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Volume 795, November 15 – November 16, 1944
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Volume 795, November 15 – November 16, 1944
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Henry Morgenthau, Jr. Papers
Diaries of Henry Morgenthau, Jr.
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DIARY
Book 795
November 15-16, 1944
Regraded Unclassified
- & -
Book Page
Appointments and Resignations
01rich, Ernest L.
Resignation announced by Treasury - 11/15/44
795
121
Correspondence - exchange of - 11/16/44
306
Sullivan, John L.: Resignation - exchange of
correspondence - 11/15/44
85
a) Drew Pearson's column on association with Navy
discussed by Sullivan and HMJr
33
- C -
Courier-Post
See Taxation: Stern, J. David
Customs, Bureau of
Dunkirk, New York: Revocation as Customs Port of Entry
recommended to FDR by HMJr - 11/16/44
308
- D - -
Dunkirk, New York
See Customs, Bureau of
- , -
Foreign Economic Administration
See Lend-Lease: United Kingdom - - Phase 2
- I -
Internal Revenue, Bureau of
See Treasury Department (Reorganisation)
Italy
Economic-financial mission to United States: HMJr will
welcome - - 11/16/44
322
a) HMJr asks FDR for advice on how far to go? -
11/17/44: See Book 796, page 119
- L -
Lend-Lease
United Kingdom
Phase a
Steering Committee conference - 11/15/44
1,31
a) Foreign Economic Administration situation
reviewed.
2
(See also Book 791)
1) Civilian standard of food consumption in
United Kingdom - memorandum
28
Conference of U.S. and U.K. representatives -
11/15/44
36,235
a) Tobacco, sugar, oil, machine tools, etc.,
discussed
Regraded Unclassified
- L - (Continued)
Book Page
Lend-Lease (Continued)
United Kingdom (Continued)
Phase 2 (Continued)
Conference of U.S. delegation - 11/16/44
795
206,244,268
a) Reopening of certain contracts discussed
244
b) Oil - memorandum on dollar expenditures by
United Kingdom
271
e) N.A.A.F.I. requirements
273
d) British var expenses abroad - Keynes review
275
e) Landing Vehicles Tracked: War Department
(Patterson)-Treasury correspondence concerning -
11/16/44
284
Federal Reserve Bank of New York statement showing
dollar disbursements, week ending November 8, 1944 -
11/16/44
286
Liquor
Certificates of Label
Sullivan-Gaston-O'Connell report - 9/18/44
113
Treasury release covering changes in label - 11/8/44
114
Gaston resume' - 11/15/44
112
- If -
N.A.A.F.I.
See Lend-Lease: United Kingdom - Phase a
Nation. The
See Taxation
- 0 -
Olrich, Ernest L.
See Appointments and Resignations
See also Post-War Planning: Surplus Property, Disposal of
- P -
Post-War Planning
Germany: Treasury Plan
See Press Conference (Treasury :HMJP)
Surplus Property, Disposal of
Olrich Puerto Rico trip reviewed - 11/15/44
115
.
resignation announced by Treasury - 11/15/44
121
Conference; present: HMJr, Olrich, 0.8. Bell, Gaston,
D.W. Bell, and O'Connell - 11/17/44: See Book 796,
a) Duncan as successor discussed
page 1
b) Memorandum for FIR ridding Treasury of
entire program discussed by Treasury group -
11/17/44: Book 796, page 10
1) Memorandum not used: Book 796, page 20
Regraded Unclassified
- ? - (Continued)
Book Page
Press Conference
Pre-talk by HMJr, Shaeffer. Gamble, and Miss Chauncey -
11/16/44
795
203
Puerto Rico
See Post-War Planning: Surplus Property, Disposal of
(Olrich trip)
- 8 -
Stern, J. David (Courier-Post)
See Taxation
Sullivan, John L.
See Appointments and Resignations
Surplus Property, Disposal of
See Post-War Planning
- T -
Taxation
The Nation: Non-profit status discussed by HMJr, O'Connell,
Cann, Miss Kirchwey, Miss Schults, Sterling - 11/15/44
46
a) O'Connell congratulated on open-mindedness by
HMJr - 11/16/44
294
b) Treasury group discusses further - 12/11/44:
See Book 802, page 53
Stern, J. David (Courier-Post): Tax case discussed by
HMJr and O'Connell - 11/16/44
295
a) Letter to Stern
298
b) Stern's reply - 11/27/44: See Book 799, page 99
Treasury Department
Reorganization
See also Book 790
Fiscal policy - memorandum on unification of - 11/15/44
59
a) Copy given to FDR
Tax matters discussed by Blough - 11/22/44: See Book 798.
page 14
Representation on the Hill discussed by Treasury group -
11/22/44: Book 798. page 16
- U -
United Kingdom
See Lend-Lease
Regraded Unclassified
copy
11/17/24
November 15, 1944
10:00 a.m.
STEERING COMMITTEE - BRITISH LEND-LEASE .
Present: Mr. Crowley
Mr. Acheson
Mr. Cox
Mr. Currie
Mr. Coe
Mr. Collado
Mr. Angell
Mr. Davidson
Dr. White
Mr. Casaday
H.M.JR: I thought this, gentlemen, that talking,
anyway for myself, the difficult part of this thing was not
brought to my attention because everybody has been so busy.
I had Lord Keynes and Sir Robert for lunch yester-
day, and they both want to leave town Friday night.
I
think Sir Robert Sinclair wants to leave Thursday. So
I mentioned to Frank Coe, who was there at the luncheon
representing the committee, that I would like really to
get down to grips with this thing about where we stand
on these difficult items. Well, this is Wednesday morn-
ing, and all of us can have a little time to turn around
and not wait until Friday.
MR. ACHESON: Does Keynes want to go away Friday?
H.M.JR: Keynes has to go, I think it is, Friday or
Saturday to Ottawa, where he wants to have six days of
talks similar to those he had here. Then - very, very
confidentially - he has a French gold situation which they
have a time limit on which he has to meet. He may have
told you that.
MR. CROWLEY: Yes.
H.M.JR: It is a very ticklish situation. I think
he has to be there on the 22nd. I know he is leaving
Friday or Saturday. What did he say, Frank?
Regraded Unclassified
2
- 2 -
MR. COE: He has got to get away over this weekend.
H.M.JR: Wasn't it one day or the other?
MR. COE: Yes.
H.M.JR: It is just as well, because we have been
kind of avoiding whether we are going to give them
tobacco, off-shore sugar, airplane contracts, and what-
have-you, and I figured we might as well come to grips with
it, ourselves.
MR. CROWLEY:. Would you like to hear for a few min-
utes how far we have progressed?
H.M.JR: I'd love to.
MR. CROWLEY: Supposing, Al, that you go ahead.
Don't get into too much detail, but bring them up to date.
MR. DAVIDSON: Yes, sir.
In the case of the food program we believe that we
have reached agreement on all sides. I believe that the
total amount of the food program was cut. It is approx-
imately 165 million dollars.
In connection with the shipping program I think we
have reached agreement on all sides and, as I recall,
we reduced that program approximately 60 million dollars.
H.M.JR: What method of payment or valuation? How
are they going to pay for these ships? That seemed to
be the question.
MR. DAVIDSON: There are two separate items. One
is the shipping service; that is, the actual shipping
services. Then there are ships which we lend-leased to
the British with the right to re-capture them. The only
question that really has been present has been with respect
to certain coastal boats. In the case of the coastal
boats we agreed that we would lend-lease those boats that
were required for carrying out the military program in
the Pacific, and that constituted approximately three-
Regraded Unclassified
3
- 3 -
quarters of the boats - or We anticipate that it will.
With respect to the remainder, we understand,
according to our latest advice of last night, that the War
Department is prepared to take over the boats that were
to be used in European waters - if, indeed, they didn't
take over all of the boats including those in the Pacific,
If that comes about, why the result will be to take it
out of our program altogether; otherwise we would provide
them on a Lend-Lease basis.
In connection with the petroleum program - under the
petroleum program - we have agreed that the requirements
are reasonable and that we will supply sufficient petrol-
eum products to meet those requirements. The only question
at issue has really been the question of stocks, and we
propose that with respect to stocks that we will reserve
the right in fulfilling their requirement to use our judg-
ment in bringing stocks down to what we believe to be
reasonable levels, which is a general reservation that we
make with respect to all other items.
The one further question on petroleum is in connection
with their exports. At the present time exports from
the United Kingdom may be made only on the condition that
they pay us the proceeds. We have tentatively agreed on
our side that when the stocks are reduced to levels which
take into account the export factor that we would be
agreeable to receiving not the full proceeds, but the
proportion of the exports based on what we contributed to
the U.K. pool and what they contributed to the U.K. pool.
Would you like some more elaboration on that, sir?
H.M.JR: No.
MR. CROWLEY: In other words, on the reserves that
are there we will have the right to draw down the pro-
portion that we put in, and they will have the right to
draw down the proportion that they put in.
Go ahead, Al.
Regraded Unclassified
4
4
MR. DAVIDSON: In connection with the program for the
Dominions and India, we were aboutto fill - I believe we
put in the full amount for all three with respect to their
original requests. Then if you recall, they put in
certain supplemental requests for easement items. I
don't recall the figures off-hand, but in the case of
India and Australia, I believe that we gave them approx-
imately half of those easement items, exclusive of any
capital equipment.
In the case of New Zealand, they had really only two
principal items; one, tobacco and the other one steel for
post-war housing.
In the case of tobacco we eliminated the cause of
the extreme shortage in this country. In the case of
steel we felt we couldn't justify it in view of the fact
that on their own proposal it was for post-war purposes.
However, what we did was to insert a miscellaneous
sort of easement fund of three million dollars which was
somewhat less than they asked for in toto for their
easements, with the understanding that this would be
available for consumers' items that were not in the short
supply in this country and which did not include any
capital items.
The only other item of interest on that program is
the locomotives for India. We had a discussion in
Mr. Terry's office yesterday, attended by Mr. Keynes and
others, and there the British turned down a tentative pro-
posal that we made that they take the locomotives and
wagons on a 3-C basis; that is, basis which would call for
their paying after knocking off the value of the war use
to them. They said that is a matter of principle - they
couldn't commit the British empire to what they conceived
to be post-war debts.
Since that time we have more or less worked out a
proposal which would call for their paying in full in
cash at the present time, with the understanding that we
would, in effect, give them 8. rebate at a later time when
the facts were known, based on the same principle; that is,
we would reduce the cost to them in terms of value of the
Regraded Unclassified
5
- 5 -
war use, and that they would really pay for only the
residual, peace-time value when those facts became known.
I believe that proposal will be acceptable to them.
MR. CROWLEY: Now, then, do you want to talk about
the exports? Oscar, do you want to talk about that?
MR. COX: Yes - on the export policy question,
Mr. Secretary.
H.M.JR: Do you mind - I'd like Mr. Acheson to have
a chance to raise any questions as we go along.
MR. ACHESON: That seems all right to me, Mr. Secretary.
MR. CURRIE: I'd like to add on the Indian program
that Keynes aske d us yesterday whether we would object to
considering an additional supplementary request for about
one hundred and fifty thousand pounds of steel for guns
for India which had been omitted by inadvertence from the
program.
MR. COX: There is one foot-note I'd like to add to
the food program. The British have taken the view that
this whole presentation is a financial one, subject to the
condition of availability of supply and competing demands.
There was & meeting of the Allocation on Food today which
proposed to cut the British requests down to one-seventh
on meats, of what they put in. If they do that, they not
even get an easement, but they will get a very drastic
reduction as against what they got in 1944. The primary
reason for that has been that there is a drop of something
over two million tons in meat production for 1945, and
they feel that they will have to put on more stringent
rationing, in any event, and that they couldn't allow more
of 8. drop than 110,000 tons when they asked for over 700,000
tons.
I think some of our people are making a presentation
to the Allocating Committee to throw it back into sub-
committee, in the light of at least the spirit of the Quebec
Conference that although technically it was financial, we
Regraded Unclassified
6
- 5 -
ought to do everything we reasonably can to see that the
supply thing backs up the financial commitment, and it
involves a pretty ticklish policy because it may well be
ascribed to the British food program and increased ration-
ing as a result in the United States.
But that is just a foot-note.
MR. ACHESON: I don't think I understand that, Oscar.
MR. COX: Well, the request that the British put in
for meat amounts to some 700,000 tons plus. We cut it to
some 500,000 tons, which would relieve their situation
somewhat but would not bring them up to a hundred percent
of either the pre-war level or to our levels.
After the request was put in, the sub-committee of
the Food Allocation group cut it down and recommended to
the main Committee that only 110,000 tons, approximately,
be supplied. Now, if that goes through without any change,
it involves a very drastic art in the British meat rations
as compared to 1944. The reason that the War Food pe ople
give for making that cut is that the meat production has
fallen off and that our own domestic consumption of meat
will have to drop from about 141 pounds per head to 128
pounds per head in 1945.
MR. CROWLEY: Now, Oscar, as I understand it, though,
we agreed to set up the money to maintain the 500,000 tons,
subject to its being available in the United States; that
we didn't want to put ourselves in a position where they
would say that we forced the reduced rationing in the
United States.
On the other hand, we didn't want to agree on the 110,000
tons, so you are agreeing to put up the money for the
500,000 tons plus the fact we will present all the evidence
we have hoping we can get what we can. And that is
agreeable to the English?
MR. COX: No, we haven't discussed that.
The reason I raise it is that I think this and
similar parts of the program where you have facts of
Regraded Unclassified
7
- 7 -
this kind will raise 8. question in substance, whether the
Quebec Conference and what happened has really been backed
up. I think up to date the British have taken the view
that we agreed to finance and that the availability of
supplies and other conditions - but where it is as extreme
as that, if it should end up at a hundred thousand tons,
then I think an appeal may have to be taken to Jimmie
Byrnes in the White House in terms of what our overall
national policy is.
The other corollary is that they have cut the Russian
food supply by fifty percent on the theory that this is
for military, for soldiers, and therefore the cut should
be less. But that is the program.
H.M.JR: Who cut the Russian food supply?
MR. COX: The Food Allocation Committee. This is
going on this morning. The sub-committee recommended
the cut to fifty percent.
DR. WHITE: you mean in meat?
MR. COX: Yes.
MR. CROWLEY: You might explain to them, too, about
the British position on the standard of living - their
food standards - as to how we agreed to handle that.
MR. DAVIDSON: If I may just interject -
H.M.JR: This isn't clear to me.
MR. DAVIDSON: The British originally proposed -
taking just the case of meat - they should have a level
of consumption that would be equivalent to their pre-war
standard or our present standard in the United States,
and they proposed to raise an issue of principle with us
that we would agree that they should get that level of
consumption.
Now, it was our feeling, I think, on this side
unanimously that we couldn't agree to any such principle
as a matter of principle; but I think - and this is in
Regraded Unclassified
B
- 8 -
line with what Oscar said - we felt that we had no
objection to stating we would finance that amount in the
event that there were great miscalculations as to the
supply and that in the event it could be made available
we stood ready to finance it.
So the figure we will put in will be the full 700,000,
with the understanding that that is no commitment at all
as to what they will actually get. And it was our under-
standing that the British would withdraw any issue of
principle if we did that.
H.M.JR: You fellows have got me kind of confused.
I know what we are aiming for.
Let me just say this. Guarantee of principle and
guarantee of money isn't going to put any food in anybody's
stomach, and the net result of this conference has got
to be, as far as I am concerned, that more calories are
made available to the English public as a result of this
meeting.. I don't care how the hell you get it, but as
far as I am concerned I am not going to take any answer
other than the net result - not dollars but calories into
the stomach of the British people in the beginning of
Phase Two.
MR. COX: That was the reason, Mr. Secretary, I
raised this question as an illustration, because if the
Food Allocation Committee goes along on its present gait
it will not be more calories in the British stomach - it
will be less.
DR. WHITE: You are just talking about meat. Are
there any substitutes, or does meat play so important
a role in the caloric consumption that you can make the
general statement that you made? In other words, the
Secretary is not saying they must have more meat--
MR. COX: It is a very substantial part--
H.M.JR: I say "calories" advisedly.
MR. COX: You can make up calories by potatoes and
brussel sprouts.
Regraded Unclassified
9
- 9 -
MR. CROWLEY: They are talking about the amount of
meat they want and need - that is, the amount they feel
is necessary to give them the calories to keep some kind
of a balanced diet.
Now, if you gave them all brussel sprouts and potatoes
and things like that, you might give them the number of
calories, but they wouldn't have any kind of balanced
diet.
H.M.JR: What Leo Crowley says is helping me in the
position. The position I have taken - and certainly I
am not going to be licked on this thing unless the
President personally turns me down - is that the net
result I have been aiming for is that the English popu-
lation have more to eat on a balanced diet. That would
do it.
MR. CROWLEY: I think we are all trying to do that,
but I think you have to keep this in your mind in dealing
with War Food: War Food says that you have to have an
eight-percent reduction in the meat supply within our
own confines of the United States.
Now, if you draw down, up to half & thousand tons
here, you. will have to have, as I understand it, about a
ten percent more reduction in rationing in the United
States on meat. Maybe agriculture and the producers of
pork and beef in this country may be under-estimating
their production, but at the present time War Foods say
to us they will make available 110,000 tons and they say,
"If you give England more than that, or if the President
gives them more than that, that means you are going to
have to step up rationing in this United States.'
So we say back to England that we will try to do
this for them, we'll put the reserve up to buy it, we'll
go before the Combined Boards and argue for it and try to
do everything we can to get it.
MR. COX: That is right.
MR. CROWLEY: That is about as far as we can go.
MR. COX: Mr. Secretary, I think you have two phases
Regraded Unclassified
10
- 10 -
of it that you ought to keep in mind, in net result. One
is that certainly, without any question, I should think
that the level ought to be at least what it was in 1944.
The second question is, if you raise the level above 1944,
above this year, then the way we have had experience with
War Food and the Hill and the public, you will have
ascribed as the reason for more stringent rationing in the
United States that the British level of nutrition, in
calories on a balanced diet, has been raised above anything
that it has been in the course of the war, when one part
of the war is being fought as against the time when both
parts were being fought.
I don't say you shouldn't do it - I say that is one
of the ways the issue will be raised as a political matter.
H.M.JR: Certainly I want to examine War Foods'
figures. I mean, I want to be satisfied, myself. If
they are cutting down on Russia at this time and propose
to cut down on England, that would be something certainly
I would want the President to pass on. Up to now I
haven't gone back to the President on anything. I didn't
feel I had to; we have been getting along so fine. So
I haven't bothered him on anything. I figured he had
plenty to do without my bothering him.
DR. WHITE: Mr. Secretary, I don't think that needs
to be done before this is agreed upon, because that is a
separate and subsequent matter that you would have to take
up with the Food Board. As far as the British are con-
cerned, you are making the funds available. Now, whether
the material is available is something that doesn't relate
to me.
MR. COX: That is true, Harry, but the fact that the
allocation is up for making today and we are trying to get
it postponed.
MR. CROWLEY: I think what Harry means is that the
President couldn't deal with this meat thing today, Oscar.
I mean, it is a political decision that has to be made
later. Harry means that we can go ahead. The English
are satisfied, I think, with what we are trying to do for
them. They want the results, but there is going to have
Regraded Unclassified
11
- 11 -
to be something greater than what we can contribute to
this meat thing to get it worked out. The only one who
can make that decision will be the President, after we
give him the facts.
MR. COX: That is right. My suggestion would be,
however - all I want to do is present the problem so that
in principle we would agree that we are not only interested
in the paper record, but in the net result, and then not
hold up the discussions with the British but within the
existing machinery that the working committee that has
been on this has, go over this with the purpose of
proceeding through the machinery.
Now, Byrnes has the review power where there is a
dispute on an allocation of that kind, if the first step
in the first go-around you lost out, so we ought to be
prepared; because if the machinery gets going too far on
you, you may not be able to reverse it.
DR. WHITE: But that should not complicate the con-
summation of this arrangement on Phase Two with the
British. That is a separate matter which the British
are unquestionably interested in but shouldn't be in-
jected into the discussion.
H.M.JR: I don't agree with you at all, Harry.
MR. COE: Mr. Secretary, we partly crossed this bridge
at the beginning when the British requested a protocol,
and we didn't give them a protocol, and all the agencies
are proceeding together on that, that the British take,
as they say, pot-luck with us in the allocation machinery.
And the British have become convinced that by and
large, if they get this document with its financial
promises in it, but sub ject to all the allocation machinery,
that they will be able to fight the thing through more
successfully.
I think that the thing that Oscar is mentioning is
one of dozens of problems. This one happens to arise at
the very beginning. This is going to happen all through
Regraded Unclassified
12
- 12 -
the year where we have Lend-Lease money for them but they
can't actually get the stuff through. Some will be big
and some little.
MR. COX: What concerns me is that as a matter of
dealing on a moral or related basis with the British, if
the first case that comes up is as drastic as this one
in terms of the cleavage between the financial commitment
and the supply result, then you are in a position where
there is a question mark as to whether the whole thing
really is meaningful.
DR. WHITE: But the Quebec understanding, according
to my understanding, never raised the question of avail-
abilities. It was a question exclusively of financing,
plus the assumed availabilities which were always sub-
ject to these many considerations which always play a role.
MR. COX: That may be true as a theoretical matter,
but in the realities of the situation it seems to me that
their view will be that we miscalculated. Let's say the
facts of War Foods are true in the hog production--
DR. WHITE: Who miscalculated? The British made &
request for a certain amount of meat. That is their cal-
culation, not ours.
MR. COX: But they will say, "You fellows won't
impose any rationing; you are going to keep your own
levels up. You reduce to one-seventh our supply; you
reduce your own by eight percent."
DR. WHITE: Their view should be presented, and you
can be sure it will be presented. As Leo has just said,
it has been agreed that you will make as much of a case
as you can for them, but that is a quite separate matter,
whatever arrangement was made at Quebec.
MR. DAVIDSON: The British understand this. We have
a note from the British on the subject of meat. Just
to read one paragraph: (Reads from Attachment B)
"What we ask is that in the circumstances of Stage II
when the British people unlike the rest of Europe will
Regraded Unclassified
13
- 13 -
still be engaged in a major war, 8. moderate easement in
British standards of consumption is agreed to be reason-
able and proper, and that if certain quantities of American
supplies be placed at the disposal of the British by the
allocating authorities, there should be no lack of
financial facilities on Lend-Lease terms."
Then the preceding sentence: "We cannot be certain
that this aim will be attained-
H.M.JR: Who said this?
MR. DAVIDSON: Keynes. "...except perhaps in par-
ticular instances. Whe ther or not it can be attained
will have to be decided at a later stage by the proper
allocating authorities, who will take into account the
aggregate supply position and the total demands on it,
including demands from liberated areas, etc."
H.M.JR: That is all relating to food, not something
else?
MR. DAVIDSON: No, sir, it is not food.
H.M.JR: I wondered if the quotes are relating to
food or something else.
MR. DAVIDSON: No, sir, this note was sent as a
result of certain discussions we had had on the food
problem. (Reads from Attachment A) "The attached note
on Civilian Standard of Food Consumption in the
United Kingdom is circulated for information."
H.M.JR: The only point I was raising is a moral one.
I didn't want them to go away feeling that we will get
them the money and that they had a reasonable chance of
expecting the food.
Now, in the light of that memorandum, I would take
it that they understand that there are doubts.
MR. DAVIDSON: Yes, sir. I might add, sir--
Regraded Unclassified
14
- 14 -
H.M.JR: They are willing to take pot-luck with us
on food?
MR. DAVIDSON: On everything.
MR. CROWLEY: The moral commitment that we have is
this, that we will prosecute their case for them before
the Combined Board with the best of our ability, to try
to get them as much of the allocation as possible.
Isn't that right?
MR. DAVIDSON: Yes, sir. I might say, to protect
ourselves and also be sure they understand what we are
doing, we propose in attaching the schedules to the food
document and to the other documents to indicate item by
item our guess at this time as to where we don't believe
we'll be able to supply up to the amount of dollars that
we set forth. When we get to meat we will say specif-
ically that we feel it is extremely doubtful or that it
is impossible from the present picture to believe we can
fulfill that request.
DR. WHITE: Are there any other sources of meat that
could be purchased with dollars?
MR. COX: The Argentine!
MR. ACHESON: They have taken all of that, anyway.
H.M.JR: To me this is important:
"We have suggested that in the case of meat, sugar
and fats the standard to be aimed at should be the British
pre-war standard of civilian consumption, but that if in
respect of any of the above commodities the American
current consumption per caput is less, the Ministry of
Food should limit its aim to the lower standard.'
I take it they mean that the per capita consumption
is lessened.
MR. DAVIDSON: They mean less than their own pre-war
standard.
Regraded Unclassified
15
- 15 -
H.M.JR: It doesn't mean that we have to take less
in 1945 than in 1944?
MR. COX: It would in one case. If you take the
meat case specifically, our reduction would be to 92
percent in 1945 of what it is in 1944, and if that were
the lower their easement in meat would not go above 92%.
H.M.JR: I'd like everybody just to read this and
make sure that they go away satisfied that we are pro-
viding the money, but there are grave doubts as to
whether we can provide the necessary food. Now, if they
thoroughly understand that, I am satisfied.
MR. CROWLEY: It is my understanding that they do.
Isn't that yours?
MR. DAVIDSON: Yes, sir.
MR. ACHESON: I think as a practical matter, Mr. Secretary
that Oscar is right - that is clearly the understanding.
But if they take a terrible licking on this important
element of food right at the very beginning, then I
should think they would doubt whether this whole under-
standing is worth very much.
DR. WHITE: I wouldn't come to that conclusion.
There are a lot of things besides meat in here. If the
meat is short, then the only appropriate position, it
seems to me, that can be taken is the one Leo says, that
you will present their case as strongly as possible.
MR. COX: There are two things. Your meat cut is
so drastic in the meat that I think you have to sit down
with them, tell them what the problem is so that there is
no misunderstanding, and that through this Combined group--
or whatever machinery is deemed to be the best to do it--
that we will exercise our best efforts to get it increased
as much as we can, but if the top fellows don't understand
that and you get a out that is as drastic as that, it seems
to me as a practical matter they will say, "Gee whiz--"
MR. CROWLEY: But, Oscar, here. I think in all the
discussion with our committee that they certainly know
Regraded Unclassified
16
- 16 -
that we feel that there is a meat shortage in this country;
that there is a reduction of seven or eight percent here.
Now, they certainly admit in their own memorandum there
that that is true. You can't go and do any more than what
we are doing, unless the President of the United States
determines that in order to increase this meat shipment
to England he is going to ask for a further reduction of
meat requirement in the United States, unless you can find
some production that you don't know about.
MR. COX: That is right, Leo, except this. We are
reducing ours by eight percent, reducing theirs by more
than ninety percent.
MR. CROWLEY: But that is a decision the President
has to make.
MR. COX: That is right.
MR. COE: Possibly Byrnes. I think we all agree.
MR. CROWLEY: That would be the administration. Now,
we are going to present our case as far as the need is
concerned, as faras England is concerned. The people who
represent us here locally are going to represent the
rationing within the United States, and Byrnes and the
President - or someone - has to decide which side do they
throw their lot with. Isn't that right?
H.M.JR: That is right. I am not arguing with you
on that. I am carrying & moral obligation, and I just
want to make sure that these people thoroughly understand
it, and I take it from that memorandum that they do; that
is all. I don't know anything about the Russian thing,
but I am not going to argue now, because it is a waste
of your good time whether we should or should not take in
our belts a couple of notches. I don't think this is
necessarily the time.
But I want to lean over backwards that when these
people leave here they know the worst that may happen
to them.
MR. CROWLEY: And that they know that we have a moral
commitment to deliver all we can to them.
Regraded Unclassified
17
- 17 -
H.M.JR: I certainly painted the picture black enough
to Cherwell on the financial front before he left, be-
cause no matter how much we missed it, we couldn't miss
it as much as I told him we would. I made it as black
as possible on the dollar balances, so whatever we do
will be better than what I told him to tell Churchill. I
figured that was the best way to do it. I'd much rather
have them go away knowing the worst and then do a little
bit better.
MR. CROWLEY: That is right; not misrepresent it to
them.
MR. ACHESON: Could I ask a question on the shipping?
H.M.JR: If you please.
MR. ACHESON: What effect does your cut in the shipping
have on the balance of payments situation and their claim
in Chapter Three? Does that affect that at all?
MR. DAVIDSON: No.
DR. WHITE: After they get through with their whole
program we will examine it and see how much involves
additional expenditure.
H.M.JR: I am going to have to stop at eleven o'clock
today.
MR. CROWLEY: Let's go ahead with the export, then.
MR. COX: During the last Lend-Lease legislation on
the Hill, one of the problems that Leo and Dean and I
all indicated was that if the White Paper was going to be
changed, because there was a lot of talk then about the change,
that we would probably advise the committees about it.
We didn't say we would consult or that their acquiescence
was necessary. In view of the fact that we will have to
go up, in addition to the moral commitment, early in the
year for the Lend-Lease extension and later on for the
appropriation, I think consideration ought to be given
to how this whole thing, insofar as it may affect the White
Regraded Unclassified
18
- 18 -
Paper, should be presented to Congress before they read
about it in the newspapers or some other way, because
certainly in terms of the psychology of dealing with them,
our experience has been that if you tell them about it you
have very little difficulty, and you get very little back-
wash in the future in terms of their clipping you on some-
thing else. So I think that ought to be kept in mind. I
don't know how it ought to be handled, but it is one of
the considerations on the White Paper thing.
The other thing is that on the White Paper business,
the one case where I think you have the major political
problem, and a large part of that is influenced both by
how you deal on the substance and how you present it. And
the thought some of us were thinking about yesterday was
to present it in terms of letting the White Paper stand,
but then saying that it does not apply to stuff that is
taken off Lend-Lease, and which the British in the future
will buy for cash, subject, however to the condition that
they can re-export in those cases subject to three major
considerations, one, that in any event the exports would
be controlled by the over-riding considerations of war
supply and war shipping, two, that they would be conditioned
on an equitable basis of dealing between the exporters of
both countries, and three, the one that presents the most
difficult problem, that the U.K. exporters would not
export articles where our exporters didn't have a reasonable
opportunity to export the same or similar article.
MR. WHITE: You mean within the geographical area?
MR. COX: Without finding the place, but focusing on
the articles. That is the kind of thing that creates most
of your political heat. The difficulty with it is whether
or not the converse is true. I mean, our exporters have
been able in some cases to export things because of an
easier supply situation than the British exporters have,
but I don't want to go into the details. All I want to
do is present a line of possible approach which makes
the political problems possibly a little bit easier.
Now, that leaves out the stock question, which I
think, has to be worked out by the working group on an
Regraded Unclassified
19
- 19 -
agreed basis. And the other part of the White Paper, I
think, can be handled possibly by an administrative memo-
randum, because they have changed 8 lot of the stuff from
time to time by administrative machinery, anyhow. In
substance, I think, you can come out the same way in terms
of objectives, possibly by taking that kind of approach.
It is just a matter of emphasis.
MR. ACHESON: Are you changing what we tentatively
talked about with the British?
MR. COX: No, not changing that at all. I don't
know whether they for their own political reasons, that
is, in presenting the thing to their people and their
exporters--whether it would serve their purpose to say
that the White Paper is not being changed, but that the
White Paper applies to Lend-Lease articles.
MR. ACHESON: We agreed on that with them.
MR. COX: That is all right.
MR. ACHESON: This last thing you said--I don't under-
stand it, or it is new.
MR. COX: It is new, and I don't want to raise it
for discussion here. I think we ought to do some thinking
about it in working as a group first, but I think that is
the one new thing in the picture.
MR. COE: Dean, I think the things that we tentatively
agreed on in the working group related mainly to stocks,
though there were some general discussions of exports. I
think what Oscar is talking about is a document, so to
speak, ahead of that. I don't think anything that he said
contradicts what has been agreed with, but the White Paper,
having three aspects, possibly in this new period, Lend-
Lease stocks, cash--it also applies to certain cash exports
by the British--and exports of Lend-Lease goods. We seize
on the exports of Lend-Lease goods and say it stands with
respect to that; it doesn't stand with respect to the first
two. Or it stands with respect to everything except the
first two, stocks and cash exports. And you handle that
by subsidiary documents.
20
- 20 -
MR. WHITE: I didn't know there was agreement that
the White Paper was not to be abandoned. I think they
are under the impression that they are going to say the
White Paper is over, whereas, the point which is being
raised, the important political point, is the view that
they ought not say that, but there are new adjustments
to be made and the White Paper exists to save us trouble
here.
MR. ACHESON: We talked about that in your office.
MR. WHITE: I don't remember their agreement on it.
MR. ACHESON: We were going to get up a paper as a
matter of approach. I don't think there will be any
difficulty between us and the British on that, but I think
this last thing that Oscar suggested, that there may be
some commodities or some places in the world where you--
that is a wholly new point.
MR. COE: We raised that when Keynes had that
session over at the State Department on sterling area.
MR. WHITE: He raised it again here when he said he
was not going to increase exports to the United States by
any significant amount, and somebody raised the question
that all the increases were going to the sterling area
and that would--
MR. COX: There are two separatè questions there, Harry,
one is the area, which involves the exchange problem and
whether they will let people in India get enough dollars
to buy goods from the United States. The other question
goes to the article itself, and one of the things that
created most of the difficulty is that if they can export
article A, for example, in competitive markets, let's say
South America, and because of the supply and other situations
our exporters can't do it. Then they procure part of the
raw materials in this country to be able to do that. It
is a very rare bird case. It isn't a common case, because
it is really a short supply item; under the combined machinery
they won't be able to get enough of the supply for export.
Regraded Unclassified
21
- 21 -
They may be able to get it for war purposes.
MR. ACHESON: Why don't you handle that under the
combined machinery for & llocating to them? Just don't
sell them any stuff that you don't--
MR. COX: Well, you can. The question that I am rais-
ing--and we don't have to settle it now--is that that is
one of the political factors involved, and it may be that,
if explored, the combined machinery does it, there will be
all the less reason for not saying it.
MR. CROWLEY: You want to get away, or you have
another meeting?
H.M.JR: No, I am all right until eleven o'clock.
MR. WHITE: When do you propose to explore these matters
with them?
MR. COE: We have a meeting set up with you for two
o'clock.
MR. WHITE: This subject is to be on the agenda?
MR. COE: Chapter Three and export principles.
H.M.JR: On the agenda. Then you will start that
first.
MR. CROWLEY: Harry, don't you think before you meet
with the British that Dean and you ought to know all the
thinking in the minds of our fellows?
MR. COX: Before it is raised?
MR. WHITE: More than that; I think we ought to agree
8.8 to what we are going to present to them.
H.M.JR: I think it would be unfortunate unless we
had agreement on the American side first.
Regraded Unclassified
22
- 22 -
MR. COX: That in right.
MR. DAVIDSON: I think the basic principle we may be
discussing is the question of words and phraseology. I
think the basic principle we are getting at is that we
want to be assured that the British are going to continue
to use their full resources for the prosecution of the
war, and they are not going to cut back or use any materials
that are really needed for war purposes in order to increase
their export trade, and I am sure we could get full a greement
with the British on a general commitment to the effect that
they intend to use their resources fully to prosecute the
war against Germany and Japan. They have said SO. And I
think that is the commitment we are really after; if there
are in this country spot places where supplies loosen up
a little bit so we can export, or spot places where supplies
loosen up on their side and they can export, I don't think
we should be concerned with that.
MR. COX: You really have to go beyond that. The
first clause in the White Paper says that, so if you start
off by saying that as to Lend-Lease articles the White Paper
still applies, then you have that covered; and if you want
to, you can repeat it for purposes of public presentation,
but I think when you get to the cash thing, the question
that you are going to have--the general public opinion
may well be that if you put these conditions on and publish
them in that form, that you are being too tough on the
British in terms of the export thing. where it makes no
practical difference in operations, and I think that is
the thing to explore.
Now, if, in fact, that is the way under the combined
allocations and shipping machinery the thing does work,
then if in one sentence or two sentences you can state that,
it makes no difference in operation, it is going to help
them and help us.
H.M.JR: Did you expect an answer to that?
MR. COX: No.
Regraded Unclassified
23
- 23 -
H.M.JR: May I just address myself a minute to Leo
and to Dean on this? If these gentlemen are going to get
away Friday, I don't know how you people are fixed, but I
am on the eve of a war bond drive, and my time is over-
crowded. But I want to give this the right of way.
Now, the thing that has been bothering me is, when
are these gentlemen, who are the so-called technical committee,
going to bring up what we are going to do about tobacco,
off-shore sugar, and airplane contracts? Nobody has yet
discussed with me all of those things in Chapter Three.
Nobody has made any recommendations. Here it is, Wednesday
morning. When are we going to talk about those things?
MR. WHITE: I thought we were this morning, right here.
H.M.JR: That is what I thought this meeting was
for, and we have gotten off on this thing. I should think
that on the technical level there ought to be agreement
on what you can agree on and what you can't, and then bring
it up to us and say, "All right, gentlemen, what are we
going to do on these things? Time is getting awfully short."
MR. CURRIE: We have had several meetings on that,
Mr. Secretary, and we had one yesterday or the day before
in Harry's office. We have a tentative list amounting to
about one hundred and fifty million dollars that we could
go along on without serious embarrassment, and some items
that we frankly deferred depending on the outcome of the
over-all balance, whether you need more or not. There
are some items which, if you needed them very badly, we
might strain for them, but if you don't, we would much
prefer you didn't. We didn't want to meet with the British
and come to a final discussion on that until we toted up
the rest of the program and saw where we came out in terms
of the effect on the dollar balance.
H.M.JR: Yes, but among ourselves--I mean, I don't
want somebody about four o'clock Friday night to hold a
pistol to my head and say, "You decide this, this, and this."
MR.WHITE: Mr. Secretary, we are ready to discuss
those items now. We have discussed them among ourselves
several times.
24
- 24 -
H.M.JR: Can you do it in six minutes?
MR. WHITE: Well, we can do a few of them.
MR. COE: Caribbean sugar.
H.M.JR: If you don't mind, I don't want to do a thing
like this in six minutes. I don't know how the rest of
you people feel. I would like to take this Chapter Three
out any time you people say you are ready to discuss it;
give me a little notice, and I will adjust myself, but I
want an hour or two hours, because that is the most difficult
thing in the whole business. I can't do it in six minutes.
MR. CROWLEY: How much difference in our own shop is
there in Chapter Three?
MR. CURRIE: Very little.
MR. CROWLEY: What about State?
MR. ACHESON: We haven't gone over it.
MR. CURRIE: State was supposed to attend this meeting
in White's office.
MR. WHITE:Nobody came.
MR. COLLADO: Harry, they didn't tell any of us.
MR. C OX: I think what we ought to do is have a
committee of State, FEA, and Treasury get together.
H.M.JR: That is the point I am trying to make, Leo.
They haven't gotten together on this, with all due respect
to them.
MR. WHITE: We thought we would go as far as could
profitably be gotten--
MR. ACHESON: There was a slip-up, and we didn't know
about the meeting.
Regraded Unclassified
25
- 25 -
MR. WHITE: Couldn't we meet right after this meeting?
MR. ACHESON: Absolutely.
MR. WHITE: The group is right here. Why don't we
meet on this Chapter Three right after, and you can meet
with us tomorrow morning?
H.M.JR: The first I would have free would be eleven
o'clock.
MR. CROWLEY: That is all right.
H.M.JR: How about the rest of you?
MR. ACHESON: I will make it all right.
MR. WHITE: I suggest that if you have to get out
by Friday that maybe everybody ought to leave Thursday
evening clear.
H.M.JR: I can leave Thursday evening or Thursday
afternoon clear.
MR. COE: If we are ready on the program, Mr. Secretary.
H.M.JR: I .will save Thursday afternoon and Thursday
evening.
MR. GROWLEY: Set aside Thursday, and if we get in
agreement and are ready, we will let your secretary know.
If not, we will do it sometime late Thursday afternoon or
evening.
H.M.JR: I am holding from eleven o'clock on.
MR. WHITE: You see, you were going to see the British
tomorrow.
H.M.JR: I will hold from eleven o'clock on for the
rest of the day until I hear from Frank Coe.
Regraded Unclassified
26
- 26 -
MR. COE: Are we ready to see the British tomorrow
on anything?
H.M.JR: I don't see that you are.
MR. ACHESON: I think you will have to.
H.M. JR: Dean, I am ashamed to see them again until
we have an answer on this Chapter Three..
MR. ACHESON: Well, I think we must have it.
MR. CROWLEY: What do you want to see the British for
tomorrow, Frank, until you have an answer?
MR. COE: We might get out these programs.
MR. CROWLEY: But can't you do that without having a
meeting with the Secretary to do it?
MR. WHITE: No, it should be a report of that committee
to the British which included Chapter Three. That could be
the next meeting. But there is food, oil, shipping, and
manufactured articles on which the same kind of report would
go to the large committee, Mr. Secretary, that the Army and
Navy gave. That is enough for one meeting. Then the second
meeting can be on Chapter Three.
H.M.JR: You don't know yet--if you don't mind, I don't
want to see them again until we have talked this thing out
on Chapter Three among ourselves. I think they would have
reason to be dissatisfied.
MR. CURRIE: I discussed this with Keynes, Mr. Secretary,
and he said it would be perfectly agreeable and understandable
that the program should be presented first, and Chapter Three
would be the supplementary thing coming after the program,
because it depends on what we do in Chapter Three as to what
the programs tote up to.
H.M.JR: If they are satisfied, I am. But between
Coe and White, I can't do any more than say from eleven
Regraded Unclassified
27
- 27 -
o'clock on I will hold it open for the rest of the day.
But for God's sake, let me know, because I have all other
kinds of appointments, too, see, Frank.
MR. COE: Yes, sir. And by the way, the British are
going to get their first crack at Chapter Three this after-
noon, the lower committee.
H.M.JR: Will you be here tomorrow?
MR. CROWLEY: Yes, sir.
MR. ACHESON: Yes, sir.
H.M.JR: I have just one other thing. Don't forget
that Ed Stettinius ran up a red flag on this Argentinian
meat business. He said that at one stage or another he
might want to get in on it. I am leaving it to you
(Acheson) in case they might want to raise it. I don't
know whether he wants to or doesn't.
MR. ACHESON: That is a little bit mixed up because
Llewellyn is supposed to be here the day after tomorrow,
so I will speak to Ed when I get back.
H.M.JR: Would you mind? I have an understanding
with Ed that he would be put on notice. I am putting him
on notice now. Tell him how fast we are going to move.
MR. ACHESON: It is not an ideal time to bring it up.
Regraded Unclassified
28
A
TOP SECRET
COPY NO. 9 9
C.S.L.L. (44) 2
14th November, 1944
COMBINED SUB-COMMITTEE ON MUTUAL
LEND-LEASE AID BETWEEN THE U.S. AND U.K.
Civilian Standard of Food Consumption
in the United Kingdom
Note by U.K. Members
The attached note on Civilian Standard of
Food Consumption in the United Kingdom is circulated
for information.
Washington, D. C.
Regraded Unclassified
29
CIVILIAN STANDARDS OF FOOD CONSUMPTION
IN THE UNITED KINGDOM
In the British Statement of Requirements an attempt
was made to give reasons why no financial obstacles should be
put in the way of some moderate easements in the standards of
British civilian consumption, should this prove possible on
the supply side. We have suggested that in the case of meat,
sugar and fats the standard to be aimed at should be the
British pre-war standard of civilian consumption, but that if
in respect of any of the above commodities the American current
consumption per caput is less, the Ministry of Food should
limit its aim to the lower standard. In total, current U.S.
food consumption is of course considerably higher than that in
the U.K.
We cannot be certain that this aim will be attained,
except perhaps in particular instances. Whether or not it
can be attained will have to be decided at a later stage by
the proper allocating authorities, who will take into account
the aggregate supply position and the total demands on it,
including demands from liberated areas, etc.
What we ask is that in the circumstances of Stage II
when the British people unlike the rest of Europe will still be
engaged in a major war, a moderate easement in British
standards of consumption is agreed to be reasonable and proper,
and that if certain quantities of American supplies be placed
at the disposal of the British by the allocating authorities,
there should be no lack of financial facilities on Lend-Lease
terms.
Thus, the inclusion of the higher figure for which
the British Food Ministry have asked would not guarantee such
supplies to the British. What it would guarantee is that if
such supplies were available,there will be no financial
difficulties. It is not clear to us that this is fully under-
stood by all those concerned. The do not see why Lend-Lease
1.
Regraded Unclassified
30
finance should be refused, if on other grounda the allocation
is practicable.
Moreover, there is a further reason why the
provisional Lend-Lease allotment should be on the high side.
Even if the total allocation of the British civilian falls
short of what we are aiming at, nevertheless the allocation
which it is convenient to obtain from U.S. sources may require
a higher Lend-Lease appropriation than is provided under
F.E.A.'s counter proposal. For example, South American
supplies may be allocated to Western Europe or other liberated
areas. Australian supplies may be increasingly furnished to
the U.S. Forces in the Pacific. For these reasons it would
be prudent to have a margin on the provisional Lend-Lease
appropriation.
To sum up, what we are concerned with is that the
Lend-Lease appropriation should not pre-judge the principles of
allocation whether in regard to total quantity or in regard to
sources, either way. On the one hand, a provisional Lend-
Lease appropriation such as we ask will not guarantee us the
allocation. On the other hand, if our Lend-Lease request is
admitted, then there will be no obstacle on the financial side
to stand in the way of an allocation. In the first paragraph
of the Introduction to the Statement of British Requirements
we summarised the substance of one of the Quebec decisions as
follows:- "In the sixth year of war the British civilian is
entitled to such moderate easements as are practicable without
interfering with the prosecution of the war
by a Lend-
Lease programme, especially for food, which would allow some
raising of standards." Our present request is, therefore, no
more than that the Quebec decision should be endorsed in favour
of any easement to the British civilian which supply consider-
ations may allow.
The above is, of course, of general application. But
it is chiefly in the case of carcass meat that it arises from
the practical point of view of there being 8. simable difference
between the British Ministry of Food application and what F.E.A.
are suggesting.
2.
mehington, D.C.
14th Revember 1944.
Regraded Unclassified
31
USC/305
COPY NO.
/
TOP SECRET
U.S. Committee on Mutual Lend-Lease Aid
Between the United States and the United Kingdom
Minutes of Meeting in Secretary Morgenthau's
Office on November 15, 1944 at 10:00 A.M.
Present
Secretary Morgenthau, Chairman
Mr. White
Mr. Casaday
Mr. Crowley
Mr. Currie
Mr. Cox
Mr. Davidson
Mr. Angell
Mr. Acheson
Mr. Collado
Mr. Coe, Secretary
Non-Munitions Programs
MR. DAVIDSON reported that agreement had been reached on the
Food Program, on the Shipping Program and on the Petroleum Program,
except for stocks; the Dominions and India Programs were almost
finished, including the Locomotive problem.
There was considerable discussion concerning the intention of
the War Food Administration to cut meat allocations for the British.
It was agreed that this matter might have to be taken up with Mr.
Byrnes or the President.
Exports
MR. COX advocated that the White Paper should not be withdrawn,
but only modified to deal with cash purchases and lend-lease stocks.
MR. ACHESON said that this approach was the one that had already been
agreed with the British. Since Mr. Cox's new memorandum had not been
seen by the Committee, SECRETARY MORGENTHAU asked that an agreed posi-
tion be obtained before discussions with the British took place.
Chapter III
MR. CURRIE said that as a result of a technical committee meeting
there nere about $150 millions of items on which the U.S. Group had
tentatively agreed. The rest would have to come before the Top
Committee.
Regraded Unclassified
TOP SECRET
32
USS/403
COPY NO.
CCLL
U.S. Subcommittee on Mutual Lend-Lease Aid
Between the U.S. and the U.K.
Minutes of Meeting held in Room 3438
of the Treasury on November 9, 1944
at 4:30 p.m.
Present
Mr. White, Chairman
Mr. Casaday
Mr. Acheson
Mr. Currie
Mr. Cox
Mr. Davidson
Mr. Angell
General Styer
Colonel Stewart
Captain Bonnell
Captain Foutch
Military Reciprocal Aid
MR. WHITE proposed that we should get a general commitment
from Australia but that if the financial burden exceeded their
ability, Australia should be given the chance to reopen the
question at any time. MR. ACHESON proposed that Australia
should undertake to furnish reciprocal aid up to the level of
1944. If that level were exceeded the British should pay for
the excess, with a right to terminate this arrangement on notice,
GENERAL STYER believed that this arrangement was satisfactory
but said that since Undersecretary Patterson was out of town
he would not be able to report before Tuesday.
Regraded Unclassified
33
November 15, 1944
12:32 p.m.
John L.
Bullivan:
Mr. Secretary.
HMJr:
Yes.
S:
I just wanted to tell you that I knew nothing
at all about the matter that was mentioned in
that Drew Pearson thing this morning.
HMJr:
Yes.
S:
I was very much disturbed by it and I am
grateful to you for calling me back so that
I'd have an opportunity to tell you that
before you went to lunch.
HMJr:
Yeah. Well, what -- what 1s there to the story?
S:
Nothing 80 far as I know.
HMJr:
I see.
S:
I saw Forrestal in Boston Saturday night before
the election.
HMJr:
Yes.
S:
I just happened to meet him in the hotel.
HMJr:
Yeah.
S:
And I told him that I was contemplating leaving;
that I'd have to be away for at least two or
three months taking care of my own affairs.
HMJr:
Yeah.
S:
And he said absolutely nothing about this.
HMJr:
He didn't?
S:
It's entirely news to me and I was afraid you
might think that I had known about this when
I talked with you yesterday.
HMJr:
Right.
S:
And that's why I was so awfully anxious to get
hold of you as soon as I saw this article.
Regraded Unclassified
34
- 2 -
HMJr:
All right. Thank you very much, John.
S:
It's entirely news to me, sir.
HMJr:
Thank you.
S:
Thank you, sir.
HMJr:
Bye.
Regraded Unclassified
35
November 15, 1944
Dear John:
I am with great reluctance transmitting to
the President your letter of resignation as
Assistant Secretary of the Treasury.
You have been a member of the Treasury family
for more than five years of the most stirring
times and have shared in much hard work and diffi-
cult decisions.
Ours has been a most pleasant association and
I want to thank you for the able service you have
rendered to the Government, for the great help you
have given me and for your unfailing loyalty.
I wish you the greatest success in your further
career and the greatest happiness to you and your
family. I value our friendship and will count on
continuing frequent contacts with you.
Sincerely,
(Signed) Henry Morgenthau, Jr.
Mr. John L. Sullivan
Assistant Secretary of the Treasury
HEG/mah
Regraded Unclassified
ASSISTANT SECRETARY OF THE TREASURY
WASHINGTON
December 1, 1944.
My dear Mr. Secretary:
I am enclosing my letter to the President resigning
8.8 Assistant Secretary of the Treasury.
I am sure you realize how reluctant I am to leave
the Treasury. The few months I spent here in 1939 as
Assistant to the Commissioner of Internal Revenue and
the five years since then as one of your assistants have
been the most stirring and satisfactory experience of my
life. This service I am now forced to terminate because
of the pressure of responsibilities in my private practice.
I am compelled to return to serve those associates and
clients who, for more than five years, have 80 patiently
awaited my return to private practice.
I want you to know how very grateful I will always
be to you, not only for the great opportunity you gave
me, but also for the kindliness and helpfulness you have
shown me. I will always count you my friend.
The way in which you have shouldered the unprecedented
responsibilities of the Treasury in its most trying years
has been an inspiration. I want you to know that if I can
ever be of service to you I will be more than proud to
have you call on me.
With kindest personal regards to Mrs. Morgenthau,
the children and yourself, I remain
Sincerely yours,
Honorable Henry Morgenthan, Jr.
John
Secretary of the Treasury,
Washington, D, C.
Regraded Unclassifie
December 1, 1944
My dear Nr. President:
with a great deal of reluctance, I submit to you
my resignation M Assistant Secretary of the Treasury.
