which will last all
the rest of our lives.
Over
Regraded Unclassified
2 -
Informal remarks of the President at Newburgh, N.Y., Nov.
6, 1944.
I am glad to be back here in Newburgh. I am glad to come
back in the same old automobile along the same old streets.
I have Just had a glimpso of one of the shipyards, and I am
very happy to know that the Navy has come back to Newburgh,
and I hope it will stay here.
I don't want to disappoint the newspaper men who are with
us. They wanted me to come down here and say all kinds of
things about your Congressman and my Congressman. I am not
going to disappoint them. I am going to talk to you about the
legislature of the State of New York. The legislature at
the last seasion redistricted the Congressional Districts,
and while you and I used to have the same Congressman, we
will not have the same Congressman after the first of January,
And that is why I want to give a little hand to the
legislature.
In Dutchess, your neighbors have had the same Congressman
for a great many years, almost back to the Dark Ages. And
shortly wo are going to have B. new Congressman from a new
district hooked up with Columbia and Ulster Counties on the
first of January. And that 18 why I am rather pleased with
what the legislature did this year.
However, we don't want to call anybody any names.
So good luck to you. And it's good to be here -- glad
to be back in the old way, I hope Orange County 18 going to
do all right tomorrow. Thanks.
Informal Remarks of the President at Kingston, N. Y.,
November 6, 1944.
Mr. Chairman, Mr. Mayor, your neighbor from across the
river is mighty glad to be back here after four years, It
has become a sort of B. four year custom by now. But it 16
rather a good custom for me to come to Kingston, and I always
like it. I am happy. too, that now my county across the river
16 going to have a new Congressman, I told them in Newburgh
that the legislature had taken my Congressman away from me,
and that Hamilton Fish won't be my Congressman after the first
of January.
You know, I go back into the history of this city quite a
long way because I had an ancestor who came up from New York
to a place called Esopus about 1660, which 1s quite B. way back.
And he came up here just in time to take a musket and help to
repol Indians that tried to kill all the original settlers.
He was a member of what they called the militia in those days.
And that, perhaps, is why I inherited a good deal of love
for the armed forces of the United States, who have been
carrying this war forward so mangificently.
The war isn't in Kingston and Hyde Park physically. It's
across the oceans. But it means the preservation of our homes
in Hyde Park and in Kingston. The people are beginning to
realize more and more that we are fighting for the defense of
America. I think we are doing a pretty good job of it,
It takes me longer to go from Hyde Park to Kingston because
you have taken off the ferry. I was complaining to the Mayor
about it, and I think probably the only other thing to do 18
to build a bridge.
Well, it has been good to see you on this occasion. I think
it's a bigger crowd than we have ever had before. I hope that
in the next four years I can come back for an occasional week
end at home from Washington and that I will be able to come
over here and see you all.
Regraded Unclassified
25
- 3 -
In the meantime, I have heard of the great things you
are doing in the war. Your Mayor was telling me the wonderful
figures, the percentage of your boys that are in the armed
forces. And I want to congratulate you also on what you are
doing for the Navy in the two yards, one of which I happened
to start 25 years ago.
So keep up the good work, and good luck to you.
Regraded Unclassified
26
FOR THE PRESS
IMMEDIATE RELEASE
November 6, 1944.
Informal remarks of the President, before the Post Office,
Poughkeepsie, New York, November 6, 1944.
Neighbors of mine, I have been today on another senti-
mental journey. I have been among my neighbors. I have come
down on this side of the river and arossed a big "sea". And
luckily there were no German submarines in that "sen" -- I
went from Beacon to Newburgh.
And in my travels this day, I think I have seen a very
encouraging sign of our American life -- I think the population
18 increasing enormously, I have seen more children than I
know existed in these three counties. They are coming along
in good shape, and it encourages me greatly to think that the
future of the country will be relatively safe in their hands,
under a Constitution which has lasted more than 150 years --
and I think ae long as we increase an we are doing now -- we
shall atill be living under the came old Constitution 155
years from now.
Down in Newburgh I wont through a shipyard, having a few
moments to spare, and then in the upper part of the city there
WAR a crowd that was at least twice or three times the size
it was four years ago, And that was encouracing. And I told
them there that I did want to say & good word for our legis-
lature because as you know, the duty of apportioning the
Congressional Districts of this State 18 the duty of the
legislature. And a curious thing happened recently. Our
county used to be in the same District with Putnam and Orange
counties. And quite n. number of poople were irked, that the
legislature changed it a bit. And then I think a Congressman
was taken out of the District, insofar as Dutchess goes. So,
after the first of January we will be in a new Congressional
District -- we won't be with Orange any more, and therefore
we will have a new Congressman.
Well, my friends, there 10 more than one way of getting
rid of EL Congressman.
Then I went up to Kingston, and there again the crowd
was at least twice the size it had been before, and I remarked
to them -- you can see I am pure Hudeon River when you come
down to it -- that my mother's family came from Newburgh --
but up in Kingston -- well, there was an old boy in 1660
who went up there from New York City. He was young, and I
guess he was rather Dutch -- with the old stubborn qualities.
About that time the Indians attacked Kingston, and he became
a member of the militia that rolled the Indians back,
And I think that it 18 for that reason, perhaps, that I
am interested and have been all my life -- though not in
uniform -- in military and naval affairs. It comes from the
old Dutch boy in 1660 who belonged to the militia.
But one sad thing happened. I had to come all the way
back down the west side of the river. They had taken off
the Kingston ferry! Otherwise, the District and the county
had changed very little in the last four years.
We were headed at that time -- four years ago -- into
a war. We didn't talk about it very much, It doesn't do
to scare people or alarm people. But we did a good deal of
building and preparation, and by 1941 we had over two million
men in the Army and Navy. We built up our munitions factories,
We sent a great deal of aid to the people who were fighting
Nazism and Fascism. And the result was that we were better
prepared for this war than we had been in all our history for
any war, We haven't been bombed in this country -- rap on
wood -- and we hassn't lost anything within our own boundaries
during this war.
Over
Regraded Unclassified
- 2 -
And now we are carrying on the offensive against the
enemy, in order to make it quite certain that our own homes
back here shall be safe.
I don't know -- I think we have done a fair job of
it, but anyway we have done it in the American way, with the
approval of the American people, and that is something -- to
go on with our same ideals, our same form of government --- as
we have always done.
And I hope tomorrow that it is going to be said in this
country that the war has been conducted constitutionally, and
with the approval of the people of the United States. I hope
that will be said. I think it will.
And so it has been good -- it has been a good day.
I have seen my near neighbors. I have seen the neighbors
across the river and down the county -- the southern end.
I have seen an awful lot of people. It has been a good day,
and I want to thank you for coming out tonight at this late
hour, because it has given me a chance to see some of my
nearer neighbors.
It is good to see you, and I am going to oome back
pretty often.
Regraded Unclassified
27
CONFIDENTIAL
CONFIDENTIAL
CONFIDENTIAL
HOLD FOR RELEASE
HOLD FOR RELEASE
HOLD FOR RELEASE
NOVEMBER 6, 1944
CAUTION: The following address of the President, prepared for delivery
in Hyde Park, New York, on the evening of November 6, 1944, is released
for all regular editions of TUESDAY MORTING (NOVEMBER 7, 1944) NEWSPAPERS.
RELEASE FOR RADIO is simultaneous with delivery of the address
by the President, NOT EARLIER THAN 10:48 o'clock, P.M., E.W.T., MONDAY,
NOVEMBER 6, 1944.
CARE MUST BE EXERCISED TO PREVENT PREMATURE PUBLICATION.
STEPHEN EARLY
Secretary to the President
As we aio quietly this evening in our home at Ryde Park, our
thoughts, like those of millions of other Americans, are most deeply
concerned with the well-being of all our American fighting men. We are
thinking of our own sons - all of them far away from home - and of our
neighbors' sons and the sons of our friends.
That concern rises above all others in this critical period of
our national life.
In great contrast to the quiet which is ours here in America in
our own secure homos is the knowledge that most of those fighting men of
ours have no quiet times, and little leisure at this hour to reflect on
the significance of our American Election Day, tomorrow.
Some are standing at battle stations on shipboard, tense in
the excitement of action; some lie In wet foxholes, or trudge doggedly
through the sticky aud, firing as they go. Still others are high above
the earth, fighting Messerschnidts or Zeros.
All of them are giving everything they have got to defeat our
enemies, and uppermost in all their minds is the one thought: to win the
war as soon as possible, 50 that they may return to the quiet and peace
of their homes.
But - in the midst of fighting -- in the presence of our brutal
enemies - our soldiers and sailors and airmon will not ferget Election Day
back home,
Millions of these mon have already cast their own ballots, and
they will be wondering about the outcome of the election, and what it will
mean to them in their future lives. And sooner or later all of them will
be asking questions AS to whether the folks back home looked after their
interests, their liberties, their government, their country - while they
themselves wore off at war.
Our boys are counting on us to show the rest of the world that
our kind of government is the best in the world - and the kind we propose
to keep! And so, when our puople turn out at the polls tomorrow - and I
sincerely hope that it will be fifty million strong - the world will
respect our democracy, and the grand old Stars and Stripes will wave more
proudly than ever before.
These brave fighters of ours have taken on enamies on both sides
of our world, enemies who word nurtured since childhood in militarism.
These boys of ours, wiscly led, and using the matchless weapons which you
hero at home have sont to them, have outfought those ruthless enemies,
outfought them on the land, outfought them on the sea, outfought them in
the skies. They are winning the victory for all of us. Many are giving
life itsulf. And it is for us to make cortain that we win for them - the
living and the dead - a losting peace.
OVER
Regraded Unclassified
- 2 -
There is nothing adequato which any one in any place can say
to those who are entitled to display the gold star in their windows. But
each night as the people of the United States rest in their homes which
have been safe from violence during all these years of the most violent
war in all history - I an sure that all of them silently give thought to
their feelings of deep gratitude to the brave departed and to their
familios for the immeasurable sacrifice that they have made for the cause
of decency and freedom and civilization.
I do not want to tnlk to you tonight of partisan politics. The
political battle is finished. Our task now is to face the future ns a
militant and & united people - united here at home as well as on the
battlefronts.
Twice in twenty-five years our people have had to put on a brave,
smiling front as they have suffered the anxiety and the agony of war.
No one wants to endure that suffering again.
When we think of the speed and long distance possibilities of
air travel to the remotest corners of the earth, we must consider the
devastation wrought on the people of England by the now long-range bombs,
Another war would be bound to bring oven more devilish and powerful
instruments of destruction to wipe out civilian populations. No coastal
defences, newover strong, could provent those silent missiles of death,
fired perhaps from planos or ships at soa, from crashing deep within the
United States.
This time, THIS time, we must be certain that the peace-loving
nations of the world band together in determination to outlaw and prevent
war.
Tomorrow, you thu people of the United States, again vote as
free men and women, with full freedom of choice -- with no secret police
watching over your shoulders. And for generations to come Americans will
continue to prove their faith in free elections,
But when the ballots are cast, your responsibilities do not
cease. The public servants you elect cannot fulfill their trust unless
you, the people, watch and advise them, raise your voices in protest when
you believe your public servants to be wrong, back them up when you beliove
them to be right.
But not for one single moment can you now or later forget the
all important goals for which we are aising -- to win the war and unite
our fighting men with their familios at the earliest moment, to see that
all have honorable jobs; and to cruate a world poace organization which
will prevent this disaster from over coming upon us again,
To achieve these goals we need strength and wisdom which is
greater than is bequenthed to more mortals. We need Divine help and
0
guidance. No people of America have over had a doep well of religious
strength, far back to the days of the Pilgrim Fathers.
And so, on this thoughtful ovo, I believe that you will find it
fitting that I read & prayer sent to me not long ago:
"Almighty God, of Whose rightoous will all things
are and were created, Thou hnst gathored our people out
of many lands and races into a grost nation.
"The commend to Thy overruling providence the men
and women of our forces by sea, by land and in the air;
beseeching Thee to take into Thine own hends both then
and the cause they serve.
Regraded Unclassified
28
- 3 -
"Be Thou their strength when they are set in the
midst of so many and great dangers. And grant that,
whether by life or by death, they may win for the whole
world the fruits of their sacrifice and a just peace.
"Guide, we beseech Thee, the nations of the world,
into the way of justice and truth, and establish among
them that peace which is the reward of righteousness.
"Make the whole people of this land equal to our
high trust, reverent in the use of freedom, just in the
exercise of power, generous in the protection of weakness.
"Enable us to guard for the least among us the
freedom we covet for ourselves; make us ill content with
the inequalities of opportunity which still prevail among
us. Proserve our union against all the divisions of race
and class which threaten it.
"And now may the blessing of God Almighty rest upon
this whole land; may He give us light to guide us, courage
to support us, charity to unite us, now and forever more.
Amen".
Regraded Unclassified
29
TED R. GAM BIE
H. MORGENTHAU, JR. PERSONAL
PRESS RATES - RUSH
WASHINGTON, D.C., NOVEMBER 6, 1944
MR. EUGENE PULLIAM
SAME WIRE TO: MR. DON STERLING
CLAYPOOL HOTEL
THE OREGON JOURNAL
INDIANAPOLIS, INDIANA
POR TLAND, OREGON
PER OUR CONVERSATION QUOTE MR. DEWEY HAS CHOSEN TO END HIS CAMPAIGN
ON A NOTE THAT DOES NOT DO HIM CREDIT. HE ACCUSES SECRETARY OF THE TREASURY
MORGENTHAU OF PROLONGING THE WAR NEEDLESSLY AT THE COST OF AMERICAN LIVES.
HE SAYS THAT THE PUBLICATION OF REPORTS OF MR. MORGENTHAU'S PLAN TO DE-
INDUSTRIALIZE GERMANY "WAS JUST WHAT THE NAZI PROPAGANDISTS NEEDED." "IT
PUT FIGHT BACK INTO THE GERMAN ARMY: IT STIFFENED THE WILL OF THE GERMAN
NATION TO RESIST. AIMOST OVERNIGHT THE HEADLONG RETREAT OF THE GERMANS
STOPPED." AND FROM THIS MR. DEWEY PROCEEDS TO THE ACCUSATION "THAT THE
BLOOD OF OUR FIGHTING MEN IS PAYING FOR THIS IMPROVISED MEDDLING."
THE FIRST REPORTS OF MR. MORGENTHAU'S REJECTED PLAN TO DE-INDUSTRIALIZE
GERMANY FOR THE PURPOSE OF DESTROYING HER POWER TO MAKE WAR WERE PUBLISHED
ON SEPTEMBER 22 - ABOUT A MONTH AFTER MR. DEWEY HIMSELF HAD PROPOSED TO
STRIP GERMANY OF HER CONTROL OF THE RICH INDUSTRIAL AREA OF THE RUHR FOR
PRECISELY THE SAME PURPOSE.
BY THAT TIME THE GERMAN ARMIES WHICH MR. DEWEY ENVISAGES AS IN
"HEADLONG RETREAT" HAD ALREADY STOPPED THE RUSSIANS AT WARSAW. BY THAT
TIME THEY WERE ALREADY BETTERING THE BRITISH EXPEDITIONARY FORCE AT
ARN HEM AND CHECKING THE ONE BOLD ALLIED MANEUVER WHICH ALONE MIGHT HAVE
BROUGHT A QUICK END TO THE WESTERN WAR. BY THAT TIME HITLER HAD ALREADY
Regraded Unclassified
30
PAGE TWO
PURGED HIS DEFEATIST GENERALS AND PLEDGED GERMANY TO FIGHT TO THE KILL.
BY THAT TIME "THE NAZI PROPAGANDISTS" WERE ALREADY IN FULL BLAST WITH
CHARGES FAR BETTER CALCULATED TO AROUSE GERMAN FEARS THAN EITHER MR. MOR-
GENTHAU'S PLAN OR MR. DEWEY'S PLAN FOR GERMAN INDUSTRY - CHARGES THAT THE
ALLIES INTEND EITHER TO ENSLAVE OR TO EMASCULATE THE MALE POPULATION
OF GERMANY. BY THAT TIME (HITLER'S DECREE OF JULY 25) EVEN THE SCHOOL
CHILDREN OF GERMANY HAD BEEN MOBILIZED FOR A WAR TO THE BITTER END.
THE GERMANS ARE NOW DOING WHAT EVERY OTHERNATION HAS DONE OR WOULD
DO IN THE SAME CIRCUMSTANCES: THEY ARE FIGHTING HARD IN DEFENSE OF AN ACTUAL
INVASION OF THEIR OWN HOMELAND. WHEN MR. DEWEY ATTRIBUTES THIS HARD
DEFENSE TO SOME PROPOSALS OF MR. ROOSEVELT'S SECRETARY OF THE TREASURY, HE
MAKES A CHARGE WHICH, FOR THE SAKE BOTH OF OUR UNITY AT HOME AND THE MORALE
OF OUR TROOPS IN THE FIELD, HAD BETTER NEVER HAVE BEEN MADE. UNQUOTE.
TED R. GAMBLE
NATIONAL DIRECTOR
WAR FINANCE DIVISION
Regraded Unclassified
8. George Little
21
H. Morgenthau, Jr.
Personal
THIS TELEGRAM SKHT TO ATTACHED LIST
NOVEMBER 6, 1944
IN LINE WITH TELEPHONE DISCUSSION, THE FOLLOWING EDITORIAL APPEARED IN YORK TIMES,
NOVEMBER 6, HEADED "MR. DEWNY'S ACCUSATION":
"MR. DEWEY HAS CHOSEN TO END HIS CAMPAIGN ON A NOTE THAT DONS NOT DO KIM CREDIT.
HE ACCUSES SECRETARY OF THE TREASURY MORGENTHAU OF PROLONGING THE WAR HENDLESSLY
AT THE COST OF AMERICAN LIVES. HE SAYS THAT THE PUBLICATION OF REPORTS or MR.
MORGENTHAU'S PLAN TO DE-INDUSTRIALIZE GERMANY "WAS JUST WHAT THE NAZI PROPANGAN-
DISTS NEEDED." "IT PUT FIGHT BACK INTO THE GERMAN ARMY: IT STIFFENED THE WILL
OF THE GERMAN NATION TO RESIST. ALMOST OVERNIGHT THE HEADLONG RETERNAT OF THE
germans STOPPED." AND FROM THIS MR. DEWEY PROCEEDS TO THE ACCUSATION "THAT THE
BLOOD OF OUR FIGHTING MEN IS PAYING FOR THIS IMPROVISED MEDDLING." PARAGRAPH,
THE FIRST REPORTS OF MR. MORGENTHAU'S REJECTED PLAN TO DE-INDUSTRIALIZE GERMANY
FOR THE PURPOSE OF DESTROYING HER POWER TO MAKE WAR WERE PUBLISHED ON SEPT. 22--
ABOUT A MONTH AFTER MR. DEWEY HIMSELF HAD PROFOSED TO STRIP GERMANY OF HER CON-
TROL OF THE RICH INDUSTRIAL AREA OF THE RUHR FOR PRECISHLY THE SANS PURPOSE.
PARAGRAPH. BY THAT TIME THE GERMAN ARRIES WHICH MR. DEWNY INVISAGES AS IN "HEAD-
LOMG RETREAT" HAD ALREADY STOPPED THE RUSSIANS AT WARSAW. BY THAT TIME not
WHRE ALREADY BATTERING THE BRITISH EXPEDITIONARY FORCE AT ARRENM AND CHECKING
THE ONE BOLD ALLIED MANEUVER WHICH ALONE MIGHT HAVE BROUGHT A QUICK IND TO THE
WESTERN WAR. BY THAT TIME HITLER HAD ALREADY PURGED HIS DEFEATIST GENERALS
AND PLEDGED GERMANY TO FIGHT TO THE KILL. BY THAT TIME "THE MAZI PROPAGANDISTS"
WERE ALREADY IN FULL BLAST WITH CHARGES FAR BETTER CALCULATED TO AROUSE GERMAN
FEARS THAN EITHER MR. MORGENTHAU'S PLAN OR MR. DEWEY'S PLAN FOR GERMAN INDUSTRY -
CHARGES THAT THE ALLIES INTEND RITHER TO ENSLAVE OR TO EMASCULATE THE MALE POPULA-
TION OF GERMANY. BY THAT TIME (HITLER'S DECREE OF JULY 25) even THE SCHOOL
CHILDREN OF GERMANY HAD BEEN MOBILIZED FOR A WAR TO THE DITTER IND. PARAGRAPH.
THE GERMANS ARE NOW DOING WHAT EVERY OTHER NATION HAS DONE OR WOULD DO IN THE
SAME CIRCUMSTANCES, THEY ARE FIGHTING HARD IN DEFENSE OF ATE ACTUAL INVASION
OF THEIR OWN HOMELAND. WHEN MR. DEWEY ATTRIBUTES THIS HARD TO SOME
PROPOSALS OF MR. ROOSEVELT'S SECRETARY OF THE TREASURY, - MAKES A CHARGE WHIGH,
FOR THE SAKE BOTH OF OUR UNITY AT HOME AND THE MORALE OF OUR TROOPS IN THE FIRLD,
HAD BETTER NEVER HAVE BEEN MADE."
8. GRORGE LITTLE
Press pective
of w+e
Regraded Unclassified
32
Mr. Clark Howell, Publisher,
Atlanta Constitution,
Atlanta, Georgia.
Mr. J. N. Heiskell,
Publisher and Editer,
Gasette,
Little Rock, Arkansas.
Mr. Buck Hood,
American Stateman,
Austin, Texas.
Mr. Lee Payne,
Hanaging Editor,
Daily News,
Les Angeles, California.
Mr. B. 2. Dimitman,
Editorial Director, (Chicage office here put editorial
Chicago Sun,
on teletype to Chicago Sun)
Chicago, Illinois.
Regraded Unclassified
33
as
Nevember 6. 1944.
Dear Mr. Willett:
In the absence of the Secretary. who
is away from Vashington, I an acknowledging
your nemorandum of November 1, which trans-
nitted for his reading copies of Executive
Reports 1, 2 and 3, on Lond-Lense Operations
se of September 30, 1944. I shall be gluk
to bring this material to Mr. Morgentham's
attention as soon as he returns to the office,
and know that be will appreciate year sending
his copies of the reports.
Sincerely yours,
(Signed) H.S. Klotz
E. s. nots,
Private Secretary.
Mr. Herbert villett,
Director of Research and Deports,
Office of General Councel,
Foreign Beenende Administration,
Washington, D. 0.
GEF/dbs
Regraded Unclassified
34
FOREIGN ECONOMIC ADMINISTRATION
WASHINGTON, D.C.
November 1, 1944
MEMORANDUM
To:
The Honorable Henry Morgenthau
From:
Herbert Willett
Director of Research and Reports
Office of General Counsel
Subject: Executive Reports on Lend-Lease Operations
Transmitted herewith, for your information,
are copies of Executive Reports 1, 2 and 3, on
lend-lease operations, as of September 30, 1944.
Regraded Unclassified
35
CONFIDENTIAL
Lend-Lease Operations
Executive Report No. I
ALLOCATIONS, OBLIGATIONS AND EXPENDITURES
LEND-LEASE FUNDS APPROPRIATED TO THE PRESIDENT
Report as of Sept. 30, 1944
(Thousands of Dollars)
Appropriation Category
Adjusted
Cumulative to September 30, 1944
Appropriations
Allocations
Obligations
Expenditures
Ordnance and Ordnance Stores
$1,467,306
$1,462,407
$1,401,911
$1,283,714
Aircraft and Aero. Material
2,474,625
2,468,920
2,427,159
2,182,449
Tanks and Other Vehicles
739,273
703,409
658,921
633,665
Watercraft
4,121,703
3,685,167
3,463,958
3,226,996
Misc. Military Equipment
304,288
300,562
268,690
266,736
Production Facilities
1,087,688
1,086,878
1,056,192
1,009,687
Agric. and Indust. Commodities
16,690,589
14,879,417
12,073,529
10,300,991
Servicing, Repair of Ships, etc.
790,818
737,467
669,555
659,330
Services and Expenses
500,000
419,526
327,397
286,984
Administrative Expenses
33,208
30,324
28,949
28,762
Total
28,209,498
25,774,077
22,376,261
19,879,314
Procuring Agency
Cumulative to September 30, 1944
Allocations
Obligations
Expenditures
War Department
$5,292,803
$5,149,168
$4,868,585
Navy Department
3,990,903
3,103,086
2,690,404
Maritime Commission and War Shipping Admin.
3,686,476
3,466,755
3,351,730
Treasury Department
5,605,808
4,211,771
3,552,344
Department of Agriculture
7,171,669
6,421,262
5,396,117
Other
26,418
24,219
20,134
Total
25,774,077
22,376,261
19,879,314
Foreign Economic Administration
Office of General Counsel
Division of Research and Reports
October 28, 1944
Regraded Unelassified
36
CONFIDENTIAL
Lend-Lease Operations
Executive Report No. 2
STATEMENT OF LEND-LEASE AID
Report as of Sept. 30, 1944
(Thousands of Dollars)
Cumulative to
Month of
Type of Aid
Sept. 30, 1944
Aug. 31, 1944
September
August
Goods Transferred
$28,251,789
$27,136,431
$1,115,358
$1,009,676
Servicing, Repair of Ships, etc,
559,493
548,445
11,048
10,376
Rental of Ships,
Ferrying of Aircraft, etc.
2,482,554
2,415,210
67,344
139,717
Production Facilities in U. S.
626,997
625,423
1,574
3,599
Miscellaneous Expenses
102,444
99,504
2,940
1,189
Total Services
3,771,488
3,688,582
82,906
154,881
Total Goods and Services
32,023,277
30,825,013
1,198,264
1,164,557
Data on Goods Transferred include value of goods procured from lend-lease appropriations
to the President and to the War and Navy Departments.
Type of Aid
Cumulative to September 30, 1944
Br. Empire
China
U.S.S.R.
Other
Total
Goods Transferred
$20,882,842
$216,662
$6,474,718
$677,567
$28,251,789
Servicing, Repair of Ships, etc.
388,986
1,896
115,782
52,829
559,493
Rental of Ships
Ferrying of Aircraft, etc.
1,937,365
13,991
319,934
211,264
2,482,554
Production Facilities in U. S.
-
-
-
,
626,997
Miscellaneous Expenses
52,778
1,213
5,048
43,405
102,444
Total Goods and Services
-
-
-
-
32,023,277
Foreign Economic Administration
Office of General Counsel
Division of Research and Reports
October 28, 1944
6-5653 PS mobe
Regraded Unclassified
37
CONFIDENTIAL
Lend-Lease Operations
Executive Report No. 3
LEND-LEASE GOODS TRANSFERRED
Report os of Sept. 30, 1944
(Thousands of Dollars)
Cumulative to September 30, 1944
Br. Empire
China
U.S.S.R.
Other
Total
Ordnance (Excl. Ammunition)
$806,747
$15,732
$287,942
$25,789
$1,136,210
Ammunition and Components
1,736,939
22,204
439,677
33,122
2,231,942
Aircraft
2,696,609
83,290
888,599
127,433
3,795,931
Aircraft Engines, Parts, etc.
1,524,717
27,342
290,789
42,950
1,885,798
Tanks and Parts
2,466,572
940
508,782
41,371
3,017,665
Motor Vehicles and Parts
670,321
26,252
734,271
22,487
1,453,331
Watercraft and Parts
2,596,678
6,147
257,123
211,207
3,071,155
Foods
2,708,996
48
1,098,560
31,781
3,839,385
Other Agric. Products
614,101
48
14,270
148
628,567
Machinery
651,889
6,684
755,327
13,585
1,427,485
Metals
997,293
11,928
434,879
45,515
1,489,615
Petroleum Products
1,265,618
2,578
60,537
3,159
1,331,892
Miscellaneous Materials
and Manufactures
2,146,362
13,469
703,962
79,020
2,942,813
Total
20,882,842
216,662
6,474,718
677,567
28,251,789
Foreign Economic Administration
Office of General Counsel
Division of Research and Reports
October 28, 1944
0-4000 P8 sobs-final
Regraded Unclassified
Read 11/8
STANDARD FORM NO. 64
38
Office Memorandum . UNITED STATES GOVERNMENT
DATE: 11/6/44
TO
:
The Secretary of the Treasury
FROM :
Frank Coe, Secretary F.C. C.
CCLL
SUBJECT:
Minutes of the Combined Committee on
Lend-Lease for October 30 at 11:30 a.m.
in the office of the Secretary of the
Treasury.
also nov. 3. minutes.
Regraded Uncla
39
TOP SECRET
COPY NO. 39
C.C.L.L. (44) 4th Meeting
MUTUAL LEND-LEASE AID BETWEEN THE
UNITED STATES AND THE DOMINIONS AND INDIA.
Minutes of Meeting held in Mr. Morgenthau's Room in the
United States Treasury on October 30th at
11.30 a.m.
PRESENT
Mr. Morgenthau (In the Chair)
U.S.
Australia
Dr. White
Mr. Brigden
Mr. Casady
Mr. Dunk
Hon, Sir Frederic Eggleston
Mr. Acheson
Mr. Jacobsen
Mr. Taft
Mr. Macgregor
Mr. Fetter
India
Mr. Crowley
Mr. Currie
Mr. Symon
Mr. Cex
Mr. Angell
New Zealand
Mr. Davidson
Mr. Berendsen
Judge Patterson
Mr. Marshall
Mr. Lovett
Mr. Middleton
General Somervell
Mr. Reid
General Steyer
Hon. Sullivan
General Kuter
General Giles
U.K.
Admiral McCormick
Hon. R.H.Brand
Lord Keynes
Mr. Onie
The Rt. Hon. Ben Smith
Mr. Snelling
Mr. Coe
Mr. Lee
3
Joint Secretaries.
1.
At the request of MR. MORGENTHAU, MR. COE explained
that the purpose of the meeting was to enable the representatives
of Australia, New Zealand and India to outline their requirements
under Lend Lease for the first year of Stage II.
DOMINION AND INDIAN REQUIREMENTS
2.
LORD KEYNES referred to the new memorandum circulated at
the meeting, amplifying the material in Chapter 4 of the document
on British requirements for the first year of Stage II. He asked
that, when considering the question of Dominion and Indian
requirements, the United States representatives should bear the
following facts in mind. First although the United States and
United Kingdom were hoping to relax their war efforts after the
cessation of hostilities in Europe, there seemed no prospects of
Australia, New Zealand and India being able to do so. These three
countries would inevitably remain fully mobilized, and it seemed
probable that Australia and New zealand, who began a large scale
Regraded Unclassified
10
mobilization five years ago, would have to maintain an intensive
war effort over a longer period of time than any other allied
country. Secondly--he drew attention to the magnitude of
Australian and New Zealand reciprocal aid. Considering the non-
munitions field alone, Australia was at present providing goods
and services under reciprocal aid at the rate of $360 millions per
annum, which was three and a half times the size of the direct non-
munitions Lend Lease requirements that she was tabling for the
first year of Stage II ($102 millions). Similarly, New Zealand
reciprocal aid in 1944 was expected to amount to $78 millions which
was more than five times the recuirement of $14.7 millions which
she was tabling for direct non-munitions aid in the first year of
Stage II. For these two reasons, he hoped that the United States
representatives would feel disposed to look sympathetically at
the Dominion and Indian recuirements,
3.
LORD KEYNES thought that three difficulties might be met
when the Dominion and Indian requirements were being scrutinized.
(a) His understanding was that the rules as to eligibility for
civilian requirements to be met under Lend Lease had hitherto been
interpreted more strictly in the case of the Dominions than in that
of the United Kingdom. He hoped that this attitude could be
modified at least to the extent of treating the Dominions not less
favorably than the United Kingdom. (b) As regards New Zoaland,
there was the problem of diversion to civilian purposes of Lend
Lease materials already shipped to the Dominion on military grounds.
I
He hoped that no obstacle would be placed in the way of New
Zealand's wishes in this respect, (c) The Indian requirement for
railway rolling stock had been submitted as part of the munitions
programme, but had been referred by the United States War Department
to F.E.A. as being in essence a civilian item. Whether regarded as
a military or civilian need, this rolling stock W&S highly
essential to the Indian war effort, particularly that part of it
which was needed for Bengal which had been a deficiency food area
since its supplies of rice from Burma had been cut off. In no
country had the civilian population suffered more than in India,
and this railway material seemed to him to be essential for meeting
such contingencies as food difficulties or famine.
4,
In response to MR. MORGENTHAU'S request, MR. ACHESON
outlined that course of previous United Kingdom/United States
discussions as to Lend Lease in Stage II. These conversations had
been carried on in the spirit which had animated the Quebec
decisions. The military requirements were well on the way to
settlement, and a start was now being made on the non-munitions
category. He felt sure that the requirements of the Dominions
and India would be considered in the same spirit as those of the
United Kingdom.
AUSTRALIAN PROGRAMME
5.
SIR FREDERIC EGGLESTON, after expressing thanks for
the assistance which Australia had received from the United States,
asked Dr. Macgregor to outline the chief points in the Australian
submission. MR. MACGREGOR said that no statement with regard to
Australian participation in Lend Lease would be complete without
an expression of appreciation for the very great aid already made
available to her and for the very excellent cooperation of the
American bodies with which he had had to deal. He then referred
first to the all out character of the Australian war effort: 7 out
of 10 men between 18 and 35 had enlisted in the fighting forces or
a total enlistment of 891,000. 71% of the total population between
the ages of 15 and 60 was serving in these forces or engaged in
essential industry. Secondly, no relief to the Australian economy
was in sight until the end of the Pacific war. Thirdly, the
estimates in money terms of Australian requirements under Lend
Lease in Stage II were based upon current conceptions as to
eligibility. If, as he hoped, these conceptions could be widened,
there might be some small increase in the total of $102 millions
-2-
Regraded Unclassified
for non-munitions items, A case in point was paper: at present
Australia had to pay cash for 30% of her paper requirements from
the United States on the ground that this proportion represented
civilian consumption; as a result two separate channels of
procurement had to be followed, Fourthly, ho pointed out that many
of the items, although described as "non-munitions" were in fact
needed for military purposes, e.g., synthetic rubber largely
required for military tire programmes. He also mentioned the large
volume of Australian reciprocal aid and the smooth and easy manner
in which the Commonwealth Government reciprocal aid machinery worked.
Finally he referred to the difficulty which was sometimes
experienced in securing implementation of allocations of civilian
recuirements for Australia. In many cases he had found great
difficulty in persuading manufacturers to accept contracts because
of other preoccupations in satisfying United States Government and
civilian needs. MR. DUNK mentioned that the Australian economy
was geared to achieve the maximum dogree of mobilization and the
minimum satisfaction of civilian needs. MR. BRIGDEN pointed out
that the Australian programme, as submitted, would not enable
Australia to relax her war effort in any way; additional relief
from outside would be necessary in order to enable her to effect any
reduction in that effort,
NEW ZEALAND PROGRAM
6.
MR. SULLIVAN expressed thanks on behalf of New Zealand
for the assistance which the Dominion had received from the United
States. He said that New Zealand, like Australia, would be unable
to relax her wor effort in Stage II, and indeed the demands upon
her would probably be intensified, She would therefore need greater
help in Stage II than she had received in the past, Her attitude,
both before and after Pearl Harbor, had been to throw herself
wholeheartedly into the war, As a consequence, her standard of
living had been much reduced, and food, clothes and footwear were
rationed on B. scale which he thought was as strict as that in force
anywhere else. United States requests for goods and services under
reciprocal aid had been met wherever it had been within New Zealand's
capacity to meet them. In order to meet such demands in Stage II
and to maintain the existing intensive war effort, New Zealand
would have to obtain some measure of assistance from outside, notably
from the United States and Lend Lease.
7.
MR. MORGENTHAU, after thanking the Australian and New
Zealand representatives for their statements, said that the United
States administration fully appreciated the great contributions
which Australia and New Zealand had made,
INDIAN PROGRAME
8.
MR. SYMON expressed gratitude for the continued
assistance which India was receiving from the United States. As
regards Stage II, he mentioned, first, that the estimates of Indian
requirements had been drawn up before the Quebuc Conference, and
would now have to be reconsidered in the light of the decisions
reached there. It appeared that these decisions would place very
serious additional burdens upon the Indian economy, and the
Government of India had expressed grave concern about the matter
to the United Kingdom Government. Secondly, as regards the request
for the provision of locomotives and wagons on Lend Lease, he asked
that an early decision should be taken as the matter was of great
urgency.
9.
JUDGE PATTERSON explained that the United States War
Department was not directly concerned with the present requirements
because they were for items of non-military type, but he wished to
mention that the War Department was very appreciative of the
assistance which they had received from Australia, New Zealand and
India, and pointed out that the extent to which these countries
would be able to fulfill their military obligations would of course
be dependent upon the maintenance of their economies, ADMIRAL
McCORMICK endorsed Judge Patterson's remarks,
-3-
Regraded Unclassified
42
PROCEDURE
10.
It was arranged that the United States representatives
should have a day or two in which to consider the requirements
tabled on behalf of Australia, New Zealand and India and that
discussion of detailed items should then begin. In the meantime,
the Dominion and Indian representatives were asked to furnish
information as to the additional requirements which they might
wish to table if the criteria as to civilian end use were relaxed.
LORD KEYNES expressed the hope that, if the need arose, discussion
on this point should take place in the main committee so that
directions might be framed for the assistance of those dealing
with individual items.
11.
In conclusion, MR. MORGENTHAU asked that no publicity
whatever should be given to the discussions.
Washington, D.C.
6th November 1944.
Regraded Unclassified
Division of Monetary Research 43
Treasury Department
Date Nov. 20, 1944
To:
Secretary Morgenthau
This is a copy of the broadcast
which you asked for. Mr. Shaeffer
obtained it.
H.D.W.
3
MR. WHITE
Branch 2058 - Room 214}
44
BROADCAST OVER BLUE NETWORK BY HENRY J. TAYLOR,
NEW YORK CITY, NOVEMBER 6, 1944, 6:45 p.m.
Front page news in our papers here that the British have asked
President Roosevelt to give them at least $2,500,000,000 of nonmilitary
supplies for resale and export trade, as reported by Mr. Arthur Krock
in the New York Times, is so well documented that Mr. Roosevelt's reply
that he knows nothing about any such thing is nothing short of astounding.
Now, Lord Keynes is handling this, and he is handling it at the
White House, calling it the second phase of lend lease, and there is no
question on the record - that Prime Minister Churchill went over the whole
ground with Mr. Roosevelt at Quebec and, furthermore, the President's re-
ply to Mr. Churchill was at least sufficiently clear to Mr. Churchill to
have out British friend believe that Mr. Roosevelt, far from knowing
nothing about it - actually agreed to it.
Now, in January, 1941, British assets in the United States had
a total value of about $2,100,000,000. Approximately one-fourth of these
British assets were in the form of gold and public and private dollar
balances on deposit in the United States. Seventy-five per cent of the
British assets were in the form of British-owned securities and British
investments in the United States.
In January, 1941, Secretary of the Treasury Morgenthau told our
Senate Committee in aid of lend lease that, and these were his words,
"In order to raise the money to pay for these orders they have already
placed, the British are going to sell every dollar of these assets in
America."
Three years later, on November 5, 1943, to be exact, Senator
Harry Truman, in his report to the Senate, said, and these were his words,
"Before authorizing lend lease, the Congress expressly requested and re-
ceived assurance that lend lease assistance would be extended only where
the recipient was fully utilizing all his own resources."
That was the intent of lend lease. But it has not worked out
that way, and the present unrevealed second phase of lend lease must be
considered against that background.
Actually, British balances went down substantially for only
five months, from January 1, 1941 to June 1, 1941, when lend lease really
got under way.
Regraded Unclassified
45
- 2 -
Since then, that is to say, for the last three years and four
months, and throughout the time the United States has been in the War,
since Pearl Harbor, British balances have increased and increased very
substantially. Now, at the present time, the British gold and public
and private balances in the United States are approximately $2,500,000,000
- an increase of nearly $2,000,000,000 in British assets since lend lease
got under way, instead of a liquidation of British assets in exchange for
lend lease. The decrease in British securities and investments, after
deducting America's Reconstruction Finance Corporation credit, against
which some British securities are still pledged and not sold, still leave
an increase in British assets here of approximately $1,500,000,000.
Now, on January 1, 1943, it appears in a memorandum, when sub-
mitted to Mr. Roosevelt by the principal members of his Cabinet, plus
Vice President Henry Wallace sitting in the Cabinet discussion, unanimously
recommending to Mr. Roosevelt that lend lease be so operated as to keep
the British hanging on in gold and dollar balances in such a way that
their balances would stay down to about $1,500,000,000 over all in ex-
change for lend lease. This was a difference of about $1,500,000,000
in Britain's favor over the original intention, that in any case, it is
reported to have been approved by Mr. Roosevelt himself on January 6, 1943.
Accordingly, it was understood that Mr. Roosevelt would clear
this with Mr. Churchill in advance of its being put into effect, and at
least bring the British balance down to $1,500,000,000 if they were not
brought down to the proper figure, namely, if they were not liquidated
entirely, and guaran teed by both Secretary Morgenthau and Senator Harry
Truman, in line with the basic intention of lend lease, namely, that lend
lease assistance would be extended only where the recipient was fully
utilizing all his own resources.
However, it appears that Mr. Roosevelt never did clear this with
Mr. Churchill but, on the contrary, lend lease has gone on operating in
such a way as to continually increase the British assets here to the point
where Great Britain's position is restored retroactively to the British
position within the United States clear back to the time when Great
Britain first went to war with Germany.
Then, at the recent Quebec conference between Mr. Roosevelt and
Mr. Churchill, it is most clearly and definitely indicated that Mr.
Churchill sai d in effect that Great Britain's prosecution of the war a-
gainst Japan, after Germany's defeat, would creat a situation such that
the British would not like to be dependent upon getting an unpredictable
amount of military material decided upon after Germany's defeat.
Mr. Churchill clearly took the view that he would like to get the commit-
ment from Mr. Roosevelt now, that is to say, last month - and that he
would further like to line up Great Britain's assurance of post war lend
lease.
Regraded Unclassified
46
- 3 -
On the record, four points were then made by Mr. Churchill to
Mr. Roosevelt and concurred on by Mr. Roosevelt. And these were the
four points:
1. During the 12 months following the end of the war against
Germany, the British would get $3,500,000,000 of so-called military
lend lease materials from the United States. This is greatly in excess
of what the Army estimation could be used by Great Britain in the war
along with all that we are supplying to the war, if limited to strictly
military materials. Therefore, presumably much of this vast grant would
be made up of American rolling stock, and like goods to be given to
Great Britain, which, while having some indirect war purpose, would
essentially be useful to Great Britain for post war.
2. In addition, Mr. Roosevelt would also give Great Briatin
$3,000,000,000 of non war materials such as raw materials, tools, etc.,
needed by the British for post war conversion of British industry and
trade in Great Britain and elsewhere, to help put English commerce on
its feet to the extent of $3,000,000.
3. Great Britain would have the right to resell lend lease
goods. Goods received from the United States. Although the British
would not do this for profit or through ordinary export channels,
this meant that the material we gave Great Britian could be resold by
the British Government at cost to the British Dominion and Colonies.
This was and is especially important, and in the case of India, where
Great Britain could sell American goods to India received by England
from the United States to cancel out the British debt to India.
4. Lastly, reconversion in the United States would be held
back until American production could be geared into satisfying the
lend lease specifications contained under Point 1, which is the delivery
of $3,500,000,000 so-called military lend lease material to Great Britain,
and Point 2, which is the supplying of $3,000,000,000 of non war material
such as raw materials, tools, etc. desired by Mr. Churchill for British
post war conversion. Our own reconversion, therefore, in respect to the
grant and supplying of these tremendous requests, remains undecided
pending the outcome of the special British mission which has arrived
under the leadership of Lord Keynes, as the result of the arrangement
made between Mr. Churchill and Mr. Roosevelt at Quebec, about which
Mr. Roosevelt is now reported in his White House - astoundingly enough -
that as saying he knows nothing.
