Commerce - Jones, Jesse

PSF Commerce: Jesse Jones PSF: Jesse Jones RECONSTRUCTION FINANCE CORPORATION WASHINGTON JESSE H. JONES CHAIRMAN OF THE BOARD kie Dear mr Purilur you very cadial birthday note mode mu very happy ron fob entirely too monato- 1 if birthdays are getting nous thanks a date you find april 5-1937 5- Jeney PSF: Jesse Jones THE WHITE HOUSE (nt WASHINGTON Commerce December 14, 1937. MEMORANDUM FOR HON. JESSE JONES I am a good deal troubled by the last paragraph on Page 9 of your speech of December third in New York. The trouble 1s that you and I know that tax changes were and are physically impossible at this session of the Congress, and that the House Committee has been working really hard since early November on a bill to correct actual inequities. Furthermore, the Administration has consistent- ly said that it 1s impossible to "provide that the changes when made apply to this year's business. You and I know that dividend declarations in the case of a very large number of companyes were determined on before December first. And, furthermore, that if we lose two or three hundred million dollars of revenue for the business year 1937, we have got to make 1t up by tax receipts of the same amount during the current government fiscal year. That makes the suggestion silly. THE WHITE HOUSE WASHINGTON -2- The statement that the present tax law works a hardship on the great majority of corporations is not strictly true. The great majority of corporations made so little in the way of profits that they were not affected by the tax bill at all. Of the balance, it is' true that many, in point of numbers, faced a hardship, but it is also true that the great majority of this balance, from the point of view of production and also of dollars, were not affected by the undistributed earnings tax -- to wit -- big corporations like General Electric, General Motors, U. S. Steel, etc. At the end of paragraph 3 on Page 10 -- 1s open to serious question. that the present tax laws are actually stifling business and industry. They are working a hard- ship on a very small minority of corporations, From the point of view of numbers, and a very small minority of production and dollars from the point of view of the total of business. I think we must all be very careful not to make general assertions but to separate the sheep from the goats and talk in terms of actual facts. THE WHITE HOUSE WASHINGTON -3- I hope the next time you speak you will point out that Government competition 1n the electric power field touches, or plans to touch, only between 10% and 20% of the geographical area of the national population and of thé total output of power. Therefore, in between 80% and 90% of these thirty criteria private power companies have com- plete and full sway without Govern- ment competition. F. D. R. Memo to the President From Morgenthau 3 1 PSF: July 14, 1939 In re-memo attached which he received from Ed Foley about testimony of Jesse Jones before the Senate Banking Committee--it was reported to Foley by Kades. See--Morgenthau folder-Drawer 1--1939 PSF: Jesse Somes Commerce yes of RECONSTRUCTION FINANCE CORPORATION fu August 31, 1939 MEMORANDUM TO THE PRESIDENT: Steve Gibbons will go into the Hudson Trust Company, Union City, New Jersey, as a Vice President, at $12,000 a year, about the first of October. Jrne JESSE H. JONES THE WHITE HOUSE file WASHINGTON Jones PSF: I commerce Sept. 23, 1939 R.F. To find out, confidentially, how Stewart McDonald can occupy this private position and also remain Chairman of the Federal Housing Administration. September 23, 1939 MEMORANDUM FOR THE PRESIDENT: Jesse Jones advises me, confidentially, that this new position for Stewart McDonald is purely an honorary one from which he receives no salary and that he devotes his full time to the Housing Administration. Mr. Jones thinks under these circumstances that there is no conflict and stated that he would be glad to speak to you about the matter if you wish. R. F. FINANCE CORPORATION FEDERAL HOUSING ADMINISTRATION HOME AND FARM AUTHORITY HOME OWNERS LOAN CORPORATION MFC WORTGAGE COMPANY FEDERAL HOME LOAN BANK BOARD DISABTER LOAN CORPORATION FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION FEDERAL NATIONAL NORTGAGE ASSOCIATION EXPORT IMPORT BANK or MASHINGTON FEDERAL LOAN AGENCY WASHINGTON JESSE H.JONES FEDERAL LOAN ADMINISTRATOR September 21, 1939 SiP 21 Sx RECEIVED 21 THE 10, 46 WHITE AM 39 HOUSE Dear Mr. President: Mr. Silliman Evans is today resigning as Chairman of the Board of the Maryland Casualty Company but will remain on the Board. Stewart McDonald will succeed Silliman as Chairman. Stewart has been Vice-Chairman since January and a member of the Board for almost two years. He will continue as Federal Housing Administrator. The Maryland has a good working organization. Edward J. Bond, Jr. is President of the Company, and Edward G. Lowry, Jr., Vice President and General Coun- sel. Silliman has done a good job with the Maryland, but felt that he could not continue commuting between Baltimore and Nashville and do justice to both his paper and the Maryland. Sincerely yours, Jon Jonez The President The White House Washington, D. C. KAOJ Silliman Evens' Statement to Directors of Maryland Casualty The increasingly heavy demands of By publishing business at Nashville and other business connections nake it impossible for me to continue the executive responsibilities that I am carrying with your Company. Accordingly, I resign as Chairman of the Board of Directors. The Maryland Casualty Company has occupied my thought, affection and labor during the past five years. It has an excellent organization comprised of as fine a body of nen as it has ever been my privilege to be associated with. Certainly there is no better casualty insurance man than President Bond. The Company is in excellent condition, and its business is continually increasing. In remaining a member of your Executive Committee and Board of Directors, my active interest in the Company will continue. full PSF J. Jones Jenn THE WHITE HOUSE WASHINGTON January 19, 1940. MEMORANDUM FOR THE PRESIDENT: From what I regard as dependable informa- tion, Finland has paid on her dollar bonded debts, held largely if not entirely in this country, eighty million dollars since 1930 or 1932; that her debt now, including that to the government, is only about sixteen million dollars. The government debt was approximately nine million dollars, upon which nine hundred thousand dollars principal has been paid and about four million, six hundred thousand dollars interest. The interest rate for the first ten years of the funded debt to the government was 3%. It 1s now 35%. Approximately ten million dollars Russian gold bars have been bought in November and December. About half of it came from Italy and the other half from Sweden. It can be assumed that we may be buying Russian gold from other markets. The information about gold I got from Dan Bell. JESSE JONES. THE WHITE HOUSE WASHINGTON 1-19-40 MEMORANDUM FOR GENERAL WATSON: Jesse Jones dictated this on the telephone to me, asking that Kannee get it to the President in time for Cabinet. (You were at lunch). He wanted me to mail him a copy, W hich I have not done without your approval. It is attached, as well ES a copy for you. Roberta OKto mail LJG 5mm PSF 5,50mes RECONSTRUCTION FINANCE CORPORATION FEDERAL HOUSING ADMINISTRATION ELECTRIC HOME AND FARM AUTHORITY HOME OWNERS' LOAN CORPORATION THE RFC MORTGAGE COMPANY FEDERAL HOME LOAN BANK BOARD DISASTER LOAN CORPORATION FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION FEDERAL NATIONAL MORTGAGE ASSOCIATION EXPORT-IMPORT BANK OF WASHINGTON FEDERAL LOAN AGENCY WASHINGTON File JESSE H. JONES FEDERAL LOAN ADMINISTRATOR Personal 3 January 30, 1940 Dear Mr. President: Another happy and altogether successful birthday. I salute you. May you have many more. Yours in admiration and affection, Jine 2 The President The White House PSF J. Jones RECONSTRUCTION FINANCE CORPORATION FEDERAL HOUSING ADMINISTRATION ELECTRIC HOME AND FARM AUTHORITY HOME OWNERS LOAN CORPORATION THE RFC MORTGAGE COMPANY FEDERAL HOME LOAN BANK BOARD DISASTER LOAN CORPORATION FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION FEDERAL NATIONAL MORTGAGE ASSOCIATION EXPORT-IMPORT BANK or WASHINGTON FEDERAL LOAN AGENCY your WASHINGTON JESSE H.JONES FEDERAL LOAN ADMINISTRATOR filsonal August 23, 1940 Dear Mr. President: I spoke to the Attorney General this after- noon about my accepting the Secretaryship of Commerce and carrying with it the work of the Federal Loan Administrator. He thinks that it would be advisable to have a joint resolution similar to the one adopted when Colonel Fleming became Administrator of the Wages and Hours Division, to the effect that my total salary should not exceed that fixed by law for the office of Secretary of Commerce. Sincerely yours, Junes Jonez r The President The White House Washington, D. C. PSF J.Jenes FEDERAL LOAN AGENCY OFFICE OF THE ADMINISTRATOR DATE August 23, 1940 Memorandum to the President: I called Louis Johnson at