When I came to Washington in September 1939, I
arranged to divest myself of professional responsibilities
for a paried of one year. Since then this period has been
extended fear times. Unfortunately, the cumulative pressure
of the problems of those people with whom I an associated,
and of others who have relied upon no, make it imporative
that I now return to private practice.
I wish to express to you my gratitude for having
given ⑉ an opportunity to work with you and with Secretary
Morgenthau during this eventful period of American history.
I will always look back upon this association and this ex-
perience with pride and satisfaction.
May I take this opportunity to congratulate you
upon year splendid victory on Nevember 7, and to wish you
the very best of health and success in solving those nom-
mental problems which challenge the peace and velfare of
humanity for generations to come.
Faithfully yours,
The President,
The White House.
JLS:vis
Regraded Unclassified
38
TOP SECRET
COPY NO. 47
C.S.L.L. (44) meeting
Combined Sub-Committee on Mutual Lend-Lease Aid
Between the U.S. and U.K.
Minutes of Meeting held in the U.S. Treasury
on 15th November, 1944,
at 2:0 p.m.
PRESENT
Mr. White (in the Chair)
U.S.Representatives
U.K.Representatives
Mr. White (Chairman)
Mr. Ben Smith
Mr. Casaday
Lord Keynes
Mr. Brand
Mr. Currie
Sir Robert Sinclair
Mr. Davidson
Sir Henry Self
Mr. Angell
Sir Charles Hambro
Mr. Havlik
Mr. Bridgeman (part time)
Mr. Goschen
Mr. Acheson
Mr. Helmore
Mr. Collado
Mr. Hutton (part time)
Mr. Fetter
Mr. Maclay (part time)
Mr. Penson (part time)
Mr. Stevens
Mr. Lee
Mr. Coe
3
Joint Secretaries
1. CHAPTER 3.
At the CHAIRMAN'S invitation MR. CURRIE and MR. DAVIDSON
gave U.S. comments, item by item, on the proposals contained in
Chapter 3 of British Requirements in the First Year of Stage II.
MR. CURRIE explained at the outset that U.S. views on
these items were not as far advanced as in the case of other
programmes being reviewed by F.E.A., the results of which they had
been awaiting.
(1) TOBACCO
MR. CURRIE said that in view of the cigarette
shortage in the United States and the probability
of a continued shortage for a considerable period,
the granting of this request would be difficult to
justify, particularly since tobacco for civilian
consumption had been removed from lend-lease early
in 1944. LORD KEYNES pointed out-
(a) that the amount involved would probably be
in excess of the $90 million listed in the
report. This figure had been based on the
assumption of a certain allocation to the
Forces which would probably be reduced.
Therefore more would have to come under the
civilian programme bringing the total for
the United Kingdom up to $101 million.
There was a similar demand from Australia
and New Zealand which would bring the
total to approximately $110 million.
Regraded Unclassified
39
(b) that If this tobacco were not supplied 00
Land-Lease, it would have to be purchased
for cash so that in any event the V.K. would
be making the same demand on U.S. supplies.
(e) that be understood that there was no shortage
of leaf in this country but only of labour
and packaging. what the United Kingdom was
asking for was leaf tobacco and not tobacco
manufactures, and it therefore seened to
him that the request for leaf tobacco was
being turned down merely on account of
bottlenecks in the manufacturing processes
which were not concerned. After further
discussion MR. CURRIE said he would examine
the matter further. He wished, however, to
record his view that tobacco for civilian
consumption was in any circumstances a
vulnerable item and as such had been removed
from the Lend-Lease programme a year ago.
(2)
SUGAR
MR. CURRIE said that this, though less
vulnerable than tobacco, had also been removed a
year ago and he was therefore doubtful as to the
possibility of restoring it now. LORD KEYNES
pointed out that whereas a year ago it was believed
that the dollar exchange position of the United
Kingdom was growing stronger, this was now understood
on the U.S. side not to be the case, and he had hoped
that sugar might be reconsidered in the light of
this change. MR. CURRIE said that the United States
might be facing a period in which supplies of sugar
were substantially reduced, and that it might be
inadvisable to use lend-lease funds for sugar
purchases in such circumstances. He would prefer
to regard this item as being held in reserve until
the position was clearer as regards the overall
Chapter 3 programme.
(3) OIL
MR. CURRIE said that the figure of $100 million
mentioned in the U.K. paper was understood to include
all non-Lend-Leasable expenses including equipment
for the development of oil fields as well as crude
oil purchases for dollars estimated at $16 million.
LORD KEYNES said that the $100 million figure was
an approximate estimate of the total dollar expend-
iture which the U.K. had to incur in connection
with the production of oil, including oil for
Reciprocal Aid. Some proportion of this total
estimated at $22 for purchase of crude, plus $8
for royalties payable to the Venezuelan Govern-
ment, had been specified in the document submitted.
The remainder represented various items including
equipment, repairs and the salaries of U.S.
technicians. If the general U.S. attitude towards
the proposal were favourable, he suggested that the
matter could be gone into with the British oil
experts. MR. CURRIE said that he thought that
it would be difficult to justify the supply under
Lend-Lease of anything that could be regarded
as equipment for development purposes. He would
be glad to receive an itemized breakdown of the
$100 million figure. LORD KEYNES then suggested
that there were in effect two possible methods
of procedure. One was that suggested in the paper,
namely that an estimate of the dollar expenditure
involved should be arrived at and net under Lend-Lease,
Regraded Unclassified
40
The other alternative of for the U.S. to purchase
the supplies it draws from the Dataras and Behrein
the amount of such purchases wild coincide approximately
with the dollar expenditure of the United Lingdom or
account of oil, 13. EEL explained that while these two
refineries were not the only refineries in which the
United Kingdom RI involved in dollar expenditure, they
were nevertheless those in which the dollar content in
the expenditure as highest, and it would therefore be
appropriate that they should be selected if the second
alternative were to be considered. -1th respect tc the
first alternative, MR. CURRIE stated that the U.S. would
face difficulties in supplying capital equipment on
Lend-Lesse terms, although it might be possible to supply
such equipment as some special credit arrangement.
MR. CURRIE thought that it would be difficult to justify
the purchase of oil from the sterling area at the same
time that other oil was being Lend-Leased to the United
Kingdom, but the United Kingdom members pointed out that
the cases were ..ot comparable since the oil from Curacao
and Bahrein involved not only the payment of dollars but
expenditures external to the U.K. MR. CURRIE undertook
to consider the matter further in the light of the
foregoing discussion and of the further information to be
furnished by the U.K. representatives.
(4) OCEAN FREIGHT.
MR. DAVIDSON said that the U.S. side was inclined to
take the view that it would be possible to grant Lend-
Lease under this head only with respect to items definitely
bearing some relation to the war. Considerable discussion
followed as to the nature of the items concerned, The
United Kingdom representatives pointed out that all the
items mentioned in the Supplement to Chapter 3, Paragraph
2 (iv) (a) were obtained on Government purchase and that
this fact in itself was a guarantee that they were required
for war purposes, since the Government of the United
Kingdom was not incurring expenditure on goods which it
did not regard as essential to the prosecution of the war.
AR. MACLAY quoted from a list of items which included
NAAFI stores, tobacco, certain types of lumber, iron
and steel, industrial machinery and parts, agricultural
machinery and parts, tractors, automobiles and parts,
medical supplies and printed matter, Some discussion
followed with regard to the Canadian loadings of a
substantially similar character, with respect to which
a retroactive demand for 1944 had been entered by the
United Kingdom representatives. MR, MACLAY pointed out
that in some cases these goods had been loaded in Canada
for reasons of administrativo convenience, but that their
character was similar to that of items supplied from the
United States under Lend-Lease, MR. DAVIDSON said that he
thought that the account, with respect to Canadian loadings
for 1944, was closed, but that if it were not the United
Kingdom suggestion would be reconsidered. MR. MACLAY
undertook to supply a list showing the items and values of
goods shipped, both in the 1944 Canadian programme and
by way of forecast with respect to 1945. It was agreed
that there should be a detailed discussion between shipping
experts regarding the dollar outlay of $40 million on
service and supplies to British controlled vessels in
U.S. ports, (Supplement to Chapter 3, Paragraph 2 (iv) (b)).
With regard to the dollar proportion of items on
Norwegian vessels on time chartered under the Tripartite
Agreement of 1941 (Supplement to Chapter 3, Paragraph 2
(1v) (c)), and to items on Allied vessels on time
chartered to the U.K. (Supplement to Chapter 3, II, (1v)(a),
MR. DAVIDSON said that he would got in touch with 2.
Maclay in order to discuss further.
Regraded Unclassified
41
There was also some discussion regarding Supplement
to Chapter 3, Paragraph 2 (1v)(e). MR. 1 ACLAY explained
that the $5 million in question was in effect a fine
for errors in filing some requisitions, and for
underestivates in other requisitions. MR. DAVIDSON
said that on this item there had been certain expenses
which would not have been allowed even had the
requisitions been properly filed, but at the CHAIRMAN's
suggestion he undertook to look into this matter in order
to see whether the element of penalty and the element
of additional expenditure could not be disassociated.
(5) MACHINE TOOLS
MR. DAVIDSON said that this proposal again raised
the problem of providing under Lond-Lease items the
life of which would extend substantially into the post-
war period. LORD KEYNES remarked that as the war drew
nearer to its close this criterion became increasingly un-
realistic. In the U.K. view the post-war use of items
supplied under Lend-Lease should be a matter for decision
in connection with the final settlement of Lend-Lease.
MR. WHITE enquired whether the United Kingdom
representatives would consider the supply of these
machine tools under Section 3(c) of the Lend-Lease Act.
LORD KEYNES replied that this would merely serve to
accumulate debts and could not be considered. MR. DAVIDSON
enquired whether the United Kingdom representatives would
consider full payment in cash now, accompanied by an
agreement that the residual value should be calculated
later and that the US. should reimburse to the United
Kingdom the difference between the initial cost and the
residual value at the end of the war. The United Kingdom
representatives did not favour this proposal and LORD
KEYNES requested that the list of machine tools in the
second supplement to the British document, Part III,
should be examined with a view to determining whether
there were not a number of tools to which the ruling
against the provision of capital goods on Lend-Loase
should not be applied. MR. PENSON said that he believed
that a large proportion of the 1945 demand was in fact
for machine tools required for war purposes and in a
critical or special category. It was agreed that the list
should be further examined by U.S. representatives. MR.
DAVIDSON stated, however, that the U.S. side did not
consider that there was any large prospect that the
present rule of the F.E.A. against Lend-Leasing capital
items would be rescinded.
(6) FOOD
MR. DAVIDSON said that with the possible exception
of essential oils and chewing gum base, these items
appeared to be eligible for Lend-Lense. He asked the
United Kingdom representatives to ascertain what
proportion if any of the essential oil demand was
required for the manufacture of cosmetics, The United
Kingdom representatives stated
(a) that they believed that the chewing gum base was
required mainly for U.S. Forces, but would
confirm this.
(b) that the amount now involved in purchases for
NAAFI was $20 million rather than $9 as previously
reported. LORD KEYNES said that he could supply
a supplementary list showing how the additional
$11 million N:S mode up.
Regraded Unclassified
42
(7) SUPPLIES FOR THE COLONIES.
MR. DAVIDSON said that this was a difficult item in
view of the established policy of removing from the scope
of Lend-Lease civilian supplies for areas not in war
theatres, He added that the arguments for the easement
of civilian standards in the United Kingdom did not, for
the most part, apply to the Colonies, LORD KEYNES said
that a factor to which woight should be given was that
the United Kingdom was purchasing goods from these Colonies
and supplying them to the United States under Reciprocal
Aid, He therefore considered that the Colonies should be
eligible for Lend-Lease. It was agreed that this itom
should be reserved for a Inter decision based on purely
financial grounds, and in the light of the overall picture.
(8) REPAIR EQUIPMENT AND REPLACEMENT OF BOMB-DAMAGED HOUSES.
MR. D.VIDSON said that it was important from the point
of view of the United States that the requirements should
be solely for temporary and emergency houses and that the
U.S. representatives would be willing to consider a sum
of the order indicated in the Supplement to Chapter 3
provided that the items supplied were for an emergency housing
programme. LORD KEYNES said that he thought that such
an assurance could be given and that the United Kingdom
representatives were thinking in part in terms of
removable houses. He suggested that it would be useful
if the United States representatives could prepare some
general ruling or formula in advance of the visit of the
U.K. housing exports, It was agreed that the particulars
of the proposed requirements would be justified later in
detnil and that the item should stand as being acceptable
in principle.
(9) CIVILIAN RELIEF SUPPLIES
The F.E.A. representatives said that they would find
it difficult to agree to provide civilian relief supplies
for the Far East on Lend-Lease. It was agreed that it
should be hold in abeyance for the time being.
(10) PRE-RECIPROCAL AID SUPPLIES OF RUBBER.
The F.E.A. representatives expressed the view that
this was a legitimate debt and that it should be refunded.
(11) SUEZ CANAL DUES
MR. CURRIE stated that this item would be paid for by
the United States, but that the U.S. did not consider itself
prejudiced thereby against opening claims for receiving
such tolls as Reciprocal Aid.
(12) TAKE-OUTS OF CAPITAL FACILITIES
The U.S. Treasury representatives said that this claim
amounting to $38 million would be viewed sympathetically,
and the details were being checked by them.
(13) PRODUCTION CONTRACTS TRANSFERRED AS TAKE-OUTS
The U.S. representatives asked for further information
on this claim amounting to $2.2 million.
(14) DIVERSIONS TO THE U.S.S.R.
The U.S. representatives said that this claim was being
examined in consultation with the War Department. It was
anticipated that there might be difficulty in regard to the
Bostons.
- 5
Regraded Unclassified
43
(15) CAPITAL PACILITIES IN THE WIY OF ACHINE TOOLS AND OTHER
EQUIPMENT.
The CHAIRMAN wis doubtful whether the U.S. would be
prepared to contemplate the payment of a rental for these
items in view of the fact that they had been bought and
paid for by the British before Lend-Lease began. It was
therefore natural that the U.K. should give the U.S. the
right to use these machines without payment, as has
boon the case, While retroactive payments for these
old items involve many difficulties, he was proposing to
raise the point with higher authorities. With regard
to the suggestion that the United States might be
propared to purchase such of these tools as had not been
disposed of, estimated to be worth $8 million, the
CHAIRMAN said that he would be prepared to look into this
suggestion, but asked that a list of the major items,
giving details of the plants in which they were located,
be furnished by the U.K. representativos.
(16) AIRCRAFT AND ENGINES TRANSFERRED TO THE U.S.
LORD KEYNES called attention to his letter of the
3rd of November, 1944 which revised the figure to $224
million form $266 million. The CHAIRMAN stated that
this item was being reserved for consideration at a
later meeting of the Combined Committee.
2.
EXPORT FREEDOM
LR. CURRIE said that the United States representatives
were not at present ready to discuss this question as a whole but
he would give F.E.A.'s proliminary views on the paper prepared
by the U.K. representatives and circulated on the 3rd of November
as C.S.L.L. (44)1. This paper was then considered, item by item.
Item I. MR. DAVID50N said that F.E.A. did not agree to the
proposal in Item I with respect to identical manufactured goods
since such goods might not be in long supply, unlike the case of
cotton. He thought that some formula might be worked out with
reference to spare parts and components which would be satisfactory
to the U.K. side. LORD KEYNES urged that the administrative
working of any new arrangement would be very greatly simplified if
the U.K. proposa. could be accepted: he pointed out that an
intolerable burden of work might be involved if both the U.S. and
the U.K. had to take steps to ensure that where goods were exported
identical to those received by U.K. or U.S. Forces as Lend-Lease
or Reciprocal A1d, the Lend-Lease and Reciprocal A1d programmes
were amended accordingly or cash payments made. Both Mr. Helmore
and he urged that arrangements applying only to spare parts and
components would not provide a comprehensive solution of this
particular problem. MR. DAVIDSON said that the U.S. side also
wanted a solution that would be administratively feasible, but
he did not think that the American proposal would in fact involve
the kind of administrative complications which Lord Keynes envisaged.
Item II. MR. DAVIDSON said that on this point there was no
quarrel with the principle but that there might be some difficulty
in the application of the principle, particularly with reference
to oil products. LORD KEYNES said that as regards rubber, the
effect of the U.K. proposal would be that if Lend-Lease or
Reciprocal A1d rubber was exported as such a cash adjustment
would be made, wherens there would be no need for a similar
adjustment in the case of exports of finished products containing
Lend-Lease or Reciprocal Aid rubber, As regards oil, the U.K.
had been at pains to take out of its Lend-Lease programme oil
products in cases where it was known that identical and identifiable
products would be exported. But apart from these Lend-Lease and
Reciprocal A1d oil would lose their identity after delivery, and
it seemed reasonable therefore that both countries should be
regarded as free to export oil without reference to the receipts
- 6
Regraded Unclassified
44
of Lend-Lease and Reciprocal Aid oil respectively. MR. DAVIDSON
said that the particular problem of oil Was being discussed at the
present time with F.E.A. representatives, and it was agreed that
this point should be left over for further consideration in the
light of that discussion.
Itom III, The statement set out in the British document was
accepted by the U.S. representatives.
Item IV. MR. DAVIDSON said that this was only a question of
a form of words and that thoro was no difference between the
U.S. and the U.K. on this point. No departure was intended from
the meaning of the phrase as used in the 1941 White Paper.
Item V. MR. CURRIE said that F.E.A. could not accept this
proposal. Considerable discussion ensued, in the course of which
MR. ACHESON suggested that the U.K. proposal was one segment
of a very much bronder question which would inevitably be discussed
in another context. LORD KEYNES urged that quite apart from the
wider considerations of policy to which Mr. Acheson referred, it
was desirable to obtain, if possible, an assurance from the U.S.
authorities that they would not object to the financial proceeds
of any salos of non-Lend-Lease military equipment to third
countries accruing to the U.K. The U.K. representatives had
thought that the financial issues involved could most appropriately
be discussed by a body which was concerning itself with the
external financial position of the United Kingdom during Stage II.
The CHAIRMAN said that he thought that this question should only be
taken up by the Committee if the receipts which might accrue to
the United Kingdom would be of considerable significance in
connection with the U.K.'s balance of payments position; otherwise
he thought that the matter sught to be left for discussion in the
separate context suggested by Mr. acheson.
MR. CURRIE said that there was one particular point in
connection with the discussions on export freedom and the Chapter
3 items which he would wish to stress. There might be damaging
public criticism in the United States if in a period after export
froedom had been accorded to the United Kingdom, the U.K. exports
to the sterling area expanded considerably while U.S. exports to
the sterling arva were restricted by reason of exchange restrictions
imposed in the interests of the sterling area dollar pool. He
suggested, thorefore, that the U.K. would be well advised to agree
to make some additional exchange available (possibly of the order
of $50 million) to facilitate the operation of the principle of
importers' choice in certain important storling area countries.
LORD KEYNES said that he was not prepared to enter into any sort
of bargain on this point as part of the présent discussions. In
actual fact he was hopeful it would be possible for the sterling
area arrangements to remain flexible and for the exchange controls
within the area to be ridden with a comparatively light rein. But
the extent to which that would be possible would, of course, depend
among other factors, upon the sizo of the sterling area dollar
resources, That in its turn depended to some extent upon the
decisions on the Chapter 3 proposals. Here again, however, he
was not prepared to consider anything in the nature of a bargain.
3. FUTURE BUSINESS.
The COMMITTEE then took note of the outstanding points
which remained to be discussed in the course of the negotiations,
It was agreed that with reference to Chapter 3, it would be
desirable to como to a decision at an early date with respect to the
three large items of importance, namely, tobacco - $110 million,
offshore sugar - $64 million and large aircraft claims and
divorsions to Russia - $243 million. It was agreed that those
questions would be for discussion at the next meeting of the
Main Committee.
- 7 -
Regraded Unclassified
45
It was agreed that the next meeting of the Committee
should be held at 3 p.m. on November 16th to discuss export policy
and the question of Reciprocal Aid from Australia and New Zealand
(if the U.S. side were ready for this) and any other problems on
which sufficient progress has been made in consideration by the
U.S. side to permit of their being brought before the Committee.
Washington, D. C.
- 8 -
Regraded Unclassified
46
November 15, 1944
3:30 p.m.
TAX CASE - NATION MAGAZINE
Present: Mr. O'Connell
Mr. Cann
Miss Kirchwey
Miss Schultz
Mr. Sterling
Mrs. Klotz
MR. O'CONNELL: Under 1016, corporations, generally
speaking, owned and operated exclusively for religious,
charitable, and educational purposes, and on a non-profit
basis, and no substantial part of their activity consists,
in the words of the statute, "in carrying on propaganda
or otherwise attempting to influence legislation" - that
limited class of corporations are entitled to be tax-
exempt under the code.
The importance of the exemption is almost entirely,
as I understand it, that if they are exempt under 1016 of
the code, then contributions made by individuals to the
organization to help it to operate are deductible for
personal income tax purposes, you see. The exemption
to the institution as such is not ordinarily important
because they don't ordinarily operate at a profit, so
that to hold the corporation exempt from income tax
doesn't ordinarily mean anything.
I think that is true with respect to The Nation
because I don't think they make a profit. They are
probably able to make both ends meet by virtue of con-
tributions from outside. So the importance of the rul-
ing from their point of view has to do with the deductions
that individuals could get from contributions made to them.
The Bureau ruled on October 29 that they were not exempt
under 1016.
Regraded Unclassified
47
2
MRS. KIOTZ: You mean the Pureau ruled for them?
MR. O'CONNELL: Against them.
MRS. KLOTZ: But the ruling was made to The Nation--
MR. 0' 'CONNELL: In answer to their request for a
ruling submitted sometime before that.
Now, the issue is simple, although the people can
probably differ as to what constitutes a corporation
organized on a non-profit basis for educational purposes.
That is the issue here. The Dureau ruled that this
corporation was not operated for educational purposes,
and it is consistent, I believe, with all of the rulings
that we have made; and in my examination of it I looked
at a couple of the cases and I believe that it is quite
clear that the Bureau ruling is quite clearly defensible
within the positions of the Board of Tax Appeals and of
the courts.
As I say, people can differ as to what is "educational
purposes" but the cases, for instance, lay great stress
on the non-controversial nature of the operations of
corporations held to be exempt; and I think that this
particular organization, as well as many others, deals
pretty much in controversial subjects, and they don't
purport to take an objective view and present both sides
of the question which, in the view of so many people,
would be, strictly speaking, educational. At least,
that is the way we ruled, and I think that one thing in
favor of continuing to rule that way would be that if
you don't rule that way, it is almost impossible to know
where you stop with respect to what would be exempt under
1016.
For example, it would seem to me that if Eugene Meyer
should decide that the operation of the New York Post
was costing him a little more money operating the way it
is than if he set it up under a non-profit basis and
deducted his losses, that you would probably be forced to
Regraded Unclassified
48
- 3 -
say that his Washington Post was tax-exempt if it was set
up on a non-profit basis, as is The Nation. There are
differences of degree.
H.M.JR: The Washington Post makes Eugene Meyer tax-
exempt.
MR. CANN: Through losses he has. That is right.
MR. O'CONNELL: And for another person it might be
more profitable taxwise.
H.M.JR: The thing there is this - just read that
thing; that is for propaganda. (Points out Section 101,
Subdivision 6, of Internal Revenue Code)
MR. O'CONNELL: Let me read the whole section.
H.M.JR: Just the end.
MR. O'CONNELL: (Reading) "No substantial part of
the activities of which is carrying on propaganda or
otherwise attempting to influence legislation."
H.M.JR: That just strikes them out:They try to influence
legislation and they do do propaganda.
MR. CANN: We think that is so, Mr. Secretary. And
incidentally, in connection with the definition of propa-
ganda that Mr. Klaus used in connection with some of those
corporations we have been following up, it would carry
out your views as you would interpret this.
H.M.JR: You mean react against it? Has he been
successful?
MR. CANN: We are still processing a great number of
them. Some of them we have had to reconsider. I would
think we have had reasonable success.
MR. O'CONNELL: Yes, pretty good. There must be some
case where the exemption has been revoked.
Regraded Unclassified
49
4 -
H.M.JR: I don't see where he has a leg to stand
on.
MRS. KLOTZ: What they want to do is just let you
hear their side of it.
H.M.JR: That is the way I interpret that, myself.
MR. 0' CONNELL: We have several strings in our bow.
You could argue they are not educational, but even if
they were, and a substantial part of their activities
was propaganda, they are still out because you have to
have all those things under the statute.
H.M.JR: Let's give them a hearing.
MR. O'CONNELL: Do you wish us to be here?
H.M.JR: Oh, my God, yes!
(Miss Kirchwey, Miss Schultz, and Mr. Sterling enter
the conference)
H.M.JR: I am sorry, but things are beyond my control.
MISS KIRCHWEY: It gave me a chance to visit with my
old friend Ernest Green, which was more important, his
having been Editor of The Nation.
H.M.JR: Now, which of you people want to speak first?
MISS KIRCHWEY: Maybe I should. I don't know at what
point to begin. Suppose I begin from where we left off
the last time we were here. Of course, we received the
letter from the Department, and I was, of course, rather
surprised as well as disappointed about it, because we
thought we had established ourselves in the role of a
public educational organization, and especially in the
light of the other groups and organizations we knew about
and had been closely in touch with, which had received the
ruling that we had asked for.
Regraded Unclassified
50
- 5 -
H.M.JR: Other organizations?
MISS KIRCHWEY: Other organizations of a character
that seemed to us to be doing comparable work.
H.M.JR: Publications?
MISS KIRCHWEY: For instance, Free World magazine,
and of course there is the old case of the Survey Graphic.
MR. O'CONNELL: +hat was litigated, as I recall.
MISS KIRCHWEY: Yes, the Survey was one of the earliest
instances of a membership corporation setup almost identi-
cally like ours, with Survey associates, as you remember,
as a part of the organization.
H.M.JR: You are prepared, you see, and I an just -
you don't mind if I interrupt you?
MISS KIRCHWEY: No, no, please.
MR. O'CONNELL: I am generally familiar with the case
of the Survey Graphic.
H.M.JR: Don't let the stenographer worry you; that
is just for myself. I do that all day long. I cannot
remember what happens all day long.
MR. O'CONNELL: In that case the Tax Court held that
this Survey Graphic magazine - I have forgotten the exact
legal name - was entitled to a 1016 exemption over the
objections of the Pureau at that time.
Our thought is that that case was clearly distinguish-
able from this in the opinion of the courts concerned,
because in that opinion they stressed the controversial
character of the material which was published by the
magazine over a long period of time, and it was my under-
standing that as the court saw it, at least, there was
none of the element of what the statute refers to as
Regraded Unclassified
51
- 6 -
any substantial part of the activities being engaged
in propaganda or attempting to influence legislation.
At least, that is, as I remember it, what the case
held. And I felt that the operations of the Survey
Graphic, at least as it was looked on by the Tax Court,
were quite clearly different from the operations of The
Nation, as a magazine, as we understand it.
MR. STERLING: I think that is quite correct, though
there is no intimation in this case, as in the case of
Nation's associates, that there was any substantial
activity with respect to influencing legislation.
H.M.JR: Just as a layman I would say, if you don't
mind my arguing with you - I would say the magazine was
no damned good, and I think it is very good if it doesn't
try to influence people.
MISS KIRCHWEY: I don't want to interrupt you, but
I think it would be ridiculous to pretend we didn't.
We take very clear-cut positions and we argue for them.
My contention in this - and I don't want to insist
on the Survey Graphic case, because there are others,
too, that I think are comparable - but the Survey certainly
couches its opinions in less positive tones than we do,
there is no doubt. They do argue for all kinds of reform
for specific improvements in social legislation, and for
all kinds of things that I think they should argue for,
but they have done it, perhaps, in a less militant spirit
than The Nation has.
I don't know - we share with them the same organiza-
tional setup; in fact, I had long consultations with the
Editor of Survey before we reorganized Nation as a member-
ship, non-profit--
H.M.JR: Who is that?
MISS KIRCHWEY: Paul Kellogg.
Regraded Unclassified
52
- 7 -
H.M.JR: What is the other magazine?
MISS KIRCHWEY: I know, you mean Leach.
H.M.JR: What about his magazine?
MISS KIRCHWEY: It has faded out of existence. But
Survey did do just what we did. The Survey associates,
with a paid membership and a definite non-profit member-
ship setup, legally - and I went into it very carefully
with them when we reorganized The Nation before I even
went for legal help in the matter - and we have this same
relationship between the people who subscribe money as
members of the Association; the only difference is that we
as an association, really carry on association activities
which we plan to extend, and have already developed to a
considerable degree, which as far as I know Survey associ-
ates - beyond having a dinner once a year - has never
bothered to do.
In both of these activities it has seemed to me that
we have carried on what I should consider public education,
while without for a single moment pretending that we don't
represent our own point of view on public questions. The
thing that we don't do, and neither does the Survey, is
to represent any partisan interest, any private interest,
or any group interest of any sort. We simply represent
our view of what is for the public welfare and what our
public ought to know about public affairs.
MR. 0' CONNELL: I can only repeat in part what I
said before, and that is that I believe the Tax Court
did find as a fact certain distinctions between the
situation that existed in the Graphic with respect to
what the court, at least, called the non-controversial
nature of the materials which were presented; and where
they did present something which was of a controversial
nature they purported, at least, to try to present both
sides of the question.
I am not arguing for that point of view; that is
merely what the court said.
Regraded Unclassified
53
B -
MR. STERLING: That is the correct statement, but
I think the Treasury subsequently actually admitted--
MR. O'CONNELL: In addition, I would like to point
out that the Treasury did not feel that the Survey should
have had a tax-exempt status, either. It took the Tax
Court to persuade us of that. We ruled against the
Survey in the first instance, and the Tax Court persuaded
us we were wrong.
MR. STERLING: I thought I would mention that some
years later the Treasury in its regulations really went
back to its position in the Survey case, if you want to
put it that way, and that it now admits that a position
may be taken on controversial issues and there may be a
discussion of controversial issues--
H.M.JR: In other publications we admit that you can
discuss controversial issues?
MR. O'CONNELL: Oh, yes, the Tax Court held that,
in that case.
H.M.JR: I can't follow these things except when some-
thing is brought to my attention like that. Do we dis-
regard the court ruling?
MR. O'CONNELL: No, no, the court ruling said--
H.M.JR: Notwithregard to the Survey Graphic, but
as to other publications? The fact that they have ruled
that this is tax-exempt, and other questions come up,
we just disregard--
MR. O'CONNELL: No, our existing regulations, as I
understand - what we consider the rules laid down in the
Survey case as well as others - the court says that if
controversial issues were discussed it was done in what
the court called an ob ctive fashion, and an attempt made
to present both sides of the question. Is that right?
Regraded Unclassified
54
-
MR. CANN: That is what we informed you in our letter
on Page 2 where we pointed out that it is also noted that
the various controversial subjects presented have not been
discussed by persons of adverse views.
MR. STERLING: I appreciate that. What I have in
mind at this point, and without going into the cases, the
Treasury regulation in 1938, or amended regulations,
applying to the Revenue Act of 1938 actually does provide
that the publication of books, or the giving of lectures
advocating a cause of a controversial nature shall not
of itself be sufficient to deny an organization the exemp-
tion.
I mean, this is actually a Treasury regulation which
shows you how far the Treasury has gone formerly beyond
the stand in the Survey associates case. I think there
are court decisions which go in opposition, the Leubuscher
case, Weyl case, and Cochran case, which represent de-
cisions by the Treasury, no doubt, that sustained exemp-
tions where there was a very strong exception taken on a
controversial issue.
MISS KIRCHWEY: I think one of them was the National
Tax Association. Of course, it was an association, not
a magazine, although they probably published something,
too.
MR. O'CONNELL: There are all sorts of variations
you could think of.
H.M.JR: This seems to be terrifically complicated.
This Survey Graphic, let's just leave it for a minute and
go to the Free World. Why do they have a tax?
MR. CANN: I am not familiar with that case.
H.M.JR: I know the Free World, and I don't see there
is an awful lot of difference between the Free World and
The Nation.
Regraded Unclassified
55
- 10 -
MISS KIRCHWEY: I hate to bring up cases--
H.M.JR: This other one - that is going to get down
to splitting hairs. Dut if the Free World is an associate
membership - is it?
MISS KIRCHWEY: Yes, a mixture - association under
a magazine.
H.M.JR: And a tax-exempt status.
MR. O'CONNELL: I am surprised.
H.M.JR: Do you know the Free World?
MR. O'CONNELL: Sure, but I did not know it was tax-
exempt.
H.M.JR: Do you know of any others?
MISS KIRCHWEY: The Protestant.
MRS. KLOTZ: was this brought up before?
MISS KIRCHWEY: I think we mentioned it earlier.
I am not being critical when I say this, it is a truly
propaganda magazine, I am sure very enlightening, and
therefore probably educational. It was instituted to fight
against the Coughlinite position. It has a very aggressive
Board that has been accused of being anti-Catholic. I
don't think it is; I think it is only against the more
extreme position of that particular group.
H.M.JR: Maybe you had better take it away from
them, Joe.
MR. O'CONNELL: I would like to keep a finger in it
if you don't mind.
MISS KIRCHWEY: They are doing a good job.
Regraded Unclassified
56
- 11 -
H.M.JR: I would take the tax exemption away from
The Protestant.
MR. O'CONNELL: Actually, I would like to get infor-
mation on it, although we could get it out of the Bureau.
If - as I had not understood, and Norman had not - we are
in the position of having given tax-exempt rulings under
1016 to periodicals and to organizations that operate
substantially as yours is doing, I think we ought to re-
examine it in that light; but that is not as I understood
the situation to be.
MISS KIRCHWEY: May I ask a question? I don't
know whether an organization is treated differently from
a publication--
H.M.JR: May I tell you a little story? My father
practiced law, until 1900. He always said, "Henry, when
you seem to win your argument, quit arguing."
Mr. 0' Connell has just said he wanted to review the
thing, and if I might give a little advice to the witness
I would stop right here, because I think he and Norman Cann
want to re-examine it. Why not give them a chance?
MISS KIRCHWEY: Good.
MR. 0' CONNELL: And if we could have a few moments
when we leave here to talk about such things as the Free
World, and if you have other examples, it would help us
in making a search in the other side.
MISS KIRCHWEY: If it wouldn't injure our case.
H.M.JR: I want to say this to you. The reason they
are being SO over-careful - and this is off the record -
is that we are pursuing under this particular statute
people like America First, and we have a great many cases.
We don't want to injure our position, do you see? We
have a number of these cases.
Regraded Unclassified
57
- 12 -
MR. O'CONNELL: Mr. Gannett's League for Constitu-
tional Government, we did not give them 1016.
H.M.JR: We do not want to give away our case or
weaken our position, so we do want to be very, very sure
of our position, because this is really the only statute
under which the Government can proceed. So this isn't
just something we approach lightly. And it is very, very
difficult to reach these people, and I am being very indis-
creet when I say that, but I want you to know that what
you are raising is something more than just your own case.
And the thing is, we take it, that the method from
your approach, from your side, is that what you are really
looking for is when people do subscribe to the association,
it can be deducted as tax.
MISS KIRCHWEY: That is all.
H.M.JR: We understand that. I assure you if there
is any way to do the thing within the interpretation of
the law we will approach it that way, keeping in mind
that we have a number of others which I think you might
agree are quite important.
MISS KIRCHWEY: I might almost sacrifice my own posi-
tion to get them knocked out.
H.M.JR: They are very important, and we are having
great, great difficulty.
MISS KIRCHWEY: I realize that.
H.M.JR: So it isn't just something we do lightly.
MISS KIRCHWEY: I am glad you told me that. I think
that is a very important part of the whole story.
H.M.JR: But if you have'the Free World and The
Protestant, or anything else--
Regraded Unclassified
58
- 13 -
MISS KIRCHWEY: I have several.
H.M.JR: Where are you from?
MR. STERLING: Engel, Judge, and Miller.
H.M.JR: I just wondered if my own attorneys were
appearing before me who shouldn't. I am serious about
that.
Regraded Unclassified
11/15/44
59
Ribbon copy given to the President
at lunch today.
60
CONTENTS
Memorandum of the Secretary of the Treasury
General Outline of Proposals
Details of Proposals
1. Federal Reserve Board
2. Federal Open-Market Committee
3. Securities and Exchange Commission
4. Bureau of the Budget
5. Examination of Financial Institutions
6. Federal Deposit Insurance Corporation
7. Postal Savings System
8. Committee on Industrial Financing
9. Committee on Agricultural Financing
10. Committee on Housing Financing
11. Committee on Maritime Financing
12. Committee on Foreign Financial Affairs
Regraded Unclassified
61
MEMORANDUM OF THE
SECRETARY OF THE TREASURY
REGARDING UNIFICATION
OF FISCAL POLICY
Regraded Unclassified
62.
PROPOSAL FOR STRENGTHENING FISCAL
CONTROL IN THE FEDERAL GOVERNMENT
With the approach of VE-Day, the Treasury
Department must be geared for borrowing and refund-
ing operations on an extensive scale. In the post-
war adjustment period, the Secretary of the Treasury
will be called upon to make recommendations for the
raising of revenue and will have responsibility for
the planning and carrying out of a. successful financ-
ing program for the Federal Government. The im-
mediately foreseeable tasks in this respect may prove
to be even more challenging and difficult than those
with which the Treasury Department has been confronted
during the course of the war. This is not only for the
obvious reason that patriotic aspects will be to some
extent in the background, but also because the raising
of revenue must be more closely correlated with the
economic condition of the country and with the borrow-
ing and refunding operations of the Government. It
is imperative that planning for the post-war period
should be directed toward having taxation and other
sources of revenue provide sufficient receipts to meet
not only continued substantial outlays of Federal funds
but also to afford a margin for the systematic retire-
ment of debt in those years when economic conditions
are favorable. Moreover, the need of unified fiscal
control over the diverse expenditure programs of the
Government will have increasing importance with the
cessation of hostilities. The Secretary of the Treasury
will be faced with the important duty of obtaining
support of this program from the American people, and it
is believed that serious attention should be given now
to strengthening management of the Federal Government's
fiscal and monetary affairs.
Throughout this administration, the Treasury
Department has held the view that, as a national policy,
the Federal Government's monetary force should be
dynamic and useful as an instrument for improving the
Regraded Unclassified
63
total national wellbeing. The use of Federal fiscal
power through the early years of the administration
represented a significant widening of the Government's
responsibility toward the individual citizen and the
industrial affairs of the nation. During the formative
period, when new programs were conceived and brought
into being rapidly to meet the exigencies of the times,
it was necessary to set up many activities on an inde-
pendent footing but experience over the past and also
consideration for fiscal tasks of the future point to
the need for realignments designed to bring about con-
trol or coordinating authority for the entire area of
Federal fiscal operations. The need for this is appare
ent from the fact that the financial transactions of
every agency and instrumentality of the Federal
Guernment, whether in the fields of borrowing, lend-
ing, insuring, or spending, are closely related to
the domestic economy of the Nation and are bound to
have a direct or indirect bearing upon the condition
of the Treasury and the responsibilities of the Sec-
retary in superintending the revenue and managing the
public debt.
The Office of the Secretary of the Treasury should
carry the responsibility for over-all policy direction
of Federal fiscal affairs. While the Secretary is
responsible for supplying the necessary funds for
running the Government, and for carrying on the inci-
dental accounting functions, he is not in a position
to exercise commensurate authority with regard to the
disposition of funds and the coordination of Federal
programs which have an impact upon the fiscal position
of the Government. This is considered to be a weakness
which is a material handicap not only to the Treasury
Department in discharging its responsibilities but also
to the orderly and unified conduct of the Government's
financial affairs. The need for bringing together all
of the components of Federal fiscal activity is great
today and, as previously stated, will become still
more pressing after the war when the preservation of
an appropriate balance between taxation, borrowing,
lending, and spending will be essential to a healthy
Regraded Unclassified
64
internal economy and the meeting of international
responsibilities which may be assumed by the United
States. Under present circumstances the Secretary
of the Treasury is unable to exercise adequate policy
direction in this wide area which, although it is
the proper field of the Government's fiscal program,
is connected to the Treasury Department in some res-
pects in no stronger way than in a bookeeping sense.
It is this deficiency which suggests a redrawing of
top policy lines so as to establish the Secretary of
the Treasury in the true role of the Chief Fiscal
Officer of the Government and place him in the position
to exercise that degree of influence which is imperative
to a cohesive Federal fiscal program.
While not attempting to present at. this time a
comprehensive analysis of the organization and policy
realignments in contemplation, there are indicated those
activities which, from the purely fiscal point of view,
should be centered in the Treasury Department, and those
activities which, while remaining organizationally out-
side of the Treasury Department, would be subject to
the degree of coordination necessary to afford the
Secretary of the Treasury control from the standpoint
of over-all fiscal policy. It is not proposed to distumb,
to any great degree, the basic corporate patterns, regu-
latory and insuring controls, or operational practices
of the agencies concerned. The proposal for strengthen-
ing fiscal control in the Federal Government is aimed at
bringing into focus, for policy purposes, all important
financial undertakings that are related to the broad
program of finance.
The proposal comprehends extension of the Treasury
Department's influence into the following areas of the
Federal Government's activities:
A. Policy making with respect to the money and
credit markets of the country, typified by
activities of the Board of Governors of the
Federal Reserve System, the Federal Open
Market Committee, and the Securities and
Exchange Commission;
Regraded Unclassified
65
B. Policy control over Federal revenue and
expenditures typified by the President's
Budget and proposed legislation submitted
to the Congress from the standpoint of a
unified fiscal program;
C. Policy control and correlation of programs
relating to banking, insurance, lending, and
borrowing now spread principally in the
Departments of Agriculture, Commerce, Interior,
and Post Office (postal savings), the National
Housing Agency, the Office for Emergency
Management, and the Federal Deposit Insurance
Corporation.
The proposals affecting the agencies involved in
the unification of fiscal policy fall into three groups
as follows:
I. Treasury participation in management.
II. Functions to be centered in the Treasury.
III. Treasury control through policy committees.
In making this proposal, I am not unmindful of the
reasons which have been assigned for the removal of the
Secretary of the Treasury from the Federal Reserve Board
in 1936, and the transfer of the Bureau of the Budget
to the Executive Office of the President in 1939. There
should be no conflict between the policy of the Federal
Reserve System and the broader policy of the Government
which is in the interest of the whole country. It
would seem proper and in accordance with good business
practice that the Treasury should have representation
in the direction of the Federal Reserve System. The
Federal Reserve notes are obligations of the United
States, and the earning assets of the Federal Reserve
banks are largely government securities, or paper col-
lateralized by such securities. Moreover, the market
for government securities and the government's credit
are vitally affected by Federal Reserve policy.
With respect to the Budget, I am in full agreement
with the statement made by Senator Glass in 1919, when
Regraded Unclassified
56
he was Secretary of the Treasury, that "The responsi-
bility for the preparation of the budget should be
placed upon the President, and, in my judgment, he
should meet this responsibility through the Secretary
of the Treasury, the chief fiscal officer of the
Government."
Responsibility for raising funds and controlling
expenditures cannot properly be separated. After the
war, when the fire of patriotism has died down, the
Treasury must continue to ask the American people to
lend the government five billion dollars a month for
at least a year. The American people will be concerned
about the purpose for which that money is to be spent.
When they lend their money, they will ask the Secretary
of the Treasury to justify its expenditure. The
Secretary of the Treasury should be in a position to
squarely shoulder that responsibility and give them
frank answers to their questions. He should not be
compelled to say, "I'm sorry, that is not in my
department."
Regraded Unclassified
67
GENERAL OUTLINE
FOR UNIFICATION OF
FISCAL POLICY
Details of these proposals
will be found by reference
to the marginal tabs corres-
ponding to the numbers used
in this outline.
Regraded Unclassified
68
UNIFICATION OF FISCAL POLICY
General Statement
The proposal for strengthening fiscal control in
the Federal Government is aimed at bringing into focus,
for policy purposes, all important undertakings that
are related to the broad program of finance. It would
be accomplished partly through organizational realign-
ment, partly through policy committees chairmanaedbby
the Secretary of the Treasury, partly through budgetary
control placed in the Treasury Department over Federal
expenditures, and partly through liaison where the element
of budgetary control is not involved or the activities
are not of sufficient scope and fundamental importance
to warrant realignment or subjection to committee policy.
I. Treasury participation in management
(1) Board of Governors, Federal Reserve System
Secretary of Treasury would be rein-
stated as a fully constituted and
active member of the Board of Gover-
nors. Secretary should have power
to designate an alternate.
(2) Federal Open Market Committee
Committee is composed of the members
of Board of Governors of Federal Re-
serve System and five representatives
of Federal Reserve Banks. Secretary
of Treasury would participate in com-
mittee affairs through membership on
Board of Governors.
(3) Securities and Exchange Commission
The functions and powers of the
Securities and Exchange Commission
would be transferred to Board of
Governors of Federal Reserve System
to be performed through a staff
agency of the Board. Secretary of
Regraded Unclassified
69
(3) Securities and Exchange Commission (cont.)
the Treasury through participation
on Board of Governors would have
representation in connection with
management of this activity.
II. Functions to be Centered in Treasury
(4) Bureau of the Budget
Transfer to Treasury Department
functions of preparation and ad-
ministration of the budget; con-
sideration of all proposed legis-
lation and executive orders; and
investigation which would be re-
stricted to essential inquiry with
regard to the consideration of
estimates and matters of purely
fiscal management.
Legislative Counsel to President
would maintain close liaison with
the Treasury Department on pro-
posed legislation and executive
orders.
(5) Examination of Banking and Financial
Institutions
Transfer to the Comptroller of the
Currency all functions of examina-
tion of banking, insurance, or
financial institutions which at
present are vested in the Board of
Governors of the Federal Reserve
System, Federal Deposit Insurance
Corporation, Federal Home Loan
Bank Administration, and Farm Credit
Administration.
Regraded Unclassified
70
(6) Federal Deposit Insurance Corporation
The Corporation would be dissolved,
its capital stock retired, and its
powers and functions transferred to
the Comptroller of the Currency. A
special fund would be created in the
Treasury equivalent to the Corpora-
tion's assets and for the assumption
of its obligations, to be supplement-
ed with future assessments and earn-
ings and invested in the manner of
other special or trust funds.
(7) Postal Savings System
The board of trustees would be
abolished and its powers and func-
tions transferred to the Treasury
Department. This involves the
qualification of depository banks
and the management and investment
of postal savings funds. It con-
templates the use of depository
banks as well as post offices for
the receipt of deposits from the
public.
Treasurer of United States would
continue functions as custodian
of reserve funds, investments,
and collateral of the system.
III. Treasury control through policy committees
The needed element of influence by the Secretary
of the Treasury over the fiscal policies of corporations
and agencies in the fields of industrial, agricultural,
housing, maritime, and foreign affairs financing, should
be exercised through a duly constituted committee for
each group with appropriate representation at the top
level of each agency concerned. Each committee, chair-
manned by the Secretary of the Treasury with veto powers,
would draw the framework of policy within which the
respective financial operations are to be carried on.
The committees' determinations on matters of broad fiscal
Regraded Unclassified
71
policy should be controlling, subject of course to
specific legislative requirements or Presidential
direction. In addition, the approval of the Secretary
of the Treasury should be required on all financing --
capital or borrowing -- of corporations owned by the
United States or in which it has a direct or indirect
controlling interest. The Secretary of the Treasury
would need to have a small staff of experts available
to carry on liaison with the operating agencies, to
deal with important fiscal problems which might arise
in any of the constituent groups, and to weld together
the programming of all these activities in relation to
the Government's financing.
(8) Committee on Industrial Financing
Would embrace fiscal activities
of the Reconstruction Finance
Corporation and its corporate
affiliates, and those of the
Smaller War Plants Corporation.
(9) Committee on Agricultural Financing
Would embrace fiscal activities of
of the Farm Credit Administration
and the corporations of the Farm
Credit system, the constituent cor-
porations and agencies of the War
Food administration, and other
financing corporations and agencies
of the Department of Agriculture as
follows: Federal Farm Mortgage Cor-
poration, Federal Crop Insurance
Corporation (in liquidation), and
Rural Electrification Administration.
(10) Committee on Housing Financing
Would embrace fiscal activities of the
Federal Home Loan Bank Administration
and its constituent corporations, and
other corporations and agencies of the
National Housing Agency, as follows:
Federal Public Housing Authority, Defense
Homes Corporation, and Federal Housing
Administration.
Regraded Unclassified
72
(11) Committee on Maritime Financing.
Would embrace fiscal activities
of United States Maritime Com-
mission and War Shipping Admin-
istration.
(12) Committee on Foreign Financial Affairs
Would embrace fiscal activities
of Foreign Economic Administra-
tion, and its constituent cor-
porations and agencies, and Office
of Coordinator of Inter-American
Affairs and its constituent corpora-
tions and agencies.
Regraded Unclassified
73
1
333
S
74
SECTION I
(1) BOARD OF GOVERNORS,
FEDERAL RESERVE SYSTEM
Background
Originally, the Secretary of the Treasury and
the Comptroller of the Currency both were ex officio members
members of the Federal Reserve Board (now Board of
Governors of the Federal Reserve System). By amend-
ment to the Federal Reserve Act they continued to
serve as members of the Board only until February 1,
1936, although there was retained the original legis-
lative provision that any powers vested in the Board
which may appear to conflict with the powers of the
Secretary of the Treasury shall be exercised subject
to the supervision and control of the Secretary.
Functions
The Board of Governors of the Federal Reserve
System determines general monetary, credit, and operat-
ing policies for the Federal Reserve System; formulates
rules and regulations for carrying out purposes of the
Federal Reserve Act; supervises the Federal Reserve
Banks and member banks of the system, and has the power
to examine such member banks.
Proposal
Any decisions in this field which are made by the
Board of Governors of the Federal Reserve System and
the Federal Open Market Committee have an important
bearing on the financial functions of the Treasury
Department and therefore it is necessary that the
Secretary of the Treasury have a voice in these deci-
sions. Moreover, the functions of the Federal Reserve
Banks as fiscal agents of the United States have assumed
ever increasing importance and scope with the enlargement
of the activities of the Treasury Department in recent
years. The Secretary of the Treasury should be
Regraded Unclassified
75
SECTION I
reinstated as a fully constituted and active member
of the Board of Governors of the Federal Reserve
System, and in view of the many demands upon his time
he should have the power to designate an alternate to
act for him in that capacity, if and when, he 80
desires.
Regraded Unclassified
76
2
7-7
SECTION I
(2) FEDERAL OPEN MARKET COMMITTEE
Functions
The Federal Open Market Committee is composed of
the members of the Board of Governors of the Federal
Reserve System and five representatives of the Federal
Reserve Banks elected annually by the boards of directors
of certain specified Federal Reserve Banks. Under
regulations adopted by this Committee (with a view to
accommodating commerce and business and with regard to
their bearing upon the general credit situation of the
country), the Federal Reserve Banks engage in open
market operations involving the purchase and sale of
obligations of the United States, certain other securi-
ties, and bills of exchange and bankers' acceptances of
the kinds and maturities eligible for discount by the
Reserve Banks.
Proposal
Any decisions in this field which are made by the
Board of Governors of the Federal Reserve System and
the Federal Open Market Committee have an important
bearing on the financial functions of the Treasury
Department and therefore it is necessary that the
Secretary of the Treasury have a voice in these deci-
sions. Moreover, the functions of the Federal Reserve
Banks as fiscal agents of the United States have
assumed ever increasing importance and scope with the
enlargement of the activities of the Treasury Department
in recent years. The Secretary of the Treasury should
be reinstated as a fully constituted and active member
of the Board of Governors of the Federal Reserve System,
and in view of the many demands upon his time he should
have the power to designate an alternate to act for him
in that capacity, if and when, he 80 desires.
Regraded Unclassified
78
3
SECTION II
79
(3) SECURITIES AND EXCHANGE
COMMISSION
Functions
The Securities and Exchange Commission, which
at present is an independent agency, has regulatory
powers and duties that have an important relation to
the broad field of banking and credit in which the
Federal Reserve System operates and with which the
Secretary of the Treasury is vitally concerned. The
Commission supervises the registration of security
issues; suppresses fraudulent practices in the sale
of securities; supervises and regulates transactions
and trading in securities, both on the stock exchanges
and in the over-the-counter markets; regulates public
utility holding companies; supervises indentures used
in the public offering of new securities; and registers
and regulates investment companies and investment
advisers.
