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OCR Page 1 of 3PSF
War Depart ment
1938
THE WHITE HOUSE
BF
WASHINGTON January 7, 1938. mar
MEMORANDUM FOR THE PRESIDENT:
I am attaching herewith all
pertinent data concerning the Nobile
Divisional Field Artillery and Anti-
aircraft. It 1a on one sheet and I
thought perhaps you would find it
interesting and available in this form.
Very respectfully,
Edwinwatin
KDWIN LATSON
Colonel, F. A.
Military Aide to The President.
This 4 our new Phase note
its increased hange to 13 500 yes
DATA on INFANTRY DIVISIONAL WEAT CHS
and
Longest range mohils gun THAT
MOBILE ANTIAIRCRAFT
we have/Dive Emer
January 3, 1938.
:
:
Maximum
: Maximum
:
Method
:
Types
:
War
:
Item :
Number Available
:
Type
:
Renge
:ntued Shote:
of
:
of
: Reserve
:
On
:
On
:
:
: Shortage
:
Notes
:
Yards
:per minute :Transportation
: Ammunition
:Requirements:
Hand
:Crder
Total
:
: INFANTRY DIVISION WEATONS
:
:
:
:
:
-
:
:
:
:
-
1 :75 m/m Gun 1(-2 (Hi-Speed towage)
:
13,500
:
15
#Horee or Truck
;Chem;
i)
(:
65:
28:
115:)
:
Standard
:
:
: Drawn.
: Shrap.
:)
(:
:
:
2 175 n/n Gun, World War Types (Modified for
1)
:
9,900
:
15
:Sexe
:Seme
:)
1,477(
1416:
410:
1826:)
0
Sub.-Std.
H1-Speed tomage)
:
:
:
:)
(:
:
:)
3 :75 m/m Gun, World War Types (Uncodified)
:
9,900
:
15
:Horse Drewn
:Sene
:)
(:
2682:
O:
2662:)
Sub.-Std.
4 :155 m/m Howitzer (Hi-Speed towage)
:
12,400
5
:Tractor or Truck:H.E. ;Chemical:)
821(:
302:
0:
302:)
0
Stenlard
:
:
Drawn.
:)
(:
:
:)
:155 m/m Howitzer (Unredified for H1-Spe ed)
:
18,400
:
5
:Horee Drawn
:Secie
:)
(:
1532:
O:
1532:)
Sub.-Std.
5 :37 n/n Oun Anti-tank
:
5,000
:
20
:Truck;
Tractor;
:Armor
Piere-
1,795
0:
0:
O:
1,795
To be Std.
:
Mule.
ing;Tracer.
-
6 :Machine Gun Cal..50 Anti-tark.
:
7,500
:
500
:Hand or Hule Cart:Sene
:
o
322:
:
322:
Sub.-Std.
7 :81 m/m Morters
:
3,300
:
20
:Hand cr Mule Cart:H.E. ;Chemical:
435
85:
is
119:)
o
Standard
B :3" Stokes Morter
:
2,500
:
20
:Same
:Sare
:)
:
1200:
0:
1200:)
Sub.-Std.
9 :Light Tank
:
:
:Self Propelled
:
957 :
246:
73:
319:
636
Standard
10 :Machine Gun Cal..50 - Tank
:
7,500
:
500
:Tank
)Ball; Arvor :
1,631
458:
171:
624:
1,007
Standard
:
)Piercing:
:
:
:
:
11 :Macline Oun Cal..30 Tank
:
5,000
:
500
:Tank
)Tracer
:
4,731
1039:
374:
1413:
3,318
Standard
12 :Machine Gun Gal.30 Hoavy Ground
:
5,000
:
650
:Hand or Mule Cert:Same
:
6,706
63,839:
O:
63,839:
o
Standard
13 :Machine Gun Cal..30 Light (Mod.Auto.Rifle)
:
5,000
:
80
:Hand
:Same
:
12,299
2,810:
O:
2,810:
9,480
Std. for Infantry.
14 :Autamatic Rifle Cal..30
:
5,000
:
80
:Sere
:Same
:
18,275
82,381:
0:
82,381:
o
Std. for other area.
15 :Rifle, Cal..30, Seni-mutomatic
:
5,000
40
:Same
tSme
:
133,178
1,000:
6,540:
7,540:
125,638
Standard
16 :Rifle, Cal..30
:
5,000
:
15
:Sam
tSem
:
210,095
:2,856,000:
0:
2,856,000:
o
Sub.-Std. for Infantry
17 :Pistol, Cal..45 Autonatic
:
1,600
21
:Seme
:Ball
):
496,854(:
272,119:
0:
272,119:)
29,831
Standard
:Revolver, Cel..45
:
1,600
10
18me
:Ball
):
(: 194,904:
0:
194,904:)
Bub.-Std.
:
:
:
: MOBILE ANTIAIRCRAFT MATERIAL
:
:
:
:
:
:
:
18 13" A.A. Gun
( :14,200-Hor. :
:
:
:
:
:
:
:
:
(: 9,700-Yert.
30
:Truck Drawn
:H.E.
:
660
106:
38
144:
516
:
Standard
10 :Moold.ne Gun Cal..50 A.4.
(: 7,500-Hor :
:
:
:
:
:
(: 2,000-Vert. :
550
:Sane
:Ball;Tracer
:
4,321
452:
37
489:
3,832
Stanlard
20 :37 m/m Gun A.A.
(: 7,300-Hor.
:
:
:
:
:
:
(: 5,000-Vert.
100
:Sene
;Tracer
:
1,800
0:
0
0:
1,800
:
Under Development.
n :Directors
:Same
:
:
229
17:
27
44:
185
Standard
as :Height Finders
:
---
1Seme
:
:
242
B:
63
71:
141
:
Standard
23 :18earchlights 60" Mobile
:
#
:Semo
:
:
1,339
260:
o
260:
1,079
Standard
REMARKS
S. War Reserve Requirements include equipment for approximately 1,000,000 men and for Harbor Defenses and Oversees garrisons.
h. Number available includes equipment eppropriated for F.Y. 1938. Does not include Estimates for F.Y. 1939.
Franklin D. Forsevelt Library
MNH/mk1
1/5/38.
DECLASSIFIED
DOD DIR. 5200.9 (9/27/59)
Date- 3-25-59
CONFIDENTIAL
Signature- Care L. Spicer
PSF mar Wept
To President
From Sumner Welles
March 4, 1938.
Letter in re-Pres. desire to obtain information a
to the nature and amount of supplies of arms and
ammunition which were at present being received
by the Chinese Gov. The War Dept. is trying to
obtain the information with regard to the amounts
of arms and ammunition coming to China from
Russian sources in the north.
Returns conf. map to Pres.---attached
SEE-China folder-Drawer 2--1938
THE WHITE HOUSE
W
WASHINGTON
March 9, 1938.
MEMORANDUM FOR
MAJOR GENERAL THOMAS HOLCOMB
The President has asked
me to send you the enclosed
letter. He thinks you will be
interested in reading it.
M. A. Le Hand
PRIVATE SECRETARY
(Enclosure)
Letter from Col. Joseph C. Fegan
in re manoeuvers.
your PSF
March 12, 1938.
Memo from Johnson, Acting Sec. of War
attaches memo sent to Chief of Staff
in re-Rumored attempts by German and Italian
Nationals to Obtain Certain Concessions in Mexico.
SEE--Louis Johnson folder-Drawer 1--1938
PSF was Dept
/
Radiogram from Pres. Quezon -Mar. 16, 1938
To War Dept. for McNutt
SEE--State Dept. folder-Drawer 1--1938
PSF was Dipt
April 4, 1938.
Memo for Sec. of State
In re- setting up standing liaison comm. of the
State, War and Navy Depts.
See--Hull folder-Drawer 1--1938
file file mar
Memo to President
From Col. Watson
May 10, 1938.
In re-Japanese troops employed.
Report attached--distribution of Japanese Troops
SEE--Japan folder-Drawer 2--1938
PSF
WAR DEPARTMENT
OFFICE OF THE CHIEF OF STAFF
man
WASHINGTON, D.C.
COME (a)
May 13, 1938.
MEMORANDUM for Mr. Johnson:
Information from a source which has heretofore not
been at fault indicates that the impressing of a large number of
coolies by the Japanese in a general movement from Manchuria
toward the eastward indicates the early intention of the part of
Japan to insure a cutting off of the Russian Maritime provinces.
The information states that the initiative will be made by Japon
and that war between Russian and Japan is nearer than it has ever
been in the past two years.
My Chief or Starf.
D. Rocaevelt Library
DECLASSIFIED
100 DIN. 5200.0 (9/27/68)
Date- 11-8-63
Signature- Card L. Spicer.
pSFWar
VIA CLIPPER MAIL
July 3, 1938
Dear Mr. President:
I have just completed a memorandum on the report of
the Joint Preparatory Committee on Philippine Affairs. The
original is being mailed to you through channels with a cover-
ing letter, but I feel it my duty to bring the enclosed copy
to your attention before the report is published, the message
transmitting it to Congress prepared, and public statements
issued.
I realize that the Philippine problem is of minor
importance when compared to the vital domestic and inter-
national matters which engage your attention, but the fact
remains that its solution will be charged to your administra-
tion and will be weighed carefully when historians appraise
America's one great colonial experiment. I an particularly
anxious that it reflect credit. Therefore I have been abso-
lutely frank (at times brutally so) in preparing the memoran-
dum. with few exceptions, I am in accord with the program for
correction of the Tydings-McDuffie Act but I have grave doubts
as to the program for special United States-Philippine trade
relations after independence.
There is one other matter which deserves attention.
The recommendations in the report have to do with the economic
provisions of the Tydings-McDuffie Act and require amendments
for effectuation. If the Act is to be amended, certain changes
in administrative provisions are indicated by experience. If
you desire, I shall be happy to prepare suitable recommenda-
tions supported by & memorandum.
In these days, purely personal considerations are of
little weight. When in Washington this spring, I spoke of my
desire to come home as soon as circumstances permitted because
of Kathleen's health and the offer of the place as President
of Indiana University. As I told you before leaving, I de-
clined the offer from the University, which would have required
my presence in Bloomington by September, for the primary reason
that I sincerely desired to prevent any semblance of politics
in University affairs. You were more than generous in sug-
gesting a trip by naval vessel through the Southern Islands to
The President
The White House
Washington, D. C.
-2-
Singapore, completing the trip home via Europe by commercial
transportation.
When I returned to the Islands I found that Kathleen had
been desperately ill during my absence. Her improvement since my
return has been slow but constant and I now feel certain of her
complete recovery. However, her condition precluded any thought
of an early return through Europe because of the physical exer-
tion required by such a trip. Furthermore, Quezon requested that
I remain in the Islands until after the special session of the
General Assembly to be called this month to consider tax legisla-
tion. The repeal of the cedula tax, the proposals of the Assembly
to throw the great weight of insular taxation on American and
foreign interests and the apparent tendency to use the proceeds
of the excise and processing taxes for purposes other than 600-
nomic adjustment have given me great concern and I feel that I
may be of service in guiding a proper program behind the scenes.
Under these circumstances, if you approve, I think it
wise to stay here until October, then, if a naval vessel is
available (the Commander in Chief of the Asiatic Fleet thinks one
will be), take the trip which you suggested, using a commercial
vessel from Singapore, arriving home in time to be of any service
you desire in connection with the consideration of the Philippine
problem by Congress.
I have no desire to desert an assignment and shall be
more than glad to do my part during the present phase of
Philippine-American relations if you wish. However, I realize
that you may have other plans in connection with this post, in
which event I shall conform with pleasure.
If it is your wish that I continue to serve until after
consideration of the problem by Congress there are certain ques-
tions of staff personnel which must be settled. The senior legal
adviser, Leo M. Gardner, left for the States on the May Transport
and will resign at the expiration of his leave in August. Gardner
did an outstanding piece of work and his resignation means a dis-
tinct loss to the service. I cannot say that I blame him, however.
He gave up eighteen thousand a year to come to the Philippines
only to have Congress out his salary from twelve to ten thousand
one month after his arrival. Since his departure I have had to
act as my own legal adviser. The assistant legal adviser was in-
herited. He was formerly Judge of the Philippine Supreme Court
and cannot forget that fact. He is still a judge and not a
counsellor. He is persona non grata in official Commonwealth
circles, which is another of several good reasons he should not
be promoted.
The vacancy should be filled by a first rate man from
home. Local connections preclude the appointment of a member of
-3-
the Philippine bar. I know of two men, who are thoroughly compe-
tent and who might be available for a year's service. They are
Fowler V. Harper, Professor of Law in Indiana University, and
Roger Branigin, until recently General Counsel for the Farm Credit
Administration at Louisville, now in private practice in Lafayette.