Regraded Unclassified
7
VICTORY
BUY
TREASURY DEPARTMENT
UNITED
STATES
WAR
BONDS
PROCUREMENT DIVISION
AND
STAMPS
WASHINGTON 25
OFFICE OF THE SECRET
November 6, 1944
MEMORANDUM TO THE SECRETARY:
SUBJECT: LEND-LEASE LUMBER AND WOOD PRODUCTS FOR GREAT
BRITAIN
To date, the dollar value actually contracted for of
lend-lease lumber and lumber products for Great Britain is
over $105,000,000.
ARMY, NAVY, R.A.F. NEEDS. Many of the multitudinous
boxes, containers and cases for ammunition, food, technical
equipment and all the other vast supplies needed to maintain
an army in the field are made from lend-lease lumber and
lumber products. These products have also been used to
build pontoons and storm boats used in the "D" Day invasion.
Hardwood lumber, too, has been used to build and repair
British Naval and Merchant shipping. In addition to army
and navy demands, the requirements of the R. A. F. have been
furnished to a large extent by lend-lease aircraft lumber,
veneers and plywood. Gliders, for example, made of these
products, and programmed and scheduled for delivery in late
1942 and 1943, were used in the "D" Day invasion. Gliders,
incidentally, are expendable since in most instances they
are one-time units which are destroyed in their first combat
operation.
THE B-29 SUPER FORTRESS. Of interest in connection with
the Aircraft Program is the story of the U. S. Army's sensa-
tional B-29 super fortress and its effect on aircraft pro-
duction. To illustrate the long-range planning necessary in
filling these demands, about B. year 2020 when the 1944 program
was being prepared, the whole thing had to be suddenly revised.
The reason for this sudden revision did not become apparent
until last summer when the army released secret information
on the B-29 and then revised its aircraft program-to stop pro-
Regraded Unclassified
SECRET
48
2
duction on all bombers except the super fortress. Às 8 result
the British, too, revised their 1944 production to eliminate
heavy bombers and practically all fighter aircraft except the
Mosquito Bomber. The latter, still called a light bomber
though it can now carry a four-ton block buster, is ideally
suited for Pacific warfare for which the B-29 was also produced.
PLYWOOD REQUISITIONS. Plywood requisitions are also being
filled with an eye toward Pacific warfare. End use of present
and future requisitions will be such items as tropic Compto
packs, tropic jungle packs, airplane cases and other containers
which need to be specially treated for use in tropical climates.
ANTI-RADAR FOIL; WET STRENGTH MAP PAPER. Of paramount
importance in the war effort is approximately 90,000 tons of
chemical wood pulp for the 1944 program valued in excess of
$5,500,000, which is being put to such unusual uses as anti-
radar foil. This foil is dropped out of planes in the form of
streamers or small sheets which float slowly to the ground.
Anti-aircraft radar picks up this foil in the same manner as it
0
spots the location of planes. Since most anti-aircraft guns
are operated by radar, thousands of these pieces of foil cause
anti-aircraft guns to shoot at paper in many instances instead
of planes and also confuse the directional finding apparatus.
According to the British Air Commission, this foil has "played
an extremely important part in reducing losses of bombers and
bomber crews of both the R.A.F. and the U.S.A.A.F. from enemy
anti-aircraft fire". The Germans, however, use a material for
the same purpose which is different in technical composition
from the Allied anti-radar foil. All information about this
anti-radar foil is highly confidential. As a matter of fact,
the British Air Commission was extremely loathe to reveal any
information at all on the subject. Equally confidential is wet
strength map paper, tons of which were used in the "D" Day
invasion.
KRAFT PAPER BOARD JETTISON TANKS. An interesting new pro-
duct, too, is the Kraft paper board jettison or belly tanks,
which are auxiliary tanks attached to fighter planes to increase
their range. These tanks are used to take the plane to its
destination, but then are jettisoned when empty or before actual
combat. Advantages of these paper board tanks are their light-
ness and the fact that they are of no salvage value to the
0
enemy.
SECRET
Director Clifton of Procurement E. Mack
bio
Regraded Unclassified
49
CORRECTION
November 6, 1944
Cable from London 7355, November 43 10 p.m.,
signed Harrison for WRB should read from Bern.
DIVISION OF COMMUNICATIONS AND RECORDS
CSB
Miss Chauncey (for the Sec'y) Abrahamson, Ackermann, Akain, Cohn,
Drury, DuBois, Friedman, Gaston, Hodel, Lesser, Marks, Mannon,
McCormack, Pehle, Files.
Regraded Unclassified
50
RP-517
PLAIN
London
Dated November 6, 1944
Rec'd 3:10 p.m.
Secretary of State
Washington
9612, Sixth
Following for Joseph Schwarts JDC from Malin
IGC.
Emerson and Kullmann left last week for a
month in France, Belgium and Switzerland. I have
forwarded your cable to them and asked for sugges-
tions. Meanwhile I am discussing the matter with
Foreign Office and American Embasay. Initial
assumption would be that Jewish agency would bear
responsibility and we have not been approached by
them.
Please bring with you to London all available
information on transportation and financing.
GALLMAN
CSB
Miss Channey (for the Sec'y) Abrahamson, Ackermann, Alcain, Colum,
Drury, DuBode, Friedman, Gaston, Hodel, Lesser, Marks, Mannon, McCormack,
Pehle, Files.
Regraded Unclassified
51
DLA-523
Rome
Dated November 6, 1944
Rec'd 3:45 pame
Secretary of State,
Washington.
666, November 6, 5 p.m.
FROM ARTHUR GREENLEIGH FOR JOSEPH SCHWARTZ
AMERICAN JOINT DISTRIBUTION COMMITTEE JEN YORK:
SHARF clearance received and I am only awaiting
French visa. This should arrive within two or three
days. Then I plan to proceed to France as soon as
possible. When are you planning to leave and where
shall I meet you? If nothing received from you
before I leave shall plan meet you in Paris. I
have transferred everything",to Perlman who is here
to replace me. To facilitate planning operations
here please send us time schedule on Jacobson
soonest.
KIRK
MRM
Miss Chancey (for the Sec'y) Abrahamson, Ackermann, Akain, Cohn, Drury,
DuBoisk Friedman, Gaston, Hodel, Lesser, Marks, Mannon, McCormake,
Pehle, Files.
Regraded Unclassified
52
EK-772
PLAIN
Lisbon
Dated November 6, 1944
Recid 7:07 a.m., 7th
Secretary of State,
Washington.
3871, Sixth, 7 p.m.
FOR LEAVITT FROM PILPEL JDC 113 WRB 247.
Jefroyicin cabled Schwarts through Embassy Paris
November 4: "Apply immediately for French visa with
French Legation and advise. Hust inform you we re-
ceived no funds for half September-October budget.
View critical situation please have funds sent ur-
gently for technical reasons our bank account will
function from December 1 meantime make transmission
account Jules Jefroyidn credit Lyonnais A Genocag 2
Avenue Messine Paris".
Saly advises about 35000 people require assist-
ance and that shortly this number will reach 60,000.
Monthly budget in millions as follows: Car 15 feder-
ation 64 Ose 8 Consistoire 1st miscellaneous 4.
Saly's opinion Ose and Federation working well
while other organisations less so. Saly believes
funds presently available adequate for next 4 or 5
weeks. Do you wish Saly transmit funds to Jefroykin
for latter's distribution or do you wish Saly contin-
us making funds available to the several organizations.
NORWEB
WMB
Regraded Unclassified
53
DMF-763
PLAIN
Lisbon
Dated November 6, 1944
Rec'd 6,29 a.m., 7th
Secretary of State,
Washington.
3872, Sixth, 7 p.m.
FOR LEAVITT FROM PILPEL JDC 112 WRB 246
86 persons arrived Istanbul November 3 by rail from
Bulgaria 51 children 4 escorts 25 men released from labor
camp Bor and family of 4 and 2 children. Group leaving
for Palestine November 6 also 43 Poles arrived Istanbul
November 5 from Rumania enroute Palestine. Reference our
111 Wolf Saind requests per capita payment 500 Swiee France
for 547 steanship SELATTHIN passengers Joseph Schwarts ca-
bled Passman August 28 "view situation would prefer pass on
each project as it naterialises instead of giving blanket
authority".
Advise whether foregoing Swise franc payment authorised.
NORWEB
WMB
54
CABLE TO MINISTER JOHNSON FOR ALSEN, STOCKHOLM, SWEDEN.
Please refer to Department's 1701 of August 24, items 3 and 3.
Petition for the issuance of immigration visas has been sub-
mitted to the Immigration and Naturalization Service by Esther Friedmann
nee Farkas, a United States citizen, 3544 Breadway, New York, on behalf
of her husband, Sander Friedmann, and their son, Imre Friedmann, born
respectively at Budapest Hungary, March 21, 1897, and Meteszalka, Hung-
ary, March 17, 1928, and whose last known address is believed to be
Bethlen U. 12, Meteszalka, Hungary. The petitions has been approved by
Immig ration and Naturalization Service. In accordance with procedure
envisaged in aforementioned cable, please request Swedish Government to
advise appropriate enemy authorities of Sweden's willingness to permit
the entry into Sweden of the persons and to take steps to issue to them
Swedish visas,
Believed to be with the above is another son of Sandor and
Eather Friedmann, Bela Friedmann, born in Meteszalka, Hungary, on
August 19, 1934. We are advised by the Immigration and Naturalization
Service that Bela Friedmann acquired United States citizenship at
birth under the previsions of the Act of May 24, 1934. Please take all
necessary steps to safeguard the life and interests of this United States
citizen,
THIS IS WRB STOCKHOLM CABLE NO. 238.
11:30 a.m.
November 6, 1944
Miss Chauncey (for the Sec'y) Abrahamson, Ackermann, Cohn, DuBeis, Friedman, Hedel,
Lesser, Mannen, McCormack, Files
BAksin:tmh 11-3-44
Regraded Unclassified
55
CABLE TO MINISTER JOHNSON AND OLSEN, STOCKHOLM, SWEDEN
Reference your 4416 of October 30. Please transmit to the
Swedish Government this Government's sincere appreciation of the
humamitarian activities of the Swedish Government and of the courage
and ingenuity displayed by Mr. Wallenberg in rendering assistance to
the persecuted Jews in Hungary.
THIS IS WRB STOCKHOLM CABLE NO. 239.
2:50 p.m.
November 6, 1944
Miss Chauncey (for the Sec'y) Abrahamsen, Ackermann, Cohn, DuBois, Friedman,
Hodel, Lesser, Mannon, McCormack, Files.
BAkzin:LSLesser:tmh 11-4-44
Regraded Unclassified
56
CABLE TO MINISTER HARRISON FOR MCCLELLAND, BERN, SWITZERLAND
Please refer to Department's 2198 of August 24, items 3 and 4.
Petition for the issuance of immigration visas has been sub-
mitted to the Immigration and Naturalization Service by Esther Friedmann
nee Farkas, a United States citizen, 3544 Broadway, New York, on behalf
of her husband, Sandor Friedmann, and their son, Imre Friedmann, born
respectively at Budapest, Hungary, March 21, 1897, and Meteszalka, Hung-
ary, March 17, 1928, and whose last known address is believed to be
Bethlem U. 12, Meteszalka, Hungary. The petition has been approved by
Immigration and Naturalization Service. In accordance with procedure
envisaged in aforementioned cable, please request Swise Government to
advise appropriate enemy authorities of Switzerland's willingness to
permit the entry into Switzerland of the persons and to take steps to
issue to them Swise visas.
Believed to be with the above is another son of Sandor and
Esther Friedmann, Bela Friedmann, born in Meteszalka, Hungary, on
August 19, 1934. We are advised by the Immigration and Naturalization
Service that Bela Friedmann acquired United States citizenship at
birth under the provisions of the Act of May 24, 1934. Please take all
necessary steps to safeguard the life and interests of this United States
citizen.
THIS IS WRB BERN CABLE NO. 263.
11:30 a.m.
November 6, 1944
Miss Chauncey (for the Sec'y) Abrahamson, Ackermann, Cohn, DuBois, Friedman, Hodel,
Lesser, Mannon, McCormack, Files
BAksin:tmh 11-3-44
Regraded Unclassified
57
CABLE TO MINISTER HARRISON AND MCCLELLAND, BERN, SWITZERLAND
Reference your 7269 of November 1.
Please transmit to Swies Government this Government's appr eciation
of Swiss action reported therein. You may assure Swiss officials that this
Government will do everything possible to assist them in every way in con-
nection with the reception and evacuation of the contemplated refugees from
Hungary.
In this connection, please ascertain and advise the Board of
total number of Jewish refugees now in Switzerland, and of the numbers
holding (1) Palestine certificates, (2) valid visas to any other countries,
or (3) valid passports of countries to which they can safely return.
THIS IS WRB BERN CABLE NO. 264.
2:50 p.m.
November 6, 1944
Miss Chauncey (for the Sec'y) Abrahamson, Ackermann, Cohn, DuBeis, Friedman,
Hedel, Lesser, Mannon, McCormack, Files.
BAkzin:LSLesser:tmh 11-6-44
Regraded Unclassified
58
Bern
Dated November 6, 1944
Rec'd 10:08 a.m. n.
Secretary of State,
Washington.
7361, November 6, 10 a.m.
FOR WRB FROM MCCLELLAND
During October increasingly difficult situation
of several thousands of Latvian refugees who in the
fave of Russian advance have fled to Germany (as well
as to Sweden) was called to my attention by ICRC and
Minister Feldmans Latvian delegate to League of Nations.
Whereas both ICRC and Feldman understand that
WRB funds cannot be used for refugees fleeing from
Russians they are anxious to know if it would not be
possible to obtain license transmit funds to Switzerland
for relief program among Latvians in Germany administered
by ICRC from Latvian sources in the United States.
Apparently similar funds have recently been sent to
Sweden for this purpose.
It is suggested that Alfred Bilmanis, Latvian
Minister in Washington, be contacted as he had certain
funds at his disposal.
I submit this appeal to WRB for any action deemed
possible. Fate of these Baltic refugees similar to that
of Poles has been doubly hard.
HARRISON
WSB
Regraded Unclassified
COPY
59
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
American Legation, Bern
TO:
Secretary of State, Washington
Dated: November 6, 1944
NUMBER; 7360
SECRET
In connection with the following message, please see telegram dated
September 21, No. 3255, from the Department, next to the last paragraph;
also cable from the Legation dated Nov. 3, No. 7302.
A summary of an informal Swiee communication dated November 2
is given below.
For the purpose of discussing all questions pertaining Deportation
from Vittel or bearers of Latin American Documentation, and with regard to
their fate, a representative of the Swiss Legation in Berlin recently called
at the Foreign Office of Germany. The Swiss Legation does not understand
why its numerous representations are not answered, he informed Sethe. The
justification for this remark was recognized by the German official and he
gave assurance that everything possible to remedy this situation would be
done by him. However, he emphasized that competent authorities, 1.0., police
authorities, were responsible and not the German Foreign Office. The recent
mobilization of members of his staff and the removal of a portion of the
German Foreign Office to the Riesengebirge complicated the performance of
its work, Sethe added.
A copy of the Swiss note recently addressed to the German Foreign Office
with regard to the Vittel deportations was then given to Bethe. Observation
was made by the Swise representative that a report from the Swies Consulate in
Paris showed that the assumption of Sethe that the Vittel deportees were still
in France was not correct and accordingly that it was not surprising that this
matter had been protested by the United States. Everything led to supposition
that the majority of these people are at Bergen Belson, the Swies official
added, and he requested that authority for visiting that camp be given the
Swiss representative. Suggestion vas made by Sethe that he consult the
Counsellor of the Legation von Thadden of Abteilung Inland Two which controls
Bergen Belsen since this involves a Jewish camp in which by definition no
foreign national 10 detained, from an administrative standpoint, Difference
in opinion exists between Foreign Office of Germany and competent German
authorities (88) with regard to Jewish bearers of foreign documentation of
a certain category, Sethe intimated. The German Foreign Office does not
mind ledging Jewish holders of Latin American passporte in civilian internment
camps but the SB follows its own policy in this regard, according to Sothe.
Sethe specifically instructed his collaborators, in the presence of the
Swies representative, to intervene urgently with competent authorities in
order that written communication on this subject explaining their position
with regard to the Vittel deportations may be finally received by the Swise
Legation.
- 2 -
60
The Swies representative during a conversation with von Thadden
which followed, again directed the attention of von Thadden to the
Regraded
unprecendented nature of the existing procedure under which Latin American
documents in Jewish possession are considered to be invalid from the outset,
and to the injustice of this procedure. There was no positive result from
the conversation with von Thadden.
A personal visit to Bergen Belsen had been made by him, he daid, and
he had ascertained that the internees there are treated in a very decent
manner, contrary to the remarks made by his questioner. In reply to &
request for authority to visit this camp, the Swiss representative was told
ghat because no Swise-protected nationals are there, such request would never
be granted. The vicious circle of this discussion was thus completed.
The Swiee Legation representative did not fail to point out to von
Thadden the artificial nature of the arguments on which this position is
based, that it is tenable, and that it only substantiated the opinion circu-
lated throughout the world that Jews in German hands are treated in an in-
human manner regardless of their nationality. Von Thadden was led by this
remark to suggest that the neutral observer who might go to Bergen Belson
would be able to confirm that such allegations do not correspond with the
facts in the case. In taking this position Himmler might perhaps make pos-
sible visit this camp by protecting pwer representative, he added.
In the belief that the primary consideration 18 that it be made possible
for the Swiss Legation to protect the interests of its proteges in the comp
at Bergen Belson, the Swise representative saw no objection to the presente-
tion in this manner of a request for an inspection of this camp. & promise
was made by von Thadden that be would soon inform the Swiss Legation as to
whether Himmler's collaborator (who handles these matters) also believes that
the request to visit Bergen Belsen might be presented to Himmler in this way
and whether the collaborator above mentioned would be disposed to attach a
recommendation to the request. If response be in the affirmative, von Thadden
added, it would be probably that authorization would actually be given, but
that this matter must be considered hopeless if the reply be in the negative
In this connection the Swise Legation in Berlin makes the observation that
application of the Intercross delegate in Germany to visit Bergen Belsen was
refused by German authorities.
Even if the Swice Legation receives a negative reply. it will request
authorisation, in a formal note, to visit the camp, the Swiss representative
told von Thadden. The Swies Legation makes the observation, in its report
covering the above, that the account given by the Swiss representative of
his conversations with von Thadden and with Schhe shows quite clearly the
obstacles encountered in its activity on behalf of Jews protected by the Swiss.
Owing to the especially strict nature of the regulations introduced by Himmler
61
- 3 -
some time ago with regard to German internal policy, these difficulties
are even greater. In addition, the account shows that officials of the
Foreign Office of Germany, which endeavors to pursue & line of conduct
which is dictated by principles of justice, are no longer able to carry
their point of view effectively to the authorities who are charged with
the internal policy of Germany. In racidl and in Heological matters, the
opinions of these latter are tending to assume every increasing importance
under the influence of recent changes in the German military situation.
HARRISON
DCR:LCW: EFR
11/9/44
Regraded Unclassified
62
RB-562
This telegram must be
Bern
paraphrased before being
communicated to anyone
Dated November 6, 1944
other than a Government
Agency. (RESTRICTED)
Rec'd. 5:15 p.m.
Secretary of State
Washington
7362, Sixth, u a.m.
FOR WRB FROM MCCLELLAND
Department's 3512, October 14, 10 p.m.
Preliminary investigation has yielded information
concerning some 60 more or less indigent Lithuanian
civilian refugees at present in Switzerland of whom
about 30 are interned in refuges homes and work camps.
These 60 comprise 24 men 25 women and 11 children about
95 percent of them Jews. Further inquiry will probably
turn up 10 or 20 additional Lithuanian refugees of whom
there are relatively few in Switzerland.
-
The Swise "Verband Juedischer Fluchtlingshilfefi"
in Zurich is fully supporting some 5 Lithuanian cases all
invalide costing around 1200 Swiss france monthly and
granting partial aid to about 20 more to extent of are
other 800 france per month.
Some 8 Lithuanian students are being assisted
by other private relief agencies at an outlay of
about 1500 france monthly.
Any contribution which the United Lithuanian
Relief Fund could make toward defraying these ex-
penditures would be of great help to the organi-
sations now paying this relief and be waraly appre-
ciated.
The "Verband" cabled Mr. Rasovsky of American
Federation for Lithuanian Jows, New York, early in
September requesting assistance which, however, has
not yet materialised.
HARRISON
NEC
RA:648
Born
63
Dated November 6, 1944
Rec'd 6:32 p.m.
Secretary of State
Washington
7365, November 6, 4 p.m.
FOR WRB FROM MCCLELLAND.
Legation's 6263, September 21.
ICRC has just submitted most encouraging report
on satisfactory distribution of CRISTINA goods allotted
to parcel program for political prisoners both meneand
women in German concentration camps. It is worth
nothing that this has been very first lot of food-
stuffs granted to ICRC for assistance to this cate-
gory of prisoners. As such it has been invaluable.
During September and October 25,600 parcels
weighing total of 54,756 kilos were sent individually
addressed to 13,300 detainees and as collective ship-
ments through men of confidence to another 12,300
prisoners. Approximately 8,500 parcels went to French
detainees, 4,300 to Belgians, 4,200 to Poles, 3,600 to
Norwegians, 2,800 to Dutch and balance to Czechs,
Greeks, Yugoslave, Spaniards, and I*)
International Red Cross delegates were able to
visit all camps where parcels were sent and satisfactorily
ascertain that great majority packages reached beneficiaries.
International Red Cross has been instrumental in getting
commenders in certain concentration camps to allow men of
confidence for various national groups which has greatly
facilitated distribution collective shipments. On the other
hand a few camps were encountered where prisoners were not even
allowed to return individual receipts.
HARRISON
(*) Repetition requested on above garbled groups.
EEC
Regraded Unclassified
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
American Legation, Bern
TO:
Secretary of State, Washington
DATED:
November 6, 1944
NUMBER: 7366
CONFIDENTIAL
The following is for the strictly confidential information
of the War Refugee Board.
Continuing my no. 7365.
8,000 new names and numbers of political deportees of
camps of Dachau alone were brought in by the use of individual
receipt cards in collective shipments. Since the German
authorities have refused consistently to communicate lists of
deportees to ICRC, these data are of great value. For a great
many families this constitutes the first sign of life from loved
ones many of whom have been reported executed previously. Also,
these names allow ICRC to send individually addressed parcels
in the future to these prisoners with accordingly better assur-
ance of receipt.
There have been shown to me recent reports on certain con-
centration camps in Germany depicting unbelievably hard and
primitive living conditions. One camp housing some 30,000
women has not even the most elementary pharmaceutical supplies,
no shipments of such supplies from any source having ever been
made to concentration camps. Acute and bitter is the lack of
clothing, especially winter underwear and warm socks. Con-
sequently I an making every attempt to organize shipments of
parcels of pharmaceuticals from Switzerland and if at all
possible I urge that you include a few thousand two and one-
half kilo clothing parcels (underwear and stockings and socks
for both women and men) with 285,000 food parcels to be shipped
this month.
Very limited is the time still available to us when trans-
portation conditions inside Germany will allow forwarding of
such parcels.
HARRISON
Regraded Unclassified
SECRET
COPY NO
4
65
NOT TO BE Re-TRANS.,CTTED
OPTEL No. 360
Information receive up to 10 A.M. 6th November 1944.
1. NAVAL
A LCT sunk br mine yesterday and two others missing off OSTEND.
One of H,M. Drifters ran aground off NEWHAVEN 3rd and considered
total loss: D casualties.
"aval landing party and main force have been withdrawn from
MILO without casualties. The Naval officer in charge LEMNOS and
his party of 15 are isolated at MUDROS and require assistance.
mineweeping in the pproaches to SALONIKA greatly assisted by discov-
ery of & plot of the minefield.
2. MILITARY
Western Front On Norhhern Front of 21st Army Group, we now
control whole of River MAAS except two small
German bridgeheads at MOERDIJK and WILLF STAD after advances
exceeding in some cases 5 miles on broad front.
On WALCHEREN ISLAND the bridgehead in Causeway sector has been
considerably enlarged and now extends to within two miles of
MIDDLEBURG, while British infantry who finally cleared FLUSHING
have advanced along the Canal towards MIDDLEBURG from the south
and were last reported within a mile of the town. The Sea Wall
for a distance of 4 miles Last of FLUSHING now cleared.
Eastern Front Russians have captured two places 14 miles South
East and 13 miles South respectively fron centre
BUDAPEST.
Greece Except for a few isolated detachments Greek mainland
now free of enemy.
Burma Our troops have occupied KENNEDY PEAK capturing much
Japanese ammuniton, equipment and rations.
3. AIR OPER TIONS
Western Front 4th/5th. BOCHUM, 3,323 tons; DORTMUND-EMS Canad
926. The 877 heavy bombers operating clai ed
21 German aircraft destroyed. including 20 jet-propelled.
5th. 165 excorted Lencesters Bomber Command (1 missing)
dropped 891 tons on SOLINGEN through cloud.
1,017 escorted U.S. Heavy Bombers attacked railway centres
FRANKFURT 1,030 tons, K.RLSRUHE 925, LUDWIGSHAFEN 572, HANEU 96 and
KAISERSLAUTERN 88. 177 others dropped 433 tons on Synthetic Jil
Plant LUDWIGSHAFEN. Cloud prevented observation results. (21 bombers
13 fighters missing) Nine fighter crews believed safe.
160 "edium bombers attacked military objectives near METZ
dropping 230 tons unobserved. 1,344 aircraft operated in the battle
area dropping total 290 tons with good effect and destroying or
damaging 24 locomotive, 78 railway wagons, 36 motor vehicles and
46 buildings. Two German aircraft destroyed in the air and 36 on
the ground for 8 Fighters missing.
5th/6th 71 Aosquitoes sent out including 65 to STUTTGART.
Mediterranean 4th. 689 escorted heavy bombers from MEDITERR-
NEAN (6 Bombers, one fighter missing) attacked
objectives AUSTRIA and GERALNY, including 6 railway centres 651 tons
and two oil targets 723; results mostly unobserved,
150 -edium bombers (3missing) attacked communications and gun
positions NORTHERN IT.LY while 332 fighters and fighter bombers at
attacked communications battle area,
5th. 507 havey bombers dropped 982 tons on oil refinery near
VIENNA,
German Activity 5th/6th 30 Flying bombs plotted.
Regraded Unclassified
66
November 7, 1944.
MEMORANDUM
TO:
Secretary Morgenthau
(For the Files)
FROM: Mr. Gaston
wr
You called me by telephone from the farm yesterday,
November 6, (talking to Ted Gamble at the same time) and
called our attention to the lead editorial in The Times
which answered Dewey's assertion in his speech of Sunday
night that the war had been prolonged by German reaction
to the so-called Morgenthau plan for treatment of Germany.
You asked Ted and me to do what we could to cause this
editorial to be reprinted in papers throughout the country,
telling us that Arthur Sulzberger had personally authorized
a waiver of the copyright. You instructed us to charge
the telephone calls to you personally.
As a result of these instructions Ted Gamble agreed
that he would get hold of his man Little, of the Promotion
Division under Ton. Lane, and would come over to see me
shortly.
I put in calls and talked over long distance to the
following:
Ted Thackrey, Publisher of the New York Post. Thackrey
said that they would do something with the editorial and
would answer the thing in other ways, including answering
it on the radio.
J. David Stern of the Philadelphia Record. Stern
said he would both utilize the editorial in the Philadelphia
Record of Tuesday and would adopt other devices to answer
the Dewey charge.
Ralph Coghlan of the St. Louis Post-Dispatch said that
they thought the story was not worth answering and it was
their intention to ignore it, but if I wished to send the
Times editorial by Western Union "overhead" to Ben Reese, he
thought Reese could run it as a news story.
Regraded Unclassified
67
- 2 -
Richard Finnegan of the Chicago Times said he would
be glad to run the Times editorial if I would wire it to
him and I sent it simultaneously to St. Louis and Chicago.
I am attaching a memorandum from Ted Gamble regarding
eleven contacts by himself and Little of his staff. We
duplicated on Thackrey of the New York Post due to my over-
sight in not informing him that I had talked to Thackrey.
Regraded Unclassified
Summary Pres 68
MEMO FOR MR. HERBERT GASTON
New York Post. We talked to Ted Thackrey, publisher of the Post.
He says he and Mrs. Thackrey (formerly Dorothy Backer) feel this
accusation of Dewey's very deeply and they are doing everything
possible to combat it. They had a radio program about it last
evening and they are mailing us copy of the script. Thackrey
promises to cover the situation editorially more fully today and
tomorrow and he feels it will be most helpful in the New York area.
Philadelphia Bulletin. We talked to Howard Stodghill and he prom-
ised to immediately talk to Mr. McLaen the publisher as well as the
editorial director. He is not sure just what can be accomplished
but he promises to do everything possible in behalf of the Secre-
tary's position.
Atlanta, Constitution. Clark Howell, publisher of the Constitution
wanted the New York Times editorial sent immediately. He promised
that he would instruct his editors to handle the matter favorably.
Little Rock, Ark. Gazette. Mr. J. N. Heiskell, publisher and editor
of the Gazette, said he thought Dewey's accusation was a disgrace
and he was anxious to get the New York Times editorial for repro-
duction. He said they would probably add additional comments of
their own editorially which should be helpful.
Fentress-Marsh Chain, (Texas), Austin, American Statesman -- Waco,
News Tribune and Times Herald -- Port Arthur, News -- Wichita Falls,
Times and Record News. We talked to Buck Hood who is associated
with this chain in editorial advisory capacity. He asked that the
New York Times editorial be wired him immediately and he promised
that it would be reprinted in most of the papers of their chain.
He will handle the distribution from his office in Dallas.
Raleigh (North Carolina) News and Observer. We talked to Frank
Daniels, General Manager of the News and Observer. He says they
want to reprint the New York Times editorial and add some of their
comments. The Times arrives there at noon today so it was not
necessary to wire the editorial.
Indianapolis (Indiana) Star. Mr. Eugene Pulliam, publisher of The
Star, agreed to use the Times editorial or publish one with the
same slant which their own editors write.
Portland (Oregon) Journal. This paper has agreed to cooperate
and & copy of the Times editorial has accordingly been wired to
Don Sterling, managing editor.
Regraded Unclassified
69
Page Two
New York PM. We talked to Mr. John P. Lewis, managing editor. He
says they made editorial reference to the "Dewey Accusation" today.
If they can develop any further effective editorial approach tomorrow,
they will do SO. He had not seen today's New York Times editorial
but promised to get it and read it immediately and possibly use
quotations.
Chicago Sun. Have talked to Mr. E. z. Dimitman, editorial director.
He is anxious to help combat the "Dewey Accusation" and volunteered
to have us send the editorial to him immediately over their own
teletype from the press building here in Washington. He promises
to make good use of the material in tomorrow morning's paper.
Los Angeles Daily News. We talked to Mr. Lee Payne, managing editor.
He asked that we get the New York Times editorial to him as soon as
possible, 80 it has accordingly been wired. He promises to use it.
These are in addition to the ones you mentioned as having contacted --
St. Louis Post Dispatch - Chicago Times - Philadelphia Record and
the Camden Courier Post.
Regraded Unclassified
70
New York Post
FOUNDED 1801
75 WEST STREET NEW YORK , WHITEHALL 4-9000
T.O. THACKREY
EDITOR AND GENERAL MANAGER
November 7, 1944
Mr. Herbert E. Gaston
Assistant Secretary of the Treasury
Washington, D. C.
Dear Mr. Gaston:
I am enclosing an editorial from the New York Post containing the
reference you mentioned in your telephone call last Monday morning.
I am elso enclosing a section of a radio script broadcast by
Mrs. Thackrey and me Sunday afternoon, over Station WOR.
Sincerely,
TOTssk
Enclosures
NEW YORK, MONDAY, NOVEMBER 6, 1944.
71
Dewey's Bombshell
We recently carried an editorial here entitled, "Dewey-
Ex-
ationist." Today we want to take that back. Dewey
has completed the great circle, and he is back with the isola-
tionists.
He began his race for the Presidency in 1940 by cam-
paigning for Republican convention delegates with an out-
and-out isolationist appeal. We all know what happened to
him afterward. He moved cautiously toward the position
held by Wendell Willkie and in this campaign he has been try-
Ing to convince independent voters there is no difference be-
tween him and President Roosevelt on foreign policy.
Rejoins Isolationists
But Saturday night in Madison Square Garden he re-
joined his old friends.
He accused the President of prolonging the war and
costing the lives of thousands of American boys because
Secretary Morgenthau was called to Quebec to discuss a
stern, realistic peace plan for Germany. Publication of that
plan, Dewey said, stiffened the resistance of the Germans,
made them fight fanatically.
We can draw only one conclusion from these charges.
If Dewey is elected he will undertake at once to let the
Germans know that we will go easy with them, in order to
persuade them to stop fight-
ing. Of course, the sole mili-
tary and political objective of
the Nazis for many months
past has been to get us to
adopt just exactly that policy.
thermore, as the New
York Times pointed out this
morning, by the time the
Morgenthau plan was pub-
lished on Sept. 22 the Nazis
were fighting fanatically.
They had stopped the Rus-
sians at Warsaw, and they
were frustrating at Arnhem
the one maneuver that might
have ended the war quickly.
The high command of
Dewey's party has shifted
with him to the isolationist
camp in the closing hours of
the campaign. Robert Moses
wrote a letter attacking the
President's proposal for im-
mediate use of force by the
U. S., in concert with other
peace loving nations, against
any aggressor.
The letter was published as
a full page ad in the New York
Times, paid for by the Repub-
lican National Committee.
Committee is now dis-
tributing copies of that adver-
tisement and by this action
se
9g notice that it bitterly opposes a plan to which Dewey
iven an equivocal endorsement in his Minneapolis speech.
We know now Dewey gave that half way endorsement
while winking at the isolationists. But in case this bit of
slyness was lost upon them, the Republican National Com-
mittee has spelled out the party's position.
The President warned us to expect a last minute bomb-
shell from the Republicans. Dewey and the Republican
National Committee have provided it by winding up their
campaign with a frank appeal to the isolationists.
Dewey at last is talking out of one side of his mouth-
the isolationist side. It is clear now that all along what he
wanted above all was the support of the isolationists-and
he has it.
The issue of this campaign is the peace. Dewey has
revealed himself at the eleventh hour as a threat to the
ReaceRegraded Unclassified
72
COPY
MRS. THACKREY:
Yes, I've heard it, with a good deal of amazement; I wonder just
exactly where Mr. Dewey would like to see this war fought: does he
propose that we fight it on the Boston Common, for example? or on
the White House lawn? or on Broadway? or in the streets of Los Angeles,
or San Francisco, or Chicago? Mr. Dewey must believe we should be
fighting this war from house to house and street to street right here
at home! But Mr. Dewey doesn't stop there. Last night at Madison
Square Garden he went a step further, and lower. He gave voice to the
German soft-peace propaganda line. He openly charged the the only reason
the Nazis are fighting desperately is because the President and the
Secretary of the Treasury have made it plain that this time, we plan
to make sure the Nazis never again can wage war on humanity! He/still
thinks President Roosevelt can, and should, appease Hitler. I suppose
next, he'll try to make us believe it was President Roosevelt who
attacked the poor Japanese at Pearl Harbor.
Regraded Unclassified
73
J. DAVID STERN
PHILADELPHIA RECORD, PHILADELPHIA
EVENING COURIER, CANDEN.N.J.
MORNING POST, CAMDEM.N.J.
Philadelphia 1, November 7, 1944
Hon. Herbert E. Gaston
Assistant Secretary of the Treasury
Treasury Department
Washington, D. C.
Dear Mr. Gaston:
As a result of your phone call yesterday
morning, we ran enclosed story in today's Record. You
will note that we combined the opportune statement by
Major Eliot with the editorial from the New York Times.
Thank you for bringing this to my attention.
I enclose a very interesting and, to my
mind, very sinister report on "Germany and Europe" by
Frank C. Hanighen, who once worked for me. He is a pro-
nounced isolationist as is his associate, Felix Morley,
former Editor of the Washington Post and now president of
Haverford College. Secretary Morgenthau might be inter-
ested in seeing this piece.
After I see the Secretary at eleven
o'clock on Wednesday, November 15th, 1 plan to drop in
your office for a moment's chat.
With kind regards,
Yours sincerely,
em
enc
Regraded Unclassified
N.Y. Times and Military Critic
Answer Dewey Charges on War
Special to The Record
NEW YORK, Nov. 6-Gov. Dew-
for German Industry charges
ey's accusation that Secretary
that the Allies intend either to
Morgenthau's plan to de-indus-
enslave or to emasculate the male
trialize Germany is prolonging
population of Germany.
the war was answered vigorously
"When Mr. Dewey attributes
today by two sources.
this hard defense to some pro-
One was the New York Times,
posals of Mr. Roosevelt's Secre-
in an editorial. The other was
tary of the Treasury, he makes a
Maj. George Fielding Eliot, mill-
charge which, for the sake both
tary critic, in an article in the
of our unity at home and the mo-
New York Herald Tribune.
rale of our troops in the field, had
The Times Replies
better never have been made."
Ellot's Answer
The Times editorial said, in
Maj. Ellot concluded his article
part:
as follows:
"Mr. Dewey has chosen to end
"Nothing we now say or sug-
his campaign on a note that does
gest about the kind of peace Ger-
not do him credit. He accuses
many is going to get has any ap-
Secretary of the Treasury Mor-
preciable effect on the fighting of
genthau of prolonging the war
the German Army, which is con-
needlessly at the cost of Amer-
trolled by those to whom these
ican lives. He says that the pub-
future considerations are of no
lication of reports of Mr. Morgen-
importance.
thau's plan to de-industrialize
"The Germans to whom these
Germany 'was just what the Nazi
considerations are really of Im-
propagandists needed. It put fight
portance, those who are planning
back into the German army; it
to come forward as the leaders of
stiffened the will of the German
the future Germany and still to
nation to resist.'
some extent influence German
"The first reports of Mr. Mor-
propaganda, are desperately anx-
genthau's rejected plan to de-in-
lous to convince us to the con-
dustrialize Germany for the pur-
trary, because they want to tone
pose of destroying her power to
down proposals which, if carried
make war were published on Sep-
out, would make a future German
tember 22-about a month after
military comeback impossible.
Mr. Dewey himself had proposed
"It is never a good idea in war
to strip Germany of her control
to accept as fact what the enemy
of
rich industrial area of the
is trying very hard to make you
Ru. for precisely the same rea-
believe.'
son.
Had Stopped Russians
"By that time the German
armies which Mr. Dewey envis-
ages as in 'headlong retreat' had
already stopped the Russians at
Warsaw. By that time they were
already battering the British ex-
peditionary force at Arnhem and
checking the one bold Allied ma-
neuver which alone might have
brought a quick end to the west-
ern war. By that time 'the Nazi
propagandists' were already in
full blast with charges far better
calculated to arouse German
fears than either Mr. Morgen-
thau's plan or Mr. Dewey's plan
75
HUMAN EVENTS
A Weekly Analysis for the American Citizen
FELIX MORLEY
EDITORIAL OFFICE
FRANK c. HANIGHEN
1702 K STREET, N. W.
EDITORS
No. 40
WASHINGTON e. D. c.
WILLIAM HENRY CHAMBERLIN
TELEPHONE NATIONAL 7490
HUGH GIBSON
November 1, 1944
CONTRIBUTING EDITORS
GERMANY AND EUROPE
By Frank C. Hanighen
The Morgenthau plan for the destruction of Germany as an industrial state has,
by its very fanaticism, produced a sobering reaction.
In the chorus of rejection which greeted the plan, a theme of common sense
predominated. The presidents of the five national engineering societies condemned
1t, saying that it would penalize "not only the owners of the materials destroyed,
but the world as a whole." Methode which Rome applied to Carthage will not work
today.
The argument of a "hard," versus & "soft" peace is utterly unrealistic. Any
peace will prove severe for Germany, in view of its present ravaged condition.
The real issue is whether or not we shall construct the foundation whereon the pros
perity necessary for enduring peace in Europe may be built up. The nature of the
terms imposed on Germany will decide that issue.
There is reason to believe that the spirit of the Morgenthau plan has not been
definitely shelved - partly because Government planners cannot agree upon an al-
ternative blue-print. The pattern of the partition of Germany is said to prevail:
some of its eastern territory to go to Russia and Poland; some in the West to the
Western Allies; only the center to remain German.
The framers of such plans seem unable to realize that territorial dismemberment
of a highly integrated and complicated economy like that of Germany would prove
hardly less destructive than removal of its industry.
Even a cursory glance at the administrative and economic organization of con-
temporary Germany shows that chaos would result from this sort of irresponsible
surgery.
Copyright 1944 by HUMAN EVENTS
Published in conjunction with the National Foundation for Education in American Citizenship
Regraded Unclassified
II
For instance, some writers on-the subject demand the destruction of Prussia, as
a prerequisite of settlement with Germany, because Prussia has a larger area and
more inhabitants than all the other German states combined. But, as Dr. Julius
Fleischman has pointed out in a timely article in the Washington Post, "It does not
seem to be sufficiently known that the dismemberment of Prussia was already carried
out by the Nasi government to such an extent that only an empty shell remains."
Dr. Fleischman describes how the Nazi government, while leaving intact the
superficial federal structure of the Reich, changed its administrative nature -
first by appointing Reich governors for the states, then by incorporating state
ministries into the Reich government, and finally in 1939 by making the agencies
of the states into agencies of the Reich. "Thus Germany has become something like
a unitary state without any actual dissolution of Prussia or the other states..."
Meanwhile the Nazi party established 32 Gaue, or Nazi party regions of Germany
proper, cutting across many of the lines of the larger states. In 1942 these be-
came "Reich defense regions," administratively used as subdivisions for regional
economic chambers, housing, labor mobilization and price administration.
Finally, on top of this complex administrative structure are the 25 "economic
regions" of which six are wholly in Prussia, while others cover parts of Prussia
and other states. Regional administration of food and industrial products, regional
regulation of labor and rationing coincide with these economic areas.
"It will be easier to restore orderly government and remove the Nasi office-
holders if existing administrative subdivisions are maintained as much as possibley
remarks Dr. Fleischman. It follows that orderly government may not be restored if
the contemplated dissection cuts through these administrative nerves and ganglia.
III
As for Germany's economic eystem, territorial dissection may prove as dangerous
as the Morgenthau plan. Exact details of the contemplated partition have not ap-
peared, but it seems that the Allies propose to separate East Prussia, Pomerania,
Silesia, and Brandenburg from the eastern area of the Reich, and the Ruhr and Rhine-
Regraded Unclassified
76
land from the western area -- leaving only the intervening territory as the new Germany
An estimated 46 million people live in this central area today. But it is
Regraded Unclassifie
assumed that this number would rise to 57 millions as a result of a shift of German
populations from the lost provinces. Germany, in short, would lose about one-third
of its territory, but only about 16% of its population. To live within these from-
tiers, that population would have to manufacture and export as never before.
But the partition would take away about 97% of the coal supply, which comes
mainly from the Ruhr and Silesia. Without coal, the iron and steel industry cannot
function on any scale; nor can the synthetic oil and textile industries. One-third
of the capacity of the present electric-power stations would regain outside the new
frontiers, and many in the center region would have to shut down for lack of coal.