Proposal
The functions and powers of the Securities and
Exchange Commission should be transferred to the Board
of Governors of the Federal Reserve System to be operated
through a staff agency of the Board. The Secretary of
the Treasury, through his participation on that Board,
would have the contact with this activity necessary for
its coordination with the Government's financing and its
fiscal program in general.
Regraded Unclassified
80
4
81
SECTION II
(4) BUREAU OF THE BUDGET
Background
When the Budget and Accounting Act, 1921, was
passed, the Bureau of the Budget was placed in the
Treasury Department. During the years that this ar-
rangement was in effect it was possible to obtain a
close coordination between the fiscal policies of the
Treasury Department and the financial programs of the
Budget. Since the Budget organization was removed
from the Treasury Department's control, experience
has shown that it has been difficult to obtain the
degree of coordination necessary for a unified fiscal
program of financing and expenditures.
Functions
Prepares and administers the Budget; studies
improvement and economy in administrative management
of the Government; coordinates and advises President
on proposed legislation and executive orders; studies
improvement in statistical services; and coordinates
work programs of the executive branch to avoid duplica-
tion and effect economies.
Proposal
There should be returned to the Treasury Department
functions now performed by the Bureau of the Budget which
concern the assembling and reviewing, for the President,
of the budget estimates for the several departments and
agencies, and the consideration, for the President, of
all proposed legislation and executive orders. The
review, as well as the approval or disapproval of ap-
propriation estimates, ought properly to be made in the
full light of the Government's entire financial program,
including the important phase of general financing.
This task of reviewing expenditure estimates as well as
Regraded Unclassified
SECTION II
82
that of preparing estimates of revenue ought best to
be carried on within the Treasury Department, where
they can be coordinated with the Secretary's fiscal
policy and closely associated with accounting operations
now in his Department by law. In the main, proposed
legislation and executive orders are financial in
nature or have important fiscal implications and hence
should be considered by the Treasury Department in
relation to the financial program in general. In
addition, it might be desirable for the President to
have his own legislative counsel to maintain close
liaison with the Treasury Department in such matters.
The present somewhat extensive functions of the Bureau
of the Budget in the field of administrative management
should be left entirely to the respective departments
and agencies concerned, except that the Treasury Depart-
ment should be in the position to make essential inquiry
with regard to the consideration of estámates and
matters of purely fiscal management.
Regraded Unclassified
5
SECTION II
(5) EXAMINATION OF BANKING AND
FINANCIAL INSTITUTIONS
Functions of Comptroller of the Currency
The Comptroller of the Currency has general super-
vision over the national banking system, including:
supervision over the organization of new national banks,
the consolidation of national banks or state with national,
and the conversion of state banks with national; the
granting of rights to operate branches by national banks;
and the administration, through receivers, of any national
banks that fail. The Comptroller's office, through its
staff of examiners, makes regular examinations of all
national banks, reporting on the condition and solvency
and state of compliance with the provisions of law with
respect to such banks. The Comptroller is also charged
with administrative duties in connection with the ship-
ment of Federal Reserve currency to Federal Reserve agents
and for the destruction of such currency when it becomes
unfit for circulation. These administrative duties could
logically be transferred to the Treasurer of the United
States to be performed as in the case of United States
currency.
Proposal
At present, functions of examination of various
classes of banking and other financial institutions
(both Governmental and public) are exercised by the
Comptroller of the Currency, the Board of Governors of
the Federal Reserve System, the Federal Deposit Insur-
ance Corporation, the Federal Home Loan Bank Administra-
tion, and the Farm Credit Administration. There should
be centered in the Comptroller of the Currency the func-
tions of the examination of all banking, insurance, and
financial institutions which is now performed in differ-
ent agencies, 80 as to effectuate a unified and consistent
program of examinations. This also would offer possibili-
ties for some economies in operation.
Regraded Unclassified
85
T
6
86
SECTION II
(6) FUNCTIONS OF FEDERAL DEPOSIT
INSURANCE CORPORATION
Functions
The Federal Deposit Insurance Corporation was
organized to insure the deposits of all banks entitled
to the benefits of such insurance under the Federal Re-
serve Act, as amended. The capital stock of the Cor-
poration, which has no vote and is not entitled to the
payment of dividends, is owned by the Treasury of the
United States to the extent of $150,000,000, and by the
various Federal Reserve Banks to the extent of
$139,299,556.99. On September 30, 1944, the accumulated
reserves of the Corporation from assessments on insured
banks and earnings, amounted to $487,847,143. The major
functions of the Corporation are to pay off the depositors
of insured banks closed without adequate provision for
the payment of their claims; to act as receivers for all
suspended national banks and for suspended state banks
when appointed by state authorities; and to prevent the
continuance or development of unsafe or unsound banking
practices. Loans are made to, and assets are purchased
from, insured banks when such loans or purchases will
facilitate a merger or consolidation and thus reduce the
probable loss to the Corporation. The Corporation peri-
odically examines insured banks not members of the Federal
Reserve System, and also makes examinations with the
written consent of the Comptroller of the Currency in the
case of national banks and of the Board of Governors of
the Federal Reserve System in the case of other banks
which are members of the Federal Reserve System.
Proposal
In the case of the Federal Deposit Insurance Cor-
poration there are two fundamental questions for consid-
eration: first, whether the corporate form of organiza-
tion 18 essential to the conduct of this activity; second,
whether the activity should not be administered by the
Comptroller of the Currency from the standpoint of a
Regraded Unclassified
87
SECTION II
unification of supervision over banking matters. The
capital and accumulated reserves of the Corporation
essentially constitute a fund for the payment of in-
surance losses and for carrying on the other business
of the Corporation. These purposes could equally be
served by creating a special fund in the Treasury
equivalent to the existing corporate assets and to
assume the corporate obligations. This fund would be
invested in the manner of other special or trust funds,
and would be supplemented with future assessments and
earnings. There does not appear otherwise to be any-
thing peculiar to the operations of the corporation
which would preclude the performance of its functions
and the assumption of its obligations by a regular
executive agency of the Government. The Comptroller
of the Currency, by law, is one of the three members
of the board of directors of the present Corporation.
In line with the idea of centralizing in the Treasury
Department supervision and coordination of authority
over banking matters, the Federal Deposit Insurance
Corporation could be dissolved, its capital stock
retired, and its powers and functions transferred to
the Bureau of the Comptroller of the Currency with
provision for a Federal deposit insurance fund in the
Treasury under the jurisdiction of the Secretary of
the Treasury.
Regraded Unclassified
7 The Own the
89
10
SECTION II
(7) POSTAL SAVINGS SYSTEM
Functions
The Postal Savings System is headed by a board
of trustees consisting of the Postmaster General, the
Secretary of the Treasury, and the Attorney General,
acting ex officio, for the control, supervision, and
administration of the System. The purpose of the
Postal Savings System is to provide facilities for the
deposit by the public of savings at interest, with the
security of the United States Government for repayment
on demand. Generally speaking, the administration of
the Postal Savings System involves the designation of
post offices as postal savings depositories, the super-
vision of the postal savings business transacted at
depository post offices, the qualification of depository
banks for receiving postal savings funds for the Board
of Trustees and the conditions and collateral security
for such deposits, and the investment of postal savings
funds by the Board of Trustees. The Third Assistant
Postmaster General is the agent for these activities
which are conducted through the Division of Postal
Savings of his bureau. The Treasurer of the United
States has custody of the 5 percent reserve fund which
is required by law, the bonds and other securities of
the United States purchased by the Board of Trustees as
investments, and the collateral pledged by depository
banks as security for postal savings funds.
Proposal
Due to the manner in which the Postal Savings Sys-
tem is operated, there appears to be no need for a
Board of Trustees. Hence the Board should be abolished
and in order to integrate the functions of the Postal
Savings System with the overall program of encouraging
public savings and the investment of such savings in
Government securities, its functions should be transferred
to the Treasury Department. This contemplates leaving
the Bost Office Department to act essentially in the
Regraded Unclassified
90
SECTION II
capacity of an agent of the Treasury Department for
the receipt and disposition of postal savings deposits
through post offices. The Post Office Department would
continue to supervise the related business transacted
at such post offices. The Treasury Department should be
empowered to designate banking institutions also as
postal savings depositories.
Regraded Unclassified
8
Regraded Uncl assified
92
SECTION III
(8)
COMMITTEE ON INDUSTRIAL FINANCING
Committee Participation
Reconstruction Finance Corporation (under Secretary of Commerce);
Smaller War Plants Corporation (under War Production Board
in Executive Office of President); Department of Commerce; War
Department; and Navy Department.
Agencies Involved
Reconstruction Finance Corporation (under Secretary of Commerce).
Affiliates of R.F.C.:
Federal National Mortgage Association;
The RFC Mortgage Company;
Disaster Loan Corporation;
War Damage Corporation;
Defense Supplies Corporation;
Metals Reserve Company;
Rubber Reserve Company;
Defense Plant Corporation
Smaller War Plants Corporation (under War Production Board).
Agency Functions
Reconstruction Finance Corporation: Extends financial assistance
to Agriculture, Commerce, and industry through loans to banks,
other financial institutions, and other classes of borrowers,
and also by purchase of capital stock of banks, insurance com-
panies, and other institutions, assists in financing the con-
struction of public works and various self-liquidating projects.
The corporation, acting directly and through subsidiary corpora-
tions, is engaged largely on war activities including the con-
struction and expansion of production facilities for the manu-
facture of war materiels and other supplies and equipment, the
procurement and stock piling of strategic and critical materials,
the operation of the Government's war damage insurance program,
and other projects directly related to the war effort.
Smaller War Plants Corporation: Mobilizes production capacity
of small business concerns to be used effectively to augment war
production. In furtherance of this, takes prime contracts and
sub-contracts, leases machinery, lands money, aids in disposal
of surplus material and equipment to small business, and assists
in the solution of technical and financial problems. Also ar-
ranges for securing of contracts by small business by recom-
mendation and assistance in negotiation. Participates with other
agencies in facilitating the prompt and equitable settlement of
claims of small prime and sub-contractors arising from termina-
tion of war contracts.
Regraded Unclassified
9
Regraded Unclassified
94
SECTION III
(9) COMMITTEE ON AGRICULTHIAL FINANCING
Committee Participation
Farm Credit Administration; War Food Administration; and the
other indicated corporations or agencies of the Department of
Agriculture concerned with this class of financing.
Agencies Involved.
Farm Credit Administration (under Department of Agriculture)
Corporations of Farm Credit System:
Federal Land Banks;
Federal Intermediate Credit Banks;
The Central and District Banks for Cooperatives;
Production Credit Corporations;
Regional Agricultureal Credit Corporation
War Food Administration (organizationally in department of
Agriculture but with Administrator responsible to President)
Constituent Corporations of War Food Administration:
Commodity Credit Corporation;
Federal Surplus Commodities Corporation;
Farm Security Administration;
Various Departmental Agencies concerned with
production, distribution, conservation, transportation,
labor, prices, etc.,
Federal Farm Mortgage Corporation;
Rural Electrification Administration;
Federal Crop Insurance Corporation (in liquidation)
Agency
Functions
Farm Credit Administration: Supervisers, through 12 districts,
the Farm Credit system operated through different bankar and
corporations for financing agricultural long and short term
credit needs; also conducts activities regarding land bank
commissioner loans, emergency crop end feed loans, and cooperative
research and service.
War Food Administration: Determines the direct and indirect,
military, other Governmental, civilian, and foreign requirements
for human and animal food and for food used industrially. In
furtherance thereof, formulates and implements a program that
will supply food adequately to meet requirements; allocates the
nations's farm production resources as needed and insures the
efficient and proper distribution of the available food supply.
The War Food Administrator also has responsibility for farm
labor supply and farm wage and salary stabilisation.
Regraded Unclassified
10
Regraded Un assified
96
SECTION III
(10) Committee on Housing Financing
Committee Participation
Federal Home Loan Bank Administration, Federal Housing Adminis-
tration, and Federal Public Housing Authority, and such other
representation of the National Housing Agency as may be ap-
propriate.
Agencies Involved
Federal Home Loan Bank Administration (in National Housing Agency)
Constituent corporations of F.H.L.B. Administration:
Federal Home Loan Banks;
Federal Savings and Loan
Insurance Corporation;
Home Owners' Loan Corporation
(in liquidation)
Other components of National Housing Agency:
Federal Housing Administration;
Federal Public Housing Authority;
Defense Homes Corporation (under
Federal Public Housing Authority)
Agency Functions
National Housing Agency: Administers all the housing functions
and activities which formerly were carried on by 17 different
agencies and administrative units consolidated by Executive
Order 9070 (under First War Powers Act, 1921). Has jurisdiction
over present 3 agencies carrying out such programs.
Federal Home Loan Bank Administration: Supervises the Federal
Home Loan Bank System and Federal Savings and Loan Associations.
Examination of member institutions would be placed under the
Comptroller of the Currency, Treasury Department.
Regraded Unclassified
11
98
SECTION III
(11) COMMITTEE ON MARITIME FINANCING
Committee Participation
United States Maritime Commission; Mar Shipping Adminis-
tration (in the Office for Emergency Management; Mar Depart-
ment; Navy Department; and possibly Foreign Economic Adminis-
tration.
AGENCIES INVOLVED
United States Maritime Commission
War Shipping Administration (In Office for Emergency Management)
AGENCY FUNCTIONS
United States Maritime Commission: Carries out long range
ship contruction program through development of shipyard
facilities utilized in merchant ship building program, and
insures mortgages on passenger, cargo, and other vessels.
War Shipping Administration: Controls the operation, purchase,
charter, requisition and use of all ocean vessels under control
of the United States except combatant and auxiliary vessels.
Allocate vessels for use by the Army, Navy, and Governments of
the United Nations. Provides Marine insurance and reinsurance
against loss or damage of vessels. The administration represents
the United States in dealings with the British Ministry of War
Transport and similar agencies of the Allied Nations.
Regraded Unclassified
12
100
SECTION III
(12) Committee on Foreign Financial Affairs
COMMITTEE PARTICIPATION
Foreign Economic Administration, and Office of Coordinator
for Inter-American Affairs (both in Office for Emergency Management);
Department of Commerce; Reconstruction Finance Corporation (Under
Secretary of Commerce); Department of State; War Department; and Navy
Department.
AGENCIES INVOLVED
Foreign Economic Administration (in Office For Emergency Management)
Constituent Agencies of Foreign Economic Administration:
Office of Lend-Lease Administration;
Export-Import Bank of Washington;
Petroleum Reserve Corporation;
Rubber Development Corporation;
United States Commercial Company;
Cargoes, Incorporated;
Office of Economic Warfare;
Office of Foreign Relief and
Rehabilitation Operations;
Foreign Economic Operations of
Office of Foreign Economic
Coordination;
Former Foreign Procurement
Activities of War Food Ad-
ministration and Commodity
Credit Corporation.
Office of Coordinator of Inter-American Affairs
(in Office for Emergency Management)
Constituent Agencies of Office of Coordinator:
Institute of Inter-American Affairs;
Institute of Inter-American
Transportation;
Inter-American Navigation Corporation;
Inter-American Educational Foundation, Inc;
Prencinradio, Inc.
AGENCY FUNCTIONS
Foreign Economic Administration: Unifies and consolidates Govern-
ment activities relating to foreign economic affairs, and has
jurisdiction over various agencies and corporations engaged on such
program. Also is the active agency in effecting U. S. participation
in United Nations Rehabilitation and Relief program.
Regraded Unclassified
101
Office of Coordinator of Inter-American Affairs: Serves as
center for coordination of cultural and commercial relations
for western hemisphere. Formulates and executes programs
(with State Department) for effective use of facilities in such
fields as arts and sciences, education, travel, etc., to
further national defense in the western hemisphere. Formulates
and executes programs in commercial and economic fields to
further commercial wellbeing in the western hemisphere. Assists
in war and navy programs to help American republics increase
their military and naval establishments. Has jurisdiction over
various agencies and corporations engaged in such programs.
Regraded Unclassified
102
November 15, 1944
Ted Gamble
Secretary Morgenthau
In every drive 80 far we have made good use of
Mrs. Franklin Roosevelt and I would like you to use
her again on the radio during the Sixth War Loan
Drive.
If you have anything else in mind to use the
President and Mrs. Roosevelt other than the night of
the 19th, I'd like anything for the President cleared
with me and anything for Mrs. Roosevelt cleared through
Mrs. Morgenthau. Fib - -
Regraded Unclassified
103
25
November 15, 1944.
Dear Mr. Folger:
Thank you for your letter of November 13.
It was kind of you to speak so pleasantly of
my address before one of the sessions of the
Investment Bankers Association of America, and
to extend an invitation to address the convention
in Chicago on November 28.
I am planning to take a few days' vacation
from Thanksgiving on, and 80 will not be making
any official engagements for the days which fall
within that time. It is good of you to ask me
in connection with the War Bond campaign, and
I am sorry not to comply with the suggestion that
I attend this and other sessions during the con-
vention of your Association.
With cerdial personal regards,
Sincerely,
(Signed) H. Morgenthew, de
Mr. John Clifford Folger.
President, Investment Bankers
Association of America,
American Security Building.
GEF/dbs
Washington 5, D. 0.
Regraded Unclassified
104
INVESTMENT ASSOCIATION OF AMERICA
GOVERNORS
PRESIDENT
GOVERNORS
WILLIAM DAYNE
BOSTON
JOHN CLIFFORD FOLGER
WASHINGTON
MUCH a. MACBAIN
PITTSBURGH
FREDERIC J. BLANCHETT
SEATTLE
RANALD H. MACDONALD
NEW YORK
FRED M. BLANKENSHIP
PORTLAND
VICE PRESIDENTS
D. DEAN MCCORMICK
CHICAGO
JOHN E. BLUNT, DRD
CHICAGO
ALBERT 1 ARMITAGE
BOSTON
JULIEN H. COLLINS
CHICAGO
STANLEY G. MCKIE
CINCINNATI
WILLIAM H. BRAND
MILWAUREE
VIC E BREEDEN SAN FRANCISCO
ALBERT H. CONDON
NEW YORK
WALTER J. MONRO
BUFFALO
CAROL E. BUCKNER
NEW ORLEANS
HAGOOD CLARKE
ATLANTA
EDWARD HOPKINSON. JR. PHILADELPHIA
PAY G. MORRIS
CHICAGO
MAYNARD H. MURCH
CLEVELAND
HAL H. DEWAR
SAN ANTONIO
EXECUTIVE SECRETARY & TREASURER
GERALD P. PETERS
FAIRMAN #, DIC
DENVER
NEW YORK
ALDEN H. LITTLE
CHICAGO
AUGUSTUS W. PHELPS
NEW YORK
ROY A. DICKIE
ST. LOUIS
A.E. PONTING
SAN FRANCISCO
RUSH s. DICKSON
CHARLOTTE
SECRETARY
EDUCATIONAL DIRECTOR
WILLIAM J. PRICE. 380
BALTIMORE
HENRY H. EGLY
NEW YORK
F. D. FARNELL
ROBERT STEVENSON. 3RD CHICAGO
ROBERT G. ROWE
KANSAS CITY
DAVID DILLMAN
CHICAGO
PHILADELPHIA
FRANK M. STANTON
NEW YORK
JOHN G. PLINT
BOSTON
FIELD SECRETARY
MUNICIPAL SECRETARY
H. MCLEAN STEWART
NEWTON P. FRYE
NEW YORK
CHICAGO
ARTHUR G. DAVIS
LLOYD 5. GILMON -
NEW YORK
CHICAGO
DUDLEY C. SMITH
CHICAGO
JOSEPH T. WALKER. JR.
BOSTON
T. JOHNSON WARD
PHILADELPHIA
ARNOLD GRUNIGEN SAN FRANCISCO
ASSISTANT SECRETARIES
PHILIP K. WATSON
CAREY 9. HILL
DETROIT
LOS ANGELES
HUBERT W. LOFF
MARY #. LINCOLN
TORONTO
CHICAGO
VIRGINIA J. FULLAM
CHICAGO
JAY N. WHIPPLE
CHICAGO
ELMER L. WILLIAMS
LONG
MINNEAPOLIS
ST. LOUIS
HARRY 0. WYETH. in
JOHN s. LOOMIS
LOS ANGELES
CHICAGO
OFFICE OF THE PRESIDENT
AMERICAN SECURITY BUILDING
WASHINGTON 5. D.C.
November 13, 1944
Dear Mr. Secretary:
The Annual Convention of the Investment
Bankers Association of America is to be held in Chicago
November 27 - 29. I recall most vividly the splendid talk
which you gave at one of our meetings in New York.
This is to say that a high point in our
meeting this year will be a War Bond Forum on the afternoon of
Tuesday, November 28th. We would feel deeply honored and it
would be most helpful if you could attend and speak at this Forum.
We would be delighted to have you with us for as many of our
sessions as possible.
With assurance of my high esteem, I am
Sincerely yours,
Honorable Henry Morgenthau, Jr.
Secretary of the Treasury
Washington, D. C.
Regraded Unclassifie
105
25
November 15, 1944.
Dear Diek:
Thank you very such for your letter of November 10
enclosing the clippings which described our recent visit
to the Bast Fishkill War Finance gathering. Mrs. Morgen-
than and I both appreciated your courtesy in sending us
these, and I also read with interest what you said of
the meeting.
Thank you for your invitation to attend the
ceremonies which will be held at the Poughkeepsie
Plant of International Business Machines Corporation
on Monday, November 30. I have a speaking engagement
of long standing for that day. and therefore shall be
unable to be in Poughksepsie for the noon ceremonies.
Will you act for me in expressing to the Employee's
Committee my appreciation of their desire to have as
present on this occasion and my regret that I cannot be
with them?
With cordial regards in which Mrs. Morgenthau joins me,
Sincerely,
(Signed) H. Morgenthau, Jr.
Mr. Richmond F. Meyer,
Chairman, War Finance Committee,
District e,
Box 1816,
Poughkoepsie, New York.
Copy
Regraded Unclassified
106
TREASURY DEPARTMENT
WAR FINANCE COMMITTEE
District 6
OFFICE OF STATE CHAIRMAN
Poughkeepsie, New York
Box 1216
November 10, 1944
Honorable Henry Morgenthau, Jr.
Secretary of the Treasury
Treasury Department
Washington, D. C.
Dear Mr. Secretary:
Herewith is a clipping of an article reporting the
War Finance meeting held at East Fishkill last Wednesday
evening. It 1s hoped that the subject matter meets with your
approval.
May I say again that I think it was exceedingly
generous and gracious of you and of Mrs. Morgenthau to take
enough time out of your busy lives to attend this particular
meeting, and I know that everyone is grateful to both of you.
There is considerable contrast between a rural town
meeting and your great regional meetings, but to me it is
very interesting to be reasonably familiar with each note in
the scale. In this way one can learn to recognize the im-
portance of both "minor" and "major" cords.
This morning two employees of the International
Business Machines Corporation called on me to say that the
Employee's Committee of the Poughkeepsie Plant of International
Business Machines Corporation wish that you could attend
ceremonies in their plant on Monday noon, November 20th, to
launch their 6th War Loan campaign. It was my suggestion that
the Employee's Committee extend their invitation directly to
you. This plant has maintained a very excellent record, not
only in regular Payroll Savings, but in selling extra Bonds
during each drive. You will remember attending ceremonies
there in July 1943 when you presented certificates to several
Poughkeepsie industries.
My kindest regards to you and Mrs. Morgenthau.
Respectfully,
Dick meyer
RFM:JR
Richmond F. Meyer, Chairman
Enclosure
Regraded Unclassified
Morgenthau Predicts Success
For County in Sixth War Lean
(Special to Ponghkeepsle New Yorker)
HOPEWELL JUNCTION-Dutchess county and its
communities have always done well on War loan drives, and I
feel sure I can look forward to reports of success in the Sixth
War Loan," Secretary of the Treasury Morgenthau told mem-
bers of the Town of East Fishkill War Finance committee at the
organization meeting of the group last night at the home of
Mrs. Earl Nisonger, town chairman.
"Mra. Morgenthau and I are
grateful to Mrs. Nisonger for this
opportunity to participate in a
meeting of this kind," said Secretary
--Morgenthau
Morgenthau, "a meeting just like
CONTINUED FROM PAGE ONE
thousands of others now being held
proximately 85 million of our na-
throughout our land for the purpose
of planning for the successful con-
tion's 135 million persons. I pay
duct of the Sixth War Loan. Such
tribute to the volunteers and to the
meetings are an expression of Amer-
business firms, newspapers, radio
stations, magazine publishers, and
ican democracy at work.
other organizations that have made
Calls It World Wonder
"It is one of the wonders of world
contributions of time, effort and
finance that volunteer workers, such
money in the promotion of our work.
as are gathered here this evening,
"To carry on, it is imperative that
this same volunteer effort continue
have helped make possible the tre-
mendous sale of War bonds to ap-
to expand, and it is to this end that
I urge each and every one-those
present here and all citizens in our
United States and possessions-to
devote themselves to the limit of his
or her ability in 'promoting this all
important home-front activity, the
sale of War bonds.
"As a vehicle to inspire volunteer
workers I strongly urge the accept-
ance of the Blue Star Brigade plan.
It works wonders in locations where
it was tried in the Fifth War Loan
and should help now on a nation-
wide basis to put our Sixth War
Loan over the topil
Those at the meeting, and the
communities they represented were:
Mr. and Mrs. Nisonger, Mrs. Lewis
McKeel, Margaret Whalen, Mr. and
Mrs. Caplan, Postmaster Storm and
Hadley A. Ross, Hopewell Junction:
Russell Brooker, Shenandoah and
Gayhead: Mrs. Mae VanAnden,
Mrs. Norman VanAnden and Mrs.
Mildred Beasimer, Stormville, and
Grant Vail, Old Hopewell.
Also at the meeting were Secretary
and Mrs. Morgenthau, Cornelius
Garrison, War Finance vice chair-
man for townships of Dutchess
county: and Richmond P. Meyer,
acting county chairman.
The purpose of the meeting was
to outline plans for the Sixth War
Loan drive, and this was done by
Mr. Meyer. He also described and
distributed promotional literature In
connection with the Sixth War Loan
drive. Each of the above named
leaders of their respective commu-
nities will appoint additional mem-
bers to their committees.
It was unanimously, agreed by the
East Fishkill committee members
present to adopt the Blue Star
Brigade to enroll workers, and they
are looking forward to the coopera-
tion offered by Boy and Girl Scouts,
4-H clubs and Granges, Mrs. NI-
songer said.
Regraded Uncla
108
November 15, 1944.
Dear Mr. Wagner:
I thank you for sending me a copy of the
editorial in the Indianapolis Star of election day.
As you surmise, kind words do occasionally
come as a shock, even though highly welcome.
In this case they have an added virtue in
making me acquainted with friends I haven't met
whose words hearten me.
Sincerely,
(Signed) H. Morgenthau, Jr.
Secretary of the Treasury.
Mr. John Wagner
48 Lafayette Loan & Trust Building
Lafayette, Indiana
HEG/mah
us
Regraded Unclassified
Tuesday
109
10
nov 1-44
THE INDIANAPOLIS STAR
Established M The Indianspotte Journas an 1894.
The Indianapolts Sunday Benlinal Allearbed to 1904.
Published Every Day in the Year by
STAR PUBLISHING COMPANY,
Pennsylvania and New York Streets
Eugene C. Pulliam, Editor and Publisher.
#UBSCRIPTION RATER:
Daily, by Carrier, Par Week
18 Centa
Bunday by Motor Carrier Outside Marion Co., Per Copy 15 Cents
MAIL SUBSCRIPTION RATES:
1 Tr.
Mos.
Mos
É
Daily and Bunday
$18.60
87.85
Daily Only
$3.95
30
9.35
4.70
2.35
Bunday Only
18
6.25
2.15
1.60
.12
RURAL ROUTE RATES IN INDIANA:
Datty Only. One Year
Bix Months
$8.00
One Week
2.50
18
service is maintained.
No mail subscriptions accepted in towns where carrier delivery
"Let the people know the facts and the
country will be saved."-Abraham Lineoln.
In Defense of Morgenthau
Probably no man in American public life works
more diligently or with greater earnestness to get a
hard job done well than does Henry Morgenthau
Jr., secretary of the Treasury. From personal ex-
perience we know that Mr. Morgenthau is thor-
oughly devoted to his job.
The eagerness with which he tackles his work
comes out of a genuinely patriotic heart. Of course,
be is loyal to President Roosevelt. We wouldn't
have much respect for him if he were not loyal to
his chief. We have not always agreed with the poli-
cies and many of the tax proposals which Secretary
Morgenthau has submitted to the Congress. Always
he has been a spokesman for the administration on
fiscal affairs. Always he has carried the ball, and
when he has been thrown for a loss he never once
in all these years has complained or cried on any-
body's shoulder.
Take this most recent discussion of Secretary
Morgenthau and the Quebec conference. The truth
is that Secretary Hull did not go to Quebec because
of illness. The truth also is that Secretary Morgen-
thau at no time proposed the so-called "Morgenthau
Plan for Germany." He took that on the chin as
has been his custom, without passing the buck where
it belonged. We like him for being that kind of a
man, but we don't like the abuse which has been
heaped on him so unjustly.
We think it was quite unfortunate that Gover-
nor Dewey accused Secretary Morgenthau of pro-
longing the war needlessly at the cost of American
lives. This rather far-fetched attack on Secretary
Morgenthau compelled the New York Times to
take Governor Dewey severely to task for his
charges. In closing its comments the Times said:
"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 an actual invasion of their homeland. When
Mr. Dewey attributes this hard defense to some
proposal of Mr. Roosevelt's secretary of the
Treasury he makes a charge which for the sake
of both our unity at home and the morale of our
troops in the field had better never have been
made."
We have supported Governor Dewey for the
presidency, but we cannot indorse his attack on Mr.
M reanthau The uth is that when the impartial
Eathis
war
finally written, the name of
will shine forth as
OF
era.
RÉAL ESTATE
LEASES
PROPERTY MANAGEMENT
110
JOHN WAGNER
48 LAFAYETTE LOAN & TRUST BLDG.
LAFAYETTE INDIANA
3973 - PHONES 5211
Nèvember 10,1944
Personal
Mr. Henry Morganthou Jr.,
Secretary of the Treasury,
Washington, D.C.
Dear Mr. Mongenthou :
This is from a friend you have never met. I merely
want you to have a copy of the editorial that appeared in the
Indianapolis Star of Tuesday November 7th. I thought, possibly,
you would never see it unless I sent it.
Public officials are often subjected to unjust criticism .
And that has been your lot . But I like the way you have taken it
on the chin .
In the long run you will win out in the esteemmof
the American public -- as a public servant who honestly and conscientious-
ly served his country in a most difficult and trying job.
No acknowledgent of this letter is necessary.
Sincerely yours,
Jhaynel John Wagner.
Regraded Unclassified
111
November 15, 1944.
Dear Mr. Gieske:
Às you suggested in your letter of November
13 I am sending you, correctly addressed, By
letter of October 30 intended for you as editor
of the Parkersburg News.
I regret that inaccuracy of our records
caused the original letter to be erroneously
addressed to Mr. Adams.
Sincerely,
(Signed) H. Morgenthau, Jr.
Secretary of the Treasury.
Mr. Herman E. Gieske
Editor, Parkersburg News
Parkersburg, West Virginia
HEG/mah
wh
Regraded Unclassified
112
November 15, 1944.
Memorandum
TO: Secretary Morgenthau
FROM: Mr. Gaston
You sent me a memorandum on Saturday asking me
to talk to you about the whiskey label matter, which
I have not yet done.
You did set up a committee, consisting of
Sullivan, O'Connell and myself, to consider the re-
quest of distillers that they be permitted to use
for blended whiskey labels heretofore used for
straight whiskeys, including bonded whiskeys. This
committee reported to you on September 18 and you
approved the report, a copy of which I am attaching.
Since then labels have been submitted and brand
changes approved in accordance with the press release
issued to comply with the memorandum. I am attaching
a copy of the release.
Our memorandum also called for hearings on the
question of requiring that the front labels of blended
whiskeys use the words "a blend with neutral spirits"
or "blended with neutral spirits. These hearings
have not yet been called.
We found that in the past distillers had been
permitted frequently to change the composition of
the liquor being sold under a given brand name. Paul
Jones, for instance, had been changed from a straight
whiskey to a blended whiskey, back to a straight
whiskey and again back to a blend. Our requirement
of a distinctively different label, plus public notice
of the brand change, was considerably more drastic
than anything that had been done before.
Attachments
mrr
Regraded Unclassified
113
September 18, 1944
P
y
MEMORANIUM FOR SECRETARY MORGENTHAU
From: John L. Sullivan
Herbert E. Gaston
J. J. O'Connell, Jr.
In regard to the requests of distillers to change a number of their
brands from bottled in bond, or straight whiskies, to blends containing
neutral spirits without changing the brand name, we think we should advise
Mr. Berkshire the requests may be granted under the following conditions:
(1) A new label must be submitted for the approval of Alcohol Tax and
this label besides containing the change in language required under the
regulations must be 80 changed in color or form, or both, as to be instantly
recognized as a different label.
(2) If the distiller finds it necessary to market any of the changed
product before approval can be obtained on a new label design, then he should
be required to affix a sticker on the front label of each bottle containing
the words "A Blend with Neutral Spirits", or "Blended with Neutral Spirits",
in type not smaller than Gothic caps of eight point face. This, of course,
will not relieve the distiller of the requirement to affix a back label reveal-
ing the composition of the blend.
(3) A press release should be issued announcing the change and the
reasons for it and naming the brands changed.
We believe a hearing should be held at an early date on the question of
requiring the front label of bottles of so-called blended whiskey to carry the
words "blended with neutral spirits" or their equivalent. We think the present
regulations which permit the words "blended whiskey" or "whiskey"- a blend"
or even "a fine blended whiskey" are deceptive notwithstanding what Mr. Berkshire
states about the antiquity of this understanding of the word "blend" in the
whiskey trade. We agree, however, that there is some point to the argument that
this issue ought not to be tied to the matter of granting the requests now
pending for changes in various brands. We don't agree that the hearing should
be long delayed. We think a call for it should go out within two weeks, at
the most, after the brand changes have been authorised and the new labels ap-
proved. This will further serve to inform the public that the composition of
whiskies is being generally changed as a result of war conditions and they
should be on guard and know what they are getting.
JLS:vls
Regraded Unclassified
114
TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
Press Service
Wednesday, November 8, 1944.
No. 43-99
The Treasury Department announced today that it had
issued certificates of label approval, under the terms of
the Federal Alcohol Administration Act, covering a number
of prominent whiskey brands, for whiskies of different
character from those on which the brand names have previ-
ously been used.
The brands in question have for varying periods been
associated with straight whiskies or blends of straight
whiskies and, under the new approval certificates, will be
employed on blended whiskies, blended bourbon whiskies or
blended rye whiskies, containing varying percentages of
neutral spirits. In other words, labels heretofore used
on bottled in bond and other straight whiskey may hereafter
be used on blends of whiskey and neutral spirits.
During the month of August, distillers, whose plants
have for nearly two years been occupied exclusively with
the production of war apcohol, were given a holiday during
which they were again permitted to distil beverage spirits.
Much of the production during this period was of neutral
spirits or alcohol, such as is commonly used in the pro-
duction of blended whiskies, gins and liqueurs. These
spirits may properly be blended with straight whiskies and
the resultant product marketed as a blended whiskey, blended
bourbon whiskey or blended rye whiskey, depending upon the
percentage and character of straight whiskey employed.
Since the stocks of aged whiskies produced prior to
the war are definitely limited, the current trend toward the
increased sale of blended whiskies will have the effect of
extending existing whiskey stocks.
The brands affected by these changes are: Golden Wedding
and Cream of Kentucky, marketed by Schenley Distilleries, Inc.;
Paul Jones, marketed by Frankfort Distilleries, Inc.; and
Mount Vernon, Hill and Hill, Old McBrayer, Black Gold, Bond
and Lillard, Blue Grass, Bourbon De Luxe and Old Sunnybrook,
marketed by National Distillers Products Corporation.
-000-
Regraded Unclassified
115
-
VICTORY
TREASURY DEPARTMENT
BUY
WASHINGTON 25
THE
SECRETARY
notread November 15, 1944
filst Mr
MEMORANDUM FOR THE SECRETARY:
There follows a resume of my trip to Puerto
Rico, October 30 - November 2, 1944, with an out-
line of the matters discussed, and the accomplish-
ments with the Army, Navy, and others:
October 30 p.m.
Following arrival, we proceeded to our office,
and with Mr. Gilmer, our San Juan representative,
we went over his organization. A new organization
chart was drafted, allowing for the filling of posi-
tions sufficient to take care of the immediate future
program. Internal procedures were also discussed,
and prescribed for the documentation, inventorying,
inspection, appraisal and sale.
October 31 a.m.
Met with Governor Tugwell and two of his aides,
Mason Barr, Federal Coordinator, and Paul Edwards,
Director of the Insular Government's War Emergency
Program. Following a brief outline to the Governor
of the purpose of our visit, the matters of the
insular government were discussed to determine the
extent that surpluses could be absorbed on the
Island.
For the purpose of simplification, and to pre-
-vent competition among the various branches of the Hoyis
to
Notes m Olios full report oftemp
Rendwriting Regraded Uncla assified
116
#2-
Memorandum for the Secretary
11/15/44
insular government, the Director of the War Emergency
Program, was designated by the Governor to act for
all branches of the insular government.
It was agreed further that a list of requirements
would be developed and made available to our repre-
sentative so that he could determine to what extent
the needs could be met from existing surpluses. It
was decided that any property needed by the insular
government would be sold to them at a fair value.
The use of certain salvage items in connection
with the work relief program was also explored. As
an example, the War Emergency Program agreed to ac-
cept salvaged Army clothing for rehabilitation in
the sewing room projects.
At the present time, certain difficulties exist
as to the availability of insular funds; however, it
is expected that the difficulties will be eliminated,
and funds will be made available to the extent needed.
October 31 - Noon
Addressed, on invitation of Mr. Edwards, a
Rotary Club gathering of about 65 members of the
San Juan business community, outlining the overall
surplus property program both within the States and
on the Island.
Regraded Unclassifie
117
#3-
Memorandum for the Secretary
11/15/44
October 31 p.m.
Met with Colonel Shely, Assistant to the
Assistant Chief of Staff (G-4), Major Parkinson,
Assistant G-4, and Lt. Col. Westley, Assistant G-4,
representing the Antilles Department of the Caribbean
Defense Command as to the present and future position
of Army surpluses on the Island.
With the exception of property required in other
theatres of operation, and items needed for reissue
to troops within the States, it was agreed that pro-
perty should remain on the Islands, particularly those
items in short supply. In this connection, it was
pointed out that very little civilian production has
been made available to Puerto Rico within the past
several years, and shipping has been very limited.
Consequently, any effort on the part of the Army to
make property available would go a long way to alle-
viate many of the shortages. The Army agreed to re-
view its inventories to determine whether or not cer-
tain items now appearing on the insular's urgent list
could be made available immediately.
Procedures as affecting Army operations as they
relate to the Treasury Department were also discussed,
and it was generally agreed that harmony would exist
between our two organizations. The Army representa-
tives were very helpful, and it was obvious that
every effort would be made to make our disposal job
as easy as possible.
Regraded Unclassified
118
#4-
Memorandum for the Secretary
11/15/44
October 31 p.m. (Con't.)
Met with Harold S. Boreham, representing the
Governor of the Virgin Islands, regarding the acqui-
sition of construction equipment declared surplus by
the Navy on the Island. Agreed to assist the local
Government in obtaining the use of this property, and
in subsequent discussions with Navy officials it was
indicated that the local Government would be assisted
by every means available.
November 1 a.m.
Held a meeting with approximately twenty Naval
officers, and reviewed the Surplus Property Program
as pertaining to the Tenth Naval District. It is
not anticipated that any great value of surpluses
will be available from this source until the progress
of the war is much more advanced, and the Navy will
be in better position to determine its requirements.
Arrangements were made, however, for the acquisition
of certain items of construction equipment, and motor
vehicles now located on the Virgin Islands. The
Tenth Naval District officers agreed to allow this
equipment to remain on the Virgin Islands until the
Department of Interior can secure an appropriation
for sufficient funds to acquire this property.
Among the Naval officers present were:
Captain Weld
Commanding Officer
Naval Air Station
Lt.Comdr. Geppart
Executive Officer
Naval Air Station
Regraded Unclassified
119
#5-
Memorandum for the Secretary
11/15/44
Captain Dickenson District Supply Officer
Commander Tily
Area Public Works Officer
Commander Paynter
Supply Officer
Naval Air Station
Lt. Graham
District Stores Officer
Lt. Ullmer
Sales and Contract Officer
together with their assistants and all
supply officers of the Naval Air Station.
Visited Fort Buchanan, and made a tour of those
areas where surplus property was stored to get some
1dea of the actual physical problems of storage, sales
and handling, as there was a substantial lot up for
sale at that time. Property consisted mostly of motor
vehicles, obsolete office furniture, tentage, and the
like. Conferred with Major Velez, Salvage Officer,
and Colonel von Holsendorf, Commanding Officer.
November 1 p.m.
I addressed representatives of all federal
agencies on the Island and outlined the various
methods by which they could aid in disposing of sur-
pluses, and also discussed their position as ac-
quiring agencies for surpluses. Following the ad-
dress, a question and answer period was held, and
all present seemed to be intensely interested in the
program and the many adherent problems.
Regraded Unclassified
120
#6-
Memorandum for the Secretary
11/15/44
November 1 p.m. (con't.)
Met with Major General Harding, Commanding General
of the Antilles Department of the Caribbean Defense
Command, following meeting with Colonel Shely and
Major Parkinson, and generally reviewed the Surplus
Property Program, which the previous day had been dis-
cussed with the other officers under his command.
This appointment was at the request of the Commanding
General.
November 2 a.m.
Met with Vice Admiral Giffen, Commandant of the
Tenth Naval District, to briefly review the previous
discussions had with other Naval officers. This was
a courtesy call, and we were very graciously accepted.
Visited the Custom's House to express our thanks
to the Collector of Customs who had shown the utmost
courtesies on our arrival.
November 2 p.m.
Left San Juan shortly after noon for return to
the States.
Street
Assistant Secretary
Regraded Unclassified
121
11/15/94
Resignation of Ernest L. Olrich as Assistant to the
Secretary in charge of the Procurement Division was
announced today by the Treasury Department.
Mr. Olrich informed Secretary Morgenthau that it was
essential that he return to the presidency of Munsingwear,
Inc., of Minneapolis, from which position he took leave
of absence to come to the Treasury last April. His
resignation is effective November 27.
Mr. Olrich has had responsibility for organizing
the unit of the Procurement Division in charge of disposing
of consumer type goods declared surplus by the War and Navy
Departments.
"I regret very much," said Secretary Morgenthau,
"that developments in his own business have made it
necessary for Mr. Olrich to leave us. In the few months
he has been with the Treasury Department he has done an
extraordinarily able job in developing in the Procurement
Division the organization necessary to handle the
tremendously difficult surplus disposal work. He has
done this at the sacrifice of his own interest and at
Regraded Unclassified
122
- 2 -
substantial personal expense. His has been a really fine
patriotic contribution to the Nation in time of war.
Mr. Olrich expressed great appreciation of the
free hand given him by the Secretary in establishing
the surplus disposal organization.
MRS
Regraded Unclassified
C
123
0
P
Y
THE WHITE HOUSE
Washington
November 15, 1944
My dear Mr. Secretary:
The President on November fourteenth
signed a proclamation entitled "Specification of
the Termination Date as Provided in the Renego-
titation (sic) Act. If
Very sincerely yours,
/s/ M. C. Latta
M.C. Latta
Executive Clerk
The Honorable
The Secretary of the Treasury,
Washington, D. C.
Regraded Unclassified
124
AIRGRAM TO AMEMBASSY, QUITO. ECUADOR
Reference is made to Department's A-514 of November 8.
Reported to be interned in Camp Belsen-Bergen near Hanover,
Germany, are Dr. Hermann Heiden-Heimer with wife, Anna Marie, and
children, Carola and Robert, all Dutch citizens formerly resident
in Amsterdam. Ecuadoren visas were issued to them 1940 or 1941 in
Amsterdam and renewed 1941 in Spain. Hermann's sister is Senora
Gertrude Hahn, Ecuadoran citizen and wife of Frederico Hahn, formerly
professor of chemistry at Quito and now professor of chemistry at
Guatemala City. Frederico's son, Roberto, also Ecuadoran citizen,
still living in Quito.
The Heiden-Heimer family would seem to offer a close
parallel to the program suggested in Department's A-514, and is
recommended for special consideration by Ecuadoran authorities in
connection therewith.
You may find it advisable to consult Roberto Hahn in this
matter.
10:25 a.m.
November 15, 1944
Miss Chauncey (for the Sec'y) Abrahamson, Ackermann, Cohn, DuBois, Friedman,
Hodel, Lesser, Mannon, McCormack, Files
BAksin:tmh 11-14-44
Regraded Unclassified
125
PROM
LONDON
November 15, 1944
Recd. 1 P.M., Nov. 21
Secretary of State,
mashington, D.C.
A-1368, November 15
FOR DEPARTMENT AND FEA
Reference Bern's 4421, July 10 to Department, repeated
to London as 1204.
The following reply has been received by the M.E.W.
from the London Delegation of the International Red Cross in
response to & request for information concerning the pro-
posal to evacuate children from German occupied Europe to
Sweden:
"May I refer to at conversation Colonel de Watteville and
I had with you in the month of August.
You asked ne whether the International Red Cross Com-
mittee had received from Sweden & proposal to hospitalize in
that country children residing in occupied countries.
I transmitted this enquiry to Geneva, and have received
the following answer:
Through the United States Legation in Berne and the British
Consulate in Geneva, both the United States and the British Govern-
ments in memoranda dated respectively 6th and 10th July 1944, have
communicated to the Committee that the Swedish Government have ex-
pressed their will to receive in their country a certain number of
children - irrespective of their race - from Norway and other
occupied territories.
has soon us the Committee were notified of this decision, they
communicated it to the German Government and several neutral countries.
Following the wish expressed by the American and British Representatives,
the International Committee themselves pretended to be the instigaters
of this request. They based themselves on the memorandum addressed to
the belligerent Governments, dated 15th March 1944, dealing with the
sanitary zones and localities, security zones and localities.
The Committee has, se far, received no answer to these various
messages. For the mement the situation remains unchanged; all further
developments will be communicated to you as soon as received by us.
I an sorry that this answer has been Be much delayed, but this
is due to the irregularity of our sail to and from Geneva during
the last menths."
GALLMAN
CHARGE D'AFFAIRES AD INTERIM
MC:JH
Unclassified
PARAPHRASE OF TELEGRAM SENT
126
FROM:
Secretary of State, Washington
TO:
American Embassy, Paris
DATED:
November 15, 1944
NUMBER:
438
SECRET
Of more urgency at the present time than it was in
August is the matter which is taken up in instruction from
the Department to Algiers dated August 24, No. 213.
Should it become possible to rescue any of the persons
from Germany to whom reference is made in Resolution XXIV,
the facilities of the Fedhala camp are urgently needed for
use, There is no other destination available for these
people at the present time. It is expected that these
individuals will be released into Switzerland and from
there will travel, either directly from France or by way
of Spain and France, to the Fedhala camp, as transportation
can be arranged, under the auspices of the War Refugee Board,
if an exchange involving these people can be arranged.
We would appreciate it, therefore, if you would urgently
take up this matter with the Provisional Government of
France and secure its consent in principle to the admittance
into French territory from Switzerland of any persons
included in such a movement, to their travel to a point
of exit on the frontier of Spain, or to Marseille, or to
any other port which may be designated, and to their
entrance into Morocco for accommodation at Fedhala camp,
subsequently.
If Reber would take up the question with SHAEF and
secure agreement in principle to this kind of movement,
along with a statement of requirements of SHAEF, it would
likewise be appreciated. Screening of these people, it
should be pointed out, cannot take place until they reach
French territory; also that authorities in Germany who
have the custody of the camps where they are held will
apparently select the individuals for exchange. Jewish
intellectuals from Poland comprise the majority of the
individuals concerned, who can, it is presumed, be
identified promptly as they are relatively well known in
such circles.
The Government of the United States and the British
Government have stated that they are opposed to the closing
of the Fedhala camp, which still has definite purposes to
serve; this for the information of Reber and the Embassy.
SWP:AEC:BB
STETTINIUS
(ACTING)
Paraphrase:
DCR:LCW:MEM
11/17/44
Miss Chauncey (for the Sec'y) Ackermann, Abrahamson, Aksin, Cohn, Drury,
BuBois, Friedman, Gaston, Hodel, Lesser, Marks, Mannon, McCormack,
Pehle, Files,
Regraded Unclassified
127
GEK
Distribution of
true reading only by
November 15, 1944
special arrangement.
SHCRET W
10 p.m.
AMPOLAD
CASERTA
385
The cable below is from War Refugee Board.
The following is the substance of a message that has been
received from McClelland, WRB representative at Born:
QUOTE The Swiss received a message from their Legation in
Budapest on the 27th of October which stated that an agreement had
been arrived at between the Governments of Germany and Hungary
according to which the enigration of about 8,000 Jews from Hungary
would soon be authorised and that by the 15th of November this
would have to be carried out. Means of transportation to the
frontier of Switserland would be furnished by the Germans and the
Hungarians.
The Swiss Political Department on the 31st of October in-
structed its legation in Budapest that these refugees would be
received in Switzerland, this instruction following approval by
Federal Council and in order to offset any possible use by the
Germans or the Hungarians of lack of readiness on the part of the
Swiss as an excuse not to allow these people to depart. The
decision was in line with assurances which in August were given to us.
All pertinent information with regard to documentation, com-
position, and ultimate destination of the group was requested
urgently by wire of the Swiss Legation in Eudapest on the 28th of
October and again on the 1st of November, since it is not clear
whether all of the 8,000 are holders of Palestine certificates, or
whether only a part of them hold such certificates.
November 1 conversations with Chief of Federal Police and
with representative for relief and refugee affairs of the Political
Department reveal that the Swiss are concerned seriously regarding
the practical difficulties which are involved in receiving and
housing a group of this size, even temporarily, at such short
notice, Switzerland has received more than 25,000 new refugees
during the past six weeks, they pointed out, (chiefly women and
children from
Regraded Unclassified
128
+ #385, Hovember 15, 10 p.m., to Caserta
children from Valdossola in Italy and from the combat sones in
France) while, on the other hand, only 8,000 people have departed:-
2000 French civilians and 6000 military escapees. It would be
difficult to solve the problem of fuel, blankets, and housing
sufficient to properly take care of 8,000 people in winter; in
addition, many of the refugees may be clothed inadequately.
Accordingly, the Swiss are anxious that steps be taken as soon as
possible for the evacuation of such Hungarian refugees. The
practicability of furnishing Swiss trains for the transportation
at once to Marseilles or to some other French seaport of all those
who are eligible for emigration to Palestine 10 being looked into
by the Swiss. Therefore, it would be wise if the board at once
could study the problem of obtaining one or more ships forPPalestine;
in addition, the Swiss would appreciate any efforts which could be
made toward evacuation to North Africa or some other territory of
Allied choice of all or a part of those who are not destined for
Palestine.
Radio Budapest, evidently reversing the decision which was
reported in October 24 telegram from the Legation, repeated several
times during the evening of the 29th of October and the morning of
the 30th of October, instructions addressed to all Hungarian authori-
ties, the army, and the police, to the effect that protective docu-
ments or foreign passports should be respected and that future
Jewish holders of such documents should not be sent to compulsory
labor service; and, in addition, that rights of extraterritoriality
should be enjoyed by foreign Consulates, Legations, and premises of
ICRC.