As you know, Wayne Coy came with me as administrative
assistant, giving up eight thousand a year to accept six here. To
the Filipinos an administrative assistant is nothing but 8 chief
clerk, but the position is actually that of an executive secre-
tary who deals directly with Commonwealth officials up to and in-
cluding cabinet officers. He should have the rank and pay of a
senior adviser on the staff and I earnestly recommend that his
title be changed to Executive Secretary and his salary raised to
nine thousand dollars. You know of his work at home as field
representative of the W.P.A. for Indiana, Kentucky, Ohio, West
Virginia, Pennsylvania and New Jersey, as state administrator
W.P.A., as state director of the Governor's Committee on Unem-
ployment Relief and as state administrator Department of Public
Welfare. His work here has been of the same high standard and
deserves recognition. Furthermore, such a promotion would make
him eligible for appointment as Acting High Commissioner from the
time of my departure until the return of J. Weldon Jones, former
Acting High Commissioner, from leave.
Jones' leave of absence is long overdue. He came to the
Philippines as Insular Auditor in 1933 and became the senior f1-
nancial adviser upon the organization of this office. He is a
public servant of the highest type and his work 88 Acting High
Commissioner under most trying circumstances deserves commendation
it has not received. He plans to go on leave the latter part of
August, returning in January or February.
I had hoped that circumstances would permit you to come
to the Philippines this summer. A welcome born of the greatest
respect and deepest affection awaits you. But I realize that
conditions at home and abroad make the trip impossible at this
time.
With every good wish that your journey along the West
Coast will bring you the rest, recreation and enjoyment which a
session of Congress seems to preclude, I am
Faithfully yours,
Paul V. McNutt,
United States High Commissioner
to the Philippine Islands
PSF
war
THE WHITE HOUSE
WASHINGTON
daise
July 5, 1938.
EXCERPT FROM MEMORANDUM TO THE
PRESIDENT FROM THE ASSISTANT
SECRETARY OF WAR AND COMMISSIONER
MANLY
We submit herewith, thirty days
ahead of schedule, a preliminary
report covering the peace-time and
war-time needs for electric power
in fifteen principal war material
centers, together with estimates
of the investment necessary to meet
these needs and an appraisal of the
capacity of the steam turbine manu-
facturers to produce the required
equipment.
SECHT
bHERI
EXCES
THE WHITE HOUSE
WASHINGTON
July 5, 1938.
MEMORANDUM FOR
THE ASSISTANT SECRETARY OF WAR
HON. BASIL MANLY
I have read this report with
much interest. It seems to me that
in the absence of government appro-
priations, except RFC loans, we
might call a meeting of a few power
company executives when I get back,
about the middle of August, and ask
them to study the subject from the
point of view of the power companies.
Then if there is any encouraging
response, we can get Jesse Jones to
do what he can by way of loans.
Just now I do not see that any
other plan is practical -- do you?
Please keep this report until
I get back and talk with me about it
then.
F. D. R.
P.S. will you take this up with
Commissioner Manly?
was 15:09 file
PSF
WAR DEPARTMENT
OFFICE OF THE CHIEF OF STAFF
WASHINGTON, D.C.
CONFIDENTIAL
August 16, 1938.
MEMORANDUM for The President:
Subject: Possibility of useful employment for
Major General Frank Parker.
My dear Mr. President:
General Parker has constantly sought some form of duty
ever since he was placed on the retired list. I know this officer
well and intimately and there is no question that in the field in
time of war he is without a superior as a gallant leader and soldier.
However, as an executive or commander in time of peace, he has been
a serious problem to the War Department ever since he was promoted
to the grade of General officer, and there is no duty that I know
of that he is capable of performing, except perhaps translating
French, and we have ample ability in that line.
Malin Chief of Staff. Gray
DECLASSIFIED Franklin D. Roosevelt Library
DOD DIR. 5200.9 (9/27/58)
Date- 2-17-59
Signature- Carl L. Spicer
PSF
ALL COMMUNICATIONS SHOULD BE ACCOMPANIED BY CARBON COPY AND ADDRESSED TO
war
8
WAR DEPARTMENT
TO INSURE PROMPT ATTENTION
IN REPLYING REFER TO
OFFICE OF THE CHIEF OF ORDNANCE
00 No. 400.12
WASHINGTON
ATTENTION OF
4849
August 24, 1938.
SUBJECT: Status of Ordnance Procurement from
Industry - -- Fiscal Year 1959 Program.
TO:
The Assistant Secretary of War.
The Status of Procurement from Industry of princi-
pal items of ordnance, including principal items of material
and components procured by arsenals in connection with manu-
facturing projects assigned them, is as follows:
1. 3" Antiaircraft Materiel:
Estimated total cost of finished items of ordnance
to be procured from industry under the 3" A.A.
program
$ 7,375,000.00
Awards made or authorized to date
$ 4,572,727.88
Award pending decision of Comp-
troller General
1,769,298.00
Awards made, authorized or pending
6,342,025.88
For details pertaining to awards see Inclosure.
2. Special Machinery:
a. Special machinery to expedite smokeless powder
production and for equipping ammunition load-
ing plants
3,280,000.00
($1,055,000.00 of $3,280,000.00 appropriated for
this purpose held in Administrative Reserve.)
Awards made or authorized to date
1,190,505.30
b. Total program for special machinery for produc-
tion of small arms ammunition
1,000,000.00
Bids have been received for entire program.
Awards made to date
244,308.96
C. Total program for special machinery and tooling
for production of cal. .30 M1 rifle and cal. .50
machine guns
2,300,000.00
Awards to date
161,871.00
d. Program for centrifugal casting equipment
and turning and boring machinery, for Water-
town Arsenal
$ 300,000.00
Awarded to date
138,700.00
e. Program for special machinery for turning and
boring cannon, for Watervliet Arsenal
200,000.00
Awards made and authorized
133,996.50
For details pertaining to awards see Inclosure.
3. Inspection Gages:
Procurement of inspection gages for standard items
of ordnance, total program for procurement of new
gages
500,000.00
Awards reported to date
72,665.10
4. Ammunition Items:
The principal items of ammunition to be procured
from industry are:
8. 7,351,667 lbs. of smokeless powder. Proposals
will be opened on September 15th and 16th.
Estimated cost
3,680,000.00
b. 1,835,000 lbs. of TNT and 1,525,000 lbs. of am-
monium nitrate. Proposals opened August 10th.
No award to date. Estimated cost
428,000.00
c. 200,000 cases, cartridge, for 75 mm. field gun.
Circular proposal will be opened September 20th.
Estimated cost
260,000.00
d. 95,600 bombs from 100-1b. to 2,000-lb. Propos-
als will open September 7th and 8th for bomb
bodies and fin assemblies. Total estimated
cost
1,000,000.00
e. 31,000 forgings for 75 m. shell M48. Awarded
to Bethlehem Steel Co. @ $1.10 ea.
34,100.00
1. 35,000 cartridges, signal, for M10 and Mil and
4,000 M9 flares. Award authorized to the
International Flare and Signal Division of
Kilgore Manufacturing Company. Total cost
.....
105,500.00
5. Artillery Items:
a. 156 sets of high speed adapters for 75 mm. gun
carriages, M1897. Awarded Martin-Parry Corpo-
ration @ $269.00 each. Total cost
$ 41,964.00
b. 84 sets of high speed adapters for 75 m. gun
carriage, M1917. Award will be made to Martin-
Parry Corporation contingent on satisfactory
test of pilot, @ $298.95 each. Total cost
25,110.12
c. 39 ea. 37 mm. aircraft cannon. Procurement will
be made from the Colt Company. Estimated cost
385,000.00
d. 25 ea. scout cars. Procurement will be made after
test of modified scout car now under way. Esti-
mated cost
162,500.00
e. Included in the appropriations is an item of approx-
imately $4,000,000.00 for cal. .50 A.A. machine guns
or 37 mm. automatic A.A. guns, together with mounts
and fire control equipment therefor. Estimated pro-
curement from industry of 37 mm. materiel
787,500.00
Cal. .50 materiel included under Small Arms Items.
f. Armor plate for 18 medium tanks. Estimated cost
162,000.00
Award made to Henry Disston Sons. Exact cost will
not be known until final delivery is made, as price
is on a poundage basis.
E. 18 ea. transmissions and 18 engines for medium
tanks. Circulars open August 23rd and September
9th. Estimated cost
171,000.00
h. 279 ea. forgings for 3" antiaircraft guns. Awards
as follows:
100 to Pennsylvania Forge Corp.@ $581.70 $ 58,170.00
100 to Camden Forge Company
@
607.46
60,746.00
79 to National Forge Company @ 623.25 49,236.75 168,152.75
1. Copper nickel alloy forgings for 3" antiaircraft re-
coil mechanisms. Estimated cost
307,247.52
Awarded to International Nickel Company and American
Hollow Boring Company. Estimated cost
152,779.68
Exact cost will not be known until final delivery
as price is on a poundage basis.
3.
6. Small Arms Items:
a. 3,008 each Browning machine guns, cal. .30
and cal. .50, will be awarded to the Colt Company.
Estimated total cost
$ 2,011,668.00
b. 24 each pyrotechnic pistols. Award authorized
to the International Flare & Signal Division of
Kilgore Manufacturing Company. Total cost
6,000.00
C. 100,000 pounds powder for cal. .50 ammunition.
Award not yet made. Estimated cost
70,000.00
d. 110,000,000 ea. cal. 22 ball cartridges awarded
to Remington Arms Company. Total cost
361,000.00
e. 1,490,000 shotgun shells. Awarded to:
Winchester Repeating Arms Co
$ 29,500.00
Western Cartridge Company
2,500.00
32,000.00
SUMMARY
Ordnance Procurement Program, 1939.
Estimated Total
Awarded or Author-
from Industry
ized to 8/23/38
( $ 4,572,727.00
3" A.A. Materiel
$ 7,375,000.00.
( 1,769,298.00 *
Special Machinery
7,080,000.00
1,869,391.76
Inspection Gages
500,000.00
72,665.10
Ammunition Items
5,507,600.00
139,600.00
Artillery Items
2,210,474.39
524,896.43
Small Arms Items
2,480,668.00
399,000.00
TOTAL
$25,153,742.39
$ 9,347,568.29
* Award pending decision of Comptroller General.
While the above summary shows that nearly 40% of the program has
awards made or authorized, another 11% is held up temporarily pending
decisions as to standardisation, test of pilot, or because funds are
held in Administrative Reserve; the remainder is in process and within
& month or six weeks most of it should be awarded.
C.M. Cincomm WESSON
Major General, Chief of Ordnance
1 incl. dup
War
Inclosure to Letter August 24, 1938,
"Status of Ordnance Procurement from Industry --
Fiscal Year 1939 Program".
010012 4849 Lue!
1. The principal items awarded under the 3" antiaircraft
material program, with costs thereof, are as follows:
200,000 ea. Mechanical time fuze M43, awarded Eclipse
Machine Co., Elmira, New York, @ $5.135
....
$ 1,027,000.00
72 ea. Height finders M, awarded Keuffel &
Esser, @ $15,400
1,108,800.00
12 ea. Height finders M, awarded Bausch &
Lomb, e $19,950
239,400.00
91 ea. Directors M4, awarded Sperry Co.@ $20,800.
1,892,800.00
404 ea. Instruments, observation, A.A., B.C.,
Bausch & Lomb, @ $ 739.37
298,705.48
Award pending decision by the Comptroller
General:
138 ea. A.A. Gun Mounts. Split award probable:
92 ea. to York Safe & Lock Co. Total cost
1,067,200.00
46 ea. to General Electric Co. Total cost
702,098.00
2. The principal items awarded under the Special
machinery program, with costs thereof, are as follows:
55 ea. Mixers, smokeless powder, to the Read Machin-
ery Co., York, Pa. total cost
98,890.00
6 ea. Mixers, amatol, Struthers-Wells-Titusville
Corp., total cost
3,954.00
5 ea. Machines, screening ammonium nitrate, to
Strout, Waldron & Co., total cost
4,210.30
11 ea. Machines, assembly and crimping, to Canister
Co., total cost
9,482.00
6 ea. Presses, detonator, to Canister Co., total
cost
4,455.00
3 ea. Driers, rotary, ammonium nitrate, to Harding
Co., York, Pa., total cost
&
6,990.00
15 ea. Presses, pelleting, to F.J. Stokes Machine Co.,
total cost
25,690.00
15 ea. Machines, drilling, TNT, Buffalo Forge Company,
total cost
4,575.00
30 ea. Jordan engines, Shartle Bros. Machine Company,
total cost
107,670.00
20 ea. Macerating machines, Read Machinery Co., York,
Pa., total cost
34,420.00
60 ea. Cutting machines, types A and B, McKiernan,
Terry Corp., total cost
64,500.00
196 ea. Smokeless powder presses as follows:
Dehydrating presses, type A, Baldwin Southworth
Co., 36 ea. at $5,800., total cost
208,800.00
Presses, vertical finishing, A.B. Farquhar Co.,
York, Pa., 48 ea., at $4,241., total cost
203,568.00
Presses, blocking, A.B. Farquhar Co., York, Pa.