Such important raw materials as bauxite and copper must be imported.
Now, within this central area lie such big industrial centers as Berlin, Augo-
burg. Magdeburg, Dresden, Leipzig, Hamburg, Nuremberg. and Munich. It contains
most of the engineering works of the country. This industry, under the plan of
partition, would be almost entirely deprived of raw materials. The effects of this
plan, in short, would be those of the Morgenthau plan,
This unreal settlement, remarks the London Economist, "would destroy most of
the manufacturing capacity and would turn it (Germany) into an agricultural country,
burdened with an enormous industrial population... Germany might then become what
Vienna was in the intervening years - a place of mass unemployment, mass undernour-
ishment and perpetual political tension. Can this really be called a recipe for
peace?"
IV
The repercussions of such a situation would certainly have serious results for
the rest of Europe. It is one of the ironies of the times that 80 few who pride
themselves on having an international viewpoint seem in any way aware of the economic
interdependence of Western Europe, including Germany.
The present woeful condition of liberated Italy is in part due to the fact that
it is cut off from the rest of the Continent from which it derived many of its raw
materials. The economic conditions in Italy have intensified social antagonisms, with
resultant unrest dangerous to any orderly political solution of Italian problems - a
portent of what can happen generally in a Western Europe in which the planners do not
Regraded Unclassified
recognize the necessity for economic cooperation.
As a matter of fact, the integration of European economies has greatly increased
since the war began. It is not generally realised that the Nasis in the past four
years have forced many of the technical and material activities plants, transporta-
tion, farming, banking, credit, etc. - on the Continent into a centralized machine
for war purposes. Plants all over Europe have been re-tooled to meet German techni-
cal standards. These plants have been linked with centralized organizations for
supplying raw materials and for distribution of finished products.
In short, the plain fact is that the Nazis have scrambled the eggs. It will take
the most restrained and intelligent statecraft to unscramble them in a manner which
must not penalize the victims of German aggression but which must punish the Nasi
leadership which is responsible.
Mass unemployment and starvation in Europe would only make that continent the
world's breeding ground of wars and revolutions. For many years, the immediate causes
of war sprang from the pauperized conditions of southeastern Europe. Tomorrow, if
the planners follow their present course, they will Balkanize all of Central Europe
that is not incorporated into the Soviet Union.
A real international outlook demands that the planners should draw the obvious
lesson from all the evidences of European interdependence and set their compase for
the only harbor which promises enduring peace - the economic and cooperative unifi-
cation of Europe.
Otherwise, a "hard" peace for Germany - whatever transient emotional satisfac-
tion it may provide - is all too likely to work out as a "hard" peace for Europe.
No reproduction or quotation of any sort from this news-letter is permissible without
credit. All rights reserved. Subscription for three months, $3.00; for six months,
$5.50; for one year, $10.00.
ST. LOUIS POST-DISPATCH - November 6, 1944
77
Editorial Replies to Dewey
Charge That F.D.R. Prolongs War
from
New York Paper Says Morgenthau Plan
m gaston.
Didn't Stiffen Nazi Morale, Hitler's Purge
Did-Cites Governor's Own Proposal.
Epacial to the 2994 Dispatch,
NEW YORK, Nov. 6.
HE New York Times, In an editorial today, replied to Gov.
T
Thomas E. Deway's charges in bis New York speech Baturday
night that President Roosevelt's administration had prolonged
the war and that Secretary Morgenthau's purported plan for making
Germany. an agricultural nation had stiffened German resistance.
The editorial follows:
"Mr. Dewey has chosen to end will merely Invite a repetition of
his campaign od a note that does
the events of 1939-44 in an even
not do him credit. He accuses Sec-
more disastrous form, particularly
retary of the Treasury Morgen-
for those nations which are un-
thau of prolonging the war need-
fortunate enough to be Germany's
leasly at the cost of American
neighbors," she wrote.
lives. He says that the publication
Even at the risk of having to
of reports of Mr. Morgenthau's plan
pay for the greater share of their
to deindustrialize Germany was
own reconstruction, the "Euro-
just what the Nazi propagandists
pean nations stand for the plan
needed.' It put fight back Into
which Secretary of the Treasury
the German Army; it stiffened the
Morgenthau is reported to have
will of the German nation to re-
submitted to President Roosevelt
sist. Almost overnight the head-
last September," Mrs. Hadsel said.
long retreat of the Germans
"Forced to decide between large-
stopped.' And from this Mr.
scale reparations and a delndus-
Dewey proceeds to the accusation
trialized Germany," she added,
'that the blood of our fighting men
"most of the continental Allies do
is paying for this improvised
not healtate to choose the destrue-
meddling.'
tion of Germany's industrial po-
"The first reports of Mr. Mor-
tential."
genthau's rejected plan to deindus-
But Germany's neighbors, Mrs.
trialize Germany for the purpose
Hadsel reported, believe that 1t.
of destroying her power to make
would not be necessary to remove
war were published on Sept. 22-
all German industries, since all of
about a month after Mr. Dewey
them would the same
himself had proposed to strip Ger-
potential military value.
many of her control of the rich
Mrs. Hadsel said that "If all the
industrial area of the Ruhr for
territorial changes proposed by
precisely the same purpose.
the French, Dutch and the rival
"By that time the German
Pollsh groups were carried into
armies which Mr. Dewey envis-
effect, Germany would loss ap-
ages as in 'headlong retreat' had
proximately one fifth of its pre-
already stopped the Russians at
1938 area.
Warsaw. By that time they were
"And through these cessions,
already battering the British ex-
Germany's coal and steel produc-
peditionary force at Arnhem and
tion would be reduced by nearly
checking the one bold Allied ma-
one fourth. Important zine, lead
neuver which alone might have
and lignite resources would also
brought a quick end to the west-
be lost, as would key strategic
ern war. By that time Hitler had
areas along the Baltie and the
already purged his defeatist gen-
Rhine.
erals and pledged Germany to
"Even after Germany hes been
fight to the kill. By that time
greatly. weakened in atze and eco-
'the Nazi propagandists' were al-
nomie poten (a), the small nations
ready in full blast with charges
feel that neijher they non their
far better calculated to arouse
larger Allies will dare to reglect
German fears than either Mr.
their military power in order
Morgenthau's plan or Mr. Deways
oppose such bida for power as
plan for German industry -
the Germans may still to
charges that the Allies intend
make in the postwar period."
either to enslave or to emasculate
the male population of Germany.
By that time (Hitler's decree of
July 25), even the school children
of Germany had been mobilized
for a war to the bitter end.
"The Germans are now doing
what every other nation has done
and would do in the same circum-
stances: they are fighting hard
in defense of an actual Invasion
of their own homeland. When
Mr. Dewey attributes this hard
defense to some proposals of Mr.
Roosevelt's Secretary of the
Treasury, he makes a charge
which, for the make AUT
unity at home and the morale of
our troops in the field, had bet-
ter never have been made."
Regraded Unclassified
78
November 7, 1944.
MEMORANDUM
TO: Secretary Morgenthau
FROM: Mr. Gaston
B. M. Edwards sent me a copy of a letter he
wrote to Pauley about party finances in South Carolina
and added this note to me: "I wish you would tell
the Secretary that I have been trying to help in this
situation. If
MR9
Regraded
Unclassified
TO:
79
MRS. KLOTZ
10-30-44
The attached letter is dated
October 4th pursuant to an agree-
ment with the office of the
Attorney General that the letter
be dated the day after the passage
of the Surplus Property Act.
It will not be mailed until We
hear from the Attorney General.
I shall advise you of that date.
kfa
FROM MR. 0' CONNELL
(dates 10/4 ht
80
not marked
until
25
October 4, 1944
My dear Mr. Attorney General:
Your opinion is respectfully requested as to the
application of section 27 of the Surplus Property Act
of 1944 to employees of the Procurement Division of the
Treasury Department whose duties relate to the disposal
of surplus property.
The Procurement Division of the Treasury Department
is presently acting, pursuant to Executive Order No. 9425
dated February 19, 1944, and Regulation No. 1 of the Sur-
plus War Property Administration issued thereunder (Fed-
eral Register for May 18, 1944, PP. 5096-5099), as the
disposal agency for surplus war property in the form of
consumers goods, and is authorised to continue to act in
the same capacity under the Surplus Property Act of 1944
unless and until the Surplus Property Board created by
that Act takes other action.
Section 27 of the Surplus Property Act of 1944 provides
as follows:
"See. 27. No person employed by any Gov-
ernment agency, including commissioned officers
assigned to duty in such agency, shall, during
the period such person is engaged in such employ-
ment or service, or for a period of two years
after the time when such employment or service
has consed, act as counsel, attorney, or agent,
or be employed as representative, in connection
with any matter involving the disposition of
surplus property by the agency in which such
person was employed, if such person during his
employment with such agency ratified, approved,
or authorized the disposition of any surplus
property pursuant to the provisions of this Act
or recommended any such approval, authorization,
or ratification as part of his official duties.
Regraded Unclassified
81
- 2 -
Any person violating the provisions of this
section shall be fined not more than $10,000,
OF imprisoned for not more than one year, or
both.
Although we do not share such a view, it has been
brought to our attention that section 27 could be con-
strued with such extreme application as would cause a
loss of the present key personnel of the Division and
greatly handleap, if not make impossible, the recruit-
ment of needed additional competent personnel in the
field of surplus property disposal.
The conduct of current disposal activities of the
Procurement Division, and the larger task of developing
adequate programs and organization for handling the antic-
ipated great increase in surplus war goods, require the
services of competent men of experience in the business
world who have specialized in the marketing of various
classes of commodities assigned to the Division. For
this purpose, the Procurement Division has recently re-
cruited a supervisory staff comprised principally of ex-
perienced merchandising men who have taken temporary leave
of their firms in order to assist the Division in these
problems, and the Division is urgently in need, not only
of the continued services of these persons, but also of
many others similarly qualified. It was the expectation
of these employees that upon the completion of their tem-
perary Government service they would be free to return to
their previous employment, or accept other comparable
employment, without Impediment to the discharge of their
normal private executive functions.
With respect to the application of section 27 to
personnel of the Presurement Division, the following
questions are submitted:
(1) Should not the prohibition of this section be
restricted to direct personal participation in negetia-
tions with the Procurement Division involving the dispo-
sition of surplus property by that agency; and if not se
Regraded Unclassified
A2
- 3 -
restricted, under what circumstances and conditions
would activities which do not involve direct personal
participation in such negotlations be considered to come
within the scope of the prohibition?
(2) Is the prohibition operative as to employees
who, subsequent to the date of approval of the Surplus
Property Act but prior to the date a majority of the ma-
bers of the Surplus Property Board have been appointed
and taken office, have ratified, approved, or authorized
the disposition of surplus property by the Precurement
Division or have recommended any such approval, authori-
sation, or ratification as part of their official duties?
I understand that you might prefer to consider the
application of section 27 in relation to specific cases
which would more usefully serve to indicate its proper
construction. For that purpose a list of examples Is sub-
mitted with this letter of specific persons who discharge
supervisory and operating functions, either general in
character or in relation to specific commodities, for the
Procurement Division of the Treasury Department in connee-
tion with the disposal of surplus property.
I should greatly appreciate the benefit of your view
on the questions above stated.
Yours very truly,
(Signed) Henry Morgenthau, Jr.
Secretary of the Treasury.
The Honorable
The Attorney General of the United States.
Regraded Unclassified
83
EXAMPLE NO. 1. ERNEST L. OLRICH is in general charge of
all surplus property activities of the Procurement Division
of the Treasury Department, serving in the capacity of Assis-
tant to the Secretary of the Treasury. Subject only to the
supervision of the Secretary, be has final authority over, and
responsibility for, all activities and transactions of the
Procurement Division in relation to the disposal of surplus
property. He is on temporary leave of absence from his posi-
tion as President of Munsingwear, Inc., of Minneapolis, Winne-
sota, a manufacturer and distributor of knitted wearing apparel
such as underwear, hosiery, ete., a class of products presently
assigned to the Procurement Division for disposal. The ques-
tion arises as to the application of section 27 to Mr. Olrich
as chief executive officer of Munsingwear, Inc., and thus re-
sponsible for its purchasing and selling operations (or in
other comparable private employment) for a period continuing
two years after severance of his connection with the Procure-
ment Division in the event of purchase by his employer of sur-
plus war property through the Procurement Division of the
Treasury Department.
EXAMPLE NO. 2. RUSSELL C. DUNCAN is Acting Deputy in
Charge of Sales and Merchandising, Office of Surplus Property,
in which capacity he has general supervision over the eight
commodity divisions established in that Office. In that
capacity he assists in the establishment of general policies
to govern the disposition of all products disposed of by the
Procurement Division and in the determination of systems of
operation and handling of sales through the eleven regional
offices. While the functions of his office may not include
the direct transaction of business or conclusion of sales
with prespective or actual purchasers of surplus property,
he does have authority on behalf of the Director of surplus
property operations to ratify, approve or authorise proposed
dispositions of surplus property and to recomend the approval,
authorization or retification of particular transactions.
Mr. Duncan is on leave of absence as President of R. C.
Dunsan Company of Minneapelis, Minnesota, which is an estab-
lished firm dealing in heavy hardware material, including a
few items such as tools and mechanical rubber goods which are
presently assigned for disposal to the Procurement Division of
the Treasury Department. It was the expectation of Mr. Dumean
upon the conclusion of his temperary Government service to
return actively to his duties as President of R. C. Dumsan
Regraded Unclassified
84
- 2 -
Company, in which capacity as chief executive officer of the
company he would be responsible for its general management
and in normal course exercise supervisory authority over sig-
nificant purchasing activities of the company, including pur-
chases of surplus property from the Government which may be
sold through the Procurement Division.
EXAMPLE NO. 3. FRED R. ATCHESON is Acting Deputy Director
in Charge of Operations, Office of Surplus Property, in which
capacity he is in charge of all document control, coding,
classification, inventory control, warehousing, reports and
accounts, and, as one member of a policy group, assists the
Director in formulating general disposal policies. He is on
leave of absence from Marshall Field & Co., Chieago, Illinois,
which engages in general merchandising and manufacture. He
serves that company as comptroller of retail stores in Chicago
and vicinity, and has responsibility, smong others, for the
establishment of procedures followed in the purchase of all
merchandise, including Government surpluses. It is understood
that the company has purchased certain items of surplus from
the Procurement Division and probably will continue to make
further purchases. Mr. Atcheson expects to return to his
company upon completion of his Government service, and his
functions might also include direct merchandising responsi-
bilities, involving the approval of purchases of Government
surpluses, including purchases from the Procurement Division.
Each of the following named persons serves as Director
of the indicated Commodity Division, in which capacity his
functions include the development of disposal programs and
the authorization or approval of particular transactions in-
volving the particular class of commodities assigned to his
supervision:
EXAMPLE NO. 4. E. P. PHILLIPS, Acting Director of the
Machinery Division, including construction and agricultural
equipment. He is one of two general partners of the Phillips
Machinery Company of Richmend, Virginia, and the Phillips
Machinery and Tractor Company of the same city, which are
engaged in the general marketing of construction machinery.
These firms, as part of the usual condust of their business,
Regraded Unclassified
85
- 3 -
have in the past purchased new and used equipment from the
Government, including purchases through the Procurement Divi-
sion of the Treasury Department.
EXAMPLE NO. 5. LEE FLEMING, Acting Director of the Tex-
tiles and Wearing Apparel Division. He is on leave of absence
from Marshall Field & Co., Manufacturers Division, Chicago,
Illinois, where his duties involve general management of a part
of its Manufacturing Division, including the buying of raw ma-
terials, planning merchandise, pricing goods, and determination
of selling policies. His company in the usual course of busi-
ness has purchased, and expects to continue to purchase, sur-
plus property from the Procurement Division, which may include
textiles and wearing apparel.
EXAMPLE NO. 6. HOMER HILTON, Acting Director of the
General Products Division, which includes, among other prod-
ucts, photographic and optical equipment and materials. He
is on leave of absence from his position as Sales Manager of
Argus, Inc., Ann Arbor, Michigan, whose peacetime activities
have included the manufacture and distribution of cameras, pre-
cision optical goods and radios.
EXAMPLE NO. 7. LEE W. MORAN, Director of the Automotive
Division. He is President of Lee Moran Company, Pittsburgh,
Pennsylvania, which is an automotive company dealing in new
and used passenger cars and trucks and engaged in the general
automotive trade. In his function as President, he is re-
sponsible for the general conduct of the business, including
the purchase of surplus automotive trucks or equipment from
the Procurement Division.
EXAMPLE NO. 8. WILLIAM C. LEHMAN, Director of the Furni-
ture Division. The question arises whether Mr. Lehman, al-
though not presently associated with any private business,
would be free upon leaving Government service to return to his
former type of employment with mercantile companies or industry
where his employment might include over-all management or
supervision as to purchase policies in the particular field
in which he is qualified through long experience.
EXAMPLE NO. 9. C. A. DICKERSON, Acting Director of the
Paper Products Division. He is on leave of absence as Presi-
dent and Treasurer of the Sabin Robbins Paper Company of
Regraded Unclassified
86
- 4 -
Cincinnati, Ohio, which is engaged in the general merchandis-
ing of paper throughout the country. It is anticipated that
his company will purchase surplus property from the Govern-
ment only in normal course and that such purchases would con-
stitute & relatively small part of the company's business;
but in his capacity as chief executive officer, Mr. Diskerson
would have executive responsibility for purchasing activities
of his company.
Regraded Unclassified
87
OFFICE OF
POPYICTORY
TREASURY DEPARTMENT
BUY
UNITED
BRATES
WAR
WASHINGTON 25
BONDS
AND
THE SECRETARY
STAMPS
November 7, 1944
MEMORANDUM TO THE SECRETARY
I am enclosing a list of the
special items valued in excess of $50,000
as of November 6, 1944.
E. E.L. L.
Assistant
Enclosures
Regraded Unclassified
PROPERTY FOR DISPOSAL
SPECIAL ITEMS, COST TO GOVERNMENT IN EXCESS OF $50,000
AS OF NOVEMBER 6, 1944
QUANTITY UNIT COST COST TO GOVT.
1. Furniture
BEDS AND COTS, USED
83 000
$3.50
310 760
Includes wooden, double-deck bunks; steel, single
beds; folding, wood and canvas cots.
BED PARTS
65 000
Springs, heads, feet, and side rails; unassembled.
Negotiating with bed mfrs. regarding repurchase.
MATTRESSES, NEW AND USED
514 000
5.50
2 827 000
About 1/3 are new. Substantial sales of used
mattresses, for conversion into paper, take
place regularly.
MATTRESSES, INNERSPRING, NEW
9 500
6.00
58 000
From O.C.D. stocks. New declaration - plans
being formulated.
2
"
88
Regraded Unclassified
Page 2
QUANTITY UNIT COST COST TO GOVT:
PILLOWS, USED
954 000
$0.73
696 420
Some cotton, some feather pillows, - mixed in
bales. Used pillows are not wanted.
STOOLS, WOOD, REVOLVING SEAT
14 364
6.30
90 493
Disposal plan is being formulated.
2. Machinery
CONSTRUCTION MACHINERY, HEAVY
6 500 1,000.00
6 500 000
(average)
General inventory of used machinery, most of it
in very poor condition. Sales are being made
regularly but inventory mounts.
DRILL, ROCK, REPLACEABLE TIP
281 097
.25
70 933
(average)
In kegs and drums. Have been offered to the
original mfr. They are not interested.
GROUSERS, ICE, NEW
76 726
2.70
207 160
pieces
Ice gripping shoes to be attached to special
rubber tired treads of high speed military tractors.
There is no known application on standard machines;
no market, except for scrap. There were 24 replies
from 7000 folders, with no interest shown.
89
Regraded Unclassified
Page 3
QUANTITY UNIT COST COST TO GOVT.
GROUSERS
43 853
$3.00
131 559
Non-standard mud cleats for crawler-type tractors.
They are nothing but sheared pieces of structural
angle iron, worth nothing except for scrap. Ad-
vertising folder will be issued.
PUMP, HYDRAULIC, USED
641
137.10
87 881
New declaration - no action as yet.
3. General Products
AMMUNITION BOXES, METAL, USED
2 856 020
.57
1 627 931
National sales plan will be announced this week.
BATTERIES, DRY CELLS AND PACKS
1 130 000
New flashlight batteries comprise bulk of this
valuation. About 17 million were declared. All
will probably be sold this week.
CAMERAS, AIRCRAFT
96
307 386
Each camera has great variety of collateral equipment.
Obsolete type. Physical inspection being made. In-
formal negotiations with Fairchild Camera Co. in pro-
cess.
06
Regraded Unclassifie
Page 4
QUANTITY UNIT COST COST TO GOVT.
FILM & PAPER, PHOTOGRAPHIC
60 000
360 000
pkgs.
Rolls, cut film, and packs - mostly overage.
The overage material will be processed to re-
cover the silver and chemicals. About $37,000
worth of non-expired material is out on bid.
GENERATING SETS, USED
12 $5,000.00
60 000
25 K.W. gasoline driven. New declaration -
no action as yet.
HORSES
2 200
165.00
333 000
All horses will be sold according to established
program of auctions.
4. Automotive
AUTOMOTIVE SPARE PARTS, NEW
15 000 000
9 000 000
Large quantities on recent declarations are
bolts, nuts, spark plugs, fuses - called "parts
common" that can be used on any motor vehicle.
Lists totalling 11 million parts worth $2,500,000
have been submitted to Ford and General Motors for
them to analyze and determine parts acceptable.
91
Regraded Unclassified
Page 5
QUANTITY UNIT COST COST TO GOVT.
AUTOMOTIVE PARTS, OBSOLETE, USED
2 000 000
Majority are used, having been taken from used
vehicles and put in stock. There are acres of
used bodies, fenders, cowls, cabs, etc., at Blue
Grass, Ky., and Fort Crook. Spot check inspection
list has gone to Chrysler as a test action on dis-
posal. Other lists are going to other manufacturers.
CRADLES, ENGINE
240
$375.00
90 000
Stands used to hold engines undergoing repair.
Inspection report awaited.
HYDRAULIC FLUID
378 459
1.74
658 580
gals.
Needs reprocessing for civilian use. Packed
in 1 gal. cans. Manufacturer not interested -
has withdrawn informal offer of $.50 a gal.
Another declaration of 100,000 gals. reported
on the way.
JACKS, HYDRAULIC
10 741
79.00
848 539
Four wheel, roller type, 10-ton capacity, for
garage use. TWO manufacturers have made offers.
Prewar sales ran at about 1000 per year, but
O.D.T. reports heavy demand at present.
92
Regraded Unclassified
Page 6
QUANTITY UNIT COST COST TO GOVT.
MOTOR ANALYZERS (TESTERS)
1 500 $100.00
150 000
Regional office has been authorized to re-sell
to manufacturer on a 3 month's delivery basis.
5. Hardware
BOLTS, MISCELLANEOUS
8 500 000
2 500 000
The regional offices have been instructed to
contact manufacturers and large jobbers. Little
interest shown.
COVERS AND SEALS, RUBBER
27 3/4
169 245
tons
Includes 3/4 ton seals, which are round rubber
washers about 1 inch in diameter. There are 27
tons of new "covers" which are 2 in. lengths of
black rubber hose - thin wall, about 1 inch in
diameter. Inspection report awaited.
FIRE EXTINGUISHERS, NEW
12 000
7.60
91 000
average
Includes 10000 carbon tetrachloride hand ex-
tinguishers. Will be sold back to the manufacturers.
300 000
.89
267 000
HELMETS, SAFETY, O.C.D.
93
Packed 10 to a carton. Have been allocated to each
regional office for sale at established prices.
Regraded Unclassified
Page 7
QUANTITY UNIT COST COST TO GOVT.
HOSE, RUBBER
5 000
$33.50
167 500
Large size, 25 ft. lengths. Army will inspect.
LANTERNS, OIL BURNING
34 460
3.00
107 316
Navy will thdraw for transfer to Army.
IMPRINTING MACHINES, NEW
35 600
21.95
781 420
Original manufacturer has shown no interest. Ad-
vertising folder is being prepared.
MACHINE GUNS, ELECTRIC
707
279.00
197 253
Practice gun. Specifications have been submitted to
amusement park owners. New York regional office has
one on display and has a few bids for small quantities.
MASKS, GAS, USED
47 967
6.28
301 399
O.C.D. stock is being transferred to Chemical
Warfare.
MARKERS, MINE FIELD
7 600
6.85
52060
sets
Carrying case with 30 metal flags on pins. Several
orders for small quantities have been received
from state road commissions.
94
Regraded Unclassified
Page 8
QUANTITY UNIT COST COST TO GOVT.
NUTS, SQUARE, NEW
925 000
57 350
The regional office have been instructed to
contact manufacturers and jobbers. Little
interest shown.
PLATFORM TRUCKS, STEEL, NEW
5 700
$75.00
427 500
Steel trucks on casters. The truck weights
800 lbs., and it takes 2 men to push an empty
truck. We have offer of $16.00 for a limited
quantity. About 1500 were sold at $15.00 each.
EMPLACEMENTS, MACHINE GUN
32 5,300.00
169 600
A mount for a machine gun. No utility value known.
RAFTS, PNEUMATIC, 5-MAN
623
200.00
124 600
Three quarters of original lot have been sold and
we have prospects on the remainder.
RESPIRATORS, DUST, COMMERCIAL
61 127
1.00
61 127
Made for African combat use - some are suitable for
industrial use. Bids have been received from three
manufacturers and we expect to dispose of the entire
lot.
5
Regraded Unclassified
Page 9
QUANTITY UNIT COST COST TO GOVT.
SCREWS (WOOD), BRASS
250 000
$0.25
62 000
gross
The regional offices have been instructed to
offer these screws to manufacturers and large
jobbers. Little interest shown.
SCABBARDS, BOLO
140 000
1.60
224 000
Designed for bolo that is now obsolete. Few
bolos available. Army will withdraw.
SHOTGUNS
1 880
55.00
101 332
Manufacturers will repurchase.
SKIIS AND BINDINGS, USED
4 000
16.00
64 000
pr.
Have immediate prospect for the purchase of
entire amount.
SMOKE GENERATOR PARTS
89 000
Small metal parts (valves, fittings) for Army
mobile-smoke generator. Last week's sales
reduced total materially.
96
Regraded Unclassified
Page 10
QUANTITY UNIT COST COST TO GOVT.
SPURS, NEW AND USED
200 000
$1.30
260 000
pr.
Some small sales have been made at $.50 a
pair. 100,000 pr. sold at $.25.
STAPLES, GALVANIZED
18 000
4.52
81 360
kegs
100 lbs. to a keg. Sales are being made in
small quantities at price near cost to govern-
ment.
6. Textiles and Wearing Apparel
All textiles and clothing in the
hands of disposal agencies have
been temporarily frozen to enable
the Army to make selections for use
in a program for occupied countries.
APRONS, IMPERMIABLE
93 989
5.00
469 945
Rubber coated, with sleeves. Manufacturer not
interested in repurchase. Samples have been
distributed to regional offices with instructions
to ask for bids.
97
Regraded Unclassified
Page 11
QUANTITY UNIT COST COST TO GOVT.
BELTS, AMMUNITION
3 000 000
$0.80
2 400 000
BELT TIPS
5 000 000
.05
250 000
Olive drab, web fabric about 1½" wide, 20 feet
long, double woven to provide loops in which
to insert cartridges.
The tips are fabric, about 12" long, to be ttached
to feed belt into gun. Interest has been shown
at price somewhat higher than salvage value.
COATS, FIREMEN'S SAFETY, NEW
22 000
4.77
104 940
New declaration. Sample awaited.
BELT POCKET FOR CARTRIDGE CLIPS
1 000 000
.10
100 000
Web pocket with fastener. Radio advertiser
is taking quantities under option as requests
from program develop. Price received $0.06.
GLOVES, RUBBER, ANTI-GAS
667 000
1.00
667 000
Gauntlet type - special design for anti-gas
work. Agreement has been reached to dispose
of this stock as crude rubber, or to sell for
export shipment only.
98
Regraded Unclassified
Page 12
QUANTITY UNIT COST COST TO GOVT.
LEGGINGS
213 280
109 833
World War I stock, good only for salvage.
Now being authorized for sale by regional
offices.
MAGAZINE BELTS
55 369
$2.35
130 325
An apron of web fabric belt pockets to
hold bullet clips. Samples have been
sent to all regions to widen sales effort.
MOSQUITO BARS, WITH RODS
40 000
5.90
236 000
This balance represents the remainder of
used mosquito bars after large sales of
new material.
HATS, ARMY SERVICE
45 928
3.00
137 784
The old-style, broad brimmed campaign hat.
Of original amount of 91,000, half have
been sold. Negotiations in process for
balance.
66
Regraded Unclassified
Page 13
QUANTITY UNIT COST COST TO GOVT:
W.A.C. CAPS
76 712
$2.20
168 766
Samples have been given to exporters and others.
This is an item that is hard to dispose of.
HOODS, ANTI-GAS, NEW
257 292
1.00
257 292
Regional offices have been instructed to ask
for bids.
PANELS, SIGNALING
37 024
2.00
74 048
New declaration - sample awaited.
RUCKSACKS, USED
7 500
12.66
94 950
Regions have been authorized to sell as
they are in bad condition.
SHEETING, NEW
150 419
.38
57 159
W111 be transferred to Lend-Lease.
SLIDE FASTENERS
2 009 694
.119
239 797
Inventories will be taken to determine quantities
by manufacturer. They will be disposed of in
same manner as prior lot.
100
Regraded Unclassified
Page 14
QUANTITY UNIT COST COST TO GOVT.
TARGETS, ANTI-AIRCRAFT
8 861
$14.32
126 891
New declaration - sample awaited.
7. Medical & Surgical
ANESTHESIA & SUCTION APPARATUS
490
173.00
84 770
Being offered to original manufacturers.
BAGS, WET DRESSING
105 000
.58
61 500
New declaration - sample awaited.
BANDAGES, MUSLIN
134 584
128 034
doz.
Offers have been transmitted to owning
regional offices. Sales action not known.
BATTERY BOXES, MEDICAL, USED
3 650
24.25
88 512
New declaration - sample awaited.
BOTTLES, WIDEMOUTH, 250 CC
201 307
.45
90 588
Purchase being considered by a large jobber
for re-sale to vinegar bottlers.
101
Regraded Unclassified
Page 15
QUANTITY UNIT COST COST TO GOVT.
BOXES, TABLET
600 000
200 000
cartons
500 boxes in a carton. Small size nested
into larger, and stick together. Not suitable
for original purpose, although sale of large
quantity in Atlanta is reported.
CARTS, FOOD
586 $86.00
50 396
Hospital equipment. Manufacturer is interested
but awaits identification as to serial numbers.
DENTAL SUPPLIES
100 000
World War I stocks located at Perry Point, Md.
Instructions have been given regional office
for disposition.
DISINFECTORS, 50 GAL.
1 600
43.33
73 360
New declaration - no action as yet.
DISK, METAL, ABRASIVE, 7/8"
134 000
.60
80 400
cards
Dental supply item - packed 12 disks on a card.
Manufacturer is not interested, reporting big
supply on hand from contract termination.
102
Regraded Unclassified
Page 16
QUANTITY UNIT COST COST TO GOVT:
DISHES, EVAPORATION, PORCELAIN
58 525
$0.09
52 672
Laboratory equipment. Will contact original
manufacturer.
DRESSINGS, FIRST AID PKGS.
27 000 000
3 300 000
Several offers awaited this week.
FLASK, WITH CUP
200 000
.33
66 000
Made for soldier to carry liquid medicine in
field - a small canteen. Several regions re-
port some interest.
FLOSS, SILK, DENTAL
510 000
173 400
spools
Awaiting possible offer from manufacturer.
GAUZE, PLAIN, 25 YD. ROLLS
150 000
.75
112 500
New. Region has been instructed to dispose
of this item to govt. agencies.
KITS AND CASES, MEDICAL
3 865
19.11
73 860
From O.C.D. stocks. Suit case type case filled
principally with professional first aid items.
New declaration - sample awaited.
103
Regraded Unclassified
Page 17
QUANTITY UNIT COST COST TO GOVT.
PERIMETERS, ELECTRIC, MEDICAL
345 $160.00
55 060
New and used. New declaration - sample awaited.
PETRI DISHES, WITH COVER
230 000
.27
62 100
Laboratory dish for making germ cultures.
Awaiting offer from manufacturer.
POUCHES, FIRST-AID, FILLED
144 350
1.19
171 776
Fabric pouch with professional items, tags,
pencils, etc.
SCALES, PRESCRIPTION
3 980
23.30
92 897
Lot apparently represents production of several
mfrs. One has been contacted and is not interested.
SCREEN, INTENSIFYING
7 000
9.00
63 000
pr.
X-ray equipment. New declaration. Samples
awaited. Names of mfrs. being determined.
SCREWS, BONE, MOLYB.
705 000
.20
141 000
Manufacturer is not interested.
104
Regraded Unclassified
Page 18
QUANTITY UNIT COST COST TO GOVT.
STERILIZERS, NEW AND USED
2 069
579 313
Includes 1381 considered unsafe by Army, and
688 new sterilizers of inferior quality due to
wartime restrictions on materials. Largest
manufacturer is not interested.
STRETCHERS, CANVAS AND METAL, NEW
8 400
54 000
New items from O.C.D. stocks. Have found no
interest among government agencies or mfrs.
SURGICAL INSTRUMENTS
250 000
Stocks at Louisville, Ky. Current inventory un-
known. Repurchase of certain items by original
manufacturers is going on.
SUTURES, SILK AND CATGUT
13 750 000
2 472 000
For sewing after surgical operations. Two of 11
units
the manufacturers might be interested in their
own product if quantity could be determined.
The inspection task is practically impossible
as long as the stock remains in the custody of
the Medical Dept. (Army).
105
Regraded Unclassified
Page 19
QUANTITY UNIT COST COST TO GOVT.
TEST TUBES, GLASS
5 670 OOO
$0.03
190 100
Some samples have arrived and disposal plans
are being made.
ACETOPHENETIDIN
70 000
1.35
94 500
bottles
5 gr. tablets, packed 1000 in a bottle. Obsolete
item awaiting action by board of medical officers.
AZOCHLORAMID IN TRIACETIN
360 000
4.55
1 638 000
quarts
World War I stock. Awaiting action by board
of medical officers.
BURROWES SOLUTION
18 000
144 000
bottles
2.27 gm. tablets - 500 to a bottle. This
item is being offered to the manufacturer.
DICHLORAMINE T
359 000
1.66
595 940
pints
16 2/3% in Tri. World War I stock. Awaiting
action by board of medical officers.
HAEMOTOXYLIN, LIGHT
99 000
1.50
148 500
bottles
10 gram bottle. Awaiting action by board of
106
medical officers.
Regraded Unclassified
Page 20
QUANTITY UNIT COST COST TO GOVT.
HYDROGEN PEROXIDE, 8% SOL.
402 000
250 000
pounds
Too strong for beauty parlor use. Stock all
reported in leaky bottles. Bottles run from
empty to two-thirds full. Probably worth on-
ly salvage value of the bottles.
PEPTONE PROTEOSE BACT.
35 000
6.20
217 000
pounds
Has been offered to govt. agencies - not interested.
PEPTONE, DRIED, U.S.P. BLAG
96 500
4.00
386 000
pounds
Has been offered to govt. agencies - not interested.
PROCAINE HYDROCHLORIDE
163 000
2.75
448 250
boxes
10 units in a box, 150 and 200 MM ampules. Being
offered to other govt. agencies by our regional
offices (after test).
SODIUM ALURATE
13 500
7.50
101 250
boxes
3 1/2 and 1 3/4 gr. tablets packed in 500 unit
boxes. Special Army package - - manufacturer not
interested.
107
Regraded Unclassified
Page 21
QUANTITY UNIT COST COST TO GOVT.
SULFANILAMIDE
539 000
344 930
packages
5 and 7.5 gr. tablets. 250,000 boxes of 12
tablets. 289,000 bottles of 1000 tablets.
Obsolete Army item. Awaiting action by board
of medical officers.
8. Paper & Office Supplies
NONE
Total
$ 52 827 142
108
Regraded Unclassified
SURPLUS
ED TRUCKS REPORT
For 7 Days and Period Ended November 4, 1944
(Period Began January 1, 1944)
7 Days to Nov. 4, 1944 Period to Date
Total Used Trucks Declared
1388
44811
Less Declarations withdrawn
1*
1466
Less Loans to Other Federal Agencies
0
150
Less Transfers to Other Federal Agencies
18*
19
3065
4681
Net Used Trucks Declared for Sale
1407
40130
Less Used Trucks Sold
1614
33871
Balance of Used Trucks on hand
6259
ANALYSIS OF INVENTORY
Inspected and ready for sale
4162
Not Inspected
2097
This report based on revised figures submitted by Regions 6 and 10
* Minus 3 withdrawn previously reported in error by Region 6
* Minus 28 transfers previously reported in error by Region 10
109
Regraded Unclassified
SURPLUS USED CARS REPORT
For 7. Days and Period Ended November 4, 1944
(Period Began January 1, 1944)
7 Days to Nov. 4, 1944 Period to Date
Total Used Cars Declared
201
6490
Less Declarations withdrawn
133
Less Loans to Other Federal Agencies
INION
19
Less Transfers to Other Federal Agencies
3
583
735
Net Used Cars Declared for Sale
198
5755
Less Used Cars Sold
224
4815
Balance of Used Cars on hand
940
ANALYSIS OF INVENTORY
Inspected and ready for sale
556
Not Inspected
384
940
110
Regraded Unclassified
SURPLUS
TORCYCLES REPORT
For 7 Days and Period Ended, November 4, 1944
(Period Began January 1, 1944)
7 Days to Nov. 4, 1944 Period to Date
if
Total Motorcycles Declared
10
15332
Less Declarations withdrawn
138
Less Loans to Other Federal Agencies
101010
o
Less Transfers to Other Federal Agencies
10
210
348
Net Motorcycles Declared for Sale
9
14984
Less Motorcycles Sold
630
9771
Balance of Motorcycles on hand
5213
ANALYSIS OF INVENTORY
Inspected and ready for sale
3864
Not Inspected
1349
5213
111
Regraded Unclassified
112
copy To me 11-14- mil12 14 &
November 7. 1944.
Dear Mrs. Roosevelt:
I have received your letter of November 2, 1944,
in which you express your interest in the college
students now at the refugee shelter at Fort Ontario
who would like to continue their studies in this
country.
The future status of the residents of the shelter
is very much on our minds and we are planning to dis-
cuss the matter promptly with representatives of the
War Relocation Authority and the Immigration and
Naturalization Service. The question of the students
to whom you refer will be considered at this meeting.
It is our hope that we shall be able to develop
a general policy which will give appropriate attention
to a number of factors. Included among these are the
wishes and needs of the individual refugees, this
Administration's public commitments on the matter of
the refugees remaining in the shelter, and the avoid-
ance of any interference in & sympathetic public
attitude toward refugees, both now and in the post-war
period.
Your interest in this matter is sincerely appreciated.
Very truly yours,
(Signed J. W. Pehle
Mrs. Eleanor Roosevelt,
The White House,
J. W. Pehle
Washington, D. C.
AA:JWP:1hh 11-7-44
COPY
113
THE WHITE HOUSE
WASHINGTON
November 2, 1944
Dear Mr. Pehle:
When I was at Fort Ontario sometime
ago I talked with several of the young people -
two of them medical students - who have attended
the universities in Europe and who would like
to go on with their education in this country.
I know that Mrs. Morgenthau has written to you
about these students, and I want to say that I
too would be interested in seeing them given
the chance to complete their college education
in this country.
Very sincerely yours,
/s/ Eleanor Roosevelt
Regraded Unclassified
114
VICTORY
BUY
EXECUTIVE OFFICE OF THE PRESIDENT
UNITED
STATES
WAR
SONDS
WAR REFUGEE BOARD
-
STAMPS
WASHINGTON
D.C.
OFFICE OF THE
EXECUTIVE DIRECTOR
not read 25,
file NOV 7 44
My dear Mr. Sporetary:
I am pleased to send you herewith a
copy of the report of the War Refugee Board for
the week of October 23 to October 28, 1944.
Very truly yours,
Executive Director
J. J.W. Pehle
The Honorable,
The Secretary of the Treasury.
Enclosure.
Regraded Unclassified
115
Report of the War Refugee Board
for the Week of October 23 to 28, 1944
SITUATION IN GERMANY AND GERMAN-OCCUPIED AREAS
In recent weeks, persons in close touch with the situation
in Germany and german-occupied areas and in a position to
evaluate the psychological effect of the steady progress of
the Allied armies have expressed great apprehension for the
fate of the civilians subject to the frenzy of the Nazis.
Representative McClelland advised us that trustworthy reports
coming from Germany tell of & new reign of terror, with
arrests, executions, and suicides among foreign prisoners end
on an unprecendented scale allong the German people themselves.
Increased Nazi ruthlessness, particularly the growing violence
against foreigners, points to the alarming possibility that at
least two million persons are threatened with death--men and
women of all nationalities, races, and faiths confined in
Nazi prisons, concentration camps, and extermination camps.
Without doubt a -reat many of these people represent valuable
political and social elements of their respective countries,
and apart from the human considerations involved, their loss
would immeasurably retard the reconstruction of Europe.
Prompted by this as well 26 humanitarian considerations,
McClelland strongly recommended that 2. concerted and powerful
warning be addressed to the Germans in the name of every Allied
country whose nationals are concerned. He urred that the warn-
ing specify that any crime committed against persons imprisoned
on political or racial grounds whom the Nazis consider state-
less will be considered as punishable as though against an
Allied national, and that this pronouncement be made in the
name of the dignity end inviolability of the human personality,
for the preservation of which the Allied nations are wering
war. In the conviction that many germans have only EL limited
idea of the organization of these camps and of the treatment
meted out in them, he pressed for the utilization of radio
broadcasts and leaflets to circulate throughout Germany
accurate and up to date information about the principal
concentration camps and prisons.
In presenting this recommendation, allowance W&G made for the
fact that the majority of the hardened murders of the ruling
Nazi clique are probably impervious to threats of ultimate
punishment 8.8 wer criminals, but the conceivably deterrent
effects of such a warning in the case of the lesser members
of the Nazi hierarchy were stressed. It was indicated that
there is good reason to believe that there exist within the
Regraded Unclassified
116
- 2 -
ranks of the SS definite rifts which should be thoroughly
exploited. Another aim of a warning at high and authorita-
tive levels would be to kindle some feeling of solidarity
between the terrorized German individual and all of these
prisoners, including his own countrymen, whose lives are
endangered by the Nazis. Evidence of Allied concern for the
fate of imprisoned German liberals, 28 well P.S foreign politi-
cal prisoners, it was felt might help to discredit the belief
fostered by Nazi propaganda that the Allies intend to enslave
and eventually destroy the whole German people.
We advised McClelland that we have for some time been consider-
1ng an approach along the lines of his suggestions and that we
are presently working on a project which it 16 hoped may
accomplish some of the objectives set out in his analysis.
Proposed Statement by General Eisenhower
The Board has recently received numerous requests for
additional statements by the President aná by military
authorities warning the termans against persecution and
extermination of persons held in forced-labor battalions and
in concentration camps. In the belief that a warning by
military authorities might carry more weight than a pronounce-
ment which might be interpreted 2.8 = political gesture, we
drafted a proposed statement for issuance by General Eisenhower.