Now it seems probable that the majority of the 50,000 male
Jeme reported as being deported as labor are being sent to western
Hungary for work along the Austro-ingarian border, on fortifica-
tions there.
It is very difficult to believe that the release of 8,000 Jews
has suddenly been decided upon in view of the recent intensified
anti-Jewish stand taken by the Sealassy regine as well as the oon-
sistent refusal of the Germans to allow the departure of even the
initial group of 2,000 holders of Palestine certificates.
We will keep you informed with reference to this matter.
UNQUOTE
It is requested
Regraded Unclassified
129
-3- #385, November 15, 10 p.m., to Caserta
It is requested that you deliver a copy of this message to
Governor Cochrane UNRRA and to 0-5 Section AFHQ for their informa-
tion and preliminary informal consideration since it may be
desirable to use Phillipsville should the resoue of these refu-
gees be effected. Any comments which they may have will be
appreciated. McClelland's message also being given to War Depart-
ment and UNRRA Washington.
STETTINIUS
(ACTING)
(GLW)
WRB:MMV:KG
SE
WE
NE
SWP
11/13/44
Miss Chauncey (for the Sec'y) Abrahamson, Ackermann, Aksin, Cohn, Drury,
DuBois, Friedman, Gaston, Hodel, Lesser, Marks, Mannon, McCormack, Pehle,
Files
Regraded Unclassified
130
CABLE TO AMEMBASSY, MADRID, SPAIN
Reference is made to your dispatch 3208 of October 9, and
cable 3489 of October 18. Please inquire and advise Board of nature
of action taken by Spanish Government in consequence of your representa-
tion.
10:25 a.m.
November 15, 1944
Miss Chauncey (for the Sec'y) Abrahamson, Ackermann, ****, Cohn, DuBois,
Friedman, Hodel, Lesser, Mannon, McCormack, Files.
BAksin:tmh 11-14-44
Regraded Unclassified
131
FE
Distribution of true
November 15, 1944
reading only by special
arrangement. (SECRET W)
9 p.m.
AMEMBASSY
MADRID
3043
The following is from War Refugee Board.
Reference is made to your dispatch 3208 of October 9
and cable 3489 of October 18. Please inquire and advise
Board of nature of action taken by Spanish Government in
consequence of your representation.
STETTINIUS
ACTING
(GIN)
WRB:MMV:KD
WE
RPA
11/15/44
Tida Chaunder (for the Sec'y)
Regraded Unclassified
132
CABLE TO MINISTER JOHNSON, STOCKHOLM, FOR OLSEN, FROM WAR REFUGES BOARD
The War Refugee Board requests that the following message be
delivered to Mr. Fritz Hollander, Congress Committee, Postbox 7306,
Stockholm from Dr. Leon Kubowitski:
QUOTE Kindly have foodparcels forwarded following
Bergenbelsen inmates: Josephine Ellenberg; Anna and Hermine
Frumkin; Eugenia Gorlin; Henryk and Maria Goldberger; Isaac
and Zivi Katznelson; Klara, Alfredjosef and Doriana Kurz
(barrack 23); Ellen, Erna and Julius Lauer; Emil Racs, wife
and children; Walter Siegel, Henry Wilner. For Swedish
protection suggest: Gisela Friedman, Szent Istvanypark 17,
Budapest 5; Elizabeth Tauber, 57 Dohanyutca, Budapest. UNQUOTE
THIS IS WRB STOCKHOLM CABLE NO. 247.
2:15 p.m.
November 15, 1944
Miss Chauncey (for the Sec'y) Abrahamson, Ackermann, Cohn, DuBois,
Friedman, Hodel, Lesser, Mannon, McCormack, Files.
PJMcCormack:ar 11/14/44
Regraded Unclassified
Iddes Chauncay for the Sec'y) Abrohamson, Ackermann, Aksin, Cohng 33
Drury, Duliois, Friedman, Gaston, Hodel, Lesser, Mannon, Marks, McCormake,
Pehle, Files.
CORRECTION
FI/H
FLAIN
November 15, 1944
Cable from Bern 7475 November 10 for WRB change
serial number to "7465".
DIVISION OF COMMUNICATIONS AND RECORDS
CSB
Miss Chauncey (for the Sec'y) Abrahamson, Ackermann, Aksin, Cohn,
Drury, DuBois, Friedman, Gaston, Hodel, Lesser, Mannon, Marks, McCormack,
Pehle, Files.
Regraded Unclassified
134
ASB- 335
Bern
Dated November 15, 1944
Rec'd 11:20 a.m.
Secretary of State,
Washington.
US URGENT
7541, November 15, 2 p.m.
FOR WRB FROM MC CLELLAND.
Swiss received wire from their Legation at
Budapest dated November 3. (Legation's 7269,
November 1) stating that departure of 7,000 Pales-
tinian certificate holders and 4500 holders of Swedish
protective documents was being organized and should
take place within about two weeks, military situation
permitting.
HARRISON
RR
135
CABLE TO MINISTER HARRISON AND MCCLELLAND, BERN, SWITZERLAND,
Reference is made to penultimate aniultimate paragraphs of your
5689 of August 31 and Department's 3180 of September 14, item one, para-
graphs five and six,
By note of October 17, Ecuadoran Foreign Office informed Amembassy
Quito that Ecuadoran representative in Switzerland has been instructed to
confirm or suggest changes in the list being compiled by Amlegation Bern of
holders of documents purporting to indicate Ecuadoran nationality.
By memorandum of October 13, Venezuelan/Foreign Office informed
Amembassy Caracas that it had notified Swiss Government through Venezuelan
Charge d'?Affaires in Bern by cable that the Venezuelan Government ratifies
the lists in 80 far as concerns persons named in Venezuelan documents, that
it appreciates the offer of this Government with regardto protecting said
persons and that it agrees that the lists mentioned be delivered to the
Swiss authorities.
THIS IS WRB BERN CABLE NO. 273
10:25 a.m.
November 15, 1944
Miss Chauncey (for the Sec'y) Abrahamson, Ackermann, Cohn, DuBois, Friedman, Hodel,
Lesser, Mannon, McCormack, Files,
BAksin:tmh 11-14-44
Regraded Unclassified
136
CABLE TO MINISTER HARRISON, BERN, FROM WAR REFUGEE BOARD.
Please deliver the following message to the International Red
Cross, Geneva, from Adolph Held, Chairman, Joseph Baskin, Secretary,
David Dubinsky, Treasurer, Jacob Pat, Executive Secretary, Jewish
Labor Committee, 175 East Broadway, New York:
QUOTE WE HAVE JUST BEEN INFORMED THAT THE INTERNATIONAL
RED CROSS IS PROVIDING ASSISTANCE TO POLES IN THE CONCENTRATION
CAMPS OF PROSHKOV. WE WERE HAPPY TO LEARN OF YOUR ACTIVITY
ON THEIR BEHALF. WE HAVE ALSO BEEN INFORMED THAT THOUSANDS
OF JEWS IN CONCENTRATION CAMPS OF POLAND ARE STARVING AND ARE
IN NEED OF SPEEDY RELIEF. WE APPEAL TO YOU TO DO FOR THE JEWISH
VICTIMS IN THE CAMPS IN OCCUPIED POLAND WHAT YOU ARE DOING FOR
THOSE IN PRUSHKOV. PLEASE CABLE. UNQUOTE
THIS IS WRB BEN CABLE NO. 275.
2:15 p.m.
November 15, 1944
Miss Chauncey (for the Sec'y) Abrahamson, Ackermann, Cohn, DuBois, Friedman,
Hodel, Lesser, Mannon, McCormack, Files,
RDrury 11/15/44
Regraded Unclassified
137
LC-594
Born
Distribution of
true reading only by
Dated November 15, 1944
special arrangement.
(SECRET W)
Rec'd 6:12 a.m., 16th
Secretary of State,
Washington.
7542, November 15, 3 p.m.
Department's 3245, September 20 - WRB 178.
Foreign Office note November 8 which was personally
handed same day to Legation secretary by Depury states
in substance following.
During interview of Feldscher the latter declared
he had been ins tructed to return these two notes
(Legation forwarded by note dated September 23 to
Foreign Office substance of first and second paragraph
your 3245. Foreign Office transmitted these to Swiss
Legation Berlin by two separate notes each enclosing
text in English as received from Legation).
According to Sethe the German Government does not
(repeat not) recognize right of American Government
to undertake representations in these two cases
matters do not (repeat not) concern protection of
American nationals and additionally it considers tone
of these notes unacceptable particularly threat con-
tained in latter part of paragraph one your 3245.
Since German Government does not recognize right
of Swiss representatives as representing American
Interests to intervene in favor of bearers of Latin
American identity documents (note here refers to Foreign
Office note of September 5 with enclosures which
were transmitted to Department with Imgation's strictly
confidential despatch 9250 September 15). Feldscher
inquires whether he should nevertheless bring to
attention of German Foreign Office four points contained
in Legation's notice of October 31 to Swiss Foreign
Office (first paragraph Department's 3648, October 26)
concerning deportation bearers documents this category
previously interned Marian Kain Slovakia. In view
Sethe's declaration Foreign Office sees no useful pur-
pose in delivering to German Foreign Office a note
based upon Legation's notice of October 31 acceptance
of which
138
-2- #7542, November 15, 3 P.E., from Bern
of which without any doubt will be refused. Foreign
Office accordingly gave instructions to Feldscher not
to pursue the matter. End summary.
Legation continued its negotiations with Division
of Foreign Interests after said meeting with Depury
and these concluded in discussion with him on November 13
at which time he agreed to have Swiss Legation Berlin
approach German authorities pursuant first paragraph
Department's 3648 as applied to bona fide United
States Nationals and similar nationals of Latin American
countries represented by Switzerland.
At meeting of November 13 Legation Secretary
was handed notice dated November 10 with reference to
Grassli's proposals which were subject of Legation's
note dated November 9 to Swiss based Department's
3769 November 4. Said no time includes following
observations:
(1). German refusal accept notes of Swiss Legation
Berlin based on fact that German Government contests right
of American Government to make representations in matter
pertaining to bearers of Latin American documents.
(2). Grassli nevertheless insists that persons
claiming and actually possessing United States nationality
are held in Slovak concentration camps. It is possible
that German authorities would not refuse a representa-
tion made not concerning bearers of Latin American
documents but regarding persons claiming United States
nationality.
(3). However procedure suggested by Grassli
would involve instructing Swies Legation, Berlin
to intervene with German Government regarding action
taken by German Government authorities in Slovakia--
provided it be limited to United States citisens
properly speaking--but requesting German Government
to surrender Jews concerned to Slovak Government.
Swiss observe that such action might be interpreted
as implying recognition of Slovak state and request
Department's comment. End summary.
Since receipt
Regraded Unclassified
139
-3- #7542, November 15, 3 p.m., from Bern
Since receipt of foregoing Legation communication
to Swiss contents Department's 3852 November 11 and
in view above summarized Swiss comments would appre-
cia to Department's observations as to whether and on
what basis Swiss should be requested further to pursue
Grassli's suggestions.
HARRISON
WSB
Regraded Unclassified
SECRET
COPY NO
4
140
NOT TO BE RE-TR-NSAITTED
OPTEL No. 371
Information received up to 10 A.M. 15th November 19441
1. NAVAL
On 13th/14th MTB's torpedoed and probably sank a 10,000
tons ship and a trawler off NORWEGIAN Coast, 40 miles north of
BERGEN. On 14th, a British Cruiser and Destroyers sank one
armed Trawler and probably another in TRONDHEIM FIORD, Same
day aircraft from B. British Escort Carrier bombed R.D.F. Station
at entrance to the Fiord.
2. MILITARY
Western Front 14th. Further progress by U.S. Third Army
N and S.E. of METZ. Considerable forces
including armour now established N.E. of METZ-SAAREBOURG Railway
while forward troops are threatening the important road running
east from METZ to SAAR. They have closed in further on METZ
and have captured some of the fort defences of the town. The two
Third Army Briggeheads across the MOSELLE S,E, of THIONVILLE
have been joined up and the whole enlarges.
Second British Army launched an attack against the German
positions West of the MEUSE in the área N.W. of ROERMOND against
minor enemy opposition. German defences this area were thinned
out before the attack and important observation posts, likely to
be of use to our troops destroyed. British armour in conjunction
with this attack have seized important Lock Gates on WESSEN Canal
linking the CANAL DU NORD and the MEUSE. This will prevent the
enemy draining the canal and rendering our pontoon bridges useless.
The WAAL and lower RHINE continue to rise.
Italy -Slight German withdrawal Forli area where our
troops have advanced with little contact. They
are now 1 È miles N.W. of FORLI on Highway 9 and have gained
further ground astride this road. Poles have also made progress
East of MODIGLIANA.
Russia Russians have made slight gains East of BUDAPEST
and have eliminated a German Bridgehead East of
the DANUBE 45 miles south of BUDAPEST.
3. AIR OPERATIONS
Western Front 14th. No bomber operation due to weather
A small number of reconnaissance sorties
flown.
Mediterranean 12th/13th. 14 heavy bombers dropped 31
BLECHHAMMER causing fires. 13th. 767 medium and fighter bombers
tons by pathfinder technique on oil refinery
and fighters (6 missing) attacked communications PO Valley and
supported ground operations with good results.
German ctivity to 7 A.M. 15th. 8 Rockets during period
three phases.
14th/15th. 32 flying bombs plotted in
Regraded Unclassified
141
November 16, 1944
9:40 a.m.
SECRETARY'S NAVY SPEECH
Present: Mr. Gaston
Mr. Duffield
Mrs. Klotz
H.M.JR: This is finished and polished? (Refers
to attached draft of Navy speech)
MR. DUFFIELD: No, it is not. You said to give you
an outline of a speech.
H.M.JR: No, no, I told you I wanted a finished
speech.
MR. DUFFIELD: That has more Navy and Navy figures
in it than you will want. You will want a good deal
more on your side of the picture, but you can compress
this thing.
H.M.JR: Have you seen Admiral King?
MR. DUFFIELD: It was being typed. I tried to get
a copy to bring over to you. He said his Aide would
send one to Ted Gamble as soon as it is finished, SO you
should have it this afternoon.
H.M.JR: I hope!
MR. DUFFIELD: You will. I will see that you do.
H.M.JR: See that it comes to Mrs. Klotz.
MR. DUFFIELD: All right.
Mit. GASTON: I will call up Ted's office, and if it
is already over there--
Regraded Unclassified
142
- 2 -
H.M.JR: Which was the Admiral he was going to
refer you to?
MR. DUFFIELD: Thibaud.
H.M.JR: I knew the only fellow who could get the
stuff for me was King.
MR. DUFFIELD: That is right. He is the only one
who can clear Security on this stuff.
H.M.JR: Let me read this: "Last June, just as the
Fifth War Loan Drive began, the first Navy planes were
wheeling in over Saipan. Three days later, the first
assault waves of Marines landed and the Pattle of the
Marianas was in full swing. Since that time -- between
these two War Loan Drives -- our armed forces have driven
another 1600 miles farther west to the Philippines, deep
in the ocean which the Japanese had boasted was their own
forever. The Philippine landings are one milestone on
the fastest-moving offensive in the history of warfare.
Since a year ago, our forces in the central Pacific have
driven the Japanese back 4,000miles."
MR. DUFFIELD: That really is pretty fast. I was
amazed when I looked it up myself. A year ago we hadn't
moved into Tarawa yet.
MR. GASTON: People don't realize the huge distance
between those islands.
H.M.JR: (Continuing): "No other Nation ever imposed
on an enemy SO rapid and humiliating a retreat. Therefore,
it is fitting that early in this Sixth war Loan Drive the
Treasury and the Nation honor the Naval forces which have
been the spearhead in that offensive. For that reason, I
am especially pleased to appear on this program with
Admiral King.
"The forces under his leadership have given the people
of the Nation an inspiring example of forceful and decisive
action. It is now up to us to support that action by
Regraded Unclassified
143
- 3 -
equally clear and decisive action during the current
War Bond Campaign.
"At no point during its tremendous westward advance
has the Navy ever had to look back over its shoulder to
see whether the people at home were furnishing the money
necessary to pay for the attack. Our Navy, Army and Air
Force have always been sure that the taxpayers and the
buyers of bonds would give them all the money they need
to whip our enemy. I know the Sixth War Loan Drive will
be another similar reassurance to them.
"Constructing and manning the Navy which carried out
this Pacific offensive, and which, at the same time, cleared
the Atlantic for our Army's invasion convoys, has been a
costly undertaking.
"In the past four and a half years, this Nation has
spent $69,000,000,000 for its Navy -- and every dollar
has been well spent. But this total is more than our
entire national income in 1938."
MR. DUFFIELD: I am not sure that is right, sir.
H.M.JR: Don't worry about that. Before I give a
speech Henry Murphy goes over it inside and out, and
Herbert Gaston kind of looks over Henry Murphy's shoulder.
(Continuing): "It is more money than we have raised
in the first four War Loan Drives, and it is more money
than we have paid in income taxes during the past years.
I would ratner just say, "In the past four and a half
years, this Nation has spent so-much for its Navy -- and
every cent has been well spent."
MR. GASTON: Yes, we don't want to boast about how
much our national income was in 1938.
MR. DUFFIELD: And I don't want to boast about how
much it costs, either.
Regraded Unclassified
144
- 4 -
H.M.JR: How do we know Roosevelt will be around for
& fifth term!
(Continuing): "Let us look for a minute at the cost
of a single naval operation. Take, for example, the
Marianas operation which, as I've said before, began just
as the Fifth War Loan Drive started. The naval force
which participated in this single operation represents an
investment by the American people of well over $5,000,000,000."
Herbert, you have to look that up. I used some Navy
figures.
MR. DUFFIELD: It was the Marshalls operation, back
in Quajalein.
H.M.JR: How did you do that?
MR. DOFFIELD: I read it.
H.M.JR: "Of course, this investment in ships and
planes and guns will be used again and again, and cannot
be charged up as the cost of conquering Guam, Saipan,
Tinian, and the other Mariana islands. But we did pay out
almost a billion dollars
---
$997,000,000, as nearly as
we can estimate it
---
for the Marianas operation alone." 11
MR. DUFFIELD: Now, what we try to do here is try to
show how it addsup, and the break-down into planes, ships,
people, and then just because ammunition is usually some-
thing special and expendable - those different things.
H.M.JR: "In the first place, there were the advance
bases where the invasion force assembled before shoving
off for their strike 1500 miles westward. These bases
cost $112,000,000."
You don't mention what the bases are.
MR. DUFFIELD: The bases are in the Marshall Islands.
There is no reason why you shouldn't mention it.
Regraded Unclassified
145
- 5 -
151. GASTON: You can easily stick it in there -
advance bases in the Marshalls.
JR: Is there any reason?
MR. DUFFIELD: The Marshalls are spread out and there
are a couple of anchorages there - they don't want to say
just which ones they used.
H.M.JR: I see. "Second, there was the cost of
sending out the great armada of ships, which amounted to
another $129,000,000" - what does that mean?
Mr. DUFFIELD: It comes in the next sentence.
H.M.JR: "Of this amount, by far the largest part
was for depreciation, losses, repair, and maintenance
of the vessels themselves."
MR. DUFFIELD: They said it cost about ninety million
dollars for the depreciation of vessels that were lost,
the repair on the vessels that were damaged, and the
maintenance. There is no reason why you can't use that
if you want to.
MR. GASTON: "Of this total of one hundred and twenty-
nine million, ninety million was for depreciation of vessels
that were lost, the repair on the vessels that were damaged,
and the maintenance. " No, you couldn't subtract - he
just says,
11
by far the largest part. if
MR. DUFFIELD: If you want to use the figure, that is
all right.
H.M.R: Put it on the side, Herbert.
MR. GASTON: Yes.
H.M.JR: (Continuing): "Nineteen million dollars
was necessary to pay for the fuel and other lubricants for
these vessels, and still other millions were paid as
charter fees on the merchant vessels which accompanied the
Navy striking force."
Regraded Unclassified
146
- 6 -
MR. DUFFILLD: That is just if you wanted to add up
to a total.
MRS. KLOTZ: It is very interesting to me because
this is in such simple style that I can understand it
and follow it. I don't get the feeling there are too
many figures here.
H.M.JR: Well, there is our audience; above average
in intelligence, but our audience.
MRS. KLOTZ: Thank you, sir, very much. It is eighth
grade.
H.M.JR: That is what I usually try to talk to.
MRS. KLOTZ: You are.
H.M.JR: Now, what has the Navy got to do with
charter fees?
MR. DUFFIELD: We had in that operation for supply
and cargo and troop transports evidently some merchant
vessels that were WSA vessels, on which we paid the
charter fees.
H.M.JR: I see. (Continuing): "Third, this great
assemblage of ships carried with it its own umbrella of
air power plus a striking force of aircraft which knocked
Japan's land-based air power out of the air. The cost of
operating this huge naval air force during the Marianas
campaign is estimated at about $199,000,000. here again
the principal cost was depreciation, maintenance, losses
and repairs, while additional millions were spent for
fuel and lubricants for the planes."
Now, the word "depreciation," what does that mean?
MR. DUFFIELD: That is one reservation I have about
this. I don't know what they have done. They have
probably taken the average life of a plane and have allo-
cated out of that a percentage which represents the time
of this thing.
Regraded Unclassified
147
- 7 -
A.M.JR: My own advice would be to leave it out.
Make this "losses and repairs.' After all, if you pay
the cost of repairs it takes the place of depreciation.
MR. DUFFIELD: It does in large part, except you
gradually write off a plane.
MR. GASTON: No, the Navy will hold a plane three or
four years at the most before it becomes obsolete. Re-
pairs may amount to two or three hundred dollars in that
time.
MR. DUFFIELD: I think for oratorical purposes I
agree with you.
H.M.JR:- I would say, "losses, maintenance and repairs."
MIL. GASTON: Depreciation is technically there.
MRS. KLOTZ: That holds true of any expensive thing
you talk about.
H.M.JR: Oh, well, "maintenance, losses, and repairs."
MR. GASTON: I am for leaving it out.
MR. DUFFIELD: Call it wear and tear.
MR. GASTON: No, it isn't that.
H.M.R: "Losses, repairs, and maintenance" is enough.
"By far, the most valuable component of this Navy
striking force was the men who fought the ships and flew
the planes. Their pay, equipment, medical supplies, and
food cost $439,000,000. By far, the greatest part of this
sum was expended for their pay, which amounted for the
total of the Marianas operation to more than $300,000,000.
To feed this great force for the six weeks of the Marianas
campaign cost $29,000,000. Their equipment and medical
supplies cost another $80,000,000."
Regraded Unclassified
148
- 8 -
Is this fresh in any sense:
MR. DUFFIELD: I have never seen these figures before
in my life.
H.M.JR: With any other operation?
MR. DUFFIELD: No, we have never done it this way;
we have never taken the bases, the ships, the planes,
and so forth. At the top of the next page the word
"Fourth," should be "Fifth."
(Secretary completes reading the attached draft.)
H.M.JR: That is good. And I think I have heard
someone say, "Which are you going to economize on,
ammunition or lives?"
"It is the policy of our Army and Navy" - Herbert,
will you make a note at the end - "This is following out
the traditional American policy in fighting this war, that
we are expending ammunition rather than lives."
MR. DUFFIELD: Right. I didn't attempt to put an
ending on, because I thought you might want to write it
yourself.
H.M.JR: I don't know, because this is SO good. Of
course, they are only allowing me eight minutes, aren't
they?
MR. DUFFIELD: +hat is right.
H.M.JR: It is a thirty-minute program.
MN. GASTON: No, they told me it was fifteen minutes
on the air, of which I got eight minutes. I don't know,
though--
H.M.JR: I tell you what I would like to do. I
think it is swell, and I think it is beautifully written.
Would they miss you for another hour?
Regraded Unclassified
149
- 9 -
MR. DUFFIELD: I don't think SO. I will just check
on my phone and make sure.
(The Secretary takes telephone call from Mr. Stettinius,
as follows:)
Regraded Unclassified
150
November 16, 1944
9:57 a.m.
HMJr:
Hello.
Operator:
Go ahead.
Edward R.
Stettinius: Henry.
HMJr:
Yes, Edward.
S:
Good morning.
HMJr:
Fine. Good morning. to you. You sound as though
you had
S:
I'm letting you down.
HMJr:
buckwheat cakes or something for breakfast.
S:
I'm letting you down, sir.
HMJr:
Oh.
S:
I have to fly to New York this morning with Joe
Davies and Halifax and Gromyko to speak in Madison
Square Garden tonight.
HMJr:
Yes.
S:
And I will not be here tomorrow for your final
round-up with the British.
HMJr:
Oh - oh.
S:
Now, I've been over the whole thing with Dean
very thoroughly.
HMJr:
Yes.
S:
How bad is that going to be from the standpoint
of appearance if I'm not -- my not being there
for the final show?
HMJr:
Well, having been in the diplomatic service for
twelve years, it's going to be terrific if you're
not there.
S:
You mean for twelve months -- me for twelve months.
- 2 -
151
HMJr:
Twelve years.
S:
(Laughs)
HMJr:
Why, I Just don't know what we'll do without you.
S:
It's really going to be -- the whole thing will
probably fail, won't it?
HMJr:
Absolutely.
S:
Perhaps I should phone Keynes and tell him
....
HMJr:
I knew there was going to be a Russian party up
in New York. Why didn't you take me along?
S:
You'd have come with me?
HMJr:
Sure. Listen
....
S:
We've got to speak to thirty thousand people
in Madison Square Garden.
HMJr:
My God. I know -- -- I was asked. That's Smith --
isn't that his name?
S:
Yeah.
HMJr:
Well, we'll do the best we can. I'm in a good
humor so I like to kid you but
S:
Henry ....
HMJr:
Yeah.
S:
it seems to me that it's in awful good shape.
HMJr:
It is. I ran into something very funny across the
street.
S:
At lunch yesterday?
HMJr:
Yeah, on this thing, and I'm sending a delegation
over to wait on General Leahy -- Admiral Leahy
....
S:
Yeah.
HMJr:
....
to explain the whole thing to him go he, in turn,
can explain it to the President.
Regraded Unclassified
- 3 -
152
S:
Yeah.
HMJr:
This 18 just B little flea in your ear -- these
speeches that Churchill has been making
....
S:
Yeah.
HMJr:
have ruffled him tremendously.
S:
Ruffled the Boss?
HMJr:
Yep.
S:
I know; I was there before before you yesterday.
HMJr:
Oh. So you found that so, didn't you?
S:
Yeah.
HMJr:
And he acts as though he never heard of this
thing.
S:
Yeah.
HMJr:
"And what is this ship for and what's that plane
for?"
S:
Yeah.
HMJr:
See?
S:
I know.
HMJr:
So I'm sending a delegation of Dean and Lauch
Currie and White and an Admiral and a General
over to explain it to Leahy.
S:
Yeah.
HMJr:
And I know that Leahy is going to be all right
and let him, in turn
S:
Henry.
HMJr:
Yeah.
S:
Is it necessary to really put the barrel over
the damn actually, before they leave the country?
Regraded Unclassified
153
- 4
HMJr:
Well, T can't in view of the position that the
President has taken.
S:
Because you know
HMJr:
But, Jod, don't breathothat. I'm not telling
that to anybody now.
S:
Well, now, Henry, the thought that I had
HMJr:
Yes.
S:
You know it would be awful -- awful eafe and wise
from the standpoint of the future relations
....
HMJr:
Yes.
S:
for somebody to have a private talk
HMJr:
Yes.
S:
with the Chairman of the Appropriations
Committee.
HMJr:
Yes.
S:
And say, "Now, here, we're doing this thing; we
think it's within the law -- within the Lend-Lease
Act, but we just want to be sure, now, that you
understand the whole thing."
HMJr:
Yes, I think that's smart.
S:
You see you could get -- you could have a fellow
like Cliff Woodrum and Dick Wigglesworth, Republican
and Democrat, and you -- you would be on much safer
ground for the next four years if you got the
Appropriations Committee to say, "Yes, this looks
right." And it wouldn't -- that wouldn't take any-
body -- somebody could do that in an hour.
HMJr:
Yeah.
S:
I mean Oscar could do it privately with them, you
know.
HMJr:
Yeah. Well, let me talk it over with our own boys
and get their reaction.
Regraded Unclassified
154
- 5 -
in
All right. But you'll excuse me and I'll
communicate with Keynes and present my apologies.
HMJr:
Well, I'm serious, I'm sorry you're not going to
be here but I -- I will explain.
S:
Yeah, but this isn't going to be the finale anyway
from what you say.
HMJr:
I don't think BO but
....
S:
That's private.
HMJr:
Yeah.
S:
Now, Henry.
HMJr:
Yeah.
S:
One other thing. Did the President at lunch
yesterday bring up with you the Treatment of
Germany?
HMJr:
Yeah.
S:
He brought it up with you?
HMJr:
Yeah.
S:
He told you of the draft memorandum?
HMJr:
Which he was sending over to me for me to look
at?
S:
That's correct.
HMJr:
Yeah.
S:
Now, what -- now, I want to get this straight
because I -- I went to him the last -- a week ago
and said, "Well, now, we have something new;
If
HMJr:
Yes.
S:
"
it's in draft. If
HMJr:
Yeah.
Regraded Unclassified
155
- 6 -
8:
"Do you want this sent to War and Treasury
before you see 1t?" He said, "I want to see it
in draft privately."
HMJr:
Yes.
S:
I sent it to him in draft privately and he didn't
respond. Then yesterday I said, "Now, how did
you like it?" He wanted to change it. I said,
"Does it present your views?" He said, "I think
it's fine. I think it's well-balanced."
HMJr:
Yes.
S:
Well, I said, "Well, now, can We send it to Henry
and to Stimson?" He said, "Please prepare notes
for my signature." I last night prepared notes
from him to you transmitting a copy of it which
I sent over last night, which -- but I wanted to
emphasize the fact that it was in draft, Henry,
you see.
HMJr:
Well, he -- of course, I didn't know anything
about it, but he brought it up and said that
this was in the works and he wanted my advice
and wanted me to go over it.
S:
Yeah.
HMJr:
So evidently you've done a good job and I appreciate
your attitude and I think that's the way it should
be.
S:
Yeah, but -- but it's important that when I --
well, we sent it to him, we said, "Now, if this
doesn't meet your -- your desire -- the way you
want this thing, let us re-do it." " You see?
And then he -- but what's coming to you now, he
says, 1s what he is satisfied with.
HMJr:
I see.
S:
Okay, boy.
HMJr:
Now, weit a minute.
S:
Yeah.
Regraded Unclassified
156
- 7 -
HMJr:
This 1s what he is satisfied with?
S:
Well, what he says 1s this -- his letter of
transmittal, he says, "Herewith -- Henry, herewith
18 a draft memo of -- covering this economic treat-
ment of Germany which has been prepared by State.
It correctly and adequately sets forth my views.
What do you think?"
HMJr:
Yes.
S:
Now, that's just the way -- that's the way it ought
to be. See?
HMJr:
Yes.
S:
From your standpoint.
HMJr:
Yes. Well, all he said to me was there was a draft
and that he wanted me to look at it and let me tell
him what I thought about it.
S:
All right, Henry, well, now
....
HMJr:
Well, now, practically the same
S:
That's good.
HMJr:
And, of course, since the Kilgore Committee and the
publicity they got, his attitude on this whole
business is just like lifting a cloud.
S:
I know that.
HMJr:
I don't know whether he's talked with you
....
S:
I know that.
HMJr:
but he went BO far as to say, "As far ae the
public is concerned, now," he said, "I don't care. "
He said, "Since the Kilgore affair."
S:
Yeah.
HMJr:
Huh?
S:
Now, of course, this thing might not go far enough
to satisfy you and if it doesn't, why, we ought to
thrash it out.
- 8 -
157
HMJr:
If it doesn't, we'll thrash it out with you before
I answer the President.
S:
All right, old boy.
HMJr:
Is that fair enough?
S:
Yes, thank you, sir.
HMJr:
And I thoroughly appreciate your cooperative
spirit, and by the way what -- how was your talk
with the gent that came over to see you?
S:
Very good. I wrote you a note.
HMJr:
Did you?
S:
It was most satisfactory and what -- what took
place was -- was probably a couple of years ago
in Lend-Lease when it was a criticism of policies
and not of personalities.
HMJr:
Good.
S:
But I'm all on the line and it's all cleared up.
HMJr:
Wonderful.
S:
Thank you, sir.
HMJr:
Have a good time and have a drink of vodka for me.
8:
All right, old boy. Thank you.
Regraded Unclassified
158
- 10 -
H. JR: Well, I figure one hundred and ten words
is thoroughly safe; that is eight hundred and eighty
words. I don't know what you have there, and whatever
I am going to do - I did this once in Philadelphia and
they had ten officers in uniform and every one with a
stop watch. But they did run it off well at the Phila-
delphia Navy Yard.
MR. DUFFIELD: This runs probably not quite eight
hundred words.
H.M.JR: I want a peroration, you see, and if I
could just take a minute and bring in the peroration to
fit in with what Marshall wants, and bring in two things:
One, that it is the American policy to use ammunition
rather than lives; and then, that this is only an indi-
cation of what will happen when we really come to grips
with the Japanese, and the thing is going to be so far
more expensive. Now, I would like to stress that, be-
cause that is what Marshall has asked me to stress, and
the way he put it, he says, "There will be a hundred
Aachens - a flaming war - the front is a thousand miles
long.
I would like to bring that in in the Pacific, be-
cause that is true. I don't really believe we will w me
to grips with the Japanese in Leyte, but that is still
ahead of us, and therefore when it comes it is going to
be terribly expensive, and that is why v.e need this loan,
and that is why we are going to need a Seventh and an
Eighth.
And the other little thing - that the manner in
which we do it, and the spirit in which we do it - that
if that can be transplanted over to our boys it will be
heartening to them. If that could be gotten into an
end paragraph, the thing would sort of dovetail with the
other one.
MR. DUFFIELD: Fine, sure.
159
- 11 -
H.M. JR: Now, what other thing, Herbert? Have
you time now, or have you some meeting?
MR. GASTON: I have plenty of time. I have a meet-
ing that I want to tell them I will not be at.
H.M.JR: Well, if you and Gene could sit down for
an hour you could give me a finished document, because
this is SO good.
MR. GASTON: This doesn't need anything but just,
as you say, a finish.
H.M.JR: That one part - I may want to change a word
or two.
MR. DUFFIELD: This isn't a contract. You can do
anything with it you want.
H.M.JR: Just one other thing which I have not yet
said I would do - you might have that in mind - they are
really crazy to have me - do about three minutes with
Bob Hope later that night. I have still refused to do
it because nobody knows where the President will be
Sunday night, including himself. My problem is, if I
have to come back I can leave there at, six-thirty and
be back Saturday night here in washington. If I stay
there with Bob Hope it means I can't leave there until
Sunday morning. But I don't know whether we might leave
something out of this for three minutes--
MR. GASTON: I think there is a late train.
H.M.JR: But those trains are very slow, they are
twenty-four hour trains, which would mean I would get in
here - I would be riding all Sunday.
MR. GASTON: No, I think you can get a fast train
to New York, and then you would have to get down from
there.
Regraded Unclassified
160
- 12 -
H.M.JR: To ride for twenty-four hours alone on a
train isn't my idea of pleasure.
Have the other three-minute spot in mind. I am
simply delighted.
Now, if you will call up your office--
MR. DUFFIELD: Yes. I am pretty sure I haven't
anything over there until eleven o'clock.
Regraded Unclassified
161
Last June, just as the Fifth far Loan Drive began, the
first Havy planes were wheeling in over Saipan. Three days later,
the first assault waves of Marines landed and the Dattle of the
Marianas me in full swing. Since that time - between these
two War Loan Drives - our armed forces have driven another 1600
miles farther west to the Philippines, deep in the ocean which
the Japanese had boasted was their own forever.
The Philippine landings are one milestone on the fastest-
noving offensive in the history of warfare. Since a year age,
our forces in the central Pacific have driven the Japanese back
4,000 miles. No other Nation ever imposed on an enemy BO rapid
and humilisting & retreat. Therefore, it 1s fitting that early
in this Sixth War Loan Drive the Treasury and the Nation honor
the Naval forces which have been the spearhead in that effensive.
For that reason, I all especially pleased to appear on this pro-
gran with Admiral King.
The forces under his leadership have given the people of
the Natdom an inspiring example of forceful and decisive action.
It is now up to as to support that action by equally clear and
decisive action during the current War Bond Compaign.
At no point during its tremendous westeard advance has
the Navy over had to look back over its shoulder to ase whether
the people at home were furnishing the money necessary to pay for
Regraded Unclassified
162
the attack. Our Havy, Army and Air Force have always been sure
that the texpayers and the buyers of bonds would give them all
the money they need to whip our anemy. I know the Sixth Mr Lean
Drive will be smother similar reassurance to them.
Constructing and manning the Navy which carried out this
Pacific offensive, and which, at the sume time, cleared the At-
lantie for our Army's invusion convoys, has been a costly under-
taking.
In the past four and a half years, this Nation has spent
$69,000,000,000 for its Havy - and every dollar has been well
spent. But this total is more than our entire national income in
1938. It is more money than we have raised in the first four Has
Loan Drives, and it is more money than we have paid in income taxes
during the past
years.
Let us look for a minute at the cost of a single navel
operation. Take, for example, the Mariansas operation which, as
I've said before, began just as the Fifth War Loan Drive started.
The neval force which participated in this single operation repre-
sents an investment by the American people of well over $5,000,000,000.
Of course, this investment in ships and planes and guns will be
used again and again, and cannot be charged up as the cost of -
quering Guan, Saipan, Tinion, and the other Mariana islands. But
we did pay out almost a billion dellars - $997,000,000, as nearly
as we can estimate 10 - for the Murianmoperation alone.
- 2 -
Regraded Unclassified
163
In the first place, there were the advance bases where the
invasion force assembled before shoving off for their strike 1500
miles westward. These bases cost $112,000,000.
Second, there was the cost of sending out the great armada
of ships, which amounted to another $129,000,000. of this amount,
by far the largest part was for depresiation, losses, repair, and
maintenance of the vessels themselves. Nineteen million dollars
was necessary to pay for the fuel and other lubricants for these
vessels, and still other millions were paid as charter fees on
the merchant vessels which accompanied the Havy striking feroe.
Third, this great assemblage of ships carried with it its
own umbrella of air power plus a striking force of aircraft which
knpcked Japan's land-based air power out of the air. The cost of
operating this huge havel air force during the Marianas campaign
is estimated at about $199,000,000. Here again the principal cost
was depreciation, maintenance, losses and repairs, while additional
millions were spent for fuel and lubricants for the planes.
By far, the most valuable component of this Havy striking
force was the men who fought the ships and flow the planes. Their
pay, equipment, medical supplies, and food cost $439,000,000. my
far, the greatest part of this am was expended for their pay,
which amounted for the total of the Marianas operation to more
than $300,000,000. To feed this great ferce for the six weeks of
the Marianas compaign cost $29,000,000. Their equipment and medi-
cal supplies cost another $80,000,000.
- 3 -
Regraded Unclassified
164
Fourth, before the Marines and Army landed, the Marianas
Islands ware subjected to tresendous air and surface benkerdment,
and this bembardment continued in support of our landing opera-
tions after the invasion was under way. All told, throughout the
campaign, our Navy's ships and planes pumped about $133,000,000
worth of bombs and shells into Guam, Saipen, Tinian, and their
adjacent islands. The ground force shot up another $19,000,000
worth of ammunition. I am sure everyone will agree that the
enormous Navy plane and surface bomberdment which cost
$133,000,000 was money well spent because that tremendous bombard-
ment leveled the enemy defenses and saved American lives.
- 4
Regraded Unclassified
may-
Darton's revision of 165
D uffails shaft.
Last June, just as the Fifth far Loan Drive began, the (Pencil
first Havy planes were wheeling in over Saipan. Three days later, changed)
the first assault waves of Marines landed and the Battle of the
Marianas was in full swing. Since that time - between these
two War Loan Drives - our armed forces have driven another 1600
miles farther west to the Philippines, deep in the occan which
the Japanese had boasted was their own forever,
The Philippine landings are one milestone on the fastest-
noving offensive in the history of warfare. Since a year up,
our forces in the central Pacific have driven the Japanese back
4,000 miles. No other Nation ever imposed on an enemy so rapid
and humilisting a retreat. Therefore, it is fitting that early
in this Sixth War Loan Drive the Treasury and the Nation honor
the Naval forces which have been the spearhead in that offensive.
For that reason, I as especially pleased to appear on this pre-
gran with Admiral King.
The forces under his leadership have given the people of
bold
the Nation an inspiring example of and decisive action.
shirited
It is now up to us to support that action by equally chear and
decisive action during the current War Bond Campaign.
At no point during its treasendous westward advance has
the Navy ever had to look back over its shoulder to - whether
the people at home were furnishing the money necessary to pay for
Regraded Unclassifie
166
the sttack. Our Navy, Army and Air Force have always been sure
that the texpayers end the buyers of bonds would give them all
the money they need to whip our enesty. I know the Birth for Lean
Drive will be another similar reassurance to them.
Constructing and manning the Havy which carried out this
Pacific offensive, and which, at the same time, cleared the At-
lantic for our Army's invasion convoys, has been a costly under-
taking.
In the past four and & half years, this Nation has spent
$69,000,000,000 for its Navy - and every dollar has been well
spent. But this total 18 entire
1938
To
Low Driver, and it 18 more money than paid in
during the past
Let us look for a minute at the cost of a single navel
operation. Take, for example, the Mariandas operation, which Arilliantly
starting The Rame like. made
fust-as the Fifth War Loan Drive started:
manked In history the date # beginning of
The naval force which participated in this single operation retre-
sents sd an investment by the American people of well over $5,000,000,000.
five billions
Of course, this investment in ships and planes and guns will be
used again and again, and cannot be charged up as the most of -
quering Guam, Saipan, Tinian, and the other Mariana islands. But
- did pay out almost & billion dollars - $997,000,000, as nearly
as - can estimate it - for the Murianssoperation alone.
- 2 -
Regraded Unclassified
167
in The marshalls
In the first place, there were the advance bases where the
invasion force assembled before shoving off for their strike 1500
miles westward. These bases cost $112,000,000.
Second, there was the cost of sending out the great armade
of ships, which amounted to another $129,000,000. of this smount,
by far the largest part was for losses, repair, and
waintenance of the vessels themselves. Nineteen million dellars
used of
was necessary to pay for the fuel and lubricants fee these
ships and still other millions were paid as charter fees on
the merchant vessels which accompenied the Havy striking force.
Third, this great assemblage of ships carried with it its
own umbrella of air power plus a striking force of aircraft which
knocked Japan's land-based air power out of the air. The cost of
operating this huge naval air force during the Marianas campaign
is estimated at about $199,000,000. Here again the principal cost
was In maintenance, losses and repairs, while additional
millions were spent for fuel and lubricants for the planes.
By furs the most valuable component of this Havy striking
force was the men who fought the shipe and flow the planes. Their
pay, equipment, medical supplies, and food cost $439,000,000.
which anounted for the total of the Marianas operation to more
than $300,000,000. To feed this great force for the six weeks of
the Marisnas compaign cost $29,000,000. Their equipment and medi-
cal pupplies cost another $80,000,000.
- 3 -
Regraded Unclassified
168
Fifth
Powrth, before the Marines and Army landed, the Marianas
Islands were subjected to tremendous air and surface bombardment,
and this bembardment continued in support of our landing opera-
tions after the invasion was under way. All told, throughout the
campaign, our Havy's ships and planes pumped about $133,000,000
worth of bombs and shells into Guam, Suipan, Tinian, and their
adjacent islands. The ground force shot up snother $19,000,000
worth of ammunition. I w sure everyone will agree that the
enermous Navy plane and surface bombfirdment which cost
$133,000,000 was money well spent because that tremendous bombard-
ment leveled the enemy defenses and saved American lives.
is
- 4 -
Regraded Unclassified
Wheneva that is meave 169
This heavy and costly bombardnam's in the Marianas is morely one
example of what Admiral King and General Marshall tell me in & firm and
defined
American war policy. W american-
That holiey R60 to make expendenting
audmaterial save american make this lions, me, insefer wherever as and
It the mb and aim of our militamleaders
can, inexpensive in terms of human losses even though by doing so
it
They
made - more costly in material things. Such a policy requires trugh huge
sums of money - money raised in bond drives like the one now beginning -
in order to keep our Army and Havy and Air Foross supplied and armed. Think of
fully and completely
this - that in higing a brnd you may He Daning Thelife of and -one
The cost will mount. It will mount because now in this world-
girdling was we are truly at grips with our enemise - in the forests
Coming w
of crez boys
before Cologne, at Mets, in Italy, on Leyta, in the Philippine con.
We are closing in on the citadels of the Nasis and the Jape. There
may be a hundred Aschens, a hundred Leytes between us and final victory.
That is why there must be & Sixth War Loan Drive and & Seventh probably and an
Eighth before mail this war is were.
I know this Bond Drive will succeed. But the spirit in which it
succeeds is as important as success itself. Let us go about this
drive in a spirit which, if it could be transmitted to the sen on
every front, would warm their hearts and steel their wills, fn The
struggle and The inetry That lis abead -
the netry That will he am only by pighting
and my working - not m waiting,
H
Unclassified
Re-Typed copy of Puffered
draft with Oaston's revisions
Last June, just as the Fifth War Loan Drive began, 11/16/45
the first Navy planes were wheeling in over Saipan. Three
days later, the first assault waves of Marines landed and
the Battle of the Marianas was in full swing. Since that
time -- between these two War Loan Drives -- our armed
fouces have driven another 1600 miles farther west to the
Philippines, deep in the ocean which the Japanese had
boasted was their own forever.
The Philippine landings are one milestone on the
fastest-moving offensive in the history of warfare.
Since a year ago, our forces in the central Pacific have
driven the Japanese back 4,000 miles. No other Nation
ever imposed on an enemy so rapid and humiliating a
retreat. Therefore, it is fitting that early in this
Sixth War Loan Drive the Treasury and the Nation honor
the Naval forces which have been the spearhead in that
offensive. For that reason, I am especially pleased to
appear on this program with Admiral King.
The forces under his leadership have given the people
of the Nation an inspiring example of bold and decisive
action. It is now up to us to support that action by
equally spirited and decisive action during the current
War Bond Campaign.
Regraded Unclassified
171
- 2 -
At no point during its tremendous westward advance
has the Navy ever had to look back over its shoulder to
500 whether the people at home were furnishing the money
necessary to pay for the attack. Our Navy, Army and Air
Force have always been sure that the taxpayers and the
buyers of bonds would give them all the money they need
to whip our enemy. I know the Sixth War Loan Drive will
be another similar reassurance to them.
Constructing and manning the Navy which carried out
this Pacific offensive, and which, at the same time,
cleared the Atlantic for our Army's invasion convoys, has
been a costly undertaking.
In the past four and a half years, this Nation has
spent $69,000,000,000 for its Navy -- and every dollar
has been well spent.
Let us look for a minute at the cost of a single naval
operation. Take, for example, the Marianas operation,
which brilliantly marked for history the date of beginning
of the Fifth War Loan Drive. The naval force which
participated in this single operation represented an
investment by the American people of well over five billions.
Of course, this investment in ships and planes and guns
172
8 -
will be used again and again, and cannot be charged up
as the cost of conquering Guam, Saipan, Tinian, and the
other Marianas islands. But we did pay out almost &
billion dollars -- $997,000,000, as nearly as we can
estimate it -- for the Marianas operation alone.
In the first place, there were the advance bases
in the Marshalls where the invasion force assembled before
shoving off for their strike 1500 miles westward. These
bases cost $112,000,000.
Second, there was the cost of sending out the great
armada of ships, which amounted to another $129,000,000.
Of this amount, by far the largest part was for losses,
repair, and maintenance of the vessels themselves.
Nineteen million dollars was necessary to pay for the
fuel and lubricants used by these ships, and still other
millions were paid as charter fees on the merchant vessels
which accompanied the Navy striking force.
Third, this great assemblage of ships carried with it
its own umbrella of air power plus a striking force of
aircraft which knocked Japan's land-based air power out
of the air. The cost of operating this hugh naval air
Regraded Unclassified
173
- 4 -
force during the Marianas campaign is estimated at about
$199,000,000. Here again the principal cost was for
maintenance, losses and repairs, while additional millions
were spent for fuel and lubricants for the planes.
By far the most valuable component of this Navy
striking force was the men who fought the ships and flew
the planes. Their pay, equipment, medical supplies, and
food constitute a fourth item that cost $439,000,000.
Fifth, before the Marines and Army landed, the
Marianas Islands were subjected to tremendous air and
surface bombardment, and this bombardment continued in
support of our landing operations after the invasion was
under way. All told, throughout the campaign, our Navy's
ships and planes pumped about $133,000,000 worth of bombs
and shells into Guam, Saipan, Tinian, and their adjacent
islands. The ground force shot up another $19,000,000
worth of ammunition.
This heavy and costly bombardment in the Marianas is
merely one example of what Admiral King and General Marshall
tell me is a firm American war policy. That policy is
to make expenditure of ammunition and material save
Regraded Unclassified
174
- 5 -
American lives, wherever and whenever that is possible.
It is the hope and aim of our military leaders to make
this war, insofar as they can, inexpensive in terms of
human losses even though by doing so it is made more
costly in material things. Such a policy requires huge
sums of money -- money raised in bond drives like the
one now beginning -- in order to keep our Army and Havy
and Air Forces fully and completely supplied and armed.
Think of this -- that in buying a bond you may be saving
the life of a hero - one of our boys.
The cost will mount. It will mount because now in
this world-girdling war we are truly coming to grips
with our enemies -- in the forests before Cologne, at
Mets, in Italy, on Leyte, in the Philippine sea. We
are closing in on the citadels of the Nasis and the Japs.
There may be a hundred Aachens, a hundred Leytes between
us and final victory. That is why there must be &
Sixth War Loan Drive and a Seventh and probably an
Eighth before this war is won.
I know this Bond Drive will succeed. But the spirit
in which it succeeds is as important as success itself.
Regraded Unclassified
175
- 6 -
Let us go about this drive in a spirit which, if it could
be transmitted to the men on every front, would warm
their hearts and steel their wills for the struggle and
the victory that lie ahead -- the victory that will be
won only by fighting and by working -- not by waiting.
Regraded Unclassified
First Barth- 11/16/44 176
Lest June, just as the Fifth War Loan Drive began, the
first Navy planes were wheeling in over Saipan. Three days later,
the first assault waves of Marines landed and the Battle of the
Marianas was in full swing. Since that time -- between these
two War Loan Drives --- our armed forces have driven another 1600
miles farther west to the Philippines, deep in the ocean which
the Japanese had boasted was their own forever.
in
The Philippine landings are one milestone on the fastest-
moving offensive in the history of warfare. Since a year ago,
our forces in the contral Pacific have driven the Japanese back
4,000 miles. No other Nation ever imposed on an enemy so rapid
all america hours the naval forces
and humiliating a retreat. $ is fitting that early
which spearheaded that offensive, and the Treasury joins
im this Sinth War Loan Drive the Treasury and the Nation benor
in hearty tribute to them. I feel especially honored by
the Navul forces which have been the spearhead in that affensive.
the presence of admiral King on this Smith War Loan program.
For that reasony 1-6m supecially on this
- with Admiral King.
admiral King A
The forces under has leadership have given the people of
daring
the Nation an inspiring example of forget and decisive action.
an spirited
It is now up to us to support that action by equally other and
response to
decisive sotion during the current War Bond Campaign.
At no point during its tremendous westward advance has
the Navy ever had to look back over its shoulder to see whether
the people at home were furnishing the money necessary to pay for
Regraded Unclassified,
177
the attack. Our Navy, Army and Air Force have always been sure
that the taxpayers and the buyers of bonds would give them all
the money they need to whip our enemy. I know the Sixth War Loan
Drive will be another similar reassurance to them.
Constructing and manning the Navy which carried out this
with the aid of our allies
Pacific offensive, and which, at the same time, cleared the At-
lantic for our Army's invasion convoys, has been a costly under-
taking.