New York for the purpose of making an appointment to see him. He did not give me B. chance to talk, but asked me abruptly if I was going to accept the Secretaryship of Commerce. I told him that I was; whereupon, he said he was glad of it, and, without further conversa- tion stated that he would not accept the Under Secretaryship. This is all that was said in our talk. June fill jumel OF COMMERCE <<< THE SECRETARY OF COMMERCE Ps F To WASHINGTON STATES OF October 4, 1940 Dear Senator Glass: Copy With reference to our talk last night about the appropriation for the construction, in- provement and repair of airports, I am advised that the President has never seen the prospectus showing an ultimate of four thousand landing fields and am sure that he does rot expect Congress to approve that plan even in principle. I am convinced, and I believe the Pres- dent will be, that sufficient landing areas can be constructed with the eighty million dollar allocation and such additional WPA help 8.8 may be available. This should provide between two and three hundred landing areas, and this number is undoubtedly needed, or will be, as soon as the delivery of planes and train- ing of pilots get under way. Sincerely, June WE goh contract 000,000. amount. cash not more no Than 250 landing fields JESS Honorable Carter Glass Chairman, Appropriations Committee United States Senate Washington, D. C. COPY 1% F EXECUTIVE OFFICE OF THE PRESIDENT Bureau of the Budget Washington, D. C. Mr. Forster: The word "Secret" was written on these letters in the President's own handwriting at the time he signed them, and they were sent under confidential cover to the addressees. M. A. Johnston COPY PSF J. Jones THE WHITE HOUSE WASHINGTON Oct 10, 1940 My dear Mr. Administrator: I have allocated to the War Department from the emergency fund for the President provided by the Military Appropriation Act, 1941, approved June 13, 1940, the sum of $12,000,000 for the purpose of developing or assisting in the development of airfields and other facilities for the defense of the Western Hemisphere. In developing these facilities, it is contemplated that Pan American Airports Corporation, or such other person or corporation as shall do the work, will need loans or advances from time to time as the work proceeds. It is requested that you arrange for these loans or advances up to but not exceeding $12,000,000. I am directing the Secretary of War to repay out of the $12,000,000 fund allotted to him for this purpose the amount that may be thus loaned or advanced. Sincerely yours, (Signed) FRANKLIN D. ROOSEVELT Honorable Jesse H. Jones, Administrator, Federal Loan Agency, Washington, D. C. DECLASSIFIED By Deputy Archivist of the U.S. By W. J. Stewart Date (original Carbon copies of therefiled - Stemen folder. Drawer 1940 COPY THE WHITE HOUSE WASHINGTON Oct 10, 1940 My dear Mr. Secretary: In connection with the $12,000,000 which has been allotted to the War Department out of the emergency fund for the President provided by the Military Appropriation Act, 1941, approved June 13, 1940, for the purpose of developing and assisting in the development of airfields and other facilities for the defense of the Western Hemisphere, it is requested that you provide in the contract which you will make with Pan American Airports Corporation, or such other person or corporation as shall do the work, for repayment from this fund of loans and advances arranged, with your approval, through the Federal Loan Agency for such purposes. Sincerely yours, (Signed) FRANKLIN D. ROOSEVELT Honorable Henry L. Stimson, Secretary of War. DECLASSIFIED By Deputy Archivist of the U.S. By W. J. Stewart Date PSF: James Folder 1-41 Commerce THE WHITE HOUSE WASHINGTON May 15, 1941. MEMORANDUM FOR HON. JESSE H. JONES Dear Jesse:- How can I answer this? I really think you should do some- - thing. F. D. R. the more - THE WHITE HOUSE filional WASHINGTON May 5, 1941 Memorandum For The President: Lyndon Johnson I got this information confidentially from Lyndon Johnson over the telephone last night. I seen to be on my pet subject again, but Jesse Jones is letting us all down pretty badly. I have this suggestion: You could send By memorendum to you to Jesse Jones, saying "How can I answer this?". This would put him right on the spot, and he would have to do something affirmative. If you do nend it, I hope I never need an RFC loan! IHR James Rowe, Jr. COPY the 5, 1941 MIMORANDUM FOR THE PRESIDENT: WHERE IS JESSE? It was my understanding that along with your private undercover support of Lyndon Johnson for Senstor, Jesse Jones was going to give him public support, including press and radio help. Every other department and agency of the Government are cooperating 100% behind Johnson, but nothing has been heard from the Secretary of Commerce. In fact, the reverse seems to be true. The following has been reported to no from Texas: (1) Last week Jesse Jones telephoned Governor O'Deniel, accord- ing to information from es man who was in the Governor's office at the time, urging O'Daniel to run for the Senate and saying that he could win if he did. (2) The R. F. C. lawyer for Texas (obviously a personal appointee of Jesse Jones) who is now a General commanding one of the Selective Service camps in Texas, called his officers together, told then O'Daniel should run and directed his officers to urge O'Deniel among the men. This caused quite a row. If this report is true, obviously disciplinary action should be taken by the War Department. (3) The editor of one of the Secretary's papers publicly says he is for O'Duniel. All of this adds up to show that not only is Jesse Jones not support- ing Lyndon Johnson but that he 1a doing exactly the opposite. The only Cabinet member from Texas is Jesse Jones. Johnson's opponents and some of the non from Texas who want n good excuse for not going down the line for Johnson are using Jones' silence na en excuse. They point out if a Cabinet member does not back Johnson publicly, that means the President is not for him and they can do what they please. Incidentally, O'Deniel's compaign manager today announeed his own condidacy for the Senste, which is good nows for Lyndon Johnson 88 indicating O'Deniel will not run. Reports have it that if O'Daniel does not run, Lyndon will probable be his choice. Everyone in the race except Johnson is strictly anti-New Deal, includ- ing O'Daniel, as Jones well knows. Every other Texan in the Administration is supporting Johnson. The question 1s, whether Josse Jones is above the Administration, or takes orders like the rest of us. If he is not above the Administration, where 10 he today? James Rowe, Jr. PSF: J. Jones THE WHITE HOUSE WASHINGTON May 23, 1941. MEMORANDUM FOR J. H. J. I sent you a memorandum on May fifteenth in regard to Texas. I hope you received it. What is the answer? F. D. R. PSF. Jesse Jone Folder THE WHITE HOUSE WASHINGTON May 24, 1941. MEMORANDUM FOR J. H. J. I sent you a memorandum on April 30, 1941. What is the answer? F. D. R. PSF Jones Folder CONSTMENT OF COMMERCE 0 10 Ye THE SECRETARY OF COMMERCE VEHICLE STATES of STATE WASHINGTON May 27, 1941 Dear Mr. President: From my contacts and impressions, I am convinced that the great majority of people want you to take a positive position in the present situation. I believe they will follow you in whatever course you outline. They want to help the British effectively, which means that our materials must get to them. They are greatly disturbed about strikes and threatened strikes that delay our efforts. I am sure you know this, but feel that I want to pass on to you the impressions I get. Sincerely, June The President The White House PSF; Jesse Jones Folder OF COMMERCE or UNITED STATES OF full THE SECRETARY OF COMMERCE x WASHINGTON July 3, 1941. MEMORANDUM for the President: In accordance with your request of June 16th the National Bureau of Standards has examined the paper used by the FRANKFURTER ZEITUNG in its issue of March 14, 1941 (returned herewith) and reports as follows: "We find that the newsprint paper of this publication has a very unusual composition. The fibers are 1/3 rag fiber, 1/3 sulphite fiber, and 1/3 fiber from a crop plant, apparently potato tops. According to statements made in news releases, the Germans are using potato tops as a source of paper fiber. The paper contains 35 percent clay filler. This very large amount of filler accounts for the opacity, which is very good considering the thinness of the sheet. "United States standard newsprint paper is composed of 24 percent or less of sulphite fiber, the balance being groundwood fiber. It contains no filler. "The newsprint paper of the German publication could readily be duplicated in this country but at greatly increased cost over the standard newsprint paper." Junes Jan Secretary of Commerce. H2AT H24 THE WHITE HOUSE WASHINGTON June 16, 1941. MEMORANDUM FOR THE SECRETARY OF COMMERCE x3 This is a clipping from the x144-A Frankfurter Zeitung and shows the x kind of newsprint now being used in Germany. # I think it may be of interest to the Bureau of