The statement hos been approved by the President, cleared with
the War and State Departments and with the British, and is
expected to be issued shortly. Efforts are also being made
through the State Department to induce the Russian military
or civil authorities to issue D. similar werning,
SITUATION IN HUNGARY
Although reports on developments in Hungary this week were some-
what meager, the few details reaching us sustained the ominous
tone sounded in the move of the Hunearian Government to mobilize
Jews for labor service and to transfer Budapest Jews to work
camps in the provinces. Minister Harrison cabled us from Bern
e summary of German press comments on changes in Hungary which
stated that the Szelasi and Pfeilkreuz party stands without
hesitation against the so-called Jewish contamination of the
Hungarian race and predicted that privileges enjoyed by certain
Hungarian Jews, particularly those married to Christians, will
shortly be abolished. The new Hungarian Minister of Interior
is said to have declared that he advocates a radical solution
of the Jewish problem and that anti-Jewish laws will be
administered with Draconian severity if necessity so demands.
It was asserted that the program of the new puppet government
calls for intensive exploitation of Jewish labor, but retention
Regraded Unclassified
117
- 3 -
of Jews in Hungary. According to 8 press dispatch from
Budapest, the Szalasi government will place Jewish questions
under the jurisdiction of the Ministry of Justice instead of
the Ministry of the Interior, treatment of Jews to depend
upon their attitude and Allied air raids on Budapest, and
compulsory emigration of Jews to follow the "victorious
conclusion of the war. il
The extreme gravity of the situation is apparent in the
disposition of the Jews remaining in Budgpest already under
way, 2.8 reported by the International Red Cross delegate at
Budapest in B. wire dated October 24. Fifty thousand men were
in the process of being deported to Germany, ostensibly 88
labor; all aged and all sick persons, including children,
were being concentrated in a ghetto in Budepest; the remainder
of the able-bodied men and women are being employed in the
construction of fortifications in the vicinity of Budapest.
The Intercross delegate stated that he had lodged an energetic
protest with the present Hungarian government.
Minister Harrison received from the Swiss confirmation that
our message concerning removal of Jews from Budapest to
provincial work camps has been transmitted to Budapest for
delivery to Hungarian officials. He was also advised of
information cabled from the Swiss Legation in Budapest that
evacuation of Jews, including non-interned foreign Jews, from
houses which they occupied in Budapest has started, and that
it 1s reported that they will be moved to camps on the out-
skirts of the city.
The Apostolic Delegate in Washington advised us that a
communication along the lines of our proposal has been
transmitted to the Holy See asking that & public appeal in
favor of Hungarian Jews be broadcast by the Vatican.
SITUATION IN SLOVAKIA
A similar dearth of new information existed with respect to
events in Slovakia. From private organization representatives
in Jerusalem and Bern reports reached us verifying earlier
indications that Slovakian Jews are all in concentration camps
and in imminent danger of deportation. Almost all Bratislava
Jews were said to have been deported to Theresienstadt and
Poland.
Following the report last week that 300 to 400 Jews in Slovakia
holding Latin American documents had been arrested and removed
to an undisclosed destination, we requested our representatives
in Bern and Madrid to approach the Swiss and Spanish Govern-
ments with the suggestion that 8.8 the protecting powers for
Regraded Unclassified
118
- 4 -
El Salvador and Paraguay, respectively, they make inquiry
of the German Government 88 to the truth of the report that
Jews from Slovakia in possession of documents issued in the
names of American republics have been removed to Germany or
areas under German control and as to the destination of such
persons, that they declare to the German Government that the.
persons in question fall under the protection of the Swiss
end Spanish Governments, and that they request of the German
Government that immediate facilities be afforded for the
exercise of such protection. We requested the Apostolic
Delegate in Washin-ton to inform the Vatican of this situation
and surrest that it seek to ascertain through the Nunciature
at Bratislave the whereabouts of the persons concerned and
any other available information concerning them. It was also
requested that any information thus obtained be made directly
available to the American Missions in Bern and Madrid. Minister
Harrison and Ambassador Norweb were advised of this request,
8.3 W&B also Mr. Myron Taylor, who we.8 requested to lend any
assistance possible in this matter.
SITUATION IN YUGOSLAVIA
On the basis of reliable information received in Istanbul from
Sofia, our representative in Ankara reported that more than
6,000 Jews, principally Hungeridns, from 16 to 60 years of
age were liberated by the Allied occupation of Bor, Yugoslavia,
near Nis. The report stated that 5,000 of these men had been
used as laborers in a copper mine for fifteen months and 1,500
had been similarly employed since June 1944. Several hundred
other men were said to have been evacuated with the German
armies to erect fortificetions in Belgrade. or the 1,600 men
of military age In the group, 900 have declared themselves
ready to join Allied armed forces, with the other 700 willing
to do BO but physically too week to be acceptable. It was
indicated that these people cannot remain in Bor but that,
while they have been informed by Russian authorities that
they are free to travel wherever they wish, no arrangements
have been made for their reception elsewhere. Efforts are
being made by a private agency to extend emergency 0.1d to
these refugees.
A report from P. representative of a private organization
received through our Embassy in Lisbon expressed the hope
that the recently suspended operations to evacuate 650 refugees
from Yugoslavia by plane may be resumed. It was stated that
the Inter overnmental Committee representative in Itsly has
requested 300 Palestine certificates for this group.
Regraded Unclassified
119
- 5 -
Refugees on the Island of Rab
Another report received through our Embassy in Lisbon
relayed information brought to Barl on October 20 by three
representatives of the group of refugees on the Island of
Rab, off the const of Yugoslavia. It WSS indicated that
because of the lack of housing, clothing, and food, it was
doubtful that more than half of the group would survive the
winter. Although the British have agreed to send by plane
500 pairs of shões, 300 blankets, and 300 pounds of medical
supplies from their army stock, it was estimated that five
more planeloads of clothing are needed. The 1,400 Jews
formerly interned on this island together with 2,000 in
another area make up the sole surviving civilien Jews of
Yugoslavia.
SITUATION IN ITALY
According to information received from Switzerland, there
are in excess of 7,000 Italian civilians and resistance group
members in the Dossola valley who, as a result of the German
and Fascist reoccupation of Domodossola, at the head of the
Simplon Pass near the Swiss border, are now refugees. The
Italian Minister in Bern was reported by Minister Harrison
as having informed the Italian Government that the Swiss
Federal Council has agreed to admit all 02 these persons
into Switzerland.
A private organization report received through our Embassy
in Lisbon indicated that arrangements are being made to
utilize opportunities to send 900 persons per month from
Itely to Palestine.
SITUATION IN RUMANIA
That the revocation of Rumanian anti-Semitic regulations was
E mere formality is the implication of e. report received this
week from a private source that nothing has been done to
return to Jews property confiscated by the Nazis and Rumanians
and that all Jews are barred from employment.
We requested our representative in Ankara to try to obtain
reasons for the recent statement of a private organization
representative that it would be necessary to evacuate
Transnistrian repatriates from Rumania.
Regraded Unclassified
120
- 6 -
EVACUATIONS THROUGH TURKEY
From our representative in Ankara the learned that 8. group
of 110 children, including Polish refugees who had been in
Rumania and Rumanian nationals, arrived in Istanbul by train
from Rumania on October 25. They were scheduled to proceed
to Palestine on October 27, accompanied by some 40 adults
from Russia.
Designation of Special Representative
Mr. Herbert E. Katzki was appointed as the Special
Representative of the War Refugee Board in Turkey, with the
designation by the Department of State R.S Special Attache to
the Embassy on war refugee matters. For several months,
Mr. Katzki has served as assistant to Representative Ira
Hirschmann, who recently returned to the United States and
has resigned from his position with the Board.
RESCUE AND RELIEF OPERATIONS FROM SWEDEN
A report on the rescue end relief activities being conducted
in Norway under the supervision of Representative Olsen' in
Stockholm disclosed that approximately 600 parcels of food,
clothing, and shoes were sent into Norway under licensed
procedure during September. Considerable other food and clothing
was sent in through underground channels. Approval has now
been obtained for sending an additional 400 packages per month
to Norway. Approximately 1,000 Norwegians were brought to
Sweden in September, and Representative Olsen is exploring
with them a program for evacuating refugees by sea routes.
The Norwegian situation was described as generally tense
and critical.
Recently the attention of the Board was directed to the pli>ht
of 2. number of Itelian seamen stranded in Stockholm without
resources, it being suggested that the Board micht be in a
position to assist them. We notified our representative that
since the Board's concern with the welfare of refugees in
neutral countries arises only when it bears 8 direct relation-
ship to the reception of additional refugees from enemy-
controlled areas, this case is not considered to be one which
is properly to be dealt with by it. We referred the problem
to the Department of State.
FOOD PARCELS
Through our representative in Bern we received a report that
a private organization has dispatched through the International
Regraded Unclassified
121
- 7 -
Red Cross a carload of foodstuffs for distribution to the
inmates at Theresienstadt. From Lisbon It was reported that
another carload of foodstuffs dispatched from Istanbul by
2. private agency and likewise destined for Theresienstadt
was unable to continue beyond Bulgaria. The International
Red Cross was requested by the agency representative to
distribute the food immediately, rather than hold it for
possible future shipment to Theresienstadt.
We advised Minister Harrison and Representative McClelland
in Bern that all of the remaining 285,000 parcels under the
Board's 300,000 parcel program will be ready for shipment
via Marseille in November.
EVACUATIONS TO AND THROUGH SPAIN
Because of indications of the precarious situation of the
155 Sephardic Jews holding Spanish passports and interned
at Bergen-Balsen, end in view of the difficulty of obtaining
their transportation to Spain, we cabled Ambassador Hayes
to request the Spanish Government to seek to obtain their
release from Germany and their temporary admission into
Switzerland, and to advise it that this Government will
appreciate it 1f requests to that effect are made by the
Spanish missions in Berlin and Bern. Our Minister in Bern
has there. been asked to support the request of his Spanish colleague
The departure of 308 refugees for Tangier from Cadiz was
reported by B. private organization representative in Lisbon.
RECOGNITION OF LATIN AMERICAN PASSPORTS
We cabled our Legation in Bern information received from
our Embassy in San Salvador to the effect that the United
States Government is authorized to compile and submit to
the Swiss Government without prior reférence to the Salvadoran
Government lists of persons claiming Salvadoran citizenship
eligible for consideration in exchange proposals.
In a further effort to obtain P. clarification of the instructions
issued by the Ecuadoran Government to its Consulate in Geneva
with respect to persons in Hungary holding Ecuadoran passports,
we cabled our Embassy in Quito that the inability of the Swiss
to take the desired action was due to the fact that they have
not yet been requested to assume representation of Ecuadoran
interests in Hungary.
-
Regraded Unclassified
122
- 8 -
We requested Ambassador Hayes to confirm to us the issuance
and execution of instructions by the Spanish Government to
its Ambassador in Berlin "to take with all speed and interest"
necessary steps for the protection of Jews in general and in
particular those holding "Spanish-American" passports, as
stated by the Spanish Ambassador in Washington in a letter
to a representative of a Jewish welfare organization on
October 13.
EVACUATION OF SPANISH REPUBLICANS TO MEXICO
According to a cable from a private source in Lisbon, seven
Spanish Republicans were arrested in Portugal on October 22,
and it was indicated that a general round-up and deportations
are likely.
W. Pehle
Executive Director
Regraded Unclassified
123
EMBASSY OF THE
UNITED STATES OF AMERICA
Quite, Equader, November 7, 1944
No. 2323
SECRET
Subject: SUSPENSION OF EGUADORAN EFFORTS TO SAFEGUARD
REFUGEES IN GERMAN-HELD TERRITORY BEARING
ECUADORAN PASSPORTS IRREGULARLY ISSUED.
The Honorable
The Secretary of State
Washington
Sir:
With reference to the Department's telegram No. 813
and the Embassy's telegram No. 1015 of October 13 and
October 20, 1944, respectively, and under previeus
correspendence on the same subject, I have the hener to
transmit herewith a copy and free translation of & note
which the Embassy has received from the Ecuaderan Ministry
for Fereign Affairs regarding the pretection of refugees
in German-held territory who bear Lcuaderan passports
or other documents irregularly issued.
It will be seen that the Ecuaderan Charge d'Affaires
in Switzerland has reperted to his Government the request
of the Swiss authorities that, as a prerequisite to their
undertaking to represent Ecuaderan interests in connec-
tion with the pretection of the aferementioned refugees,
the Ecuaderan Government recegnize as Ecuaderan nationals
the bearers of Louaderan documents irregularly issued
and that the Equaderan Government, in view of its
inability to meet this request, has decided to suspend
negetiations in the matter.
Respectfully yeurs,
13/ R.M. SCOTTEN
Enclesures:
1. Copy of Note #67-D-21, dated
October 30, 1944, from the
Ministry for Foreign Affairs
2. Translation of Note
840.1
CGR:mrg
Osalia to the Department
Copy to Censulate General, Guayaquil
Regraded Unclassified
Enclosure No. 2 to Despatch No. 3323, 124
dated November 7, 1944, from the American
Embassy, Quite, Ecuador, on the subject:
Suspension of Ecuaderan Efferts to Safe-
guard Refugees in German-Held Territory
Bearing Founderan Passparts Irregularly
Issued.
Republic of Bouader
Ministry for Fereign Affairs
Diplematic Department
#67-D-21
Quite, October 30, 1944
Mr. Ambassader:
In due course I informed Your Excellency that the Government of
Bounder, in spite of having denied the validity of passports obtained
illegally by Jews living in territeries occupied by Axis ferces, and
censidering the difficulties through which these persons would pass if
they were deprived of said documents, had decided not to insist on the
invalisity of these papers while they might serve to pretect the life
and preperty of their bearers.
In accerdance with humanitarian principles, my Government addressed
its diplematic representative in Switzerland in order to arrange for the
Federal Government as protecter of Ecuaderan interests in Azis Nations,
to negatiate with the German authorities Se that they would respect the
fereign status of persens who might be protected by Ecuaderan papers.
The Charge d'Affaires of Acusder in Switzerland has infermed GO that
the Federal Government has indicated that it is necessary, in order to
carry out the negetiations entrusted to it, that the Ecuaderan Government
previously recegnize the Ecuadoran nationality of the bearers of these
documents.
The Government of Founder cannet accede on any account to the I'0-
quirement stipulated by the Federal Government since, in addition to the
fact that the declaration requested would mean the validating of papers
obtained through fraudulent means, the constitutional previsiens that
regulate the declaration of nationality establish a precedure which cannet
be set aside without committing grave errer that would give rise to a
legislative investigation and to censure of wheever might authorise the
violation of the fundamental laws of the Nation.
Consequently, my Government in reiterating to Your Excellency's Govern-
ment its intention of net insisting for the mement on the invalidity of
these decuments, informs it that in view of the feregeing, it has decided
to suspens the negetiations under reference with the Swiss Government.
I avail mysekf of the oppertunity to renew to Your Excellency the
assurances of my highest and most distinguished consideration.
10/ C. Pence Enriques
TR:CGR:mrg
Regraded Unclassified
125
PARAPHRASE OF TELEGRAM SENT
To:
American Embassy, London
From:
Secretary of State
Dated:
November 7, 1944
Number: 9321
SECRET
For EWD from FEA and Department.
Approval of proposed shipments as listed in
Stockholm's 1400, October 31 to London, is recommended.
Inform Stockholm if MEN concurs.
STETTINIUS
(Acting)
Regraded Unclassified
126
CABLE TO AMERICAN EMBASSY, PARIS, FROM WAR REFUGEE BOARD.
Please deliver the following message to Sir Herbert Emerson of
the Intergovernmental Committee from Paul Baerwald of the American
Jewish Joint Distribution Committee:
QUOTE THANKS YOUR AND HOEHLER'S CABLE. SCHWARTZ LEFT FOR
LONDON AND HOPES BE ABLE SEE YOU PARIS ENROUTE SWITZERLAND.
WE REALIZE SITUATION FRANCE DURING FIRST SEVERAL DIFFICULT
MONTHS REQUIRES EMERGENCY HELP AND IN RESPONSE DIRECT APPEAL
FROM MAURICE BRENNER WE REMITTED $100,000 PENDING SCHWARTZ'S
REPORT TO US. AGREE WITH IMPORTANCE GREENLEIGH TAKING OVER
IN PARIS EARLIEST DATE AND HAPPY LEARN FROM YOU THAT DIFFICULTIES
HIS ENTRY BEING REMOVED. UNQUOTE
11:45 a.m.
November 7, 1944
Miss Chauncey (for the Sec'y) Abrahamson, Ackermann, Cohn, DuBois, Friedman,
Hodel, Lesser, Mannon, McCormack Fiels.
RDrury 11/6/44
Regraded Unclassified
127
ALB-77
PLAIN
Lisbon
Dated November 7, 1944
Rec'd 5:02 a.m., 8th
Secretary of State,
Washington,
3883, Seventh, 6 p.m.
FOR LEAVITT FROM PILPEL JDC 114 WRB 248.
Mariciu Harnstein, nephew of Filderman, presently
Istanbul, reiterates importance our representative
proceeding Bulgaria Roumania earliest. Hornstedn con-
sulting Kessler Katski. For your information Ben Gurion
expected Istanbul next few days enroute Bulgaria Roumanda.
NORWEB
MJF
lies Chauncey (for the Sec'y) Abrahamson, Ackermann, Alcaine Colm, Drury,
DuBois, Friedman, Gaston, Hodel, Lesser, Marks, Mannon, McCormack,
Pehle, Files.
Regraded Unclassified
128
November 7₂ 1944
3 p.m.
AMLEGATION
STOCKHOLM
2232
The following message for Olsen is WRB 239,
Reference your 4416 of October 30. Please transmit to
the Swedish Government this Covernment's sincere appreciation
of the humanitarian activities of the Swedish Government and
of the courage and ingenuity displayed by Mr. Wallenberg in
rendering assistance to the persecuted Jews in Hungary.
STETTINIUS
(Acting)
(10/V)
WRB:MMV:KG
NOE
11/7/42
Miss Chauncey (for the Sec'y) Abrahamson, Aksin, Ackermann, Cohn, Drury,
DuBois, Friedman, Gaston, Hedel, Lesser, Marks, Mannon, McCormack,
Pehle, Files.
Regraded Unclassified
129
FMH-890
Stockholm
Dated November 7, 1944
Rec'd 2:20 p.m.
Secretary of State,
Washington.
4548, November 7, noon (SECTION ONE OF TWO)
Reply to your inquiry was deferred until most
recent information could be obtained from Swedish
Consul General in Oslo, who has now been in Stockholm
for 2. few days. This is our No. 102 for War Refugee
Board in reply to WRB 220 (Department's 2128 of October
23, 9 penis)
To date 90,000 Swedish kronor have been deposited
at Foreign Office for account of Consulate General
Westring, against which deposit he uses equivalent in
Norwegian kronor obtained as consuler fees. Westring
is working closely with Central Relief Committee of
Lutheran church in Oslo, and supplies this group the
necessary funds to bring urgent relief to a carefully
selected list of most needy cases. These cases in
almost all instances comprise families of men who have
either been deported, imprisoned or shot by the Germans,
and include perhaps a dozen severely stranded Jewish
families. This type of relief is totally illegal in
Norway, subject to punishment by imprisonment, and it
is extremely important that the whole matter is kept strictly
confidential, particularly as to Swedish cooperation
and assistance. Westring informs that this work is
accomplishing an enormous amount of good, that
conditions in Norway for such families are becoming
increasingly difficult, that considerable more could
be done along the same lines if funds were available.
Have supplied 25,000 Swedish kronor to certain
officials of the Norwegian Legation here responsible
for home front activities. This was for the purpose
of supplying necessary medicine, clothing and food to
the home front groups as well as the Norwegian students
hiding in the forests. This program also is moving
JOHNSON
WMB
Miss Chauncey (for the Sec'y) Abrahamson, Ackermann, Akain, Cohn, Drusy,
DuBois, Friedman, Gaston, Hodel, Lesser, Marks, Mannon, McCormack,
Pehle, Files.
Regraded Unclassified
130
Stockholm
Dated November 7, 1944
Received 2:20 p.m.
Secretary of State,
Washington.
4548 November 7, noon (SECTION TWO)
forward and is connected with other operations con-
cerning facilities established to rescue these student
groups when and if necessary.
Third program with which American Relief for
Norway funds are being employed has been worked out
with pastors of Norwegian Lutheran church in Sweden
Amount of 25,000 Swedish kronor has been made available
to them to permit more or less penniless Norwegian
refugees here to send food parcels back to relatives
in Norway particularly for Christmas. Same group being
supplied with 50,000 Norwegian kronor which they will
send in by underground to needy cases in the more
isolated Norwegian parishes. We believe this to be an
excellent project.
American Relief for Normay may be interested in
knowing that one of its founders and former member
of ite board of directors, Sigurd Arneson, presently
assistant Military Attache to this Legation, has been
consulted fully regarding the disposition of these
funds and not only feels that a tremendous good is
being before. done but considers that the need is greater than ever
JOHNSON
WMB
Miss Chauncey (for the Sec'y) Abrahamson, Ackermann, Aksin, Cojun, Drury,
DuBois, Friedman, Gaston, Hodel, Lesser, Marks, Mannon, McCormack,
Pehle, Files.
Regraded Unclassified
131
ORIGINAL TEXT OF TELEGRAM SENT
FROM:
Secretary of State, Washington
TO:
American Legation, Born
DATED:
November 7, 1944
NUMBER:
3786
SECRET
To Minister Harrison and McClelland, Bern.
Reference your 7269 of November 1.
Please transmit to Swiss Government this Government's apprecia-
tion of Swiss action reported therein. You may assure Swise officials
that this Government will do everything possible to assist them in
every way in connection with the reception and evacuation of the con-
templated refugees from Hungary.
In this connection, please ascertain and advise the Board of
total number of refugees now in Switzerland, and of the numbers
holding (1) Palestine certificates, (2) valid visas to any other
countries, or (3) valid passports of countries to which they can
safely return.
This is WRB Bern cable No. 264.
STETTINIUS
ACTING
Miss Chauncey (for the Sec'y) Abrahamson, Ackermann, Aksin, Cohn,
Drury, DuBois, Friedman, Gaston, Hodel, Leeser, Marks, Mannon,
McCormack, Pehle, Files.
Regraded Unclassified
ORIGINAL TEXT OF TELEGRAM SENT
132
FROMs
Secretary of State, Washington
TO:
AMLEGATION
Regraded Unclassified
DATED:
November 7a 1944
NUMBER:
3788
SECRET
To Minister Harrison at Bern for McClelland.
Reference your 7170 of October 28 to the Department. For
your information the following is the text of a letter written by
Pehle to The Apostolic Delegate in Washington:
QUOTE A: report from Bern from private sources indicates that
the Nunciature at Bern may present to the Holy See a proposal where-
by the Vatican, together with certain neutral governments, would
intercede with the German Government on behalf of civilian deportees
in German-controlled territories. According to the report, the
proposal envisages that Germany would be requested
(a) to liberate or allow to be interned in neutral countries
those deportees who are elderly men, women, and children; and
(b) to apply to other deportees treatment similar to that
accorded prisoners of war.
Without knowing whether this report is correct, I, neverthe-
less, wish to assure you that, in the opinion of the Board, a step
of this kind might result in saving the lives of deported civilians
in German-controlled territory.
I should, however, like to draw your attention to two parti-
cularly import circumstances. First, the Germans have often
shown a tendency to exclude Jene from concessions made in response
to foreign intercessions, and to assure that Jews are not among the
persons on whose behalf my intercession is made unless express
reference is made to them. Second, the valud of any German con-
cessions will be doubtful unless provision is made for effective
supervision of their execution by competent neutral authorities.
Should you deem it appropriate, I would be very grateful if
you could bring the foregoing comments to the attention of the
Holy 8se. CLOSE QUOTE.
This is WRB Bern cable No. 259.
STETTINIUS
ACTING
Miss Channeey (for the Sec'y) Abrahamson, Actormann, Aksin, Cohn,
Drury, DuBode, Friedman, Gaston, Hodel, Lesser, Marks, Mannon,
McCormack, Pshle, Files.
133
BJR... 46
Ankara
Dated November 7, 1944
Rec'd 1:45 a.m. 8th.
Secretary of State,
Washington.
2128, November 7, 2 p.m.
FROM KATZKI TO PEHLE WAR REFUGEE BOARD.
Ankara's No. 179.
The group of 80 adults and children who arrived
in Istanbul from Bulgaria on November 3 (see Ankara's
No. 177 of November 4) departed under the Ambassador's
agreement with the Foreign Office by rail from
Istanbul on November 6 proceeding to Palestine.
An additional group comprising 43 adult Polish
refugees who had been in Rumania for some time
arrived in Istanbul November 5 en route to Palestine.
STEINHARDT
MEV
Regraded Unclassified
134
DEPARTMENT
INCOMING
DIVISION OF
OF
COMMUNICATIONS
0
STATE
TELEGRAM
AND RECORDS
ASB - 852
Chungking
This telegram must bE
paraphrased before being
Dated November 7, 1944
communicated to anyone
other than a Government
REc'd 2:24 p.m.
Agency. (SECRET 0)
Secretary of State,
Washington.
B this no werk CONPIDENTIAL
cleanly B reasons
Carded au the
1789, November 7, 9 n,m,
FOR SECRETARY OF TREASURY FROM FRIE
AND (LIAISON) RECORDS
(LIAIS
COMMUNICATIONS COMMUNIC ATIONS
1944 NOV 8 AM 944
DIVISION OF
DEPARTMENT OF STATE
OnE. US Army finance officer here requesting
CN two billion of no rate CII from Central Government
404
text
is
for November; one billion to bE alloted to Kunming;
100 million to Chengtu; 70 million to Liuchow but
kept on deposit in Kunming; 830 million to bE kept
in Chungking. When FEA'S request made, finance
officer informed this request and all future requests
would have to bE cleared with Generalissimo.
Two. For November US Army here requesting
Chinese Government agencies to spend CN 1047 million
for our account; 830 million in Kunming area (includ-
ing Eastern Yunnan) 217 million in Chengtu area.
Practically all of Kunming area Expenditures for
new airfield construction; most of Chengtu area
Expenditures for airfield maintenance CN.
Three.
Regraded Unclassified
135
#1789, November 7, 9 a.m., from Chungking
Three. Gold sales in October by Central Bank
totalled 187081 ounces; 31731 already delivered.
Receipts from sales about CN dollars 3274 million
Excluding receipts from compulsory purchases of
"community welfare savings certificates"; since
October 2 hyro-gold purchases required to purchase
these certificates Equal to 20% of gold purchase.
Heavy sales partly due to anticipation of rise in
official price because of general recognition that
current price too low but Kwok still maintains price
cannot bE raised until hE has sufficient stocks on
hand to meet EXPECTED increased demand.
Four. Black market price for gold fluctuated
in October between CN dollars 21,000 and 24,500
per ounce. During October 4 - 6 black market
virtually Eliminated since Government sold for inmedi-
ate delivery.
GAUSS
RB
Regraded Unclassified
SECRET
COPY NO 4
136
NOT TO BE RE TRANSMITTED
OPTEL No. 362
Information received up to 10 A.M. 7th November 1944.
1. NAVAL
Convoy of two ships taking home recaptured Russians has
arrived in North Russia. Minesweeping of SCHELTD proceeding
satisfactorily; 97 mines destroyed up to 5th evening. ZEEBRUGGE
MOLE badly damaged, look to BRUGES CANAL partly obstructed by a
wreck and train ferry terminal blocked by two sunken ships. The
basin is suitable for five tank landing ships. DALMATIAN Coast
from ZARA to RISAN, N.W. of KOTOR now reported clear of enemy.
2. MILITARY
Western Front East of EPINAL slight gains against 11ght
resistance. U.S. attack near SCHMIDT has
continued through extensive minefields; further small gains made
and counter attacks nontained. German bridgeheads South of MAAS
blown at former. On WALCHEREN the outskirts of VEERE and
at HOERDIJK and WILLEMST. DT limbst eliminated; bridges reported :1
MIDDELBURG have been reached.
Italy Poles have reduced German salient neur MELDOLA and
S.N CASCI.NO in continued fine weather.
Finland Finns report their troops have advanced along the
ARCTIC strongly. Highway to IVALO where Germans are resisting
3. AIR OPERATIONS
Western. Front 6th. 1088 U.S. Heavy Dombers escorted by
772 U.S. Fighters bombed, under conditions..
of three quarters to total cloud, Synthetic 011 Plants HAMBURG
379 tons, HARBURG 370, STERKRADE 388, BOTTROP 177, and DUI3BURG
121, MITTELLAND CANAL 582, Aircraft Repair Factory NEUMUNSTER 49,
Railway Centres NEUMUNSTER 497, RHEYDT 94, and HAMM 24, German
casulaties 3:0:3. U.S. seven bombers, ten fighters missing.
700 escorted Heavy Bombers of Bomber Command (five missing)
dropped 3,325 tons on GELSENKIRCHEN Area. Weather at first clear
but deteriorated to complete cloud, nevertheless bombing concentrated.
1,576 Fighter Bombers and Fighters (8 missing) operated over the
Battle areas.
6th/7th. Bomber Command Aircraft despatched:- MITTELLAND
CANAL 236 (10 missing) KOBLENZ 128 (2 missing), GELSENKIRCHEN 48
(one missing) Sea Mining etc. 48.
mediterranean 5th. 325 Medium Bombers attacked BRENNER
PASS. Several bridges destroyed or damaged
and railway further blocked. 729 aircraft (5 missing) attacked
communications in Battle Area, shipping in YUGOSL VIA and other
military objectives with good results. Enemy casualties 5:2:0
6th, 657 aircraft (3 missing) attacked objectives
YUGOSLAVIA, MOOSBIERB. UM 011 Refinery 359 tons, VIENN. 502 and
PODGORICA 238.
German Activity During night 6th/7th 17 flying bombs
plotted.
Regraded Unclassified
137
November 8, 1944
10:49 a.m.
HMJr:
Dan.
Dan
Bell:
Good morning.
HMJr:
Good morning.
B:
Well, it seems like you did a good job some place.
HMJr:
Well, I think the President did.
B:
He certainly did. He surprised in a lot of places.
HMJr:
Well, we fixed the little man with the big dog.
B:
(Laughs) Yes, sir. Well, that was a grand job.
It really was.
HMJr:
Yeah. Well, I don't know how good it was because
at 3:20 the -- of course, we knew it was good but
we didn't know how good.
B:
Uh huh. 3:20?
HMJr:
Well, we -- that was when Dewey signed off.
B:
He conceded it?
HMJr:
Yeah.
B:
Oh. Were you up that late?
HMJr:
Later than that.
B:
Really?
HMJr:
Yeah.
B:
You made a night of it, huh?
HMJr:
That's right.
B:
Good.
HMJr:
No liquor.
B:
No liquor, huh?
HMJr:
No.
Regraded Unclassified
138
- 2 -
B:
How did you stay awake?
HMJr:
Coffee.
B:
Yeah. Just coffee? Coffee and Dewey, Harry says.
HMJr:
Yeah.
B:
Well, there's a few upsets, I think --
he even took Illinois. There's a chance of him
taking Michigan, they say.
HMJr:
It's close.
B:
Ohio is a close state.
HMJr:
Yeah.
B:
It's amazing.
HMJr:
Just -- can you hold on one second? My other
phone is ringing.
B:
Yeah.
HMJr:
Do you mind waiting one minute?
B:
Yeah.
(Pause)
B:
Hello.
HMJr:
I had to sell a few apples.
B:
Oh, you've still got apples to sell, huh?
HMJr:
(Laughs)
B:
You ought to get a good price now.
HMJr:
Right.
B:
Well, the group is here; all seem to be smiling
and happy.
HMJr:
The only thing I have -- unless you have something --
I'd like to say a word to Gaston.
Regraded Unclassified
139
- 3 -
B:
All right. He's here. No, I haven't a thing.
HMJr:
Right.
B:
Things are kind of quiet.
Herbert
Gaston:
Hello.
HMJr:
Hello, Herbert.
G:
How are you?
HMJr:
I'm all right.
G:
I congratulate you on your nice work.
HMJr:
Well, I didn't do anything.
G:
(Laughs)
HMJr:
But the President did a beautiful job.
G:
Yeah Ted just came in -- Ted Gamble.
HMJr:
Good. Now, the only thing that I have today
1s, Herbert
G:
Yeah.
HMJr:
I would like to send a telegram to Truman and
one to Wagner
G:
Yeah.
HMJr:
and in Wagner's case include the name of
Mrs. Morgenthau.
G:
Yeah.
HMJr:
And I want to send one to Hannegan.
G:
Yeah.
HMJr:
And include her name there too.
G:
Yeah.
HMJr:
You might as well include her name in each case.
Regraded Unclassified
140
- 4 -
G:
Yeah. Uh huh.
HMJr:
And I don't know any other -- what about
....
G:
Uh ....
HMJr:
....
Walter George?
G:
Well, Dan was suggesting Doughton and George.
HMJr:
We can't -- we can't send telegrams. Letters
will have to be written and I'll sign them.
G:
That's right. That's right.
HMJr:
I'll sign them Friday morning.
G:
Yeah. All right. All right.
HMJr:
But you might -- if anybody has any suggestions,
you might fix up letters for me.
G:
Yes. Good.
HMJr:
And include Mrs. Morgenthau.
G:
Yes. Yeah, the only thing you could do would be
to call them.
HMJr:
Well, I'm
....
G:
And you'd probably have a pretty hard -- pretty
hard thing to do.
HMJr:
I'm too exhausted.
G:
Yes.
HMJr:
Herbert.
G:
Yes.
HMJr:
On that letter that you wrote for me to the New
York Times
G:
Uh huh.
HMJr:
....
in view of their editorial
Regraded Unclassified
111
- 5 -
G:
Yes.
HMJr:
....
try your hand at just rewriting it to Krock.
G:
Rewriting it to Krock?
HMJr:
Addressing it to Krock. Hello?
G:
Yes.
HMJr:
In regard to that story he wrote on Lend-Lease.
And then after you've writeen it, I'll discuss
it with you Friday whether we should or should
not send it.
G:
Uh huh. I -- I'm rather cold to sending it.
HMJr:
Well, just redraft it to go to him and then let
me ....
G:
All right.
HMJr:
....
see whether I want to send it to the son-of-
a-bitch or not.
G:
(Laughs) Well, yeah.
HMJr:
See?
G:
Yeah. Yeah.
HMJr:
But just redraft it.
G:
Yeah.
HMJr:
Now, you might tell Ted -- I don't know when
this fellow Robson is coming down.
G:
Robson?
HMJr:
Robson.
G:
Uh huh. But tell Ted what?
HMJr:
Well, I -- I -- I wouldn't be able to work with
him. I think if the fellow can come down Monday
it's time enough.
G:
Monday?
Regraded Unclassified
- 6 -
142
HMJr:
Yeah.
G:
Uh huh. Uh huh.
HMJr:
What does he think?
G:
Just a minute. (Talks aside.) Yes, Ted thinks
that would be all right if he comes down Monday.
HMJr:
Could I talk with Ted a minute?
G:
Yes, certainly. All right.
Ted
Gamble:
Good morning.
HMJr:
Hello, Ted.
G:
What are We going to do with all of our money?
HMJr:
Wasn't Oregon patriotic yesterday?
G:
Well, they're only about fifteen hundred votes
behind and I suspect that they don't have all of
Multnomah County yet.
HMJr:
Can't they do like what you do -- go borrow money
from the bank and put it across?
G:
(Laughs) Well, I think they'll come out all right.
I received in the mail this morning air mail --
that editorial from the Portland, Oregon, Journal.
HMJr:
oh, wonderful.
G:
And we'll collect them all so that you can see
them.
HMJr:
That's what put the election across.
G:
Well, I'll tell you a curious thing. We had a
call this morning bright and early from Eugene
Meyer
HMJr:
Yeah.
G:
with a little olive branch that I'll tell
you about when you get back.
HMJr:
What does that bastard want?
Regraded Unclassified
143
- 7 -
G:
(Laughs)
HMJr:
That's the humor I'm in for the fourth term.
G:
Well, I -- I think there's something to be said
for what he had to say.
HMJr:
Yes.
G:
He said he'd like to sit down and have a chat
with you.
HMJr:
Well, God damn him. He writes another thing
about the German business and everything else --
I'm got no use for these publishers who can't
control their editors.
G:
Well, I think that he -- I feel the same way
about him, personally, that you feel about him,
but after all the Washington Post is influential,
at least in this community.
HMJr:
I know.
G:
And
HMJr:
You're going to bread your butter.
G:
(Laughs) That's right. But he wants to have a
chat with you. He called me up this morning to
invite me to have lunch with him. I told him I
couldn't make it but
HMJr:
But no cigars.
G:
No -- no cigars.
HMJr:
When he starts smoking, we'll leave Harry White
behind.
G:
We'll leave Harry White there and depart.
HMJr:
Yeah.
G:
With Eugene Meyer and his cigars. Well, we'll --
do you want Robson down on Monday?
HMJr:
Yeah.
G:
Fine.
Regraded Unclassified
144
- 8 -
0
HMJr:
Don't high pressure me now on this Chicago
business.
G:
Well, the reason you got that wire yesterday
is because these fellows have the heat on me.
HMJr:
Well
G:
And this fellow Lutman wanted to fly down here
and be sitting on your doorstep when you returned
and I told him he didn't need to do that -- to
send you a wire at Beacon.
HMJr:
I told you Lutman was good but you wouldn't use
him.
G:
Well, now that we're using him he can't get you.
HMJr:
Yeah. Well, we'll talk about that.
G:
All right, sir.
HMJr:
I suppose Harry White has got Lord Keynes in his
pocket.
G:
I think he has everybody in his pocket this
morning.
HMJr:
Am I on the loud speaker?
G:
Yes.
HMJr:
Yeah. Well, I've got nothing else. I'll be in
Friday.
G:
All right, sir.
HMJr:
Nobody got anything, huh?
G:
No. No. Just a minute. (Aside: Anyone have
anything else they want to talk to the Secretary
about?) You might -- if you make a decision on
that Chicago thing -- one of the reasons they
were turning a little heat on us yesterday, they
wanted to get out some invitations and they didn't
want to get them out without using yourself and
Admiral King.
HMJr:
I'm luke warm. If you don't know how to get me
to go on those programs, I'm not going to tell you
on the loud speaker.
Regraded Unclassified
145
- 9 -
G:
(Laughs) Well, I'll have her call
HMJr:
(Laughs)
G:
....
if that's the next step.
HMJr:
I'm going to a Town Meeting in East Fishkill.
G:
Yes.
HMJr:
Lytle Hull appointed a redhead here as Chairman
and he came over and vamped Mrs. Morgenthau, as
a result of which I'm going to the meeting.
G:
(Laughs)
HMJr:
Harry White can put that story in -his pipe.
G:
All right. Well, if you get a call from Myrna
Loy or somebody, you square me with Mrs. Morgenthau.
HMJr:
Myrna Loy wouldn't do it.
G:
She wouldn't do it, huh? Well, I won't mention
any other names for fear of giving us away.
HMJr:
All right.
G:
All right, sir. Bye.
Regraded Unclassified
146
STANDARD MAM NO. 64
Office Memorandum UNITED STATES GOVERNMENT
DATE: 11/8/44
TO
:
Miss Chauncey
FROM :
Frank Coe
SUBJECT:
Minutes of an informal meeting in
Secretary Morgenthau's Office on
November 3 at 10 a.m.
Regraded Unclass
147
TOP
SECRET
TOP SECRET
November 7, 1944
NOTES ON AN INFORMAL MEETING RELATING TO
LEND LEASE BETWEEN THE BRITISH AND THE
UNITED STATES IN PHASE TWO
Present: Secretary Morgenthau
Nov. 3, 10 a.m.
Lord Keynes
Sir Robert Sinclair
Mr. Casaday
Mr. Coe
Mr. Lee
Navy Program
Lord KEYNES said that the British wished to speak about the deadlock that
seemed to have been reached with the Navy Department. Sir Robert said
that it was not a declared deadlock, and outlined the course of negotia-
tions. The Navy Department asked for answers to a great many questions.
The British sent in the most complete answers they could on October 26.
The British asked for an opportunity to discuss the requirements after
they had been considered by the Navy Department. But on November 1,
Admiral McCormich told Admiral Waller that the U.S. Navy had decided
what could be done and that that decision had been communicated to
Secretary Morgenthau and the U.S. Navy did not feel that it was a matter
for discussion at this stage. The British had waited to see whether
there would be any chance to discuss the matter, but 80 far none had
been given.
MR. MORGENTHAU said that as a result of the letter which LORD KEYNES
had sent him, which came in at 4 - 5 o'clock the night before, he had
called SECRETARY FORRESTAL and asked him about the report, which SECRE-
TARY FORRESTAL thought had already come over. It arrived Nov. 2 about
9 o'clock. What SECRETARY FORRESTAL had said verbally was that they
should first decide their own position, then refer to the American Com-
mittee for advice. MR. MORGENTHAU had pointed out that this was not
the way the Army had proceeded. However, SECRETARY FORRESTAL thought
that the Navy preferred to do it that way. MR. MORGENTHAU said that
he had not yet had a chance to study the Navy's report. SIR ROBERT
SINCLAIR thought that the problem was one of small dimensions since
the total program was not large, and especially if the item of repairs,
which could hardly be estimated, was removed from the total program.
MR. MORGENTHAU said he would raise the matter with the American Committee
that day and give the British an answer before night.
Regraded Unclassified
148
- 2 -
Air Program and Reciprocal Aid
LORD KEYNES said that the air people had put in the same reservation
about the U.K.'s underwriting military reciprocal aid as had the Army
people. Therefore the British would have to put in a reservation on
this point. He stated that it would be unconstitutional to make this
commitment. He did not know what was in the Army's mind. Perhaps they
would be satisfied with a clause for the Dominions similar to the one
which the U.K. was making. If there is anything that needs to be dis-
cussed, the British thought it ought to be handled in connection with
the Dominions' application for Lend-Lease.
The Secretary asked MR. COE to arrange a committee of the subcommittee
to go over this whole question of reciprocal aid. He wished the meeting
to be prior to the meeting of his Top Committee. MR. COE thought that
since the combined group was likely to meet that afternoon, the best
that could be done was a meeting of the American group with the Secretary
prior to the combined meeting.
LORD KEYNES promised to send MR. COE a copy of the statement which he
would make that afternoon on reciprocal aid. The SECRETARY said that
MR. COE would let the British know at what time the meeting was to be.
Regraded Unclassified
149
RECRET
TOP SECRET
November 7, 1944
NOTES ON AN INFORMAL MEETING RELATING TO
LEND LEASE BETWEEN THE BRITISH AND THE
UNITED STATES IN PHASE TWO
Present: Secretary Morgenthau
Nov. 3, 10 a.m.
Lord Keynes
Sir Robert Sinolair
Mr. Casaday
Mr. Coe
Mr. Lee
Navy Program
Lord KEYNES said that the British wished to speak about the deadlock that
seemed to have been reached with the Navy Department. Sir Robert said
that it was not a declared deadlock, and outlined the course of negotia-
tions. The Navy Department asked for answers to a great many questions.
The British sent in the most complete answers they could on October 26.
The British asked for an opportunity to discuss the requirements after
they had been considered by the Navy Department. But on November 1,
Admiral McCormich told Admiral Waller that the U.S. Mavy had decided
what could be done and that that decision had been communicated to
Secretary Morgenthau and the U.S. Navy did not feel that it was a matter
for discussion at this stage. The British had waited to nee whether
there would be any chance to discuss the matter, but 80 far none had
been given.