In the past four and a half years, this Nation has spent
$69,000,000,000 for its Navy -- and every dollar has been well
spent. (Part this total is more than our entire national invome done
1938. It is more money than we have reised in the Mrst Commition
been Delivery and 10 18 more money than we have paid IN income bases
during the years
Let us look for a minute at the cost of a single naval
operation. Take, for example, the Marian as compaign operation which, builliantly
marked for history the Q ate of the beginning of
I've cald before, began just 06 the Fifth War Loan Drive started.
The naval force which participated in this single operation repre-
ful billion dollars.
sente an investment by the American people of well over $5,000,000,000.
Of course, this investment in ships and planes and guns will be
used again and again, and cannot be charged up as the cost of con-
quering Guam, Saipan, Tinian, and the other Mariana islands. But
we did pay out almost a billion dollars - $997,000,000, 8.8 nearly
as we can estimate it -- for the Marianas operation alone.
- 2 -
Regraded Unclassified
178
w the Wandells
In the first place, there were the advance bases where the
invasion force assembled before shoving off for their strike 1500
miles westward. These bases cost $112,000,000.
Second, there was the cost of sending out the great armada
of ships, which amounted to another $129,000,000. Of this amount,
by far the largest part was for losses, repair, and
maintenance of the vessels themselves. Nineteen million dollars
was necessary to pay for the fuel and other lubricants used by for these
ships.
and
still
other
willions
paid
E
other
1003
E
vessole
which
the
Havy
striking
Third, this great assemblage of ships carried with it its
own umbrella of air power plus a striking force of aircraft which
knocked Japan's land-based air power out of the air. The cost of
operating this huge naval air force during the Marianas campaign
is estimated at about $199,000,000. Here again the principal cost
was depreciation, maintenance, losses, repairs, while additional
millions were spent for fuel and lubricants for the planes.
By far, the most valuable component of this Navy striking
force was the men who fought the ships and flew the planes. Their
pay, equipment, medical supplies, and food cost $439,000,000.
for mestest part of this SWB VILE expended for
anounted
for
the
total
of
them
$300,000,000 To feed this great force for the six weeks of
the Marianas campaign cost $29,000,000.
onl
supplior
$80,000,000.
- 3 -
Regraded Unclassified
179
Ficially,
Fourth, before the Marines and Army landed, the Marianas
Islands were subjected to tremendous air and surface bombardment,
and this bombardment continued in support of our landing opera-
tions after the invasion was under way. All told, throughout the
campaign, our Navy's ships and planes pumped about $133,000,000
worth of bombs and shells into Guam, Saipan, Tinian, and their
adjacent islands. The ground force shot up another $19,000,000
worth of ammunition. I am sure everyone will agree that the
represcrited
enormous Navy plane and surface bombardment which
it
$199,000,000- money well spent because that tremendous benhard
leveled the enemy defenses and saved American lives.
- 4 -
Regraded Unclassified
180
This heavy and costly bombardment in the Marianas is merely one
example of what Admiral King and General Marshall tell me is a firm
American war policy. We in wery way possible to ammunition
That policy is to save the expenditure 8 Ever by the appendition
and
materiel,
rether
-
lives.
We
the can; incipensive in terms of though lega so
we
make
it
cestly
in
material
Such Soch a policy a policy required requires hugh huge
sums of money -- money raised in bond drives like the one now beginning --
in order to give keep our Army and Navy and Air The Forces estimate supplied in and weapons assed and aquipment,
The cost will mount. It will mount because now in this world-
girdling war we are truly at grips with our enemies -- in the forests
before Cologne, at Metz, in Italy, on Leyte, in the Philippine sea.
We are closing in on the citadels of the Nazis and the Japs. There
may be a hundred Aachens, a hundred Leytes between us and final victory.
perhaps
That is why there must be a Sixth War Loan Drive and a Seventh and an
Eighth before until this war is won.
I know this Bond Drive will succeed. But the spirit in which it
succeeds is as important as success itself. Let us go about this
drive in a spirit which
the
will the
warm their hearts and steel their the wills of the
fighting men on every front
Regraded Unclassified
Many Sparch-Barth Spart Second 11/16/14- 181
Last June, just as the Fifth War Loan Drive began, the
first Navy planes were wheeling in over Saipan. Three days later,
the first assault waves of Marines landed and the Battle of the
Marianas was in full swing. Since that time - between these
two War Loan Drives - our armed forces have driven another 1600
miles farther west to the Philippines, deep in the ocean which
the Japanese had boasted was their own forever.
The Philippine landings are one milestone in the fastest
moving offensive in the history of warfare. Since a year ago,
our forces in the Pacific have driven the Japanese back 4,000
miles. No other Nation ever imposed on an enemy so rapid
and humiliating a retreat. All America honors the Naval forces
which spearheaded that offensive, and the Treasury joins in
hearty tribute to them. I feel especially honored by the presence
of Admiral King on this Sixth War Loan program.
The forces under Admiral King's leadership have given the
people of the Nation an inspiring example of daring and decisive
action. It is now up to us to support that action by an equally
spirited and decisive response to the current War Bond Campaign.
At no point during its tremendous westward advance has
the Navy ever had to look back over its shoulder to see whether
the people at home were furnishing the money necessary to pay for
Regraded Unclassified
182
- 2 -
the attack. Our Navy, Army and Air Force have always been sure
that the taxpayers and the buyers of bonds would give them all
the money they need to whip our enemy. I know the Sixth War
Loan Drive will be another similar reassurance to them.
Constructing and manning the Navy which carried out this
Pacific offensive, and which, at the same time, with the aid of our
Allies, cleared the Atlantic for our Army's invasion convoys,
has been a costly undertaking.
In the past four and 8. half years, this Nation has spent
$69,000,000,000 for its Navy - and every dollar has been well spent.
Let us look for a minute at the cost of a single naval
operation. Take, for example, the Marianas campaign which
brilliantly marked for history the date of the beginning of the
Fifth War Loan Drive. The naval force which participated in
this single operation represented an investment by the American
people of well over five billion dollars. Of course, this
investment in ships and planes and guns will be used again and
again, and cannot be charged up as the cost of conquering Guam,
Saipan, Tinian, and the other Mariana Islands. But we did pay out
almost a billion dollars - $997,000,000, as nearly as we can
estimate it - for the Marianas operation alone.
Regraded Unclassified
183
- 3 -
In the first place, there were the advance bases in
the Marshalls where the invasion force assembled before shoving
off for their strike 1500 miles westward. These bases cost
$112,000,000.
Second, there was the cost of sending out the great
armada of ships, which amounted to another $129,000,000. Of this
amount, by far the largest part was for losses, repair, and
maintenance of the vessels themselves. Nineteen million dollars
was necessary to pay for the fuel and lubricants used by these
ships.
Third, this great assemblage of ships carried with it its
own umbrella of air power plus a striking force of aircraft which
knocked Japan's land-based air power out of the air. The cost of
operating this huge naval air force during the Marianas campaign
is estimated at about $199,000,000. Here again the principal cost
was losses, repairs, and maintenance, while additional millions
were spent for fuel and lubricants for the planes.
By far, the most valuable component of this Navy striking
force was the men who fought the ships and flew the planes. Their
pay, equipment, medical supplies, and food cost $439,000,000.
To feed this great force for the six weeks of the Marianas campaign
cost $29,000,000.
Regraded Unclassified
184
Finally, before the Marines and Army landed, the Marianas
Islands were subjected to tremendous air and surface bombardment,
and this bombardment continued in support of our landing operations
after the invasion was under way. All told, throughout the
campaign, our Navy's ships and planes pumped about $133,000,000
worth of bombs and shells into Guam, Saipan, Tinian, and their
adjacent islands. The ground force shot up another $19,000,000
worth of ammunition. I an sure every one will agree that the
enormous Navy plane and surface bombardment represented money
well spent because it leveled the enemy defenses and saved
American lives.
This heavy and costly bombardment in the Marianas is
merely one example of what Admiral King and General Marshall
tell me is a firm American war policy. That policy is to save
the expenditure of lives by the expenditure of ammunition and
materiel. Such a policy requires huge sums of money - money
raised in bond drives like the one now beginning - in order to
give OUT Army and Navy and Air Forces the utmost in weapons and
equipment.
The cost will mount. It will mount because now in this
world-girdling war we are truly at grips with our enemies - in
the forests before Cologne, at Metz, in Italy, on Leyte, in the
Philippine sea. We are closing in on the citadels of the Nasis
Regraded nclassified
185
- 5 -
and the Japs. There may be a hundred Aachens, a hundred Leytes
between us and final victory. That is why there must be a
Sixth War Loan Drive and a Seventh and perhaps an Eighth before
this war is won.
I know this Bond Drive will succeed. But the spirit in
which it succeeds is as important as success itself. Let us go
about this drive in a spirit which will warm the hearts and steel
the wills of the fighting men on every front.
Regraded Unclassified
186
Last June, just as the Fifth War Loan Drive began, the
first Navy planes were wheeling in over Saipan. Three days later,
the first assault waves of Marines landed and the Battle of the
Marianas was in full swing. Since that time - between these
two War Loan Drives - our armed forces have driven another 1600
miles farther west to the Philippines, deep in the ocean which
the Japanese had boasted was their own forever.
The Philippine landings are one milestone in the fastest
moving offensive in the history of warfare. Since a year ago,
our forces in the Pacific have driven the Japanese back 4,000
miles. No other Nation ever imposed on an enemy 80 rapid
and humiliating a retreat. All America honors the Naval forces
which spearheaded that offensive, and the Treasury joins in
hearty tribute to them. I feel especially honored by the presence
of Admiral King on this Sixth War Loan program.
The forces under Admiral King's leadership have given the
people of the Nation an inspiring example of daring and decisive
action. It is now up to us to support that action by an equally
spirited and decisive response to the current War Bond Campaign.
At no point during its tremendous westward advance has
the Navy ever had to look back over its shoulder to see whether
the people at home were furnishing the money necessary to pay for
Regraded Unclassified
- 2 -
187
the attack. Our Navy, Army and Air Force have always been sure
that the taxpayers and the buyers of bonds would give them all
the money they need to whip our enemy. I know the Sixth War
Loan Drive will be another similar reassurance to them.
Constructing and manning the Navy which carried out this
Pacific offensive, and which, at the same time, with the aid of our
Allies, cleared the Atlantic for our Army's invasion convoys,
has been a costly undertaking.
In the past four and 8. half years, this Nation has spent
$69,000,000,000 for its Navy - and every dollar has been well spent.
Let us look for a minute at the cost of a single naval
operation. Take, for example, the Marianas campaign which
brilliantly marked for history the date of the beginning of the
Fifth War Loan Drive. The naval force which participated in
this single operation represented an investment by the American
people of well over five billion dollars. Of course, this
investment in ships and planes and guns will be used again and
again, and cannot be charged up as the cost of conquering Guam,
Saipan, Tinian, and the other Mariana Islands. But we did pay out
almost & billion dollars - $997,000,000, as nearly as we can
estimate it - for the Marianas operation alone.
Regraded.Unclassified
188
- 3 -
In the first place, there were the advance bases in
the Marshalls where the invasion force assembled before shoving
off for their strike 1500 miles westward. These bases cost
$112,000,000.
Second, there was the cost of sending out the great
armada of ships, which amounted to another $129,000,000. Of this
amount, by far the largest part was for losses, repair, and
maintenance of the vessels themselves. Nineteen million dollars
was necessary to pay for the fuel and lubricants used by these
ships.
Third, this great assemblage of ships carried with it its
own umbrella of air power plus a striking force of aircraft which
knocked Japan's land-based air power out of the air. The cost of
operating this huge naval air force during the Marianas campaign
is estimated at about $199,000,000. Here again the principal cost
was losses, repairs, and maintenance, while additional millions
were spent for fuel and lubricants for the planes.
By far, the most valuable component of this Navy striking
force was the men who fought the ships and flew the planes. Their
pay, equipment, medical supplies, and food cost $439,000,000.
To feed this great force for the six weeks of the Marianas campaign
cost $29,000,000.
Regraded Unclassified
189
- 4 -
Finally, before the Marines and Army landed, the Marianas
Islands were subjected to tremendous air and surface bombardment,
and this bombardment continued in support of our landing operations
after the invasion was under way. All told, throughout the
campaign, our Navy's ships and planes pumped about $133,000,000
worth of bombs and shells into Guam, Saipan, Tinian, and their
adjacent islands. The ground force shot up another $19,000,000
worth of ammunition. I am sure every one will agree that the
enormous Navy plane and surface bombardment represented money
well spent because it leveled the enemy defenses and saved
American lives.
This heavy and costly bombardment in the Marianas is
merely one example of what Admiral King and General Marshall
tell me is a firm American war policy. That policy is to save
the expenditure of lives by the expenditure of ammunition and
materiel. Such a policy requires huge sums of money - money
raised in bond drives like the one now beginning - in order to
give OUP Army and Navy and Air Forces the utmost in weapons and
equipment.
The cost will mount. It will mount because now in this
world-girdling war we are truly at grips with our enemies - in
the forests before Cologne, at Metz, in Italy, on Leyte, in the
Philippine sea. We are closing in on the citadels of the Nazis
Regraded Unclassified
190
- 5 -
and the Japs. There may be a hundred Aachens, a hundred Leytes
between us and final victory. That is why there must be a
Sixth War Loan Drive and a Seventh and perhaps an Eighth before
this war is won.
I know this Bond Drive will succeed. But the spirit in
which it succeeds is as important as success itself. Let us go
about this drive in a spirit which will warm the hearts and steel
the wills of the fighting men on every front.
Regraded Unclassified
army.
Draft from
191
which mading
6th War Loan -- Opening Address
Secretary Morgenthau
(Bartho#1) copy me made. 11/16/24-
War is the greatest and grimmest of human endurance tests.
The side that wins, in the final analysis, is the side that is
in there working and fighting at the end - the side with the
stamina and the spirit to endure the long and terrible ordeal.
The present war imposes its test no less upon civilians
than upon the men in the armed services. For no modern army can
fight without full support at home. Victory goes inevitably
to the side whose men and women, in and out of uniform, stick
longest and most unwaveringly to the performance of their jobs.
Our enemies believed that the democracies were soft and
decadent. They believed that we who had lived our lives in
freedom would not muster the self-discipline or the toughness
to stick out the long, hard grind until the end. They believed
that somewhere along the line we would flinch and falter, that
we would grow tired and slacken in our stride, that we would
hesitate to pay the total cost of total victory.
Well, they miscalculated. They have found out from the
Americans they met in France and on Leyte, and at a score of other
bridgeheads, that there is nothing either decadent or soft about
us. But perhaps they still cling to the hope that we who have been
Regraded Unclassifie
192
- 2 -
left safe at home will be lulled into complacency and will quit
our job before we have completed it. If so, they are wrong
about this, too.
I have been talking lately about our job at home with one
of the great architects of our victories overseas - the Chief
of Staff of the United States Army, General George C. Marshall.
Before each of our great War Bond campaigns, I have gone to
General Marshall and asked him to tell me something of the needs
to gain
of our fighting forces for the objectives immediately ahead -
to tell me, in other words, what the men at the front expected
of us here at home. It has always given me reassurance and
inspiration to talk with him - reassurance because I have come
away with a fresh certainty that those who have to bear the real
brunt of this terrible conflict will do all that we expect of them -
and more; inspiration because I have come away with a clearer
understanding of the vital part our own efforts play in the
tremendous job that they are doing.
What I am going to tell you about the current needs of our
armed forces is not based on any amateur or armchair strategy.
It comes directly from General Marshall himself. He has authorized
me to report it to you.
2
Regraded Unclassified
193
- 3 -
There has been a fundamental change in the nature of the war,
both in Europe and in the Pacific. A year or two ago we were
attacking the enemy only on the periphery of his farthermost
advance. Each time we attacked, we had a single, limited
objective. Today, in the east and in the west, we are closing
in on the enemy's homeland. There is no limited objective now.
The objective is total victory.
In Europe, we have embarked upon the final push. It demands
a concentration of materials and of effort immeasurably greater
than any we have yet brought to bear. The nearer we drive toward
the enemy's heart, the costlier the war becomes. It requires,
in its present phase, guns and tanks, trucks and bridges and
pipelines and railroads in quantities far beyond anything called
for in past offensives. The last barrage, that fearful tornado
of high e xplosives which will knock, first Germany, and then
Japan, out of the war, will make our previous expenditure of
ammunition seem trivial.
We have moved into position for our final thrusts through
a series of short, sharp blows. The last drive in Tunisia,
for example, took only 18 days. Tarawa was captured in 10
days, Kwajalein in 8, Guam in three weeks, the Island of Sicily
in a little over a month.
3
Regraded Unclassified
194
- 4 -
But the war has now settled down to 8. sustained, continuous
attack. And sustained, continuous attack is costly in supplies.
For we must now blast the enemy out of heavily fortified positions
to which he clings with the tenaciousness of despair.
Let me illustrate the difference for you in terms of the
weapons and munitions and equipment consumed by General Eisenhower
couley
so brilliant ly and so suc
in the three campaigns through which he has led our troops -
Tunisia, Sicily and the Battle for Germany.
The whole of the Tunisian battle lasted 96 days and cost 88
mortars. It took 38 days to overrun Sicily where we lost 47
mortars. But in a single month on the German front we expended
no less than 700 mortars.
A single month of combat on the German border destroyed 2400
of our trucks and jeeps - two and one-half times the rate of loss
in the other two campaigns.
As we hem the enemy in, we naturally shoot more heavy
ammunition. Last June, our 105 millimeter howitzers hurled a
quarter of a million high explosive shells at the Germans. In
September, just three months later, they fired a million and
a half rounds - six times as much. Our 155 millimeter cannon
during September flung more than 130,000 big shells at the German
lines - a greater total than during the preceding three months
combined.
4
Regraded Unclassified
195
- 5 -
In the Aachen sector alone in two weeks last month, our
artillerymen fired 300,000 shells from their 105 millimeter howitzers.
This is at the rate of 900 big, high-explosive shells an hour -
one every four seconds, day and night, for two weeks.
Now, remember this: Aachen is just a sample. A hundred
other Aachens lie spread along the front from the North Sea to
Switzerland. We have encountered the same thing at Metz. We
shall have to encounter and overcome it at every waypoint on
and Jobyo.
the long road to Berlin, And then, along the road to Tokyo.
There are no short cuts to victory and no bargain prices for the
purchase of it.
Ever since our troops landed in Normandy on the sixth of June
we have been able to supply them only through the battered, inadequate
port of Cherbourg and by the use of floating harbors on the Norman
bottleneck
beaches. This limitation of supply has prevented the United States
Army from deploying its full strength against the enemy. It is
this factor, and no other, which has been responsible for the pause
in our advance into Germany. We have had to wait until tanks and
putashore and
guns and munitions could be moved up to our front lines.
5
Regraded Unclassified
196
6
with help of alles
But the handicap will soon be overcome. When the great
port of Antwerp comes into operation, the tonnage of materiel
shipped to American forces in Europe is expected to double. It
is expected to be twice as great as it has been during October
of this year.
And in the Pacific, the supplies moving to General McArthur
must be half again as great as those he received at the beginning
of the year. The Navy, too, must be given greatly increased
quantities of ships and planes and shells for its final obliteration
of the Japanese fleet.
These are the needs of the men on the firing lines. The
nearer we come to victory, the greater these needs will be. And
the more quickly we meet them, the more quickly can victory be
achieved.
I know that Americans need no appeal to meet these needs beyond
a simple knowledge of the facts.
The way for each of us here at home to meet them is through
unceasing devotion to his job and through the purchase of war bonds
to the limit of his individual ability. The Sixth War Loan
offers to every American an opportunity to play his part in the
great offensives now being launched against the enemy.
Regraded Unclassified
197
- 7 -
There have been many demands made of you in the three long
years that we have been at war. You have met all of them faith-
fully and generously. If you are tired now or feel that you
have done your utmost, then think for a moment of the men in
battle. Think of the men who come out of the foxholes
drained of their last physical resources, cold and grimed and
hungry, their nerves pulled taut to the breaking point by the
incessant whine of bullets and the shattering roar of unseen
high-explosive shells. And think of their response when they
are asked to go into the firing line again - to find inside them-
selves new sources of courage and of strength and of endurance.
One indispensable source of spirit to these men is the
knowledge that we at home are backing them up with all we have -
with nothing less than the fullest consecration of our wealth
This is oursendurance test aswell as theirs.
and strength. ^ Our response to the Sixth War Loan drive will be
the vindication to these men of their faith in us. This is
our endurance test as well as theirs.
7.
Regraded Unclassified
198
November 16, 1944
10:13 a.m.
HMJr:
to tell you personally that I am not going
to settle anything until Roy Blough 18 back here
on Tuesday.
Roy
Blough:
Well, that's very kind of you, Mr. Secretary.
HMJr:
And I'm being very serious and this is just a
little way that I have of showing you how much
I appreciate all you've done since you've been
here.
B:
Well, thank you very much, Mr. Secretary. The
way we were talking -- Charlie Bell and Joe
O'Connell and I the other day, I think probably
something can be worked out that will be okay.
HMJr:
Well, you'll have a day or days in court until
you are entirely happy.
B:
That's very good of you and I appreciate it
no end.
HMJr:
Because I need your services very badly and I
want you to work under friendly and happy
surroundings.
B:
Well, thank you very much.
HMJr:
So, we'll work it and don't worry and when we
come back Tuesday, we'll have another talk and
we'll keep talking until everything shakes down.
B:
Good enough.
HMJr:
Right.
B:
Thanks very much.
HMJr:
You're welcome.
B:
Bye.
Regraded Unclassified
199
November 16, 1944
10:25 a.m.
WAR BOND SPEECH
Present: Mr. Gamble
Mrs. Klotz
H.M.JR: I thought you might want to say 8 word or
two about this. I have Gene Duffield free, and he has
just come through with something he says has never been
in the papers before on the cost of one battle in the
Pacific, one naval battle. But he says he has never seen
this release before. It is the greatest detail. Mrs.
Klotz was thoroughly impressed.
MRS. KLOTZ: It was interesting, and I followed it.
Most times when he has figures in his speech they are
meaningless to me.
H.M.JR: Did anybody tell you how my thing went over
at OPA?
MR. GAMBLE: No.
H.M.JR: Inquire, will you?
MR. GAMBLE: I will. Let me give you this thought,
and maybe you won't have to read that, but I thought I
would have it in case you asked for something. The thought
I think you could give to the press about the War Loan Drive
is that we are better prepared than we have ever been in
any previous drive. We have six million volunteers; there
is great enthusiasm among our workers; we have wonderful
cooperation from all the media; it is now up to the indivi-
dual buyer, and we don't know, of course, what his attitude
is; we think it is good.
H.M.JR: What are the two words that Dewey always
used--bungling and confusion. Do you think it would be
all right to say it, "Notwithstanding the bungling and
confusion'
Regraded Unclassified
200
- 2 -
MR. GAMBLE: Oh, sure, it would be perfect.
H.M.JR: We are better organized.
MRS. KLOTZ: You said that recently.
H.M.JR: I said it in East Fishkill.
MR. GAMBLE: It would be all right to say it, because
in every section of the country--well, you saw some of it.
H.M.JR: As a matter of fact, it wouldn't be bad to
say that I went to a meeting in my own township and that
is the level to see whether they are organized.
MR. GAMBLE: And you also went to regional meetings,
and then to a meeting in the township, so they would get
the impression you have been all over the country. And
the people are ready.
MRS. KLOTZ: If you say bungling, some nasty person
might play it up, "Even Henry Morgenthau, Junior, Secretary
of the Treasury, a dmits it."
MR. GAMBLE: And they might, too, get the impression
that someone had said that this particular program had
some confusion and bungling in it, which they haven't.
H.M.JR: The series of speeches which I made certainly
had the campaign in mind. I never heard any speaker do that
on the war bonds. I guess we might just as well leave it
alone.
MR. GAMBLE: Well, it has been non-controversial,
but you could say thout any equivocation, Mr. Secretary,
that we are in the best shape we have ever been in.
Now, you have seen ome of it, and I have seen it in
thirty of our forty-eight States. We had 8 perfectly
amazing meeting yesterday in Pittsburgh. We had three
hundred and three bankers on the banker program present
at this meeting, and they spent the entire day. They came
from all over western Pennsylvania.
Unclassifie
201
- 3 -
H.M.JR: Stay behind afterwards a minute. Did you
get my note?
MR. GAMBIE: Yes, sir. I called early. He was out
of his office. I left word with his office to call me
this morning. We are now preparing six hundred words,
and they will be ready before the day is over. Also, we
invited Mrs. Roosevelt, through Mrs. Morgenthau, to do one
job. Mrs. Morgenthau thought the selection of the day
was wrong. We wanted her on a special Thanksgiving program.
H.M.JR: Yes, I thought it was silly to ask the
Roosevelts to do something in their home; they just won't
do it.
MR. GAMBLE: The home part of it was just for their
convenience, but it was & special Thanksgiving program
for the people of the country.
H.M.JR: I don't think she got it that way; it was
Mrs. Roosevelt giving something of the Roosevelt's home
life on Thanksgiving day.
MR. GAMBLE: That is wrong.
H.M.JR: If you want her to, take two minutes and
call up Mrs. Morgenthau, yourself, but the message was,
"Would the President and Mrs. Roosevelt stop in next
Thanksgiving day in their home and give the American
people an insight into their home living on Thanksgiving
day?"
MR. GAMBLE: Well, they had a full range of programs.
NBC on Thanksgiving day is dedicating every program on the
air to war bonds.
H.M.JR: Will you explain that, please?
MR. GAMBLE: Yes, sir, but I wanted you to know we
are on it.
H.M.JR: I thought the most effective thing I could
do was to read to hem from Shirer.
Regraded Unclassified
202
- 4 -
I was desperate yesterday. I had absolutely nothing.
What's-his-name gave me just an absolutely flat job. He
took this thing and God! I got Alan Barth off, and whoosh,
"This is wonderful, this is marvelous; I can make a great
speech of this thing, If and he went right to work. Then
Gene couldn't get anything out of the Admirals. The
Admirals didn't come through. Well, he got them, and he
said he, himself, has never seen figures like this before.
MR. GAMBLE: That is wonderful.
H.M.JR: So yesterday it was good you were out of town.
MR. GAMBLE: Well, I think what we ought to do, Mr.
Secretary, if we first decided you were going to do this
job and we had plenty of time so we wouldn't have imposed
on Barth, to have him do it.
Now, fellows like Barth don't grow on trees; they are
not easy to get, and I would almost rather see you plan your
speeches far enough in advance that we can use that fellow.
H.M.JR; Somebody wrote a speech for Jimmy Byrnes
in the Army.
Regraded Unclassified
203
November 16, 1944
10:30 a.m.
PRE-PRESS
Present: Mr. Shaeffer
Miss Chauncey
Mr. Gamble
H.M.JR: Is there anybody outside?
MR. SHAEFFER: Yes, about fifteen prepared to ask you
about the Morgenthau plan and the tax program - Has John
L. Sullivan resigned? - Are you in favor of pressing social
security? - And have you resigned? I think that is about
all.
H.M.JR: Well now, what are you going to say to these
people? I resigned yesterday, and the President said, "I
reappoint you. Should + tell them that?
MR. SHAEFFER: I don't know. It strikes me that the
President should make that announcement.
MR. GAMBLE: Another reason I wouldn't do it is, there
are half a dozen newspapers around the country that have
been picking on certain Cabinet Members. They haven't been
picking on you, but if you are the first fellow that is
publicly reappointed, they might use you as a symbol and
say, "Is this what the President is going to do, reappoint
all these people?"
H.M.JR: Simply say, "That is the President's business"?
MRS. KLOTZ: Yes.
H.M.JR: Now, when they get on this Morgenthau plan,
what I would like to say, unless you are all going to sit
on me, is this: "This so-called Morgenthau plan is part
of a series of memoranda furnished the President by State,
War, and Treasury, but some disloyal person who had access
to them took it upon himself to take a memorandum which
Regraded Unclassified
204
- 2 -
was furnished the Commander in Chief during wartime and
showed it to some newspaperman."
MR. SHAEFFER: Flynn is out there. He is very friendly
toward the plan. They all are, as a matter of fact.
H.M.JR: Now, would you say that?
MR. SHAEFFER: Yes.
H.M.JR: Of course, what I said to one of the people
who I thought did it the other day is, "Some son of a bitch
did it"--pardon me ladies--and I looked him right in the eye.
MRS. KLOTZ: I would like you to word it just that way.
H.M.JR: I would rather just say, "Some disloyal so and
so."
MR. SHAEFFER: That is very good.
MRS. KLOTZ: I don't know.
You see one minute I think so, and the next minute
I don't know, because you are saving that story; that ought
to be a part of a lot of other things you give out. I
don't know.
MR. GAMBLE: Have you thought about not saying anything
for the record about the Morgenthau plan? It has taken an
awfully g ood turn, Mr. Secretary.
H.M.JR: Just no comment?
MR. GAMBLE: I would almost rather let you see it take
its course.
H.M.JR: Yesterday the President said that since the
Kilgore Report came out, as far as he is concerned, what
the public thinks now he doesn't care. He thinks the
Kilgore Report was 80 wonderful on this thing.
Regraded Unclassified
205
- 3 -
MRS. KLOTZ: You haven't talked up to now, and because
you haven't the criticism has been so favorable to it.
MR. GAMBLE: And I think you have gotten the respect
of the people for holding your counsel.
Herbert and I talked a bout it. You know, you suggested
that we talk about your three suggestions, and we did talk
about it. We more or less thought that this was taking
such a good turn that anything we might try to do to help
it might hurt it rather than help it, and it might be
smart at the moment to do nothing about it. And I am
satisfied in my own mind that that is the best course.
H.M. JR: I don't want to show that it has gotten under
my skin.
MR. GAMBLE: I would just very smilingly say, "I
would rather not discuss it."
H.M.JR: I will say, "You people have all discussed it
so much, why should I?"
MR. GAMBLE: You couldn't answer all the things that
have been said about it in a week.
MR. SHAEFFER: That would be consistent, because you
have never discussed anything that happened between you
and the White House.
Regraded Unclassified
206
November 16, 1944
11:10 a.m.
AMERICAN STEERING COMMITTEE - BRITISH LEND-LEASE
Present: Mr. White
Mr. Acheson
Mr. Casaday
Mr. Collado
Mr. Currie
Mr. Cox
Mr. Angell
Mr. Coe
Mr. Davidson
Mr. Fedder
Mr. Havlik
Mrs. Klotz
H.M.JR: What I did - they asked me about it, and
they asked a question something like this, "How are
you getting along with the loan to Great Britain?"
I said that there was no loan, and as far as I knew
there was no statute under which we could make a loan.
They said, "Was it five billion dollars?"
I said that the British Government and the United
States Government had under discussion, as an outgrowth
of Quebec, extension of Lend-Lease after the fighting
in Europe stops, in order to continue the war in the
Pacific, but that the thing was purely in the discussion
stage. That is all I told them.
Then they asked something about this export. I said,
"Well, some newspapers wrote a wholly erroneous statement
on the export, and I think the people who wrote it knew
it was erroneous at the time."
Regraded Unclassified
207
- 2 -
MR. COX: Well, read Krock tomorrow!
H.M.JR: They said, "Do you mean Krock?"
I said, "I never mention names, or reporters, or
newspapers. And I never do. So Crider spoke up and
said, Well, nobody denied it before."
I said that I knew Mr. Krock was told he was wrong
that same morning.
He said, "Nobody has publicly denied it."
I said, "I am publicly denying it, then."
That is all. I got off that easy. I don't know
whether it was right or wrong, but I was awfully good on
everything else, but I just did have to get that off,
that he knew it was erroneous when he wrote it.
I don't know whether you agree, Oscar--
MR. COX: I don't know whether he did or not. That
is a mental operation.
H.M. JR: Anyway, these people come on the radio and
write everything they want; I ought to have the same
privilege at a press conference.
Somebody said to me this morning, "You are not fair
to me."
I said, "Since when does a person have to be fair
in washington!"
I don't think I did it any harm. I did hit that
export thing awfully hard, and did hit that there is no
loan, and that the thing is wholly within the discussion
stage, and it didn't get into who was here on the
Committee, or who took part - any of that. I will
make available what I said. I think it was all right.
Regraded Unclassified
208
- 3 -
The only person I don't think will like it is
Mr. Krock, and that is too damned bad. I.don't like
what he says, either!
Now, at your service.
MR. WHITE: What I would like to do is to review very
quickly the progress that has been made, and then come to
the specific problems for your consideration. On the
unsettled items, what is first is the question of the
export policy - the British White Paper. Let me set that
aside for a moment and I will come back to that.
The next item was the question of food, and yester-
day Keynes complained a little bitterly to me that the
FEA had abandoned its position, or was trying to put
something over. Anyway, he was quite upset about it;
and inquiring this morning from the FEA I am informed that
the food matter is settled and agreed with with the British,
and Keynes just didn't happen to know what he was talking
about on that particular thing.
MR. COX: Wait a minute, Harry.
MR. WHITE: Davidson just told me.
MR. COX: We have agreed on the "merican side, but
they still want the principle of the pre-war standard.
MR. WHITE: Then you had better go on and expound
the whole situation.
H.M.JR: May I just ask this question, because it is
a rather startling statement? I thought that that very
important memorandum of Mr. Davidson, shown me yesterday,
was from Lord Keynes.
MR. DAVIDSON: Yes, sir, it was. However, our com-
putations, scheduled as to the amounts that we put
in, were not determined as of yesterday, and have only been
determined since that time. We have agreed to put in
Regraded Unclassified
209
- 4 -
sufficient money to meet the British requests in one way
or another. We are going to take issue with the question
of principle.
It is my own feeling, and I think we all believe,
that from what was said in Keynes' note yesterday, that
they will be satisfied with that, because my own reading
of that note leads me to believe that it will be accept-
able to the British, but they haven't yet seen the docu-
ment. We are agreed on the American side.
MR. WHITE: I gathered from Keynes' remark - and
he will speak for himself, unquestionably - that he does
not like the statement of principle which FEA has announced;
but whether he will be satisfied with the fact that you
are giving him whatever they ask for financially, or not,
I don't know. But he will speak for himself.
H.M.JR: Now, wait a minute. Isn't Keynes satisfied
with this document which the British Mission sent us?
Mic. DAVIDSON: There is some question of interpreta-
tion, I gather, of that document. The reading we had
yesterday seemed to me, and to all of us, I thought,
perfectly clear that we were not agreeing in principle
at this time, that it would be subject to the decisions
made later by the proper allocating authorities, and that
we were merely agreeing to put in sufficient money.
MR. WHITE: That is true. He accepts that. That
would satisfy him very definitely. but he said, in addi-
tion to that, that the FEA has stated that under no
circumstance will you agree to finance increased food
consumption that is more than half way between the pre-
war and--
MR. DAVIDSON: That has been resolved since yesterday.
MR. COE: We have abandoned that - FEA.
MR. WHITE: That is what I say; I just heard that you
have abandoned it and you will be in agreement.
Regraded Unclassified
210
- 5 -
H.M.JR: What did they abandon?
MR. COE: A proviso on meat and certain other short
things, that we would only finance up to three-quarters
of the way back to pre-war. Now we are willing to
finance all the way back.
MR. COX: If the supplies are available.
Mil. 00E: Of course.
MR. WHITE: It was Keynes who objected to what they
have abandoned, SO it is all right now.
H.M. JR: He objected to the point which they have
subsequently abandoned.
MR. WHITE: So that is clear.
MR. CURRIE: I think I had better elaborate, that in
the itemized program of fats and oils, and the carcass
meat, there only is amount sufficient to go three-
quarters of the way back to the pre-war standards from
the present levels, but at the end of the program we will
have the contingencies, I figure, but no items opposite
of money which would be available to finance the additional,
if the supplies were available.
H.M.JR: I am just a simple apple-grower; one man
says you have abandoned it, and what you say is that it
is still there.
MR. CURRIE: I was just elaborating.
H.M.JR: What these gentlemen on the left said was
that you abandoned the statement that you were only willing
to finance up to three-quarters of the pre-war standard;
that has been abandoned, and you are willing to finance
all the way up, provided the meat is available. Is that
correct?
Regraded Unclassified
211
- 6 -
MR. CURRIE: It is not related to the meat or any
item now. we are putting in a final supplementary item,
just a dollar figure, which if the supplies were avail-
able could be used to raise the whole program slightly
to the pre-war level. But the itemized program, as you
go down the list, only specifies the three-quarters of
the way back to the pre-war.
H.M.JR: Keynes is satisfied with that?
MR. CURRIE: I don't know.
MR. WHITE: That is a new wrinkle.
M.t. CURRIE: That happened this morning at nine-thirty.
You really ought to meet continuously.
MR. WHITE: We have been!
H.M.JR: When were these side wrinkles put in?
MR. WHITE: Must have been between midnight and
eight this morning.
MR. ACHESON: They have done it in two bites instead
of one.
MR. COLLADO: The second bite is over-all - not
itemized.
MR. ACHESON: He doesn't insist that you subscribe
to that particular Paper that he handed in as long as you
get a total amount of money in.
MR. CURRIE: If he raises that point with you,
Mr. Secretary, as he may, to interpret the correct agree-
ment, as providing for a moderate easement as meaning
the complete restoration of the pre-war diet standards,
as a matter of principle, that may give you some difficulty
because I don't think we could go along.
Regraded Unclassified
212
- 7 -
H.M.JR: No, let me just say what is in my mind;
that is that we would increase the amount of food to the
British public over what they have been getting in this
year.
MR. WHITE: That is right. Nothing was said about
the pre-war standard.
MR. CURRIE: And in that document you read yesterday
he is interpreting this "moderate easement" as meaning
full restoration.
H.M.JR: Never heard it until this morning - or
have I?
MR. WHITE: No.
MR. CURRIE: You read the document.
H.M.JR: At Quebec that was never mentioned; simply
that these people, after four or five years of war, were
so tired and so exhausted they needed more to eat, which
I am wholly in sympathy with. That was all; there were
no general terms.
MR. WHITE: I thought if they had gone back to their
pre-war standard they would take a cut in their food.
They are supposed to be eating more food than they were
before the war. however, that is academic.
H.M.JR: It is academic until you sit down at the
table.
MR. WHITE: well, the people who ate well are eating
much less well; the people who ate very badly are eating
better.
H.M.JR: But I think the standard for the children
is now above the pre-war standards.
MR. COX: And for most of the people.
Regraded Unclassifie
213
- 8 -
MR. WHITE: That is good, unless there is something
important that you want to add.
MR. COX: I want to add one footnote that always
ought to be kept in mind, that is, the Russian food program
for Russian soldiers is being cut fifty percent presently
by war Foods. It is going to be tough to get food for
the liberated areas, SO you just have a practical problem,
probably, for all of '45 in terms of U.S. production.
H.M.JR: Talking just as a member of Mr. Roosevelt's
Cabinet, I think before it should get out in any kind of
a way, I do think he should have a chance to know about it.
MR. CURRIE: Mr. Secretary, on that same point, and
the one we were discussing yesterday of the current allo-
cation being made, recommended by the War Food Administra-
tion, which cuts the allocation of meat to the British
one-seventh of what they are getting, I believe it is,
we are having a paper prepared for you today which will
come over today stating these facts which you may or may
not want to take up with the Committee.
H.M.JR: You mean you are giving them one-seventh?
MR. COX: Of what they are asking for, and the
Russians one-half.
MR. COE: I think what Oscar was saying yesterday,
and where there was some dispute, it does add up to the
fact relatively fast that War Food has to be cracked on
this because they are taking impossible positions.
H.M.JR: Mr. Roosevelt hasn't asked me to do anything
about the Russian thing, but if in any way it could be
brought to my attention SO I could do something about it,
I would like to, because I think it is one of the stupidest
proposals, from a military angle, I have ever heard of.
It is no secret that we had hopes that they will come
in and help us lick Japan. Well, there isn't much
Regraded Unclassified
214
- 9 -
incentive for them to come in if as a reward we are going
to cut half their meat.
MR. COX: No, but they are cutting the protocol re-
quirements by fifty percent, so what it means, in effect,
is that as far as we know that you miss meeting the proto-
col by fifty percent.
MR. ACHESON: When does this get into the Protocol
Committee, because we had a meeting of the Protocol Com-
mittee?
MR. COX: It should have been in before. Fortunately,
our people got this thing thrown back into subcommittee
for a week.
MR. ACHESON: This has not come to the Protocol Com-
mittee.
MR. COX: No, and I think that Committee ought to
get it.
H.M.JR: White, are we on the Protocol Committee?
MR. WHITE: No.
MR. ACHESON: Harry Hopkins is the Chairman.
MR. CURRIE: but you come into it very much in this
program, Mr. Secretary.
MR COX: They are related questions.
H.M.JR: Now it is one-seventh?
MR. COE: Proposed allocation for the first quarter.
MR. COX: For the whole year.
MR. ACHESON: Just meat alone? What relation does
that bear to a similar quota?
215
- 10 -
MR. DAVIDSON: It is about a fourth.
MR. WHITE: How much does that mean you will have
to cut their meat consumption?
MR. COX: As against '44, by three hundred and some
odd thousand tons.
MR. WHITE: What is that in terms of percent?
H.M.JR: Could I get a memorandum from you of how
much meat they have been getting in England and hussia -
not in percentage, but in pounds?
MR. CURRIE: I will get that for you this afternoon.
H.M.JR: Now, what else.
MR. WHITE: The next item is oil which they raised
this morning. If you will describe the oil agreement
briefly, Al--
MR. DAVIDSON: The chief problems with respect to
the oil program related first of all to stocks, and
second of all to British exports of petroleum from the
United Kingdom.
With respect to the stock problem, we have reached
an agreement that we will be free to control the supplies
that we provide during 1945 in order to bring stock levels
down, but that, of course, we will try to reach mutual
agreement as to what the proper level 01 stocks is. That
has been agreed to by the British oil people.
The second problem relating to British exports of
petroleum from the United Kingdom is involved with the
question of proceeds; who gets the proceeds and how much.
In the past we have been getting the proceeds of all pe-
troleum shipped from the United Kingdom to non-sterling
areas, and with respect to the shipments to sterling
areas, they have only been permitted to ship with our
consent, and we have, of course, only consented where it
supplied a vital war need.
Regraded Unclassified
216
- 11 -
It is proposed that that agreement continue. The
only modification of the principle is in connection
with the level that stocks may reach; if they decline
to a point where we believe they would be more reason-
able than they are at the present time, we have agreed
that we will not demand the full proceeds, but only get
the proportion which the United States supplied in rela-
tion to the total supply available in Pritain. And that
has also been agreed to by the British.
MR. WHITE: Then the oil program is completely agreed?
MR. DAVIDSON: That is correct.
MR. WHITE: Now the shipping, Lauch--
MR. CURRIE: We had complete agreement with the British
on the shipping program except for certain coastal ships
which we had undertaken to supply them. And we had made
a proposal that those coastal ships which would be used
in the Japanese war we would lend-lease them and those
that would be used in the European war, coming off the
ways in the spring, to take on the 3-C agreement.
They declined to do that; we then went to the War
Department to see whether they would take these ships being
used in the European war. I got a call from my people
saying that not only would the War Department be delighted
to take those, but they wanted all of them. They went
into a meeting this morning with the British shipping
people and that vill be communicated to Keynes right away;
and I don't know whether or not he will agree to that, but
we can't help ourselves very much if the "ar Department
wants them. That may come up this afternoon for further
discussion.
Apart from that we are all fixed on the ships.
MR. WHITE: That leaves two items.
MR. CURRIE: No, the raw material program, the
miscellaneous industrial commodities - that has been agreed
ucon. that should be ready today.
Regraded Unclassified
217
- 12 -
MR. WHITE: Then that leaves the export policy and
Chapter 3?
MR. CURRIE: No, it leaves the Dominions and India,
and the reciprocal aid question.
MR. WHITE: That is in the Dominions, isn't it?
Mr. CURRIE: The last check is that we have pretty
complete agreement with the Dominions and India. One
remaining item they were working on yesterday is steel.
Ma. WHITE: And the reciprocal aid program is raised
in a letter from Patterson to you, of yesterday, which we
want to bring up for discussion later because it isn't
satisfactory.
So then I will very briefly describe the export
policy. In the main, it might be said on the major
points there is agreement on it in the American group,
and we think there will be agreement with the British
that the position they are now taking will be satisfac-
tory to them, though there may be a couple of minor
points which will continue to give some trouble; and
there still remains to be worked out the final formula-
tion of the document.
But the major question which Oscar raises, and which
we need to focus on, is this one. When we started the dis-
cussion of a change in export policy we started with the
understanding that it applied to Phase II, the end of
the Buropean war. They presented a definite date of
January 1. We took that date hypothetically; we said,
"All right, let's assume it is going to stop January 1."
As the discussion proceeded they froze that date saying
that that was the date that they had to have, whether
the war ended or not, that they had to have a specific
date according to which their exporters could plan, and
they felt that January 1 would be satisfactory, though
they had at first wanted December 1.
Regraded Unclassified
218
- 13 -
now, the point that Oscar raises is this one, that
if the change in policy were publicized here as a change
which was initiated in the end of the European war, it
would be a simple matter at home, it would be recognized
as a reasonable alteration in the policy.
If, on the other hand, the date at which the British
are to announce a chance in policy would be as of January
1, and the war is not ended by January 1, that there
would be political objections in this country to a relaxa-
tion - an apparent relaxation, though, in effect, it
wouldn't necessarily mean that - of the export policy at
a time when both they and ourselves should be devoting
full efforts to the prosecution of the war.
Now, the British will be pretty adamant on the spe-
cific date. I say they will be adamant - as a matter of
fact, I personally don't see they have any choice. If
you object, the worst they can do is to refuse to accept
Lend-Lease, but the question as to whether the political
objections to giving what they want are too great to make
a fuss about it, is the issue.
H.M.JR: I would like to make a statement here for
the benefit of all of you. Mr. Stettinius called me up
this morning. He had quite a long talk and he was
explaining why he couldn't be here tomorrow, and made
his apologies. He raised one question and made one
suggestion. The question was, do we have to push the
barrel over the waterfalls before they leave - conclude
the thing definitely? The other thing was, he thought
that before we got too much of a definite agreement,
that somebody - he mentioned Oscar Cox - ought to go
up and see the members of both parties of the Committee
on Appropriations and tell them a little something about
this thing and get their reaction before we go too far.
I thought that was an excellent suggestion, that be-
fore we 60 too far, that we do sort of tell whoever the
legislation is going to come up before.
Regraded Unclassified
219
- 14 -
MR. COX: House Foreign Affairs and Jenate Foreign
Relations.
MR. WHITE: Currie and Cox have taken that position.
I think State Department ought to be with them.
MR. COX: We all ought to be together.
H.M.JR: But I think that before we commit ourselves
too far, that that is a good suggestion. And then I take
it that everybody present here can keep his mouth shut, or
else he wouldn't be here. The Committee has to wait on
Admiral Leahy to explain what we have done SO he in turn
can explain it to the President.
Mr. WHITE: I haven't talked to them about it yet.
H.M.JR: I gave the President that report yesterday
and the President always, the first thing, wants to know
what about ships - what kind of ships. Well, I couldn't
tell him. 30 he asked me some other questions and said
he would like to know more about it. So I asked him
if it would be agreeable to him il I explained it to
Admiral Leahy. He said wholly. I stopped in to see
Admiral Leahy, and his only interest was, are we making
any commitments that will go beyond the duration of the
Pacific war? I assured him we wouldn't, which was all
right as far as he was concerned. Dut I thought that some-
body from State, FEA, and Treasury, plus a general and an
admiral, aight to call pretty promptly - if possible today -
on Admiral Leahy. But he said he wanted a memorandum which
he could speak to.
I gather this thing hasn't seeped up to the Chiefs
of Staff; they knew nothing about it. 1 don't look for
any trouble, but the thing ought to be done. So that is
another reason why we can't commit ourselves too much
until first we sell Admiral Leahy. I don't look for
any trouble. His only worry was, are we going to give
them anything which they want after both wars are over.
Evidently he had heard - and I had heard - of some battle-
ship coming over here that is going to cost a lot of money.
Regraded Unclassified
220
- 15 -
I said, "If it is, it hasn't come to us."
Forrestal mentioned weeks ago that they had a big
program. I asked him for it and he said it didn't come.
I didn't think it was up to me to follow up. He said he
wouldn't do anything without sending it over here.
But I am just for a minute mentioning my conversation
with the President and Admiral Leahy, and then the conver-
sation this morning with Mr. Stettinius. So I think we
are going to have to, SO to speak, drag our feet a little
bit as to when to get down to a joint paper, or whatever
it was. They didn't say "joint"; they want to submit their
report to Churchill to us for approval. Then I think the
thing on the Hill should be done.
MR. WHITE: I think that Keynes can come back from
Canada if you have some time between. what is the final
date as far as you are concerned?
H. JR: I am going down to spend Thanksgiving with
my son and his wife. I am going to take a week after that
and I am not coming back to see Keynes or anybody else.
MR. WHITE: After that?
H.M.JR: I will be back the week after Thanksgiving.
MR. WHITE: The boys in FEA have been complaining that
they are pushing them too hard for the magnitude of the
problem. I don't see why it is an impossible request to
ask Keynes to come back. by that timemany of these things
will be ironed out.
H.M.JR: Been giving them the Bretton Woods rush?
Mr. COX: Yes, that is our old Bretton Woods fullback.
MR. WHITE: He is turning the tables, this time!
H.M.JR: Well, I am just thinking out loud, which I
think I can in this group. I am keeping you people posted
Regraded Unclassified
221
- 16 -
as to what happened yesterday noon and afternoon, and this
morning. But I think the Congressional thing is very im-
portant.
MR. WHITE: Then do we still have instructions to
push ahead and try to wind up by Saturday?
H.M.JR: Yes, I would like to carry out the thing.
At least we have reached a point where we know what we
can or cannot do, and I think we might just as well go
full steam ahead. Lauch looks a little pale, but Oscar
doesn't.
MR. COX: I think you have to move ahead, because
you can't, for example, go up to Congress for their advice
unless you know pretty clearly what you want to do, be-
cause the minute you open it up--
MR. COE: Mr. Secretary, Admiral McCormick of the
Navy rang me the other day and asked me when this stuff
would descend from being "Top Secret.' He said that
they had this schedule for 1945 now, and that is the one
that they thought there was no question but what they would
go along on, and it was an awful nuisance having all the
papers held in, and what was the next step, according to
the protocol?
I said I thought this wasn't agreed until it was
submitted by the Committee to the President and the Prime
Minister; however, they would get as far as they could on
a planning basis and use their own judgment as to whether
on concrete steps they had to make them according to this
document or not.
H.M.JR: You had better tell him to go easy, because
he happens to be in the one field the President is interested
in. He better hold his horses until Admiral Leahy and
the President have a look at it. Just as soon as he saw
ships, that is his meat, and he wants to know what it is.
Regraded Unclassified
222
- 17 -
But I don't want to be misunderstood. I think we
ought not to slow up any, and try to get just as far as
we can. It is only another day.
MR. CURRIE: I think we can get you these major
programs, but the Chapter 3 items and the commercial
policy thing are both very difficult things which I
hate to rush through at the very last minute, because I
think it needs a good deal of thought and consideration.
H.M.JR: They haven't come to me yet, Lauch.
MR. WHITE: They will this morning, Mr. Secretary.
H.M.JR: I an going to stop at twelve 'clock,
gentlemen, but I am available this afternoon.
MR. COX: This point Frank raised is a very important
one in the light of what the Secretary said, because
this is no longer a Stage II program, you know, even on
the munitions. It has become a program for the year '45.
Now, the productions may, in part, be effective - they
have to act fairly quickly on the Navy stuff.
H.M.JR: Tell that to Leahy.
MR. WHITE: The character of the negotiations has
changed. It is a '45 program instead of the first year
of Phase II.
H.M.JR: Tell that to the Admiral.
MR. WHITE: All right. Did you have any reaction,
then, as to whether it is politically necessary to con-
vert this export policy into a VE-Day or whether it can
be January 1? Do you want to state your case?
MR. COX: I would only like to add about three
sentences.