Standards to study x3-M this because, while very improbable, we might have to save on the thick- ness and quality of newsprint our- selves, and there should be an investigation of that possibility. F. D. R. Clipping from the "Frankfurter Zeitung". x198 X198-A OF CORRECT of THE SECRETARY OF COMMERCE file UNITED STATES of WASHINGTON June 18, 1941. Memorandum for The President. I have your note of the 16th and shall be glad to have the Bureau of Standards study the quality and properties of the accompanying clipping from the "Frankfurter Zeitung" in anticipation of possible economies in newsprint in this country if necessity therefor should arise. I will acquaint you with the findings. Secretary Jongon of Commerce Frankfurter ferting Luftpo-Wodyenanogabe / Seite 2 Metall Per Botfdjafter des New Deal. Winant - der neue Dextreter Roofevelts in Condon. MB New York, im März. velts befürwortete, da gab der Sohn nicht nach, sondern brach das Studium ab und wurde Geschichtslehrer an seiner ische Botschafter in London, John früheren Schule. Damals zeigte sich sein erstes Interesse für den Amerikanern oft mit Abraham die sozialen Fragen. Er verbrachte viele Stunden in Stein- oß, eckig, ungeschickt in den Be- brüchen und unterhielt sich mit Arbeitern. Sein Interesse rk ausgeprägten Gesichtszügen und war immer stark theoretisch. Die Arbeiter dachten an ihre ine Spezialität ist das Interesse für täglichen Sorgen, Winant dachte an das Problem Labour. Freundschaft zu den Labourleuten Als er in den zwanziger Jahren in New Hampshire zum alb gilt er als der größte Gegensatz Gouverneur gewählt wurde, führte er, Jahre vor Roosevelt, n Botschafter, der vor einem Monat in diesem reaktionären Staat ein New Deal ein. Nachdem Schlachtschiff den Potomac herauf- Roosevelt an die Macht gekommen war, zog er den Repu- treten, der von vielen Beobachtern Winant PSF: Jones Folder THE WHITE HOUSE WASHINGTON July 25, 1941. MEMORANDUM FOR JESSE JONES: I have long felt that it would pay the Federal Government to put all of the Federal offices in and around New York City into one central building. We all know that the Empire State Building is a losing proposition, but on the other side, it is ideally located for a central Federal Office Building. I wish you would look into this whole subject, without passing it over to anyone else or speaking to anyone else about it. We can talk it over next week. F.D.R. Note in Pres. handwriting: .Jones To put together & justify if possible" Also typewritten list of number of square ft. available etc. Jones Folder 3-42 THE WHITE HOUSE WASHINGTON January 13, 1942. MEMORANDUM FOR JESSE JONES What is the answer? I really think we should do something and this is much the best time to buy those Puget Sound Light and Power Company properties. F.D.R. Letter from the Secretary of the Interior, 1/9/42, to the President, referring to the President's memorandum of several weeks ago to Jesse Jones, suggesting to him directly what the President had already authorized Mr. Ickes to suggest, namely, that he and I join in a request to the Attorney General to determine whether or not there is power under existing laws for RFC to finance the purchase of the properties of the Puget Sound Light and Power Company. Mr. Ickes states he has heard nothing from Jesse Jones in this matter and wonders if the President has. PSF: Jones Folder Folder THE WHITE HOUSE WASHINGTON February 26, 1942. MEMORANDUM FOR HON. JESSE H. JONES How well do you know Kelly, the President of Anaconda? Is there some way in which you can persuade him and the Montana newspapers he controls (practically all in the State) not to fight Jim Murray this year in the Democratic Primaries. Jim Murray is a thoroughly decent soul, whom Wheeler is trying to get, and I cannot see the sense of Kelly going along with a man like Jim O'Connor or Wheeler. Let me know if you can do something privately. F. D. R. PSF J. Jmes 11 RECONSTRUCTION FINANCE CORPORATION FEDERAL HOUSING ADMINISTRATION ELECTRIC HOME AND FARM AUTHORITY HOME OWNERS LOAN CORPORATION THE RFC MORTGAGE COMPANY FEDERAL HOME LOAN BANK BOARD DISASTER LOAN CORPORATION FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION FEDERAL NATIONAL MORTGAGE ASSOCIATION EXPORT IMPORT BANK or WASHINGTON commerce FEDERAL LOAN AGENCY WASHINGTON JESSE H. JONES FEDERAL LOAN ADMINISTRATOR of SPECIAL PARTNERSHIP Invested Capital - F. D. R. $6.00 Invested Capital - J. H. J. 6.00 Total Capital $12.00 Investment in Bimelech $4.00 Dividend $7.60 Investment in Gallahadion 4.00 Dividend 0.00 Investment Mioland 4.00 Dividend 13.80 Total Dividends $21.40 Less Expense - 4 hot dogs .40 $21.00 Dividend in liquidation to F. D. R. $10.50 Dividend in liquidation to J. H. J. 10.50 $21.00 PSF 8 « 4 THE SECRETARY OF COMMERCE Jesse Jones STATE STATES of STATE WASHINGTON Commerce March 24, 1943 Dear Mr. President: Enclosed is copy of a letter I am sending Senator Truman, and which I am releasing to the press. These aluminum contracts were discussed in the Washington-Merry-Go-Round of March 22nd, and in PM of the same date, copies of which are enclosed. The information about these contracts could only have been given out by BEW which has copies of our foreign purchase contracts, and it is by no means the first time BEW has fed distorted facts to these scandalmongers in an effort to serve its purpose to smear me. The PM story apparently caused & heated discussion in the Parliament at Ottawa. Sincerely yours, JanesHJone The President The White House FORVICTORY BUY UNITED STATES WAR BONDS AND STAMPS OF COMMENTS COPY or * THE SECRETARY OF COMMERCE a AMERICA START WASHINGTON March 24, 1943 Dear Senator Truman: In reply to your inquiry about Metals Reserve Company's purchases of aluminum from Canada, beg to advise that May 2, 1941, at the request of OPM, Metals Reserve Company contracted with the Aluminum Company of Canada for the purchase of 170,000 metric tons (374,680,000 pounds) of aluminum at 17¢ per pound, the then prevailing price of aluminum in this country. This contract and all subsequent contracts in this program were approved by the President. In connection with the purchase, the Aluminum Company re- quired an advance of $25,000,000, which we agreed to make at 2% interest. Such advances are authorized in connection with the purchase of critical and strategic materials under Section 5d of the Reconstruction Finance Corporation Act, as amended, and do not require interest. The interest was computed to equal 0.295 per pound of aluminum, and in drawing the contract this was deducted from the price of 17¢. The advance was to be amortized at the rate of 6-2/3$ per pound of aluminum delivered. Substantial advances on purchase contracts of critical and strategic materials have been made to China and Russia, and in connection with purchases in some Latin American countries. May 13, 1941, OPM requested that the initial contract be doubled. This was concluded at the same price. The company asked for an advance of $25,000,000 against this contract, and & loan for this amount was made to it by the Export-Import Bank at 3% interest. In negotiating contracts with the Aluminum Company of America to build and operate aluminum plants in the United States for our account, we secured a reduction from Alcoa in the price of aluminum in the United States from 17¢ to 15¢ per pound, thereby saving the government a great many millions of dollars. FORVICTORY BUY UNITED STATES WAR BONDS AND STAMPS Honorable Harry S. Truman Page two After getting the reduced price from Alcoa, we asked the Aluminum Company of Canada to reduce their price from 17¢ to 15$, notwithstanding we had contracted to pay 174. The company was reluctant to reduce the price since they were getting 17$ from the British and Canadian governments. However, we finally prevailed upon them to reduce the price to 15$ on 80% of the shipments. To get this reduction in price, we waived the interest on the advances, and made a reduction in the amortization requirements. The reduction from 17¢ to 15$ saved Metals Reserve Company $16,000,000, while only $2,500,000 was waived in interest. This revision of the previous contracts provided for an increase in our purchases of aluminum from Canada to 1,000,000,000 pounds. February 23, 1942, we were requested by WPB to increase the purchase of Canadian aluminum by an additional 370,000,000 pounds. These purchases were made at the reduced price schedule. The latter contracts also provided for advances against deliveries. Total loans and advances to date in connection with all purchase contracts aggregate $69,500,000, and repayments have been $15,919,477. Total amount of aluminum contracted for is 1,370,000,000 pounds, and deliveries to date have been 368,000,000 pounds. The contracts made provision for & fixed basis of cancellation on any part of the aluminum that we might determine not to buy. Metals Reserve Company has had no control over the expenditure of the loans and advances, that is, whether they were to be used for working capital, plant expansion, or other- wise. Sincerely yours, (Signed) JESSE H. JONES Secretary of Commerce Honorable Harry S. Truman United States Senate Washington, D. C. The Washington Post 10 March 22, 1943 The Washington Merry- Go- Round By Drew Pearson Jones Lends Alcoa Millions Without Interest ANOTHER of Jesse Jones' Interesting banking deals has just leaked out. This time the genial Jesse has extended his generous bank- roll-on behalf of the United States taxpayer-to the Anumi- num Corp. of Canada to build a glant power plant in the wilds of Quebec rivaling Boulder Dam. There it will be beyond United States control, will escape United States taxes, and will In- crease the control which Alcoa holds in both Canada and the United States. The Alcoa power project to which Jesse Junes has been so generous is the Shipsshaw de- velopment on the upper Sague- nay River. To build it, the Aluminum Corp. has received from Jesse a loan of $68,500,000 of United States Government cash. Furthermore, Jesse is charging no interest. But most interesting of all, he provides that If the plant's con- tract is canceled before Decem- ber 31. 