MR. MORGENTHAU said that as & result of the letter which LORD KEYNES
had sent him, which came in at 4 - 5 o'clock the night before, he had
called SECRETARY FORRESTAL and asked him about the report, which SECRE-
TARY FORRESTAL thought had already come over. It arrived Nov. 2 about
9 o'clock. What SECRETARY FORRESTAL had said verbally was that they
should first decide their own position, then refer to the American Com-
mittee for advice. MR. MORGENTHAU had pointed out that this was not
the way the Army had proceeded. However, SECRETARY FORRESTAL thought
that the Navy preferred to do it that way. MR. MORGENTHAU said that
be had not yet had a chance to study the Navy's report. SIR ROBERT
SINCLAIR thought that the problem was one of small dimensions since
the total program was not large, and especially if the item of repairs,
which could hardly be estimated, was removed from the total program.
MR. MORGENTHAU said he would raise the matter with the American Committee
that day and give the British an answer before night.
Regraded Unclassified
150
- 2 -
Air Program and Reciprocal Aid
LORD KEYNES said that the air people had put in the same reservation
about the U.K.'s underwriting military reciprocal aid as had the Army
people. Therefore the British would have to put in a reservation on
this point. He stated that it would be unconstitutional to make this
commitment. He did not know what was in the Army's mind. Perhaps they
would be satisfied with a clause for the Dominions similar to the one
which the U.K. was making. If there is anything that needs to be dis-
cussed, the British thought it ought to be handled in connection with
the Dominions' application for Lend-Lease.
The Secretary asked MR. COE to arrange a committee of the subcommittee
to go over this whole question of reciprocal aid. He wished the meeting
to be prior to the meeting of his Top Committee. MR. COE thought that
since*the combined group was likely to meet that afternoon, the best
that could be done was a meeting of the American group with the Secretary
prior to the combined meeting.
LORD KEYNES promised to send MR. COE a copy of the statement which he
would make that afternoon on reciprocal aid. The SECRETARY said that
MR. COE would let the British know at what time the meeting was to be.
Regraded Unclassified
11.844
151
CCLL
U.S. No. 37
Copy No. 3
TOP SECRET
Fr. Henry l'orgenthau, Jr.,
Chairman, British-American Committee on Lend-Lease.
Dear Sir:
In accordance with the directions of your Committee, the British
requirements of Naval items for the first year of Stage II, assumed to be
the calendar year 1945, have been examined. Our conclusions are as follows:
(1) The Navy Department accepts the British requirements as listed
in the enclosure to this letter as a production requirement, or as a re-
quirement from surplus stocks. Subject to paragraph 8 below and remarks
in the enclosure, the necessary procurement will be undertaken concurrently
with the U.S. Navy Department's requirements. The requirements presented
are considered to include all requirements previously submitted for the
second half of the fiscal year 1945.
(2) It is understood that the material is to be used to perform the
role assigned to the British at the Quebec Conference subject to such
modifications as may later be made by Combined Chiefs of Staff action.
(3) It is understood that the agreements reached herein, so far as
deliveries are concerned, fall within and are subject to established pro-
cedures of the Combined Munitions Assignment Board.
(4) In certain instances where quantities are not stated and the Navy
Department has accepted dollar values, as shown by the enclosure, it is
understood that the ability of the Navy Department to deliver any specific
item that may be requisitioned will depend upon the production and stock
W
situation at the time the firm requirement is established.
(5) There are certain specific items where the quantities offered in
the enclosure do not meet stated British requirements because the combined
British and U.S. requirements are greater than existing production capa-
city. It is understood that the British may bid for additional quantities
of these items under the Contingent fund described in the enclosure and
under established combined l'unitions Assignments Board procedures.
(6) As indicated in the enclosure, it is agreed that a figure of 25
million dollars will cover the United Kingdom demand for spot items.
(7) As indicated in the enclosure, it is agreed that the United King-
dom will be provided with spares for Lead-Lease equipment to be supplied
or already in British hands on the same scale as for the United States
forces.
Regraded Unclassified
152
TOP SECRET
(8) The Navy Department makes no commitment to procure any material
that cannot be produced by existing production facilities and that cannot
be delivered during the calendar year 1945. Also, commitments for Navy
Department procurement and services, not already authorized by appropriated
funds, are dependent upon the appropriation of funds by the Congress for
that purpose.
(9) It is agreed that the United Kingdom will accept combat-service-
able equipment of the type and kind suitable for re-issue to the U.S. Navy
for use against Japan with the understanding that spares will be furnish-
ed on the same scale as for the U.S. Services.
(10) It is agreed that the United Kingdom shall undertake to continue
to supply Admiralty items of reciprocal aid within the limits prevailing
at the time of the defeat of Germany and dependent upon the production and
stock situation at the time,
United States
British
F. J, HORNE
Vice Admiral, U.S. Navy
Vice Chief of Naval Operations
- 2 -
Regraded Unclassified
153
Photostats to
8 November 1944
White Y be. 11/16/28
Mr. Henry J. Morgenthau, Jr.
Chairman, British-American Committee on Lond-Lease
Dear Sir,
Since submission of our letter of 31 October, 1944 relative to the
British requirements for air items for the first year of Stage II, Sir Robert
Sinclair has requested that we consider his recommendation that it would be
wise to include in the total financial provision an additional $75,000,000.00
over and above the amounts stated in the schedules, as financial cover against
the possibility that the stated quantities of aircraft allocations to the Royal
Navy might later be increased, without prejudice to the operations of the U.S.
Navy. Our recommendations of 31 October included the provision of $200,000,000.00
for New Developments and Spot Items, which in the opinion of the American repre-
sentatives, would be sufficient to cover this additional $75,000,000.00, but
as the British representatives do not wish to absorb such charges under the
heading of New Developments and Spot Items, they suggest this additional amount
8.8 specific coverage for possible increased airoraft allocations to the Royal
Navy.
This proposal has been studied and is considered to be acceptable. It
is recommended, therefore, that an additional amount of $75,000,000.00 be in-
cluded in the total financial provision, over and above the amounts stated in
the schedules, for the specific purpose of covering any increased allocations of
U.S. Navy type airoraft to the Royal Navy which may develop during the period
covered by the agreement and not now included in it, with the stipulation that
-
such amount may be used for no other purpose.
Respectfully,
UNITED STATES
BRITISH
PPt
C. Cheminy L. Courtney
Robert P. Patterson
Undersecretary of War
Air Chief Marshal
Royal Air Force
Robert &. Lovett
Assistant Secretary of War for Air
Exting British Air Commission
C. R. Fairey
Director General
TOP SEGRET
Regraded Unclassified
154
for
H. H. Arhold
R. P. Willook
General, U.S.A.
Air Vice Marshal
Commanding General, Army Air Forces
Acting Head, Royal Air Force Delegation
artimus L Gates
T.F.Somerille
Artemis L. Gates
J. F. Somerville
Assistant Secretary of Navy for Air
Admiral, R. N.
Head, British Admiralty Delegation
Curly written
Aubrey W. Fitch
Vice Admiral, U. S. Navy
Deputy Chief of Naval Operations (Air)
TOP SECRET
Regraded Unclassifie
155
EXECUTIVE OFFICE OF THE PRESIDENT
WAR REFUGEE BOARD
141
INTER-OFFICE COMMUNICATION
DATE
November 8, 1944
TO
Secretary Morgenthau
FROM
J. W. Pehle
Eisenhower issued the statement prepared by the
War Refugee Board on November 7.
As issued by Eisenhower, the statement reads as
follows:
"Germans! You have in your midst a great
many men in concentration camps and forced
labor battalions.
"Germans! Do not obey any orders, regardless
of their source, urging you to molest, harm or
persecute them, no matter what their religion or
nationality may be.
"The Allies, whose armies have already es-
tablished a firm foot-hold in Germany, expect,
on their advance, to find these people alive
and unharmed. Heavy punishment awaits those
who, directly or indirectly, and to whatever
extent, bear any responsibility for the mis-
treatment of these people.
"May this serve as a warning to whoever at
present has the power to issue orders."
Inc
Regraded Unclassified
Treasury Department
156
Division of Monetary Research
Date Nov. 9, 194419
To:
Secretary Morgenthau
You will be interested in
reading the marked portion on Page 3.
H.D.W.
MR. WHITE
Branch 2058 - Room 214-1/2
157
TREASURY DEPARTMENT
m
INTER OFFICE COMMUNICATION
DATE 11/8/44
TO
Yr. White
FROM Mr. Nathan
Subject: Report of the Foreign Policy Association, dated November 15,
1944, discussing proposals of Liberated Nations of Europe
for a peace settlement with Germany.
The Foreign Policy Association has just released a publication
in which the attitudes of Allied European nations concerning possible
peace terms for Germany are discussed. This very interesting publica-
tion is based on statements in newspapers and magazines made by official
and semi-official representatives of France, Belgium, Netherlands, Norway,
Poland, and Czechoslavakia.
The various European nations are said to be agreed that the preven-
tion of renewed German aggression must be the objective of the peace
settlement, and that the coming peace may offer them their last chance
to end the threat of German aggression. Whatever the peace settlement,
they believe that continued United Nations cooperation must supplement
it, and that the United Nations must be prepared to take effective
military action if any signs of German rearmament reappear. The future
security of Europe demands that Germany be deprived of her potential
military and economic supremacy on the continent; it would be entirely
unjustified to distinguish "two Germanys," one militaristic and the
other peace-loving.
As far as the details of the peace settlement for Germany are
concerned, the attitudes of the Allied European nations, as represented
in the Foreign Policy publication, may be summarized as follows:
(a) Occupation
Complete military occupation of the Reich is indispensable.
There is no unanimity, however, concerning its duration. Some
nations believe it should last an entire generation, others that
it should continue as long as necessary to carry out the peace
settlement. All of Germany's neighbors should participate in the
occupation, provided that the smaller ones can spare the necessary
manpower from the tasks of reconstruction. France has officially
stated that she wants to send an army into the Rhineland -including
the laihr and the Saar- for an indefinite period, as a guarantee
What Kind of Peace with Germany - Terms proposed by Liberated Nations
of Europe, by Winifred N. Hadsel.
158
Division of
- 2 -
Monetary Research
against a recurrence of German aggression. The French attitude
is warmly supported by the Belgians and the Dutch.
(b) Territorial Changes
The Allied European nations have little sympathy for parti-
tioning Germany, because the attempt to destroy German unity from
without is considered useless. While partition is rejected, it
is hoped that other territorial changes may come about during the
period of occupation. Although territorial changes will encourage
the German desire for revenge, the European Allies are convinced
that Germany will seek revenge anyhow, and that such attempts can
be defeated only by the determined will of the United Nations to
enforce the peace terms. Two different types of changes
are recommended:
(1) Political decentralization within Germany by encouraging
the traditions of local independence for Bavaria, Wurtemberg,
Saxony, Hanover, and Hesse.
(2) Frontier adjustments which it is hoped will weaken
Germany and strengthen the position of the Allied nations.
The French, Belgians, and Dutch want the Rhineland under
their military control for an indefinite period. Holland
may claim some land from Germany as reparation for the
destruction caused by the Nazis. In that case, Holland may
want to move all the Germans residing in the claimed terri-
tory into the interior of Germany, to avoid the emergence of
an irredenta population. Except for East Prussia and Upper
Silesia, no agreement exists yet among the Poles about the
territorial claims which they may want to raise. The Polish
Committee of National Liberation will demand a larger slice
of eastern Germany than the Polish Government in Exile.
(c) Reparations
The Allied nations in Europe have an enlightened attitude re-
garding reparations. They will ask to have all the property
returned which was looted by Germany; in addition, they may ask for
other moveable assets and equipment to replace that part of the
looted property which no longer exists. While the desire for
additional payments may be very real on the part of some of the
liberated nations, they realize that such payments can be made
only in goods, and that the production of such goods would require
the preservation of the surviving German industries and the re-
Regraded Unclassified
159
Division of
Monetary Research
- 3 -
construction of the plants which have been destroyed. When faced
with this choice, most of the liberated nations prefer the de-
struction of Germany's industrial potential to the possibility of
recurrent reparation payments.
Concerning reparations in form of labor performed by German
workers in the liberated areas themselves, the attitude of the
European nations is supposedly not unanimous. It is considered
likely that Norway and Poland would not be prepared to admit
German workers into their countries while the other nations may
be more sympathetic.
(d) Deindustrialization
The Foreign Policy publication is very emphatic in the belief
that the liberated nations in Europe realize the importance of
industry in modern warfare and hence support the Morgenthau Plan
and the razing of Germany's large industrial plants. They do not
believe that their own welfare would materially suffer from a
change in Germany's industrial structure, and are convinced that
Germany's "great economic significance for Europe" is to a large
extent a myth. They recommend that all heavy industries in
Germany damaged by bombing be left unrepaired, and that industries
making synthetic rubber and oil, machine tools, and steel alloys
be dismanteled and sent to the liberated countries. In all other
industries, the plants employing more than a given number of
workers should be decentralized. Small factories and light
industries may be left intact without endangering Europe's future
security. It appears that the proposals for deindustrialization
meet some opposition from the countries which formerly sold
agricultural products to Germany, particularly the Netherlands,
the Balkan countries, and Denmark. These countries prefer long-
term United Nations control of German industries to deindustrializa-
tion. As an example, a statement of the Netherlands Ambassador
to the United States is cited in which he suggested that a strict
watch over all German industries could be maintained by Allied
control of the majority of stock in these plants. The majority
shares of stock in German industries would be placed under the
trusteeship of an international cooperative body. None of the
members of this body would be permitted to have ties with similar
businesses in their own countries.
Comment:
This publication is a very welcome synopsis of the views of various
European nations, liberated or soon to be liberated, as to a desirable
peace with Germany. The neighbors of Germany seem to be very much in
Regraded Unclassified.
160
Division of
Monetary Researcy
- 4 -
agreement with the views held in the Treasury. They appear convinced
that the threat of future German aggression can be defeated only by
long-term military occupation and deindustrialization. They are pre-
pared to forego reparation paymentsif that is necessary to make peace
more secure.
Regraded Unclassified
161
NOV
8 1944
TO EMPLOYEES or THE
TREASURY DEPARTMENT:
Because of increasing difficulties in the preparation,
certification, and payment of pay rolle, & revised schedule
of calary payments for employees of the Treasury Department
will be installed in accordance with the following table:
Pay Day
Period Covered
1944
Nov. 22
Five days
Nov. 11
to
Nov. 15
Dec. 2
Half-month
Nov. 16
to
Nov. 30
Dec. 18
Half-month
Dec. 1
to
Dec. 15
1945
Jan. 4
Half-month
Dec. 16
to
Dec.
31
Jan. 20
Half-month
Jan.
1
to
Jan. 15
Feb. 6
Half-month
Jan. 16
to
Jm.
31
Feb. 22
Half-month
Feb. 1
to
Feb. 15
Mar. 10
Half-month
Feb. 16
to
Feb. 26
Thereafter, employees will receive a
full half-month's pay on the 10th and
25th of the month.
. Applicable only to employees whose salaries
are now payable on the 10th and 25th of the
month.
Under this plan, which 10 based upon & joint study w
the Treasury Department, the Bureau of the Budget, and the
General Accounting Office, the pay periods will and on the
15th and last days of the month, respectively.
In changing to the nov procedure, employees who are nov
paid on the 10th and 25th of the month will receive an inter-
mediate payment for five days covering the period November 11
to 15th. This payment will be made on November 22, and will
not be subject to any bond deductions. Thereafter, employees
Regraded Unclassified
162
- 2 -
will receive seuimonthly salary payments in accordance with the
above schedule.
After the new system is in full effect, employees will receive
their pay regularly on the 10th and 25th of the month, except that
when such days fall on Sunday or & holiday payments will be made on
the preceding working day. This arrangement overcenes a difficulty
under the present system when such payments would have to be made on
the first working day following Sunday or a holiday.
The reasons which have necessitated the change may be briefly
summarised as follows:
In order to pay employees promptly under the present system
it is necessary to prepare pay rolls several days prior to the
close of the pay period. Due to numerous changes which occur after
the roll has been prepared and before pay day, a great deal of extra
work is involved. For instance, when employees take leave without
pay or are promoted or resign, or when nev employees are hired,
adjustments have to be made on the roll. As a result, numerous book-
keeping adjustments are necessary, supplemental pay rolle must be
prepared, checks met be cancelled, or new checks issued. These
difficulties have been accontuated by the passage of the Act of
December 29, 1941, which holds employees who certify pay rolls are
personally liable under bend for overpayments resulting from erreneous
certification.
It is believed that the employees will realize the necessity
for adopting the new schedule, and that they will also appreciate
the fact that the plan has been devised so as to cause a minimum of
inconvenience to those affected.
(Signed) H. Morgenthau, Jr.
Secretary of the Treasury
EfBartelt:hbw 11/3/44
Regraded Unclassified
163
NOV 8 1944
TO HEADS OF BUREAUS AND OFFICES,
CHIEFS OF DIVISIONS, TREASURY DEPARTMENT.
In accordance with recommendation of a joint committee composed
of representatives of the Treasury Department, Bureau of the Budget,
and the General Accounting Office that pay rolls be certified after
the pay period ends, the following changes in pay-rell procedure are
hereby prescribed, effective as of the dates indicated.
The pay periods of employees whose salaries are payable on an
annual basis will run from the first to the fifteenth, and from the
sixteenth to the last days of the month, respectively. Payments will
be made on the tenth day following the end of the pay period, except
as otherwise noted in the following schedules:
I. EMPLOYEES PAID ON AN ANNUAL BASIS
(Except Bureau of Engraving and
Printing)
(a) Per annum employees whose present pay periods end on the 10th
and 25th of each month.
Amount
Pay period
of pay
Pay day
1944
Nov. 11-15
Five days
Nov. 22
Nov. 16-30
Half month
Dec. 2
Dec. 1-15
Half month
Dec. 18
Dec. 16-31
Half month
Jan. 4
1945
Jan. 1-15
Half month
Jan. 20
Jan. 16-31
Half month
Feb. 6
Feb. 1-15
Half month
Feb. 22
Feb. 16-28
Half month
Mar. 10
Thereafter employees will receive a full half-month pay on the
10th and 25th of each month as at present.
Regraded Unclassified
164
- 2 -
(b) Per mployees whose present pay periods end on the 15th
and last days of each month.
Pay period
Pay day
1944
Nov. 1-15
Nov. 16
Nov. 16-30
Dec. 2
Dec. 1-15
Dec. 18
Dec. 16-31
Jan. 4
1945
Jan. 1-15
Jan. 20
Jan. 16-31
Feb. 6
Feb. 1-15
Feb. 22
Feb. 16-28
Mar. 10
Thereafter pay days will be on the 10th and 25th of each month.
II. EMPLOYEES OF THE BUREAU OF ENGRAVING AND PRINTING
(a) Employees paid on per annus,per dien, or per hour basis:
Pay period
Pay day
1944
Nov. 16-30
Dec. 2
Dec. 1-15
Dec. 18
Des. 16-31
Jan. 4
1945
Jan. 1-15
Jan. 20
Jan. 16-31
Feb. 6
Feb. 1-15
Feb. 22
Feb. 16-28
Mar. 8
Mar. 1-15
Mar. 24
Mar. 16-31
Apr. 10
Apr. 1-15
Apr. 26
Apr. 16-30
May 12
May 1-15
May 28
May 16-31
June 14
June 1-15
June 30
Thereafter pay days will be on the 15th and last days of each month.
Regraded
165
- 3 -
(b) Plate printers and their assistants (paid on piece-work basts):
Pay period
Pay day
1944
Dec. 16-31
Jan. 9
1945
Jan. 1-15
Jan. 25
Jan. 16-31
Feb. 20
Thereafter pay days will be on the 10th and 25th of each month.
III. EMPLOYEES OF THE BUREAU OF THE MINT - FIELD SERVICE
(a) Per diem employees:
Two weeks'
pay period
ending
Pay day
1944
Nov. 4
Nov. 10
Nov. 18
Nov. 25
Dec. 2
Dec. 101
Dee, 16
Dec. 252
Dec. 30
Jan. 9
1945
Jan. 13
Jan. 23
Thereafter pay days will be on the second Tuesday following close
of pay period,
(b) Per annual employees:
Per annus employees of the Bureeu of the Mint (both departmental
and field) will be paid in accordance with Schedule I (a),
1/Payment will be made Saturday, December 9, since December 10 falls
on Sunday,
2/Payment will be made on Saturday, December 23, since Christmas,
December 25, is preceded by Sunday,
Regraded Unclassified
166
- 4 -
IV. GENERAL PROVISIONS
When & pay day falls on Sunday or holiday, payment will be made
on the first preceding working day.
Pay rolls will be delivered to the Division of Disbursement not
less than four full working days prior to pay day.
No bond deductions will be made on pay rolls covering the period
from November 11 to 15, in Schedule I (a).
T
The Secretary of the Treasury may at any time, or from time to
time, withdraw or amend any or all of the provisions of this circular.
(Signed) H. Morgenthau, Jr.
Secretary of the Treasury
Regraded Unclassified
notedly m 11-1-167 for for 167
FARMERS EDUCATIONAL AND COOPERATIVE UNION
of America
3501 EAST 46TH AVENUE
DENVER. COLO.
OFFICE OF THE PRESIDENT
November 8, 1944
Honorable
Henry Morgenthau
Secretary of the Treasury
Washington, D. C.
Dear Mr. Secretary:
Thank you very much for your kind
letter of November 1. I appreciate your de-
voting time to inquiring into the matter I
mentioned to you, and am glad to agree with
you that disposal of surplus property in such
8. way as to disorganize markets would not be
in the public interest.
This is not to say, however, that
Mr. Olrich is correct in his strictures upon
the preference provisions of the law. I was,
of course, aware of the President's remarks
at the time he signed the bill and our staff
has carefully studied provisions of the law to
which you refer. In fact, some of these pro-
visions were inserted in the law at our sugges-
tion.
I regret very much that your views
coincide with those of Mr. Olrich, since I an
convinced that in the public interest we must
continue to oppose such attacks upon the law
as vigorously as possible.
I appreciate your renewing your in-
vitation to call upon you, and certainly will
take advantage of it at the earliest possible
date.
With kindest personal esteem,
JAMES G. PATTON, President
NATIONAL FARMERS UNION
JGP/EK
18
Regraded Unclassified
168
AVICTORY
TREASURY DEPARTMENT
BUY
UNITED
STATES
WAR
BONDS
PROCUREMENT DIVISION
AND
STAMPS
WASHINGTON 25
OFFICE OF THE DIRECTOR
November 8, 1944
SECRET
MEMORANDUM TO THE SECRETARY:
Attached is the weekly report of Lend-Lease
purchases.
A requirement has been received for a large
quantity of equipment, including various kinds of
machinery, tools, lathes and scales, amounting to
approximately $194,267, for a new ammunition arsenal
located in Mexico.
apr Clifton E. Mack
Am
Director of Procurement
ELO
the
Regraded Unclassified
169
LEND-LEASE
SECRET
TREASURY DEPARTMENT, PROCUREMENT DIVISION
STATEMENT OF ALLOCATIONS, OBLIGATIONS (PURCHASES) AND
DELIVERIES TO FOREIGN GOVERNMENTS AT U. S. PORTS
AS OF NOVEMBER 1, 1944
(In Millions of Dollars)
Administrative
Miscellaneous &
Total
U.K.
Russia
China
Expenses
Undistributed
Allocations
$5606.6
$2627.1
$2257.3
$133.9
$15.9
$572.4
(5574.6)
(2627.1)
(2257.3)
(133.9)
(15.9)
(540.4)
Requisitions
$ 219.2
$ 26.2
$ 65.0
$ 2.1
-
$125.9
in Purchase
( 220.7)
( 26.3)
( 66.3)
( 1.9)
-
(126.2)
$ 135.6
-
Requisitions not
$ 32.5
$ 85.2
$ .3
$ 17.6
Cleared by W.P.B.
( 128.3)
( 30.9)
( 83.9)
( .3)
-
( 13.2)
Obligations
$4234.1
$2029.8
$1787.8
$ 68.1
$14.9
$333.5
(Purchases)
(4209.7)
(2022.6)
(1777.5)
( 67.9)
(14.5)
(327.2)
Deliveries to Foreign
$2567.0
$1515.8
$ 973.2
$ 25.1
-
$ 52.9
Governments at U. S.
(2526.3)
(1503.0)
( 945.9)
( 25.1)
-
( 52.3)
Ports*
*Deliveries to foreign governments at U. S. Ports do not include the tonnage that is
either in storage, "in-transit" storage, or in the port area for which actual receipts
have not been received from the foreign governments.
Note: Figures in parentheses are those shown on report of October 25, 1944.
1
SECRET
Regraded Unclassified
170
CVI-189
Tehran via Army
This telegram must be
paraphrased before being
Dated November 8, 1944
communicated to anyone
Regraded Unclassifie
other than a Government
Rec'd 1:56 p.m.
Agency. (RESTRICTED)
Secretary of State
Washington
823, November 8, 9 a.m.
FOR JOSEPH SCHWARTZ AMERICAN JOINT DISTRIBUTION COMMITTEE
NEW YORK FROM CHARLES PASSMAN
The following are results cenversations with Polish Minister,
Tehran representatives, Polish Committee Liberation, Russian Consul
General and FEA regarding immediate help from Tehran to liberated
parts Peland.
One. Pelish Minister expressed willingness place our disposal
their available supplies including medical equipment which I believe
is gift frem United States also provide us with funds purchase
additional Lend-Lease supplies as previously agreed provided help will
be also to non-Jews. He also has no objection if distribution will
be through existing Lublin Committee. The above is his personal view
which cable to his Government Lenden asking approval. He thought that
approval will surely be given if our representative will participate in
supervision distribution.
Two. Representatives Cemmittee Liberation stated they sure Lublin
Committee will de everything assure just distribution and will ask
Russian permission presence our representative. One of them leaving for
Mescow and Lublia tomerrew.
Three. Russian Censul stated believes no difficulty their trans-
porting our supplies Tehran-Lublin which should take about a menth, but
not sure about presence our representative. He premised cable immediately
Mobers.
Feur. FEA stated they have instructions dispose at once all stecks
here therefore refused our previous request to sell us part. They have
under consideration other effers and will have to make quick decision.
If we should send relief liberated Peland with financial help Pelish
Government, Lenden and taking into consideration need of additional
supplies fer parcels service 1945 we should buy the entire stock cos-
sisting of fellowing: 92 tens pendered seup, 479,000 ascerbic acid E
tablets, 33,000 weelen blankets, 12,000 winter caps, 46,000 used seas
overceats, 28,000 used womens everceats, also small quantities other used
wearing apparel. Proposed all ether clothing for Peland. Total cost
$579,000. Expect Pelish authorities will pay at least half.
171
-2- #823, November 8, 9 a.m., from Tehran
In discussions with all parties made clear have no definite
instructions also that possibility our help liberated Poland depends
upon permission State Department. Informed American Embassy here of
all cenveruations.
Regarding our representative going Lublin was informed by all
parties concerned that question likely to be simplified if could say
that I ready go. I told them that when you make final decision you
will surely propose acceptable person.
Regarding myself do not know yet whether ready and able undertake
either mission to Balkans according your request or go Peland if
favorable decision reached.
Please cable immediately your opinion above preblems.
MORRIS
EEC
Regraded Unclassified
172
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
AMEMBASSY, Madrid
TO:
Secretary of State, Washington
DATED:
November 8, 1944
NUMBER:
3696
CONFIDENTIAL
See Department's 1872, July 1, 1944; Department's
2324, August 21, 1944.
Below are the non-preference quota numbers which were
allotted for refugee children for October, 1944, returned here with unused
fourth 25% of block (all numbers inclusive): French 63-82, Czechoslovak
48-62, Netherlands 61-80, Belgian 22-30, Polish one 15-16, German 458-608.
October 29 French non preference quota number 62 was allotted
to Lisbon for use of Joseph Lerman, refugee child.
In connection with the following see the last-mentionedteference.
Non preference quota numbers 56-71 inclusive, which were allotted for
October for refugee children from Hungary, were returned unused.
HAYES
11-11-44
DCR:EMS
Regraded Unclassified
173
CABLE TO MINISTER JOHNSON, STOCKHOLM FOR OLSEN, FROM WAR REFUGEE BOARD.
Please deliver the following message to Mrs. Elise Ottesen-Jensen,
John Ericssonsg 6, Stockholm, from Sheba Strunsky of the International
Rescue and Relief Committee:
QUOTE CABLED YOU SIX THOUSAND DOLLARS ONE THOUSAND FOR
REGULAR MONTHLY REMITTANCE FIVE THOUSAND TO BE TURNED
OVER TO MR. OLSEN FOR STOCKHOLM COMMITTEE FOR STATELESS
REFUGEES STOP STILL RECEIVED NO LETTERS OR REPORTS UNQUOTE
THIS IS WRB STOCKHOLM CABLE NO. 241.
9:00 a.m.
November 8, 1944
Regraded Unclassified
174
CABIE TO MINISTER JOHNSON, STOCKHOLM, FOR OLSEN, FROM WAR REFUGEE BOARD.
Please deliver the following message to Rabbi Wilhelm Wolbe,
11 Olsefsgotten, Stockholm, from Rabbi Abraham Kalmanowitz of the Vaad
Hahatzala Emergency Committee:
QUOTE RECENT SHANGHAI REPORTS ALARMING. INFLATIONARY PRICES
AND SICKNESS ENDANGER EXISTENCE. URGE YOU TAKE FOLLOWING MEASURES
(1) ENDEAVOR SEND FOOD CLOTHING PARCELS MEDICAMENTS TO OUR
RABBINICAL GROUP IN SHANGHAI BY ARRANGEMENT OF SWEDISH AND
JAPANESE GOVERNMENTS. (2) URGE INTERCESSION OF SWEDISH GOVERN-
MENT FOR OUTRIGHT RELEASE OF THIS RELIGIOUS RABBINICAL GROUP.
(3) ENDEAVOR SECURE SWEDISH CITIZENSHIP FOR ENTIRE GROUP TO
FACILITATE RELEASE WILL SEND YOU ENTIRE LIST. ENLIST COOPERATION
SUPPORT RABBI EHRENPREIS THESE PROJECTS UNQUOTE
THIS IS WRB STOCKHOLM CABLE NO. 242.
3:45 p.m.
November 8, 1944
175
CABLE TO MINISTER JOHNSON, STOCKHOLM, FOR OLSEN, FROM WAR REFUGEE BOARD.
Please deliver the following message to Rabbi Marcus Ehrenpreis, Stockholm,
from Rabbi Abraham Kalmanowitz of the Vaad Hahatzala Emergency Committee:
QUOTE RECENT SHANGHAI REPORTS ALARMING. INFLATIONARY PRICES
AND SICKNESS ENDANGER EXISTENCE. URGE YOU TAKE FOLLOWING MEASURES
(1) ENDEAVOR SEND FOOD CLOTHING PARCELS MEDICAMENTS TO OUR RABBINICAL
GROUP IN SHANGHAI BY ARRANGEMENT OF SWEDISH AND JAPANESE GOVERNMENTS.
(2) URGE INTERCESSION OF SWEDISH GOVERNMENT FOR OUTRIGHT RELEASE OF
THIS RELIGIOUS RABBINICAL GROUP (3) ENDEAVOR SECURE SWEDISH CITIZENSHIP
FOR ENTIRE GROUP TO FACILITATE RELEASE. WILL SEND YOU ENTIRE LIST.
URGE YOU LEND FULLEST COOPERATION RABBI WOLFE AND COMMITTEE. UNQUOTE
THIS IS WRB STOCKHOLM CABLE NO. 243.
3:45 p.m.
November 8, 1944
176
CABLE TO MINISTER HARRISON, BERN, FOR MC CIELLAND, FROM WAR REFUGEE BOARD.
Please deliver the following message to Isaac Sternbuch, St. Gall,
from Abraham Kalmanowitz of the Vaad Hahatzala Emergency Committee:
QUOTE RECENT SHANGHAI REPORTS ALARMING. INFLATIONARY PRICES
AND SICKNESS ENDANGER EXISTENCE. URGE YOU TAKE FOLLOWING MEASURES
(1) ENDEAVOR SEND FOOD CLOTHING PARCELS MEDICAMENTS TO OUR RABBINICAL
GROUP IN SHANCHAI BY SWISS AND JAPANESE GOVERNMENTS (2) URGE
INTERCESSION OF SWISS GOVERNMENT FOR OUTRIGHT RELEASE OF THIS
RELIGIOUS RABBINICAL GROUP. HAVE CABLED YOU 106,750 SWISS FRANCS
THROUGH POLISH CONSULATE. FORWARD TO RABBI SZMULEWICZ WITH EXACT
INSTRUCTIVE MESSAGE. ADVISE US WHEN RECEIPT CONFIRMED. UNQUOTE
THIS IS WRB BERN CABLE NO. 266.
3:45 p.m.
November 8, 1944
177
PARAPHRASE OF TELEGRAM SENT
FROM:
Secretary of State, Washington
TO:
American Legation, Bern
DATED:
November 8, 1944
NUMBER: 3810
CONFIDENTIAL
Reference is made herewith to your cables of October 18
and 20, Nos. 6902 and 6905 respectively.
Should Venta Sanatorium or similar quarters be rented,
the Swiss should arrange that there be given refuge therein
Jews of United States nationality and their accompanying rela-
tives, whether Americans or aliens. If such facilities have
not been rented, the wiss should see that United States Jews
and their families are sheltered in quarters where all the
rights to which they are entitled can be given them.
We have taken telegraph action.
STETTINIUS
(ACTING)
SWP:EJD:MA
Paraphrase DCR:VAG 11/11/44
Miss Chauncey (for the Sec'y) Abrahamson, Ackermann, Akzin, Cohn, Drury,
DuBois, Friedman, Qaston, Hodel, Lesser, Marks, Mannon, McCormack, Pehle,
Files.
Regraded Unclassified
178
ALH-164
Ankara
This telegram must be
Dated November 8, 1944
paraphrased before being
Rec'd 1:50 p.m.
communicated to anyone
other than a Government
Agency. (RESTRICTED)
Secretary of State,
Washington.
2130, November 8, 4 p.m.
FROM KATZKI TO pehle WAR REFUGEE BOARD. ANKARA'S NO. 181.
According to El report dated October 28 received from William
Fielderman Bucharest to supplement earlier information (see Embassy's
1988, Ankara's 166) thousands of Hungarian Jews have entered Rumenia.
They are located in several cities throughout the country. According to
Fielderman "All are naked all need winter clothing, shelter, food." The
total number of refugees is about 5,000 at this time with others arriving
daily.
In my opinion the influx of these refugees makes urgent the ex-
ploration in Kumanis of possibilities for organizing additional refugee entry
into that country. I would appreciate your advices on the matter (see
Embassy's 1977 Ankara's 165).
Fielderman's report states that 150,000 Rumanian Jews are 8.8 needy
as the refugees. This figure includes 15,000 repatriates from Transnistria
20,000 persons now in the departmental capitals who had been evacuated from
villages and small towns of the provinces, 30,000 persons who have returned
from forced labor battalions who having been compelled to provide their own
clothing are now returning to the cities with their clothing in tatters and
shoes worn out or barefooted. hs the families of these laborers received
no allowances while the men were away they were required to sell everything
in order to live. ¹he laborers and their families would involve upwards
of 90,000 souls.
In several towns houses of Jews have been destroyed. In Jassy for
example, 30,000 Jews are without shelter and without any possibility of
repairing their houses. None of the repatriates or the evacuees have
found any of their furniture even in areas where no bombardments took place.
The houses of the returned Jews are without doors, windows, floors, roofs.
The report states that each (*) hundreds of persons arrive from the
provinces seeking clothing and relief. Fielderman's committee has already
clothed 8,000 persons but he indicated that its limited resources make it
impossible for it to continue the work to the extent necessary. Without
substantial and immediate aid, a great many deaths may be expected this
winter. Typhus is already raging in Moldavia and medicines of all kinds
are lacking.
179
-2- #2130, November 8, 4 p.m. from Ankara
A Jewish community will be formed under the auspices of the Inter-
national Red Cross, whose delegates will follow the armies in order to
search for Jews who have hidden themselves, and to bring aid to them.
Fielderman's report concludes with the statement that a million and a
half dollars are needed for the next months.
For your information, although rights are being restored on paper to
Jewish people in Rumania, few benefits are being received thereunder,
according to other reports in Istanbul. Jews are unable to secure reentry
into their new homes from which they were evicted and must continue to pay
high rents, several families being forced to share one apartment. They
generally are unable to secure repossession of their businesses and even
if they are there are no stocks or raw materials. Realistically they
cannot obtain re-employment in the positions they formerly occupied as this
would involve the displacement of non-Jewish Rumanian employees.
According to all reports the Jews of Rumania have been reduced to
dependence upon charitable assistance. Support from international and private
relief organizations is urgently needed. All private relief agencies here-
tofore represented in Istanbul none of which has funds in amounts necessary
to provide reasonable aid have sent representatives to Bucharest with the
exception of JDC which has not yet secured official permission to do SO. If
JDC's plans include the despatch of an American representative to Rumania
and to Bulgaria, I urge the facilitation of their application.
(*) Apparent ommission.
STEINHARDT
WMB
Regraded
PARAPHRASE OF TELEGRAM SENT
180
FROM:
Secretary of State, Washington
TO:
American Embassy, Chungking
DATED:
November 8, 1944
NO.:
1457
CONFIDENTIAL
For Friedman from Secretary of the Treasury.
A request has been made by the Secretary for you to arrange departure from
Chungking about November 20 to return to Washington for consultation. Adler
will depart for Chungking after you arrive in Washington. Please advise the
Ambassador.
You should make arrangements to stop in India E. week or ten days en route
in order to discuss with Bombay Reserve Bank officials and Gregory and Raisman at
Delhi the possible increase in golá sales for our account.
The foregoing message was repeated to the American Mission, New Delhi, as
our No. 813, and to the American Consulate, Bombay, as our No. 371.
STETTINIUS
(Acting)
FMA:PMcG:rmk
Paraphrased:
DCR:MAS:EFR
11/16/44
Regraded Unclassified
181
NOT TO BE RE-TRANSMITTED
COPY NO.
4
SECRET
OPTEL No. 363
Information received up to 10 a.m., 8th November,
1944,
1. NAVAL
After intensive sweeping Scheldt Approaches,
shallow draught vessels can now reach Flushing.
One ef H.M. Submarines on patrol Malacca Strait
20th October attacked 12 ship convoy sinking 800-ton coaster
and a landing craft and damaging other vessels. The Submarine
also sank two coasters and a barge and sank or damaged three
Junks during her patrol.
Another of H.M. Submarines on patrol East Java
Sea 21st to 26th October sank 14 schooners, four coasters and
an anti-submarine vessel and damaged two schooners' and a
coaster. All ships attacked were heavily laden.
2. MILITARY
WESTERN FRONT. Willemstadt captured and German
resistance south of Maas confined to small bridgehead near
Moerdijk. On Walcheren, Middelburg and Veere captured, Many
prisoners taken in this operation.
ITALY. Poles have captured Monte Casaluda, south
of Forli and held it against determined counter attacks. Troops
of Indian Division occupied Monte Monsignano due east Marradi.
EASTERN FRONT. Finns have captured Ivalo.
Russians admit withdrawal from Goldap.
3. AIR OPERATIONS
WESTERN FRONT. 6th/7th. Coblenz - 513 tons.
Weather clear, bombing concentrated. Mittelland Canal -
attack abandoned owing to difficulty in marking objective.
7th. Weather restricted operations. 706 air-
craft (8 missing) provided close support and attacked railways.
Photographs show attack on Dortmund-Ems Canal 4th/5th success-
ful.
MEDITERRANEAN. 6th, 318 medium bombers des-
troyed four transformers and several bridges Brenner Pass.
763 fighters and fighter bombers (7 missing) attacked communi-
cations battle area.
Regraded Unclassified
182
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
CONFIDENTIAL
DATE November 9, 1944
TO
FROM
Mr. JJ
Secretary Morgenthau
Subject:
The Business Situation,
Week ending November 8, 1944.
Summary
Election: Neither the security nor the commodity markets showed
any pronounced reaction to the election results, except for
some liquidation of low-priced utility issues, and some
advance in cotton and grain prices on an expected continuation
of support programs.
National income: Payments rose less than seasonally in September
and the annual rate of income payments declined to $156.0 bil-
lions from the record high of $157.0 billions in August. The
Department of Agriculture estimates cash receipts from farm
marketings in 1944 at 3 percent higher than in 1943, with a
possible 5 to 10 percent decline in 1945.
Reconversion: Approval of applications to produce civilian
goods under the "spot authorization" program maintained a
fairly steady pace in the latter half of October. By the
close of the month 1,594 applications had been approved,
authorizing production totaling $361,000,000.
Cost of living: Due chiefly to higher prices for clothing and
household furnishings, living costs rose slightly to a new
high in September. The index is now 2.1 percent higher
than a year ago and is 28.3 percent above the pre-war level
of June 1939.
Commodity prices: Commodity prices eased last week, led by
declines in hog and corn prices. The BLS index of 28 basic
commodities was off 0.3 percent, and is now back to the
level prevailing just before the parity purchase program
for wheat and cotton was announced in late September.
Retail trade: Department store sales rose substantially in
October and the FRB adjusted index of sales advanced to a
record high of 196 from 183 in the previous month. The
Department of Commerce estimates that total retail sales in
1944 will be 5 percent higher than in 1943.
Regraded Unclassified
183
- 2 -
Election has little effect on markets
The security and commodity markets showed no pronounced
reaction to the election results this week. Stock prices
continued to move in a narrow range, although some liquidation
appeared in low-priced utility shares, previously bought on
the possibility of a Republican victory. Cotton and grain
markets were firm and slightly higher, reflecting the
expectation that government price support programs will be
continued.
Income payments rise less than seasonally
National income payments continue around record levels,
but adjustments for seasonal factors reveal a leveling off in
the rate of payments since last June. Actual income payments
in September rose to a new high for the year, but the rise was
less than seasonal and the annual rate of payments dropped to
$156.0 billions from the record peak of $157.0 in August. (See
Chart 1.) Government payments for salaries and wages (including
military pay) rose to a new high, but disbursements for salaries
and wages in industry and trade declined slightly.
Cash farm income from crops rose 33 percent in September,
reflecting seasonal influences, but the rise in total farm
income WAB less than usual for the month. Nevertheless, farm :
income was slightly above the previous year's level after
falling behind in August. Cash income from farm marketings
in the first 9 months of 1944 exceeded the 1943 level by 7 per-
cent. The Department of Agriculture recently estimated cash
receipts from farm marketings for this year at $19. E billions,
which would be 3 percent higher than in 1943. The same source
estimates that cash receipts in 1945 may drop 5 to 10 percent,
due to some reduction in marketings and demand.
The customary heavy disbursement of interest and
dividends during September was an important factor in swelling
total income payments during the month. Interest and dividend
payments showed the widest percentage gain over year-earlier
levels of any major income group. (See Chart 1, lower section.)
The major factor in this increase, of course, has been the
mounting interest on the public debt.
Progress of reconversion program
Approval of applications to produce civilian goods under
the WPB's "spot authorization" program maintained a fairly
steady pace in the last week in October, with 316 applications
Regraded Unclassified
184
- 3 -
being approved as compared with 338 in the previous week. By
the end of the month a total of 1,594 applications had been
approved since the program's inception in mid-August. The
total value of production authorized under the program thus far
amounts to $361,000,000 of which $92,000,000 is slated for pro-
duction in the fourth quarter of this year. As in previous
weeks, a majority of the approvals granted in the last week
in October covered small wares in the consumer's durable goods
classification, such as aluminum cooking utensils, metal cur-
tain rods, etc.