H.M.JR: lie asked me a question.
Regraded Unclassified
223
- 18 -
MR. WHITE: Oscar can restate it.
MR. 00X: I only want to add about three sentences.
This thing started out as a Stage II problem, and this
is an emotional issue which goes to straight politics.
But emotionally and psychologically, nobody knows when
the war is going to end on the European phase. The
British have their own local political problems to get
going and be able to start the planning on the exports
as much as possible.
We have, I think, oversold the reconversion thing,
and at the same time are reversing the field in trying to
create the impression now, which I think is sound, that
the war isn't over by a long sight in Europe, and you
certainly have to get your production moving to the full
hilt.
Now, obviously, they have got to play up the January
l day, and the way, to my mind, it may hit the public,
is - "What is all this reat noise and to-do about the
Fritish exporting from January 1 on, when our fellows
are getting killed and we can't get supplies for civilian
purposes as well 88 the got before" - because you may, in
this whole picture, get more severe rations--
H.M.JR: Oscar, I can answer you - if you don't mind
my interrupting you - I think certain things that have
happened, and I think the President is going to feel that
way from things that he said yesterday - I think the-
thing will be VE-Day and not January 1.
MR. COX: That is what I would argue for.
H.M.JR: If you are asking me how I feel, that is
it. And if Mr. Churchill makes a few more speeches like
ne did in Paris, it may not even be VE-Day. So I think
you will find he will want it VE-Day and not January 1.
That has nothing to do with - like the Navy and the Army--
MR. COX: All I am trying to present, Mr. Secretary,
is that that is a matter of political judgment.
Regraded Unclassified
224
- 19 -
H.M. JR: I would say VE-Day.
MR. WHITE: Dean, do you want to present your view
on that?
MR. ACHESON: Yes, I certainly do. It is very hard
for me to understand whether Oscar is talking about the
statement of the thing - how you state it - or whether
he is talking about the technical decision which is made,
because we get on this thing about emotional attitudes
towards things. The thing I am talking about is not how
you state it; we can state it in any way that it is de-
sirable to state it. The point I am talking about is what
we decide.
Now, the British wanted to be released from certain
of the white Paper obligations as of December 1. What
we finally worked out was that all the materials which
went in, of any sort of exports the British were going
to have, would be cut off Lend-Lease on January 1, bang!
No more raw materials which go into their exports, on
January 1.
Now, as of that date, they ought to be relieved from
inhibition of export. that doesn't mean they are going
to export; they have said over and over again that they
are not going to export until their manpower is released
from the war.
But the decision we ought to make is perfectly clear,
and we will be in another three-weeks debate here if we
say to the British, "Beginning January 1 you get no more
materials of any kind, such as steel, iron, all these ma-
terials which go into your exports; but you cannot be
released from the White Paper until some indefinite date
in the future.
Now, that is going to make it impossible for them to
present this to the House of Commons.
H.M.JR: I think Oscar can answer you.
Regraded Unclassified
225
- 20 -
MR. COX: My point is that whatever the decision is,
I think, obviously, we can all make the best case, or
at least try to make the best case that is available, but
on this specific point it seems to me the two ought to go
together; that is, that the stuff ought not to be taken
off Lend-Lease; if you pick the VE-Day, that they both
ou ht to go off at the same time, unless you want to have
a gap period there.
But my only point is a matter of politics, and it is
just my guess that no matter how you present it, if you
pick the January 1 date, even if you do the best job in
the terms of context of American public opinion, if the
war should be going on when the announcement is made as
of January 1, the public will have a great deal of diffi-
culty understanding all this hoop-la about exports when
the war in Europe is not over. Just the same as if we
announced a reconversion program on January 1 and had a
lot of conditions in it, the public would have greater
difficulty than they would if we said we had a reconver-
sion program that begins after VE-Day, which is a certain
indeterminate fact in that you can't predict, but it means
when the German resistance is over.
MR. CURRIE: It is my distinct understanding that the
British are prepared to cut off all these industrial raw
materials January 1, regardless of the course of the war.
That is the impression I have at the moment.
-MR. WHITE: That is right.
H.M.JR: It isn't quite clear in my mind. I mean, if
we stopped furnishing them with these raw materials, are
they going to buy them?
MR. ACHESON: Yes, as of January 1.
H.M.JR: Does that also mean - does it necessarily relate
to the export?
MR. COX: Yes.
Regraded Unclassified
226
- 21 -
MR. ACHESON: But if they do buy them, then they say
they ought to be free to export. Now they say, "We are
not going to export because we will have to be working
on the war, but as soon as the war is over, we want to
export.' They want to go out and get orders and make
plans, and so forth.
H.M.JR: Then if we say no to them then we are in the
impossible position of saying that we don't want to be
paid in cash, we want to lend-lease after January 1.
MR. ACHESON: That is right.
H.M.JR: That doesn't sound very good.
MR. COX: You have to tie the two things together;
one is if they get them on Lend-Lease then you have cer-
tain additional restrictions as to the commercial exports
of those things, SO that they will get a much smaller
amount where they can't export, under existing conditions,
the Lend-Lease articles themselves or substantially
similar articles. If they pay cash, in the reality of
the situation, they will, in effect, be limited by short
supply and the allocation machinery. So that is a practi-
cal matter; if the war in Europe is still heavy, they
won't be able to get very much and export very much.
H.M.JR: Oscar, I think that you and Dean ought to
get together and argue this a little bit more, privately.
DO you mind? See if you can't get together.
MR. COX: +hat is all right.
H.M.JR: I think you want to accomplish the same thing,
but--
MR. WHITE: Then we will leave the export policy and
go to Chapter 3, which is the major remaining item - and
reciprocal aid of the Army is the second.
H.M.JR: Why do we always get down to the last ten
minutes on this? Yesterday it was six minutes.
Regraded Unclassified
227
- 22 -
MR. COX: Harry, will you talk long enough for me to
eat an apple?
H.M.JR: He can talk long enough, but can you keep
quiet?
MR. WHITE: They have tentatively agreed, they
haven't thoroughly cleared, amounts around one hundred and
twenty-five million dollars - twenty-five million a month,
more or less; there is another one hundred and fifty
million dollars of I was going to say odds and ends -
for various items which they are in the process of con-
sidering and for which they will need a good deal of time
to go to the bottom of some of them. It would be most un-
likely that they will get anything like the maximum.
That leaves three major items, on which no agreement has
been reached, and which I think further discussion at a
lower level will not be very productive.
H.M.JR: May I interrupt you, Harry? The ones that
have to do - which you tell me that everybody agrees -
that RFC owes them - why don't we in some way or other
bring the RFC into the thing and tell them that we have
examined this thing, it is a contract - which it is - they
owe them the money, and this is as good a time as any to
pay it?
MR. WHITE: we propose to do that.
H.M.JR: I wouldn't wait too long because Mr. Jones
doesn't move too fast.
MR. WHITE: All right. We can draft the letter on
both items tomorrow.
MR. DAVIDSON: We have letters ready.
MR. WHITE: Who is going to sign them?
MR. DAVIDSON: If you would like to sign it, that is
fine.
Regraded Unclassified
228
- 23 -
MR. CURRIE: We have already had a very formal
exchange of letters with Jones on these two points.
MR. COE: I think if we send our letter, and you
draft one for the Secretary--
MR. WHITE: You show me a draft of the one you have
written.
H.M.JR: It could be signed by the Committee - State,
Treasury, and FEA.
MR. WHITE: Now, the three items which, as I say, I
don't think any more discussion at the lower level is
going to be fruitful - and to be delicate, we are dumping
it in your lap at this stage of the game - one is the
tobacco; two is the off-shore sugar - the tobacco has
been increased to one hundred and ten million by virtue
of cutting down certain other items--
H.M.JR: I want somebody to tell me, is the cigarette
shortage due to labor, or due to the amount of tobacco in
storage? I think that is important and we ought to have
a memorandum on that. My impression is there is plenty
of tobacco, but we don't have the people to make the
cigarettes. I am also under the impression that the
tobacco is shipped in leaf form to England.
Mit. COX: No, most--
H.M.JR: Sir Robert Sinclair said, didn't he, Frank,
what they wanted is leaf tobacco?
MR. WHITE: For civilian uses.
MR. COX: That is the supplementary thing, but the
tobacco which is being supplied now is in the form of
tobacco and cigarettes for the soldiers. Now we are
going to have the civilian--
H.M.JR: I think you ought to have a little one-page
memo saying what the leaf tobacco situation is in this
country.
Regraded Unclassified
229
- 24 -
MR. COE: There would still be objections, though,
Mr. Secretary. I think it is our position that almost
irrespective of the facts, if we say we are lend-leasing
tobacco to civilians, misrepresentations will get around
which will be very hard to check.
H.M.JR: Frank, when these gentlemen go up on the
Hill, that is one of the things they can ask their advice
about - how would the Hill feel about it.
MR. COE: All right.
MR. ANGELL: There is no manpower for curing tobacco.
It isn't only processing.
H.M.JR: And how does the Hill feel about off-shore
sugar.
MR. WHITE: Then on those two items you would like
to get the reaction of people on the Hill?
H.M.JR: Yes. I can be convinced--
MR. WHITE: They amount to about two hundred million
dollars - both of them.
H.M.JR: But I con't feel about those two items the
way I feelabout the airplane contracts.
MR. DAVIDSON: I don't think there is much question
that if you put those items up to the Committee they are
going to turn you down. It seems to me that - I can
not envisage the fact that they would tell you to go ahead
on those two items if you bring those up to them.
MR. CURRIE: That is pretty significant in itself,
isn't it?
MR. WHITE: Unless you made a very strong case of
their financial position.
Regraded Unclassified
230
- 25 -
H.M.JR: Mr. Davidson, the Hill is funny; if there is
a large supply of tobacco leaf on hand in North Carolina
and Virginia, you will get support - if there isn't, you
don't.
But aside from that, some one item like this, if
they feel uncooperative about it, the whole program
might fall through.
MR. DAVIDSON: In the first place they, like ourselves,
will not particularly want to step up and take responsi-
bility for what is being done.
H.M.JR: Yes, but if this is going to be dumped in my
lap for me to advise the President, I definitely want to
know how the Hill will feel on those two items.
MR. COX: I think that is right, Mr. Secretary, but
I think it is dependent on the point you made about
tobacco. If you know the facts and know what position
you want to take with the Congress - I mean, you just
can't go up there--
MR. W.ITE: We asked about those facts at least two
or three weeks ago. I guess some of your men are still
getting them.
H.M.JR: I could call up Marvin Jones and get them
in a half hour, I hope!
MR. 00X: You have to know in advance if you go
on the Hill, and be pretty firm about what you want to do,
because they won't take the responsibility if you leave
it up to them cold.
H.M. JR: Now, does anybody in this room want to
stand up and fight for reopening the airplane contract?
MR. WHITE: All of them - all except Maxwell.
Regraded Unclassified
231
- 26 -
US. CURRIE: Except on this condition, Mr. Secretary,
you wanted to pick on one item - of helping the British
balance. We feel that item would be less vulnerable than
the others. For us to put sugar back at this time we
can explain it on no other ground than doing that to pre-
serve the British balance.
H.M. JR: I don't think you can get General Arnold to
budge one inch on that thing. You see, you people, I
don't think, lived through that thing the way I did. Dean
did - I think he probably could convince the Army.
MR. ACHESON: I was around in '42; I think that is
when we were talking about it. We did one item, you
remember, of some eighty million, which is just like this.
Could we look at the thing from the point of view of
what we are trying to do here? The British Paper, on the
basis of the requests which they have made, cut down as
they are, claims that their position will deteriorate - the
foreign exchange position will deteriorate - beginning
at the last quarter of '44 to the end of '45 by six hun-
dred million dollars.
Now there is scepticism among those who know about
this, whether that will really happen. Harry, I think,
guesses it will be nearer one hundred and fifty or two
hundred million, sloughing off. But it is somewhere in
between those two figures.
Now, the most that we are able to get out of
Chapter 3 is a little over a hundred million dollars.
H.M.JR: In what way?
MR. ACHESON: Of cash payments, or removing cash
payments. So we can squeeze out about a hundred million.
Now, if Harry is right there will be fifty million to a
hundred million deterioration, which ne wouldn't have
covered; if the British are right there will be five
hundred million.
Regraded Unclassified
232
- 27 -
Now, there are only tvo groups of items that really
have any promise in them at all - - or come nearer doing
something; one is the airplanes, which is two hundred
and fifty million, and the other is this tobacco and off-
shore sugar coming to about one hundred and seventy
million.
If you allowed either one of those items you would
take care of whatever deterioration there was going to
be, and you would accomplish what you said when we began
these meetings, that we wanted to bring them to the end
of '45 in as good shape as possible without having them
suffer. Now, that is the point.
We either don't do it, or we have to pick one or
the other of these two items.
H.M.JR: Well, let me ask you - I am not going to
answer you now - I don't know why it seems we are always
dodging the thing and leaving it to the last part of the
meeting. I would like to start the next meeting, whenever
it is, with this discussion. Now, when can we meet again?
Mr. WHITE: Two-thirty or three?
H.M.JR: Three o'clock would be perfect for me.
MR. WHITE: Why don't we postpone meeting the British
until tomorrow morning? We ought to have a meeting with
you (Currie) here. By then you will have your reports
on the food and oil in written form that could be presented
tomorrow.
MR. CURRIE: Yes. There may be kick-backs from Keynes
this afternoon, both on the food and on the shipping.
MR. WHITE: Don't you think, Dean, we could more
profitably spend that time at this meeting than with
the British?
MR. ACHESON: Yes, if we could get a decision on
these points; then we would not argue with the British
any more, just say, "This is it."
Regraded Unclassified
233
- 28 -
MR. WHITE: Then we need more time. If you want to
discuss the planes this afternoon, then we ought to have
the Army.
H.M.JR: I have plenty of time starting at three
o'clock.
MR. WHITE: Then suppose we call off the British
meeting.
H.M.JR: Will you call Admiral Leahy?
MR. WHITE: We will try to get him at two o'clock
or two-thirty.
MR. ACHESON: Do you want to talk with him before
you have these items finished up?
MR. WHITE: Maybe we could see him tomorrow morning
or at five o'clock - preferably tomorrow morning, I think,
because the more we can tell him--
H.M.JR: I know he goes in to see the President in
the morning.
MR. WHITE: Suppose you get in touch with him and
find out, but we will need a little time.
H.M.JR: I will do it now. I will ask him how early
in the morning you can see him.
(The Secretary places a call for Admiral Leahy over
White House phone)
H.M.JR: (Over telephone) Will you let Mrs. Klotz
in my office know? I thank you.
She suggests nine-thirty.
MR. COX: He is Secretary of State today, in case you
don't know it:
Regraded Unclassified
234
- 29 -
MR. ACHESON: So I won't be able to go to too many
meetings.
H.M.JR: Well, do you want to come back at three?
MR. ACHESON: Oh, yes, I will come back at three.
MR. WHITE: Is the date set or will you verify it?
H.M.JR: She will verify it.
MR. WHITE: Don't you think we had better call
Patterson and Forrestal and find out whom they want to go?
H.M.JR: That is right.
Regraded Unclassified
235
CCLL
USC/306
TOP SECRET
COPY NO. 8
U.S. Committee on Mutual Lend-Lease Aid
Between the U.S. and the U.K.
Minutes of Meeting held in Secretary Morgenthau's
Office, U.S. Treasury Building, on November 16,1944,
at 11:10 a.m.
Present
Secretary Morgenthau, Chairman
Mr. White
Mr. Casaday
Mrs. Klotz
Mr. Acheson
Mr. Collado
Mr. Fetter
Mr. Cox
Mr. Angell
Mr. Davidson
Mr. Havlik
Mr. Coe, Secretary
Press Reports on Phase II Discussions
SECRETARY MORGENTHAU stated that at a press conference he had
made it clear that the British Government and the United States
Government now had under discussion lend-lease arrangements after
the end of the war in Europe, that a loan was not being contemplated,
and that newspaper reports to the effect that lend-lease goods would
be used for export from Great Britain were in error,
United Kingdom Food Requirements
SECRETARY MORGENTHAU referred to Lord Keynes' memorandum on
the civilian standard of food consumption in the United Kingdom
(CSLL(44)2, 14th November 1944), and asked whether agreement with
the British had been reached. MR. CURRIE and MR. DAVIDSON stated
that agreement had been reached in the FEA to offer to finance the
whole of the British request, without accepting the principle on
which the requirements were calculated. Owing to probable future
shortages in certain items, chiefly carcass meat and fats and oils,
the itemized program for such items would list funds sufficient to
lift the British consumption three-quarters of the way back to
Regraded Unclassified
- 2 -
236
British pre-war levels (or U.S. 1944 levels, whichever was lower)
from the present consumption levels. In addition, the remainder
of the British request would be covered by a contingency fund to
be used if supplies are available. Actual food supplies available
for lend-leasing would depend upon allocations by the War Food
Administration.
SECRETARY MORGENTHAU said that he was in full sympathy with
the desire of the British to achieve easement with respect to
food consumption. MR. CURRIE thought that the FEA proposal would
satisfy the British representatives but that FEA specifically de-
sired to avoid commitment to the principle of full recovery in
civilian consumption standards,
MR. COX briefly reviewed the current allocation difficulties
with respect to meat, and stated that FEA would supply additional
information on the effect of such allocations upon British and
Russian food requirements,
Petroleum Requirements
MR. DAVIDSON stated that complete agreement had been reached
with the British at the technical level on petroleum. With respect
to stocks in the U.K., the U.S. would control 1945 supplies so as
to bring stocks down to levels to be agreed upon, Further, it has
been agreed to continue the arrangement by which full proceeds from
non-sterling exports were paid to the U.S., with the condition that,
if U.K. stocks fall to certain lower levels, the U.S. would receive
that proportion represented by the U.S. supply to the U.K. in re-
lation to the total U.K. supply.
U.K. Shipping Program
MR. CURRIE reported that agreement had been reached with the
British on the shipping program, except for certain coastal
vessels. While the British accepted the FEA proposal to lend-
lease those coastal ships to be used directly in the Japanese War,
they had rejected the offer of those to be used in the European
War (and coming off the ways in the Spring of 1945) on an agree-
ment under Section 3(c) of the Lend-Lease Act. In the meantime,
the War Department, however, has requested all the vessels; and
this will remove them from the British lend-lease program.
Other Programs
MR. CURRIE reported progress on the remaining program as
follows:
(a) Raw materials and miscellaneous industrial commodities -
complete agreement reached with the British
(b) Dominions and India - agreement practically complete on
lend-lease items. The problem of reciprocal aid to the
U.S. Forces remains to be settled.
3 -
237
Export Policy
MR. WHITE reviewed the discussion at the preceding meeting of
the U.S. Subcommittee (at 10:00 a.m., November 16, 1944), indicating
that while a substantial agreement had been reached by the Sub-
committee, the major question of the effective date of freedom of
British exports remained to be resolved. There followed a dis-
cussion of the effective date of the proposed export policy. In
view of the lack of agreement, SECRETARY MORGENTHAU requested the
Subcommittee to consider the matter further in an attempt to arrive
at a complete and early agreement,
Chapter 3 Items
After some discussion on tobacco and sugar, SECRETARY MORGENTHAU
requested additional information on the supply situation and indi-
cated that Congressional reaction to the lend-leasing of these items
should be investigated. It was agreed that a further meeting with
the Army representatives should be held at 3:00 p.m. that afternoon
to discuss (a) the British claims with respect to airplanes and
engines, and (b) reciprocal aid from the Dominions.
SECRETARY MORGENTHAU stated that Mr. Stettinius had made a
suggestion, which he endorsed, that the appropriate Congressional
Committees be informed of the substance of the British program and
of the proposed export policy before a final commitment is made.
Further, he said that, at the President's suggestion, a small group
would wait on Admiral Leahy as soon as possible to review the pro-
posed program with him. He further requested Mr. Coe to advise the
Navy that the program had not yet been approved by the President
and that its details should not be made known at operating levels,
Regraded Unclassified
238
November 16, 1944
12:15 p.m.
HMJr:
Hello.
Operator:
Mr. Baruch.
HMJr:
Hello.
B. M.
Baruch:
Hello, Henry.
HMJr:
Talking.
B:
This is Bernie.
HMJr:
How are you?
B:
All right. I tried to get a hold of you last
Friday -- or Saturday before election
HMJr:
Yes.
B:
just to tell you how I thought things were
going to go and not to be discouraged by anything
that Dewey said because it wasn't affecting any-
thing.
HMJr:
Good.
B:
I knew that you were unhappy about it and that's
what I tried to get a hold of you for.
HMJr:
They told me you cancelled the call when I tried
to put it back.
B:
Well, I'll tell you I just said, well, I wasn't
going to bother him, but all I wanted to say to
you was, "Don't worry; don't be annoyed about
anything because it's going to be worked out all
right. And I knew how -- that you were sensitive
to
HMJr:
Well, who wouldn't be?
B:
(Laughs) Well, when you win, it doesn't make
any difference.
HMJr:
Well
B:
Well, I want to -- I want to talk to you about
this thing
-- I -- I was -- I saw the President
the other day and did you see Cherwell after he
came to see me?
Regraded Unclassified
239
- 2 -
HMJr:
oh, yes.
B:
How did he seem to react to what I told him?
HMJr:
Good.
B:
Now, I want to talk to you a little bit more
about that. Has the President talked to you
about it at all?
HMJr:
Well ....
B:
I went in to see him about luncheon and also
about a tax program.
HMJr:
Yes.
B:
I don't know whether he spoke to you. I supposed,
naturally, he would and I thought I'd wait until
he said something to you before I spilled it all
to you and go in more details.
HMJr:
Well, I -- we covered the whole waterfront yes-
terday. I don't know -- of course, we did talk
about the Kilgore report and that sort of thing.
B:
Oh, well, that -- that -- I think that -- I think
pretty soon that you and I had better make medicine
over that -- over that German control.
HMJr:
Well, when would you like to do it?
B:
Well, if I stay here 'till tomorrow, I can -- I'll
keep open tomorrow morning, unless you -- you're
probably tied up.
HMJr:
Well, I could
B:
You look over your schedule and see how you're
fixed for tomorrow, Henry.
HMJr:
Well, I could do it at 9:30.
B:
Oh, listen, what are you trying to do -- get me
up in the morning? (Laughs)
HMJr:
Well, I've got to go on the Hill at 11:00.
B:
Yeah.
Regraded Unclassifie
240
- 3 -
HMJr:
What time
....
B:
Well, let's see
....
HMJr:
Do you want to make it -- I don't know -- how
long -- I've got to leave here at 10:45 to go
on the Hill. Do you want to come over around
10:00?
B:
Well, I could -- I can do that. If I get up
in the morning, I'll be there.
HMJr:
Well, you -- you name the time now, what would
be comfortable for you?
B:
Well, I'll try to get there at about ten minutes
of ten.
HMJr:
At ten minutes of ten?
B:
Yeah, about that time.
HMJr:
Tomorrow morning?
B:
Yeah, is that all right?
HMJr:
What are you going to do at a quarter of ten?
B:
(Laughs) Well, I just want to be -- I want to
be certain I'll be up.
HMJr:
(Laughs) I'll be waiting for you.
B:
All right.
HMJr:
Thank you.
Regraded Unclassified
241
November 16, 1944
2:12 p.m.
HMJr:
Hello.
Operator:
Colonel McCarthy.
HMJr:
Hello.
Colonel
McCarthy:
Yes, Mr. Secretary.
HMJr:
Good afternoon.
M:
How are you, sir?
HMJr:
Fine. Colonel, I would like to now send over
my proposed speech for next Monday.
M:
Yes, sir.
HMJr:
And if there's anything like -- in it you don't
like, if you'll call me
M:
Fine, Mr. Secretary.
HMJr:
personally
M:
Yes, sir.
HMJr:
I'd appreciate it.
M:
Well, thank you very much. I'm looking forward
to seeing it and I'll have our security people
take a look at it, too, if I may.
HMJr:
Yes. Now, to save me a little wear and tear, once
it's cleared over there could you tell O.W.I. it's
all right?
M:
I certainly shall.
HMJr:
So that I won't have to bother going through that
rigmarole.
M:
Well, I'll call Mr. Davis' office
HMJr:
Yeah.
M:
....
and tell them. Are you going to refer it to
them, Mr. Secretary?
Regraded Unclassified
242
- 2 -
HMJr:
Well, We can but if it's -- if it's cleared
by you it won't be necessary. We normally send
the speeches over but this has got so many
unusual figures.
M:
Yes, sir. Well, what I will do is to tell them
that it's all right 8.8 far as the War Department
is concerned, but then they still will probably
ask to see a copy of it, won't they?
HMJr:
Yeah, but then I give it to them very late.
M:
(Laughs) All right, sir.
HMJr:
I'll tell you what happened once before for your
guidance.
M:
Yes.
HMJr:
When General Marshall made available those figures
on Sicily
....
M:
Yes.
HMJr:
Elmer Davis got all excited and he wanted
a joint release and he wanted to get in on it
and everything else.
M:
We have those troubles ourselves. I know exactly
what you mean.
HMJr:
And I don't want to be bothered to go through
with it. And he tried to release his ahead of my
speech and all that damn nonsense.
M:
Yes, sir, I understand.
HMJr:
See?
M:
Well, what I'll do is this, once we have it
cleared here, I'll simply call up and say that
you're working on a speech and We want them to
know that it's all right with the War Department.
HMJr:
Fine.
M:
And that won't say anything about when you submit
it to them.
Regraded Unclassifie
- 3 -
243
HMJr:
I'll give it to them about five minutes before
I go on the air.
M:
Fine, sir, we'll take care of that.
HMJr:
Thank you.
M:
Yes, Mr. Secretary.
HMJr:
All right.
M:
Bye.
244
11/23/27
November 16, 1944
3:10 p.m.
AMERICAN DELEGATION - BRITISH LEND-LEASE
Present: General Somervell
Mr. Lovett
General Styer
Mr. Acheson
Colonel Stewart
Mr. Cox
Mr. Collado
Mr. Coe
Mr. Currie
Mr. Davidson
Mr. Angell
Mr. Havlik
Dr. White
Mr. Casaday
Mr. Fedder
H.M.JR: Gentlemen, I don't know who is to blame,
but we are a little late.
Anyway, we have now arrived at the difficult stage
of these negotiations with our friends the British, and
we are in this Chapter Three which has to do with
re-opening some of these contracts.
We are trying awfully hard to find them some money,
and some of our good friends in this room think it is
easier to open up the airplane contract than it is to give
them tobacco for the civilian population.
I, sitting in this chair for this meeting, will try
not to take sides, other than I'd like to get some money
out of the turnip. I think we have to get it somewhere -
I don't say where - whether it is tobacco or off-shore
sugar - out of the RFC or out of the Army.
Have I put it well or badly, Mr. Acheson?
Regraded Unclassified
245
- 2 -
MR. ACHESON: That is clear.
H.M.JR: So if somebody for the Army would let us
know how they feel about these contracts, I'd appreciate
it.
MR. LOVETT: I suppose, Mr. Secretary, you are referring
to the comments made by the British in Chapter Three of
this Second Phase document. And you ask about the feeling
of the Army. I can state with some accuracy the feeling
of the Air Forces on it, and I believe that that is in
consonance with the War Department's feeling, although
the time has been short to go through these files which
date back to 1941.
We feel that we must recommend against it; that is,
against acceding to the British request that they be
re-opened. Our feeling is based on two main factors:
First, that we do not think that the British claim has
merit in it for the reasons I'll attempt to show; and
secondly, we feel that going back and attempting to re-
open the matter may cause grave embarrassment in other ways.
To be specific, and perhaps to over-simplify it a
little bit, they referred to what they call "aircraft and
engines that were taken over by the War Department between
the 7th and 31st of December, 1941" and subsequently the
so-called "Arnold-Portal" agreement with respect to the
diversion of aircraft which they state they had ordered
and paid for.
The second item they referred to is the so-called
"take-out of capital" facilities.
H.M.JR: May I interrupt you a minute? I have not
studied this for this meeting. It has just been physically
impossible for me to prepare myself, and I wondered if
you would be sufficiently patient to go back a little bit
and refresh my memory. I know we had a great discussion -
there were either 800 or 900 planes right after Pearl
Harbor. I haven't looked at this for two years, so you
will have to be charitable - but right after Pearl Harbor,
as I recall, there were 800 or 900 planes that you needed
desperately, and which we took off their lines, so to speak.
Regraded Unclassified
246
- 3 -
And then, as I remember it, we paid them--
MR. WHITE:
eighty millions-
H.M.JR:
...for those eight or nine hundred planes.
MR. WHITE: It was seventy million, and then nine
million was later calculated as the value--seventy-nine
million dollars.
MR. LOVETT: We not only paid them for the planes,
but we also replaced the planes.
H.M.JR: In Lend-Lease?
MR. LOVETT: Yes, sir, subsequently, so they got their
military requirements over a period of months.
H.M.JR: It was around eight or nine hundred, wasn't
it?
MR. LOVETT: I don't remember, sir, but it was around
eighty million dollars.
MR. COX: That is my recollection, but the amount, I
think, is quite accurate.
H.M.JR: And then we paid them for them, and now I
have heard for the first time that we replaced them with
similar planes.
MR. LOVETT: Or superior planes over a period of
less time so that the British military requirement has been
met through the Munitions Assignment Board. They have not
only been repaid for the items which we seized immediately
following Pearl Harbor to replace the losses at Pearl Harbor
and adjacent fields, but also they received their military
requirement on their basic claims under Lend-Lease.
H.M.JR: Are they re-opening that phase?
MR. LOVETT: I don't know, sir.
Regraded Unclassified
247
- 4 -
MR. ACHESON: No, that is another.
MR. LOVETT: But they state that as being a precedent,
which I think I can bring out somewhat more clearly if
you will let me go back and try to bring you up to date
on the matter you asked about.
H.M.JR: If you would, please.
MR. LOVETT: In 1941 you wrote the War Department
under date of October 14, in detail, in which, among
other things it was stated that there were outstanding
contracts for one hundred and fourteen million dollars,
for which the British have obligated themselves to pay
dollars, and that is being discussed with Mr. McCloy.
I am speaking in part from recollection, sir, and
in part from the files, as all of this matter was handled
through Mr. McCloy, and only the aircraft section referred
to me.
Out of that one hundred and fourteen million dollars
there were forty million dollars' worth of aircraft engines
contracted for prior to March 11. I suppose that relates
to the Lend-Lease.
MR. COX: That is right.
MR. LOVETT: The Army in defense of Lend-Lease stated
that everything up to that time had been paid for in cash
and that Lend-Lease applied to future items, as I recall
it, in the military field.
Upon receipt of the request from the Treasury Department
to see if we could help strengthen their dollar position by
taking over these contracts from the British, we then
arranged to take over forty million dollars' worth of
engine contracts as requested by the Treasury by this
transparent method. To make it clear, we will assume that
plant A is running a line which produces one thousand
engines under British contract and five thousand engines
under Army contracts. The engines are interchangeable.
Regraded Unclassified
248
- 5 -
We, therefore, took over the one thousand engines on the
British contract for American use, and gave them one thou-
sand identical engines under the Army contract; and by
that device they received the cash in the amount of forty
million dollars, and the identical engines.
Now, it seems to me, therefore, that the merit of
their case is thin, to say the least, since they not
only received delivery in kind, though it may have been
at a later date, but they also received cash. That was
in 1941.
They then assert that payment in part is an indica-
tion of inconsistency when we subsequently decided that
we could no longer do that, since our appropriations were
defined to given classes.
In connection with the request from the Treasury to
supply funds by exchange by taking over these contracts,
we examined every type of contract we had. There were a
very large number that we could not take over, as, for
example, if they were building a specific item for a
thirty caliber gun which we did not use in our types,
clearly there was no method of working that interchange
from the same line, and, therefore, it became impossible.
As to certain of the facilities, it also became inadvis-
able, or at least appeared unlikely to stand up, because
the facility was producing a type of plane in which the
Army had absolutely no interest and had never used it.
In those circumstances the file is perfectly clear,
the correspondence between the War Department and the
Treasury Department as late as this year on the attitude
of the War Department toward efforts to take over these
current facility contracts except on a reciprocal aid
basis.
Now, they refer here to items that were agreed on
in 1942 as being taken over. As I have previously said,
by and large the British received their military require-
ments through the Munitions Assignment Board on asserted
needs. They got them even though they may have come from
an American contract as compared with a British contract,
Regraded Unclassifie
249
- 6 -
and we can't see that that makes the slightest difference
in the British end product.
As to the take-out of capital expenditures, we have
had a list of items which have been taken out, the
recommendation in each instance being that the take-out
be worked out if the Treasury felt it necessary or desir-
able on the basis of reciprocal aid.
Let me give you a case in point. On May 19 of this
year - in the Packard Company case - the British asserted
a cost of approximately twenty million dollars as repre-
senting their expenditures in the Packard plant to build
Rolls Royce engines. The Army subsequently went in and
built facilities in the amount of thirty-three million
dollars, and out of that combined facility - it not being
segregated, but a single facility - we have delivered to
the British as of the middle of May 985 million dollars
worth of engines.
Consequently, in making the answer to the Foreign
Economic Administration, we pointed out this situation and
stated that we felt that the combined contribution of this
country and the British in that plant which had produced
deliveries to the British of 985 million dollars was a
matter which the FEA might wish to consider as an offset
credit item in reciprocal aid.
H.M.JR: How much are the facilities they are asking
for at Packard?
MR. LOVETT: That was twenty million dollars of
British funds and thirty-three million dollars of American
funds.
H.M.JR: Of which they received almost a billion
dollars worth of engines.
MR. LOVETT: Yes, sir.
H.M.JR: On an investment of twenty million? That
is a damned good investment!
Regraded Unclassified
250
- 7 -
MR. LOVETT: On February 1, 1944, after Mr. Denby
had written the British Ministry of Supply on this subject,
relating to the matter of handling this through reciprocal
aid - that is, giving them a twenty million dollar credit -
they replied to Judge Patterson as follows:
"Careful consideration is being given by them"-that
is, the London group--"to your proposal that the facilities
in question be transferred on a reciprocal aid basis and
the matter thus terminated. They have reached the con-
clusion that the method of settlement might be left over
for future consideration, as they do not feel justified
in present circumstances in agreeing to your proposal."
I think the "future circumstances" - or consideration -
is what faces us now.
I won't multiply these cases, Mr. Secretary, unless
you want to go into them.
H.M.JR: I'll ask Mr. Acheson whether he at all cares
to argue in behalf of the British viewpoint - just as a
Devil's Advocate.
DR. WHITE: May I add some facts before that? The
Army took the position at the time when you had urged them
to take out as many of the contracts as they thought they
could, in order to bring up the balances, that they could
take care of some of the ordnance - which they did. It
was a hundred million dollars. They could take care of
some of the take-outs, which they did. They examined the
plane situation and they said the maximum they could do
was to take the planes up to January 1 - from December 7
to January 1; and that was, we thought at the time, a
hundred million. It became seventy-nine million in the
final settlement.
They said they were doing that only because of the
grave urgency of the dollar balances, and that they could
not go any further. When the matter was re-opened a
year or a year and a half ago, they re-canvassed the
situation and again reiterated their position. So at
the time when they took this seventy-nine million dollars
worth of planes it was definitely understood it was not
Regraded Unclassified
251
- 8 -
to be a precedent, but it was to meet an existing urgency
which they did most reluctantly and at the request of the
President at the time.
MR. LOVETT: And we have a statement at the State
Department that they agreed it would be unreasonable to
ask us to open up those contracts again.
You see, what we had to do was to take a contract
which was based on Army specifications or AN specifications
and match that insofar as possible against some British
contract. Then, as I have indicated to you, we take over
the British contract and pay them for it in cash. Then we
give them the product of the American contract and a
like amount which they have asked for on their own
contract; so that they get the dollars and the planes
and that comes out of Army appropriations.
MR. ACHESON: What I am not clear about, Mr. Secretary,
is whether we have yet talked about the principal item
which the British put forward. They talk about the
eighty million or the seventy-nine million, and about that
Mr. Lovett has talked. We know what has happened and
exactly the same thing happened - they got the dollars
and they got the planes. In addition to that, there is
two hundred and fifty million representing what the
British have paid for planes, whichwere taken by the United
States and not paid for. They say, since that time, of
course, the British have received planes far in excess of
that value and that that might be an argument which would
carry the day:
H.M.JR: We took two hundred and fifty million of
their planes?
MR. ACHESON: That is what they say.
MR. CURRIE: That would make two hundred and twenty-
four subsequently.
MR. WHITE: It went into the pool.
MR. LOVETT: What happened was that under the Lend-
Lease arrangement we threw aircraft into a pool, and they
received their two hundred and fifty million dollars worth
of corresponding aircraft from us.
Regraded Unclassified
252
- 9 -
MR. ACHESON: They say that.
MR. WHITE: May I quote from General Meyers? It
was on this general point. The discussion had proceeded
for several months, the question of whether they could
take over additional amounts beyond the eighty million
dollars which were suggested, and in reply to that par-
ticular point which the British raised, General Meyers
says, "May I reiterate that in the agreement under which
the United States is taking over the airplanes in question,
the following is pertinent: U.K. will receive nine hundred
and eighty-eight planes from the AAF contracts, and a
thousand, eight hundred and eighty planes from the Lend-
Lease contracts, making a total of two thousand, eight
hundred and seventy-seven planes. U.S. will receive from
this pool seven hundred and seventy-three airplanes--from
the United Kingdom contract." And he said, "It is merely
an exchange in the use of equipment based on strategic
employment of the minimum amount of shipping.
MR. LOVETT: We left out the hundreds and hundreds
of planes that were given them otherwise. In other words,
we can see no merit in their setting up a two hundred and
fifty million dollar claim when they got the two hundred
and fifty million dollars worth of planes by agreement.
What happened was that they wanted long-range--what was
then called VLR's, B-24's, and items of that sort for
coastal command, and in order to get them we took some
other kind, B-17's, for example, which were not so suitable
for that work. It was a shuffling out of a pool and was
not a take-over in the ordinary sense at all.
H.M.JR: Mr. Lovett, could I just interrupt for one
minute? I am a little confused. I thought General
Somervell was here in connection with this problem. I
understand he is here in connection with Reciprocal Aid.
I want to give General Somervell a chance. How would
you suggest I proceed?
MR. LOVETT: I have said my say, sir.
H.M.JR: I mean, I want to get the benefit of
General Somervell, but on the other hand--you haven't
said your say, have you?
Regraded Unclassified
253
- 10 -
MR. ACHESON: I think we are practically to the
point of reaching some conclusion about this thing. It
would be well to stay on it for five minutes and be
through with it.
H.M.JR: Is your appointment for four 'clock?
GENERAL SOMERVELL: Yes.
H.M.JR: It is just that I have a--
MR. ACHESON: The point that I am trying to bring
out, Mr. Secretary, is that on this engine matter--on
this airplane matter--the facts which had been brought out
are exactly the facts that have already been stated.
MR. LOVETT: That is where I disagree, Dean. I don't
think the facts have already been stated with their proper
implications.
MR. ACHESON: All right, let's say they haven't been,
but they now are. The point is that the British paid
dollars on account of some planes which went into a pool,
and the British got some other planes out of the pool.
Now, they admit, and everybody admits, that if that
is all there is to it, and if there is no financial
problem, why, the thing is over. They got planes, and
they paid dollars. Now, the point, as I see it, is that
there is a financial problem. There is a necessity of
trying to find some dollars somewhere, and the question
is, is this the best source we can use to find those
dollars? And the point is, it is no different from what
was done before, and if you want to find dollars, and if
the British position requires your finding dollars, here
is the source.
Now, if the Army is adamant on the thing and they
won't do it, why then it is not a source.
MR. LOVETT: I disagree that there is the possibility
of finding in this fashion the articles which were interchanged
were not identical as they were in the identical-engine case,
Regraded Unclassified
254
- 11 -
and I feel that the records are so clear as to the War
Department's position that we would be very badly advised
to attempt to open this whole thing up again. We had
much better find them funds through a frank loan or some
other way of doing it than to go back and skate on the
thin ice of a claim that they had paid dollars for these
items and that therefore we owed them dollars or could now
go back and pretend that we took over these planes without
some current quid pro quo.
MR. ACHESON: You mean they got their exact planes?
MR. LOVETT: They got the planes which they wanted
at that time - you bet they did!
DR. WHITE: Not the exact planes, but you said
better planes.
MR. LOVETT: I mean a counterpart, equivalent.
H.M.JR: Was this before or after March 11, 1942?
MR. COX: After.
DR. WHITE: The discussions started before. They
continued right through March and April.
MR. COX: It started in 1940. I think Bob has
stated the history very concisely. Lend-Lease went in
in March, 1941; but you remember in the fall of 1940
the thing started of the War Department taking the
British out of cash contracts that they had placed right
up to the time--
DR. WHITE: They paid dollars for all of that.
MR. COX: Sure, but we stepped in. It was financial
assistance. Ordnance stepped in and Air stepped in in
1940, and then it went through and you had the plant thing
which came up in 1941.
H.M.JR: I don't think Oscar is right, but may I
just get this: These particular planes, could you just
date them for me?
Regraded Unclassified
255
- 12 -
MR. LOVETT: Well, the planes never happened at
a given moment, Mr. Secretary. They started in 1941 and
ran through, I should think, to August or September of 1942
on this type of arrangement.
DR. WHITE: The contracts ended in the fall of 1942.
MR. COX: You have a nice legal problem here that no
one has raised yet.
DR. WHITE: Before you do that, during 1940 the take-
outs were not for financial reasons; they were for other
reasons. The financial reasons the Secretary didn't
bring to the fore until a little later than that.
MR. COX: I'll bet you a nickel on that!
H.M.JR: He has a letter there from me. I don't
know what I said. Did I say, "financial"?
MR. LOVELL: Yes, sir, but that was in 1941, sir.
MR. COX: I'll give you an example that will bring
it back to you. That was when Mr. Stimson went to Cabinet
meeting and read a memorandum prepared by McCloy and Palmer
which he hadn't had a chance to read before, and the
President teased him about it. It was the same kind of
take-out.
DR. WHITE: That constitutes proof in the court,
but what was it about?
MR. COX: But the legal question involved here is,
even if you wanted to take out you would have to have an
obligation within the year of the appropriation committed,
and, as I remember this thing, most of it took place
in 1941 or 1942 on these items.
MR. LOVETT: We brought that out, Oscar, in one of
the letters. I have the file here, but your point is a
good one. That is one of the matters that was discussed,
recently, in November of 1944.
Regraded Unclassified
256
- 13 -
DR. WHITE: This is the third time this question has
come up. It came up once at the period you were speaking
about; it came up later when there was an attempt to
further increase the balances and we were looking for
various ways of doing it; this is the third time.
MR. LOVETT: That is right, sir, and it has been a
matter of current discussion in connection with certain
specific facilities.
MR. COX: There was one intermediate stage where it
was exactly the opposite, where the American Government
was trying to get Reverse Lend-Lease. This is the fourth
time.
MR. ACHESON: Is it a fact there isn't any money that
can be used for this purpose? If that is so--
MR. COX: I don't see how you can use your present
appropriation unless your Fiscal Officers have some
suspense accounts. Even if you had some transaction,
unless you had a commitment in the year in which the
appropriation was available, you could carry beyond the
year if you have had an obligation in the year; but you
can't undertake an obligation for this which happened two
years ago.
MR. LOVETT: Our Fiscal Officers take precisely the
view that Oscar mentions, but they go somewhat further
in the sense that we have had to report back to the
Appropriation Committees the surplus funds which were not
expended and get a re-designation of them.
MR. ACHESON: There isn't any money.
MR. COE: Then we can drop it.
H.M.JR: Is it agreeable to you, then, that we drop it?
MR. ACHESON: If that is correct, there is no use
talking about it, Mr. Secretary, because there isn't any
money. If there is no money, I don't see that these
considerations would be controlling.
Regraded Unclassifie
257
- 14 -
H.M.JR: Let's drop it, then.
MR. LOVETT: I was trying to be discreet in saying
earlier that I thought it would be most unfortunate to
attempt to re-open it. What I mean to say directly is
I think it would require our going to Congress and making
the case; and in doing so, I think it will re-open the
past ones.
DR. WHITE: At this stage it would look just like an
outright gift, after having turned it down three times in
succession. To pick it up looks like dressing up a gift
to fool somebody or other, because if it was 8. legitimate
gift it should have been settled when it was carefully
considered on the previous two occasions. That is my
objection.
H.M.JR: When, after this term is up, if I have to
come back and explain some of those 1941-1942 transactions,
I hope we are all friends!
MR. LOVETT: I do, too.
18
DR. WHITE: The record is pretty clear up to now.
H.M.JR: I think in those days, as long as it is
settled, I didn't want to say it - but I think it is pro-
per that Mr. Acheson raised it this morning and I am glad
he did, because I certainly sweat blood and tears in those
days to get them those things.
MR. ACHESON: Let's go on to General Somervell.
H.M.JR: Don't you want me to talk about my sweat,
blood, and tears!
DR. WHITE: This is the ninth time this cat has been
killed. It's dead.
H.M.JR: As long as Dean Acheson, himself, says let's
drop it, I kept quiet. I'm glad he brought it up.
MR. ACHESON: Unless you tell me legally there isn't
any money - I am not sure I believe you, but I can't --
Regraded Unclassified
258
- 15 -
MR. LOVETT: I'll defer to better legal advice, but
at the present time I don't see how 1944-1945 funds can be
used to go back to take up a 1941-1942 payment.
H.M.JR: I say it is a dead horse; I hope it stays buried.
GENERAL SOMERVELL: Our point, sir, is a very simple
one and can be stated in a few words. We made the propo-
sition originally that these commitments that were offered
by the United States should be made contingent on one by
Great Britain to regard the Empire as a whole and not as
individual pieces, and that we should be given a guarantee
that reciprocal aid would be furnished by the Commonwealths
or Dominions on the basis of a guarantee of the U.K. They
came back with certain language, and I believe you suggested
certain language (to Mr. Acheson). We then submitted
another paper in which we said that it could be accepted
on the basis of the Dominions - Australia, New Zealand,
and the Government of India - furnishing us reciprocal
aid on the same scale as they had heretofore furnished it;
and that any additional aid would be supplied if called
on, but with the guarantee of the U.K. to foot the bill
over and above what they had been furnishing in the past.
We regard this matter as a purely financial one and
one for the decision of the main committee. We don't
care how it is decided, provided we have the guarantee that
these supplies will be furnished us on reciprocal aid and
at once, without having to haggle.
DR. WHITE: I am afraid after the discussion which we
had in which I thought that your colleagues made some sort
of a compromise, you not only went back to the original
position but even to a much stronger position. I think
we would like to clarify that, because this letter and the
record of this letter I don't think is something that we
could proceed successfully on with the British and I am not
sure it adequately describes what I thought we had agreed to.
GENERAL SOMERVELL: What is the difference?
Regraded Unclassified
259
- 16 -
MR. WHITE: Do you want to pick it up from there,
Dean?
MR. ACHESON: What you say in tnis letter is that
Australia, with the guarantee of the British, will guarantee
at least as much aid as they had last year, and only addi-
tional aid as is necessary for the Japanese war. Now, they
can't possibly do that. That is an impossible thing to
ask. I tnink all we can ask of them is what they are ask-
ing of us in this document, which is that we put forward
certain proposals for the amount of stuff that we want,
and that you say here that financial considerations won't
stand in the way of that, and leaving the allocations
machinery to take care of it. This is an absolutely open-
ended guarantee which might go to any heights. Well,
you can't ask them to do that. They don't ask us to do it.
GENERAL SOMERVELL: We only ask them to furnish us
what they can furnish us.
MR. ACHESON: I think in the first place that has to
be made clear, which isn't clear at all in this language,
and secondly, since they put forward statements of how
much this and that and the other thing--they want us to
make financial provisions for--I think we ought to do that
with them and say, "Here is the schedule; now, supply con-
siderations permitting, the two of you, British and
Australians together, will set up the finances and take
care of so much of this and so much of that."
MR. WHITE: I thought the Army replied to that that
they were unable to do so, so we suggested a compromise.
They said the condition was too uncertain; you couldn't
give that kind of a program at this time.
GENERAL SOMERVELL: That is right; the first thing
that occurred to us was for us to make up 8 list like
theirs of the things we would want to get from them, but
in view of the great disparity in the balance between the
United States and Great Britain, we thought it was only
fair for us to ask them to give whatever they could. I
don't think that is an unfeir demand.
Regraded Unclassified
h-2
260
- 17 -
MR. WHITE: I thought the reason for the reluctance
of the Army to submit a program was the difficulty of
knowing what they would want in view of the changing cir-
cumstances. I thought that we had compromised this way,
by saying that they would be called upon to give in total,
irrespective of the destination, no more than they had given
previously; if they were called upon to give more, then
they would have an opportunity--the discussion was for
thirty or sixty days delay--to raise the issue and say, "We
are unable to take care of this additional amount, and we
want to re-open the question.' That would have given them
assurance that your future demands would not exceed the
past demands, but that you would have the right to determine
the destination. It might well be India or anywhere else.
And it gave them the further possibility of opening the
question in the event that your demands in excess of that
were such that they felt they couldn't meet it. And we
thought that in addition to that, you could get assurance
from them that irrespective of whether or not the stuff
was to go on reciprocal aid or to be paid cash for, you
were to get whatever you wanted that they were able to
supply, the financial question being discussed at a dif-
ferent time while the supplies were going forward so
there would be no stop in the supply, though there might
be discussions going on as to whether those additional
supplies would be paid for in cash or whether they would
constitute reciprocal aid. That was my understanding of
the discussions we had in a subsequent meeting at which
our colleagues were present.
GENERAL STYER: My understanding was--I never had any
idea that the United States would pay for this reciprocal
aid. In other words, we assumed that if the Commonwealth
didn't pay for it that Great Britain would pay for the
excess.
MR. WHITE: Well, that was true.
GENERAL STYER: I think there was 8 proposition by
Mr. Acheson along that line.
MR. WHITE: The further addition being that in the
event U.K. felt it was being called upon to pay more than
Regraded Unclassified
H-3
261
- 18 -
it wi shed to, it could re-open the question as to the
matter of financing, whether they would pay for it or
take dollars for it. I think that was the addition.
GENERAL somervell: Well, the financial end of it is
up to you. What we can't see, however, is this: Quite
obviously the demands that are going to be made out in the
South Pacific are going to be greater than they have ever
been. We don't want to start off by limiting ourselves to
a figure which is based on less intensive effort out there,
and, secondly, in our examination of the question, with a
balance of something like five to one against us, why, we
couldn't imagine our being called on to pay for something.
MR. WHITE: Unfortunately, the basis of comparison
is not what they give and we give, but how much their
balances can afford to let them give.
GENERAL SOMERVELL: That is what I say, that is up to
you, but we would like to make two points, one, the demands
we are going to make out there are probably going to be
greater than they have ever been before. We are going to
make an intensive effort. We want an engagement on their
part to furnish us what they can. Certainly we want to
get it right now, when we ask for it, and not have to
begin a series of negotiations to do SO. Beyond that, you
get into the financial picture, and that is not our business.
MR. WHITE: Well, it seems to me that that is a basis
for easy reconciliation, merely a drafting problem.
MR. ACHESON: We continually get mixed up as we are
now between supply questions and financial questions, and
what the General is now saying is that he wants Australia
to say that they will give everything that they have, but
I don't think they can be asked to do that. You have to
have some idea of what they are being asked to do from a
supply point of view. Let's leave finance out of it.
GENERAL SOMERVELL: I don't see why that is unreasonable.
In other words, if we find that Australia can give us, say,
more beef than they have been giving without its hurting
their economy, I don't see why we shouldn't be allowed to
ask them to do SO.
Regraded Unclassified
h-4
262
- 19 -
MR. ACHESON: Sure, ou can ask them to do it. This
is 8 guarantee that they will do it.
GENERAL SOMERVELL: I don't see why they shouldn't.