1945, the balance of the $68,500,000 not repaid by the delivery of aluminem win Tel main in Alcoa's hands and need not be repaid to the United States. Blance everyone hopes the war will be over before the end of 1945 in which case the United plans to cancel all war immediately, the Alumi- Corp. stands ready to get A title windfall. Mor Money From Jesse DDITION to this $68,500,- Ivanced without interest, also has advanced the um Corp. $34,240,000 at ent. In other words, the $68,500,000 will just ay for the cost of the power plant, after which Alcoa tan borrow up to $34,240,000 at 3 per cent to operate It. Thus Alcoa has no expense and abso- Jutely no risk. While Jesse was helping pro- mote this giant plant in Canada, with Its large use of strategic materials, various American púb- lie power projects, which could have supplied ample power, were abandoned for lack of stra- tegle materials. Among them were the Shasta project on the Sacramento River; Grand Coulee units T, 8 and 9; one new TVA dam; the Colorado- Hig Thompson project, and the the Davis Dam on the Colorado River. Jesse Jones, however, never has been & public power enthusi- ast, apparently Ignoring that his chief in the White House is. NOTE: For some reason word of the big sluminum power proj- ect in Canada has been a elosely guarded secret will recently, Astually Jesse signed the con- tract in the spring of 1942, but his outfit has been very mum about IL N.Y.Times 3-24-1943 we CANADA FINANCES THIS OVERSIZE ITEM HAS BEEN ALUMINUM OUTPUT MICROFILMED IN SECTIONS. Munitions Minister Explains Operations in the House of Commons METAL SOLD IN ADVANCE Loan by British Government; None From United States -Charges Denied Recisl to Tax new Thas TIMES OTTAWA, Ont., March 23-- Charges made by Colonel George Drew, Progressive Conservative Lender in the Ontario Legislature, and by a Washington correspond- ent of a New York newspaper n- garding the financing of the Hilp- shaw power plant of the Alluntzum Company of Canada provoked this afternoon a stormy ecene in the usually placid Canadian House of Commons and an explanation from c. D. Howe, Munitions Minis+ ter, which was finally applauded by & large majority of members Mr. Howe gave & direct denial to Colonel Drew's charge that pub- lie funds had been spent on the Shipshaw development and to the newspaper charge that It had been financed by American funds, The development, he said, had bles bullt with the corporate funds of the Aluminum Corporation of Can- ada andall the aluminium produced in Canada was sold at the same price to whoever bought It. The price In Canada to Great Britain, the United States and Australia was exactly the same and any statements to the contrary were "wholly erroneous." It was Mr. Howe's reference to Colonel Drew's military record that produced the storm. When this had subsided be settled down to give his account of how, by & combination of private enterpitie ( and government support, the alin- minum production of Canada had been stepped up to many times its pre-war output and had given the United Nations the airplanes that were bombing and outfighting the enemy into submission. Growth of Production Before the war, he asid, Cana- da's aluminum was 100 million pounds yearly. which was increased to 160 millions in 1938, when war seemed likely, and to 200 millions in 1939. In 1940 the British Government offered to finance & large expansion of the Aluminum Company and lent 555- 000,000, which resulted in an - pariston of production to 435 mll- Non pounds. The Canadian Gov- emment was in no way involved in this transaction. The United States was at the same time preasing for an Increase in alumisum. Power had to be brought to the Nagurary from all quarters, and fisally is had e be decided to increase the available power which the Minister asid was the cheapest in the Dominion. In view of the importance of alu- intisum in war, the work had to be rushed and pre-war estimates of costa had in some cagre nearly doubled, and the conclusion was reached. Mr. Howe said, "that It would be reasonable le write off 62 per sent of the cost of the proj- ect from the earnings of the com- pany in war years. The company would by this arrangement finish the war with a huge power plant. over a million horsepower, for the output of which st. would have no immediate market. But it would be relieved for a few years at Senat of having to write off deprectation. That Mr. Howe said, was the story of the Shipshaw develop- ment. No money from the United States went into that development. unless it was by private borrowing of the corporation. The transaction was between the Government Canada and the Aluminam Code- party of Canada, and It was clearly understood on both sides that No other Than these two parties THE Angenting de with Financing by Sales Turning then to the question of advance payment for aluminum, Mr. Howe described how by the middle of 1941 the total demands were 1,823,500,000 pounds of alumi- num, of which about 80 per cent was for the Metals Reserve Cor- poration of the United States. "You can see the difficulty at that point" he continued. "Here was a plant which had been ex- panded nearly four and a half times from its pre-war size. I took objection to other governments lending money to the company. subject to repayment after the war, sufficient to meet the capital outlay. We have tried to avoid burdens of that kind. What was finally evolved and accepted by the purchasers was that the Aluminum Company would sell a block of aluminum at the current market price totaling the figure I have just given. To manufacture that aluminum meant an investment of $117,000,000 in manufacturing plants. "The company did what is com- non practice in contracts involv- ng the building of new plant. They asked for an advance pay- ment on that purchase. The ad- vance payment for the share of the United States was $68,500,000. "Exactly the same terms were offered to the three countries in- volved in the transaction. In addi- tion, arrangement was made to borrow certain funds at interest from the United States and Great Britain at the same terms." The money asked for advance! payment for the metal, Mr. Howe explained, was not capital. It was revenue. The only money that came in was payment for meta!, even though advance payment vance payment which was subject to taxation under the excess profits tax in the year in which the metal was delivered. "I may add," Mr. Howe said, "that it has not been our policy to tax products sold to the United States under the Hyde Park agree- ment or sold to Britain for war purposes. Anything we do for Brit- ain is done tax-free and we have applied for the same principle and L policy to the United States." In reply to a question, he said that 5 or 5½ cents a pound went to write off the value of the assets as the metal was delivered. The price of the metal was fixed and the price had gone down instead of up. The first British contract called for a base price of 20 cents per pound. It was later reduced to Di 18½ cents. While in the United LA States the Federal Reserve Bank at could dictate the price in the et United States, the price in Can- g ada was a matter of negotiation with the government and the price here was exactly the same as in the United States, having regard to the relative value of the two currencies-15 cents in the United States and 16 cepte in Canada. PM, MONDAY, MARCH 22, 1943 PSF 3 THE NATION Jesse Jones Finances Plant for Aluminum Trust While Government Bans Public Power Projects ALCOA Affiliate Gets $68,500,000 Without Interest to Build Plant in Canada By L F. STONE PM's Burres WASHINGTON, Mar, 22-While free project, ready to undercut our own PIN construction of new public power Government plants with some of the cheap- projects in this country was being est power in the world. stopped by War Production Board Shipshaw also will give the aluminum priority orders, the U. S. A. has been quiet- trust a whip hand in "restoring order" on ly financing one of the world's greatest