A significant development in the reconversion program has
been the issuance of a memorandum by the Chairman of the WPB
outlining the duties of WPB officials under the new War Mobili-
zation and Reconversion Act. Among other features, the memoran-
dum calls attention to the fact that the Act outlaws certain
suggested reconversion procedures which had been advanced in
some quarters, designed to maintain the competitive position
of companies now engaged in war production. The memorandum
points out that under the Reconversion Act "production for
non-war use shall be permitted regardless of whether one or
more competitors normally engaged in the same type of production
are still engaged in the prosecution of the war." Likewise,
newcomers may not be kept out of new fields of production,
since the Act also provides that production "shall not be made
dependent upon the existence of a concern or the functioning
of a concern in a given field of activity at a given time."
Living costs edge higher
Living costs edged upward to a new high in September, due
chiefly to higher prices for clothing and household furnishings.
The BLS cost-of-living index rose only 0.1 percent, a smaller
increase than in previous months, but this increase marked the
sixth consecutive month in which the index has advanced. The
index 1s now 2.1 percent higher than a year ago and is 28.3
percent above the pre-war level of June 1939.
Retail food prices, after having shown a steady rise
since last March, declined moderately in September, as large
supplies and seasonally-lower price ceilings reduced the prices
of apples, onions, and both white and sweet potatoes. (See
Chart 2.) Food prices are now slightly lower than a year ago.
A pronounced rise occurred in clothing prices, which are
now 6.7 percent higher than in September 1943. Most of this
increase has been due to the disappearance of low price line
merchandise, and in the latest month reports were again wide-
spread of scarcity of children's clothing, underwear, house
dresses, work clothing, and other cotton articles. Prices of
household furnishings and miscellaneous charges have continued
their gradual rise.
Regraded Unclassified
185
- 4 -
The cost-of-living indexes of both the United States
and the United Kingdom have moved up to new highs in recent
months, but that of Canada has continued practically un-
changed. (See Chart 3.) Retail food prices in all three
countries have followed a pattern somewhat similar to that
of living costs, with a greater relative rise, but in each
case food prices now are somewhat below their war-time
highs.
In connection with the recent rise in the British cost-
of-living index, the Chancellor of the Exchequer indicated
last April the Government's intention to allow a rise in the
living cost stabilization range from 25-30 percent to 30-35
percent above the pre-war level. The Chancellor stated
that in order to stabilize living costs in the face of a 15
percent rise in wage rates since 1941, the amount spent for
subsidies had to be increased from 70 million pounds in 1940
to 190 million pounds in 1943.
Commodity prices lower
Featured by declines in corn and hog prices, commodity
prices showed an easing tendency last week. The BLS index
of 28 basic commodities declined 0.3 percent, the widest de-
cline in over a year, and is back to the level of late
September. (See Chart 4.) With hog marketings increasing
seasonally, hog prices declined 4.6 percent, dropping below
ceiling levels for the first time in more than 3 months.
Corn prices continued to ease last week on increased
marketings from the 1944 crop, and prices are now reported
to be averaging 8 cents per bushel below ceiling, the widest
margin since ceilings were imposed in March 1943. However,
the price for No. 3 yellow corn, Chicago, the quotation used
in the BLS index, shows only about a 22-cent decline below
ceiling. The weakness in corn prices last week tended to
depress the prices of other grains, but the declines were
small.
The CCC indicated last week that the Government cotton
buying program had started, but no reports were available as
to the amount of cotton purchased. Despite CCC buying, cotton
prices declined moderately and the average price of 15/16-inch
middling cotton in the 10 spot markets is now at practically
the same level as prevailed just before the purchase program
was announced. The price at Memphis last Friday was 21.15
cents per pound as compared with the COC purchase price of
21.95 cents per pound.
Regraded Unclassified
186
- 5 -
Farmers are reportedly selling much of their cotton in
the open market because suitable warehouse space is not avail-
able to permit sales to the CCC. Moreover, in view of the fact
that the Department of Agriculture's farm price index for
October showed cotton prices averaging above parity, it appears
likely that farmers are marketing a larger portion of their
better grades of cotton, the market prices of which are more
nearly comparable to parity and the CCC buying prices than are
the market prices of the lower grades.
Steel scrap prices firm slightly
Steel scrap prices advanced slightly last week following
a downward trend since the end of August. Scrap prices, how-
ever, are still substantially below ceiling levels, with the
Iron Age composite scrap price at $15.75 per ton last week,
as compared with the equivalent ceiling price of $19.17.
In the week ended October 28 the BLS general index of
wholesale prices advanced 0.1 percent, due largely to higher
prices for oats and rye and to seasonal advances for live
poultry and eggs. The index now stands at 103.9 percent of
the 1926 average, which is 1.1 percent higher than a year ago
and is 38.5 percent above the pre-war August 1939 average.
Slight rise in wholesale prices in 1945 foreseen
The possibility of a slight rise in the BLS general index
of wholesale prices next year is foreseen by the Department of
Agriculture in its "Demand and Price Situation," released last
week. Possible declines in prices of farm products may be more
than offset by increases in the prices of other products. The
general stability in the level of commodity prices, however,
which has prevailed in the past year and one-half, is not ex-
pected to be broken by the price changes.
Although the record 1944 farm production and the large
carry-over of certain items into 1945 are likely to cause some
reduction in farm prices next year, according to the Depart-
ment of Agriculture, the decline will be limited by the Govern-
ment's support programs. The commodities covered by support
programs have accounted for about two-thirds of the cash farm
income during the war. Military and lend-lease requirements
for some items are expected to be out back after V-E Day, but
relief demands will tend to maintain agricultural exports,
and a high level of domestic demand next year may continue to
exceed the supplies of some farm products.
187
- 6 -
Farm prices strengthen
Farm prices rose moderately in the month ended October 15,
with the index of prices received by farmers up 2 points to
194 percent of the 1910-14 average. The index is now at pre-
cisely the same level as a year ago, but is more than double
(118 percent higher) that of the pre-war month of August 1939.
On the other hand, the index of prices paid (including interest
and taxes) was unchanged for the fifth consecutive month, and
as & result, the parity ratio advanced 1 point last month.
Farm prices now average 114 percent of parity as compared with
113 percent in September and with 118 percent in October 1943.
Prices of livestock and livestock products were generally
higher last month. (See Chart 5.) Egg prices showed a sharp,
greater-than-seasonal advance and milk and hog prices moved
moderately higher. Wheat and cotton prices rose 5.2 and 1.1
percent, respectively, due largely to the announcement of the
parity purchase program for these commodities. Despite the
rise, wheat prices are still 5 percent below parity but cotton
prices, however, are now 1 percent above parity. Larger
marketings caused a sharp drop in truck crop prices and small
declines in the prices of fruit, feed grains, and tobacco.
Truck crop prices are now at the lowest point since September
1942.
Department of Agriculture releases estimates
of hurricane crop damage
The severity of the damage to the Florida fruit and vege-
table crops caused by the recent hurricane became known last
week when the Department of Agriculture released preliminary
estimates based on & survey made by its field representatives.
Florida grapefruit production was reduced 43 percent and the
orange crop about 19 percent. Since bumper fruit crops had
been expected, citrus production in Florida may still sub-
stantially exceed the 1933-42 average, although it will be
considerably below last year's crop. Severe damage to Florida
vegetable crops was reported.
Due to the hurricane damage, the OPA announced an increase
in country shipper ceiling prices for Florida grapefruit of
81 cents per 1-3/5 bushel box and for Florida oranges of 45
cents per 1-3/5 bushel box, effective November 6. Retail
prices of grapefruit will be raised from 13 to 2 cents per
pound, and prices of oranges around 1 cent per pound. The
price ceilings on Florida snap beans were recently raised
6 cents a pound during November and increases in the price
ceilings of other Florida vegetables are anticipated. These
Regraded Unclassified
188
- 7 -
upward revisions in price ceilings are mandatory under the
Stabilization Extension Act, which requires price adjustments
when crop yields are reduced because of adverse growing condi-
tions.
Price differential hinders sales of domestic wool
Although wool consumption has continued at record levels
this year, most of this has been foreign wool, owing to a price
advantage (tariff included) of about 20 cents a pound. The cco,
the sole buyer of domestic wool, sells fine wools (scoured basis)
at ceiling prices of $1.12 to $1.21 per pound. Little of this
is being used, however, except in military fabrics, in which a
high percentage of domestic wool is called for in Army contracts.
Because of this situation, it is feared that large stocks of
domestic wool may become a serious problem if military require-
ments drop.
In order to eliminate the price differential, the National
Wool Growers' Association is recommending the adoption of the
Hill Plan, suggested by Dean J. A. Hill of the University of
Wyoming. This plan proposes that the Government should (1) take
over all privately-owned foreign wool in this country and become
the sole buyer of any additional foreign wool needed by manu-
facturers, (2) sell the foreign wool on a parity with the
selling price for domestic wool, (3) be the sole buyer of
foreign and domestic wool as long as the British Government
continues its purchase plan, and (4) work out a plan of gradual
price adjustment until the price of domestic wool comes down to
a parity with duty-paid foreign wool.
The Hill Plan has been subject to considerable opposition
from wool dealers and manufacturers, who maintain: (1) that
the 000's price for domestic wool is too high, (2) that the
high price for wool would foster the use of substitute fibers,
and (3) that our tariff protection on finished cloth would
not compensate for the high price of raw wool, and hence the
domestic manufacturer would be threatened with foreign competi-
tion (presumably in the post-war period). Dealers and brokers
fear the plan would eliminate their business.
Recently heavy orders for woolen goods have been placed
by the Army, and by UNRRA, in which the contracts require the
use of a large proportion of domestic wool. These orders will
consume almost half of this year's domestic wool crop, accord-
ing to an estimate of F. E. Ackerman, executive director of the
American Wool Council.
Regraded Unclassified
189
- OR. -
Lend-lease food shipments lower
Lend-lease food shipments in the first 9 months of this
year have constituted a smaller proportion of the total food
supply of this country than in the same period of 1943, accord-
ing to a statement issued by the Foreign Economic Administration
last week. This is partly due, however, to the fact that our
total food supply has been somewhat larger.
Lend-lease shipments still supply about 10 percent of
British requirements, and are a significant factor sustaining
the rations of the Soviet Army. Reverse lend-lease, particularly
from Australia and New Zealand, has continued heavy, supplying
more than 90 percent of the food consumed by our troops in the
South and Southwest Pacific.
Retail trade active
Although department store sales declined in the latter
half of October, sales in the week ended October 28 were still
11 percent above year-earlier levels. (See Chart 6.) Moreover,
heavy buying in the early part of the month raised the FRB
seasonally-adjusted index of sales for October to a record
high of 196 from 183 in September. While sales figures for
last week are not yet available, preliminary reports indicate
that trade continued very active, with Dun and Bradstreet esti-
mating retail sales during the period at 6 to 9 percent above
last year's levels.
Since earlier concern over possible war contract outbacks
and employment dislocations have proved premature, a brisk
Christmas trade is expected, although goods shortages will be
a limiting factor. It 1s uncertain, however, to what extent
Christmas sales may be held down by the forthcoming war bond
drive. Moreover, considerable Christmas buying already has
been carried out in order to meet the mid-October deadline in
shipments to overseas Army personnel, as well as to avoid
shortages which customers fear will develop later in the season.
A recent Wall Street Journal survey of Christmas retail trade
prospects in a dozen big cities revealed increased tangible
evidences of free spending and customer emphasis on quality
merchandise. The Department of Commerce has estimated that
total retail sales this year will rise to a record high of
$67 billions, thus exceeding 1943 sales by 5 percent.
Regraded Unclassified
Chart 180
NATIONAL INCOME PAYMENTS AND COMPONENTS
1939
1940
1941
1942
1943
1944
1945
DOLLARS
DOLLARS
Billions
Annual Rate, by months
Billions
170
170
160
160
150
150
140
140
130
130
120
120
110
110
100
100
90
90
80
60
70
70
AOD F A J A o D F A J A o D F A J A o D F A J A o D F A J A o D F A J A 0 D
1939
1940
1941
1942
1943
1944
1945
Dollar Totals for Selected Components. Sept. 1943 and Sept. 1944
DOLLARS
Billions
DOLLARS
Billions
4.5
4.5
Sept. 1943
Sept 1944
4.0
4.0
3.5
3.5
3.0
3.0
2.5
2.5
2.0
2.0
1.5
1.5
1.0
1.0
.5
.5
0
o
Distributive
Commodity Pro-
Government
Net Income
Dividends
Other Income
and Service
duction Industries
Including
of Proprietors
and
Payments
Industries
(Chiefly Mfg.)
Military
(Includes Forms)
Interest
Solaries and Woges
Source: Department of Commerce
Office of the Secretary of the Trassery
Division of Reserved and -
0-485-8
Regraded Unclassified
COST OF LIVING AND SELECTED ITEMS
June 1939=100
1939
1940
1941
1942
1943
1944
PERCENT
PERCENT
160
160
150
150
Food
140
140
130
Clothing
130
Combined Index
120
120
110
Household Furnishings
and Miscellaneous
110
100
Rent, Light,
and Heat
100
90
J
S
D
M
J
SONDJFMAMJ
90
JAS
ONDJF
A
J
J
A
S
o
D
J
F
J
ONDJF
JJASOND
1939
1940
1941
1942
1943
1944
Office of the Secretary of the Treasury
Source: B.L.S.
Division of Ressarch and Statistics
C-413-8-1
191
Chart 2
Regraded Unclassified
Chart 3
192
COST OF LIVING, U.S., U.K. AND CANADA
August 1939-100
1939
1940
1941
1942
1943
1944
PERCENT
PERCENT
135
Cost of Living
135
U.K.
(Min. of Lebor)
130
130
125
125
120
120
115
115
Canada
(Dom. Bur. of Stat.)
110
110
U.S.
(8. LS)
105
105
100
100
95
95
JASOND
JF
M
JASOND
PERCENT
PERCENT
155
Foods, Retail
155
150
150
145
145
140
140
135
135
130
130
U.K.
(M/n. of Labor)
125
125
Canada
(Dom Bur. of Stat.)
120
120
115
115
U.S.
(B.L.S.)
110
110
105
105
100
100
95
95
J
1939
1940
1941
1942
1943
1944
Office of the Secretary of - Insury
Date of - - -
C-486-A
Regraded Unclassified
WHOLESALE COMMODITY PRICES
1943
1944
PERCENT
PERCENT
WEEKLY
1926=100
106
106
105
105
104
104
889 Commodities. B.L.S.
103
103
102
102
28 Basic Commodities. B.L.S.
101
101
100
JUNE
100
AUG
OCT.
DEC.
FEB.
APR.
JUNE
AUG.
OCT.
DEC.
1943
1944
SELECTED BASIC COMMODITIES
Percentage Change December 6, 1941 to Oct27 and NOV.3. 1944
PERCENT
+100
Resia 102.4%
+80
Beriey 67.9%
193
Flexased 67.3%
+60
Care 536%
+40
40.9%
Hogs 390%
Steers 310%
Lard 20.8%
Caffee 22.2%
Butter N.O%
+20
Print Claim 10.5%
Cofference or 87%
Super 7/%
I The 3.9%
o
Wide 0%
Totler -4.7%
-20
Des 6.
Oct 22
Nov3,
IS41
1944
1944
Office of the Secretary of the Trumpy
Chart 4
- of - and -
P-202 P-
Regraded Unclassified
AVERAGE PRICES RECEIVED BY FARMERS
Indexes, August 1909-July 1914=100
PERCENT
PERCENT
All Form Products
225
225
1944
200
200
1943
175
175
150
150
125
125
1941
100
100
J
F
M
A
M
J
J
A
S
o
N
D
PERCENT
PERCENT
PERCENT
Truck Crops
Feed Grains
Fruit
350
200
225
1944
325
175
200
1944
1943.
300
150
175
1943,
275
125
150
1941
250
100
125
1944,
1941
225
75
100
J F M A M J J A S o N D
1943
225
200
Cotton
75
200
175
50
1944
J F M A M J J A s 0 N D
175
250
150
Meat Animals
1941
150
1943
225
125
125
200
19451
1941
100
1944
100
175
75
J F M A M J J A $ o N D
75
150
J F M A M J J A $ o N D
1941
194
225
225
Food Grains
Poultry and Eggs
125
J F M A M J J A S o N D
200
200
250
1943
1944
Dairy Products
175
175
225
1944
150
150
1944
200
1943
1943
125
125
175
1941
1941)
100
100
150
1941
75
75
125
J F M A M J J A S 0 N D
J F M A M J J A 5 o N D
J F M A M J J A S o # D
Chart 5
Other of the Secretary of the Treasury
of Research are
P-257-8
Regraded Unclassified
Chart 6
195
DEPARTMENT STORE SALES
1935-39 B 100, Unadjusted
PERCENT
PERCENT
320
320
Weekly
300
300
280
280
260
260
240
240
220
220
11944
200
200
1943
180
180
160
160
140
140
120
120
1942
100
100
80
80
JAN FEB. MAR. APR. MAY JUNE JULY AUG. SEPT. OCT. NOV. DEC.
Office of the Secretary of the Treasury
Division of Research and Statistics
C-390-C-I
Regraded Unclassified
196
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE
NOV
9
1944
TO
Secretary Morgenthau
FROM
Mr. Haas MA
Subject: Recent Developments in the High-Grade Security
Markets; New British 1-3/4 Percent Bond
I. Recent Government Security Price Movements Mixed
The improvement in the market for taxable Government
securities, which set in after the close of the Fifth War
Loan drive, continued until the third and fourth weeks of
September during which most taxable issues reached their
highs for the year. About half of this rise was lost during
the closing days of September and the month of October, but
prices have been firm during the last week. Changes on the
day following the election were negligible. The whole move-
ment of the market in taxable securities since the Fifth
War Loan has been of very moderate extent. Announcement of
the Sixth War Loan basket, on October 6, had no appreciable
effect on the market, indicating that the issues to be offered
were in line with expectations.
The partially tax-exempt issues, on the other hand, have
registered marked declines since the close of the Fifth War
Loan. Losses average 20/32 in the case of issues not due or
callable for five years or longer. Most of the issues in
this maturity range reached their lows for the year at about
the same time that the taxables were selling around their
year's highs, but they have since recovered a substantial
part of their losses. The weakness in the partially tax-
exempts has been attributed by financial writers to current
discussions of tax revision, particularly with reference to
the corporate normal and surtax rates.
The called 4 percent bonds are currently quoted at 4/32
in excess of a zero yield. This indicates a probable premium
of about 5/32 or 6/32 on the 2's of 1952-54, into which it
seems probable the bulk of the exchanges of the 4's will go.
II. Excess Reserves Hold Close to $1 Billion
Excess reserves of member banks on November 1, the most
recent weekly report date for which figures are available,
amounted to $921 millions (Chart I). The volume of excess
Regraded Unclassified
197
Secretary Morgenthau - 2
reserves has fluctuated around an average level of about
$900 millions following its decline from the temporary peak
during the Fifth War Loan.
Since excess reserves were at their high in connection
with the Fifth War Loan, on July 12, it has been necessary
for the Federal Reserve Banks to increase their holdings of
Treasury bills by $2,717 millions, and their holdings of other
Governments by $72 millions, in order to maintain member bank
reserves. In addition, member bank borrowing from the Federal
Reserve Banks increased by $312 millions during the same period,
and now stands at the highest level since 1933.
Temporary relief to bank reserves will come in a few
weeks as funds invested in War Loan securities are transferred
to War Loan accounts. After the drive, however, the pressure
on reserves may be expected to resume.
At the latest report date, November 1, the reserve ratio
of the Federal Reserve Banks -- which measures the statutory
ability of the Reserve Banks to provide the market with funds --
stood at 51.2 percent. At this level it is approximately 14
percentage points above the legal minimum; but the "policy"
minimum, below which it would be inadvisable to let the ratio
fall without legislative relief, is somewhat closer.
III. Corporate and Municipal Bonds Below Recent Highs
High-grade corporate bonds continue to fluctuate within
& narrow range, but are now somewhat below the highs registered
early in October. High-grade municipals have fallen back from
the all-time high prices reached at the beginning of August,
the price declines being equivalent to a rise of 10 basis
points in yield.
IV. Corporate and Municipal Financing Between Fifth
and Sixth War Loans About $1-1/2 Billions
Earlier Wall Street estimates that the volume of finanoing
between the Fifth and Sixth War Loans would amount to a billion
dollars appear now to have been overly modest. Figures avail-
able at present indicate that public bond flotations during
July, August, September, and October totaled $1,550 millions
(Chart II). The volume of offerings for October is reported
by the New York Times as $680 millions, which, according to
its records, 18 greater than for any month since April 1936.
Regraded Unclassified
198
Secretary Morgenthau - 3
The large bulk of the issues offered have been refund-
ings to take advantage of prevailing low interest rates.
Such offerings, of course, do not compete with the war loans
for new capital. The strong condition of the capital market
which these refundings reflect is further evidenced by the
speed with which most of the issues offered have been taken
up.
V. New British Treasury Tap Security Offered
Sir John Anderson, the British Chancellor of the Exchequer,
on October 31, announced a new Treasury issue to be offered
after November 6, in place of the 2-1/2 percent National War
Bonds, 1952-54. The new security, a 1-3/4 percent Exchequer
bond maturing February 15, 1950, represents a distinct departure
from the previous war finance technique in Britain.
Since the outbreak of the war in September 1939, the
public new money market issues of the British Treasury have
been confined exclusively to:
(1) 3-month Treasury bills yielding approximately
1 percent;
(2) 2-1/2 percent National War Bon'ds (tap) -- five
issues, with first call dates ranging from
5 to 8-1/2 years from the date when first
offered;
(3) 3 percent Savings Bonds (tap) -- three issues,
with first call dates ranging from about
14-1/2 to 21 years from the date when first
offered;
(4) 3 percent War Loan, 1955-59, a nontap offering
issued in March 1940.
(In addition, banks have subscribed to 1-1/8 percent
6-month Treasury deposit receipts.)
The new issue has a maturity approximately the same as
the term to earliest call date of the first of the tap 2-1/2's.
On subsequent issues of the 2-1/2 percent tap bonds the maturity
Was gradually extended. The new issue appears to constitute a
marked change in the pattern of interest rates applicable to
new government securities, although this aspect of the matter
was de-emphasized by the Chancellor in his remarks announcing
the new issue. Chart III shows the interest rate curve on
issues available for purchase from the government as it existed
Regraded Unclassified
199
Secretary Morgenthau - 4
Just prior to the discontinuance of the 2-1/2 percent National
War Bonds, 1952-54, and also the curve resulting from the sub-
stitution of the 1-3/4 percent Exchequer bonds for the 2-1/2
percent issue. These curves are compared with the pattern of
interest rates on new offerings of Government securities in
the United States, as represented by the rates on the issues
to be offered in the Sixth War Loan and the ourrent rate on
Treasury bills. The several issues upon which the comparison
is based are identified in the attached table.
The Chancellor, in announcing the new British Treasury
issue, stated that the discontinuance of the 2-1/2 percent
National War Bonds, 1952-54, was in accordance with the Treasury
policy of replacement whenever the outstanding amount of an
issue on "tap" reached a certain level. Subscriptions to the
five issues of National War Bonds have been as follows:
Issue
Millions of pounds
1945-47
444
1946-48
493
1949-51
714
1951-53
522
1952-54
700 (approx.)
Thus, subscriptions to only one other issue have been allowed
to reach as high a level as that attained by the recently
discontinued 1952-54 issue.
It was stated further that it was contemplated that the
new 1-3/4 percent bond would remain on tap for only a few
months and that it would be replaced by another issue of the
type of the National War Bonds.
Attachments
Regraded Unclassified
200
Chart I
MEMBER BANK EXCESS RESERVES
1943
1944
1945
DEC.
FEB.
APR.
JUNE
AUG.
OCT.
DEC.
FEB.
APR.
JUNE
AUG.
OCT.
DEG
FEB.
APR.
JUNE
DOLLARS
DOLLARS
Billions
Billions
2.8
2.8
2.4
2.4
2.0
2.0
All Member Banks
1.6
1.6
1.2
1.2
.8
.8
.4
.4
0
o
.8
.8
.4
.4
New York City Banks
o
o
-.4
-.4
.4
4
Chicago Banks
o
0
-.4
-.4
DEC.
FEB.
APR.
JUNE
AUG.
OCT.
DEC.
FEB
APR.
JUNE
AUG.
OCT.
DEC.
FEB.
APR.
JUNE
1942
1943
1944
1945
Office of the Secretary of the Treasury
F-251-C
Divisire of Research and Ratistion
Regraded Unclassified
Cha
II
TOTAL DOMESTIC BOND FLOTATIONS
(EXCLUDING FEDERAL)
DOLLARS
DOLLARS
Millions
Millions
Total Excluding Federal Government
800
and Federal Agency
800
700
{
Refunding
Total
New Capital
700
600
600
500
500
400
400
300
300
200
200
100
100
o
o
1930
1931
1932
1933
1934
1935
1936
1937
1938
1939
1940
1941
1942
1943
1944
700
700
Domestic Corporate
600
600
201
500
500
400
400
300
300
200
200
100
100
0
o
1930
1931
1932
1933
1934
1935
1936
1937
1938
1939
1940
1941
1942
1943
1944
400
400
State and Local
300
300
200
200
100
100
o
1930
1931
1932
1933
1934
1935
1936
1937
1938
1939
1940
1941
1942
o
1943
1944
Office of the Secretary of the Treasury
Droper d - - Signature
Regraded Unclassified
202
Chart III
CURRENT INTEREST RATES ON NEW MARKETABLE GOVERNMENT SECURITIES
IN THE UNITED STATES AND THE UNITED KINGDOM*
Yield at Issue Price to Maturity or First Call Date
PERCENT
PERCENT
3.2
3.2
2.8
2.8
U.K.
Discontinued 2½%
2.4
2.4
U.S.
2.0
2.0
New
13/4%
*
1.6
1.6
1.2
1.2
.8
.8
.4
.4
o
o
I 2 3 4 5 6 7 8 9 IO II 12 13 14 15 16 17 18 I9 20 21 22 23 24
YEARS TO FIRST CALL DATE
*Includes British Treasury deposit receipts
Office of the Secretary of the Treasury
Division of Research and Statistics
F-354
Regraded Unclassified
203
Current Interest Rates on New Marketable
Government Securities in the United States
and the United Kingdom
: Term to :
Issue
: first :
Rate
:
call
:
(percent)
United States
Treasury bills
3 months
0.375
Certificates of indebtedness
1 year
0.875
1-1/4 percent Treasury notes, 1947
2 years-
9-1/2 months 1.25
2 percent Treasury bonds, 1952-54
OR years-
1/2 month
2.0
2-1/2 percent Treasury bonds,
1966-71
21 years-
3-1/2 months 2.5
United Kingdom
Treasury bills
3 months
1.0
Treasury deposit receipts
6 months
1.125
1-3/4 percent Exchequer Bonds, 1950
(new issue)
5 years-
3 months
1.75
2-1/2 percent National War Bonds,
1952-54 (discontinued issue)
7 years-
4 months
2.5
3 percent Savings Bonds, 1965-75
20 years-
9 months
3.0
Not marketable; offered to commercial banks.
Regraded Unclassified
204
Form FEA 75
FOREIGN ECONOMIC ADMINISTRATION
11/9/44
Date
Referred for action checked to
SECRETARY MORGENTHAU
Approval
Note and file
Attention
Previous correspondence
Comment
Recommendation
Consideration
Record
Correction
RUSH
Filing
Reply for signature of
Initials
Memorandum
Bee me
Note and forward
Signature
Note and return
To be rewritten
REMARKS:
FRANK OE
(Initials of sender)
Use revente side If necessary
SPO 16-25817-8
205
CCLL
U.S.No.36
TOP SECRET
COPY NO. 14
SECOND SUPPLEMENT TO THE STATEMENT OF BRITISH
REQUIREMENTS IN THE FIRST YEAR OF STAGE II
CONTENTS
I. Revised estimate of balance of payments
between U.K. and U.S. in 1945 (Non-
Munitions).
II. The scope for exports from U.K. to U.S. in 1945.
III. A further note on the Lend-Lease eligibility
of certain machine tools and manufactured
articles for civilian end-use.
IV. A second supplementary statement of items
suitable for Chapter 3.
V. A revised statement of the aggregate of
British Lend-Lease requirements in the
light of decisions up to November 6th,
1944.
Washington, D.C.
8th November, 1944.
Regraded Unclassified
206
TOP SECRET
COPY NO. 14
I.
REVISED ESTIMATE OF THE BALANCE OF PAYMENTS
BETWEEN U.K. AND U.S. IN 1945 (NON-MUNITIONS)
1.
The table on Page 10 of Annex & of the
Statement of Requirements has been revised in
accordance with the suggestions of the Ameri-
can Group by dividing the requirements under
the several headings into three categories,
namely:-
(1) those which have been asked for on
Lend-Lease terms, excluding the
items in Chapter 3;
(11) payments in the United States for
which cash is required on the present
basis (1.e. including items at present
in Chapter 3);
(111) certain dollar expenditure in third
countries included as U.S. expenditure
in the previous table (part of which
is also included in Chapter 3).
Also, a further break-up is provided of certain
items.
2.
This amended statement has also provided
the opportunity to include certain revisions,
some of which have been previously reported.
Regraded Unclassified
U.K.-U.S. Balance of Payments 1945 (Non-Munitions)
207
3. Requirements.
$ Millions
Head
U.S. L/Lease
U.S. Cash
Dollar Expend-
iture in Third
Countries
1. Food
Civilian
774*
4
81
Caribbean
(Essential 01ls
Sugar
71
Vitamin A 011s)
Icelandic
prod.
10
2. Food,
UK Forces
219
14
-
(Naafi 9
Pickles etc for
the forces 5)
3. Materials
222
40
-
(Chemicals
and misc.
28
Misc. Metals
6
Abrasives
2)
4. Oil
353
54
54
(Venezuelan
(011 mainten-
(crude 30
ance equipment
(0ilfield
14
(expenses24
Capital equip-
ment 40)
5. Tobacco
59
90
-
6.
Other Imports :
23
125
-
(Machine tools 30
Industrial Eq. 20
Hand tools etc.10
Spare parts
15
Other misc.
imps.
50)
7. Shipping
877
125
-
(as explained
in Chapter 3)
8. Interest etc.
-
60
-
9. Other payments
-
280
-
(Films
72
Missions in
U.S.
60
Emigrant
Remittances
(Eire)
32
Travel
Insurance
etc)
10. Exports from U.K. on
Reciprocal Aid (incl. -
20
in exports below)
2522 *
812
135
*
Excludes $2 millions for the Colonies.
Receipts
11. Exports (f.o.b.)
120
12. Interest etc.
40
13. Income from pay of U.S.
troops in U.K.
60
14. Unidentifiable
260
480
Cash Receipts expenditure in US
812
480
Cash deficit: 332
(For notes on these figures see Regradedlunclassified
208
NOTES
(a)
Item 10. An entry in respect of exports on Reciprocal
Aid appears for the first time. It was found on further investi-
gation that benzol and coal tar acid which are given on Reciprocal
Aid had been included in the estimated figure of 120 for U. K.
exports to the U.S. in 1945. It is, therefore, necessary to off-
set this item on the receipts side, since it will not in fact
bring in cash.
(b)
The above table mainly represents items of account with
the U. K. proper. But there are certain 1tems relating to the
rest of the Sterling Area which it has become normal for us to
include in this table, particularly certain items relating to oil
and shipping and immigrant remittances from Eire.
(c)
In the previous statement there was double counting af-
fecting certain dollar expenditure in third countries, which was
included both in the table on Page 10 and in the table on Page 14.
On the other hand, there was also a substantial item of double
counting the other way, inasmuch as the income from the pay of
U.S. troops in U.K. was included both on Page 10 and on Page 14.
(d)
The British Group were asked to examine whether the es-
timate of receipts of $120 millions from exports to U.S. in 1945
was suffaciently high. This matter is fully discussed in a sep-
arate section below. Further examination appears to justify the
figure already given.
4.
On the above basis, the table as given on Page 14 of
Annex A of the British Statement of Requirements should be revised
as follows:-
Rest of Sterling Area
U.K. cash deficit with
earnings from U.S. Forces
200
U.S. (see above table)
332
Dollar receipts from 3rd
countries(Russia&Spain)
17 Rest of Sterling Area
100
deficit
Net receipts of gold
160
Dollar payments to 3rd
135
countries, as shown in
377
table above
Estimated reduction of
Refunds of U.S. dollars
reserves
303 to Canada
63
Increase in gold liabil-
ities
50
680
680
Regraded Unclassified
209
NOTES
(a)
The reduction of reserves as now estimated at 303 compares
with a reduction of 298 previously given (355 in the original state-
ment reduced by 58 as reported in the supplementary statement).
(b)
Discussion with the American Group indicates that the es-
timate of 200 for Sterling Area receipts from U.S. Forces, after
allowing for sales of gold on behalf of U.S., may be over-estimated.
(c)
The estimate of net receipts for gold assumes gross pur-
chases of $290 millions (South Africa $210 millions, other countries
$80 millions) as against total gold sales of $130 millions. The es-
timate of gold purchases from South Africa is based on the amount of
the assumed deficit on current account in 1945 between South Africa
and the United Kingdom, and does not assume any special receipts,
such as were received in 1944. No allowance has been made for any
exchanges of dollars for gold, which, of course, leave the total
feserve of gold and dollars unchanged on balance. The estimated
gold sales of $130 millions assume that the agreements with third
countries necessitating gold payments operative in 1945 will be of
similar effect to those operating in the third quarter of 1944.
Negotiations have, however, been initiated with a view to reducing
the burden of such gold sales, though such alternative arrangements
will mean a corresponding increase in the external obligations of
the U.K. No allowance is made for possible receipts of gold from
the Western European Allies. The estimate also assumes that there
will be no further gold sales on U.K. account in India or the Middle
East.
(d)
The increase in the gold liabilities assumes that there
will be no change in our present arrangements with Portugal, etc.
But here also negotiations will be entered upon shortly with a view
to making better arrangements.
5.
The best hope for an improvement in the above position is
offered by the prospect of revised arrangements with neutral coun-
tries, which now require payment in gold or gold liabilities, though,
as pointed out above, the revised arrangements, if successful, will
involve an increase in the growth of British overseas obligations.
As against this, the assumed earnings from U.S. Forces in the above
tables may be optimistic. The most dangerous item, however, is the
estimate of $100 millions for the deficit of the rest of the Sterling
Regraded Unclassified
210
Area. Further research indicates that this figure is almost certain-
ly too optimistic. In the last quarter of 1944 it is believed that
this deficit was running at an annual rate of $160 millions. This
figure will almost certainly become worse as shipping and goods are
more easily available, unless there is much more stringent restric-
tion than hitherto on the use of dollars by the rest of the Sterling
Area. The position would, however, be eased if additional Lend-
Lease assistance were given to Australia, New Zealand and India in
respect of certain requirements of those countries which are at
present excluded from lend-lease under the rulings as to end use
and for other reasons. Details of such requirements are being com-
municated separately.
6.
In a recent telegram, the Bank of England adhere to the
estimate of a total reduction of reserves in 1945 of $355 millions,
as shown on Page 6 of the original statement. This figure is the
result of more recent work than the original versions of the balance
of payments on Page 10 of Annex A. We have no itemised details other
than those given above which lead up to the figure of $303 millions
shown above. Nevertheless $355 millions is still believed in London
to be a better guide to the probable order of magnitude of the loss
of reserves on the various assumptions set forth above. Having regard
to the probable inadequacy of $100 millions as the estimate of the
deficit of the rest of the Sterling Area, and the complete absence
of any provision for unforeseen contingencies, it is improbable that
we can get nearer to the prospects than by an estimate for the reduc-
tion of reserves of some figure between $300 and $400 millions
subject always to the various qualifications and assumptions men-
tioned above, and to the reservations already emphasised arising out
of the inevitable precariousness of any such forecast. This could
mean a total reduction in the reserves of between $500 and $600 mil-
lions from the figure at the end of August 1944.
Regraded Unclassified
211
TOP SECRET
COPY NO.
4
II. U.K. EXPORTS TO U.S.A. IN 1945
Annex A, paragraph 12, in "British Requirements for
the first year of Stage II" gives in the forecast of the U.K.
prospective balance of trade in 1945 of the probable earnings from
exports as $1,740 m. for all markets and $120 m. for the U.S.A.
(see table - item 12).
Some surprise has been caused by the fact that although
exports to the U.S.A. have been running at the rate of about $80 m.
per annum, the estimate for 1945 for this market is only 50%
higher than previously, whereas the increase for all markets is
about 80%.
The following table shows the principal U.K. exports
to the U.S.A. in 1938 and recently :-
($ millions f.o.b.)
1938
1943
1944
Remarks
TOTAL
of which:-
81.0
77.0
79.0
(U,K, Trade Accounts
Group Headings)
Beverages and cocoa
preparations
22.8
24.8
17.0
All whiskey
Other food
1,6
-
-
Wool, raw and waste,
and woollen rage
3.2
-
-
Silk, raw and waste
and artificial silk
waste
2,0
-
-
Hides and skins,
undressed
.4
4.0
5.4
War time trade
Pottery, glass,
abrasives, etc.
1.6
2.8
2.9
Mainly pottery
Non-Ferrous metals
and manufactures
thereof
2.8
-
1.1
Cutlery, hardware,
implements and
instruments
.8
1.6
1.7
Machinery
2.4
2.0
2.9
Woollen and worsted
yarns and manufactures
4.0
4,0
1,5
Manufactures of other
textile materials
8.0
5.0
3.4
Excludes cotton,
woollens, silk and
artificial silk.
Regraded Unclassified
212
($ million f.o.b.)
1938
1943
1944
Remarks
Apparel
2.0
1,2
.8
Chemicals, drugs,
dyes and colours
3.7
15.2
15.0
All benzol etc. on
Reciprocal Aid.
Leather and manufactures
thereof
2.8
1.2
.7
Paper, cardboard etc.
.8
1,2
1.3
(NOTE: Items amounting to less than $1 m. have
been omitted. They amount to about a
quarter of the total).
Two items in the particulars call for special mention:
(1) $15. million of benzol etc. is recorded as an export,
although no dollars are received, since supply is
made on Reciprocal Aid terms. (This figure is lower
than the equivalent value of the programme figure,
which would be rather more than $20 million).
(11) Whiskey accounts for $17 million in 1944, No increase
in exports is thought to be likely owing to the fact
that little or no distilling has taken place during
the war years.
In estimating the probable increase to exports to
U.S.A. in 1945, the Board of Trade have therefore assumed an
equal increase in all other items approximately equal to that
forecast for all other markets, as follows :-
Forecast Approximate percentage
1944
1945
increase 1945 over 1944
$ million
$ million
U.K. exports to all
markets
(non-munitions)
960
1,740
80
to U.S.A. :-
All other items
47
83
80
Whiskey
17
17
nil
Total for cash
64
100
60
Reciprocal Aid items
15
20 (programme figure)
Total Recorded Exports 81
120 (as given in balance of
payments table)
The fact that other traditional U.K. markets have had
to be kept short of U.K. exports during the war makes it very
difficult for the U.K. to contemplate directing & greater share
of the increase to the U.S* market than is represented by above
figures. Indeed, it will be with some difficulty that we shall
Regraded Unclassified
213
achieve parity in our increase to the U.S. with the increase
proposed for other markets - in itself a very high target indeed
for the first year of Stage II. Apart from whiskey our traditional
exports to the U.S. consist of certain high priced specialities,
e.g. pottery, woollen textiles and apparel. In these classes
of consumer goods the U.K. consumer has been kept, during the
war, at a volume of consumption far below that needed for
normal replacements and in order to give the home market the
essential extra supplies and to increase our exports, it will
be necessary for us, at least in the first year of Stage II,
to concentrate largely on the "utility" types which give a high
output per man employed. These are not the types likely to
find favour with U.S. consumers and to that extent our increase
in exports to this market might be expected to fall below
that to other markets rather than the reverse.
Regraded Unclassified
214
TOP SECRET
COPY NO. 14
III, PROPOSED RESTORATION OF MACHINE TOOLS TO LEND-LEASE
ELIGIBILITY
1.
We have assumed total estimated value of machine tools,
other than hand tools, to be procured for the U.K. in 1945 under
Stage II conditions to be $30 millions. This figure is probably
somewhat Inflated, the current rate of procurement being about
$22 millions a year. $30 millions was the figure envisaged last
March and for the sake of safety we have not altered it. Latest
indications are, however, that the rate of procurement is likely
to decline slightly rather than increase. For the purpose of
these discussions, however, it is suggested that the figure of $30
millions be retained.
2.
of the $30 millions over 95% say $29 millions,
represents tools required for the manufacture of munitions in the
U.K. The largest part of this total consists of machines required
for the production of aircraft. Other important elements are
machines for naval equipment, other large machines for munitions
purposes, components and parts for American machines now working
on munitions in the U.K., portable tools (electric and pneumatic),
and precision tools, all required for munitions purposes.
3.
Nearly 90% of the machines required for munitions pur-
poses are of a special kind which cannot be made in the U.K., the
value of these tools is estimated on the above basis at just over
$25 billions. All the tools procured for non-munitions purposes
are also of specialized U.S. types. A few items which are also
manufactured in the U.K. are procured here because U.K. capacity
is insufficient; all these are tools for munitions purposes. It
is unlikely that we should export these whilst this pressure on
U.K. capacity continues. It is accordingly estimated that tools
required for munitions purposes, not involving export questions,
can safely be put at $27 millions.
4,
We should not forget that our general proposals con-
template that a number of items which We presently secure on Lend-
Lease may in Stage II be procured for cash, In the case of manu-
factured goods, the value to be transferred has been estimated
Regraded Unclassified
215
project of securing coal in the U.K. by opencast mining has been
encouraged and facilitated by the U.S. Government from the outset,
and machinery was furnished at the end of 1943 and early in 1944
under the highest military priority. The equipments then supplied
were practically all used machines and it was therefore to be
expected that a considerable quantity of spares would be required
at an early stage.
2.
The importance of securing increased coal production in
the U.K. is well recognized and the U.K. is endeavouring to
furnish up to 20 millions tons of opencast coal to Europe as a
result of the programme.
3.
The whole of the $5 millions will consist of spare
parts of various kinds, including spare parts for tractors,
excavators, scrapers, etc., and also general supplies for the
maintenance of the project, e.g., rope, chain, buckets. The
spare parts included in this requirement are of special American
types not made in the U.K. As regards maintenance supplies, e.g.
buckets, rope and chain, similar material can be made in the U.K.,
but present capacity does not provide sufficient and supplies must
be obtained from the U.S. The proportion of this latter group is
approximately 20%.
Agricultural Machinery
1.
This requirement must be looked upon as part of a
combined effort to solve the general food problem. The programme
of $5 millions, which is a good deal less than that of previous
years, is for machinery required in the latter part of 1945 to
be used in the 1946 crop year. It is an essential part of the
programme for enabling the U.K. to achieve maximum agricultural
production with a view to meeting its own food needs and to
relieve pressure which would otherwise come upon the U.S.
2.
The programme contains no wheeled tractors since the
quantities already supplied are deemed sufficient. $3# millions
out of the $5 millions consist, however, of spares for tractors
and other American equipment already sent to the U.K. for food
production purposes. Just over $1 million in the programme is
Regraded Unclassified
216
at $10 millions, but with the inclusion of raw materials the
figure will be considerably larger. The proposed resumption of
Lend-Lease on machine tools can thus be regarded as an offset
against these transfers to cash procurement.
5.