The only excuse they could offer for not furnishing--well,
they have two excuses, one is that it would make it impossible
for them to supply their legitimate needs, and the other
one is the financial. Now, as far as the first is con-
cerned, it seems to me they shouldn't be allowed to give
that excuse.
MR. ACHESON: Well, they have to give it just as we
give it.
GENERAL SOMERVELL: If we say it interferes with our
legitimate needs, then that is a good excuse, and that
is the only excuse they should be allowed to give.
MR. ACHESON: Yes, but that is not in this draft.
There is nothing about supply considerations.
MR. COX: I am not so sure that as a practical matter
this thing can't be solved. The U.K. and the Dominions
set up a document. They say so much for food--for example,
you have an almost parallel case. They ask for seven
hundred and some odd thousand tons of meat. It looks
questionable whether it can be supplied, but we say if the
supply is available with all the machinery you have, we
will finance up to that. Now, the Australians have
financed up to something like eighteen percent of their
budget. I would think the most practical approach would
be to parallel the pieces of paper we give them. For
example, in the U.K. food and war materials stuff, we say,
"Here is so much food, so much this, so much contingency,
because we just don't know that we are ready to finance.
That depends on availability of funds from Congress." It
depends on the allocation and the availability of supply
in terms of competing demands, that the thing will be
reviewed in the light of changing conditions of the war
from time to time, but you at least give them an outer
limit which, if they want to go to their party for financial
purposes, they can meet.
Regraded Unclassified
h-5
263
- 20 -
When you get into the meat thing, they say the
American soldier gets eight pounds per head, and the
British only four, and so forth. You just thresh that
out. But I would think you would have to give them your
best guess, which might not be perfect, of 80 much for
meat, butter, this, and that, and a contingency account
which is your finance thing, which means they have at least
a moral commitment to exercise every effort they can to
make that commitment good in terms of available supply.
Now, if they have 8 bad crop failure, you wouldn't
get any wheat from them, just because they haven't got it.
Or if something else happens to their cattle or dairy
production, you wouldn't get it. But if you parcel it, it
seems to me you wouldn't run into much difficulty. Then
you can get an answer out of them. If the amount involved
is fifty percent of their budget, then they have to face
up to the financial question and say, "We just can't commit
ourselves because we haven't that money and can't get it
out of our Parliament.'
GENERAL SOMERVELL: Personally, I see no reason why
we shouldn't have the original language. That states the
case very cleanly, and that would be what I would recommend,
in other words, that we put this thing in on the basis of
the language which we used in our original report. Now, as
I get it, your proposition is for us to make a list for the
things that we may want to ask Australia for. I don't know
that we can do that, but we will go into that and see what
we can do.
We can do this: We can do it the way they do by
putting in fifty million dollars worth of spot items.
There are a hundred million dollars' worth of spot items.
Then we can ask for anything we want.
MR. WHITE: Aren't you unnecessary complicating the
task and postponing the time of consummation by that approach?
Australia will be willing to go along on the general state-
ment provided you give her some assurance of the upper limit
in finances. She is willing to depend upon safety devices
which already exist in the allocation of her supplies. She
is not raising that question.
Regraded Unclassified
H-6
264
- 21 -
GENERAL SOMERVELL: You mean, we just give you an
over-all dollar figure?
MR. WHITE: If we could assure them and say that the
amount which they will be called upon to supply as reciprocal
aid will not be in excess of the previous amount, not the
amount she will be called upon to supply, but as reciprocal
aid--that figure in excess U.K. will pay. If U.K. feels
that she cannot pay, she can re-open that case with us, but
one of financing and not supply; the question of supply to
be determined through whatever agencies have always
determined it.
GENERAL SOMERVELL: We say, as I understand it now, to
Australia, "You will furnish us these items up to X dollars.
Anything that we call on you to furnish over and above that,
U.K. guarantees."
MR. WHITE: And that U.K. is accorded the privilege
of re-opening the question as to whether she can afford to
pay or whether they will have to be paid for in dollars.
But as I see it, that r emains separate from the supply
question.
GENERAL SOMERVELL: If you in the Treasury are willing
to re-open the financial question, of course we are.
MR. WHITE: We haven't presented that to the British,
but I thought that was our conclusion, that the question
of supply will be left to the regular agencies.
GENERAL STYER: This paragraph will state what you
stated, except we did not put in the revision paragraph.
There was some argument as to whether it was a month, two
months, or three months in which it could be brought up.
(General Somervell leaves the conference.)
MR. LOVETT: Bill, sitting on the sidelines and
knowing nothing about this, I believe there is one point
in which perhaps there has not been a meeting of the minds.
Mr. Acheson and Doctor White have related their plan to
the inclusion in there of some yerdstick by which Australia
might measure her obligations.
Regraded Unclassified
h-7
265
- 22 -
GENERAL STYER: So have we.
MR. LOVETT: Whereas, the language in here as I
understand it--I haven't read it--does not contain such a
limit.
GENERAL STYER: Let me go back to the discussions we
had the other day, Mr. White, and Mr. Acheson.
H.M.JR: May I interrupt you a minute? I have an
Italian delegation coming at four o'clock, the Minister
of Finance of Italy.
MR. WHITE: I think this is an item, Mr. Secretary,
that we can agree on among ourselves. I don't think we
are far apart. From what has been said, don't you think
it is possible to work this out?
MR. ACHESON: I think so, if they have this re-opening
business.
GENERAL STYER: We intend to carry out your suggestion,
except we left out this revision part.
MR. ACHESON: You also don't have a ceiling. You don't
have anything about "subject to supply considerations."
GENERAL STYER: In the first place, we assume that you
can only take what he country can produce and all that is
subject to allocation.
MR. DAVIDSON: Would you have any objection to simply
writing in there that in providing supplies they will be
provided in accordance with the usual allocations procedure?
MR. WHITE: I don't think this needs any more attention
from Mr. Lovett or yourself. I think we can probably work
something out.
H.M.JR: Before you break up, let's get the schedule.
Lord Keynes asked me if he could see me at four-thirty.
Did you get a message, Mr. Coe? I wanted you here, and Mr.
White. I don't know what he wants.
Regraded Unclassified
h-8
266
- 23 -
MR. WHITE: I would like to correct something I said
this morning that is important. I think I said the FEA
considered the tobacco case as a possibility, and Lauch
informs me that their view is to disapprove of the tobacco
even though the people on the Hill might say that it is a
possible thing. They don't think that is one of the alter-
natives. Am I correct, Lauch?
MR. CURRIE: Yes.
H.M.JR: Are you scared of the new Congressmen?
MR. CURRIE: Yes. I think what Lord Keynes maybe
wanted to take up with you, Mr. Secretary, is the snarl
we got into on the coastal ships. They have objected
violently to transferring those to the Army. And I have
suggested--I don't know whether Frank g ot word back or
not--that we might get ahead with the program by taking
out the shipping program and agreeing on that, because it
looks like a series of conferences on the shipping. We
can approve all the rest.
H.M.JR: Will somebody be here besides Mr. Coe from
FEA? I don't know what he is going to discuss.
MR. CURRIE: We will be up the hall, probably.
H.M.JR: How about State?
MR. ACHESON: I think I will probably be up the hall,
too!
MR. COE: Before you see him, Mr. Secretary, do you
want to canvass the group as to whether we are ready to
meet with the British tomorrow morning, or when? I am
sure that is one thing he will want.
MR. WHITE: There is no way of dodging that Friday
morning meeting.
H.M.JR: It sounds plain silly, but if you are going
to meet with me tomorrow morning, is eight-thirty--
Regraded Unclassified
h-9
267
- 24 -
MR. WHITE: That is not silly; that is cruel.
H.M.JR: That is, if they have Cabinet tomorrow--I
am free if they have no Cabinet, but otherwise--
MR. WHITE: Evening is better than the middle of the
night.
H.M.JR: Or I can meet after Cabinet, but I have an
impossible schedule.
MR. ACHESON: You might do it late in the afternoon.
H.M.JR: I could do it at four o'clock.
MR. ACHESON: That is better.
MR. LOVETT: I can't tell you what a comfort it is,
Mr. Secretary, to C ome over and bring my little headache
and put it on the floor and let the others swell all over
it.
H.M.JR: Did you know Oscar was going to say it was
illegal?
MR. COX: I didn't know, myself.
Regraded Unclassified
CCLL
USC/307
TOP SECRET
COPY NO. 3 268
U.S. Committee on Mutual Lend-Lease Aid
Between the United States and the United Kingdom
Minutes of Meeting in Secretary Morgenthau's
Office on November 16, 1944, at 3:10 P.M.
Present
Secretary Morgenthau, Chairman
Mr. White
Mr. Casaday
Mrs. Klotz
General Somervell
Mr. Lovett
General Styer
Colonel Stewart
Mr. Acheson
Mr. Collado
Mr. Fetter
Mr. Currie
Mr. Cox
Mr. Angell
Mr. Davidson
Mr. Havlik
Mr. Coe, Secretary
British Chapter 3 Claims on Airplanes and Motors
MR. LOVETT stated that the feeling of the Air Forces, which
was in consonance with that of the War Department, was against re-
opening the claims, which had been considered in the past, because
the British claim had no merit, and a reopening might cause embar-
rassment in other respects. The United States had replaced the
planes taken over from the British in December, 1941 and under the
so-called "Arnold-Portal" agreement and at a later time had filled
the British military requirements through the Munitions Assignments
Board. Further, as a measure of financial assistance, the War De-
partment had assumed the $40 million of British contracts for engines,
although it continued to furnish the British with the equipment pro-
duced under the contracts. With respect to "take-outs" of capital
facilities contracts, he pointed out, as an example, that the British
had invested $20 million in the Packard plant, which was augmented by
$33 million of United States Army funds; in comparison, deliveries of
Packard engines by May 1944 to Britain had amounted to $985 million.
He thought that it would be appropriate to record the $20 million of
British investment as reciprocal aid, although the British had de-
clined to do so, preferring to leave it for future settlement.
- 2 -
269
MR. WHITE stated that it had been understood that the trans-
action in which the United States paid the British $79 million
for airplanes taken over in December 1941 was not a precedent for
payment of the present claims. MR. LOVETT pointed out that we
had paid the British cash in that case and that in addition we
had provided them a larger value of like equipment under lend-
lease.
MR. ACHESON stated that the problem presented was a financial
one; if the British faced no difficulty now there would be no need
for considering the question. However, since there was a financial
problem, the possible payment for the British claims ought to be
considered as a means of solving the present British financial
problem. MR. LOVETT indicated that it would be difficult for the
Army to find the funds for such payments. MR. COX pointed out that
there was a legal question, in view of the fact that the obligation
of funds for the proposed payments would have to take place within
the year of the appropriation committed. MR. LOVETT further pointed
out that the Army had earmarked no funds for such payments, and,
since surpluses had been reappropriated by Congress, the Army could
not find the requisite funds without an appropriation from Congress,
which would be difficult to explain.
It was agreed that the British request should be disapproved,
in view of the past history of the transactions and the unavaila-
bility of funds.
Reciprocal Aid and Army Requirements
SECRETARY MORGENTHAU stated that he hoped it would be possible
to come to an agreement with respect to the conditions under which
the British Dominions furnish reciprocal aid to the United States
Forces. GENERAL SOMERVELL stated that the Army desired to obtain
reciprocal aid supplies without reference to the distribution of the
financial burden within the Empire, and that it was willing to accept
an agreement that the Dominions would continue to supply reciprocal
aid on the same scale as in the past, with a guarantee from the U.K.
that it would underwrite that part of reciprocal aid in excess of
the amounts being financed by the Dominions.
MR. ACHESON stated that the letter of November 14, 1944, from
Under Secretary of War Patterson to the Secretary of the Treasury
(CCLL:U.S. No. 44), could be interpreted as a request for an open-
ended guarantee for reciprocal aid from the Dominions which they
could not be expected to accept. He thought that it would be de-
sirable to furnish the Dominions with a statement of the supplies
required by the United States Forces on reciprocal aid, to ascer-
tain whether the requirements could be met in fact. GENERAL
SOMERVELL stated that it would be difficult to formulate any sub-
stantially accurate statement of requirements at this time, but
he indicated that he would investigate the possibility of making
a schedule of requirements from the Dominions for reciprocal aid.
Regraded Unclassified
270
- 3 -
In fact, however, the Dominions would not be called upon to
provide more than was available, although the demands of the
United States Forces in the Southwest Pacific and adjacent areas
would increase. He desired an assurance of prompt delivery upon
request of the United States Forces, and, beyond that, he was
willing to leave the financial question to be settled by the
Treasury, FEA, and the State Department. MR. ACHESON pointed
out that the Army letter offered no protection to Australia with
respect to the amounts they might be called upon to supply.
MR. WHITE summarized a possible arrangement which had pre-
viously been discussed with General Styer. There would be a
joint agreement by which the Dominions would undertake to provide
reciprocal aid in the same quantities as heretofore; if these
quantities were exceeded, the question of financial underwriting
could be opened for discussion on due notice, ranging, say, from
thirty to ninety days. There would be no restrictions on destina-
tion; the flow of supplies would be regulated by allocations.
Further, in response to an inquiry by General Somervell, MR. WHITE
stated that the proposal was that the U.K. should pay for the
amounts required by the United States Forces in excess of the
Dominion quotas, with the right to reopen the question if it felt
the burden too great. After further discussion, it was agreed
that the U.S. Sub-Committee would meet immediately with the Army
representative to work out an agreed U.S. position.
Further Business
MR. MORGENTHAU stated that he would receive Lord Keynes at
4:30 that afternoon, and requested Messrs. Coe and White to join
him at that time. It was agreed to meet with British representatives
at 4 O'clock on November 17, 1944.
Regraded Unclassified
05
NO
vp
271
TOP SECRET
COPY NO.
C.S.L.L.(44)3
16th November, 1944
COMBINED SUB-COMMITTEE ON MUTUAL
LEND-LEASE AID BETWEEN THE U.S. AND U.K.
Dollar expenditure by the United Kingdom
on oil
Note by U.K. Members
la The whole position of oil as a suitable commodity for reverse
Lend-Lease perhaps desorves to be considered. The British obtain
their oil from Bahrein, Persia, Curacao, Iraq, Egypt and Trinidad.
All those sources of supply, apart from Trinidad, lie outside the
British Commonwealth. It has been a general principle that we
do not give reverse Lond-Lease where it involves the U.K. in cash
expenditure outside the British Commonwealth. The only, but not
perhaps sufficient, justification for the present arrangements
into which we have gradually slippod, is the fact that the oil
from all these sources goes into a single pool, so that it is
difficult or impossible to say in advance from which source over
a period of the year the oil provided to the American forces is
drawn, although this could be approximately established after
the event; and secondly, that certain of the companies concerned
are British or largely British concerns, though operating outside
British territory. When it was provisionally decided to provide
oil from Bahrein and Curacao on reverse Lend-Lease, it was
agreed that this decision might be re-considered after six months'
time in the light of the dollar expenditure being incurred. In
this case, therefore, it would be fully in accordance with
previous arrangements that the position should be looked into
again. We think, however, that the position as a whole requires
re-consideration owing to the immensely greater quantities of oil
now being furnished and to be furnished on reverse Lend-Lease on
account of the movement of American shipping and forces into
Eastern waters.
Taking everything into account, we should feel that
the position was sufficiently met if by some formula or other
we could be reimbursed $60 to $100 millions of the expenditure
in external currencies with which the supply of reverse Lend-Lease
oil involves us. The possible formulas under which this result
could be secured are indicated below.
Meeting 2. on the 15th November, we mentioned a figure of about $100
During the discussion at the Combined Sub-Committee
million as the total annual dollar outlay involved in producing
sterling oil, and undertook to provide further details,
3. between the U.K. and U.S. in 1945, circulated on the 8th November,
In the revised estimate of the balance of payments
1944, a total of $108 million was shown as cash dollar expenditure
in connection with oil. That figure was made up as follows:-
$ Million
Dollar purchases of crude oil for British
refineries
22
Dollar royalties on Reciprocal Aid oil from
Curacao
8
Meintonance Equipment -
14
Capital Equipment
40
Regraded Unclassified
272
Dollar outlay on net balance of U.S.
oil supplied to non-British Areas
15
Other oil field expenses including
royalties payable in dollars -
9
Total
108
4.
We suggested that one way in which the U.K. dollar
reserve could be increased was if the U.S. would agree to
purchase for dollars certain oil now being supplied on Reciprocal
Aid - namely, that drawn from Curacao & Bahrein. The payment
by the U.K. for oil drawn from these sources involves a higher
dollar outlay than oil from other British sources. It is
estimated if the U.S. agreed to pay for their requirements from
Curacao and Bahrein the total involved in 1945 would be $69
million in respect of Curacao and $31 million in respect of
Bahrein. This would give a total of $100. million which was the
highest figure mentioned at the discussion on the 15th November.
While it is, of course, for the U.S. to decide what would be,
from their standpoint, the most defensible form of presentation
of exponditure in connection with oil, it is suggested that
from an administrative standpoint a purchase of Curacao and
Bahrein oil on the lines proposed would be the simplest
course to pursue.
5.
If this clear cut course cannot be taken, an alter-
native would be to arrange for the reimbursement to the U.K.
of the dollar outgoings necessary to maintain the output of
sterling oil for war purposes. On further consideration we
agree that the figure of $40. million shown in paragraph 2
above as expenditure on capital equipment ought not to be
regarded as wholly attributable to the cost of securing high
sterling oil output for war purposes. If this figure were ex-
cluded the dollar outgoings would amount to $65 million.
6.
A third course - but one yielding considerably less
dollars - would be to reimburse the U.K. the cost of the crude
oil purchased for dollars for the Curacao and Bahrein refineries.
This would give $22. million in 1945 - the lowest figure
mentioned, If this payment were made retrospective with effect
from the date in 1944 from which oil from the Curacao and Bahrein
refineries was made available on Reciprocal Aid the figure would
become $38. million. If reimbursement for the dollar royalties
in Venezuela on Reciprocal Aid were added the figures would
become $36. million and $46. million respectively.
7.
An additional (and administratively easy) way of
providing dollars would be for the U.S. to pay for the benzol
which is at present being made available from the U.K. on
Reciprocal Aid for refining in U.S. refineries. On the basis
of current programming, this would provide about $16=20 millions
a year. If this course were adopted in addition to that suggest-
ed in the preceding paragraph, the figures would become, say,
$52-55 millions and $62-65 millions respectively--i.e, roughly
a figure of the same order asthat mentioned at the end of
paragraph 4,
Washington, D&C.
Regraded Unclassified
CCLL
U.S. No. 46
COPY NO. 29
TOP SECRET
273
181 H.V. Goschen
11/16/44
U.K. TREASURY
DELEGATION
WASHINGTON, D.C.
-- N.A.A.F.I. REQUIREMENTS --
The purchases now being made by N.A.A.F.I. in the
United States are approximately
Biscuits
1
Beer
2
Subar Candy
11
Chewing Gum
1
Fruit Squashes
1
Lemon Juice Powder
1
Meat Extract
$
Pickles
the
Vegetable Extract
Sundry Food Items
3/4
$ 9 million
Hops and Malt
1
Razor Blades
1½
Matches
1
Toothpaste
12
Beer Bottles (sent to
Canada to be filled)
NP
Handkerchiefs
Tennis Balls
aop
Oddments
52
Freight (ocean and inland)
2₂
$ 15 million
TOTAL:- $ 24 millions
Two particular points arise in connection with these
requirements:-
1. As the U.S. War Department can no doubt confirm, troops are
unwilling to purchase goods unless they are of the type and quality
to which they are accustomed to buy. For example, they would not
take chocolate if it is the same chocolate as that which they
normally get as part of their rations.
2. There are a large and varied number of items. Many of these
require special packing; for many it is necessary (with the backing
of the U.S. Service Departments) to obtain priorities from the W.P.B.
Regraded Unclassified
- 2 -
274
To bring the procurement of all these items under the
normal Lend-Lease procedure would throw a large amount of adminis-
trative work on the Lend-Lease machinery, administrative work which
requires considerable technical knowledge to deal with the points
set out above.
If, therefore, it is agreed in principle that these
items can be provided on Lend-Lease, it is suggested that dis-
cussions should take place with, say, the U. S. War Department,
with a view to finding out the best method for dealing with the
situation. It might be found convenient to retain the present
organization which N.A.A.F.I. have built up, thus N.A.A.F.I.
would pay for the goods in the first instance obtaining reimburse-
ment afterwards under the same kind of procedure as is adopted in
the case of certain shipping services and supplies. The U. S. War
Department would no doubt require certain safeguards but we are
confident that with the experience which they have with their own
Post Exchanges, agreement could speedily be secured.
Regraded Unclassified
UNITED KINGDOM TREASURY DELEGATION,
WASHINGTON, D.C.
16th November 1944.
Dear Mr. Secretary,
: AS acrey that I have been 80 slow in letting you have
the further break-up of British war expenses abroad, which I promised
you some little time ago, The reason is, of course, as you are only
too well aware, that your people and ours have been kept busy up to
almost the limit of possibility. I have thought that the most
convenient way might be to arrange my reply in a series of short
annexes, each dealing with a particular matter.
You will see that I have partly devoted myself to
giving you some further figures for your own information, not suitable
for general use, and that here and there I have suggested very briefly
one or two lines of argument which might be useful, if later on you
have to go up to The Hill on our behalf.
Perhaps I might sum up here a few of the salient points:-
1. As you will see below, our indebtedness is largely due to our
military expenditure in the Middle East and India. For five years
we, and we alone, have been responsible for practically the whole
cash outgoings for the war over the vast territories from North
Africa to Burma. Without these expenditures we should never have
held Rommel at the critical moment of the war.
2. Quite early in the war, -the Treasury control over war expenditure
overseas was virtually abandoned. If Treasury control over
expenditure had continued, unquestionably many economies could have
been made. But these economies would not have been possible with-
out setting up a machine: / of control which would have impeded the
prosecution of the war One has to choose. The principles of
good housekeeping do not apply when you are fighting for your lives
over three continents far from home. We threw good house-
keeping to the winds. But we saved ourselves, and helped to save the
world. Too much financial precaution might easily have made just
the difference when, as-at one time, the forces were so evenly
balanced. It is easy to argue that a method set up in an emergency
Regraded Unclassified
- 2 -
has been continued too long. Very probably that is the case.
But the obstacles in the way of re-imposing detailed control when
it has been long absent are very great.
3. To ourselves receive no.reverse Lend-Lease whatever from the
British Commonwealth, apart from Canada. AS is shown below, we
have made far less favourable financial arrangements with our own
Dominions than has the United States. We pay Australia, for
example, for the same goods and services which the United States
receive without payment. Even when Lend-Lease is brought into the
account, the United States has with these countries more favourable
arrangements than we have.
4. We have not thought it right to ask for any contribution to the war
from the Crown Colonies, where we are in a position of Trustee.
We have paid them for everything we have obtained, and consequently
owe them vast sums. We even pay them for the goods which they
send as reverse Lend-Lease to the United States, so that this
contribution also falls on our shoulders.
5. We abandoned our export business in order to devote to the war the
whole of the manpower which could by any means be made available.
6. We paid over nearly the whole of the gold reserves with which we
started the war to the United States, and spent the money to build
up the American munitions industries from small beginnings, with
the result that when America came into the war, the time-lag in the
expansion of production was very greatly reduced.
No doubt the above makes up collectively a story of
financial imprudence which has no parallel in history. Nevertheless,
that financial imprudence may have been a facet of that single-minded
devotion without which the war would have been lost. So we beg leave
to think that it was worth while - for us, and also for you.
If there is anything further I can do whilst I am here,
I am, of course, always at your service.
Sincerely yours,
keyns
The
Hon. Benry Morgenthau, Jr.
Regraded Unclassified
- 1 -
SECRET
I- BRITISH WAR EXPENSES OVERSEAS
The incurring of overseas debt and loss of overseas assets
has been going on at the rate of $2-1/2 to $3 billions a year, since the
beginning of the WAT, smounting to something over $12 billions over the
period as a whole up to the end of 1944.
By far the greater part of this is due to military
expenditure which we have had to meet in cash overseas, mainly in India
and the Middle East. This has been running at an aggregate of about
$2
billions a year. The nature of this expenditure is set forth
in some detail below, on the basis of 1944.
For 1945 present estimates are nearly as high as for 1944.
In Annex A of the Statement of Requirements, these were given (Page 12)
as follows:-
India
$1,360 millions
Egypt
240
Australia
160
Palestine
100
South Africa
80
Persia
60
Iraq
40
Others
40
$2,080 millions
The break-up of this expenditure on the 1944 basis is given below.
Since the above preliminary estimates for 1945 have been built up mainly
on the 1944 basis, that break-up would be broadly similar. I under-
the 1944
stand, however, that the Chancellor of the Exchequer considers that
these estimates may be unnecessarily high, and he is at present engaged
in having enquiries made as to how best economies can be made. The final
expenditure will partly depend on economy in detail, partly on broad
decisions to be made by the War Cabinet. The above estimates are based
on certain provisional decisions, but these decisions are not to be
regarded as final. The Chancellor of the Exchecuer hopes, therefore,
that in fact our overseas expenditure in 1945 will be reduced below the
figure given. If it should prove possible to reduce the expenditure by
(say) half a billion dollars, then the expected disinvestment in the
current year, which otherwise would approach $3 billions, will be that
much less. It will be appreciated that it is very difficult to estimate
long in advance the rate of expenditure over many far distant countries
in war conditions subject to continuous change.
Regraded Unclassified
2 -
the United Kingdom
1.
In 1943-44 the expenditure jentyls in
India amounted to $1,132 millions, made up as follows:-
A.
Personnel Charges (excluding rations, clothing,
equipment etc.)
1. Combatant units and ancillaries
$90.4 millions
2. Supply and store depots, THE hospitals etc.
in India
SOYW
3. Share of establishment costs of training and
other formations treated as joint liabilities
34.0
4. Transportation charges of personnel
24.0
5. Provision of cash for payment of forces
overseas (including S.K.A.C. payments in India) 90.0
Total A.
$294.8 millions
B. Acquisition of stores
610.8
C.
Transportation charges on stores
59.6
D.
Works expenditure in India on buildings, roads,
airfields etc,
135.2
E.
Prisoners of War
16.8
F.
Share, of capital outlay on projects for
expanding India's industrial capacity for.
production of stores for war purposes
16.4
TOTAL
$1,133.6 millions
The expenditure in 1944-45 is expected to be at the somewhat higher
aggregate rate of $1,312 millions. The distribution of this expenditure
between the different items will be broadly the same as in the previous
the U.K.
year.
It is often inferred from the magnitude of expenditure that
the Government of India is not itself bearing a very heavy burden of
charges. This is not in fact the case. The Government of India bears
the whole of the local charges of the Indian Army when it is in India.
AS a result of this and of other expenditure arising out of the war the
Government of India's expenditure in 1944-45 is estimated at $1,250
millions, which is about four times the peace-time budget. Thus in
addition to what the British Government bear, the Government of India is
spending not far short of a billion dollars a year on war expenditure.
aloreever, they are covering nearly the whole of tris by taxation, which
nas been raised to nearly three times the pre-war level. Their loan
programme is Mainly to finance the loans which they have been making to
the U.F.
the United Kingdom
The contribution of ### unjestyle Government consists of
supplying Lice Indian Aray with munitions Lade in the U.K. without payment
th the cust : Indian forces then overati:, rutside India, und with the
of Britier .ree> in India. It *1.. be bservel tist moro than
Regraded Unclassified
- 3 -
half of the expenditure relates to the acquisition of stores. These
stores are for use not only in India, but in various theatres where
geographical considerations make India the best source of supply.
2. Expenditure in the Middle Fast
on the basis of our latest available figures of current
expenditure, the aggregate rate during 1944 will work out at about 576
millions, covering Egypt, Palestine, Persia, Iraq and Syria. For 1945
this is estimated at the reduced figure of $400 millions. The main
items were as follows:-
Pay of troops
$96 millions
Work services
144
Provisions
48
Conveyance of troops
and stores
48
Petrol, fuel and light
36
Wages of civilians,
R.A.S.C. and Ordnance
Departments
36
3. Australia
The total war expenditure by U.K. and Australia in 1944
is estimated at $267.2 millions (the estimate for 1945 is at the reduced
figure of $160 millions).
Based on the expenditure of the first half of 1944, the
major items making up the total were as follows:-
War Office expenditure
$24.0 millions
Admiralty
32.0
Air Ministry
22.4
Ministry of War Transport
32.8
Ministry of Supply
146.4
The Ministry of War Transport payments are refunds to the
Australian Government of freight received on sterling oil carried in
Lend-Lease tankers. This is, therefore, not a genuine net expenditure,
and might more properly be excluded from the total. Payments by the
Ministry of Supply are principally for munitions supplied by Austrilia
under the munitions assignment procedure, and supplies for the Fastern
Group Supply Council. It will be seen that our ,ayments in res act of
munitions produced in Australia is, us in the case of Inlin, rather more
than a half of our total expenditure.
Regraded Unclassified
II. VIKE U.K., U.S., will THE DOMINIONS
It is not commonly understo that the United States has sade
much more fav urable financial arrangements with the British Dominions,
apart from Canada, than the British Government nas. In the case of
Canada, as is woll known, Conadian contributions in the shape of Mutual
Aid and in other ways have produced broadly the same effect as the Lend-
Lease arrangements with the United States. With the other Dominions,
however, the United Kingdom has no Reciprocal Aid arrangements; and the
net result of the arrangements is that much more is paid to them than is
received from them. India and Australia can be taken as leading
examples.
In the case of Australia, as has been seen above, the
United Kingdom pays for all her expenditure from Australia, both for
supplies for the troops and for all raw materials. As against this,
Australia makes certain capitation payments to the United Kingdom in
respect of munitions and other services provided by the U.K. to the
Australian forces. In the year 1944 military expenditure paid by the
U.K. to Australia amounted to $184.4 millions, whilst similar war
expenditure paid by Australia to the U.K. came to $138.8 millions,
leaving a balance adverse to the U.K. of $45.6 millions. In addition
to the above, the U.K. paid Australia for all meat, other food, and raw
materials obtained from them, leading to a very large adverse balance
in the aggregate, whereas the U.S. receives meat on Reciprocal Aid terms.
This may be compared with the financial arrangements made
with Australia by the United States. Reciprocal Aid supplied to the
United States forces by Australia in 1944 is estimated at $360 millions.
ÀS against this, Australis is expecting to receive under Lend-Lease non-
munitions to the value of $103.4 millions. This is exclusive of oil,
shipping freights, aircraft supplied under direct Lend-Lease, and munitior
included in the U.K. programme. When allowance is made for these, there
remains a balance of about $100 millions in favour of Australia.
As regards India, the comparison is still more striking,
since the U.K. supplies the Indian Army with munitions without charge,
which is not the case with Australia. The result is, as we have seen
above, that in 1944-45 British ;ayments to India on account of the war
will amount to nr.ess than $1,312 millions, with no significant counter
balancing ,Ayments the other cay.
Regraded Unclassified
- 5 -
Turning to the American comparison, the Reciprocal Aid
afforded by India to the United States exceeds by a significant amount
what they themselves obtain on Lend-Lease. Broadly speaking, the volume
of Reciprocal Aid afforded by India is at the rate of $260 millions.
WHILED
Lend-Lesse
including
both
non-aunitions
and
munitions
furnished to the Indian Army, has fallen slightly short of the above
Regraded Unclassified
III.
UNFAVOURABLE TRADE BALANCES WITH OTHER COUNTRIES
The remaining part of the Biitish overseas indebtedness
is the result of her abandoning her export trade, which has meant that
imports necessary for carrying on the war can only be obtained by
incurring debta.
for
Exporte
from
South
American
countries
in
1944 will so much exceed exports to them, that a large adverse balance
of payment, which can only be covered by an increase of debt,
necessarily results. The following are some illustrations covering
the year 1944:-
$ millions
British exports to
British imports from
Argentine
11.2
163.2
15.6
92.0
Brazil
Rest of South America
(Bolivia, Peru, Chile,
15.6
92.0
Uruguay, Paraguay)
The above is an absolutely inevitable consecuence of the abandonment of
British export trade and the diversion of manpower to direct war service.
Much the same sort of figures could be supplied relating to the Crown
Colonies. The Crown Colonies are mainly inhabited by native
populations at a low standard of life, for which the British Government
is in a position of Trustee. It has not been thought right to ask
them to make any direct contribution to the costs of the war. Since
imports from these Colonies have greatly exceeded exports, the present
position is that the United Kingdom owes the Crown Colonies (doubtless
to their great advantage in future years) the sum of about 12 billions.
The British Government meet out of their own pocket the cost of the raw
materials furnished to the U.S. from theColonies, for example, rubber
from Ceylon, thus increasing our debt to them.
2. The Dollar Expenditure of the United Kingdom
It is commonly believed that, as a result of Lend-Lease,
practically the whole of the British Government's dollor expenditure is
covered. In fact this 18 far from the case, as has been shown in
detail in the British Statement of Recuirements. British cash expends
ture in the United States, on the basis of the existin, scope of Lend
Lease, will exceed $800 millions in 1945. In addition there are cer
expenditures which are unav:idably incurred in terms of dollars in the
ountries, bringing the total dollar expenditure of the U.K. utside
Lease to about si billion a year.
Regraded Unclassified
7 -
3. British Gold Reserves
The United Kingdom started the war with net gold reserves
of about $2-1/2 billions. In the period before Lend-Lease, the whole
of this was expended, the net gold reserves of the U.K. at the end of
April 1941 having fallen to 63 millions. By far the greater part of
the $2-1/2 billions of gold thus lost was paid to the United States.
This money was spent in building up the munitions industry of the United
States, so that there was a very much shorter time-lag in the expansion
of munitions output after Pearl Harbor which would otherwise have been
inevitable. More recently, the British gold and dollar reserves have
been somewhat increased, largely as a result of earnings from the pay
of American forces in the SterlingArea, a source of income which is
rapidly falling off. At the end of this year the reserves may amount
to $1-1/2 billions, that is, a billion less than at the beginning of the
war. During this same period, however, the overseas liabilities of the
U.K., which were more than covered by their reserves at the beginning of
the war, will have risen to $12 billions, which is eight times the figur's
of the reserves.
As a result of the war, the U.K. will have parted with much
of its gold to the United States, as mentioned already, and will, for
reasons also summarised above, have incurred indebtedness to almost every
other Allied andAssociated Nation and to every neutral.
This great burden of indebtedness has not been due to
wastefulnessor failure to economise. It has been due to our extreme
single-mindedness in devoting all we have to the war. We have never
allowed financial prudence to impede the prosecution of the war. This
policy will have shortened the duration of the war for us and for every-
one. But the burden will remain.
Regraded Unclassified
284
NOV 16 1944
Dear Judge Patterson:
Thank you for your letter of November 14, 1944
stating tha t the War Department, the Navy Department
and the British representatives have agreed that the
item of $32 million for Landing Vehicles Tracked will
remain on the Navy Department schedule of British
requirements while the War Department will reduce
the item of $52,601,110 on its schedule to $3,063,270
to cover the arments for these vehicles only, thus
eliminating duplication in the two programs.
Very truly yours,
(Signed) H. Morgenthau, Jr.
Secretary of the Treasury.
Honorable Robert P. Patterson,
Under Secretary of War,
Munitions Building,
20th & Constitution,
Washington, D.C.
INC:T1 WE 11/16/44
HOW
FILE COPY
Regraded Unclassified
285
war department
NOV 14 1944
WASHINGTON
TOP SECRET
The Honorable
The Secretary of the Treasury
Dear Mr. Secretary:
As indicated by Sir Robert Sinclair at the meeting held
in your office on Friday, 10 November, there is a duplication as
between the War Department schedule of Ground equipment and the
Navy Department schedule with respect to Landing Vehicles Tracked.
On page 5 of the War Department schedule of Ground equipment, there
appears an a ccepted requirement for Landing Vehicles Tracked total-
ling $52,601,110. This figure included the vehicles themselves,
spare parts, armament and all other ancillary charges. In the Navy's
schedule of accepted requirements, there appears & figure of
$32,000,000 for the same vehicles.
By agreement between the War Department, the Navy Depart-
ment and British Representatives, it is suggested that the War
Department's acceptance with regard to this item be limited to the
armament for the vehicles and that the Navy's acceptance of the
requirement for the vehicle remain as presently stated.
It is, therefore, requested that the item referred to
above in the War Department schedule should read as follows:
Armament and Fire Control Instruments
for Landing Vehicles Tracked
$3,063,270
in lieu of the present reference to Landing Vehicles Tracked and
at a total value of $52,601,110.
This alteration of the schedule results in & reduction
in the total dollar value of the War Department's acceptance to the
extent of $49,537,840. Дв amended, the summary would be as follows:
Estimated Undelivered Phase II (U.S. Period I) Total
Balance of 1944 ASP
Requirement
$179,631,728
$599,086,498
$778,718,226
Sincerely RUPP yours,
Robert P. Patterson
Under Secretary of War
TOP SECRET
Regraded Unclassified
286
FEDERAL RESERVE BANK
OF NEW YORK
November 16, 1944
CONFIDENTIAL
Dear Mr. Secretary:
Attention: Mr. H. ". White
I am enclosing our compilation for the week ended
November 8, 1944, showing dollar disbursements out of the British
Empire and French accounts at this bank and the means by which
these expenditures were financed.
Very truly yours,
/s/ L. W. Knoke
L. W. Knoke,
Vice President.
The Honorable Henry Morgenthau, Jr.,
Secretary of the Treasury,
Washington 25, D.C.
Enclosure
COPY
Regraded Unclassified
287
TREASURY DEPARTMENT
OFFICE OF THE SECRETARY
November 18, 1944
CONFIDENTIAL
Received this date from the Federal Reserve Bank
of New York, for the confidential information of the
Secretary of the Treasury, compilation for the week
ended November 8, 1944, showing dollar disbursements
out of the British Empire and French accounts at the
Federal Reserve Bank of New York and the means by
which these expenditures were financed.
EmB
Regraded Unclassified
Strictly
ANALYSIS OF BRITISH AND FRENCH ACCOUNTS
Confidontial
(In Millions of Dollars)
Week Ended November 8. 1944
B.NK OF ENGLAND (BRITISH COVERNMENT)
BANK OF FRANCE
DEBITS
CREDITS
Not Incr.(+)
Not Incr, (+)
Gov't
Proceeds OI
Transi ors
PERIOD
Belos of
from
Other
or Decn, (-)
Total
Total
or Decr. (-)
Total
Expendi-
Official
Securities
Official
three
Canadian
Other
Total
(Official)
Australian
Credits
in $ Fends
Debits
Credits
in à Punds
was Years (g)
Debite
(a)
Account
Dobits
Credits
Gold
(b)
Account
(c)
(d)
(o)
(0)
(d)
First
1,793.2
605,6
20.9
1,166,7
1,828,2
1,356.1
52.0
3.9
476.2
+ 35.0
866.3 (f)
1,095.3 (1)
+ 299.0
Second
2,203,0
1,792.2
3.4
407.4
2,189.8
1,193.7
274.0
16.7
705.4
- 13,2
38.9
8,8
- 30.1
Third
1,235.6
904,8
7.7
223.3
1,361.5
21.8
5.5
57.4
1,276,8
+ 125,9
18.5
4.4
- 14,1
Fourth
764.0
312:7
170.4
280.9
1,072.3
-
0.5
155.1
916,7
+ 308.3
10.3
1,0
- 9.3
61.4
1,369.6
253.0
1,116,6
+ 171.9
-
Fifth
1,197.7
300.4
835.9
-
-
-
-
1944
September
151.0
19.9
50.4
80.7
56.6
-
-
1.0
55.5
- 94.5
-
-
-
October
127.9
21.0
7.4
99.5
54.7
-
-
1.0
53.7
- 73.2
-
-
-
Novumber
Docember
-
1945
January
February
March
April
May
June
July
August
Wook Endod
7.8
6.3
1.5
2.6
-
-
-
2.6
- 5.2
-
-
-
Catober 18, 1944
-
October 25. 1944
19.3
4.1
7.4
7.8
29.3
-
-
-
29.3
+ 10.0
-
-
-
Regraded Unclassified
November 1, 1944
29.4
3.5
-
25.9
12.1
-
-
1.0
11.1
- 17.3
-
-
-
November 8. 1944
9.3
3.9
-
5.4
9.6 (b)
-
-
9.6 (h)
+ 0.3
-
-
-
-
AVERAGED Wookly Expend tures Since Outbrdak of Mar
Soc attached shoot for footnotos.
Franco (through June 19, 1940) $19.6 million
England (through June 19, 1940) 27.6 million
England (through Juno 20, 1940 to March 12, 1941) $54.9 million
England (sinco Harch 12, 1941) 21.9 million
(a) Includes payments for account of British Ministry of Supply Mission, British Supply Board, Ministry of Supply Timber
Control, and Ministry of Shipping,
(b) Estimated figures based on transfers from the New York Agency of the Bank of Montreal, which apparently represent the
proceeds of official British sales of American securities, including those effected through direct negotiation, In addition
to the official selling, substantial liquidation of securities for private British account occurred, particularly during the
to data supplied by the British Treasury and released by Secretary Horgenthau, total official and private British liquidation
early nonths of the war, although the receipt of the proceeds at this Bank cannot be identified with any accuracy. According
of our securities through December, 1940 amounted to $334 million.
(c) Includes about $85 million received during October, 1939 from the accounts of British authorized banks with Now York banks,
presumably reflecting the requisitioning of privato dollar balancos. Other large transfors from such accounts since October,
1939 apparantly represent current acquisitions of proceeds of exports from the storling area and other accruing dollar
receipts. See (k) below.
(4) Reflects net change in all dollar holdings payable on domand or maturing in one year.
(a) for broakdown by typos of dobite and crodits 500 tabulations prior to Harch 10, 1943.
(0 Adjusted to eliminate the offect of $20 million paid out on June 26, 1940 and roturned the following day.
(g) For monthly broakforn 500 tabulations prior to April 23, 1941; October 8, 1941; October 14, 1942, September 29, 1943, September 6, 1944.
(b) Instrudos $ 6.8 sillion apparently reprosonting current and accumalated dollar proceeds of storling area services and
exports, and $ 1.0 million transferred from account in this market of Norwegian Shipping and Trade Nission.
Regraded Unclassified
ANAYLSIS OF CANADIAN AND AUSTRALIAN ACCOUNTS
(In Hillions of Dollars)
Strictly
Wook Endod November 8. 1944 Confidential
BANK
OF
CANADA (and Canadian Government)
COMMONWEALTH BANK OF AUSTRILLA (and Australian Government)
DEBITS
CREDITS
DE
BITS
Transfers
CREDITS
Transfers from Official
Transfers
to
Procceds
British A/C
Net Iner.
to
Proseeds
Not Incr,
Official
of
(+) or
Official
PERIOD
of
(+) or
Total
British
Others
Total
Gold
For Own
For French
Other
Decr. (-)
Total
British
Other
Total
Gold
Other
Decr. (-)
War Years (a)
Debits
A/C
Debits
Credits
Sales
A/C
A/C
Credits
in @unds (e)
[ebits
A/C
Debits
Credits
Sales
Credits
in $Punds w
First
323.0
16.6
306,4
504.7
412.7
20,9
38.7
32.4
+ 181.7
31.2
3.9
27.3
36.1
30.0
6.1
+ 4.9
Socond
460.4
-
460.4
462.0
246.2
3.4
123.9
88.5
+ 1,6
72.2
16.7
55.5
81,2
62.9
18.3
- 9.0
Third
525.8
0.3
525.5
566.3
198.6
7.7
-
360.0
+ 40.5
107,2
57.4
49.8
112,2
17.2
95.0
- 5,0
Fourth
723.6
-
723.6
958.8
47.1
170.4
-
741.3
+ 235.2
197.0
155.1
41.9
200.4
-
200.4
+ 3.4
Fifth
849.3
1,0
848.3
958.5
38.1
61.4
-
859.0
+ 283.3
298.6
253.0
45.6
287.7
1
287.7
- 10.9
1944
September
74.5
0.1
74.4
91,8
-
50.4
-
41.4
+ 17.3(r)
5.8
1.0
4.8
7.3
-
7-3
- 1.5
tober
24.1
-
24.1
84,2
-
7.4
-
76.8
+ 60.1
20.5
1.0
19.5
21.0
,
21.0
- 0.5
overper
December
1945
futurwary
March
will
als
Week Ended
Detaber 18. 1944
3.1
-
3.1
5,2
-
-
-
5.2
+ 2.1
0.2
-
0.2
0.4
-
0.4
0.2
October 25. 1944
7.9
-
7.9
29.4
-
7.4
-
22.0
+ 21.5
0.1
-
0.1
0.8
-
0.8
+ 0.7
Novamber 1. 1944
7.1
-
7.1
15.3
-
-
-
15.3
+ 8.2
20.5
1.0
19.5
19.5
-
19.5
- 1.0
Movember E. 1944
6.0(c)
-
6.0
13.2(c)
-
-
-
13.2(d)
+ 7.2
-
-
-
0.4
-
9d
+ 0.4
Wookly oxpenditures for
First year of war
6,2 million.
(a) For monthly broakdowns 500 tabulations prior to: April 23, 1941; Ortober 8, 1941;
Second year of war
8.9 million.
October 14, 1942; September 29, 1943; Septomber 6, 1944.
Third year of war
10.1 million.
(b) Reflects changes in all, dollar holdings payable on domand or acturing in one year.
Fourth year of war
13.9 million.
(c) Does not reflect transactions in short torm 0. S. socurities.
Firsh year of wor
16.1 million.
(d) Includes 8 1.7 million deposited by War Supplice, Ltd.
5ixth year of was (through) November 8, 1944)
7.0 million.
and 8 11.5 million received from New York accounts of Canadian chartered bankes
291
November 16, 1944
5:27 p.m.
Grace
Tully:
Mr. Secretary, how are you, sir?
HMJr:
Very well.
T:
That's good.
HMJr:
How are you?
T:
Fine, thank you.
HMJr:
I thought you were a little on the serious
side yesterday.
T:
No, I wasn't. It was just that I had a few
little things to check and
....
HMJr:
Yes.
T:
....
I'm always out of breath running, trying
to catch up with him 80 I can get the answers.
HMJr:
When is that nice man that you work for going
to tell us where he's going to be Sunday night?
T:
I don't know that he's made up mind; I haven't
heard yet.
HMJr:
Ah
T:
Sunday night is your broadcast if he's here,
huh?
HMJr:
Yeah. Are you going to see him?
T:
Yeah, I expect to; I haven't gotten in there
yet and it's now half-past five. I haven't seen
him all day except a glimpse of him when I had
to go in to get something signed, but actually
I haven't done any work with him today.
HMJr:
Well, tell him to quit kidding.
T:
(Laughs)
HMJr:
Because -- will you?
T:
Yeah.
Regraded Unclassified
292
- 2 -
HMJr:
And see if you can find out because -- the point
is we had this thing and he said it was too long
80 we're rewriting it for six hundred words.
That's what he wanted. Well, that's easy enough.
T:
Uh huh.
HMJr:
But if he isn't going to do it, then he's got to
make a record.
T:
Uh huh.
HMJr:
We've got to set the thing up, you know
T:
Yeah.
HMJr:
....
and find the time and all that rigmarole.
T:
Uh huh. Well, let me find out if he's made up
his mind about the week-end and if he has, I'll
let you know, and if he's not to be here, then
we'll -- I'll let you know that so you can --
and see if we can find the time -- let Steve
work out a time when he can make the record.
HMJr:
Well, we've been after Steve and Steve knows
nothing.
T:
Well
HMJr:
I mean he doesn't know any more than I do.
T:
No, and I don't know either, you see. He's the
only one that knows or maybe he -- even he doesn't
know.
HMJr:
Well, give him the "woiks".
T:
All right, fine. (Laughs) I'll go to work on
him.
HMJr:
Say, wasn't that funny yesterday. I finally got
T:
(Coughs) You finally what?
HMJr:
God, you sound as though you really
T:
Oh, sure, on my way to Denver.
Regraded Unclassified
- 3 -
293
HMJr:
I finally got him to put it on a piece of paper.
T:
Uh huh.
HMJr:
And then he put it in his pocket.
T:
Yeah. (Laughs)
HMJr:
What a man.
T:
(Laughs)
HMJr:
But I suppose someday those papers will be coming
over.
T:
Yeah.
HMJr:
You give him the works and I'll be home tonight.
T:
Fine, Mr. Secretary, I'll let you know just as
soon as I can check with him.
HMJr:
I thank you.
T:
Fine. Bye.
Regraded Unclassified
294
November 16, 1944
5:35 p.m.
TAX CASE - J. DAVID STERN
Present: Mr. O'Connell
Mrs. Klotz
H.M.JR: I want to compliment you on your appro ach
on that Nation thing yesterday. In other words, your
mind was open. Just because they have always ruled
that way, still you were willing to approach it from
the angle - what can you do to be helpful. I liked
that approach.
MR. O'CONNELL: Thank you for saying that.
H.M.JR: But this idea, why they have to come in
here and see me, and that they don't know about the
Free World, or this Survey Graphic, doesn't speak very
well for--
MR. O'CONNELL: Well, there is always a difficulty
in a big organization like the Bureau that they tend
to become bureaucratic in the sense that they follow a
straight line, or tend to follow too much the precedent
that has been established some time before, and you
pointed out to them, one of the difficulties that we have,
even in doing what they would like us to do, is that as a
result of probably stupid decisions that we made in years
gone by, we have been reversing a whole lot of decisions,
as granting tax exemptions to--
H.M.JR: Well, your mind is open. This fellow Cann,
he won't do a damned thing because they might some way
upset their procedure.
Regraded Unclassified
295
- 2 -
MR. 0' CONNELL: Yes, it is easier, you see. Once
you take a little different tack, then they have to make
some additional decisions, and it is just a condition
that will always exist; it is just a case of fighting it
as much as you can. The bigger the organization the
more difficult it is to combat it, because you can't
handle volume on case-by-case methods, with the type of
person in you have to have.
H.M.JR: Where do we stand?
MR. 0' CONNELL: I have a memorandum, or a letter,
for you to send to Mr. Stern, but whether I could tell
you more quickly than by having you read the letter, I
don't know. The fact is, the letter is a page plus two
lines. The fact is that the application of his has been
down here for several months and it is being sent back
now to the regional office because, although approved
in the regional office, it has been disapproved here by
the Review Board of Economists and others whose job it
is to review these 722 cases.
Now, as I said in this memorandum at the end of it,
he indicated that he had been informed or advised by
Sullivan that it would be approved, or handled like that.
This is entirely inaccurate. I do not see how anyone
familiar with the problems inherent in this situation
could have told Mr. Stern that the Review in "ashington
was either in proper form, or that it could have been
completed within a matter of 8. few days. As a matter of
fact, the function of Review here is a very important
and time-consuming one, especially at this stage in the
game.
Now, what I wanted to get at was that we have
thirty-four thousand applications for relief under
722 in the Bureau of Internal Revenue right now.
They involve some three billion dollars of relief.
That is for one war year. That is 1941, and the possi-
bilities are, if you were to assume that you would grant
all the applications for relief that it would ru.l up in
Regraded Unclassified
296
- 3 -
terms of ten to twelve billion dollars of refund.
Now, with that as a background, and also indicating
that we have actually only approved some three hundred
cases - we have only finally handled three hundred cases
involving refund, of seven hundred and twenty-two. Now,
with that as a background, at least Mr. Stern is in the
same boat with thirty-three thousand seven hundred other
people. Now, there is a very good reason for that, and
this is, in general, the reason: This provision of seven
hundred and twenty-two provides without adequate standards
that under circumstances not well set forth in the statute,
the Bureau of Internal Revenue, or the Commissioner, is
to give individual companies relief from excess profits
taxes, and the theory is that if a company which operates
on a base period of earnings, excess profits tax basis,
can show the Bureau that for some peculiar reason his
income during the base period was abnormally low during
one or more of the years, then - I am trying not to make
this too complicated--
H.M.JR: I am too tired, is the trouble. Let me
read this letter. I am so terrifically tired I can't
see. I should have gotten to it earlier but it was
physically impossible.
MR. O'CONNELL: It isn't being finally rejected.