the world market as soon as the war la power projects in Quebec and preparing to over, since the Canadian company will be hand it free of charge to Aluminum, Ltd., in position to undersell new European com- of Canda, corporate Stamese twin of the petitors. As a Canadian company outside Aluminum Co. of America. the jurisdiction of the anti-trust laws of Jesse Jones' agreement with Aluminum, the U. S. A., It also will be free to use Ltd., hitherto kept secret not only from the this economic power to re-establish and rule public, but from interested officials, turns the pre-war aluminum cartel. out to be an even more one-sided horse The Shipshaw hydro-electric development is nearing completion in the wilds trade than the agreements he made with Higher Lend-Lease Price of Northern Quebec to supply power for Aluminum, Ltd., of Canada. The the Aluminum Co. of America revelation Foreshadowing restoration of the cartel Chute a Caron powerhouse and dam are shown. of which caused a sensation in the Sum- is a provision in the contracts which pro- mer of 1941. vides that the U. S. Government shall pay ward to the time when they can produce liveries of aluminum, half as a loan at 8 The Canadian project, the Shipshaw 15 cents a pound for aluminum destined for alaiminum from native clays instead of being Power Development on the Saguenay River, per cent, its own use, but 17 cents a pound for Lend- dependent on ALCOA's bauxite holdings in rivals Boulder Dam. When completed, it Construction began in October, 1941. Lease use. Presumably the idea is to pre- Arkansas and the Gulanas. will have cost $65,900,000. Construction On Mar. 6, 1942, and Apr. 1, 1942, two serve the higher fixed price on the world costs Aluminum, Ltd., nothing since the But while the public projects must prove new contracts were signed, which super- market even in time of war. U. S. A. advanced $68,500,000 to the their worth by making both ends meet and sede the old coes, The older contracts called Canadain company, Interest free, under two While construction has been speeded on partage internet and amortization, they may for payment of 17 cents a pound for alu- contracts negotiated by Jones through his this -borsepower project in Que- have to meet competition from abuminum minum. The new contracts reduced this to Metals Reserve Co. täst Spring. The ed- bec, priorities and stop orders have shut and other light metale produced in Canada 15 cents-the some price charged by vance is $2,600,000 more than the cost of down work on new public power projects with electricity generated. by cost-free fa- ALCOA in this country-but the old 17. totalling close to 1,600,000 horsepower in cilities at Shipshaw. Here the usual argu- cent price was left in effect on Lend-Lease the project. this country, some of them badly needed, ment is reversed. The private project will aluminum. The new contracts called for de- Debt Cancellation Provision especially in the Northwest. be "Covernment subsidized," while the livery of a total of 1,370,000,000 pounds by The $68,500,000 given Aluminum, Ltd., Scareity of such Items as generators was Government projects will have to pay nor- the end of 1945. by the U. S. Government is an advance the reason given for stopping the projects mal Interest and amortization charges. In the Summer of 1941, there had been against 1,370,000,000 pounds of aluminum in this country, but the Canadian project criticism by the Truman Committee of the Discrimination in Reverse to be delivered by Dec. 31, 1945. Should the seems to have found it possible to obtain plan to pay 17 cents for aluminum from war end before that time and the Govern- all it needed from U.S. concerns and from Shipshaw thus would become a winning Canada while the price in this country had ment decide to cancel the contract, Alumi- such Canadian subsidiaries of U. S. firms, card in two battles-one between public and been reduced to 15 cents, num, Ltd., will not be accountable for the as Canadian General Electric. private ownership, the other between the How Arrangement Works balance. Most important of the public power pro- established private industries and monopo- Presumably in return for the price redue- Shipshaw, paid for by U.S. Government jects which have suffered while Shipshaw lies of the American-Canadian Eastern Sea- tion and in consideration of the larger de- funds, will give the ALCOA's international went abead are TVA, which had to suspend board and the new joint public-private en- liveries negotiated, Jones increased the In- aluminum trust its most powerful weapon construction on some 650,000 borsepower terprises of the West. terest-free advance from $25,000,000 to against our own new publicly owned and of additional capacity, and Grand Coulee, In this conflict, the Government's own $68,500,000. In addition be gave Aluminum, financed-but ALCOA-managed-aluminum which stopped work on three units, 480,000 financing agency, the Reconstruction Fi- Ltd., the right to borrow $34,5000,000 from plants and against the great public power horsepower of additional capacity. nance Corp., is accused of being far friend- the Export-Import Bank at 8 per cent. projects which serve those plants. Farm Development Curtailed lier to the great private monopolies than to This is how the arrangement works: For While the public plants in this country the Government. every pound of aluminum delivered at 15 in most cases will have to meet Interest and An important factor in the eyes of mem- First contracts with Aluminum, Ltd., cents, the Government pays Aluminum, amortization on the bonds Issued to finance bers of Congress from the Pacific Coast is were signed by Jesse Jones in May and Ltd., 10 cents and credits 5 cents against them, Aluminum, Ltd., will have a cost- that the public power projects stopped by July, 1941. In August, the company was the $68,500,000 advance. For every 5 cents priorities not only were to have served the given # down payment of $50,000,000 so credited, Aluminum, Ltd., may borrow vastly expanded aircraft industry but also half as an advance payment against de- 5 cents at 3 per cent interest from the Ex- IN PM TODAY were linked with valuable flood control, re- port-Import Bank, up to $34,500,000. National News 3-5 clamation, and irrigation projects which had A little penell-and-paper work will show News From Abroad 6-10 promised to increase the food-producing what a happy financial arrangement this is possibilities of that area. They regard this -for Aluminum, Ltd. The contracts call for New York News 10-11 as a national, rather than a sectional, prob- delivery of 1,096,000,000 pounds at 15 The Scuttles 11 lem. cents a pound and 274,000,000 pounds at Picture Magazine 12-17 An example is curtailment of the Central 17 cents a pound and Aluminum will en- Valley project in California by priorities. Letters to the Editor joy a large income long before the Govern- 17 Another is the Colorado-Big Thompson ment advance is repaid. Living in Wartime 17-18 power and irrigation project, Food 19 The combination of these power and land Votes for 18-Year-Olds projects with new wartime aluminum, elec- PM Burnes Shopping News 20-21 tro-chemical, electro-metallurgical and air- WASHINGTON, Mar. 22.-Thirty-four Barnaby 22 craft Industries is regarded as offering the States will be represented at a meeting to Theaters, Movies, Music 22,23.25 hope of à tremendous expansion of produc- be held here soon to organize a National tion In the West on just such joint basis of Committee of Votes for Youth. It will direct Radio 24 public ownership and private enterprise as a nation-wide campaign planned by Harold Sports 26-2" is envisaged in the National Resources Plan- Moskovit, presidetit of the Affiliated Young Vie Jordan 28 ning Board's new post-war program. Democrats of New York, to get the voting Representatives of that area also look for- Jesse Jones age lowered from 21 to 18. 4 PM, MONDAY, MARCH 22, 1943 NRPB Foresees Free Schools for All GOP Freshmen Post-War Plan Would OK Peace Plan Give Children Equal Access to HOW CURRENT EXPENDITURES FOR EDUCATION 4000 IN THE U. S.A. COMPARE WITH THE NRPB'S Grade and High Schools 3500 26 Republicans in House PROPOSALS FOR THE POST-WAR ERA. Indorse "Win the Peace' pro- By VOLTA TORREY PM's Burrow 3000 posal WASHINGTON, Mar. 22-The PRE-SCHOOL, ELEMENTARY SCHOOL AND HIGH SCHOOL PM's Butter PIN World of Tomorrow that is en- 2500 visaged by the National Resources WASHINGTON, Mar. 22.-Twenty-six Planning Board (NRPB) will have COLLEGE, UNIVERSITY, PROFESSIONAL AND TECHNICAL SCHOOLS 1940 Republican freshmen in the House have no forgotten child. 