The question of ultimate convertibility to non-munition
uses must also be considered. It is estimated that 70% to 75%
of the value of the larger units could be converted, whilst 15%
of the whole would be regarded as consumable. In all some $12
millions out of the total value of $30 millions will not be
converted. The tools when converted by retooling or modification
will undoubtedly be required for British post war industry. On
the other hand, the U.S. right of recapture remains and, in the
event of it being decided that the U.K. can take over the tools
for industrial purposes, it is thought that an arrangement with
the U.S. Authorities could be effected as has been done tentatively
already in the case of the tools previously acquired on Lend-Lease
terms.
6.
This takes us to a point which has been raised as to the
relation of the proposal now under discussion to the terms tenta-
tively agreed between Sir Percy Mills and the U.S. Authorities at
the beginning of the present month. It is not desired that that
tentative agreement should, in any way, be affected adversely by
the present proposal. It should be observed that the tentative
agreement itself contemplated that there would be a few machine
tools procured under Lend-Lease after the date on which the agree-
ment became operative, and these few items would, in any case, be
outside the Mills' agreement. It is true to say indeed that the
Mills-Mason Britton negotiations help the present proposal in so
far as they showed how an agreement can be reached ultimately
where machines originally supplied for munitions purposes are
required by the U.K. for non-munitions industry. What we are in
effect asking for is that the munitions or military portion of the
user of these machine tools be granted to us on Lend-Lease.
Opencast Mining Machinery
1.
-
The circumstances in which this requirement is put for-
ward are well known to the American Agencies concerned. The
Regraded Unclassified
217
for crawler tractors (tractors on tracks, not wheels), and the
balance of $500,000 is made up of harvester-combines and special
equipment to increase the utility of the American made tractors
now being used in the U.K.
3.
It can be said definitely that all these are special
American equipments which are not made in the U.K. So far as we
are aware, no similar equipments are made in the U.K. even of
somewhat differing types.
Civilian Tires
$1 million has been included in the Lend-Lease programme
for tractor maintenance tires and other essential civilian tires
not made in the U.K. The tractor maintenance tires are for
agricultural equipments and should be regarded as part of the
agricultural production programme. The miscellaneous civilian
tires, including bus tires, are now confined, so far as the Lend-
Lease programme is concerned, to types and sizes not manufactured
in the U.K. Any other civilian tires will be procured for cash.
Regraded Unclassified
218
TOP SECRET
COPY NO. H
IV SECOND SUPPLEMENTARY STATEMENT OF ITEMS SUITABLE FOR
CHAPTER 3.
A. ADDITIONAL ITEMS FOR LEND-LEASE
1.
Cutting Tools. Types not made in the United
Kingdom.
$250,000
2.
Machinery required for emergency housing
programme. Power presses, etc.
$930,000
B. ADDITIONAL CLAIMS, etc.
1.
We still hold in the United States, a number
of machine tools and other facilities. Of the total
cost of $25 millions, $10 millions are under option to
sell to user plants. It is suggested that the U.S.
Government might take over these tools and facilities,
paying us at "Clayton formula" rates. If this were
done the U.S. Government would of course take over all
our rights, subject of course to the options; subjet
to valuation we provisionally put this at
$8,000,000
2.
Sale of Buildings to Packards. Previous
to Lend-Lease, we erected buildings on land owned by
Packards at a cost of $51 million. The buildings are
now used by Packards for the manufacture of aero engines.
Packards have now offered (and we are prepared to accept)
$200,000 for these buildings. The U.S. Treasury,
however, have asked that this money be held
"in suspense".
$200,000
3.
Savage Arms. This is a claim for $684,000
being the balance of approximately $1,350,000 re-
presenting expenditure under our contract with Savage
Arms, which was taken over retroactively by the U.S.
War Department under the "Take-Out Arrangements" in
1941. $675,000 was recovered, leaving the balance
of $684,000 which the U.S.W.D. would have paid us but
it was hold up by the U.S. Controller-General who held
the arrangements were tantamount to loan of money
prohibited by Johnson Act.
$684,000
Regraded Unclassified
219
4.
Tennessee Powder Company, Chicknsaw Plant.
in connection with the take-over by U.S.W.D. of
our contract with DuPont's an arrangement for mutual
cancellation of certain claims was made under a letter
signed by Brigadier General R.E. Hardy, dated
November 14th, 1942. This provided that the War
Department would assume liability for certain pay
accrued prior to the take-over and in return we
would not claim for certain inventory which they
had taken over. The amount of the former is app-
roximately $292,200. The U.S.W.D. whilst not dis-
puting that we have a claim, have suggested that it be
be satisfied by & reverse Lend-Lease credit.
$292,000
=
Regraded Unclassified
220
TOP SECRET
COPY NO. 14
V. NOTE ON PRESENT POSITION OF DOLLAR VALUES OF STAGE II LEND-LEASE
(N.B. Direct Dominions and Indian Requirements are
excluded throughout)
1.
We were asked to circulate a note giving a comparison
between the present position, in the light of (1) Discussions with
the U.S. Departments (11) modifications in our programmes (includ-
ing revisions of price assumptions) and the statement of our
requirements as first communicated to the U.S. Authorities.
A. MUNITIONS
$ Billions
(1) ORIGINAL SUBMISSION
2.
NAVY
.416
GROUND ARMY
U.S.W.D. .769
F.E.A.
.077
.846
AIR
1.832
TOTAL OF MUNITIONS
3.094
3.
The above figures excluded any allowances for
spot items, ship repairs, aircraft modifications, and, so
far as possible for delivery charges.
(11) U.S. OFFERS ON BASIS COMPARABLE
TO ORIGINAL SUBMISSION
$ Billions
4.
The NAVY PROGRAMME has not been discussed in
detail and must therefore stand at:
.416
5.
The GROUND ARMY figure for U.S.W.D. Items
comparable to the figure $.769 million above is:
.604
(Annex "A" shows the detailed make-up).
6.
The GROUND ARMY figure for F.E.A. Items
immediately comparable to the figure of $77 millions
above remains at the moment unchanged; in addition the
requirement for Indian Locomotives and Wagons has been
transferred to F.E.A.; if this is accepted the total
of F.E.A. Items would be:-
.107
7.
The AIR figure strictly comparable to the
figure of $1,832 billions (but see Para 11 below) 1s:-
1,312
(Annex "B" shows the detailed make-up)
8.
The TOTAL on a basis strictly comparable to
the figure of $3.094 in the original submission is:
2.439
Regraded Unclassified
221
(111) SUPPLEMENTARY PROVISIONS AGREED
BY U.S. AUTHORITIES
$ Billions
9.
In the course of the negotiations, agreement
has been reached on the dollar values for certain of
the allowances and charges referred to in para 3.
10,
For SPOT ITEMS OF GROUND ARMY EQU PMENT an
allowance has been agreed of:
.050
11.
For SPOT ITEMS IN THE AIRCRAFT AGREEMENT an
allowance has been made which will cover, inter alia,
any deliveries we may secure of certain aircraft of
which firm offers could not be made; this amounts to:
,200
12.
For AIRCRAFT MODIFICATIONS. HANDLING, AND
DELIVERY CHARGES, an allowance of 10% was added in
a number of categories; this was excluded from the
figures of $1.312 above, and amounts to:
.131
13.
The TOTAL of these Supplementary Provisions for
which we have firm offers from the U.S. Authorities
is.
.381
(1v) SUPPLE ENTARY PROVISIONS STILL UNDER
DISCUSSION WITH U.S. AUTHORITIES
$ Billions
14.
SHIP REPAIRS AND CERTAIN OTHER CHARGES were
excluded from the figure of $416. millions for the
NAVY; they amount to about
.106
15.
For F.A.A. AIRCRAFT, we are also proposing to
ask for a special allowance, to cover such additional
assignments as might prove possible in the light of
production and strategic developments, amounting to:
.075
16.
The TOTAL of these further provisions is:
.181
(v) SUMMARY OF MUNITIONS
$ Billions
17.
The figures for MUNITIONS may thus be summarised
as follows:
Total comparable to original $3.094 billions
2.439
Items agreed by U.S. Authorities but excluded
from $3.094 billions
.381
Items excluded from $3.094 and not yet agreed
by U.S. Authorities
.181
3,001
18.
There are certain other items, including possible
delivery charges on Ground Army Items (say $30. millions)
and Air Training (about $15. millions) which are not included
above.
Regraded Unclassified
222
B. NON - MUNITIONS
(1) ORIGINAL SUBMISSION
19,
Our requirements in the original submission
were made up as follows:
$ Billions
FOOD, etc.
1,064
OIL
.475
SHIPPING
.993
RAW MATERIALS
,222
MISCELLANEOUS GOODS
.013
TOTAL
2,767
(11) SUBSEQUENT REVISIONS
20;
The revised requirements as communicated on
the 29th October were:
$ Billions
FOOD
1,064
OIL
A353
SHIPPING
.877
RAW MATERIALS
.222
MISCELLANEOUS GOODS
,013
TOTAL
2,529
Regraded Unclassified
223
C. SUMMARY
21.
The TOTALS for both MUNITIONS and NON-MUNITIONS
together are as follows:
MUNITIONS
NON-MUNITIONS
TOTALS
$ Billions
$ Billions
$ Billions
Original Submission
3.094
2.767
5.861
Revised Figures to date
on Comparable Basis.
2,439
2.529
4.968
Supplementary Provisions
already agreed.
.381
-
.381
Supplementary Provisions
under discussion.
.181
-
.181
Totals of Revised Figures
3.001
2.529
5.530
(Signed) F.G. Lee
Austin Robinson
Washington, D.C.
November 6th, 1944.
Regraded Unclassified
224
ANNEX A
War Office and Ministry of Supply Programmes.
$m.
(1) Total U.K. Requirements at U.K. calculated prices
846
(2)
less F.E.A. Items
77
(3) Total U.K. Requirements from U.S.W.D.
769
(4) Total adjusted for Items valued but not finally
submitted and corrected to U.S. prices.
728
(5) Reductions of Requirements agreed by U.K. Representativ
Representatives
124
(6) Remaining U.K. Requirements
604
(7) Of which: Unqualified Acceptances
325
(8)
Items subject to Bids
86
(9)
Acceptances subject to Production
Possibilities
188
(10)
Allowance for Air Corps and "Other
Navy" Items
5
(11) Allowance for Spot Items (not included above)
50
(12) Total U.S. offer
654
Notes:
(4) Items valued but not submitted $36 m.
(mainly clothing). Net correction
for prices $5 m.
(5) For items covered see Table below
(8) Includes Light Cargo Carriers ($6 m.),
L.V.T.'s ($53 m.) Special Fuzes from
U.S. Navy Dept. ($20 m.) .30 Carbines
and Ammunition ($7 m.)
(9) Of this total, $157 m. represents items
for which full detail is not yet available.
Regraded Unclassified
225
ANNEX B
AIRCRAFT AGREEMENT
Value Asked
Value Given
at our prices
(as included (as adjusted
at our
at U.S.
in original
before detailed
prices
prices
Submission)
negotiation)
Aircraft Etc.
h.A.F.
720
723
452
446
F.A.A.
341
315
195
180
Gliders &
Helicopters
69
63
63
42
Components
Merlin Engines
213
213
213
184
Others
127
127
127
125
Supplementary
100
100
100
91
Spares
Radio & Radar
162
162
162
198
Bombs
100
75
75
46
Total of Above
1,832
1,778
1,387
1,312
%
100
97
76
U.S. Provision for
131
Modifications, Handling
Delivery, etc.
Spot Items
200
Grand Total
1643
Notes:-
(1) The above figures cover an allocation of 383 Corsairs.
(2) The Liberator Cargo (R Y-3) aircraft, though to be
procured by the U.S.Navy Department, have been included
under R.A.F. aircraft, as they are in substitution
for an R.A.F. requirement for C. 54's.
(3)
Provision is made in the figure for Spot Items to
cover possible Assignments of certain types of
aircraft for which firm offers could not be made.
Regraded Unclassified
Treasury Department
226
Division of Monetary Research
Date November 9 19 44
To:
Secretary Morgenthau
from:
Mr. White
You may be interested in glancing
at the Chancellor of Exchequer's
statements on Bretton Woods.
MR. WHITE
Branch 2058 - Room 214-1/2
AAK
227
UNITED KINGDOM TREASURY DELEGATION
BOX 680
BENJAMIN FRANKLIN STATION
WASHINGTON, D. c.
EFERENCE:
TELEPHONE EXECUTIVE 2020
23rd October 1944.
My dear Harry,
Some recent expressions of opinion in London concerning
Bretton Woods have lately arrived which are worth your attention, if
you have not seen them already.
First and foremost is the very important speech from the
Chancellor of the Exchequer delivered at the Mansion House on October
4th. I have no doubt that this speech was intended for the United
States as well as for the British public. Yet, to the best of my
knowledge, it received only the barest mention in the American Press
through brief cabled comments at the time when it was delivered.
Nevertheless, the speech is of the first importance for
two reasons. To begin with, it is the first definite official state-
ment of the Chancellor of the Exchequer of the attitude of the
Government to Bretton Woods. In the second place, it contains a
very specific statement of the Chancellor's interpretation of Article
VII of the Mutual Aid Agreement. If the Secretary has not already
seen this, I should be grateful if you could call his attention to it
"The Times" leader on the speech, which I also attach, is,
as you will notice, by no means satisfactory. The opinion from
"The Economist", which I also attach, is rather better, but consider-
ably qualified. I also enclose another paper giving the Chancellor
of the Exchequer's answer to a Parliamentary question on September
28th. This is of secondary importance, but you may be glad to have
Regraded Unclassified
- 2 -
228
it for your records.
If you have not already received copies of the cuttings,
by all means keep these. Otherwise, I should be rather glad to have
them back when you have finished with them, since they are the only
ones I have.
Sincerely yours,
Maynard Keyns
Dr.H.D.White.
NEW
m. white orig.)
DEPARTMENT
ON
INCOMING
DIVISION OF
OF
COMMUNICATIONS
STATE
TELEGRAM
0
AND RECORDS
Canf UK 229
CP-715
PLAIN
London
Dated October 5, 1944
Rec'd 12:36 a.m., 6th
Secretary of State
GNY
Washington
(NOSIVE)
8382, Fifth
SNOL
1944 OCT 7 AM 9 22
30 no
DEPART went OF STATE
FOR SECRETARIES OF STATE AND TREASURY
There follows the complete text of the addresses of
Sir John Anderson and Lord Catto delivered at the
Lord Major's lunchson to bankers and merchants at the
mansion House October 4, 1944. From the FINANCIAL NEWS
October 5:
Sir John Anderson said: "This traditional ceremony.
would I am told have been held last year but fell through
because of the sudden and tragic death of my pradecessor
Sir Kinglsty wood who was personally known to so many of
you. I have the best reasons for appreciating how much
our country OWES to the wisdom and courage with which
hE handled the national finances while he was Chancellor
of the Exchaquer. The solidarity of our position and
the control Established over inflationary tendencies
which
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which would cause hardship to large numbers of our people
both afford hope that WE may move to the problems of the
peace serious though they will bE down a WELL planned
road. This result will bE a fitting memorial to Sir
Kingsley. It is right for me to pay this tribute here
to the man who made my task so much Easier than it might
have bEEn.
It is customary on this occasion when the Chancellor
of the Exchequer stands up before representatives of
finance and COMMERCE in the city of London - and I am
still bold Enough to believe that the City of London will
bE again the world's centre for finance and commerce - to
EXPECT him to say something of interest. Whether that
tradition adds to the Enjoyment of the other guests or
indeed to that of the Chancellor of the Exchaquer who is
honored by the invitation must bE a matter of opinion.
But I shall defer to the tradition and try to say something
which I hope may bE of interest to some of you.
You will not EXPECT ME today to make any formal and
far reaching declarations of government policy. WE are
meeting in a more intimate atmosphere in which I might,
as the phrase goes, 'think aloud' on one or two subjects
on which in due course decisions will have to bE taken.
In doing
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In doing so I am with your leave going to by pass the
problems of our internal finance. Thanks to the sound
lines of policy laid down in the early years of the war
and thanks also to the remarkable way in which our
people have sustained the great effort which they have
been called upon to make, our financial and Economic
position is today, after five long years of a most
Exacting war, strong Enough to bE a legitimate source of
pride. In the fifth year of war when our Expenditure
was higher than EVEr before, WE met a greater proportion
of it than in any of the previous four years out of
current tax revenue. The very large sums WE have had to
borrow Each year can truly bE said to have been raised in
ways which have avoided the risks awaiting any government
which must by hook or by crook raise large sums of money
in a limited time to meet inscapable obligations. It is
I think no mean achievement that out of a total borrowings
during the war of nearly L13000 millions less than 30
percent took the form of floating debt in the hands of the
public; and that in the process of raising over L4000
millions from the public on medium and long term securities
the terms have steadily improved in favor of the Exchequer.
WE are now, when some relief from the burdens of war
seems
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seems at last to bE in sight, contemplating the acceptance
of fresh obligations in various directions. It is my
duty to SEE that the Government and Parliament do not
accept such obligations without counting the cost. If
the people of this country are prepared to work for a
better standard of life as they have worked for victory -
not with the same intensity but with the same purposeful
resolution - all will bE well. Any Expenditure can bE
justified which is matched by increased productive
Efficiency. This is the light in which EVEry new proposal
must bE judged. I shall have to develop this theme at
greater length on some other occasion.
Meanwhile there are other subjects on which I wish
to talk to you today and I ask you first to go with mE
to Bretton Woods in whose pleasant groves my friend
Mr. Morgenthau, Secretary of the United States Treasury,
summoned the International Monetary Conference. This
conference produced a document called the Final Act, which
has bEEn published. It is I confess 8 difficult document
inevitably long and technical. There are some obscurities
of language in it which have lEd to misunderstanding and
must bE clarified. The time for detailed Exposition will
COME when the whole matter has to bE debated in Parliament.
But it
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But it does seem to ME important that while necessary and
useful preliminary discussions are taking place in the
press and among interested groups, one or two
misunderstandings which unless they are corrected may
darken counsel should bE removed.
The document is the draft of an international
agreement which the technical Experts of the United Nations
submit for favorable consideration by the governments and
legislatures concerned. Neither our government nor any
other government is in any way committed to acceptance of
it.
At the some time, if WE find that the United States
and other countries important in international trade and
finance decide that it is acceptable to them, WE must not
reject it lightly. If WE have to choose between standing
out of international institutions or taking a leading part in
making them work, particularly when they are institutions
for Economic cooperation, I have no doubt where our true
interest lies. Anyone who doubts this has only to look
at the map of the world and SEE how widely spread our
interests are and with how many countries the frontiers
of those interests march.
Moreover WE should betray much of the hope for peace
if WE failed
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if WE failed to carry forward into those difficult years
the unity and cooperation that have Existed between us
and our chief Allies during the war.
The second point I want to make is that the Bratton
Woods document explicitly recognizes that while WE might
agree upon objectives and methods when the worlds trade
is settling down, countries like our own have to face an
extramely difficult period of transition in which they
must keep their hands free to deal with their difficulties
as they arise and as seems best period it is in our
interest to make that transitional period as short as
possible and Equally, to Endeavour while it lasts to
develop our policy so that others will bE willing to
cooperate with us.
For these reasons the first plea I make with regard
to the results of the Bretton Woods Conference is that
what was done there should bE studied carefully. I say
'what was done there' deliberately for some of the
criticisms are about the things that were not done there.
It is complained that the conference did not deal with
commercial policy and the removal of trade barriers,
with the stabilization of commodity prices, with schemes
for bulk purchases and long term contracts, and so on.
I admit
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I admit all these criticisms at once but the answer is
that the conference was not summoned to deal with these
subjects. It was dealing with the Essentials of
international monetary policy without which policies of
Economic cooperation in other parts of the international
field could not bE sustained. Bretton Woods is not the
End of the story. Indeed the SUCCESS of SOME parts of
the Bretton Woods plan will depend in turn upon schemes
of cooperation in other related fields.
I do not want to range too widely today; but there
is one point that I must bring to the attention of some
of the critics of the Final Act. I mean those who
appear to think that the line of safety for us after the
war is to reserve our full rights to Enter into
discriminatory commercial and currency agreements not
only as temporary measure during the transitional period
but permanently. Various ways of achieving this have been
suggested and one of the criticisms of the Final Act is
that it would prohibit or frown upon such arrangements.
Now I think it is doubtful whether in fact the Final Act
is decisive on this point, but there is another and
wider issue involved. It is an issue of good faith.
Under Article V11 of the Mutual Aid Agreement, the master
agreement
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agreement under which WE have received assistance of
prodigious amount, WE agreed to work for the Elimination
of all forms of discrimination in international commerce.
The only qualification was concerned with imperial
preferences. WE are bound by this agreement and WE are
going to honour it, Incidentally, quite apart from
the Mutual Aid Agreement, by our commercial agreement
with the United States of 1938 WE also accepted a policy
of nondiscrimination in trade. I would ask those who
recommend what is in ESSENCE a barter system as the basis
for our international trade; do they really wish us to
follow a course which goes back on what WE have formally
agreed with the United States and flouts one of the
principles of international commerce to which the United
States Government attach importance, and which as a
matter of fact I believe in our own interest is a sound
principle? If WE discriminate, other people can
discriminate. If WE indulge in barter other people can
indulge in barter. It is a difficulty in all agreements
and contracts that one party cannot have it all his own
way.
I commend these issues to your very careful
consideration.
I am also
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I am also told that the Bratton Woods Conference
means a return to the gold standard. Now I doubt whether
those critics who use the words 'gold standard' as a
term of approbrium always have a perfectly clear idea
of what they mean, but perhaps one can assume that what
they are thinking of is a system under which the External
value of sterling was fixed, and the internal credit
policy was made subservient to the maintenance of that
value. To that system, if it EVEr existed in such a
crude form, WE do not propose to return. I have not
minced my words about that in Parliament.
But it is said that Bretton Woods has tied our
Exchanges in virtually the same way whereas the Experience
between the wars has shown the necessity for flexibility
or adaptability in Exchange rates.
To read some criticisms one would imagine that
Britain's foreign trade fundamentally depends upon
Exchange rates, which rush up and down almost like a
barometer in a cyclone. Now that is nonsense. For a
country whose whole Economy is widely influenced by
international trade, some reasonable stability in the
value of sterling is of primary interest. WE have not
much less interest in the reasonable stability of other
peoples
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peoples Exchanges. I do not go the whole way in believing
that the greater part of our troubles between the wars
was caused by unstable Exchanges. Nor do I believe that
countrits with 8 major interest in international trade
lightly alter their Exchange rates. Those alterations
disturb internal as well as External values. But there
is no doubt that the instability of the Exchange rates
of some important countries at some periods between the
wars was a disturbing factor in international trade.
After the huge Economic disturbance of this wer WE must
Expect difficulties in arriving at equilibrium in the
balance of payments.
The Bratton Woods document follows a middle course
in this matter. So far from imposing a system of rigid
Exchange rates, it expressly recognizes the need for
adjustment of Exchange rates to correct disequilibrium.
If WE believe it is in our own interests to have a
reasonable stability of Exchange but at the same time to
have a method for the orderly adjustment of Exchanges
when the occasion arises, I do not SEE very WELL how one
could have a very different principle from that stated
in the Bratton Woods document.
It is of course true that to a certain Extent WE
would
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would bring our Exchange policy under review by an
international body on which WE should bE represented.
But so would EVEry other country. WE would not surrender
any ultimate right to follow our own policy but WE would
accept an obligation to recognize that the adjustment
of the Exchange value of sterling, or of any other ma jor
international currency, is a two Ended process and that
WE OWE it to the general interests of international trade
to consult with an international institution before WE
make a change which will affect our commercial as WELL as
our financial relations with other countries. For those
who are particularly anxious on the question of our
freedom to adjust our Exchanges, I would commend a study
of Section 5 of Article 1V of the document, the last
paragraph of which makes it obligatory on the management
of the fund to allow a change in Exchange rates in order
to correct a fundomental distquilibrium.
Before the conference at Bratton Woods took place
I made it plain that the Government would watch with
great care our position with regard to our Exchanges. For
myself, I am absolutely unimpressed by the loose criticism
that by accepting the plan WE shall have returned to the
gold standard in the SENSE of putting our policy under the
dictation
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diotation of others.
There is much more that has to bE said about the
Bratton Woods document and I feel confident that it will
bE said, but for the moment I have chosen these three
points - the international aspect of the document, the
provisions for the difficulties of the transition, and
the treatment of Exchange values, for comment here,
before you, who have such wide knowledge and such great
responsibility for international commerce.
I should like now to turn to an Entirely different
subject - the relation between the Government and industry,
COMMERCE and finance after the war. You will not EXPECT
to find me greatly concerned to test each issue of policy
by asking whether this is true private Enterprise or
that is good Socialism.
I am tempted to think that those who make Extreme
judgements in these matters overlook one not unimportant
motive in human conduct - the ordinary desire to do a job
properly for its own sake. An honest ship WELL found is
an honest ship, whether its ultimate owners are a large
and scottered body of shareholders or a public authority.
Pride of craftmanship and Enterprise are not the sole
prerogative Either of private or of public trade. Whatever
may bE
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may bE the ultimate shape of our Economic structure in
this country, it is quite clear that after waging a terribl
war WE shall have too much to do to waste time on sweeping
up all private Enterprise and turning it into some other
kind of Enterprise. But private Enterprise has a public
responsibility. I believe this to bE true at any time,
but in any case I am certain that it is true for the very
difficult conditions of the resettlement of industry and
trade in the immediate years after the war. WE must all
recognize this new partnership and develop it to the full.
It will bE the duty of the Government to EXERT itself to
achieve conditions in which private Enterprise can play
its part worthily and well; it will bE a big part. But
those conditions cannot bE achieved unless private
Enterprise is willing genuinely and regularly to consult
with the Government on main lines of policy, and to accept
the determination of the Government to take a much closer
interest in the general lines of industrial and commercial
policy than it has taken in the past.
A gathering like this would not seriously wish for
any other policy in the situation in which WE shall find
ourselves. The interest of the Government in private
Enterprise does not mean interference by the Government at
EVEry
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EVEry stage. The closer the voluntary consultation, the
less frequent will bE the need for interference.
I need hardly remind you of the bearing of taxation
policy upon industry and trade after the war. I tried to
give some EVIDENCE of my own appreciation of this fact
in my budget last April. It is part of the public
responsibility of the Chancellor of the Exchaquer in these
days that hE must pay continuing attention to the relation.
between taxation and industry, but speaking quite plainly
it will bE much Easier to Ensure that that attention has
fruitful results if trade and industry recognize their
public responsibility by close and free consultation with
the Government.
Finally I want to say a very brief word about our
External financial position after the war. WE shall Emerge
with heavy overseas obligations, but at the same time our
credit throughout the world will stand very high. I hope
I am not doing unorthodox in suggesting at such a gathering
that the basis of national credit is the character of the
people, their courage, their determination and skill, and
above all their productive Efficiency. I do not think
that anyone need bE apprehensive about our possession of
these real assets. Now that means that our financial
indebtedness can bE translated into physical terms of
production
243
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production. I tell you and I speak under a sense of
responsibility that I believe WE can SEE our way through.
WE can meet our obligations in a realistic way, that is,
by producing the goods that other countries will want.
The process will take time, but it depends in the main
not upon skillful financial adjustments, but upon the
willingness of our own people to recognize that as they
fought their way to freedom so they can work their way to
security and prograssive improvement in all their material.
conditions. It depends also upon the recognition by our
creditors that they have a common interest with us and
must collaborate. They must bE reasonable and not SEEK
to treat war debts on the footing of ordinary commercial
obligations. Practically the whole of our External
obligations incurred during the war are to our Allies and
associates in the war. WE have incurred a debt to them -
but have they not also incurred SOME kind of a debt to us
which they too can pay, by their confidence in us, which
has stood a much sterner test, and by their practical
cooperation with us?"
Lord Catto, Governor of the Bank of England, said:
"Such an occasion as this SEEMS hardly complete without my
distinguished predecessor who on so many occasions repliec
to this
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to this toast with his characteristic charm. I am glad
to assure you hE is wEll and greatly restored in health.
To succeed him as Governor of the Bank of England has not
been a Easy task: but it is an honor of which I am deeply
appreciative. It carries with it however many
responsibilitiss - not the least of which is my ordeal
today of replying to the toast so Eloquently proposed
by Sir Robert Pearson and responded to with so much
kindness by you all.
It is perhaps permissible, without undue optimism,
to look forward a little, and I should therefore like to
say a word or two about the situation that will face us
at the End of hostilities. I am frequently asked whether
this country can regain its old financial and industrial
leadership. WELL, I am full of quiet confidence!
It is true that our national debt is likely to bE
about three times as much as it was at the End of the last
war. It is true also that part consists of obligations
to overseas countries of an important amount. All that
is a heavy burden. But the productive capacity of the
country and therefore the national income have also very
substantially increased since the End of the last war.
RECOVERY will not bE Easy: it will require much
effort
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Effort, much restraint, and to USE historic words of our
great Prime Minister, much 'toil and sweat' to make full
use of our productive capacity. HOWEVER great the effort,
it will have its compensations for if guided aright it
will assist the full Employment policy to which the
Government is committed and with which WE are all in such
ardent sympathy. But recovery will need something more;
it will need a resurgence of that individual initiative,
that resourcefulness, and that spirit of adventure which
in war and in peace have EVEr of old contributed to our
country's prosperity and to its greatness.
In that respect the City of London must bE given lead
and play a ma jor part. I do not need to tell you that
her position in world commerce and in finance is unique -
and I would ask you to note I say 'is' and not 'was'.
And that COMES not from wealth: not from stocks of gold
or foreign investments - for WE have less of these than
WE had 1 But rather from something more lasting:
something that EVEN war cannot destroy or take from us,
and that is, the City of London's generations of
accumulated Experience, the integrity of her institutions,
and her reputation for fair dealing. That is a precious
heritage! It is still intact, in spite of war and in spite
of destroyed
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246
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of destroyed and damaged buildings. And it is this
heritage that will inspire leadership of the City of
London in providing financial sinews so that the vast
manufacturing output of our country and the unsurpassed
technical skill of our people may bE given full SCOPE.
It will bE my duty, and my endeavour, to help that
leadership, and I know I will receive in full measure
that help, that guidance, and that support from the
financial and commercial community of the City of London
which as a new and untried governor I will sorely need
and which, if I may say so, I have a right to EXPECT.
For I have taken on my new work in no spirit of ambition
but with humble duty to SErVE the country at this
difficult and anxious time.
But, I am asked, EVEN if WE are able to carry
internally our national debt, how about our External
obligations? WEll, next to our distinguished Chancellor
of the Exchequer, to whose great speech WE have just
listened with so much interest and instruction, I suppose
I know as much about these debts as anyone. They are
large and they have special difficulties of their own
in regard to their liquidation. But let me say at once,
these debts do not fill ME with dismay; although I would
not like to contemplate what they might have been but
for that
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for that financial miracle 'Lend-Lease' and the most
generous war contributions of Canada. Many countries may
well End the war with national debts proportionately as
large as WE have, but no other nation has an External
financial problem of anything like the magnitude of ours.
It arises through our heavy overseas Expenditure in the
long weary war years and our inability in that period to
counterbalance that expenditure by exports in any
considerable volume: for WE have devoted our whole
resources, without counting the cost, to the single task
of winning the war. In a word, what WE have done is to
USE in advance a substantial part of our postwar export
capacity. Our problem therefore will bE to Emport in
sufficient volume to Enable us to pay for our current
Essential imports - of raw materials and food - to maintai:
the standards of living of our people and to have some
surplus towards the gradual and orderly liquidation of
our External obligations. It is indeed a serious problem.
But there is this consoling thought that it is not our
problem only: it concerns just as much the craditor
countries: in fact, it is a world problem. For plainly,
the Extent to which WE can import world products is
dependent upon that gradual and orderly liquidation of
which
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which I have spoken. Obviously if in the early years too
large a proportion of the value of our Exports and
SERVICES goes in liquidation of these debts then there
will bE that much less with which WE can buy the current
Exports of creditor countries and the rest of the world.
And that is serious for all, for WE are a very important
market! In fact WE are and are likely to continue to bE
the greatest importing country in the world! And
therefore the world's best customer!
These are plain Economic facts. They should bE widel:
understood: For on a full appreciation of them will
depend the solution of the problem of these External
obligations in the interests not alons of this country
but of the creditor nations themselves and the whole world.
The Chancellor of the Exchequer has spoken of the
feature aim of government plans and policy: in particular
that government EXPECTS, and has a right to EXPECT, full
cooperation in these plans and policits from the financial
and industrial leaders of the country. HE has told us
there must bE closer working between the appropriate
government departments and business people so that
individual effort and initiative may be best aligned in
the national interest. I am sure I can speak for you all
in promising
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249
in promising that closer working. I think the financial
history of the war, so far as the City of London is
concerned, is Evidence that I can give that assurance
without hesitation. As the Chancellor WELL knows, the
city has accepted without reservation all and EVEry rule
and regulation imposed by government and has loyally
observed not only the formal but EVEry informal indication
of government policy. But in giving that assurance I
venture to hope that closer working with government
departments will not involve too great delay or curb that
individual initiative, that resourcefulness and that
spirit of adventure of which I have spoken, and I am
sure the Chancellor will agree with ME.
I have nearly finished and I conclude on the same
note of quiet confidence with which I began. But I
cannot End without some reference to the glorious but
anxious days through which WE are passing. I have
spoken much of debts. But these sink into insignificance
when WE think of that other form of debt - the debt of
gratitude - that WE OWE to those who are fighting
for the world's liberty; to those who have been wounded;
and above all to those who have made the great sacrafice
and to
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and to their stricken families at home - in particular to
those in this ancient house of great hospitality.
My Lord Ma jor, I thank you on behalf of the bankers
and merchants of the City of London for your hospitality
and for this gracious revival of these time honored
gatherings".
WINANT
JM
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Treasury Department
251
Division of Monetary Research
Date Nov. 9, 194419
To:
Secretary Morgenthau
I think you will be interested
in glancing through this letter
from Mr. Friedman.
H.D.W.
MR. WHITE
Branch 2058 - Room 214-1/2
AM
252
COPY
October 28, 1944
Dear Mr. White,
Chungking seethes with rumor, charges and counter-charges, intrigue and
thruths not yet made public but nevertheiess widely known. The news of the
naval victory in the Philippines 18, of course, beginning to dominate all
thinking and all are trying to judge the effects on the many problems vexing
China today. I believe that the first reaction of the liberal pro-American
Chinese is the fear that, coupled together with the other current developments,
it might result in the complete bypassing of China. They are eager for China
to play an important part in the war against Japan not only because they are
sincerely and deeply anti-Japanese but also because they seem to feel that in
joint participation with the U. S. in the war lies the best chance for the
emergence of a strong democratic China. They are also very concerned about
the elections for they feel that the Republicans will not favor, as Mr.
Roosevelt does, this strong democratic China. I would imagine when the news
becomes public of the appointment of a two star general (Wedemeyer) to replace
& four star general in this theatre and, if it is true as I hear, that the
China-Burma-India theatre is being split into two and that Formosa and Hainan
Island will not be included in the China theatre, the liberal groups will see
in these developments rurther justification of their fears aroused by the
recall of Stilwell that China is being eliminated from Allied strategy as
an area of major military importance. It seems safe to say that we have in
China today the paradox that those groups who would like to see American
influence in China strong are being thwarted and suppressed by the government
that the U. S. gives its support and recogmtion.
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I have had the opportunity in recent weeks of meeting some of China's
liberal leaders who do not belong to any party. They see the present government
as hopelessly corrupt and inefficient; they charge it with unwillingness to
prosecute the war against Japan vigorously; they claim that, as now constituted,
the Government is hopelessly reactionary; they say that the only solution is a
real coalition government in which the Kuomintang would have the largest
representation but not a majority; they see the Kuomintang-Communist conflict
as clash between those who favor the complete unification of China's armies
under the present military leadership and those who insist that democratic
reform must precede military unification in this dispute they side with the
Communists because they (the liberals) say unification of the armies under
the present leadership would not mean a more effective war effort but a less
effective effort and would Fery seriously weaken the chances of democratic
reform; they answer the question whether they are not afraid that they are
being made use of by the Communists by saying that they are confident that
their (the liberals') policies, namely, democratic reform and national unity,
are truly popular, and that the Communists would lose their present support
if they tried to go beyond this: they look to the U. S. as their foreign
friend and express wonder as to whether the American people realize that
unless a democratic solution is found to China's problems, the basis for a
new world war will have been laid. One of the leaders of this group is a
Mrs. Liu who is a member of the People's Political Council. She visited
Chengtu recently and was invited along with some others by a group of cultural
organizations belonging to the various universities to conduct a forum on the
condition of China. She did so and all the cultural organizations were
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consequently suppressed by the Ministry of Education. In the People's
Political Council she maintained the position that China's military defeats
were not the result of insufficient foreign aid and spoke of the heart of
China being dead. She says she is prepared to be "soft-jailed" and cheerfully
adds that it will give her the opportunity to write a book. She is a product
of American education and has great admiration for the U. S. (She is about
50; her husband was a doctor, killed in the war)(I need not say that in talking
with her as well as with any others, I am very careful not to express any
personal opinions.)
The military situation in the Southeast seems to be rather static. Some
well-informed people are saying that the Japanese are now engaged in a
political campaign in China and for the time being are easing up on a
military campaign which was undermining the position of the Chungking Govern-
ment and that this situation would prevail until after the elections in the
U. Se They also say, however, that the naval defeat in the Philippines may
make it necessary to complete this campaign quickly to provide an overland
escape route for the Japanese troops in the Netherlands Indies, Malaya, etc.
The Salween campaign is also quite static at the moment, but in this
case the initiative is the Chinese. I have just spoken to some officers
who have come up from this front. The Generalissimo has practically
ordered the campaign to stop even though they have now in their possession
the territory to build the much desired road, Some here feel that the
Generalissimo may pull out of the Salween campaign completely since it
was mostly Stilwell's project, even though this road presents the most
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immediate prospect of further breaking the blockade. The building of the
road is not going as rapidly as expected because of the Chinese attitude.
I do hope that you received the copy of the memorandum I sent on
conversation between Davies and Mme. Sun Yat-sen since it is fairly typical
of the liberal reaction to Stilwell's recall. To them it meant a major
victory for the Generalissimo and his policies. They say that the news of
Stilwell's return was received with much glee by the Supreme Military Council
here. It is wondered here what this will mean for the military mission to
Yenan and the prospects of direct aid to the guerilla areas. The communists
seem to feel that there will not be a fundamental change in our policy since
our policy is based on the desire to do all possible to facilitate the defeat
of Japan. It seems to me, however, that this assumes that China will continue
to be an important strategic area.
There are still no new developments with regard to the 5 man mission to
Yenan and, although its departure is already long overdue, no definite date,
it is believed, has been set.
There has been considerable speculation in Chungking as to whether Nelson
is returning as he planned. Most people seem to feel that he will not because
of his departure from the WPB. There is little evidence that I have seen
that anything important is being done to implement his proposals.
The autonomy movement in the Southeast seems to be developing. It is
said that a conference of military leaders in the Southeastern provinces has
been going on in the Kwangtung city of Loting, including the famous defender
of Shanghai, General Tsai Ting-Kai, and General Chang Fah-kwei, in charge of
Regraded Unclassified
256
- 5 -
the defense of Kweilin, is reportedly not unsympathetic to the proposal
supposedly being discussed, i.e. the establishment of a semi-autonomous
government in the Southeast. Moreover rumor has it that the representatives
of the Governor of Yunnan, Lung Yung, are also participating in the discussions.
The Generalissimo is said to be making overtures to Marshall Li, one of the
principal leaders in this group, to accept a job in Chungking but it is not
thought likely that the Generalissimo would be willing to accept the terms on
which Li would come.
The correspondents who went to Yenan have finally returned. The real
here it seems is Votaw since he is an employee of the Chungking Government
who was known for his violent anti-Chinese communist attitude. On his return
to Chungking he made a public statement to his colleagues in the press hostel
that he had been wrong and that in his extensive tour of the Northwest he
had seen the China he had always favored. It remains to be seen whether this
will cost him his job with the Ministry of Information. A similar case is
that of Harrison Forman, London Times correspondent who had been known for
his complete cynicism and lack of faith in anything. His enthusiasm for the
Northwest is that of a reformed sinner.
There is a good story about Stilwell's withdrawal that I have frankly
hesitated to tell because it's sort of off-color, but I believe it is too
significant to omit. During their last interview, the Generalissimo offered
to Stilwell the highest military order the Chinese Government has to give.
The General told the interpreter to tell the Generalissimo "to stick it
up his _". ". (It is presumed that this was not translated literally to the
Generalissimo.
Regraded
257
- 6 -
Sol wrote me in his letter of October 13 that he expected to leave
Washington about Nov. 1 and since this letter will not leave China until
about November 1, I am not enclosing a letter for Sol, but, instead, have
made a copy for his information when he arrives here. I need not say how
glad I will be to return home.
Please give my best regards to my many friends in the Division.
Sincerely yours,
Irving
P.S. I am enclosing letter for information and action of Treasury
regarding purchase of foreign exchange by Army Personnel.
P.P.S. Please excuse the typing.
Regraded Unclassified
258
ED PY
FORWARD ECHELON
Headquarters
United States Army Forces
China Burma India
Chungking, China
October 23, 1944
Mr. Irving S. Friedman,
U. S. Treasury Representative in China,
c/o American Embassy,
Chungking, China.
Dear Mr. Friedman:
Since the discontinuance of the sale and/or purchase of
Chinese Clearing Board Drafts, etc., by military personnel on
21 September 1944, it has come to the attention of the under--
signed that many purchases made by individuals prior to that
date have failed to clear due to various reasons such as checks
being erroneously drawn, banks failing to accept checks, and
the inability of the Clearing Board to deliver checks to
certain personnel who were absent on duty in the field.
We would appreciate your notifying the Treasury that this
headquarters has no objection to such individuals, mentioned
above, making final clearances of such purchases subsequent to
21 September 1944.
For General STILWELL:
(Signed) C. M. Davis
C. M. Davis
Lt. Col., A.G.D.
Asst. Adjutant General
Regraded Unclassified
Treasury Department
259
Division of Monetary Research
Date Nov. 9, 1944 19
To:
Secretary Morgenthau
You might want to glance at
this letter from Taylor and Aarons.
H.D.W.
MR. WHITE
Branch 2058 - Room 214-1/2
200
AA
ycToB
BUY
TREASURY DEPARTMENT
WASHINGTON 25
AIR MAIL
11 October 1944
AIR POUCH
NO. 104
Personal and Confidential.
Dear Mr. White:
The situation of American and related agencies in London
since your visit here has changed drastically, and during
the present period of transition is in a state of pretty bad
confusion. Winn Riefler of the Economic Warfare Division
has resigned and returned to the States, assertedly to resume
teaching duties at Princeton. Bill Stone, formerly of the
Foreign Policy Agsociation, has taken over, but so far as we
can gather, no one has any clear idea of what the future of
EWD will be. We talked to one of the officials of the
Embassy yesterday and he said that he expected that most of
the people in EWD would be taken over by the State Department
sooner or later. MEA is also in a period of flux. As you
may know, there is currently taking place a tussle between
FEA in Washington and MEA in London. It is the feeling of
Phil Reed and his group that all FEA boys going to the continent
should be responsible to and report through the London MEA
office. Steve Mitchell of the State Department who is
proceeding to the Embassy in Paris, told me that this was an
impossible situation and that State was going to insist upon
direct communications with Washington. In that event, it
looks as though MEA may have its wings clipped and many of its
functions taken away. As you know, Ambassador Phillips is no
longer here and no one has been appointed to take his place.
His assistants, Tom Wailes and Robert Pell, have been ordered
to join the Embassy in Paris. With Ambassador Phillips gone
and General Holmes located at Versailles, it would be impossible
to organize a quorum on the American side for the Combined
Civil Affairs Committee, London.