64 ea. at $2,200., total cost
140,800.00
Presses, macaroni and finishing, type A, Wat-
son, Stillman Co., 16 ea., at $4,950., total
cost
79,200.00
Presses, macaroni and finishing, type B,
A.B. Farquhar Co., York, Pa., 32 ea. at
$5,038., total cost
161,216.00
PSF Was Dept
August 25, 1938
The President,
The White House.
My dear Mr. President:
I think you will be interested in the
attached report from Major General C. M. Wesson,
Chief of Ordnance, to me, under date of August
24th, with reference to the status of the Ordnance
Procurement Program from Industry for the fiscal
year 1939.
It shows that awards have been made or
authorized for nearly forty per cent. of the program,
and that the remaining eleven per cent. is held up
temporarily "pending decisions as to standardization,
test of pilot, or because funds are held in Adminis-
trative Reserve", and that "the remainder is in process
and within a month or six weeks most of it should be
awarded".
General Wesson and his staff are doing a
fine job in speeding up these awards to give to
heavy and semi-heavy industries an economic boost at
this time.
Sincerely yours,
Acting Secretary of War
PSF:War
DEPARTMENT OF COMMERCE
BUREAU OF FOREIGN AND DOMESTIC COMMERCE
WASHINGTON
September 17, 1938.
MEMORANDUM RE. PRICE MOVEMENTS.
IN REPLY REFER TO
This portion of the report is addressed to the problem of price
controls, with particular reference to the trend of prices and for-
eign trade during the world war period, and the question of the ex-
tent to which conditions differ today from those of 1914.
The attached charts and tables present a summary of the movement
of the general price level during the war period, and the changes in
the prices of about 30 individual commodities or commodity groups.
It will be noted that the general price level did not advance with
the outbreak of the war in 1914, and that the combined indexes of the
prices of farm products and raw materials actually declined during the
final six months of 1914. It was not until the latter part of 1915
- more than a year after the outbreak of hostilities - that the
broad forward movement in prices was inaugurated. This upward trend
extended through the period of the war and, after some hesitancy in
1919, there was a further substantial, though uneven, rise which cul-
minated in the 1920 boom and subsequent collapse which reduced the
general price level by nearly one-half.
Since certain controls were instituted during the war period,
Table No. 1 has been included in order to indicate the varying flue-
tuations of controlled and uncontrolled prices. Commodities ulti-
mately brought under government price control advanced more rapidly
from the middle of 1915 until the severance of diplomatic relations
with Germany than did the uncontrolled group; also they rose much
more rapidly from that time until the declaration of war. After the
controls were made effective the controlled prices declined, while
the uncontrolled prices continued to rise. In the armistice month
(November 1918) the indexes of controlled and uncontrolled prices
both stood at 200 (July 1915-June 1914 = 100). In April 1917, the
indexes were 183 and 146, respectively.
Foreign Trade.
From Table No. 3 it will be seen that in August 1914 there was
an abrupt drop in our exports, and that during the latter half of
1914, exports to Europe were smaller in value than in the latter half
of 1913. By the end of the later year, however, there was a marked
acceleration of the export trade movement. Exports to Europe during
the year 1915 were 92 percent higher than in the preceding year and
72 percent above the 1913 total.
- 2 -
Shortly after the disruption incident to the outbreak of war in 1914,
demands for war materials increased at the same time that there was a down-
ward shift in the demand for many other commodities. Exports of unmanu-
factured cotton to Europe during the fiscal years 1915 and 1916 were re-
duced by about 40 percent in value, as compared with the shipments in the
fiscal year 1913. The quantity data should also be examined in a study
of the shifts which occurred in our trade at that time, since price changes
in individual commodities were of major importance. Germany was a more
important market for cotton and other products in pre-war than in recent
years.
The enclosed Table No. 5 shows the changes that occurred in our ex-
ports of selected materials for the first two years of the war in com-
parison with our pre-war trade. Of the total value of our exports in
1913-14, one-fifth was represented by the commodities included in this
list (exclusive of cotton). In the fiscal year 1916, exports of these
same commodities comprised more than half of the value of our exports.
The table (together with Table No. 4) and the accompanying charts, give
a comprehensive picture of the value of our export trade movement.
Shipments of cereals increased very rapidly in value in 1914-15 and
declined somewhat in the following year. In this latter period shipments
of such products as explosives, sugar, shoes, aeroplanes, iron and steel
products, machinery and locomotives, and nonferrous metals and chemicals
rose more rapidly than in the first year of the war. (See table No. 5)
Fiscal Operations and Production Trends.
In order to bring out the shifts in production and prices, and their
relation to fiscal operations, Chart No. 1 has been prepared. As this
chart indicates, the country was experiencing sub-normal activity in 1914,
and prices were under pressure, but conditions at that time were not so
depressed as at present. It was not until the latter part of 1915 that
the index of industrial activity recovered to the normal trend line; in
the final quarter of 1915 when the index went 10 percent above normal the
rise in prices got under way. After December 1916, the index of industrial
production did not rise further; from this point forward, the rapidly ris-
ing dollar totals of business represented mainly the declining purchasing
power of the dollar. With our resources fully employed, increased demands
were reflected in price rises. Nevertheless, there was a considerable
achievement in maintaining production at a relatively high rate during the
war period when it was necessary to revise the structure of production to
a major degree. But even the rapid price advances after 1916 failed to
bring out an enlarged volume of production. For raw materials alone, the
War Industries Board calculated that production was increased about 3 per-
cent in 1917 and a further 2 percent in 1918.
The methods of financing the war were a factor in this price situa-
tion. The extent of the government deficit during this period is shown
on Chart No. 1, while the amount of the United States Government advances
to European governments is presented in Chart No. 2. This is & broad sub-
ject which can only be mentioned here.
gerru
- 3 -
In this connection, the extent of the loans raised in the United
States prior to our entrance into the war provides an essential back-
ground for the study of price and export movements. The volume of
these loans is set forth in Chart No. 1. Such advances, plus the
liquidation of foreign holdings, and subsequently the advances made
by the United States Government were instrumental in financing the
enlarged volume of goods moving to Europe.
Wherein Does The Existing Situation Differ From That In 1914?
It is not the intention to review this situation in detail, but
rather to list a few of the major points of difference.
1. In 1914, the country was experiencing a business re-
cession, but with industrial output only moderately below nor-
mal; unemployment, though increasing, was not a major problem.
Today, our industrial plant is operating at no more than two-
thirds of its capacity, with about 10,000,000 persons unem-
ployed. It is possible at present to expand the output of in-
dustrial commodities very materially without causing a sharp
rise in prices. Some advance from current price levels would
be constructive rather than otherwise. There is no assurance
that the outbreak of war would act as a stimulus to the general
price level; it would necessitate a considerable readjustment
which might well have a deflationary effect.
2. Our transportation facilities are only partly em-
ployed at present. Car loadings are about 40 percent below
the 1929 level. Expansion is possible with the existing equip-
ment, but with full utilization of our productive resources
the railroads would require a considerable volume of additional
rolling stock.
3. The general trend of prices has been downward in re-
cent years, with the wholesale price index currently about one-
fifth below the pre-depression average. In 1914, prices were
at a relatively high level, having moved upward over the pre-
ceding two decades. The wholesale price index of the Bureau
of Labor Statistics was more than 40 percent higher in 1913
than in 1896.
4. European nations have been preparing for war for a
considerable period, and stocks of essential materials held
are probably larger than in 1914. The facilities for the manu-
facture of war supplies are greater in Europe today than in
1914, and demands are likely to run more heavily in terms of
raw materials than in finished commodities.
At present, stocks of raw materials are relatively
high (see Table No. 6) and tend to act as a brake on prices,
notwithstanding the controls that have been exercised through-
out the world during recent years. The Bureau's index of
world stocks of seven foodstuffs and raw materials is currently
around 200 (1923-25 = 100). The agricultural situation (cov-
ered in a separate report by the Department of Agriculture) is
also quite different today from that of 1914.
- 4 -
5. A smaller part of this country's output of movable
goods has been exported in recent years than in the pre-war
period; hence, the dependence upon foreign markets at the
moment, while important, is not so great relatively as in
1914. In the pre-war period we exported about 10 percent of
our output of movable goods. In recent years, the proportion
has been 7 - 7½ percent. (See Chart No. 5)
6. The situation with regard to the dollar purchasing
power of foreign countries differs today from that of 1914.
This subject is covered by a separate memorandum of the Fi-
nance Division, which is enclosed. It appears from this
memorandum that the immediately realizable assets of foreign
countries in the form of short-term credits or investments,
and in the form of earmarked gold, are considerably larger
than were available in 1914. On the other hand, long-term
foreign investments in this country were in the aggregate
larger in 1914 than at the end of 1937, and the composition
of the total was significantly different.
7. The technical resources of this country are vastly
superior to those available in 1914, a fact which should be
considered in connection with the existence of idle resources.
8. The banking situation today is much stronger than
that existing in 1914. The reserve banks are now firmly es-
tablished, and in a position, with the cooperation of the
Treasury, to exercise considerable control over the general
financial and monetary situation; excess reserves are at or
near record heights, and the financial resources are avail-
able to foster and sustain a considerable expansion of busi-
ness activity.
9. Existing controls are more numerous and far-reaching.
(This subject is covered by another part of the report.)
The accompanying supporting data are listed on the following
pages for ready reference.
Division of Business Review,
Bureau of Foreign and Domestic Commerce,
U. S. Department of Commerce.
September 17, 1938.
PSFiWar
TREASURY DEPARTMENT
PROCUREMENT DIVISION
OFFICE OF THE DIRECTOR
WASHINGTON
September 20, 1938
Mr. Alexander Holtzhoff
Department of Justice
My dear Mr. Holtzhoff:
The accompanying memorandum sets forth the result
of our conference which you were kind enough to
attend last Friday.
This contains my idens exactly.
Very truly yours,
Director of Procurement
A. The Objective: The objective is the question of price control through
indirect methods or directed methods. Price control for peace time application
aimed to prevent the skyrocketing of prices.
The necessity for drafting such & plan immediately arises by reason of
the present critical European situation. Should war break out in Europe, European
belligerents would undoubtedly endeavor to obtain in large quantities & great
variety of products from this country. These products would comprise not only
items required directly and indirectly for war purposes, but also a great many that
they normally produce themselves but which they would cease to produce because of
the diversion of normal producing capacity to the manufacture of munitions indis-
pensable to their war efforts. Such & situation developed rapidly during the period,
1914 to 1916. The resulting expansion of our foreign market caused violent increases
in demand for our products, a skyrocketing of prices, and 8. disruption of not only
our price structure, but of our entire national economy. The international situation
now may prove to be identical to that of the summer of 1914.
The orders of European belligerents, as well as of those who normally are
supplied by those belligerents, may again flood this country to such an extent as to
exceed our present normal capacity to produce. In any such eventuality we must be
prepared to avert a disruption of our national price structure, with its inevitable
ill effects upon our whole national economy. The plan below is an attempt to suggest
& means to this end.
B. Postulates:
1. In the event of immediate war in Europe, this country will assume a
status of neutrality.
2. Any system of price control which may now be installed must be of such
a character to be sufficiently flexible for immediate and smooth conversion to
wartime application.
3. Any system of price control imposed must be such as to merit the whole-
hearted cooperation of industry, labor, and the public.
C. Principles:
1. When inventories and capacity to produce exceed demand, a system of
minimum price control is applicable, i.e., a figure below which the price of 8.
given commodity is not permitted to fall. The application of this principle is
suited to periods of depression. Outstanding examples of it are embodied in the
functioning of the N.R.A. and of the administration of the present agricultural
surpluses. This principle is not applicable to the present problem, as it pertains
to the control of skyrocketing of prices with its attendant disruption of the
national economy.
2. When demand exceeds inventories and capacity to produce, price control
of another nature is required. Under these conditions one of at least two means of
control are available. First, for a given commodity, 8. definite fixed price may be
set, or second, A maximum price may be established above which the price of that
commodity would not be permitted to climb. This is the objective with which the
present problem is concerned.
(a) The second of the alternatives just cited, namely, the maximum
price beyond which the price of 8. given commodity would not be permitted to rise,
is to be preferred for the following reasons:
-2-
(1) A definite fixed price is in effect a minimum as well as
8. maximum price and, as shown above, the minimum price principle is not applicable
to the problem before us.
(2) Fixation of definite fixed prices presumes a fineness or
perfection of administration not practically attainsble.
(3) The establishment of workable fixed prices would require an
army of administrative accountants, which in turn would make the method too
unwieldy for prompt and effective administration.
(4) Lack of flexibility in price range below an upper limit
would favor the low-cost, large-scale producer, and would tend to prevent the full
cooperation of the small and marginal producers.