2000 signed a statement indorsing the "win the ADULT EDUCATION PROVIDED BY SCHOOLS AND peace" resolution introduced last week by He is the child who does not go to school HIGHER INSTITUTIONS Sens. Joseph H. Ball (R., Minn.), Harold now, the child who is cheated by cir- 1500 H. Burton (R., 0.), Lister Hill (D., Ala.) cumstances. Giving every such youngster a and Carl A. Hatch (D., N. M.). chance, and Improving as well as expending America's school systems, will more than 1000 The President signified Friday that he had no objections to the broad principles double the cost of public education. But a world in which everyone who works will be * of the resolution, which calls for Immedi- 1940 500 ate collaboration of the United Nations to able to afford it. work out a limited set of rules to minimize The NRPB has recommended that all 1940 1940 1940 1940 the possibility of future wars and create children be given equal access to grade and Junior Student Public an international force to back up the rules. high schools, and that additional special- College Aid Library Post-War Period That House Republicans are not unani- Ized education be made available according mous in their indorsement is shown by the to young people's abilities. Figures are in millions of dollars. Post-war estimates are based on 1940 pur- latest issue of the Congressional Record, The Facts chasing power. which contains an article placed there by Rep. Roy Woodruff (R., Mich.). The statistics behind those simple sugges- who need the experience of camp life are tions are startling. The NRPB report reveals: not getting it now despite the efforts of the Farm Lobbyist Hit This article, written by John T. Flynn, economist and former America Firster, de- PRE-SCHOOLS: Nurseries and kindergar- Boy Scouts, the YMCA, the YWCA, and scribes the proposal as an attempt "to hurry tens can help most children between 3 and other such organizations. By Farmers Union America into commitment" while our people 3 years old. In 1940, about 650,000 children Adult Services Too are in " state of high emotional voltage." received such help. The enrollment should FM's Burees Said the junior Republicans' statement: have totalled 2,500,000. More adequate educational services for all WASHINGTON, Mar. 22-The current "The only sure way to keep the United adults are recommended, too, Particular at- issue of the National Union Farmer, official States out of future wars is not to have CRADE Schools: In 1940, about 750,000 tention is directed to public libraries. AL publication of the National Farmers Union, future wars. Our Nation alone cannot police children of elementary-school age were not the world. Our Nation alone cannot prevent in school. With few exceptions, all the though a reasonably good library costs only charges "John L. Lewis, Ed O'Neal and Tory $1.50 per capita, 35,000,000 Americans who big business" with threatening "to launch wars. The world can progress toward perma- 18,000,000 children of that age should have live in rural regions now have no adoquate the Nation on a perilous economic course." nent stability and peace only through the been In school. public libraries. The editorial declares that Lewis be- collaboration of its component peoples." High Schools: Nine-tenths of the chil- Emphasis also is placed on the necessity lleves In "the principle of the "boss" running Among the signers are Reps. Wintfred dren of high-school age should be in high of pre-employment training or retraining the show with his own men, just as Hitler Stanley, of New York; Clare Luce, Ranulf school and eight-tenths of them should fin- for several million men when they are re- runs Germany with his own Storm Troop- Compton and John D. McWilliams, of Con- ish high school, In 1940, American high leased from the armed services after the war. ers." It says be runs the United Mine Work- necticut; James C. Auchineloss and Harry schools had about 7,000,000 pupils, They This program will have to be diversified for ers In that fashion. L. Towe, of New Jersey: Daniel Ellison, should have had 1,700,000 more. the training of war workers, and special pro- It accuses Lewis and O'Neal, the presi- of Maryland; Walter J. Judd, of Minnesota; JUNIOR COLLEGES: Four-tenths of the visions will be necessary for those who are dent of the Américan Farm Bureau Fed- Harry P. Jeffrey, of Ohio, and Alvin E. young people of junior-college age should disabled. eration, of fighting on a common front "to O'Konski, of Wisconsin. continue their education beyond high school. Where is the money for all this going to break down the Nation's price structure." Sens. Ball, Butorn, Hill and Hatch re- In 1940, about 870,000 were in freshman come from? "The "cost of production' theory was used vealed, meanwhile, that they have been and sophomore classes at college or in tech- "During the years immediately following to wipe out small farmers in Germany just getting from 10 to 15 times as many letters nical schools. That number should be In- the war," says the NRPB, "it does not ap- AS it could wipe them out in America," the in favor of their resolution as against it. creased 130 per cent. pear probable that the total revenue avail- editorial contínues. "Suppose our govern- able for education from state and local ment guaranteed cost of production to all UNIVERSITIES: In 1940, about 687,000 sources can be greatly increased it also farmers. The large farmers, who ex- Profits Seen as Bar students were beyond the second year of appears improbable that any great increase ploit labor, provide squalid housing and college work. The best interests of society To Labor Draft require that enrollment in such advanced will occur in the governmental funds avail- force relief agencies to support their sea- able for education. It is therefore evident sonal labor, would come out top dog.' classes be increased about 25 per cent. that most of the increase in expenditures for "The National Farmers Union has, COD- FM's Purneu Poverty Shares Blame education in the postwar period must be sequently directed itself toward the real WASHINGTON, Mar. 22.-Sen. Lister financed almost If not entirely by Federal goal-the security of the farm family on the Hill (D., Ala.), a supporter of universal Poverty is what keeps many children out funds." land in an economy of abundance brought service legislation, said today that big war of school. For those under 15 or 16 years about by a free interchange of goods and profits are the obstacle to enactment of a old, this handicap should be removed where Discrepancies Among States services." compulsory draft bill. necessary by family allowances through The report recommends that the wealth- Hill, a member of the Senate Military social agencies. For older boys and girls, for districts be required to help the poorer Waverly Root: Affairs Committee now considering the Aus- there should be scholarships, loans and jobs. districts, in order to equalize educational tin-Wadsworth labor draft bill, recognized "Fewer than half of the Nation's youth opportunities. State Dept. Prejudiced labor's objections to the measure. who are able to do acceptable college work "Measured in terms of the number of Hill said when workers are drafted into now continue their education beyong high children to be educated and the ability to Against De Gaullists the Army they know they are working for school," the NRPB has found. "In the post- raise school revenue, some states are six or the Government, but if they were drafted to war period no youth should be barred by seven times as able as others to support BY Waverley Root (WINS) said over work in an industry "they feel they would economic circumstances from carrying his education. Within the states the discrepan- the week-end that the primary ob- be made to work to help make a profit" for education as far as be profitably can." cies among the school districts are jective of the State Dept. is not some company. The postwar planners maintain, too, that RADIO to get ships or sailors on our side While he recognized the situation, Hill even greater the schools must provide more care for chil- "Most state plans for equalization should but to get rid of the Fighting French." Root said there was nothing his Committee could dren whose mothers work, for those from said: be revised to distribute state funds more do about It, because tax legislation is broken homes, for those who don't get nearly on the basis of need. The only agency "Having this blind and obstinate preju- handled by other Congressional committees. enough to eat at home, and for those with dice against the Fighting French, the State Hill conceded that labor draft laws were that can remedy the Inequality among the physical handicaps. states in the tax burden for education is the Dept. has been unable to draw the obvious working in other countries, but said: conclusion from the fact that all the deser- Federal Government. It should accept this "There are two main reasons why it has In many districts, the NRPB suggests, role." tions are from Giraud to De Gaulle, and worked so well in England. First, England the school day and the school term should none from De Gaulle to Ciraud, that It is is a battle front, with the war brought be lengthened. It recommends specifically that children be sent to camps under school NEXT: Recreation in the attempting to Impose an unwanted man on closer by bombings; and, second, under the the French, Politically, the State Dept. Post-War World British tax system practically no one in Eng- ausploes because it finds that most children is trying to repeal the law of gravity." land is making any war profits." PSF Jesse Jones THE WHITE HOUSE per your WASHINGTON April 19, 1943. MEMORANDUM FOR HON. JESSE H. JONES Please let me have a copy of the Shipsaw Dam contract with the Aluminum Company. Honestly I do not remember specifically approving the contract -- but I may be wrong. F.D.R. OF THE BION THE SECRETARY OF THE INTERIOR WASHINGTON April 13, 1943. ESPECIALLY PRIVATE My dear Mr. President: I note that Jesse Jones has said in a letter to Senator Truman, with reference to the Shipsaw Dam that has been built by the Aluminum interests in Quebec, that the original Aluminum Company contract and "all such contracts in this program were approved by the President." Personally, I doubt this because I know from personal experience that Jesse doesn't like to show his contracts to anyone. Moreover, I do not believe that you would "O.K." in an off-hand manner a formal written contract submitted to you. You would, naturally, refer it to the Department of Justice or to some lawyer in whom you have confidence. But I am not 80 certain that you have not "O.K. 