SHAEF represents the transition and confusion that prevails
for the moment. Until quite recently SHAEF FORWARD was located
in Versailles, and SHAEF MAIN in London. Within the past week,
SHAEF MAIN has been transferred to Versailles and London SHAEF
now becomes SHAEF REAR. Almost all of SHAEF functions have
been transferred out of this area to France, and peòple remaining
in London have been left to gather up the loose ends and to
Regraded Unclassified
261
Mr. Herry D. White,
2,
11 October 1944
facilitate such communications as are still routed through
London. Col. Bernstein continues to be Deputy Chief of the
Financial Section of SHAEF and, therefore, must spend much
of his time in Versailles, although he plans to spend some of
his time in London because German planning is still centered
here.
A new organization has come into the picture on planning
for Germany. It is the Allied Control Commission compounded
at the present time of the U. S. Group Control Commission
and the U. K. Group Control Commission. It is hoped that the
Russians will participate by establishing in London a Russian
Group Control Commission. General Wickersham is currently
the head of the American Group, although there are many rumors
to the effect that he will not long remain in this theater.
The State Department has assigned three people to work with this
Commission, viz., Bob Murphy, Jacob Beam and one yet to be
designated. FEA has named three people, Messrs. George S.
Wheeler, Samuel Wennberg and David F. Levitan. Colonel Bernstein
is the chief of the Finance Section in the American Control Group.
We expect to have a conference with Colonel Bernstein soon and
will report to you in greater detail regarding the work and
personnel at that time.
EAC continues on its merry way. The American section of
EAC is now busily engaged either in drafting or having drafted
for it a series of detailed directives on what should be done
in Germany. The EAC boys are busy having OSS and various
sections of Army Civil Affairs draw up these directives for it.
These directives will then be sent back to Washington for comment
and clearance with the State Department, at which time they
will be issued as official American papers.
The American newspaper comments on the treatment of Germany
have evoked considerable comment and discussion in the British
press. A large section of the daily press and the more important
weeklies (The Economist, New Statesman & Nation, Statist,
Spectator, etc.,) are all for lenient treatment of Germany.
They phrase their case in terms of the necessity of returning
Germany to the family of nations, but on final analysis their
argument tends to come down to a discussion of Britain's trade
with Germany and the rest of the continent, and the necessity of
maintaining strong political alliances on the continent. As
indicative of the sort of thing that is currently being written,
X
I am attaching herewith an article from the October 7 edition of
the New Statesman and Nation. A few papers, on the other hand,
Regraded Unclassified
702
Mr. Harry D. White,
3,
11 October 1944
have urged the necessity of adopting a strong and resolute
attitude toward Germany. The London Daily Express (Lord
Beaverbrook) has run a series of articles along these lines,
the latest of which, by J. L. Garvin, appeared in the Sunday
Express for October 8, and is attached herewith. The
Chronicle has also urged a strong attitude towards Germany.
The question of what to do about Germany has not been
allayed by the evasive tactics pursued by the Prime Minister
and Mr. Eden in their recent statements in the Commons.
Some 38 members of Parliament, including Socialists, Liberals,
Independents, Common Wealth and I. L. P., have subscribed to
a Motion to the effect that the House would welcome a Government
declaration in respect to the policy to be adopted for Germany.
This group is in favor of encuraging the emergence within
Germany of 8 new regime composed of democratic-minded persons
in whom the United Nations could have confidence. It is to be
anticipated that these people will not rest until they have forced
a public debate upon the subject. It is possible that Mr. Churchill
may have more to say about this subject when he returns from his
current discussions in Moscow.
On the Clipper coming over I had an opportunity of talking
with Bill Shirer, who told me he was on his way to cover the
news front in that section of Germany now occupied by American
forces. He stated that he was rather impressed by the Treasury
program as he had been able to piece it together from the press
articles and that he was personally glad that the matter had been
flushed into the open. He mentioned having given a radio address
in New York recently in which he urged the necessity of dealing
with the Germans in a tough manner. Subsequently he received
a letter from Dorothy Thompson protesting against his "hysteria"
and requesting him not to be "sentimental" in future on the
German issue. He said that what he had been able to learn about
our activities in the occupied areas of Germany did not give him
any confidence that the issues would be handled satisfactorily.
I asked him specifically what information he had received and he
mentioned some despatches he had read from Bill Stoneman of
the Chicago News and Drew Middleton of the New York Times, in-
dicating that we are playing around with Nazi officials and
treating the German population leniently. He acknowledged, how-
ever, that it was too early to pass judgment on the significance
of these matters inasmuch as the area under occupation was still
very very small.
Regraded Unclassified
283
Mr. Harry D. White,
4,
11 October 1944
It may interest you to know that Col. Graeme Howard,
Chief of the Economic Section for the U. S. Group Control
Commission in Germany, is planning on returning to Washington
within the next week or two. Col. Graeme Howard is a former
Vice President of GMC and a close friend and adviser of Mooney,
former president of GMC. Howard has let it be known that he
expects to recruit a large body of personnel, including
agricultural experts for his economic section for Germany.
One of his aides is Major Kimmel, formerly of the Department of
Agriculture. Kimmel has stated that they are in the process of
hiring a number of high-powered food experts from Washington
to institute a detailed program of control for German agriculture.
The situation is such that one feels that these people have either
not seen the September 22 interim directive or do not feel that
it means what it says.
I was somewhat surprised to find upon my arrival that
Iver Olsen was in London. He states that he came here on OSS
business, although he has not been able to give us a detailed or
adequate report of what he is doing whilst here. He tried to
arrange for a trip to Paris, but it was cancelled at the last
minute. I have suggested that he should write you a lengthy
letter from here about his work in Stockholm and his thoughts
regarding the future of the Treasury Office there. I have told
him that I thought it would be a good idea if he were to obtain
your prior approval before taking off on other trips as he had
intimated that he might want to visit Finland, Norway when liberated,
or Germany, when occupied.
London continues to receive visits from the Nazi doodle-bugs,
Some of these have been launched from the pick-a-back planes
although it is understood that still others are being sent over.
The present activity is nothing compared to that which we had
this summer. The British Government is moving workers into
London to repair bomb damage and plans to have a force of 100,000
men working on the reconstruction of dwellings, apartments and
public establishments.
Very truly yours,
diavers
Aper 130
Taylor
to notivi()
L.C. Aarons
Mr. Harry 1. Whitess VISIONOM
Assistant to the
U. S. Treasury Representatives
Secretary
Treasury Department
Washington, D. C.
Regraded Unclassified
IME SEARCELIGHT
Iron Peace or
no Victory
By J.L. GARVIN
the German war doctrine and
war machine was the Geteral
Staff Under the Welmar
Republic at remained the
power behind the It
T
HIS week, and it will happen again, the
Mourshed and Invished as
war must be left aside pending more deci-
before
This time a this to be exite-
sive developments, From now forward
pated. The West Wall and
world polities will be Inseparable from world
all other fortifications have
to be name No 7-bosts or
conflict. One of the political issues contains the
other warships. No Luft-
walle. No chell alteraft that
whole quéstion of life and death.
might be currented.
There is - false and pernicious controversy upon
THE HIDDEN
the suppoind alternative between a "hard" and a "soft"
peace. The misimum of the Allies" terms means a hard
HANDS
and an Irnis peace.
Even these world
Otherwise we ahould
threaten exerrilla wartare
only cut down and efecticate
have é third and work
and murderous conspiracy.
evila that lts en Win aut-
world WAT in ten years or
Their political aprota may my
the We have 5 drai with
what Bes undernista and be-
less, Britain might not find
to organise anetal chain, What
of 11
blad. For lotalitation abd
herseit at equal advantage
With planes and
predatory war in the machine
in the coming rocket age.
Comacks as the Allter' dia-
REV. the German Industrial
So far as the supreme co-
posal, the guerrilla bands will
was the basts or Org-
Bnd themselves the hunted.
mas militariam and the con-
jective of Insting Derman
dition of its éxistration
disarmament is concerned, "
not the humers They will
be an unbearable nuissance to
Without that the second
are facted to 8 chain of area-
Work War milk not have
Milles. Les tas examine them
the más of the general
taken place. to bevie could
Unk by link.
pépulation and a measer so
iss means of
have been dared by the
Find the organized forces
of the Webermächt must be
Fear of the Omtapo will be
smalled and pulvertied in the
times by the Allet. They
The botten milignates wire
will have broadeasting in
hand to glove with the
final battles on the frontiers
their hands
General State is other coun-
of the Reich and within ft.
The dometados of beffied
tries they the whole vast
This time the Germans, on
their own will must suffer
bullydom must be crushed,
financial complex Interintand
colorent a a di tratesevable
wilhout mercy. It may be
with them were the resi and
defeat
the best thing for the Betch
efficient Fifth Column et
and the world that the Name
Mitleriam active even
What next? The Allies
Britain but powhere so ID:
must subject the whole of
fanalics should contribute
their so their own es-
permiting AND potent
Germany to thorough me.
termination
as = the United States
taby occupation. R will have
Oerman International raz-
to be prolonged for % term
of years renewable or deter
THEN, MAKE SURE
tole possessed the accest con-
trul of namerous disquised
minable The nature of the
When the last sparks of
subsidiaries. By another
sequel after that period will
armed anarchy are trodden
arthod DE less extensive they
depend on whether the Get-
out the occupying Powers
allared co-partient Imposed
man people have redousced
must personed with their
TEL return for
Moloch or not
exurable of extinge
advantages, and not the better
- German militarium
of the
THREE ZONES
Et means the destruction of
For example, the enormose
methods and traditions which
chemical their unity anown
AND BERLIN
tax beimged to the filire
as the L 0. Parten manipo-
and habit of the whole of
lated a tat must apacimas and
We may expect that Our
German Date for generations
varied sobare of Interesta than
many at the estart will be
divided into three total of
since they first began to
Its same implies Be visible
regard themselves as a ton-
and Invistble tentacles com-
occupation
verba people,
passed the globe. In the
a la understood. according
Not - - wrench
crucial years = worked Dir
to Mooring abserves, that
from them their weapdes of
not only by
will control the
my not my fir-reaching
canning trade desis, but by
eastern region with the expep-
and unprenidented measures
pleasibility and
tion of Befuil: Beflain the
BY must exclude every pourt-
espionage.
north and the United
bility of reviving this enemy's
Heavy industry has to be
States the southwell Later,
was meking power.
readered in Get-
no doubt, shese arrange
No water of an armed
many, Arienals the Kruppe
ments will be residented 10
turne of any sort as be un
and /-ime others, whose NO
make room too the vital and
to Overnany. The beath of
wage 4th
ungent claims of Free Prance
- the was spicial
Bertin signe will he main
should 30 cleared from the
to joint control " the Great
mish. All chemical
Three
The relentidas businvida et
nesipation a to annibiliate
total International mane-
Germany's war-making power.
a means root-and-branch
Dotorious cattela have so be
und intragues of The
Claimament of a dosible
All the books and
End-millistr and industrial
= accounta of Orrman banking,
well a other
This process m - No-
tematão form TEAS be analyed
must be open to screting due-
by the tast - of the
Ing the years of compation
Name death april They
CRIME AND
JUSTICE
They masse be 79473 of
territory late control over all Owner
will - time to
Many other salient sipina
been under the scourge of
Time The peoples who have
Barry have and depoga-
to insredible struction
have been subject
leties have thes Accom-
a cold-biooded leering devting
In Strope by
robbery, and (Tery non-
of murder, manage rape,
crivable form of crusity ton.
the and outrage These
crimes 57 so Heaven
realise to what extens
We of the WYRE do not
delivered benefit aur how the
suffered an this Defore
Besh deoply is has billen toto bee
Other liberited peripies are
possessed, Has the Boviet
of contitution, compensation
Union to verming questions
British and American dama-
and exteguards which the
stand Chieles must learn to under-
here to the core of the mai-
Today we confine oltratives
diamed The Industrial
an German the X totally
to atexant her for
TERMS Be Unit this in
many E FINE frein responsions
Me lla nature 14 . United Dates-
in of time.
Begand IL there can be the
resultion of viatory and no
Brittsh Commenwealth the
the reducing alliance of the
system 4d security without
United Blates and the floving
Union Fatter this will be
or a better world or -
the imprenable foundation
see & WITH
One PATE trush is certain
long-term and effect Bo far 45 the
BENCE Piere to Desce VIII be to 4 list 100-
Treasury Department
265
Division of Monetary Research
Date Nov. 9, 194419
To:
Secretary Morgenthau
You might want to glance at
the red-penciled portions of this
letter from Aarons.
H.D.W.
:
WHITE
- Room 214-1/2
286
22
VICTORY
BUY
TREASURY DEPARTMENT
WASHINGTON 25
AIR MAIL
London
Mr
AIR POUCH
October 11, 1944
No. 103
Dear Mr. White:
I have just returned from a short trip to Paris and thought
you might be interested in a few observations.
I left London (via Air Tran sport Command) on Sunday after-
noon, October 8th, and arrived back here again Tuesday noon,
October 10th. The specific purpose of the trip was to talk to
Hoffman and Col. Bernstein on the problem of restoration of
financial and business communications and lifting of Trading
with the Enemy restrictions. I am drafting a comprehensive
cable on that subject and therefore shall not go into the matter
here except to say that the lifting of the ban on commmunications
would naturally raise a question as regards effectuation of the
purpose of Saxon's trip. Thus, if financial and commercial re-
lationships are allowed to be restored, by virtue of our contem-
plated deletion of France from General Ruling No. 11, it is per-
tinent to ask whether this would not permit the American banks
to "jump the gun" and reestablish relationships, ratify past
conduct of their Paris offices, etc., before we had a chance to
complete our investigation.
My answer to this is that there is in fact no ban on com-
munications with Paris right now and that it would be better for
Treasury to deal with the matter ad hoc with the head offices
in the United States. There is a steady stream of people, both
in uniform and in civilian clothes, proceeding daily to and from
Paris on official business. There is no censorship or security
examination, or questioning of any nature (insofar as Americans
are concerned) on the Journey to Paris. There is a pro-forma
security examination on the return journey. It is necessary for
civilians to obtain a visa and a military permit in order to go
to Paris. However, when Paris becomes part of the "zone of the
interior", as is contempla ted very soon, it is probable that the
French will ease up on such restrictions as now exist.
In other words, it is so simple a matter now to communicate
with Paris, either personally or through persons who travel
there, or through State Department channels, that it would be
only a hollow gesture - and one which would produce no substan-
tial benefits for us - to insist on a retention of our legal re-
strictions on communications and financial intercourse, especially
after external closed letter service is resumed, and after Paris
becomes part of the "zone of the interior".
Regraded Unclassified
267
-2-
It is also a simple matter at the present time to take
sterling and dollar currency from England into France, although
it is understood that in the very near future new policing mea-
sures on this score will be installed. We and the Financial
Branch of G-5 SHAEF, as well as the interested U.K. agencies,
have pressed for the installation of these policing measures.
At the present, however, no questions are asked of outgoing
passengers, no instructions are handed out, and no signs or
posters are in evidence on the subject. There are good grounds
for believing that many pilots and passengers carry sterling
currency to Paris, sell it for around 400 francs to the pound,
and that some of them bring back francs for reconversion at the
Finance Office here. This supposition is reinforced by the un1-
versal discontent expressed by U.S. officers on the rate of ex-
change. It is their most popular subject of conversation. They
blame the United States for not giving them enough francs to
meet the high Paris prices. That is as far as the average think-
inc goes, except that they think they are thereby fully justified
in using black market currency facilities.
I found that the officers' messes in Paris were good and
that breakfast cost 10 francs, and lunch and dinner 20 francs
each. Officers are generally billeted in luxurious establish-
ments. Cabaret entertainment, champagne, etc., are, of course,
not priced on the same level.
Passing to another subject, Hoffman is now occupying the
office of the former Treasury Attache and, in accordance with
Taylor's and my agreement, is going to break away from formal
attachment to the SHAEF Mission for France, although he will, of
course, continue to cooperate fully with the SHAEF people in and
around Paris. Hoffman feels that he can effect this change in
status (whereby he will become exclusively a U.S. Treasury Re-
presentative attached to the diplomatic mission) without a formal
statement on the subject from Washington. He will let you know
if he runs into any difficulties. To the extent practicable,
Hoffman will communicate with you directly from Paris through
the mission there, but will furnish us copies of all such commu-
nications.
At Taylor's request I passed on to Hoffman a number of
suggestions as to subjects for reporting by him, and also had
some general discussion with him concerning his work.
Saxon was in the process of orienting himself when I was
there. He had only arrived a few days before my arrival. He
had scheduled a conference with the Paris manager of Chase Bank
the day of my departure.
You will be interested to know that Saxon's plane was shot
up by anti-aircraft fire on his passage to Paris. The pilot was
not too familiar with the route and passed over Alderney, one
of the German-held Channel Islands. They were under attack for
Regraded Unclassified
He su iciony 208
Y un
-3-
whap who tooh
to ta
about three minutes. The first shell wounded General Betts
(G-2). The succeeding ones knocked out both motors and riddled
the plane. Just as the plane was about tc hit the sea, the
pilot succeeded in starting one motor and managed to reach an
emergency landing strip on the mainland coast. Saxon and his
baggage miraculously escaped without a scratch. Saxon counted
over 100 holes in the fusilage of the plane.
Sincerely,
L.C.Aanous
L. C. Aarons,
U.S. Treasury Representative.
Mr. Harry D. White,
Assistant to the Secretary,
Treasury Department,
Washington 25, D. C.
P.S.: Since the above letter was written, your No. 8283 of
October 9 has been received. Inasmuch as It is advisable that
Taylor should proceed to Paris to confer with Col. Bernstein,
General Hilldring, and others, we are trying to make arrangements
to get a reservation for him on the plane leaving here October
13. Under the circumstances, he will arrange for Hoffman's re-
turn to London. Inasmuch as Saxon is already in Paris, there
should be no difficulty in arranging for him to take over. It
is our view that Hoffman can be usefully employed in France, and
that, given instructions, he will stay within the reservation.
However, we await your further instructions on this matter.
developm
L.C.A.
institutions
130
30 misiviC
domands
Regraded Unclassified
269
Treasury Department
Division of Monetary Research
Date
Nov. 9, 194419
:
Secretary Morgenthau
This letter from Hoffman raises
some important questions that you may
want to discuss with us, though they
are not directly Treasury business.
H.D.W.
MR. WHITE
Branch 2058 - Room 214-1/2
270
VICTORY
BUY
TREASURY DEPARTMENT
BONDS
WASHINGTON 25
AIR MAIL
AS
FIAMPS
Paris
SECRET
October 12, 1944
Mr. H.D. White
Assistant to thenSecretary
United States Treasury
Washington, D/C/
Dear Mr. White:
I understand that Lt. Col. Cadys is returning to the States
early next week and am taking this opportunity to write to you
directly on a matter which I would not want to report through
ordinary channels. I will sand a copy to Taylor in London for
his information. Please excuse the typing, which is my own,
as I have as yet no secretary except a soldier through whom I
would not want this tompass.
As I have reported on numerous occasions the basic pol-
itical situation in France remains in a very uncertain state.
It is extremely difficult to get a clear picture of all the
forces at work, but it is certain that the future of France
is going to be governed to a great extent by what is going on
now and in the next few months. It is my impression that the
dominant factor in the situation is the widespread and deep-
rooted determination on the part of the masses of the people
to force through a real "new deal" in the control of the
French state and French economic life. This is what underlies
the demand for epuration in the broad sense. There can be no
question but that the articulate working classes, small
bourgeoisie end, to a great extent, the higher income groups
as well, are thoroughly and completely fed up with the kind of
control of government and industry which existsed prior to
the war. While this feeling is generally expressed in the
form of demands for cleaning out collaborators it is clearly
& much more fnfdamentalmatter at bottom. I think it is important
to realize this, as many current developments are comprehensible
only in the light of this fact.
In this situation, and under the extreme difficulties of
a material and economic nature under which all administration must
be carried out now, the government has as yet not taken action
to meet the public pressure for "epuration" and reorganization
and gives an impression of not being able to meet the issues
squarely. DeGaulle's recent speehhes ( copies of which have
been forwarded in the form of clippings) are supposed to outline
the governments policy on major issues. Of these, only the
Lille speech seems at all outstanding and that sounds to most
Frenchmen like the same old popular front line which got nowhere.
Regraded Unclassified
271
2
There are, therefore, tremendous potentialities in the situation
as the government line is not fixed.
In this unsettled situation the French are looking every-
where for guidance. They are extremely receptive to views of
outsiders, particularly the English and Americans. They are
also, of course, determined that they will handle their own
affairs and sensitive to the point of mild insanity on the
question of sovermeignty etc.. All this is natural under the
circumstances. However, they are clearly looking for straws in
the wind and for help and guidance, and they are being influenced
by what they are told about American and British views. (I am
speaking now of our influence on opinion, not our obvious
influence on policy which arises from the presence of our
armies here, day to day dealings with the French, etc..)
This brings me to the special point of this letter.
I am convinced that American influence which could do
a lot to stablise the situation and push int in a progressive
direction, ,first, being very poorly represented, and, second,
almost whally bad. The caliber of our diplomatic representation
is not high, to put it mildly, The people in this embassy
are without exceptionscareer officers in the foreign service
who have not one spark of drive or imagination and who would,
on the whole, be incapable of getting across a policy if we had
one. They are not bad people, they are simply not competent
to represent the United States in a country like France. They
are not even competent to report on political developments because
they have no real conception of what those developments are
about. It is my conviction that our top people have not the
slightest appreciation of what is going on now in a situation
which is, in the real sens revolutionary. There is nothing
in the past record of Reber ( Eisenhowers adviser on France) or
Chapin ( charge d'affaires) to indicate that they would have
such appreciation. I have called on Chapin numerous times to
discuss in a general way the problems I am dealing with and
he has never had one single thing to offer except to complain
about the cost of living and ask whether I thought they could
get bigger allowances. The situation is a disgrace. Unfortunatey
it is not relieved by the caliber of our representation on the
military side which is, if anything, worse. The SHAEF mission
is, in my opinion, even less competent than the embassy to
represent our government here and interpret to the French
our policies and point of view. There is, in fact, nobody here
who could be looked upon as & strong, competent, and effective
representative of our government at a time when such represent-
ation is probably more important for the future of Europe and
of our relations with Europe than it will ever be agin.I have
not met the new ambassador but advance reports do not lead me
to believe he will remedy this situation.
The second and more important point is that I believe
that what influence the U/S/ is exerting is in the direction of
thwarting any real progress towards the solution of the basic
political problems of France. It could hardly be otherwise
under the circumstances. Whenever there is a question of supporting,
Regraded Unclassifie
3
272
even in small ways, a point of view or a policy the American
view which the French are likely to get is one that encourages
inaction, or action to thwart the radical and progressive
elements in the country in their drive for change. I don't see
how there could be any doubt in the mind of the average French
official but that the U/S/ policy is against change, against
nationalisation of industry, against radical monetary or tax
measures, and for a strong policy against communism. The local
views which are heard and which get acceptance here are mostly
those of people who have something to lose from epuration or
changes in industrial control, particularly ex-patriate Americas
and French managers of American firms who are anxious to have
the American flag thrown over their properties. The embassy
has every reason to be interested in their point of view, of
course, but when it merely accepts this point of view without
investigation, without any effort to find out whether these people
betrayed France during the occupation, and without criticism, it
is a serious reflection on the mentality of the people represeding
us here. The one effort I know of to protect the embassy again$
dealing with scoundrels was an inquiry made of M. Hervé Alphand,
of all people ( now in the ministry of foreign affairs), as to
whether the embassy needed to be concerned lest it talk with
or deal with collaborationists unknowingly. Alphand replied that
the embassy needmn't worry as all collaborationists would be
in jail and the embassy could feel free to deal with anyone who
is at liberty. Even if this were true, of course, it is no
excuse for accepting the political philosophy of extreme reaction
to the exclusion of other points of view.
To sum up this situation I would say that if the French
government has shown little change from the mentality of 1939,
the American representation here has shown no change from that
of 1940 - i.e., the Vichy policy. In fact a very considerable
part of the personnel of this embassy is made up of people who
were in Vichy until 1942. If any real progress is made by the
French in the next few months it will be in spite of U/S/
indifference or even opposition, not with our support. At a time
when, in my opinion, we would push the French government ina
liberal direction and possibly head off the explosion that is
bound to come otherwise we are encouraging a do-nothing policy
and strengthening the position of a lot of second rate men
who are incapable of acting boldly under the circumstances.
On reading over this letter I realize that my comments have
a very familiar ring and that, unfortunately, the status of
American representation here is not peculiar to this place. How-
ever I believe it is my duty to submit my views on this matter
to you as I feel that many things that will happen in French-
American relations and in French affairs will be a direct or
indirect consequence of this state of affairs.
As far as my own operations are concerned it would be a
tremendous help to me to have some guidance from the Treasury
on what role I should try to play in this general situation. I
would particularly like to know the Secretary's views on the
extent to which I should try to encourage tendencies which seem
to me to be progressive and democratic. Occasions are constantly
Regraded Unclassifier
CABLE TO AMBASSADOR WINANT AND MANN FROM DEPARTMENT, FEA AND WRB
273
During the first and second half of November, the balance of War Refugee
Board's 300,000 three-kilo food parcels will go forward consigned to Inter-
cross as authorized by the Berle-Foot Agreement.
In view of the extreme urgency of extending additional aid to unassimi-
lated persons in German-controlled concentration camps and the time-sonsuming
aspects in this country of food procurement, packaging and shipping operations,
the Department, FEA and WRB recommend the shipment from this country of an
additional 300,000 three-kilo food parcels during a three month period
beginning December 1944 for consignment to Intercross. This recommendation
is endorsed by the Department, FEA and WRB and we jointly request that this
matter be referred to the Relief Sub-Committee with a view to obtaining
Blockade authorization to proceed with this program at the earliest possible
date.
THIS IS WRB LONDON CABLE NO. 21.
14
9:30 a.m.
November 9, 1944
Miss Chauncey (for the Sec'y) Abrahamson, Ackermann, Cohn, DuBois, Friedman, Hodel,
Lesser, Mannon, McCormack, Files.
FH:AA:PJM:ar 11/8/44
Regraded Unclassified
274
CABLE TO AMBASSADOR WINANT, LONDON, FOR MANN FROM WAR REFUGEE BOARD.
Please deliver the following message to Dr. Joseph Schwartz from
M. A. Leavitt of the American Jewish Joint Distribution Committee:
QUOTE CONTRARY TO PREVIOUS INFORMATION OUR LATEST INFORMATION
IS THAT BECKELMAN HAS NOT DEFINITELY MADE DECISION AND IT MUST
BE LEFT SQUARELY TO HIM. UNQUOTE
THIS IS WRB LONDON CABLE NO. 22.
4:45 p.m.
November 9, 1944
Regraded Unclassified
275
ALH- 634
Lenden
Distribution of
true reading only by
Dated November 9, 1944
special arrangement.
(SECRET a)
Rec'd 8:20 p.m.
Secretary of State,
Washington.
9735, November 9, 5 p.m.
FOR PEHLE FROM MANN.
Notwithstansing that I requested materials men-
tioned in your WRB 20 en feur separate occasions since
sending my 8133 of September 29, I was successful in
obtaining them only on November 7. They were ferwarded
to you by air peuch same day. I have premises of other
materials cencerning this preject which will be for-
warded when and if received.
GALLMAN
BB
Regraded Unclassified
276
KEM-618
London
Dated November 9, 1944
Rec'd 5 p.m.
Secretary of State,
Washington.
9736, November 9, 5 p.m.
FOR PEHLE FROM MANN.
Browne and I saw Mason, Chief Refugee Section,
Foreign Office, and informed him of contents of WRB 19.
He would not give definite commitments concerning steps
which British would take. British Minister in Bern had
been advised by Jewish agency on October 31 that
negotiations condicted directly with Germans had assured
exit of 8,000 Jews and Mason believes that the 2,000
reported by Katsi are a part of that group. He has
cabled Bern to determine facts and instructed Minister
to do everything possible to obtain entry of these
persons into Switzerland. As soon as a reply has been
received or it is learned that some or all of these
persons are in Switzerland, Mason has said that he will
be in a position to advise the steps which British will
take. He agrees with boards view that this is an
unexpected chance to rescue some of doomed Jews in
Budapest if report is true and that this opportunity
must not be allowed to end in failure.
Mason, as you know, is very cautious and hesitates
to commit himself on anything. Also when we discussed
subject matter with him he had not discussed it with
other interested persons in the British Government.
I feel that if Katsi's report is confirmed, we will be
able to get a commitment from the British Government
to take parallel action to that outlined in board's
telegram. I shall report developments learned through
British Foreign Office.
GALLMAN
JMS
Regraded Unclassified
277
CABLE TO AMERICAN DELEGATE, ROME, FROM WAR REFUGEE BOARD.
Please deliver the following message to Arthur Greenleigh from
M. A. Leavitt of the American Jewish Joint Distribution Committee:
QUOTE WE AUTHORIZED JUDAH MAGNES ARRANGE REIMBURSE REFUGEES
FROM ITALY THEIR LIRA EQUIVALENT LEFT WITH ALLIED CONTROL
COMMISSION. MAGNES ADVISES CLAIMS IN PALESTINE AGGREGATE
APPROXIMATELY 11,000 POUNDS ALTHOUGH WE UNDER IMPRESSION TOTAL
THESE CLAIMS AMOUNTED TO $90,000. PLEASE ARRANGE THAT COMPLETE
LIST OF CLAIMS BE FORWARDED TO MAGNES JERUSALEM FOR REIMBURSEMENT.
WE ASKED MAGNES THAT PALESTINE GOVERNMENT CERTIFY AMOUNTS REPAID
TO REFUGEES SO THAT EQUIVALENT LIRA CAN BE PAID OUT TO YOUR ACCOUNT.
PLEASE KEEP US ADVISED. UNQUOTE
4:45 p.m.
November 9, 1944
Regraded Unclassifie
278
CABIE TO AMERICAN CONSULATE, JERUSALEM, FROM WAR REFUGEE BOARD.
Please deliver the following message to Judah Magnes from M. A. Leavitt
of the American Jewish Joint Distribution Committee:
QUOTE WE HAVE RECEIVED APPROVAL TO REIMBURSE ITALIAN REFUGEES
PALESTINE EQUIVALENT THEIR LIRA DEPOSITS LEFT IN ITALY. PLEASE
ARRANGE HAVE CENTRAL BANK PAY OUT CLAIMS IN FULL AGAINST PROPER
RELEASES AND RECEIPTS AND HAVE PALESTINE GOVERNMENT CERTIFY TO
ALLIED CONTROL COMMISSION ITALY THAT SUCH PAYMENTS HAVE BEEN MADE
SO THAT LIRA EQUIVALENT WILL BE PAID OUT TO OUR REPRESENTATIVE
ARTHUR GREENLEIGH. WE ASKING GREENLEIGH CHECK TOTAL AMOUNT CLAIMS
WHICH WE UNDERSTOOD WAS $90,000 INSTEAD OF $45,000 WHICH YOU REPORTED.
UNQUOTE
4:45 p.m.
November 9, 1944
Regraded Unclassifie
279
SECRET
" 174
4:35 PM
Nov. 9, 1944
AMERICAN CONSUL
JERUSALEM (PALESTINE)
With reference to Department's telegram ne. 8925
to Lenden of October 26, 3 P.M., repeated to you as
Department's 174, and your 165, October 30, neen, there
fellows for your information a paraphrase of Lendèn's
reply (telegram no. 9498, Nevember 2, 7 p.m.).
BEGIN PARAPHRASE. Today we teek eccasion to discuss
the situation in Palestine (reference Department's telegram
no. 8925) at the Fereign Office. Although no pelicy change
respecting the Palestine situation is anticipates by the
Foreign Office, an efficial stated that QUOTE seener or
later UNQUOTE - upon exhaustion of the immigration quotas -
the Government of Great Britain would need to reach a. new
decision in the matter. This would net, he believed, be
earlier than the beginning of the summer of 1945. This
efficial added that it is ebvieusly to the interest of the
Allies to have a quiescent situation in the Middle East.
No risks, he said, could be run that might result in majer
- disersers on the part of the Arabs in that area.
Embassy is attempting to ebtain cenfirmation of the
statistics given in Department's telegram.
With reference to statements made en the Jewish
question during the Presidential campaign in the United
States, the same efficial was of the epinien that these
preneuncements have net aroused as much reaction as had been
expected, as far as the Araba are concerned. END PARAPHRASE.
Acting
Stettinius
Acting
UPM
ME:EMN:MA 11/7/44 NEA
BC
280
CABLE TO AMBASSADOR NORWEB, LISBON, FROM WAR REFUGEE BOARD.
Please daliver the following message to Robert Pilpel from
M. A. Leavitt of the American Jewish Joint Distribution Committee:
QUOTE SCHWARTZ WELL LEFT FOR LONDON PLANNING PROCEED
SWITZERLAND SOONEST VIA FRANCE. ADVISE SALY MAYER.
UNQUOTE
THIS IS WRB LISBON CABLE NO. 112.
4:45 p.m.
November 9, 1944
Regraded Unclassified
281
DCG-795
Lisbon
Dated November 9, 1944
Rec'd 10,54 a.m. 10th
Secretary of State,
Washington.
3904, November 9, 7 p.m.
Blickenstaff says Spanish Embassy Washington
has not sent information concerning release group
rabbis Shanghai to Foreign Office. This is WRB
250 JDC 116 from Pilpel for Leavitt. Refers to
WRB 108 your SOF October 25.
NORWEB
WSB
Itiss Chauncey (for the Sec'y) Abrahamson, Ackormann, Askin, Cohn,
Drury, DuBois, Friedman, Gaston, Hodel, Lesser, Marks, Mannon,
McCormack, Pehle, Files.
Regraded Unclassified
282
FMH-27
PLAIN
Lisben
Dated November 9, 1944
Rec'd 10:03 p.m., 10th
Secretary of State,
Washington.
3905, ninth, 7 p.m.
FOR LEAVITT FROM PILPER
JDC 117 WRB 251.
Perlaan Rome advises, (first) 150 male Polish Jews
interned Cerfu being breught Ferramenti camp (secend)
further our WRB 97 military furnishing three additional
planes carrying six tens winter army clething to Jewish
community creatia thereby alleviating situation these
1,400 people (third) cembined chiefs of staff approved
clearance of funds for refugees new Palestine Fort
Ontarie from Italy and Allied Commission prepared pay
us lire equivalent when advise jeint has paid refugees
(feurth) volume work increasing and Perlman needs
help. Perlman suggests you endeaver arrange temperary
assignment Skernikleub and Shacew until their UNRRA
missions require them (fifth) Greenleigh's French
visa expected today and Greenleigh leaving upon receipt.
MORNED
RB
Regraded Unclassified
283
JVC-55
PLAIN
Lisben
Dated November 9, 1944
Rec'd. 10:33 p.m. 10th.
Secretary of State,
Washington.
3906, Ninth, 7 p.m.
FOR LEAVITT FROM PILPER JDC 115.
WHB 249. 87 children, 28 adults, arrived
Istanbul November 8 from Bulgaria preceeding
Palestinewards tenorrew. View present inability
send food packages Theresienstaat Bergenbelsen
other camps ex Lisben and view Laura Margelis
reports feasibility sending parcels ex Sweden
suggest apprepriate amendment license. Laura
advises world Congress parcel preject likely be
abortive.
Laura more eptimistic concerning Steckhelm's
Jewish cemunity understanding of our function and
cengress functions and indicates Ehrenpreis aware
of inadvisability his Cengress connection. She
visited Malmo, Geteberg, Halsingberg, meeting
communities and Chalutsim and finds general interest
and desire to be infermed about sur work. Laura
desire receive regularly dezen cepies digest other
publicity material.
MORREB
MJF
Regraded Unclassified
284
CORRECTION
DMH-648
November 9, 1944
This telegram must be
paraphrased before being
communicated to anyone
other than a Government
agency. (RESTRICTED)
In telegram from Bern numbered 7365, dated
November 6, 4 p.m. page 2 line 1 delete "(*)"
insert "Italians" 80 as to read "Yugoslavs,
Spaniards and Italians."
DIVISION OF COMMUNICATIONS AND RECORDS
of
MEV
Note: Correction from the Legation.
Mannon, McCormack, Pehle, Files
Cohn, Drury, DuBois, Friedman, Gaston, Hodel, Lesser, Marks,
Miss Chauncey (for the Sec'y) Abrahamson, Ackermann, Akain,
Regraded Unclassified
285
CABLE TO MINISTER HARRISON AND MCCLELLAND, BERN, SWITZERLAND
Amembasey Managua reports that the following telegram was sent by
Nicaraguan Foreign Office to Swiss Foreign Office on October 18:
QUOTE I have the honor to request Your Excellency to
communicate to the German Government that my Government has
given authority to the United States of America to negotiate
the exchange of all persons who claim Nicaraguan nationality
for German nationals who find themselves in this hemisphere.
UNQUOTE
The foregoing is communicated for your information in connection
with earlier messages referring to the protection of claimants to Latin
American nationality in Axis-controlled territory.
THIS IS WRB BERN CABLE NO. 267.
9:30 a.m.
November 9, 1944
Miss Chauncey (for the Sec'y) Abrahamson, Ackermann, Cohn, DuBois, Friedman, Hodel,
Lesser, Mannon, McCormack, Files.
BAksin:tmh 11-6-44
Regraded Unclassified
28.6
AIRGRAM
A-540
5:35 PM
Nov. 9, 1944
ANLEGATION,
BERN.
The Department considers it necessary to add another
category to the priority grouping of persons eligible
for exchange given in Department's telegram no. 3082,
September 6, 1944.
The priority groupings listed in telegram under
reference are therefore amended by the addition of the
following classification:
G. Immediate family members, regardless of the
state of their documentation, of alien residents of
the United States or of other American Republics.
This heading is intended to cover spouses and/or
children.
Please inform the Swiss Government accordingly.
ACTING
Stettinius
Acting
BL
Regraded Unclassified
287
CABLE TO STEINHARDT, ANKARA, FOR KATZKI FROM WAR REFUGEE BOARD
Board would appreciate having list of names of people lost on
the "Mefkura." It is suggested you forward same through pouch.
THIS IS WRB ANKARA CABLE NO. 126.
11:00 a.m.
November 9, 1944
Miss Chauncey (for the Sec'y) Abrahamson, Ackermann, Cohn, DuBois, Friedman,
Hodel, Lesser, Mannon, McCormack, Files.
FH:hd 11/8/44
Regraded Unclassified
DEPARTMENT
288
INCOMING
DIVISION OF
OF
COMMUNICATIONS
STATE
TELEGRAM
AND RECORDS
LC - 656
Chungking
This telegram must be
paraphrased before being
Dated November D, 1944
communicated to anyone
Rec'd 8:59 p.m.,
**
For security reasons the
text of this message must
other than a Government
agency. (SECRET 0)
CONFIDENCIAL
be closely guarded
Secretary of State,
state
Division
06
Washington.
NOV 2 U
1795, November 8, 1 p.m.
FOR SECRETARY OF TREASURY FROM FRIEM.N.
0.0. During October price trond in Chun ixed
and retail prices for October is 39,740 as compared
with 36,726 in September. Rice prices rose during
first half of month but declined during second half
approximately to levol prevailing at beginning of
month while prices of clothing, vegetables and coal
rose steadily.
Two. Money market tight during most of month
but eased towards end. Price rates between eight
and ten percent per (=)h with some transactions at
eloven and twelve percont.
Three. In Chungking United States dollar notos
roso stoadily during October from about 235 to
275-280; United Statos dollar bonds rose from 101
to 122; United States dollar savings certificatos
from 160 to
Regraded Unclassified
289
-2- #1795, November 8, 1 p.m., from Chungking
from 160 to 185; rupee notes from 81 to 97. Except
for rupees, most of rise during last week of month
and trend continues; United States dollar notes now
(November 6) at 300 to 310 and United States dollar
saving certificates about 200. In Kunming similar
trend; United States dollar notes rose from 250 to
300 during October, United States savings cortificates
from 180 to 200-205; rupees from 90 to 112. Among
more immediate causes for sharp rise are: naval
victory in Philippinos stimulated demand both in free
and occupied China, roduction in supply of foreign
exchange as UCB still not resumed large scale salos
and United States military personnel not offoring
notes as means of obtaining CN dollars to buy UCB
drafts and in Kunming reported scarce during carly
part of month that Provincial Government was going
to ovacuate because of military defeats in southoast.
Smuggling of rupee notos and G. tolas into Kunming
from India reportedly still being done on oxtonsive
scale.
Four. In Shanghai during last week in October
rates for CRB were 4 CRB to 1 CN and 800 CRB to 1
United States dollar; bond at 180,000 CRB por ounce;
roports
Regraded Unclassified
290
-3- #1795, November 8, 1 p.m., from Chungking
roports here that high price for gold in Shanghai
is accelerating flow of gold from free China into
Shanghai.
GAUSS
BB
(*) apparent omission
it
Regraded Unclassified
291
NOT TO BE RE-TRANSMITTED
COPY NO. 4
SECRET
OPTEL No. 364
1944.
Information received up to 10 a.m., 9th November,
1. NAVAL
On 7th bad weather prevented minesweeping Scheldt
Estuary. The length restriction on ships entering the port of
Rouen has been lifted. A U-boat was attacked yesterday in St.
George's Channel and possibly sunk by one of H.M. Canadian
Frigates and a Corvette.
2. MILITARY
WESTERN FRONT. Unconfirmed reports state U.S.
Third Army has launched large-scale attack between Nancy and
Metz and has captured a number of small towns. Slight progress
at ceased. Moerdijk. On Walcheren organised resistance has practically
ITALY. Eighth Army began an attack 7th/8th de-
signed to secure Forli. Fair progress made and immediately
south of Highway 9 we have secured the airport while our left
flank is now only two miles south of Forli. Satisfactory
advances reported from Polish sector where leading troops have
occupied Dovadola on road 10 miles S.W. Forli and are within
21 miles S.E. of Medigliana.
BURMA. Our troops have advanced against opposition
to positions 1* miles west and 2÷ miles S.S.E. Fort White.
3. AIR OPERATIONS
WESTERN FRONT. 8th, 136 escorted Lancasters
(1 missing) dropped 655 tons in good weather on Homberg Synthetic
011 Plant - bombing concentrated. 289 escorted U.S. heavy
bombers (5 missing) dropped 426 tons on Leuna Synthetic 011
Plant, 140 on Rheine Railway Centre and 44 on other objectives.
Pathfinder technique employed with unobserved results. 23
Allied fighters missing but 12 believed landed safely in France.
German casualties 2, 0, 2. 1,353 fighter bombers and fighters
(6 missing) operated mainly over N.E. Holland and Western
Germany. Railway track cut in about 70 places, 37 locomotives
and many vehicles destroyed or damaged. 10 German aircraft
shot down. Beaufighters attacked shipping off Norway. Two
3,000 ton ships and an 800 ton coaster set on fire.
8th/9th. 50 Mosquitoes sent to Hanover and 9
to Herford. All returned safely.
MEDITERRANEAN. 7th. 711 strategic bombers (4
missing) dropped total 1,569 tons in Austria, Yugoslavia, Italy
and Albania. Main attacks railway centres Maribor - 349 tons,
2 railway targets Sarajevo total 444, Brenner Pass - 170, troop
concentrations Yugoslavia - 228. 302 medium bombers attacked
831 other aircraft hit 7 bridges and attacked communications
troop concentrations Forli area and hit 5 bridges N.E. Italy.
Italy and Yugoslavia.
Regraded Unclassified