(5) Any tendency toward discouraging the small-volume producer
would make the Government's position in peacetime extremely vulnerable to attack
by unsympathetic elements - which in turn would tend to impair the effectiveness
of the means of attaining the prescribed objective.
On the other hand, 8 system of maximum price control:
(1) allows the forces of supply and demand to function
elastically below upper limits.
(2) provides elastic means of control with upper limits
established through trial and error, bringing in all production considered desirable
and consistent with the prescribed objective, i.e., the prevention of skyrocketing
of prices.
(3) was tried and found effective during the World War.
D. Scope of application:
The volume of work necessary and the staff required to extend price
control to all materials and commodities make such a plan impracticable of application.
For this reason alone price control should be restricted as much as possible. It is
likely that control of the prices of basic materials and commodities at source of
production will suffice. In any case, unnecessary control must be avoided.
It is believed that peacetime price control, at least initially,
should be further restricted to items involved in foreign trade. If sufficient
control can be exercised by our Government over the volume and distribution to
American producers of foreign orders, it may be practicable to permit an upward
price differential for foreign orders over and above that prescribed for domestic
consumption. With property vested authorily, this may even comprise a strong weapon
for keeping prices in proper bounds. In any case, however, large volumes of foreign
orders would make mandatory the imposition of price control over the items they
involve. Large foreign demand for these items would create domestic scarcity, and
if uncontrolled, prices would rise rapidly.
It may be necessary soon to extend price control to items other
than those involved in foreign trade. The effect of large volume foreign business
would soon be reflected in increased public purchasing power, which of itself would
create additional demand and hence tend to raise the general level of prices.
-3-
Incidentally, it must be borne in mind that the existing neutrality
legislation limits the scope of products that may be exported to nations at war or
to nations declared by the President to be belligerents. A further limiting factor
is the prohibition against credit or loans which may be granted domestically to
finance sales to nations now in debt to the United States.
The extent to which foreign orders should be encouraged by price differentials
or otherwise is debatable. Rapid productive expansion beyond domestic peacetime
needs would be desirable if we were drawn into the conflict; World War experience
has proved that it would have disastrous repercussions if we were not.
As has already been indicated, one of the sources of foreign orders may be
expected to be those for whom belligerents or potential belligerents have acted as
suppliers, but whose productive capacity is now or may be preempted for war production.
Expansion of our own productive capacity over and above our normal peacetime
ability to consume should be gauged to 8. considerable degree by our probable ability
to hold & substantial amount of this newly acquired foreign trade with neutrals.
Some measure of aggressive action might even be desirable as a means of
utilizing present idle capacity and of furnishing useful work for the present
millions of our unemployed.
It must be borne in mind, however, that the peacetime mission of price
control is the maintenance of stable domestic prices and that only in war time or
when war is imminent does the paramount consideration become one of bringing into
production the last indispensable unit required for the war effort and for essential
civilian consumption. Until it is evident that we will ourselves become a belligerent,
and subject to the above reference to increased foreign trade possibilities,
production to meet maximum peacetime requirements hould be thehappy medium for
which to strive in the system of price control adopted.
E. Type of Control:
Price control should be constructed primarily upon the principle of
volumtary cooperation of all concerned. Arbitrary measures of duress normally are
distastefull to American standards. In view of the limited direct means of enforce-
ment at present available, control of a voluntary cooperative nature is mandatory in
peacetime. In wartime, such cooperation is indispensable for the maintenance of public
support of the war effort, without which maximum prosecution thereof cannot be
attained.
F. Means of Control:
1. Agricultural Products: Governmental agencies now in being are, in
effect, at the present time controlling the prices of & number of agricultural
products. This control is of the minimum price type, since supply of these products
considerably exceeds the demand for them. War abroad undoubtedly would create &
market for the present surpluses; would likely eliminate these surpluses, and render
unnecessary the type of control now exercised. The Government thereupon would be
relieved of the necessity of acting in its present capacity as & corporation to buy
and sell these products, but might continue to utilize its existing machinery to
set upper limits of agricultural prices as the emphasis is shifted from minimum to
maximum price control.
2.. Industrial Control: Control of the prices of industrial output, both
extractive and manufacturing, is quite another matter. It is believed that the
-4-
normal means of doing business should here also be adhered to as closely as possible.
The setting up of a governmental corporation to buy industrial products from the
producer and to sell them to & foreign belligerent, however, is not recommended.
Such a departure from the normal means of conducting international trade appears
entirely unnecessary and, in all likelihood, would entail most undesirable reper-
cussions. It would set up an expensive temporary bureaucracy difficult subsequently
to eliminate, and its administration might involve us politically from an inter-
national standpoint.
Here again it is believed desirable to utilize for price control purposes
the framework which is now actually in existence, augmented as may be found necessary -
such augmentations being made in a manner to fit into the projected wartime organiza-
tion for the mobilization of American Industry.
Here also must be considered the fact that at present, compulsory means of
enforcement are now largely non-existent, and that voluntary cooperation of industry
must be relied upon.
The following means of price control in peacetime is therefore suggested:
(a) Direct Means:
(1) Trade Associations: We have at present trade associations for
nearly all industries. The potential value of these associations in policing the
members within their own organizations was demonstrated during the World War.
It was again demonstrated during the days of the NRA, which, incidentally, served
to revitalize and expand these associations as component parts of our industrial
structure. Their framework is now available for peacetime and wartime application
of price control.
(2) Commodity Committees; Commodity Committees composed of
representatives of industry, of the Government, and of the public, could be set up
in each industry to parallel trade association alignments. These Commodity Committees
could be used to determine fair maximum prices for the voluntary application of the
trade associations. One policy forming Price Control Authority to coordinate the
work of the commodity committees could be established in Washington.
(3) Foreign Purchasing Agents: It is believed that the State
Department through diplomatic negotiations could induce each foreign belligerent
to establish within the United States 8. centralized purchasing agent. The J. P.
Morgan Company acted in this capacity before we entered the World War. The desire
of foreign belligerents to obtain and maintain the good-will of our National
Administration, and the fact that otherwise inevitable high prices and other ill
effects of unrestricted competition could thereby be avoided, should furnish the
incentive to accomplish this end. Our Government could appoint advisor-observers
to act as liaison agents among the foreign belligerent purchasing agents, our own
government, commodity committees and trade associations, thus making available full
information to the policy forming committee in Washington and to the Administration
for the determination of price control policies. Any additional administrative or
legislative measures necessary to make price control measures more effective would
thereby be brought to light.
-5-
(4) Export Quotas: Export quotas could be used as a brake by the
Administration on excessive exports. The records of our various fact-finding
agencies, such 88 embodied in the Departments of Commerce, Labor and Interior,
could be used so determine when the brakes should be applied.
(b) Indirect Means:
(1) Financial: It is a well recognized economic fact that the contrac-
tion and expansion of credit have a very definite indirect effect upon business
activity, and hence upon the national price structure. Such a means of control
is now exercised by such Government or Government controled agencies as the
Securities and Exchange Commission, the Reconstruction Finance Corporation, the
Federal Reserve System and even the Treasury Department itself. The Securities and
Exchange Commission, for example, controls the issuance of commercial securities;
the Federal Reserve System sets rediscount rates, prescribes reserve balance require-
ments of member banks, and enters into open market transactions to stabilize credit;
the structure of the Reconstruction Finance Corporation is available to make loans to
prevent undesirable business failures; and the Treasury Department regulates the
issuance of long and short term public securities. All of the functions of these
agencies can be coordinated indirectly to support the direct means of controlling
prices.
(2) Numerous other indirect but nevertheless powerful means of
enlisting the cooperation of industry in a price control program are available.
Wages of labor, for instance, constitute & great portion of the costs of production,
which, together with a reasonable profit, comprise the base upon which the price
structure must be constructed. The Government has assumed an important position in
the determination of labor wages. The determination of export quotas by the Govern-
ment, previously mentioned, comprise another indirect method of enlisting the
cooperation of industry in price control matters. Excess profit taxes now imposed
and the threat of increasing them could also be employed for this purpose. The
power of the purse in public grants of money is still another potent weapon for
obtaining industrial cooperation. In fact, the Government now has so much of our
national economy under review and so many indirect means of compelling the coopera-
tion of industry with its policies that it can exercise powers tantamount to
coercive action in making price control measures effective.
G. Application of the Means of Control:
The fact that the Government has adequate direct and indirect means
of enlisting national compliance in a system of peacetime price control is of little
consequence if a proper organization is not set up for the timely application of
control Only when such powers are at the disposal of one authority can control
become effective. It is for this reason that the above organization, with the
central Price Control Code Authority superimposed upon all of the organization's
component parts, is suggested.
It can be safely forecasted that the proposed organization will
prove to be imperfect, and that mistakes will be made in constructing and in
administering it. This is the price one must pay for any new undertaking. The
really important consideration, however, if disturbed conditions abroad should
culminate in a European war, is to get this price control mechanism functioning,
and, through trial and error during the initial period of peacetime experimentation,
discover its weaknesses and take remedial action to correct them. The remedial
-6-
action required may prove to be either administrative or legislative in nature,
but if the organization is non-existent when prices begin to skyrocket, the damage
to our national economy will be incurred before the mechanism to cohtrol it can be
made operative. To maintain the stability of our price structure, timely action by
a control agency is imperative. Almost anyone knows when prices get out of line.
The important factor is to have the organization to control them ready to function
before prices become exhorbitant.
In placing any price control mechanism in operation, we must not lose
sight of the force of public opinion. The temper of the people is in times of peace
different from the attitude of the public in times of war. In wartime emergency
measures are expected. In peacetime the people must be educated to recognize the
necessity for such measures as price control. To this end appropriate publicity
must be used to explain the necessity for price control measures, and the people
must understand that price control, in the event of European war, is not only
necessary to maintain our own economic stability, but may even be a means, properly
controlled, for helping us to avoid being drawn into the conflict.
H. Transition from Peace to War: This organization suggested can be readily
adapted to wartime use. The Trade associations can be used as war service committees
now projected in the Industrial Mobilization Plan; the Commodity Committees can be
employed in identical capacities as a part of the projected War Resources Adminis-
tration; the Advisor-Observers to the foreign belligerent purchasing agents can
form the nucleus of the projected War Trade Board; export quotas can be supplemented
by export licenses, and the Federal Reserve System, the R.F.C. and the S.E.C. cen
continue to perform in wartime the identical functions they perform in times of
peace.
Director of Prenoment
Franklin D. Roosevelt Library
DEGLASSIFIED
CONFIDENTIAL
PSF: may War -feleten
000 DIR. 5200.9 (9/27/50)
WAR DEPARTMENT
OFFICE OF THE ASSISTANT SECRETARY
Date- 2-17-59
WASHINGTON, D.C.
was
Care L Specian
September 29, 1938.
Signature]
MEMORANDUM FOR THE PRESIDENT.
Subject: Munitions Shortage under Protective Mobilization Plan.
1. In preparing for national defense, the War Department has de-
veloped the Protective Mobilization Plan which, in the first month,
mobilizes a force of 400,000 men made up of the Regular Army and Na-
tional Guard. Although these trained men would be immediately avail-
able for service in the field, shortages in equipment are apparent
which, unless remedied, would seriously interefere with their effective-
ness. The money value of the shortages in munitions for this initial
force of 400,000 men may be summarized as follows:
(1) Shortage in critical items only, after
utilizing older existing types as sub-
stitutes where usable
$131,000,000
(2) Shortage using standard equipment only
$213,000,000
(3) Shortage in aircraft
Under computation
2. In 4 months, the Protective Mobilization Plan contemplates a
total of approximately 1,000,000 men under arms. This is the force vis-
ualized by Congress in 1924 as the proper basis for retention of war re-
serves. In the present condition of reserves of munitions, the following
shortages would be found were this force to be called into being:
(1) Shortage in critical items only, after
utilizing older existing types as sub-
stitutes where usable
$402,000,000
(2) Shortage using standard equipment only
$507,000,000
(3) Shortage in aircraft
Under computation
3. A reasonable war reserve objective would be to provide the latest
standard equipment for the initial force of 400,000 men and for the re-
mainder of the one million man program to utilize older existing types as
substitutes wherever practicable. It has been determined that the short-
age in equipment for an army of 1,000,000 men on the above basis would be
$484,000,000, exclusive of aircraft.
CONFIDENTIAL
4. With respect to aircraft, the present objective is 2320 planes
in service, which objective it is not expected to reach in the present
year. The requirements in aircraft are extremely difficult to compute
because of the rapid developments in airplane tactics. Judging by
European experience, however, it would appear that considerably more
planes than now in prospect will eventually be needed. Since at least
a year will be required to deliver planes in large numbers, a reserve
of aircraft may eventually have to be established, in addition to the
reserves already mentioned. As an indication of its cost, it is es-
timated that a reserve of 1000 planes would involve an expenditure of
approximately $100,000,000.