'd" a written memorandum that Jesse could flash as a pretended approval by you of a form of contract. Such a memorandum, if it exists, would probably be in general and not too clear terms. It might recite, for instance, how much aluminum was to be contracted for and its price -- perhaps even the delivery dates of the aluminum. I am certain that it would not show the explicit terms of this contract under which it became possible for the Aluminum Company to build this great plant, in the Province of Quebec, with funds advanced by this Government, without interest and containing a forfeiture clause under which, in certain circumstances, a large sum may be forfeited to the Aluminum Company without any benefit having been received by this country. I beg of you, Mr. President, not to sign any letter, contract, or memorandum even, without submitting it to some trusted person for scrutiny, and a report. After all, we must remember that the history of this era is still to be written. We won't want anything in the record that would cause a lifting of eye-brows. We must remember that this Congress is only beginning to investigate matters connected with the war. These investigations are likely to continue for many years under more critical and even Republican Congresses when there may be in the White House a President who will not be interested in protecting your record. Sincerely yours, Secretary of the Interior. The President, The White House. # Jesse Jones rump in BOARD OF ECONOMIC WARFARE OFFICE OF EXECUTIVE DIRECTOR WASHINGTON, D.C. March 31, 1943 Handl RECE DEPARTMENT HOUSE is The President, Timer The White House. mins Dear Mr. President: Thank you for sending me Mr. Jones' letter of March 24th. His assumptions are quite without foundation. After careful checking, I am sure that no one in BEW gave Drew Pearson, PM, or any other outsider any information on this aluminum matter either directly or indirectly. As the war goes on, it is inevitable that more in- stances of this sort will receive public attention. For example, I should like to mention the Nicaro Nickel case. This is a recent instance in which BEW stopped a very loose handling of government funds by the Defense Plant Corpora- tion. The situation is covered by the Vice President's letter of February 8th to Mr. Jones, 8. copy of which is en- closed. BEW has had the enthusiastic support of the Army, Navy and WPB in cleaning up this situation. Several people, - 2 - both within government and outside government, know the facts, however. We have cautioned our people to "keep their traps shut and saw wood", but there are many sources from which such a story could come to light. In the future, therefore, we shall very much appre- ciate it if Mr. Jones will furnish us with any concrete and specific evidence he may have regarding any possible impro- priety on the part of any of our employees rather than tak- ing "pot-shots in the dark". This is the policy we have followed in dealing with similar cases with the RFC Corpora- tions where the situation has been reversed. Only last week, for example, we brought to Mr. Clayton's attention certain statements which our Brazilian representative informed us were directly traceable to Warren Pierson, President of the Export-Import Bank, who was then in Brazil. It may well be that these statements, attributable to Mr. Pierson, were the foundation for certain untrue and unfair stories in the New York Times, date lined at Rio. Mr. Clayton was very decent about this and he knows that he can count on equally decent consideration of such matters by mem- bers of our staff. Because of the large amount of secret work we are doing for the Army and Navy, we have the most stringent regu- - 3 - lations within BEW to protect the security of information available to us. Any specific facts Mr. Jones can give us in the future that will help us to protect the integrity of this system will be very much welcomed. Respectfully yours, Milo Ferkins Executive Director Enclosures C 0 P BOARD OF ECONOMIC WARFARE Y WASHINGTON, D.C. OFFICE OF THE CHAIRMAN February 8, 1943 The Honorable The Secretary of Commerce Dear Mr. Secretary: I want to call to your attention several very serious develop- ments in the Nicaro Nickel situation which would seem to call for immediate investigation and action. Some of these raise the question of the desirability of continuing with this project at the present time, in view of doubts as to the feasibility of the metallurgical process involved and the requirements within our own country of strategic war materials which are being used in the construction of this plant. Others involve the adequacy of management and super- vision controls established for this project by Defense Plant Corporation. Still others point to practices, chiefly on the part of Nicaro officials, 80 unusual as to suggest the desira- bility of independent investigation by the Department of Justice. This project, as you know, calls for the construction of mining and milling facilities for the production of nickel oxide in Cuba, the oxide to be transported to the United States for refining. The contract was entered into by Defense Plant Corporation and Nicaro Nickel Company and Freeport Sulphur Company on March 12, 1942, prior to Executive Order 9128, and therefore without prior consultation with or clearance by the Board of Economic Warfare. The contract provided that Defense Plant should not be required to expend more than $19,300,000. The estimates, approved by Defense Plant, contemplated that the plant would be completed within twelve months. Nine months later, Defense Plant advised the Board of Economic Warfare for the first time that the plant could not be completed for the original contract figure of $19,300,000 and that an additional $10,000,000 would be necessary. It appears now that construction will probably be completed in November instead of in March, as originally contemplated. The Secretary of Commerce - 2 The proposal for increasing expenditures by $10,000,000 was submitted to the Board on December 14th in & letter from John W. Snyder of Defense Plant, enclosing a copy of a proposed supplementary agreement. The original of the agreement had previously been sent to Nicaro and Freeport Sulphur, without consultation with the Board, and had been executed by these companies on December 5, 1942. Mr. Snyder's letter did not include any detailed explanation of the need for additional expenditures and no report was given to us as to the present justification for carrying on the delayed construction in the light of our urgent need for critical materials for use within the United States. Accordingly, we advised Mr. Snyder that we could not assume the responsibility of approving the completion of this project without further information. Pending such investigation, Defense Plant was authorized to continue making advances so as to permit Nicaro to go ahead with its construction operations for the time being. The preliminary investigation which we have been making, in collaboration with representatives of the Defense Plant Corporation, indicates three major points which call for immediate action: 1. The matter of first importance, of course, is to reexamine the soundness of the decision to proceed with this project in the light of developments since last March. It does not appear that Defense Plant Corporation has given any technical consideration to the feasibility of the process since the original contracts were executed. On this point, the following facts have come to our attention in the course of our investigation: (a) At a conference on February 5, Mr. Leith of the War Production Board stated that he was not at all satisfied with the feasibility of the metallurgical process involved in the Nicaro project; that the process had only been tried in a small pilot plant, and metallurgical experience indicates that it may not work out in as large an operation as that involved at Nicaro. As you probably know, the War Production Board approval of the $10,000,000 increase has recently been withdrawn. The Secretary of Commerce - 3 (b) Our engineers find that the trade in general concurs in Mr. Leith's skepticism. The Nicaro project seems to be widely known in the trade as "the $20,000,000 pilot plant". (c) There have 8.5 yet been no final arrangements made for the refining in this country of the oxide produced at Nicaro and there is apparently considerable doubt as to whether satisfactory use of this oxide can and will be made. (d) Army and Navy representatives advise us informally that Nicaro nickel will not be in actual battlefield use before 1945. We hope to be in a position by March 1 to make a report which will serve as a basis for determining what, if any, modifications should be made in the plans for going ahead with this project. 