It is being sent back for an additional showing. It
is an awful case.
H.M.JR: +hat is a very nice letter. (The Secretary
signs letter to Mr. Stern)
MR. O'CONNELL: The memorandum in a little more
detail says something of the same thing. This is a memoran-
dum which I wrote, and then when I didn't get to the Secre-
tary later in the day, I then decided to write the letter.
That is about the situation.
H.M.JR: Let a special delivery stamp go on it.
Regraded Unclassified
297
- 4 -
MR. O'CONNELL: The probabilities are that you are
going to get an increasing number of complaints. I don't
believe justifiable complaints under seven hundred and
twenty-two, because there is more dynamite in seven hundred
and twenty-two, if we don't do a defensible job, because
you can give away the county courthouse, and in Mr. Stern's
case, for example, he says it involved thirty thousand
dollars; it involves that in reconstruction of his base
period earnings, but if his earnings are high enough in
the four years of '41 to '45 it may mean half a million
dollars because it has an effect each year.
The Bureau in this case has a very good justifica-
tion for going slow. They couldn't approve cases until
they could see the panorama of the types of situations
they are going to be confronted with, until the cases
came in.
Now the cases are in. They have spent six months
trying to prepare a document which would instruct the
people in the field. The document is one hundred and
seventy-five pages long; it has to be interpreted by poor
people in the field who wouldn't know how to do it.
They will all have to be reviewed here, at least until
you have a pattern and a case method which will permit
us to go a little faster, anyway.
H.M.JR: When will you have a report on The Nation?
MR. O'CONNELL: I am afraid not until Saturday.
H.M.JR: They didn't seem to mind if I took a few
days, and Norman Cann left town last night until Saturday.
He was collecting some information for me and I will have
something for you when you come back Tuesday.
Regraded Unclassified
298
NOV 16 1944
Dear Mr. Stern:
I have had Mr. O'Connell check into the situation
you described to me yesterday with respect to the claim
filed by the Courier-Post for relief under Section 722
of the Internal Revenue Code.
From the information given no I an satisfied that
your disquietude about the fact that the claim for re-
lief has not been finally acted on is without substance.
So that you may understand a little better the diffi-
culties with which we are confronted in this field, you
should know that some 34,000 claims for relief have been
filed involving, for only one year, upwards of $3 billion.
Furthermore, the necessity for "feeling our way in an
uncharted field, and also the obvious desirability of
obtaining the greatest possible amount of uniformity in
results, has made it necessary to set up a system which
involves a substantial amount of examination of individual
cases here. The situation has in general been such that
we have as of this time finally passed on a very small
number of the pending cases.
In your particular case, I an informed that for
reasons that will be made known to you through the field
office, it has been found necessary to return the case
to the field for further examination in the light of
considerations felt to be important by our review Givi-
sion here.
I can give you every assurance that your case will
be given every possible consideration. In fact I have
given instructions that it be expedited. I do hope what
I have said will give you a little better understanding
of the difficulties we face, and in any event please
Regraded Unclassified
299
- 2 -
believe that we will do everything reasonably possible
to get a quick and fair decision, and at the same time
please accept my assurances of personal esteem.
Sincerely yours,
(Signed) H. Morgenthau, Jr.
Secretary of the Treasury
Mr. J. David Stern,
President, Philadelphia Record Co.,
Philadelphia Record Building,
Philadelphia, Pennsylvania.
JJO'C:mv
Regraded Unclassified
300
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
Date
November 15, 1944
TO Secretary Morgenthau
FROM Joseph J. O'Connell, Jr.
I checked on the claim for relief under Section 722
of the Internal Revenue Code, filed by the Courier-Post,
about which Mr. Stern spoke to you this morning.
The case has been in Washington for several months, it
having been sent in from the field for post review in accord-
ance with the usual procedure. The economists and others
responsible for this operation are not in agreement with the
recommendation made in the field (the field recommended sub-
stantial relief), and the case is being returned to the field
office for further consideration there. What this really
means is that the Bureau people here do not believe that the
taxpayer has made & showing which justifies a granting of the
relief sought.
In explanation of what might seem to be an unjustifiable
delay in this case, I think it should be pointed out that
there have been some 34,000 claims for relief already filed.
Section 722 is probably the most difficult provision in the
Internal Revenue Code, from the standpoint of administration,
and is also the section probably most fraught with danger if
extreme care is not taken not only to produce uniform results
but also results which can be defended from the standpoint of
the Government interest in protecting the revenue. An idea
of the magnitude of the job (and the guides set out by Congress
for deciding the extent to which relief should be granted in
individual cases are far from satisfactory) can be gained by
a realization that the total amount of money involved is,
roughly, $3 billion a year for each of the war years, starting
with 1941.
The Bureau has been working for months attempting to
formulate satisfactory rules to guide those responsible for
the examination of claims. It was, as a practical matter,
impossible to formulate rules except in the light of an examina-
tion of the various types of claims actually filed. Because of
the factors I have mentioned, as well as others, the Bureau has
Regraded Unclassified
301
- 2 -
actually passed on a very small portion of the claims filed --
my information is that it is at most a few hundred. What I
am really trying to say is that Mr. Stern is in the same
position as almost all claimants for relief, as of today, and
that there are very good reasons for it.
I do not see how anyone familiar with the problems
inherent in this situation could have told Mr. Stern that
the review in Washington was either pro forma or that it
would be completed in a matter of a few days. As a matter
of fact, the function of review here is a very important
and time-consuming one, at least at this stage of the game.
Regraded Unclassified
302
TREASU RY DEPARTMENT 11-16-44
Commissioner of Accounts
To Secretary Morgenthan
Thank you
very much
for your
him speech
at O.P.a.
to was a
speendid talk
and a good
hoost for
P/re savings
Respectfully.
E.5.Bartok
Mr. Bartelt
EXTEMPORANEOUS SPEECH BY SECRETARY
Regraded Unclas
303
TREASURY DEPARTMENT
WAR FINANCE COMMITTEE
OFFICE OF STATE CHAIRMAN
1270 Sixth Avenue
New York 20, New York
November 16, 1944
Dear Mr. Morgenthau:
We are looking forward with a great
deal of anticipation to having you with us
on Monday next, both at lunch and dinner.
To meet you informally, I am asking
the members of the Executive Committee of
the New York State War Finance Committee to
lunch at the Metropolitan Club. We are
looking forward to a pleasant time, without
imposing on you the need for a speech.
I understand from Ted Gamble that your
speech on Monday evening is to be on the air,
and we are arranging the schedule of our pro-
gram accordingly.
We feel greatly honored that you have
agreed to come to New York to inaugurate the
national campaign for the Sixth War Loan, and
trust that we will give you no cause to regret
your decision.
With respectful good wishes,
F.w. Sincerely Give yours,
Frederick W. Gehle
State Chairman
Honorable Henry Morgenthau, Jr.
Treasurer of the United States
Washington, D. C.
Regraded Unclassified
304
TREASURY DEPARTMENT
WASHINGTON
25
War Finance Division
November 16, 1944
Dear Mr. Secretary:
Thank you so much for your kind and generous
note of November 11th.
I am glad you liked our report to General
Cobbs and I certainly hope the War Bond Drive
in the E.T.O. is a success.
As I have said to you before, I shall
always regard the opportunity to go to Europe
on this mission as a great privilege. To you
who made it possible, I shall be everlastingly
grateful.
Sincerely,
Peter Peter H. Odegard
The Honorable
The Secretary of the Treasury
Washington, D. C.
PORDEFENSE
BUY
UNITED
STATES
SAVINGS
BONDS
women
Regraded Unclassified
ROBERT a. RETHOLDS, N. C., CHAIRMAN
305
ELGERT D. THOMAS, UTAH
WARREN a. AUSTIN, VT.
EDWIN c. JOHNSON, COLO,
STYLES BRIDGES, N. N.
LISTER HILL, ALA.
CHAN GURNEY, a. DAK.
THERIDAN DOWNEY, CALIF.
RUPUS c. HOLMAN, OREG.
MERT a. CHANDLER, KY.
CHAPMAN REVERCOMB, W. VA.
ARY a. TRUMAN, MO.
GEORGE A. WILSON, IOWA
United States Senate
MON, c. WALLGREN, WASH.
JOHN THOMAS, IDAHO
HARLEY M. KILGORE, w. VA.
JAMES E. MURRAY, MONT.
COMMITTEE ON MILITARY AFFAIRS
JOSEPH c. O'MAHONEY, WYO.
MARGUERITE E. WATTS, CLERK
Washington, D.C.
Nov ember 16, 1944
Dear Mr. Secretary:
Appreciated very much your letter of congratulations,
which I found on my desk when I returned to Washington.
I was certainly glad to hear from you.
Sincerely yours
HST:MLD
Harry S. Trumary0.S.S.
Honorable Henry Morgenthau, Jr.
The Secretary of the Treasury
Washington, D. C.
301770 to YPAT38035
so e Mr OS vonerer
Regraded Unclassified
306
NOV 16 1944
Dear Mr. Olrich:
I accept with the very greatest relustance
your resignation as Assistant to the Secretary in
charge of the Procurement Division to take effect
November 27.
If I did not recognize the urgeney of the
conditions which seem to compel you to return to
your own business I should insist much more strongly
on your remaining with us.
In the few months you have been with the
Treasury Department you have done a magnificent job
in putting together the organisation necessary for
handling the extremely difficult part of the sur-
plus disposal problem which has been assigned to
the Treasury.
I know that you have done this at a serious
sacrifice only because you desired to render all
possible service to your country in time of mar.
Recognising this patriotic service I desire at
the same time to thank you personally for the help
you have given to me.
Sincerely,
(Signed) H. Morgenthau, Jr.
Secretary of the Treasury.
Mr. Krnest L. Olrish
Assistant to the Secretary
Treasury Department
HEG/mah
Regraded
OFFICE
OF
FOR VICTORY
TREASURY DEPARTMENT
BUY
UNITED
STATES
WASHINGTON 25
WAR
BONDS
AND
THE ECRETARY
STAMPS
November 14, 1944
MEMORAN DUM TO THE SECRETARY
I herewith tender my resignation as Assistant to the
Secretary in charge of the Procurement Division, effective
Monday, November 27, 1944.
You and I have discussed on numerous occasions the
reasons why Munsingwear's affairs require that I return to
Minneapolis.
May I take this opportunity of telling you how much
I appreciate the confidence that you have evidenced in me.
The free hand that I have had in the conduct of Procure-
ment affairs has contributed in no small way to the
progress we have made in Procurement and Surplus Property
reorganization.
It is with regret that I am leaving your services.
E. Olrich
Assistant to the Secretary
Regraded Unclassified
308
NOV 16 1944
Through the Bureau of the Budget
Attorney General
Division of the
Federal Register.
My dear Mr. President:
I have the honor to transmit herewith for
your consideration and approval, if you concur
in my recommendation, a draft of an Executive
order revoking the designation of Dunkirk, New
York, as a customs port of entry in Customs Col-
lection District No. 9 (Buffalo), to become ef-
fective at the close of business on November 30,
1944.
The customs port of entry of Dunkirk, 10-
cated on Lake Erie, was established by President
Taft in his Message to Congress submitting a plan
of organ ization of the Customs Service, datad
March 3, 1913. Its designation became effective
July 1, 1913, and has been continued in effect
since that date. A part-time deputy collector
of customs, receiving a salary of $480 per an-
num, is now assigned to duty at this port.
Regraded Unclassified
309
- z -
Since 1938, very few vessels engaged in
trade have entered at the port of Dunkirk from
points in the Dominion of Canada. All the ner-
chandise carried by these vessels was free of
duty, and no merchandise was exported on such
vessels through this port.
As an indication of the decrease in the
volume of business handled at this port, it is
desired to state that during the fiscal year of
1938 & total of 48 entries covering dutiable in-
ported goods was filed there, on which the duties
collected amounted to $4,295.90; in 1939, there
were 29 dutiable entries, and the duties aggre-
gated $2,204.27; in 1940, 21 entries, and the
total collections were $833.72; in 1941, 5 en-
tries, yielding $201.70 in revenue; in 1942, 2
entries, total collections $4,355.05; in 1943, 3
entries, the collections amounting to $7,067.44;
and in 1944, 3 entries, on which the total duties
amounted to only $169.70.
The number of transactions described in the
preceding paragraph represents a very small vol-
use of customs business, simply consisting of an
Regraded Unclassified
310
- 3 -
average of from two to four dutiable consumption
entries per month in the fiscal years of 1938,
1939, and 1940, and from two to five entries in
the entire fiscal years of 1941, 1942, 1943, and
1944. As a large amount of duties is frequently
collected on 8. single importation, the work re-
quired to be performed by the customs officer at
this port during the past several years has been
negligible.
The entire amount of revenue collected at
Dunkirk since 1938 consisted of duties assessed
on merchandise shipped thereto via bonded car-
riers from other ports of entry, and such ner-
chandise could have been examined and appraised,
and the duties collected thereon, at the ports
of arrival.
In view of the decrease in the volume of
the customs and marine business at this port dur-
ing the past seven years, and the fact that the
small quantity of imported goods consigned to in-
porters there may be cleared through customs at
the ports where such goods arrive in the United
States, thereby resulting in no loss of customs
Regraded Unclassified
311
- 4
revenue, it is recommended that its designation
as a port of entry be revoked.
Upon the revocation of the designation of
Dunkirk as a port of entry, if an owner or oper-
ator of a vessel desires to make entry at that
port for the purpose of lading or unlading cargo,
the Commissioner of Customs of this Department
may grant permission to such owner or operator to
enter his vessel under the provisions of section
447 of the Tariff Act of 1930 (U. S. C. title 19,
sec. 1447), and Executive Order No. 9083, dated
February 28, 1942 (7 F. R. 1609), and a customs
officer will be detailed from the port of Buffalo
to handle the business.
The abolition of this port of entry will ac-
complish a saving of $480 per annum, comprising
the salary now paid to the part-time deputy col-
lector, plus certain contingent expenses.
The action recommended is within the author-
ity conferred upon you by section 1 of the Act of
August 1, 1914, 38 Stat. 609, 623 (U. S. 0. title
19, sec. 2).
Faithfully yours,
(Signed) H. Morgenthau, Jr.
Secretary of the Treasury.
The President,
The White House.
Regraded Unclassified
312
EXECUTIVE ORDER
-
REVOKING THE DESIGNATION OF DUNKIRK, NEW YORK,
AS A CUSTOMS PORT OF ENTRY.
By virtue of the authority vested in me
by section 1 of the Act of August 1, 1914, 38
Stat. 609, 623 (U. S. C. title 19, sec. 2),
it is ordered that the designation of Dunkirk,
New York, as a customs port of entry in Gus-
toms Collection District Number 9 (Buffalo),
be, and it is hereby, revoked, effective at
the close of business November 30, 1944.
THE WHITE HOUSE,
November . 1944.
grade Unclassified
313
Treasury Department
Division of Monetary Research
313
Date November 16, 1944 19
To:
10. White
From:
E. M. Bernstein FMB
Mrs. Adams of the League of Women Voters
told me today that their present business meet-
ings are not of a kind in which it would be
suitable to have a discussion of the Bretton
Woods Agreements. She said, however, that the
League endorses the Bretton Moods program.
I thanked her for that and told her that we
would appreciate it if she would have an officer
of the League write to Secretary Morgenthau
to this effect.
Regraded Unclassified
314
The Hem York Times
Times Square
November 16, 1944.
Dear Mr. Secretary:
Thank you for your letter. I am
returning herewith Mr. Shirer's article,
since you may want it for your files. I
agree with you that it supports the con-
tention in our editorial of November 6th.
I shall look forward to a chance to
see you when I am in Washington again.
Sincerely yours,
Charles Marg.
Mr. Henry Morgenthau, Jr.,
The Secretary of the Treasury,
Washington, D. C.
Regraded Uncles
315
NEW
YORK
Herald
Tribune
NOV 1 2 1944
PROPAGANDA
FRONT
Tri
NOV
By WILLIAM L. SHIRER
By Wireless to the Herald Tribune
"brown pest" then. They cheered
the Rhine, and millions more be-
Copyright, 1944, New York Tribune Inc.
it. For it had, they thought-and
hind the Rhine, all the way to
AACHEN Germany, Nov. 11.-
some of them admitted it to me to-
East Prussia. These Germans
Here in the city of Charlemagne,
day-won them a great war.
they stoutly maintain, want to
where your correspondent once
Swastika flags flew from their win-
halt the war, preferring anything
heard Adolf Hitler boast that his
dows then and the citizens greeted
that the Allies may have in store
Third Reich would last a thousand
each other with a resounding "Heil
for them rather than to go down
years, if not longer, one can see
Hitler."
in Goetterdaemmerung ruin with
Nazism dead amongst the ruins.
Today when Hitler is mentioned
the Nazi leaders.
Bent and broken Germans of all
it is with a curse. And for a very
ages, but mostly old, dig in the
In Himmler's Grip
simple reason. He has brought
debris which is all there is left of
ruin to Germany-ruin they never
Why don't they quit then, you
this once proud city of 160,000 in-
dreamed was possible four years
ask. The answer invariably is the
habitants. American artillery
thunders from behind the town
ago.
same. They can't. Himmler's
When did they have a change
grip on the population and on the
and shells explode in the German
of heart about Hitler and Nazism
army is too iron. To falter now
lines not far away. Occasionally 8.
and the war? I returned to Ger-
means instant execution whether
German shell comes over adding
many today after an absence of
you are a worker, housewife, farm-
its might to the utter destruction
of this German town. Civilians, a
four years to try to find out. We
er, business man or general.
have occupied but a tiny fraction
Eleven years of Nazism and five
little shell-shocked still from the
bombardment and bombings and
of the Reich. The rest of Ger-
years of war-all Germans I
many still is fighting desperately
talked to agreed-have knocked
shocked, too, that the war which
Hitler waged so long in distant
against the Allies, whe are closing
out of the German people all the
lands should return to lay waste to
in from three sides. The picture
principles and morals and, above
their German homes, pause in
you get here is still incomplete.
all, any urge to revolt. All they
And the few thousands who re-
think of now is how to survive.
their digging to curse "the brown
mained in the shambles of Aachen
But they all know that the war
pest," meaning the Nazis. They
were those who defied the Nazi
is lost and secretly hope that the
dig and curse and as night falls
Allies finish the war before winter,
they crawl down to their cellar
evacuation order, the Gestapo who
holes, dark and cold and damp, to
tried to drive them from their cel-
which promises to be the grim-
prepare a sparse evening meal.
lars into interior Germany, and
mest in modern German history.
the terrible bombing and shelling
I was curious to know-since
They Used to Cheer
in order to remain.
Germany has been pretty much of
Pitiful specimens of humanity
Such folk obviously are not
a closed book to us for four years
you think
And yet I saw them in
fanatical Nazis, except the spies
-when the German peopli them-
this same historic town exactly
who remained behind for an obvi-
selves realized the Jig was up and
four years ago. They were not
ous purpose. But they insisted to
the Nazis had merely led them to
bent or broken or shell-shocked
me today that there are millions
another lost war as had- the Kai-
the They did not curse the
more like them between here and
Regraded Unclassified
NEW
YORK
316
Herald
Tribune
NOV 1 2 1944
propaganda was highly effective
ser's regime a quarter-century be-
in spurring the masses in the first
fore. I questioned several Germans
three years of the wary but has
of all types and classes among the
lost its effect now.
ruins today - few, chiefly intel-
When I brought up the subject
lectuals, said that they felt the
of Goebbels today most of the
war was lost on July 22, 1941, when
Germans either cursed or laughed.
Germany attacked Russia. Why?
But they have an unholy fear of
Because, they said, every German
Himmler and his 8. 8. gunmen.
knew Germany could never win a
And in Aachen they hope the Ger-
two-front war.
man Army won't retake the city,
Others said they realized that
since they feel it would mean their
the war was lost when the Wehr-
doom for having stayed behind.
macht failed to take Moscow in
The American military govern-
December, 1941, and the United
ment, so far as I can see, is tak-
States entered the war. The rest
ing a firm but fair attitude. Most
of the German civilians I talked
agreed the people knew that the
to were shocked that we were
war was lost after Stalingrad.
Many hoped then that the Army
treating them so decently. Most
would take over and get a negoti-
of them said they expected the
worst.
ated peace. But all I talked with
today were unanimous that there
I watched the American military
police bringing in men and women
is little hope of a revolt in the
apprehended for the lack of iden-
Army command today. Hitler and
tity papers or military permits.
Himmler have seen to that. The
The police were highly polite and
moment a general does not toe the
usually drive the civilians, espe-
line he is a candidate for a firing
cially the elderly ones, to the Civil
squad.
Affairs Headquarters, where mat-
I found little evidence that, as
ters are straightened out for the
Governor Thomas Dewey and
German population. They also
many others in America and Brit-
were impressed by the recent ae-
ain, believe that our insistence on
quittal by an American military
unconditional surrender or even
court of two German civilians for
the publicity given the so-called
harboring German soldiers who
Morgenthau and Vansittart plans
had shed their uniforms for civil-
for harsh peace are spurring the
ian clothing. As the Obegbuerger-
Germans on to fight to the death.
meister, whose name cannot be
The genefal attitude seems to be
mentioned for fear of Nadi repris-
that any kind of peace is pref-
als against his family, remarked
erable to a continuance of the war.
to me: "We hardly expected you
All acknowledge that Goebbels's
to be so fair."
Regraded Unclassified
Treasury Department
317
Division of Monetary Research
Date Nov. 20, 1944 19
To:
Mrs. McHugh
This isn't important, but I think
the Secretary will be interested in
reading this gist of a report from
Mr. Saxon in Paris.
H.D.W.
MR. WHITE
Branch 2058 - Room 214}
318
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE November 16, 1944.
TO
Mr. White
FROM
Mr. Glasser
Has
You will be interested in the following points from Saxon's letter
No. 2, October 25, 1944.
1. A State Department Financial Expert, Ivan White, will soon arrive
in Paris to assume the rank of Second Secretary of the Embassy. He is
a career foreign service officer. Saxon anticipates his presence will
present problems with regard to comminications since he will have access
to all Treasury cables. Saxon says he may wish to comminicate with
Treasury by military courier. There are now six State economic analysts
in Paris and it is reported that more are to arrive. In addition there
is a State Department Labor Attache whose job is "to report to the State
Department on commistic and socialistic trend among French laborers"
and who is also interested in the financial progrm, in particular, the
exchange rate.
2. Saxon reports that the "same old crowd" is in Paris in the Ministry
of Finance. Among these is the present Director of the Budget, Francois
Didier Oregh, who was particularly difficult for us to deal with in Algiers.
3. It is believed that the best opportunity for initiating a financial
program in France has passed. The enthusiasm of the people immediately
after the liberation of Paris would have overcome the opposition which
acceptance of tough policies will now encounter. DeGaulle is definitely
to the right of center, and Palewski, Mendes-France, Pleven, Monnet,
Giacobbi, and others of his cabinet are not the group who are going to
swing him away from his present policy.
4. Investigation of French banks is being handled slowly. Hocus is
now a part of the Ministry of Finance of France and on this basis alone
it is doubted that the French will make a forceful effort to clean up
French banks.
5. On the recommendation of Mendes-France, the French Council of
Ministers decided on September 29, 1944 to abrogate all existing trade
agreements. When advised of this the State Department replied in very
strong terms that this action would immediately restore on French imports
to the United States the high tariff rates which existed before conclusion
of the trade agreement between the United States and France. The reply
also questioned the propriety of the French decision in view of the Lend
Lease Act, United Nations Declaration and the Atlantic Charter, The
French were informed that this was a matter in which Secretary Hill had
a strong personal interest.
Regraded Unclassified
319
- 2 -
Division of
Monetary Research
On the basis of the Washington reply M. Alphand, somewhat abashed,
reported that the French would reconsider their decision. Mendes-France,
however, remained adamant in his decision to "start fresh on the tariff
question". The matter is being discussed further and is being handled
very secretly.
6. M. Alphand requested from Saxon an official note on the state-
ment released at the Quebec Conference with regard to the Morgenthau
plan for de-industrializing the Rhineland. Saxon informed Alphand that
he knew of no official statement made on this matter either at Quebec
or elsewhere.
Regraded Unclassified
Treasury Department
320
Division of Monetary Research
Date Nov 14 19
To:
Miss Chauncey
From:
Mr. White
I should like to talk to
the Secretary about this letter
before he signs it.
MR. WHITE
Branch 2058 - Room 214-1/2
321
NOV 16 1944
My dear Mr. Secretary:
Reference is made to my letter of November 11, 1944 conserning
the investigations undertaken by the Treasury Department of the activ-
ities of the French branches of the American banks during the period
of German occupation.
During the course of these investigations the Treasury repre-
sentative in Paris requested the French branches of the American
banks to submit certain information on their activities during the
German occupation. All of the banks complied with this request ex-
cept Morgan and Company. Colenel Bernard Carter of the U. s. Army, a
Morgan partner, intervened on behalf of the bank with respect to
this matter and expressed the refusal of the bank to cooperate with
the U. s. Treasury.
It is our understanding that it is contrary to SHAEF policy for
United States Army officers to intervene on behalf of private institu-
tions unless authorised to de so by the appropriate military authorities.
It would be appreciated if you would advise me of any action
which the War Department may take on this matter.
Very truly yours,
(Signed) H. Morgenthau, Jr.
Secretary of the Treasury.
The Honorable,
The Secretary of War.
11/9/44
Regraded Unclassified
322
NOV 16 1944
Excellency:
This will acknowledge your letter of November
1, 1944 concerning the economic and financial
mission which you are sending to the United States,
in response to the invitation extended to the
Italian Government by Secretary of State, Cordell
Hull.
I shall be very pleased to receive Baron
Quintieri and Dr. Mattioli and discuss Italian
financial and fiscal problems with them.
Sincerely yours,
(Signed) H. Morgenthaw, in
Secretary of the Treasury
His Emellency, Ivanoe Bonomi,
The President of the Council
of Ministers,
Rome., Italy
H.Don
HGtDr1 -11/14/44
FILE COPY
Regraded Unclassified
rongh Translation
323
Rome, November 1, 1944.
No. 44/03453/28
Honorable Sir:
The economic-financial mission which I am sending
to the United States, in accordance with the invitation
extended to the Italian Government by the Secretary of
State, the Honorable Cordell Hull, is composed of
H. E. Baron Quinto Quintieri and Dr. Raffaele Mattioli.
This mission has the purpose to contact the United
States authorities in order to discuss the situation which
has arisen in Italy because of the war, the destruction
caused by it, the disorganization it has produced, as well
as the besis of a loyal and constructive collaboration
between Italy and the United States of America in the
economic-financial field.
Both H. E. Quintieri and Dr. Mattioli, who have been
accredited by the Italian Government, are by reason of their
ability and past experience peculiarly qualified to discuss
the present day conditions of their country, and they are
ready with full consciousness for the conversations in
which there will be discussed problems of vital importance
for both the immediate and remote future of Italy.
The mission is charged particularly to examine with
you, Honorable Sir, the Italian financial and fiscal problems
The Honorable
Henry Morgenthau,
Secretary of the Treasury
of the United States of America,
Weshington.
Regraded Unclassified
- 2 -
which comprise 8 great part of the problems relating to the
reconstruction of Italy, and which have already been the
subject of the first measures in Italy's favor on the part
of the Treasury of the United States.
These measures have been greeted by the Italian
Government with deep gratitude and have strengthened still
further the feelings of grateful friendliness that the
Italian people hold for the United States of America.
I feel certain that the mission, in the work it shall
initiste with the American authorities for the purpose of
increasing the scope of collaboration between the two countries
in the economic-financial field, will offer a favorable occasion
for a first approach, aiming to nourish and confirm the friend-
ship and admiration that Italy holds for the United States of
America.
Please accept, Honorable Sir, the expressions of my
highest consideration.
Signed: Ivanoe Bonomi
Regraded Unclassified
jjh
325
03453
87
П Presidente
del Consiglioda Ministri
Roma, 11
Sccellenza,
la missione economico-finanziaria one giunge ora ne-
gli Stati Uniti, a seguito dell'invito trasmesso al Governo its-
liano dal Segretario 11 Stato Cordell Hull, è composta da S.E.
il barone Quinto Quintieri e lal Dout. Raffaele Mattioli.
Tale missione sí preficye lo scopo di preniere contat-
to con le autorità degli Stati Uniti d'America, al fine di illu-
strare la situazione che si e Venuta determinando in Italia per
affatto della guarra, delle listruzioni che questa ha causate,
della limorgeniztazione che ha prodotta, nonché di stabilire le
basi :i the leale e costruttive collaborazione tra l'Italia e gli
Stati Unitid J'America nel campo economico-finanziario.
Sia 5.5. Quintieri che 11 Dott.Matticli, i quali han-
no avuto pieno malliato dal Governo italiano, sono, per qualità
e par esperienza passate, particolarmente in grado di rappreson-
tar le consitioni presenti del loro Passe, e si accingono con
piena consapevolezza ai colloqui nei quali saranno discusse que-
suioni 11 visale importanza per l'avvenire immediato a lontano
DEll'Italia.
Im missione si ripromette in particolar moro di asami-
upl's con V.S. le questioni finanziarie e valutaria itallane, le
Sue HERRY
Segretario 181 issuro Jegla
direct Units
Unclassific
326
П Presidente
del Consiglio dei- Ministri
2)
quali assommano gran parte dei problemi inerenti alla ricostru-
zione dell'Italia, e che già hanno fatto oggetto dei primi prov-
vedimenti a favore di questo Paese da parte del Tesoro degli
Stati Uniti d'America.
Tali provvedimenti sono stati accolti dal Governo ita-
liano con viva riconoscenza e hanno rafforzato ancora i sentimen-
ti di grata simpatia che il popolo italiano nutre nei riguardi
degli Stati Uniti d'America.
Sono certo che, nel lavoro che essa inizierà con le
autorità americans, inteso al allargare il quadro della collabo-
razione ora 1 que Paesi nel campo economico-finanziario, la mis-
sione costituirà una utile occasione per una prima presa di con-
tatto, atta BJ alimentare e potenziare l'amicizia e l'ammirazio-
ne che l'Italia the per -11 Stati Uniti l'America.
Voglia gradire, Eccellenza, i sensi della mia più al-
ta considerazione.
Ivane Bouwing
Regraded Unclassified
327
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
American Embassy, Quite
TO:
Secretary of State, Washington
DATED:
November 16, 1944
NUMBER:
1098
CONFIDENTIAL
Reference is nade herewith to Department's airgram A-500
of November 1 and Embassy's A-493 of October 30.
The Embassy has been informed by the Ecuadoran Foreign
Office that it cabled request to Switzerland on October 31
but that the Ecuadoran representative there reported by telegram
dated November 10 that Swiss authorities had regretted that
they would not be able to assume representation in Hungary of
Ecuadoran interests.
SCOTTEN
DCR:VAG 11/18/44
Regraded Unclassified
328
CABLE TO AMERICAN LEGATION, CAIRO, FROM WAR REFUGEE BOARD.
Please deliver following message to Harry Greenstein, UNRRA
Representative, Cairo, from M. A. Leavitt of American Jewish Joint
Distribution Committee:
JUOTE PLEASE ADVISE BELLE MAZUR REGARDING APPEAL WE RECEIVED
FROM JAQUES BENZONANA AND ELIL COHEN NOW CARE OF GREEK LEGATION
CAIRO BEHAF JEWISH COMMUNITIES athers SALONICA. WE SUGGESTED
THEY COMMUNICATE WITH YOU AND HOPEFUL YOU WILL DISCUSS WITH MAZUR
SHOULD SIG Bi: ASSIGNED GREECE POSSIBILITY HER REPORTING TO US
AND MAGNES SITUATION OF JIMS AND SPECIAL SUPPLEMENTAL REQUIREMENTS
THAT JDC SROULD MEET WHICH NOT RET BY MILITARY OF GOVERNMENTAL
OF. UNFRA ACTION. Unquote
4:30 p.m.
November 16, 1944
Dr.ory 11/16/44
Regraded Unclassified
329
MAIL To DIRAST, LONDON, FOR MAMN, FROM WAR REFUGLE BOARD.
Please celiver following message to Joseph Schwartz, London, from
11. A. Lesvitt of American Jewish Joint Distribution Committee:
QUOTE SUBJECT YOUR AGREEMENT ADMINISTRATION COMMITTEE APPROPRIATED
FOLLOWING ONETIME GRANTS FOR emergency AID. RUMANIA $250,000
HUNGARIAN REPUGIES IN RUMANIA $100,000 FRANCE PARIS DISTRICT $100,000
LIBERATED POLAND $500,000 BULGARIA $50,000 GREECE $100,000. REGARDING
LIBERATED POLAND KL AUTHORIZING PASSMAN NEGOTIATE PURCHASE 250 TONS SUPPLIES
TEHERAN FOR WHICH ABOVE APPROPHIATION MADE. REGARDING HUNGARIAN REFUGEES
IN RUMANIA UNDERSTAND ABOUT %,000 IN DIRE MID AND MORE COMING DAILY
INTO RUMANIA REGARDING GREECE AND BULGARIA WE WILL AWAIT FURTHER ADVICES
FROM YOU MEFORE ARRANGING FOR remittances. ABOVE APPROPRIATIONS MORE
THAN COMPLETELY AXHAUST $900,000 RESERVE WEICH WAS AT YOUR DISPOSAL.
ADMINISTRATION COMMITTE APPROPRIATED ADDITIONAL $300,000 TO BE PLACED
AT YOUR DISPOSAL REALIZING THAT ENTRGENCY NEEDS IN BELGIUM SOUTHERN
FRANCE AND HUNGABY UNTIL END THIS YEAR HAVE NOT BEEN MET. IF YOU
AGREE ABOVE WI ASSUME YOU WILL DIRECTLY NOTIFY VARIOUS COUNTRIES ALSO
ADVISING US WIGN RESITT/NCFS SHOULD BE MADE. UNDERSTAND THAT OF 3,000
JEWS ARTWERP 30% DUTCH NATIONALS. WE ASSUME BRUSSEL COMMITTEE ALSO
MAKING PROVISION KELP ALL JLWS ANTWLEP ALSO ASSUME YOU DISCUSSING
WITH DUTCH GOVERNMENT ASSUMPTION RELIEF NEEDS FOR THEIR DUTCH NATIONALS
BILGIUM. GLAD IN ORM YOU DONALD HURWITZ JOINING OUR STAFF HERE. UNQUOTE
THIS IS WRB CABLE TO LONDON NO. 26.
4:30 p.m.
November 16, 1944
Harry 11/16/44
Regraded Unclassified
330
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
AMERICAN EMRASSY, LONDON
TO:
SECRETARY OF STATE. WASHINGTON
DATED:
November 16, 1944
NUMBER:
10022
SECRET
This message is for WRB, the Department and FEA.
As set forth in Department's 9419 of the tenth of
November and WRB 21, the Relief Sub-Committee approves
shipment of further 300,000 three kilo parcels. In approving
consignment, MEW representative, drew attention to the present
shortage of transportation to Geneva from Marseilles and
stated he presumed that these parcels would be scheduled
so that they did not conflict with essential Prisoner of War
supplies' onshipment.
GALLMAN
DCR:MLG
11-17-44
Regraded Unclassified
331
FBM-759
London
Dated November 16, 1944
Rec'd 4:50 p.m.
Secretary of State,
Washington.
10027, November 16, 6 p.m.
FOR PEHLE FROM MANN.
For your information the following is a message
which has just been received by the Jewish agency
here from its representative in Bern.
"According reliable report dated first November
about 50,000 male Jews from Budapest deported for labor
service. They left on foot for Austria where they are
apparently employed for actual work. Others remained
Budapest. Bearers certificates issued by protecting
power including holders South American passports,
Palestine certificates, also Swedish passports, were
exempted from deportation labor service other verations.
This due to repeated interventions British American
Legations Bern and helpful attitude protecting power.
Inter Red Cross also assisted arranged soup kitchen
Budapest. Two weeks ago there seemed to be good prespects
that above mentioned bearers certificates and passports
numbering up to 12000 would be permitted to leave pro-
tecting power having declared readiness to admit them
but BO far expected groups not arrived. Remnants Jews
Slovakia deported September, October excepting few
hundred hiding and several hundred camps Sered Marianka".
GALLMAN
MJF
Regraded Unclassified
332
AIH-305
Distribution of
Paris
true reading only by
special arrangement.
Dated November 16, 1944
(SECRET w)
Rec'd 6:19 a.m., 18th
Secretary of State,
Washington
545, November 16, 6 p.m.
FOR PEHLE WAR REFUGEE BOARD FROM SAXON
Brenner promised delivery soon of report re-
quested by you.
CAFFERY
RR
Regraded Unclassified
333
CABLE TO AMAIN CORBULATE, JENUSALEM, FROM RA REFUGEE BOARD,
Pierse deliver following measage to Judah Magnes from M. A. Leavitt
of American Jenish Joint Distribution Committee:
QUOTE YOUR 256 NATURALLY APPROVE YOUR ACTION AUTHORIZING
INTERCROSS DISTRIBUTE FOOD MACEDONIA. WE RECEIVED APPEAL ON
BEHALF GREEK JEWS PROM JAQUES BENZONANA AND KLIE COHEN BOTH
NOW CARE OF GREEK LEGATION CAIRO REQUESTING EMERGENCY AID.
ME REPLIED SUGGESTING They COMMUNICATE WITH HARRY GREENSTEIN.
UNRRA REPRESENTATIVE CAIRO WHOM WE CABLING TO INFORM MEMBER
OUR UNKRA BALKAN UNIT BELLE MAZUR WHO WE BELIEVE WILL BE
ASSIGNED GREECE BY URINKA TO PEPORT TO US AND YOU REGARDING
NEEDS AND BAST PROCEDURE BRING RELIEF WHICH NOT MET BY MILITARY
OR governmental OR. UNFRA OPERATIONS. UNQUOTE
4:30 p.m.
November 16, 1944
KDrury 11/16/44
Regraded Unclassified
334
CABLE TO AMERICAN CONSULTE, JERUSALES, FROM nan REFUGEE BOARD.
Please deliver following message to Charles Passman from M. A. Leavitt
of American Jenish Joint Distribution Committee:
QUOTE GREATLY ENCOURAGED PROGRESS YOUR NEGOTIATIONS teheran
REGARDING SUPPLIES FOR $579,000 WHICH PURCHASE WE AUTHORIZE.
WE IN COMMUNICATION WITH SOMMERSTEIN REGARDING SHIPMENT FIRST
FIFTY TOMS FOR WHICH HOPE YOU COMPLETED ARRANGEMENTS BEFORE YOUR
DEPARTURE FOR jerusalem. SOMMERSTLIN ADVISES ARRANGEMENTS COMPLETED
FOR SCHWARTZ ENTER LIBIRATED POLAND AND ON CONCLUSION SCHWARTZ'S
TRIP TO SWITZERLAND ASSUME HE MAKING PLANS PROCEED THERE WHICH SHOULD
BL WITHIN PERIOD TWO MONTHS. MIANWHILE WE very ANXIOUS YOU UNDERTAKE
BALKAN ASSIGNMENT AND SCHWARTZ DISCUSSING WITH YOUR BOARD LONDON
YOUR AVAILABILITY WHICH WE HOPE PROM YOUR own PERSONAL VIEWPOINT
WILL ALSO BE FAVORABLE. ASSUMING SCHWARTZ PROCEEDS POLAND BELIEVE
THERE WILL DE NO OBJECTION FROM ANY SOURCE TO SUPPLIES BEING USED
FOR JEWISH AND NON-JEWISH PERSONS IN NEED IN WHICH event UNDERSTAND
POLISH GOVERNMENT WILL PARTICIPATE IN COST SUPPLIES. MEANWHILE
WE PURCHASING HERE $250,000 SUPPLIES FOR SHIPMENT LIBERATED POLAND
AND FOR USE POLISH REFUGLES IN SOVIET UNION. HOPEFUL PERMISSION
WILL BE GRANTED SHORTLY YOUR ENTRANCE RUMANIA AND SUGGEST ON YOUR
ARRIVAL BUCHAREST YOU DIRECTLY COMMUNICATE WITH SALY NAYER AND
SCHEART PROBLEM BURANIA AND RECEIVING FULL INFORMATION
FUNDE AVAILABLE FOR RILIEF RUMANIA. Was ENGAGED AMERICAN REPRESENTATIVE
AFTHUR FISH/OHN TO BE ASSIGNED ISTANBUL REPLACING KESSLER AND WORK
(ITH YOU THAT AREA. HOWEVER FTSHZOHN NOT APRIVING MIDDLE EAST UNTIL
HARLY JANUARY. UNAUOTE
4:30 p.m.
November 16, 1944
RDrury 11/16/44
Regraded Unclassified
335
CABLE TO AMBASSADOR NORWEB, LISBON, FROM WAR REFUGEE BOARD.
Please deliver the following message to Robert Pilpel from M.A.
Leavitt of American Jewish Joint Distribution Committee:
QUOTE YOUR 118 REGARDING GRIFFEL REQUEST 630,000 FOR EVACUATION
300 PEOPLE FROM CONSTANZA WE AUTHORIZE SUCH PAYMENT SUBJECT SCHWARTZ'S
APPROVAL. ADVISE SCHWARTZ OUR POSITION THAT IF OTHER TWO BOATS AND
SMYRNA SEAWORTHY AND PASSMAN KESSLER CONVINCED MINIMUM RISK INVOLVED
WE PREPARED MEET SHARE TRANSPORTATION ACCORDING ESTABLISHED FORMULA.
THEREFORE OUR REPRESENTATIVE ISTANBUL SHOULD BE AUTHORIZED IF SCHWARTZ
AGREES TO APPROVE OR DISAPPROVE BOAT SAILINGS ON SPOT WITHOUT FURTHER
reference NEWYORK OR LISBON. REGARDING YOUR REQUEST ABOUT SALY
REMITTING FUNDS TO Jefroykin SUGGEST THAT SALY DO NOTHING PENDING
SCHWARTZ'S ARRIVAL SWITZERLAND. UNQUOTE.
THIS IS WRB LISBON CABLE NO. 115
4:30 p.m.
November 16, 1944
RDrury 11/16/44
Regraded Unclassified
336
CABLE TO AMBASSADOR NORWEB, LISBON, FROM WAR REFUGEE BOARD
Please deliver the following message to Robert Pilpel from
M. A. Lenvitt of American Jewish Joint Distribution Committee:
QUOTE NADINE FELDSER AND HELENE GOLDENWEISER 63 YEAR OLD
TWIN SISTERS OF L. A. GOLDENWEISER OF FEDERAL RESERVE BOARD,
WASHINGTON, WERE DEPORTED FROM LA COLLINE ST. ANTOINE NEAR
NICE DECEMBER 1943. PLEASE ASK TOHLENOFF SALY MAYER DO UTMOST
TRACE ALSO IF POSSIBLE HAVE PARIS OFFICE CONTACT ALICE CHAPTAL
134 RUE DELA POMPL DAUGHTER NADINE FELDSER FOR FURTHER INFORMATION
AND POSSIBLE TRACING FROM FRANCE UNQUOTE
THIS IS WRB LISBON CABLE NO. 116.
4:30 p.m.
November 16, 1944
RDrury 11/16/44
Regraded Unclassified
337
CABLE TO JOHNSON, STOCKHOLM, FOR OLSEN FROM WAR REFUGEE BOARD
American Relief for Norway is remitting an additional $4,375
to Olsen this week for special program on which Olsen reported in
Stockholm's No. 4548 of November 7.
THIS IS WRB STOCKHOLM CABLE NO. 248.
9:00 a.m.
November 16, 1944
Regraded Unclassified
338
November 16, 1944
9 p.m.
AMLEGATION
BERN
3904
The following for McClelland is WRB 273 and refers to
penultimate and final paragraphs Legation's 5689 of August 31
and to paragraphs four and five of item one of Department's
3180 dated September 14.
Ecuadoran Foreign Office informed Amembassy Quito by
note of October 17 that insturctions had been issued to
Ecuadoran representative in Switzerland to confirm or suggest
changes in the list of holders of documents purporting to
indicate Bern. Ecuadoran nationality being compiled by Amlegation
Venezuelan Foreign Office informed Amembassy Caracas by
memorandum of October 13 that Swiss Government had been
notified by cable through Venesuelan Charge d'Affaires at Bern
that the Venezuelan Government ratifies the lists insofar as
concerns persons named in Venezuelan documents, that it agrees
that the lists mentioned be delivered to the Swise authorities
and that the offer of this Government with regard to protecting
said persons is appreciated.
STETTINIUS
(Acting)
GLW
WRB:MMV:KG
11/15/44
WE
NWC
l/iss Chauncey (for the Sec'y) Abrahamson, Ackermann, Aksin, Cohn, Drury,
DuBois, Friedman, Gaston, Hodel, Lesser, Marks, Mannon, McCormack,
Pehle, Files.
Regraded Unclassified
339
RNG-787
Bern
This telegram must be
paraphrased before being
Dated November 16, 1944
communicated to anyone
other than 41 Government
Rec'd 6:20 p.m.
Agency. (RESTRICTED)
Secretary of State,
Washington.
7572, November 16, 7 P.M.
FOR WRB FROM NCCLELLAND FOR LEON KUBOWITZKI,
WORLD JEWISH CONGRESS FROM GERHARD RIEGNER: "Referring
to your cable 155, Swiss Political Department informed
us that Swiss Minister at Budapest doing all humanly
possible protect as many Hungarian Jews as he can justify
by any means. Swiss protection documents are recognized
by Hungarian authorities. Swiss government agreed entry
for transit 12,000 Jews from Hungary."
HARRISON
MJF
Regraded Unclassified
340
FBM-788
This telegram must be
Barn
paraphrased before being
comminicated to anyone
Dated November 16, 1944
other than a Government
Agency. (RESTRICTED)
Rec'd 6:19 p.m.
Secretary of State,
Washington.
7574, November 16, 9 p.m.
FOR WRB FROM MCCLELLAND.
FOR NAHUM GOLDMANN OF WORLD JEWISH CONGRESS
FROM GERHARD REIGNER.
Had long conversation with Dr. Schirmer Inter-
national Red Cross representative temporarily attached
to their Budapest delegation who left Hungary on
October 29 and just returned to Switzerland. No gave
detailed report on situation of Jews in Budapest and
action taken by International Red Cross which an
dispatching to you through the Mar Refuges Board.
Schirwer reports that about 160,000 still in Budapest,
50,000 nale Jems having been marched direction Austria
for labor service. Further 50,000 are still in Hungary
in Honved labor service camps. Protection documents
of International Red Cross (for Jewish personnel working
with them in Budapest), Sweden, Switserland and Spain
are recognised. All institutions under International
Red Cross protection including Jewish institutions,
soup-id tchens, hospitals, children's homes, food
warehouses, et cetera, are respected.
HARRISON
WMB
Regraded Unclassified
341
RNG-832
Bern
Distribution of true
reading only by special
Dated November 16, 1944
arrangement. (SECRET W)
Rec'd 7:56 p.m.
Secretary of State,
Washington.
7575, November 16, 10 p.m.
Schirmer (continuing my 7574) reports that BORO
18,000 Jews are working in vicinity of Vienna split up
among 4 to 5 hundred small camps or work detachments
each one having from 3 to 5 hundred persons. They are
mostly Hungarians but include number Poles and Cascho-
slovaks. German authorities at Vienna surprisingly
enough seen willing permit ICR assist these Jews in
collaboration and through Dr. Lowenhers who still holds
his position with Vienna community and directs their
office. Dr. Schirmer who soon returning Vienna urged
funds be made available for this purpose. If money can
be placed his disposal Lowenherz informed him that
clothing and food stuffs could be obtained in Vienna.
Urging therefore your soonest remittance. End Riegner
message.
HARRISON
JMB
Regraded Unclassified
342
BERN
Dated November 16, 1944
Rec'd 8:36 a.m., 17th
JP-951
Distribution of true
reading only by special
arrangement. (SECRET E)
Secretary of State
Washington
7579, November 16, 10 p.m.
CONFIDENTIAL FOR WRB FROM MCCLELLAND
(Continuing my 7575)
Kindly request AJC New York consider this information
concerning possible "modus operandi" between German
authorities Jewish comsunity and ICRC in Vienna as
strictly confidential. Schirmer informed me that
Berlin knows nothing about it. Any talk consequently
would be most harmful. Saly Mayer and I are examining
with Schirmer question of immediately making funds
available to Lowenhers in Vienna to support whatever
relief work he can carry out. Schirmer leaves for
Berlin November 20 expects to be in Vienna by end month
to set up ICRC office there if it still appears funds
can be usefully spent.
HARRISON
RR
Regraded Unclassified
343
RNG-807
Ankara
Dated November 16, 1944
Rec'd 6:44 p.m.
Secretary of State,
Washington.
2195, November 16, noon.
FROM KATZKI TO PEHLE WAR REFUGEE BOARD ANKARA'S
NO. 186.
Many efforts have been made to secure lists (refer
Department's 1015 WRB 126) of the names of people lost
on the Mefkura. Up to the present it has not been
possible to obtain them from Rumania. As soon as they
are received copies will be forwarded to you.
STEINHARDT
JM
Miss Chauncey (for the Sec'y) Abrahamson, Ackermann, Akzin, Cohn, Drury,
Files. DuBois, Friedman, Gaston, Hodel, Lesser, Marks, Mannon, McCormack, Pehle,
Regraded Unclassified
344
CABLE TO AMERICAN EMBASSY, MOSCOW, FROM WAR REFUGEE BOARD.
Please deliver following message to Dr. Emil Sommerstein, Polpress,
Moscow, from M. A. Leavitt of American Jewish Joint Distribution Committee:
QUOTE WE ACKNOWLEDGE RECEIPT YOUR THREE CABLES. UNDERSTAND
ARRANGEMENTS NOW BEING MADE TEHERAN FOR SHIPMENT FIFTY TONS SUPPLIES
TO YOU. GRATEFUL YOUR EFFORTS BEHALF SCHWARTZ WHO NOW LONDON AND
WHO INFORMED YOUR CABLES so THAT HE APPLYING FOR VISA SOVIET EMRASSY
LONDON. UNQUOTE
4:30 p.m.
November 16, 1944
Regraded Unclassified
345
NOT TO BE RE-TRANSMITTED
COPY NO. 4
SECRET
OPTEL No, 372
Information received up to 10 a.m., 16th
November, 1944.
1. NAVAL
2 ships from North Russia arrived safely in
Home Waters, Escorting aircraft from one of H.M. Escort Carriers
shot down 2 flying boats 350 miles N.E.N. of Taeroes.
2: MILITARY
WESTERN FRONT. 7th U.S. Army made gains of 1
or 2 miles at several points in St. Die and Luneville sectors.
In Metz sector U.S. forces repulsed counter attacks and in-
creased pressure on city from north and south.
In Meuse pocket, operations developing well.
Bridgeheads gained over Wessem Canal and Canal du Nord have
all been expanded. By dark on 15th British troops in out-
skirts Baexem and Heythukjzen, Further north they occupied
Meijel on 15th. Enemy opposition has not been strong although
mining extensive and some evidence that enemy has been thinning
out and withdrawing artillery in this area.
ITALY. British troops have advanced up to river
Montone north of Highway 9. Slight advances also made south
of road, Polish troops occupied hill feature and small village
on their front.
BALKANS. Bulgarian and Yugoslav troops have
captured Skoplje in Southern Yugoslavia.
3. AIR OPERATIONS
WESTERN FRONT. 15th. 174 Lancasters (2 missing)
bombed synthetic oil plant Dortmund - 901 tons. Attack made
through 10/10ths (?cloud) but marking very concentrated.
Bad weather restricted operations by Allied Expeditionary Air
Forces
15th/16th. Bomber Command despatched 113 air-
craft, including 36 (1 missing) to Berlin.
MEDITERRANEAN. 14th, Bad weather severely
restricted operations.
BURMA. 13th. 38 Liberators successfully attacked
bridges on Martaban/Pegu railway and 34 Mitchells started
large fire in railway yards at Ywataung.
4. HOME SECURITY
4 incidents, believed, rockets, during period.
Regraded Unclassified