5. The Protective Mobilization Plan visualizes a possible eventual
expansion to a maximum effort of 4 million or more men under arms. With
the mobilization of such & force, the problem of munitions supply becomes
one largely of new production, since the cost of reserves would be pro-
hibitive. To carry out a reasonable program of industrial preparedness
to meet this situation, it is estimated that the following funds will be
required:
(1) Production studies, gages, jigs and
other aids to manufacture
$20,000,000
(2) Special machinery for the manufacture
of munitions
$10,700,000
(3) Machine tools and equipment to re-
habilitate and round out Government
establishments
$11,300,000
Total
$42,000,000
6. In any program of industrial preparedness, supplies of strategic
raw materials are essential. Stock piles totalling in value 100 million
dollars, distributed over a number of items, are the eventual objectives.
The present international situation would appear to justify the expendi-
ture of at least 25 millions for this purpose.
7. Summary of estimated costs.
(1) Minimum reserves for 400,000 men
$131,000,000
(2) Standard critical equipment 400,000 men
$213,000,000
(3) Minimum reserves for 1 million men
$402,000,000
(4) Standard critical equipment 1 million men
$507,000,000
(5) All essential equipment 1 million men
$966,000,000
(6) War reserve objective 1 million men
$484,000,000
(7) Program of Industrial Preparedness
$ 42,000,000
(8) Strategic materials - partial supply
$ 25,000,000
(9) Aircraft
Under consideration
LOUIS JOHNSON,
The Assistant Secretary of War.
CONFIDENTIAL
psFar
THE WHITE HOUSE
WASHINGTON
Sent to Leon Henderson, by
direction of the President, on
September 30, 1938.
Taken from "Raw File"
1. Memorandum from the Attorney
General - "The President's Power
in the Field of Foreign Relations."
2. Confidential memorandum to
the President from the Assistant
Secretary of War - Subject:
"Advisory Board for Industrial
Mobilization.", etc.
3. Memorandum from the Attorney
General - Subject: "Control of
Commodity Prices by the Federal
Government during Ware not Involving
the United States as a Belligerent".
THE MAILE HOGES
PSF
war
A SUGGESTED PROCEDURE
FOR THE
CREATION OF AN ADVISORY BOARD TO THE ASSISTANT
SECRETARY OF WAR ON INDUSTRIAL MOBILIZATION
OUTLINE
OF
PROCEDURE
1937.
OUTLINE OF PROCEDURE
1. In the preparation of the attached drafts of the directive and
letters necessary for the organization of the Advisory Board for the
Mobilization of Industry, the methods of creation of the War Department
Special Committee on Army Air Corps, July, 1934; the War Industries
Board; the President's Aircraft Board of September, 1925; and a number
of the boards and councils of the present administration were carefully
examined with a view to determining the best procedure.
2. The following plan is suggested:
3. Executive Order creating the Advisory Board for
Industrial Mobilization.
b. Selection of Board membership. (A tentative list
is inclosed.)
2. Letter of inquiry from The Assistant Secretary of
War to the selected members asking whether or not
they will be willing to serve on the Board.
d. Upon signification by the Board Member that he
will serve, letter of appointment from the
President.
2. At the first meeting of the Board, directive and
orientation talk by The Assistant Secretary of War.
3. A discussion of methods of payment is included. It will be
noted that the Executive Order in & above, is not included under
alternative reimbursement program.
EXECUTIVE
ORDER
EXECUTIVE ORDER
Creation of The Advisory Board for Industrial Mobilization.
WHEREAS, the most effective neans of insuring peace is to be pre-
pared against war, and
WHEREAS, the successful prosecution of modern warfare, should the
defense of the nation require it, is directly dependent upon the ability
of the nation to produce the requisite munitions and supplies, and
WHEREAS, under Section 5a of the National Defense Act The Assistant
Secretary of War, under the direction of the Secretary of War, is
charged specifically with the assurance of adequate provision for the
mobilization of materiel and industrial organizations essential to war-
time needs, and
WHEREAS, the War and Navy Departments, in accordance with the pro-
visions of the National Defense Act, have, in September, 1936, completed
the Industrial Mobilisation Plan, and
WHEREAS, the burden of producing munitions of war will fall upon
private industry and the people, and the hardships incident thereto
reach every citizen of the nation,
NOW THEREFORE, it is highly advisable that plans for the mobiliza-
tion of the industrial resources of the nation be dispassionately re-
viewed by an authoritative group of civilians and accordingly there is
hereby created an organization that shall be known as the ADVISORY
BOARD FOR INDUSTRIAL MOBILIZATION, which shall examine the plans for the
mobilization of material resources prepared under the National Defense
Act and shall determine whether they are sound, practical, adequate and
in accord with American principles and shall make recommendations of
measures that will improve the readiness of the economic structure of
the nation to assume the burdens of the national defense.
Such rules and regulations as may be necessary to execute the pur-
poses of the Board created shall be outlined by The Assistant Secretary
of War.
The members of the Board shall be compensated for their services
and expenses as prescribed by the President.
The facilities of the War Department will be made available to the
Board in the prosecution of its functions.
For the purposes of this Order the sum of ten thousand dollars
($10,000) is hereby allocated to the Advisory Board for Industrial Mob-
ilisation from the appropriation authorized by
FRANKLIN D. ROOSEVELT.
THE WHITE HOUSE
1937.
SUGGESTED
MEMBER-
SHIP
PERSONNEL SUGGESTED FOR MEMBERSHIP
ON
"ADVISORY BOARD FOR INDUSTRIAL MOBILIZATION"
1. "Elder Statesmen" with experience gained in the World War. (Three
to be selected):
Age
Bernard M. Baruch,
67
Chairman, War Industries Board, 1918.
Benedict Crowell,
68
Assistant Secretary of War and
Director of Munitions in World War.
Frank A. Scott,
64
Former President, now Chairman of Board,
Warner and Swasey Co., Cleveland, Ohio;
Chairman, General Munitions Board and of
War Industries Board, 1917.
General James G. Harbord,
71
Chairman of Board, Radio Corp. of America;
Chief, Service of Supply A.E.F., 1918.
Walter S. Gifford,
52
President, American Tel. and Tel. Co.;
Council of National Defense, 1916-18.
2. Men qualified to pass upon the effect of the plan on the economic
activities of the nation. (Two to be selected):
Harold G. Moulton,
53
Economist, President of Brookings
Institution since organization in 1928.
Virgil D. Jordan,
45
Economist, National Industrial Conference
Board, 1920-29;
President, National Industrial Conference
Board since 1932.
3. Industrialists qualified to examine the plans with reference to
their effectiveness in industry. (Three to be selected):
Age
Kenneth R. Kingsbury,
61
President, Standard Oil of California.
Donaldson Brown,
52
Vice President, General Motors.
William F. Barrett,
51
Vice President, Union Carbide and Carbon Corp.
William G. Marshall,
49
Vice President, Westinghouse Electric and
Manufacturing Co.
Lewis H. Brown,
43
President, Johns-Mansville Corp.
Edward R. Stettinius, Jr.,
37
Chairman, Finance Committee, U. S. Steel Corp.
Andrew W. Robertson,
57
Chairman Board, Westinghouse Electric and
Manufacturing Co.
Calvin Verity,
48
Executive Vice President, American Rolling
Mills.
4. Members to consider the plans from the viewpoint of labor. (Four
to be selected):
Edward McGrady.
1 Representative from A.F.L.
1 Representative from C.I.O.
1 Representative from Railway Brotherhoods.
5. Members to review the plans from the standpoint of the civilian
population. (Three to be selected; of group in parentheses, one
only to be selected):
Age
Colonel Leonard P. Ayres,
58
Director of Statistics, War Industries Board,
Priorities Board, Council of National Defense,
and Allies Purchasing Commission in World War.
Chief Statistical Officer, U.S. Army and
A.E.F., as Colonel, G.S.
Vice President, Cleveland Trust Co.
James O. Adler,
45
Vice President, New York Times.
(Harry Emerson Fosdick,
58
Rector, Riverside Church.)
(Rabbi Stephen S. Wise,
63
Free Synagogue, New York.)
(Bishop James Edward Freeman,
71
Bishop of Washington, D.C.)
(Mgr. Joseph M. Corrigan,
58
Rector, Catholic University.)
INVITATION
TO
SERVE
ON
BOARD
Dear Mr.
:
Will you please examine the inclosed Executive Order.
As you see, & board is being organized to report upon the sound-
ness and feasibility of our plans for the mobilization of industry in
the unfortunate event of war.
As Assistant Secretary of War, I am charged by the National De-
fense Act with the assurance of adequate provision for the mobiliza-
tion of matériel and industrial organizations essential to war-time
needs. In the prosecution of this duty I am forcibly impressed with
the burden which war, if such should be forced upon us, will place on
the entire industrial structure and the people of the nation. War is
no longer simply a battle between armed forces in the field-it is
a struggle in which each side strives to bring to bear against the
enemy the coordinated power of every individual and every material re-
source at its command. The conflict extends from the soldier in the
most forward line to the humblest citizen in the remotest hamlet in
the rear.
Accordingly, since the burden of war must fall so drastically
upon the people and private industry of the nation, it seems highly
advisable to obtain a nonmilitary review of the plans which have been
made for the mobilization of industry to determine whether they are
sound, adequate, and in accord with American principles. Our aim in
creating the Board, therefore, is to organize 8. group of qualified
representatives of industry, labor, and of social and humanitarian
interests, to scrutinize as authoritative civilians the Industrial
War Plans of the military establishment.
The President has asked me to inquire if you will consent to
serve on this Board. The final appointment, should you acquiesce,
will, of course, come from the President.
Unfortunately, our appropriation does not permit us to compen-
sate you in a manner at all commensurate with the value of your serv-
ices. These services must be, therefore, to a large extent voluntary,
although all your expenses will be covered.
It is expected to call the first meeting of the Board on or about
and it is believed that thorough examination
of all of the elements of the Industrial Mobilization Plans can be ef-
fected in several sittings of the Board, with intervening recesses for
examination and analysis.
Will you kindly let me know at your earliest convenience whether
you will be able to serve on the Board?
As the organization is still in the formative state, it is ro-
quested that you consider this letter as confidential.
Sincerely yours,
LOUIS JOHNSON,
The Assistant Secretary of War.
Incl.
PRESIDENT
LETTER
To
MEMBERS
My dear Mr.
:
Inclosed is a copy of the Executive Order creating the Advisory
Board for Industrial Mobilization with which you are already familier.
I request that you serve as a Member of this Board and I would like
you to meet at
on
#
I feel that your efforts will be exceptionally valuable in assuring
that Plans for the Mobilization of the Nation's Industry in event of
war are sound and practical.
Very sincerely,
FRANKLIN D. ROOSEVELT.
ORAL
DIRECTIVE
OF
ASSISTANT
SECRETARY
ORAL DIRECTIVE
To be given by The Assistant Secretary of War at the first meet-
ing of the Advisory Board for Industrial Mobilization.
Gentlemen:
I am going to read from the National Defense Act.
"Sec. 5a. Hereafter, in addition to such other
duties as may be assigned him by the Secretary of War,
the Assistant Secretary of War, under the direction of
the Secretary of War, shall be charged with supervision
of the procurement of all military supplies and other
business of the War Department pertaining thereto and
the assurance of adequate provision for the mobilization
of materiel and industrial organizations essential to
war-time needs."
In accordance with this mandate the Planning Branch of my office
has, since its organization in 1921, devoted every effort to the pre-
paration of sound and adequate plans for the mobilization of the in-
dustrial resources of the nation and the minimization of hardship and
social and economic distress in event of war. Coordination with the
Navy has been secured by means of the Army and Navy Munitions Board
and the joint efforts of the War and Navy Departments have resulted in
the Industrial Mobilization Plan of 1936, which lays down the basic
principles and policies for the mobilization of industrial resources
of the nation in event of war.
In accord with these basic principles, specific plans have been
made for the procurement of military supplies and for each of the ele-
ments of the industrial mobilization program--commodities, power, fuel,
transportation, etc.
I am going to read from the introduction to the Industrial Mobili-
zation Plan, Paragraph 1, Page VII.
"Complicated weapons and machines are used up rapidly
in war. Armies and navies must not only be well supplied
initially but maintenance must be adequate and continuous.
Thus, the success of a modern fighting force is directly
and immediately dependent upon the ability of the nation's
resources to satisfy promptly its requirements in munitions.
In addition, throughout the duration of the war the nation
must continue to provide all the material things upon which
the health and well-being of its population depend. War is
no longer simply a battle between armed forces in the field--
it is a struggle in which each side strives to bring to bear
against the enemy the coordinated power of every individual
and every material resource at its command. The conflict
extends from the soldier in the most forward line to the
humblest citizen in the remotest hamlet in the rear."
It is for this reason that this Board has been created. It is felt,
since the burden of war will reach every individual in the nation,
that the opinion of a nonmilitary body should be obtained to assure us
that the plans will be effective and that they are in accord with social,
humanitarian and industrial principles, as well as with American tradi-
tion.