2. There is next the point of the adequacy of management and supervisory control of these operations by Defense Plant Corporation. When our investigators tried to obtain some explanation for the $10,000,000 revision in the cost of the project, they found an almost complete lack of independent accounting procedures and disbursement controls. The following are suggestive of the way in which expenditures on this project appear to have been handled: (a) It has apparently been the Defense Plant practice to accept the Nicaro engineers' reports as final. I understand that the Defense Plant accountant in the New York office submits a semi-monthly report on the Nicaro project which is signed by him, but which is prepared entirely by Nicaro and is not checked in- dependently by the accountant. (b) I am further informed that it has been the practice of the Defense Plant officials in New York, whenever the Nicaro repre- sentatives presented requisitions for expenditures not included in the original schedules, not to reject them but simply to insist that a revised page be inserted in the proper schedule. This substi- tution would include a description of the new item added but no statement of justification for the change. (c) At the February 5 conference referred to above, Mr. Repass of Defense Plant Corporation stated that "Defense Plant does not have the engineers to manage these jobs insofar as their technical features are concerned". Mr. Leith added that "Defense The Secretary of Commerce - 4 Plant is simply not in a position to check up on a project of this kind and must accept the reports of the Nicaro engineers as final." (d) Illustrative of the lack of engineering or accounting supervision is the manner in which the $10,000,000 increase was approved by Defense Plant. The Nicaro request for the $10,000,000 increase, when it was presented to Defense Plant Corporation in November, was apparently supported by a statement broken down into only five general items, with but a single sentence explanation of the reasons for the tremendous increases involved. The $10,000,000 increase appears to have been approved without any detailed information as to the items for which the additional money was needed. The only justification received by Defense Plant öfficials in Washington was apparently a one-page statement broken down into the following five items: Labor - $2,387,026 increase; Materials and Construction Equipment - $4,769,156 increase; Freight - $2,193,861 increase; Engineering Overhead - $1,375,851 increase; Contingencies - $725,894 decrease. There were single sentence explanations following each item. Each of these items has subsequently been substantially revised. 3. The following irregularities appear to call for a further and different type of investigation: (a) Two days after the BEW investigation began, Mr. George Wentworth, the Defense Plant representative in New York charged with responsibility for approving all Nicaro requisitions, was discharged. Inquiring as to the reasons for such discharge, our investigators were advised it was because of "drunkenness". The dismissal of Mr. Wentworth was followed within a few days by the resignation of the two secretaries assigned to assist him. Our investigators were advised further that Mr. McQuillan, in general charge of the New York Defense Plant office, is entertained extensively by some of the Nicaro officials. (b) It appears that there are included as construction costs on the Nicaro project and paid by Nicaro the salaries of 19 clerical and stenographic employees of Defense Plant; that Nicaro also pays for Defense Plant stationery, rental, postage and telephone service; that Nicaro pays the entire rent for the offices of Mr. John McQuillan at 39 Broadway, although McQuillan performs services of projects other than the Nicaro project. No explanation has been made as to why this method was adopted for the handling of Defense Plant administrative overhead. The Secretary of Commerce - 5 (e) The revised estimates submitted by Nicaro have proven insccurate and unreliable. At least three different estimates have been submitted and although they all add up to the same total, the breakdown has been different each time. In one of the summary statements justifying the increase which WES submitted to our people, there WES a "Freight" item of $3,171,380. On January 7, 1943, our engineers asked the Nicaro people about this estimate, They were shown certain calculations supporting this figure. A duplication of a $185,000 item was discovered in these calculations. in the revised estimate brank- down submitted on January 18, the freight figure had been re- duced to $2,671,380, that is by an even $500,000. This $500,000 had been distributed, however, among the other schedules in the revised estimate, 50 that the total remained at $10,000,000. The revised estimate is broken down into seven schedules. The first six cover the various parts of the project (e.g., mining plant, docks, metallurgical plant, townsite, etc.). These schedules appear to include items of construction expense. All of them show the revised estimate as at least 250 percent more than actual costs to date. The seventh schedule is entitled "Construction Expense". The revised estimate is $2,608,315, as against an original estimate of $238,000. The revised estimate for this schedule is to the exact dollar the same DE actual cost to dute. One item in thismhedule, covering "Auxiliary and Service Equip- ment" was $90,400 in the original estimate; but $1,167,082 was actually spent to December 31, 1942, and the revised estimate is in this exact amount. The revised estimate includes one item which, when inquiries were made with respect to it by a Board of Economic Worfare engineer, was stated to have been, 55 A result of insivertence, overestimated by $50,000. The revised estimate includes $52,254 for an airplane. This plane, purchased by Nicaro, WAS never used on this project but was, several months ago, requisitioned by Defense Supplies Corporation for reconnaissance flights in connection with searches for strategic materials in Brazil and other Latin American countries. Yet it is still carried 0.6 an item of estimated cost on the Nicaro project. The Secretary of Commerce - 6 (d) The total payroll on this project is now running at between $700,000 and $800,000 per month. Included in this total are salaries and wages not only for the more than 5,000 employees of Frederick Snare Corporation (the Company doing the sctual construction work), but also for several hundred Nicaro employees and executives and a number of Freeport Sulphur Company top officials. There is evidence, unsubstantiated, of salaries 8.6 high BB $12,000 being paid employees who are doing work for which they had no previous experience before the date of their employment by Nicaro. (e) A number of rental and purchase contracts have been made between Nicaro and Frederick Snare Corporation. Such con- tracts are undoubtedly called for in this situation, but several of those referred to appear to represent substantial departures from the original plans. (f) All or part of the designing work on the project was originally subcontracted by Nicaro to Ford, Bacon and Davis. This contract WHO subsequently terminated before completion of this work but not until after expenses and fees totaling over $100,000 had accumulated. It may perhaps be that these last items can all be satisfactorily explained and that they are simply the result of & failure by Defense Plant to prescribe orderly accounting methods. It is my feeling, however, that we cannot be sure of this without having the entire matter checked into independently. I am suggesting, therefore, that this matter be referred to the Har Frauds Unit of the Department of Justice. Irrespective of whether or not any legal proceedings might appear to be called for, such an investigation would furnish us with 6. basis for de- termining, if the project is to be continued, whether its opera- tion should be placed in different hunds. Please advise me at your earliest opportunity as to whether you desire to join with ne in this proposed handling of this situation. Sincerely yours, H. A. Wallace