The following approach to the problem is suggested:
1. A. Examination of the 1936 Mobilization Plan.
b. Examination of each of the subsidiary plans prepared
thereunder.
c. Examination of the agencies for coordination by the
Army and Navy.
2. Answers to the following specific questions:
a. Are the basic policies set forth in the Industrial
Mobilization Plan sound? If not, why not?
b. Are the organizations created in the plan adequate?
c. Are the methods for the utilization and coordination
of the industrial war effort practical?
d. Are the essential needs of the civilian population
sufficiently cared for?
e. Is there adequate provision for transition from peace
to war?
f. Is the allocation system sound?
g. Is there sufficient coordination between the Army and
the Navy?
h. Are the plans and proposals set forth in accord with
the principles of Americanism?
1. Will the plans work?
3. Such recommendation as the Board may see fit to make as to
measures which would improve the ability of the nation's industrial and
social structures to assume the burdens of the national defense.
METHODS
OF
REIM
-
BURSEMENT
DISCUSSION OF METHODS OF REIMBURSEMENT OF ADVISORY BOARD FOR
INDUSTRIAL MOBILIZATION
The services and expenses of members of the Advisory Board for
Industrial Mobilization may be reimbursed by either of two methods:
1. By allocation of emergency funds under control of the
President. Routine is as follows, -
&. Secretary will make request to the President
for allocation from emergency funds.
b. This request is turned over to the Bureau of
the Budget which prepares & directive to itself for the
President's signature authorizing allocation.
Note: It should be noted that, normally, under Executive Order
7298, February 18, 1936, the Executive Order creating the Ad-
visory Board for Industrial Mobilization would be cleared by
the Bureau of the Budget and the Attorney General before sub-
mission to the President. Under such conditions clearance of
allocation of funds by the Bureau of the Budget would be auto-
matic. In the present instance, should the Executive Order be
taken up directly with the President, the opinion of the Bureau
of the Budget 8.8 to practicability of obtaining necessary money
from Emergency funds will be rendered at b, above.
C. Bureau of the Budget submits this directive to
the Treasury, which issues warrent sending same through
the Comptroller General for countersignature.
d. Accounts Division of the Treasury submits war-
rant and allocation number to the Chief of Finance, who
may then make payment upon voucher from Chairmen or Re-
corder of the Board.
2. By employing members as expert advisers to the Secretary of
War, reimbursing them from current Army appropriations.
a. Under this method no Executive Order creating a
board or council may be issued. Each member will receive
a letter of appointment from the Secretary of War, which
letter is filed with payroll signed by Chairman or Recorder.
b. The Adjutant General instructs the branches to al-
locate pro rata sums from their appropriations.
c. Branches then set up an allotment for this amount
with the Chief of Finance who will make payment on voucher
from Chairman or Recorder of the Board.
The majority of the members of the Board should be content to serve
with reimbursement of their expenses. Certain members may, however, re-
quire additional payment. No additional procedure is required in such
event. Voucher from Chairman of the Board will specify amount to be
paid each member.
140ct. 1938
PSF
War
OFFICE
OF
TREASURY DEPARTMENT
WASHINGTON
THE SECRETARY
MEMORANDUM TO THE PRESIDENT:
Executive Order No. 6166, referred to in the memorandum dated
October 14, 1938, on the subject of "Aviation Procurement" is in full
force and effect, it having been submitted to Congress on June 10,
1933, pursuant to the provisions of Section I, Title III of the Act
entitled "An Act to Maintain the Credit of the United States Government."
Therefore your authority exists legally with respect to the con-
solidation, or any part thereof, in the Procurement Division of any
function of determination of policies and methods of procurement, not
only as to aircraft, but also 8.8 to any other "property, facilities,
structures, improvements, machinery, equipment, stores, and supplies"
referred to in said Order.
The legal effect of the Executive Order is that:
"In respect of any kind of procurement, warehousing, or
distribution for any agency the Procurement Division may,
with the approval of the President,
"(a) undertake the performance of such procurement, ware-
housing, or distribution itself, or
"(b) permit such agency to perform such procurement,
warehousing, or distribution, or
"(c) entrust such performance to some other agency, or
"(d) avail itself in part of any of these recourses,
according 8.8 it may deem desirable in the interest of economy
and efficiency."
The Director of Procurement has followed the principle that
where an agency is performing, efficiently and economically, 8 special
mission, such agency should be permitted to continue to handle the
procurement of equipment special to itself; and, therefore, for the
reasons stated in sub-paragraphs (a), (b), and (c) of the memorandum
of October 14, 1938, the actual procurement of aircraft for the Army,
Navy and Coast Guard has been handled by each such agency under sub-
paragraph (b) as above-quoted.
Maymen
Secretary.
P
Y
October 14, 1938
MEMORANDUM FOR THE SECRETARY:
Re: Aviation Procurement
On October 25, 1934, the Director of Procurement, in accordance with
the provisions of Executive Order 6166, issued an order establishing in the
Procurement Division an Aviation Procurement Committee for the purpose of
studying and recommending to the Director of Procurement uniform policies and
methods of procuring air-craft, air-craft parts and aeronautical accessories
for the various Government Agencies handling air-craft. The plan in general
contemplated that this Committee would be B. "Clearing House" where policies
and methods might be coordinated for the various Government Agencies procuring
air-craft and after approval such policies and methods would be carried out
under the terms prescribed in Executive Order 6166.
In accordance with the terms of this order, the organization meeting of
the Committee was held in the Procurement Division on November 5, 1934. At
this meeting the Director of Procurement indicated that the Committee was (A)
an agent of the Procurement Division of the Treasury; (B) that it was to study
and recommend uniform policies and methods for procuring air-craft for the Govern-
ment Agencies; (c) that the policies and methods were to be those best for the
Federal Government; and (D) that members of the Committee are to act as liaison
between the Director of Procurement and the Agencies concerned.
After the organization meeting, meetings were held at various intervals
during the next fifteen months.
It was early evident in the proceedings that there was a wide divergence
of opinion as to technical features between the Army, Navy and Commerce as to
technical designs, types, instruments, materials to be used, experimental com-
petitions and conditions of purchase, each service firmly entrenched in its
position because of certain fundamental conditions which were:
A. That the Army and the Navy obtain their appropriations from separate
committees of Congress; that each service must justify these appropriations
and as the funds are made available direct to each service, each such service
should have control over the military features of each set of planes and the
procurement program for obtaining them.
B. That each service was separately responsible for its efficiency as
a fighting arm and hence should have control over its own program.
C. That the mission in each instance was essentially different; on the
one hand planes were designed for service over the land or for patrolling coasts
Memo for the Secretary
-2-
October 14, 1938
or a short distance at sea; on the other hand, for sea planes to be catapulted
from aboard ship and to land alongside or of a type suitable for taking off from
or landing on board of an airplane carrier. In other words, the Army problem is
one thing; the Navy problem another; the Coast Guard still another.
Aviation has been and is expected to be in a constant state of flux of
evolution, and it is recognized that the competitive spirit to obtain the best
type of plane to perform a particular mission is one which under the constant
processes of change should be encouraged so that in the long run each service may
gain from the experience of the other.
However, much constructive work resulted through these meetings of the Pro-
curement Aviation Committee. Different statutes being applicable, no general
method of procurement can lay down identical procedures to be followed in each
case by each branch of the Service. A general method of procurement was agreed
to, which permitted the respective Services the rights to make exceptions there-
from in proper cases countenanced by law. The military services were brought
closer together, and there was a frank expression of opinions as to experience
with and types of plans and methods, and there was developed a necessity for each
service working with the other insofar as practicable as to the times of going
into the market, - this to their own mutual benefit.
Director of Procurement
TREASURY DEPARTMENT
Washington
October 25, 1934
TREASURY DEPARTMENT ORDER
1. In accordance with the provisions of Executive Order 6166, there
will be established in the Procurement Division an "Aviation Procurement
Committee" for the purpose of studying and recommending to the Director of
Procurement uniform policies and methods of procuring aircraft, aircraft
parts, and aeronautical accessories for the various Government agencies
handling aircraft.
2. The plan, in general, contemplates that this Committee will be a
"Clearing House" where policies and methods may be coordinated for the
various Government agencies procuring aircraft; and, after approval, will
be carried out under the terms prescribed in Executive Order 6166.
3. This aeronautical procurement function will be directly adminis-
tered by the Chairman of the Procurement Committee for Aviation, who will
receive orders to report to the Director of Procurement for this purpose.
4. the membership of the "Aviation Procurement Committee" is to be
composed of six representatives to be selected from agencies purchasing
aircraft, consisting of two from the Navy Department, two from the War
Department, one from the Department of Commerce, and one from the Coast
Guard, Treasury Department. In addition, there will be a Secretary pro-
vided for the Committee.
5. The "Aviation Procurement Committee" will convene upon order of
the Director of Procurement.
(Signed) C. J. Peoples
Director of Procurement.
APPROVED: Oct. 26, 1934
(Signed) H. Morgenthau,
Secretary of the Treasury.
C
0
P
Y
Executive Order
ORGANIZATION OF EXECUTIVE AGENCIES
WHEREAS section 16 of the act of March 3, 1933 (Public, No. 428, 47 Stat.
1517), provides for reorganizations within the executive branch of the Government;
requires the President to investigate and determine what reorganizations are neces-
sary to effectuate the purposes of the statute; and authorizes the President to make
such reorganizations by Executive order; and
WHEREAS I have investigated the organization of all executive and adminis-
trative agencies of the Government and have determined that certain regroupings,
consolidations, transfers, and abolitions of executive agencies and functions thereof
are necessary to accomplish the purposes of section 16;
NOW, THEREFORE, by virtue of the aforesaid authority, I do hereby order
that:
SECTION 1.-Procurement
The function of determination of policies and methods of procurement, ware-
housing, and distribution of property, facilities, structures, improvements, machinery,
equipment, stores, and supplies exercised by any agency is transferred to a Procure-
ment Division in the Treasury Department, at the head of which shall be a Director
of Procurement.
The Office of the Supervising Architect of the Treasury Department is trans-
ferred to the Procurement Division, except that the buildings of the Treasury Depart-
ment shall be administered by the Treasury Department and the administration of
post office buildings is transferred to the Post Office Department. The General
Supply Committee of the Treasury Department is abolished.
In respect of any kind of procurement, warehousing, or distribution for any
agency the Procurement Division may, with the approval of the President, (a) under-
take the performance of such procurement, warehousing, or distribution itself, or (b)
permit such agency to perform such procurement, warehousing, or distribution, or (c)
entrust such performance to some other agency, or (d) avail itself in part of any of
these recourses, according as it may deem desirable in the interest of economy and
efficiency. When the Procurement Division has prescribed the manner of procure-
ment, warehousing, or distribution of any thing, no agency shall thereafter procure,
warehouse, or distribute such thing in any manner other than so prescribed.
2
The execution of work now performed by the Corps of Engineers of the Army
shall remain with said corps, subject to the responsibilities herein vested in the
Procurement Division.
The Procurement Division shall also have control of all property, facilities, struc-
tures, machinery, equipment, stores, and supplies not necessary to the work of any
agency; may have custody thereof or entrust custody to any other agency; and shall
furnish the same to agencies as need therefor may arise.
The Fuel Yards of the Bureau of Mines of the Department of Commerce are
transferred to the Procurement Office.
The Federal Employment Stabilization Board is abolished, and its records are
transferred to the Federal Emergency Administration of Public Works if and when
said administration is authorized and established.
SECTION 2.-National Parks, Buildings, and Reservations
All functions of administration of public buildings, reservations, national parks,
national monuments, and national cemeteries are consolidated in an Office of National
Parks, Buildings, and Reservations in the Department of the Interior, at the head of
which shall be a Director of National Parks, Buildings, and Reservations; except
that where deemed desirable there may be excluded from this provision any public
building or reservation which is chiefly employed as a facility in the work of a particu-
lar agency. This transfer and consolidation of functions shall include, among others,
those of the National Park Service of the Department of the Interior and the National
Cemeteries and Parks of the War Department which are located within the conti-
nental limits of the United States. National cemeteries located in foreign countries
shall be transferred to the Department of State, and those located in insular posses-
sions under the jurisdiction of the War Department shall be administered by the
Bureau of Insular Affairs of the War Department.
The functions of the following agencies are transferred to the Office of National
Parks, Buildings, and Reservations of the Department of the Interior, and the agen-
cies are abolished:
Arlington Memorial Bridge Commission
Public Buildings Commission
Public Buildings and Public Parks of the National Capital
National Memorial Commission
Rock Creek and Potomac Parkway Commission
3
Expenditures by the Federal Government for the purposes of the Commission
of Fine Arts, the George Rogers Clark Sesquicentennial Commission, and the Rush-
more National Commission shall be administered by the Department of the Interior.
SECTION 3.-Investigations
All functions now exercised by the Bureau of Prohibition of the Department of
Justice with respect to the granting of permits under the national prohibition laws
are transferred to the Division of Internal Revenue in the Treasury Department.
All functions now exercised by the Bureau of Prohibition with respect to investi-
gations and all the functions now performed by the Bureau of Investigation of the
Department of Justice are transferred to and consolidated in a Division of Investiga-
tion in the Department of Justice, at the head of which shall be a Director of Investi-
gation.
All other functions now performed by the Bureau of Prohibition are transferred
to such divisions in the Department of Justice as in the judgment of the Attorney
General may be desirable.
SECTION 4.-Disbursement
The function of disbursement of moneys of the United States exercised by any
agency is transferred to the Treasury Department and, together with the Office of
Disbursing Clerk of that Department, is consolidated in a Division of Disbursement,
at the head of which shall be a Chief Disbursing Officer.
The Division of Disbursement of the Treasury Department is authorized to
establish local offices, or to delegate the exercise of its functions locally to officers or
employees of other agencies, according as the interests of efficiency and economy may
require.
The Division of Disbursement shall disburse moneys only upon the certification
of persons by law duly authorized to incur obligations upon behalf of the United
States. The function of accountability for improper certification shall be transferred
to such persons, and no disbursing officer shall be held accountable therefor.
SECTION 5.-Claims by or against the United States
The functions of prosecuting in the courts of the United States claims and
demands by, and offenses against, the Government of the United States, and of de-
fending claims and demands against the Government, and of supervising the work of
United States attorneys, marshals, and clerks in connection therewith, now exercised
by any agency or officer, are transferred to the Department of Justice.
4
As to any case referred to the Department of Justice for prosecution or defense
in the courts, the function of decision whether and in what manner to prosecute, or
to defend, or to compromise, or to appeal, or to abandon prosecution or defense,
now exercised by any agency or officer, is transferred to the Department of Justice.
For the exercise of such of his functions as are not transferred to the Department
of Justice by the foregoing two paragraphs, the Solicitor of the Treasury is transferred
from the Department of Justice to the Treasury Department.
Nothing in this section shall be construed to affect the function of any agency or
officer with respect to cases at any stage prior to reference to the Department of
Justice for prosecution or defense.
SECTION 6.-Insular Courts
The United States Court for China, the District Court of the United States for
the Panama Canal Zone, and the District Court of the Virgin Islands of the United
States are transferred to the Department of Justice.
SECTION 7.-Solicitors
The Solicitor for the Department of Commerce is transferred from the Depart-
ment of Justice to the Department of Commerce.
The Solicitor for the Department of Labor is transferred from the Department
of Justice to the Department of Labor.
SECTION 8.-Internal Revenue
The Bureaus of Internal Revenue and of Industrial Alcohol of the Treasury
Department are consolidated in a Division of Internal Revenue, at the head of
which shall be a Commissioner of Internal Revenue.
SECTION 9.-Assistant Secretary of Commerce
The Assistant Secretary of Commerce for Aeronautics shall be an Assistant Sec-
retary of Commerce and shall perform such functions as the Secretary of Commerce
may designate.
SECTION 10.-Oficial Register
The function of preparation of the Official Register is transferred from the Bureau
of the Census to the Civil Service Commission.
SECTION 11.-Statistics of Cities
The function of the Bureau of the Census of the Department of Commerce of
compiling statistics of cities under 100,000 population is abolished for the period
ending June 30, 1935.
5
SECTION 12.-Shipping Board
The functions of the United States Shipping Board including those over and in
respect to the United States Shipping Board Merchant Fleet Corporation are trans-
ferred to the Department of Commerce, and the United States Shipping Board is
abolished.
SECTION 13.-National Screw Thread Commission
The National Screw Thread Commission is abolished, and its records, property,
facilities, equipment, and supplies are transferred to the Department of Commerce.
SECTION 14.-Immigration and Naturalization
The Bureaus of Immigration and of Naturalization of the Department of Labor
are consolidated as an Immigration and Naturalization Service of the Department
of Labor, at the head of which shall be & Commissioner of Immigration and
Naturalization.
SECTION 15.-Vocational Education
The functions of the Federal Board for Vocational Education are transferred to
the Department of the Interior, and the Board shall act in an advisory capacity
without compensation.
SECTION 16.-Apportionment of Appropriations
The functions of making, waiving, and modifying apportionments of appropria-
tions are transferred to the Director of the Bureau of the Budget.
SECTION 17.-Coordinating Service
The Federal Coordinating Service is abolished.
SECTION 18.
The following functions are abolished in part:
Cooperative vocational education and rehabilitation, 25 percent thereof.
Payments for agricultural experiment stations, 25 percent thereof.
Cooperative agricultural extension work, 25 percent thereof.
Endowment and maintenance of colleges for the benefit of agriculture and
the mechanic arts, 25 percent thereof.
SECTION 19.-General Provisions
Each agency, all the functions of which are transferred to or consolidated with
another agency, is abolished.
The records pertaining to an abolished agency or & function disposed of, dis-
position of which is not elsewhere herein provided for, shall be transferred to the
require that
this order
he may for
6
successor. If there be no successor agency, and such abolished agency be within a
department, said records shall be disposed of as the head of such department may
direct.
The property, facilities, equipment, and supplies employed in the work of an
abolished agency or the exercise of & function disposed of, disposition of which is not
elsewhere herein provided for, shall, to the extent required, be transferred to the
successor agency. Other such property, facilities, equipment, and supplies shall be
transferred to the Procurement Division.
All personnel employed in connection with the work of an abolished agency or
function disposed of shall be separated from the service of the United States, except
that the head of any successor agency, subject to my approval, may, within a period
of four months after transfer or consolidation, reappoint any of such personnel
required for the work of the successor agency without reexamination or loss of civil-
service status.
SECTION 20.-Appropriations
Such portions of the unexpended balances of appropriations for any abolished
agency or function disposed of shall be transferred to the successor agency as the
Director of the Budget shall deem necessary.
Unexpended balances of appropriations for an abolished agency or function dis-
posed of, not so transferred by the Director of the Budget, shall, in accordance with
law, be impounded and returned to the Treasury.
SECTION 21.-Definitions
As used in this order-
"Agency" means any commission, independent establishment, board, bureau,
division, service, or office in the executive branch of the Government.
"Abolished agency" means any agency which is abolished, transferred, or con-
solidated.
"Successor agency" means any agency to which is transferred some other agency
or function, or which results from the consolidation of other agencies or functions.
"Function disposed of" means any function eliminated or transferred.
SECTION 22.-Effective Date
In accordance with law, this order shall become effective 61 days from its date;
Provided, That in case it shall appear to the President that the interests of economy
epartment may
ney be within a
7
require that any transfer, consolidation, or elimination be delayed beyond the date
this order becomes effective, he may, in his discretion, fix & later date therefor, and
he may for like cause further defer such date from time to time.
FRANKLIN D. ROOSEVELT.
THE WHITE HOUSE,
June 10, 1933.
[No. 6166]
To Sey / Theas:
Creative
ADDITIONAL MEASURES FOR CONTROLLING COSTS, SOME OR ALL OF
WHICH MIGHT BE USED
Note: For administering these measures, whether a Central
Price Board, or other existing or new administrative
agency should be used, will be the subject of a
separate outline.
1. Bigger buying power and hence greater bargaining power through
centralized Government purchasing of materials, parts and supplies.
2. Put a condition in Government supply contracts that the successful
bidder will supply the article in question at the same price to companies
involved in the airplane program.
3. The use of cost plus fixed fee contracts in proper cases.
broad
4. Give the President power by proclamation to suspend the Buy America
Act in particular cases.
5. Provision for lowering tariff rates on articles subject to excessive
prices.
6. Develop Government plants, not merely to provide stand-by capacity,
but also to serve as potential price control.
7. Power in particular cases to take over material or parts on payment
of 75 per cent of their estimated worth with procedure in the court of
claims to determine how much of the balance should be paid.
8. Revise present provisions for spot-check cost studies and possible
publication if necessary for control.
9. Hearings by the Temporary National Economic Committee on articles
subject to run-up prices, and such specific changes in the anti-monopoly
law as the immediate situation may require.
10. Cheap credit and technical assistance to new and financially weak
plants needed to provide competitive capacity.
-2-
11. Reexamine present provisions for awarding contracts to companies other
than those submitting successful designs, with particular reference to
cases where excessive prices are encountered.
terman Olipbans
nor 14 38
INDEX OF TABLES
Table 1 -- Index Numbers of Controlled and of Uncontrolled
Prices, 1913-18.
Table 2 -- Relative Changes in Commodity Price Series During
the World War and Immediate Post-war Periods,
July 1914 - December 1921.
Table 3 - Exports from the United States to All Countries
and to Europe, 1913-18.
Table 4 - Exports from the United States, by Continents,
for the Fiscal Years, 1914-16.
Table 5 -- Exports of Selected Commodities to All Countries
and Specified European Countries for the Fis-
cal Years 1914-16.
Table 6 -- Comparative Data on Domestic Stocks of Important
Raw Materials and Dollar Inventories of All
Manufacturing Corporations, 1929, 1933, and
1936-38.
HISTORY OF PRICES DURING THE WAR
War Industries Board
I
TABLE INDEX NUMBERS OF CONTROLLED AND OF UNCONTROLLED PRICES.
(Fivehundred and seventy-three commodities brought under formal or informal Government price control
at some time during the war, compared with 793 commodities whose prices were left uncontrolled.)
[Average prices in July, 1913-June, 1914=100.]
1913
1914
1915
1916
1917
1918
Un-
Con-
Un-
Con-
Un-
Con-
Con-
Un-
Con-
Un-
Con-
Un-
troled
con-
trolled
con-
trolled
con-
trolled
trolled
trolled
con-
trolled
con-
trolled
con-
trolled
trolled
trolled
trolled
prices.
prices.
prices.
prices.
prices.
prices.
prices.
prices.
prices.
prices.
prices.
prices.
Year
100
102
100
97
102
102
125
124
188
156
197
191
Quarters:
First
97
103
99
99
101
97
115
119
157
141
197
180
Second
98
101
98
99
101
101
120
123
194
149
192
189
Third
101
fo1
102
97
102
103
124
124
206
162
199
196
Fourth
102
101
100
94
104
109
141
131
196
171
201
199
Months:
January
98
103
99
99
101
97
113
116
151
140
195
178
February
97
103
99
99
102
97
115
119
155
142
198
180
March
98
103
99
99
101
98
117
121
164
142
197
182
April
99
102
99
99
101
99
120
123
183
146
196
187
May
98
101
99
98
101
101
121
123
192
149
192
189
June
98
101
98
99
100
102
120
124
201
152
189
191
July
98
101
98
98
103
103
121
124
209
160
195
194
August
102
101
104
98
103
102
125
124
204
162
199
195
September
103
102
105
96
101
103
127
125
205
163
204
199
October
102
102
101
95
101
106
134
127
198
167
201
201
November
102
102
99
94
103
109
143
131
200
172
200
200-
December
101
100
99
94
107
111
146
135
193
174
204
197
Table 2
DEPARTMENT OF COMMERCE
BUREAU OF FOREIGN AND DOMESTIC COMMERCE
RELATIVE CHANGE IN COMMODITY PRICE SERIES DURING THE WORLD WAR AND IMMIDIATE POST-WAR PERIOD
Percentage change from
July 1914
July 1914
July 1914
Mar. 1917
Nov. 1918
Nov. 1919
May 1920
to
to
to
to
to
to
to
Dec. 1914
Mar. 1917
Nov. 1918
Nov. 1918
Nov. 1919
May 1920
Dec. 1921
Composite - Indexes -
o
60.0
/102.5
26.6
6.0
+ 15.7
- 44.4
Raw materials
- 2.2
67.9
4106.2
22.8
+ 8.2
+ 8.8
- 45.3
Semimanufactured articles -
+ .9
/119.0
4140.0
+ 9.6
+ 9.3
42.3
- 64.3
Finished products -
+ 1.3
46.8
494.9
32.8
+ 4.1
+ 16.2
- 39.7
All commodities other than farm products and foods -
- 1.1
/ 68.0
+97.7
17.7
+ 7.9
+ 21.7
- 41.3
Nonagricultural -
+ 1.1
60.3
$99.4
24.4
6.0
19.2
- 43.0
Farm products -
- 3.4
+58.7
A110.5
32.7
6.1
+ 6.5
- 48.2
Foods -
t 6.0
146.4
/104.5
39.6
+ 1.7
12.6
- 41.1
Hides and leather products -
+ 6.6
83.4
$ 88.8
3.0
53.3
- 4.3
- 45.0
Textile products -
- 8.0
$ 53.2
A157.9
68.4
9.8
& 20.2
- 48.2
Fuel and lighting -
- 6.5
/ 94.4
4105.2
+ 5.5
- 6.6
749.8
- 39.4
Metale and metal products -
- 1.0
$82.7
$ 81.4
-
.7
- 5.2
+14.3
- 31.8
Nonferrous metals -
- 2.5
4152.6
/100.1
- 20.8
- 15.1
- 3.1
- 34.9
Building materials -
- 4.5
$52.0
+92.4
26.6
29.6
24.6
- 44.2
Cement, Portland -
- 9.6
-38.7
79.9
29.7
+ 3.2
11.8
- 12.2
Lumber, composite -
- 5.4
$28.5
- 66.7
+ 29.8
66.9
$ 33.9
- 51.9
Chemicals and Drugs -
11.2
/ 98.6
$128.5
15.1
- 10.1
+ 8.6
- 38.0
Chemicals -
+ 15.6
+107.3
/110.1
t 1.3
- 14.2
/17.8
- 43.9
House furnishing goods -
- 1.1
22.2
75.0
43.1
+ 20.9
19.5
- 26.2
Miscellaneous -
t 6.4
37.6
61.5
17.4
+
in
+ 23.0
- 45.3
Commodities:
Barley, fair to good -
t 24.0
/128.0
79.7
- 21.2
46.6
+ 22.9
- 68.2
Corn #3 mixed -
- 9.9
+58.8
80.1
/13.4
17.4
33.3
- 76.4
Wheat #2 red, Chicago -
46.4
40.9
+172.6
t 13.1
+ 2,2
30.0
- 60.4
- 1.1
50.4
- 66.8
Oats, cash -
+ 31.2
+57.5
$99.5
26.7
Cotton, New York -
- 42.0
$ 42.0
/125.2
58.6
33.9
+ 4.6
- 55.7
Wool. Ohio, fine -
+ 7.3
$ 96.5
/215.0
60.3
+ 10.4
+ 9.5
- 63.0
Cattle, steers, good to choice -
- 3.3
-28.7
/ 96.9
t 53.0
- 3.6
- 28.0
- 34.8
Hoge, heavy -
- 18.0
68.7
/103.1
20.4
- 17.8
- 4.6
- 51.7
Hides, calfakins, country #1 -
+ 20.0
/100.0
$ 95.0
- 2.5
+ 97.9
- 41.7
- 68.9
Flour, wheat, winter straights, Kansas City -
t 49.3
/162.1
/205.9
t 16.7
+ 9.7
+ 19.4
- 56.4
Lard, prime contract -
t 1.0
/ 96.1
A166.7
+ 36.0
- 4.8
- 19.7
- 54.8
Secon, short clear sides -
- 13.5
$ 39.0
/102.1
45.4
- 18.6
- 6.0
- 47.7
Beef, fresh, carcass, good native steers, Chicago -
t 5.9
/10.4
+81.5
+ 64.4
- 4.1
- 17.0
- 15.9
Pork, salt, mess -
- 14.3
$ 50.0
+87.3
+ 24.9
t 5.5
- 9.5
- 41.7
Sugar 96° certrifugal -
+ 21.2
/66.7
/121.2
+ 32.7
o
4186.3
- 82.3
Coal, bituminous, Pittsburgh -
o
/127.3
$ 86.4
- 18.0
o
46.3
- 35.8
Petroleum, crude, Pennsylvan 1a -
- 17.2
+74.3
/128.6
t 31.1
11.0
637.4
- 34.4
Potroleum, refined 150° water white -
0
0
$45.8
7 45.8
-25.7
.18.2
- 7.7
Lead, pig -
- 2.6
143.6
/107.7
- 14.7
- 16,1
26.5
- 45.4
Pig iron, foundry #2 northern -
- 1.4
/171.2
+154.7
- 6.1
- 7.1
38.8
- 51.9
Steel billets, Bessemer -
o
+248.7
/150.0
- 28.3
- 12.9
45.0
- 51.7
Tin pig -
+ 6.8
$65.6
4137.9
43.7
- 26.5
+ 2.2
- 41.4
Wire fence, barbed, galvanized, f.o.b. Chicago -
+ 2.8
4103.8
$122.1
+ 9.0
- 2.2
t 4.4
- 21.2
Copper, ingot, electrolytic -
- 4.5
4170.9
$ 94.0
- 28.4
- 21.5
- 6.4
- 28.8
Wire, copper, bare -
- 5.4
/148.6
$ 95.9
- 21.2
- 14.5
- 7.3
- 32.6
Sulphuric acid 66° -
o
$ 80.0
$ 30.0
- 27.8
- 15.4
t 9.1
- 25.0
Muriatic acid 20° -
o
+38.5
761.5
/16.7
- 19.1
35.3
- 39.1
Alcohol, wood refined 95 percent -
0
A122.2
+103.3
- 8.5
$50.8
t 92.0
- 78.1
Lubricating oil, paraffin -
o
+34.4
A112.5
+ 58.1
- 14.7
+ 42.8
- 39.6
Wrapping paper, manila -
o
#116.3
/155.1
/17.9
- 5.6
18.6
- 37.2
Source: Computed from original data from the Bureau of Labor Statistice, United States Department of Labor, Washington, D.C.
Table 3
Bureau of Foreign & Domestic Commerce
UNITED STATES EXPORTS* BY MONTHS
(1,000 dollars)
MONTH
Total
To Europe
Total
To Europe
1913
1914
January
227,033
143,281
204,067
140,321
February
193,997
113,957
173,920
113,467
March
187,427
106,145
187,499
117,609
April
199,813
114,077
162,553
93,197
May
194,607
102,881
161,733
94,451
June
163,405
82,089
157,072
90,311
July
160,991
83,145
154,139
85,691
August
187,909
107,196
110,367
48,875
September
218,240
142,312
156,052
89,978
October
271,861
181,658
194,711
130,415
November
245,539
166,164
205,878
144,780
December
233,196
156,668
245,633
190,201
TOTAL
2,484,018
1,499,573
2,113,624
1,339,296
1915
1916
January
267,879
211,827
330,036
228,449
February
299,806
237,897
401,784
284,437
March
296,612
231,649
410,742
291,007
April
294,746
217,492
398,569
259,784
May
274,218
201,143
474,804
330,487
June
268,547
181,487
464,686
313,227
July
268,469
180,071
444,714
313,089
August
260,610
172,073
510,167
359,354
September
300,655
211,759
514,924
379,823
October
336,152
240,105
492,814
350,352
November
327,670
231,484
516,167
353,709
December
359,306
256,423
523,234
349,559
TOTAL
3,554,671
2,573,408
5,482,641
3,813,278
-
Reexports are included.
Bureau of Foreign & Domestic Commerce
UNITED STATES EXPORTS BY MONTHS - (Continued)
(1,000 dollars)
MONTH
Total
To Europe
Total
To Europe
1917
1918
January
613,325
444,300
504,797
334,027
February
467,648
327,373
411,362
259,017
March
553,986
354,202
522,900
349,654
April
529,928
365,801
500,443
308,351
May
549,674
361,419
550,925
338,554
June
573,468
365,534
483,799
298,743
July
372,758
242,564
507,468
319,597
August
488,656
310,375
527,014
327,252
September
454,507
291,958
550,396
348,532
October
542,101
358,378
501,861
315,440
November
487,328
308,921
522,237
297,357
December
600,135
330,903
565,886
362,174
TOTAL
6,233,513
4,061,729
6,149,088
3,858,698
Table 4
UNITED STATES DEPARTMENT OF COMMERCE
Bureau of Foreign and Domestic Commerce
Total Exports of United States Merchandise by Continents
Years ended June 30
(1000 dollars)
1914
1915
1916
Total
2,329,684
2,716,178
4,272,178
Europe
1,471,266
1,944,327
2,972,350
North America
509,948
455,185
702,706
South America
124,061
97,565
177,629
Asia
113,190
113,242
277,850
Oceania
83,331
77,448
98,263
Africa
27,887
28,410
43,380
STATE
Table 5
UNITED STATES DEPARTMENT OF COMMERCE
Bureau of Foreign and Domestic Commerce
United States Exports of Explosives, Firearms, Principal
Foodstuffs. Wearing Apparel, Unmanufactured Cotton. and Various
Miscellaneous Articles. by Leading Countries of Destination:
Fiscal Years Ended June 30.
Note: - Principal Commodities which Increased Substantially during the
Period from 1914 to 1916 in the United States Exports to the World, as
a Whole, and to Leading Belligerent Nations, are Shown Separately in
the Table.
.**....
Explosives and Firearms -
1914
1915
1916
Explosives
Cartridges, total
dol.
3,521,533
17,714,205
37,083,488
France
If
6,093
4,926,294
6,786,591
England
If
70,353
7,697,865
23,523,125
Spain
If
1,050
9,675
1,958,484
Gunpowder, total
dol.
247,200
5,091,542
173,736,374
France
-
---
2,501,833
47,514,775
Italy
If
---
7,053,240
Russia in Europe
at
---
923,571
26,228,417
England
M
12,350
732,692
57,107,391
Canada
=
46,628
157,814
1,852,435
Russia in Asia
M
237
487,118
15,500,912
"All other" explosives (excl.dynamite)
total
dol.
916,280
17,746,362
252,605,413
France
II
26
6,644,347
25,654,526
Italy
If
---
25,681
1,834,227
Russia in Europe
If
552
754,591
18,619,411
England
If
56
6,914,670
179,854,441
Canada
II
183,064
1,722,475
7,241,683
Russia in Asia
II
846
552,098
15,500,912
Firearms, total
dol.
3,442,297
9,474,947
18,065,485
France
#
24,745
1,253,318
3,192,414
Russia in Europe
⑉
180,120
231,218
3,893,437
England
II
95,408
944,998
3,933,064
Canada
#
529,528
823,404
3,019,690
Russia in Asia
#
14,245
1,755,328
1,505,536
Foodstuffs -
Barley, total
dol.
4,523,129
18,184,079
20,663,533
England
If
3,064,028
5,316,565
9,915,842
Scotland
II
83,545
997,542
2,073,992
Ireland
IS
286,330
3,580,001
1,981,129
Corn, total
dol.
7,008,028
39,339,064
30,780,887
Denmark
#
95
9,052,044
7,764,187
France
#
43,783
3,022,399
2,113,714
Netherlands
#
287,417
12,969,647
4,699,487
England
If
65,224
1,393,457
2,946,855
Canada
If
3,328,785
6,154,904
4,969,459
- 2 -
1914
1915
1916
Foodstuffs (Continued)
Oats, total
dol.
757,527
57,469,964
47,985,790
France
If
-
28,098,093
20,977,863
Italy
II
---
7,731,674
13,819,165
England
If
395,850
15,071,263
8,751,512
Canada
Il
8,792
1,430,763
1,072,101
Wheat, total
dol,
87,953,456
333,552,226
215,532,681
France
#
5,384,663
66,352,832
27,898,643
Greece
II
---
12,234,412
15,421,880
Italy
If
1,789,400
66,538,785
38,191,428
Netherlands
If
19,380,347
42,070,210
26,224,787
England
If
21,878,800
68,017,326
56,019,319
Canada
#
3,831,719
19,941,388
7,430,824
Wheat flour. total
dol.
54,454,175
94,869,343
87,337,805
Belgium
If
67,584
4,600,767
565,924
France
H
63,866
14,222,838
16,642,736
England
If
6,952,632
16,017,723
9,957,534
Greece
II
851
2,278,168
2,455,490
Netherlands
II
4,669,565
10,553,446
1,318,349
Hay, total
dol.
827,205
1,980,297
3,267,028
France
II
---
687,161
1,862,352
England
II
6,739
239,936
198,969
Canned beef, total
dol.
461,901
11,973,530
9,439,066
France
II
5,447
1,386,430
861,964
England
#
129,913
9,871,355
7,445,609
Fresh beef, total
dol.
788,793
21,731,633
28,885,999
France
If
-
12,931,138
5,436,020
Italy
II
-
1,270,444
6,340,028
England
II
-
6,783,152
15,048,346
Bacon, total
dol.
25,879,056
47,326,129
78,615,616
Denmark
II
---
3,964,743
945,743
France
If
25,416
5,766,832
6,442,595
England
H
17,230,389
27,230,091
46,601,723
Hams and shoulders, total dol.
23,767,447
29,049,931
40,803,022
England
.
16,171,292
21,887,769
31,564,186
Butter, total
dol.
877,453
2,392,480
3,590,105
England
If
146,456
741,526
1,434,039
Canada
#
62,914
641,108
503,696
Cheese, total
dol.
414,124
8,463,174
7,430,089
England
If
66,180
7,358,630
5,920,167
- 3 -
Foodstuffs (Continued)
1914
1915
1916
Refined sugar, total
dol.
1,839,983
25,615,016
79,390,147
France
#
35
9,718,974
17,234,827
Greece
If
-
473,600
1,714,270
Italy
If
-
-
1,350,285
Norway
If
-
80,956
5,919,376
England
m
42,150
9,775,906
19,188,885
Scotland
m
-
1,412,593
157,472
Ireland
If
-
2,457,606
23,824,848
Wearing Apparel and Unmanufactured Cotton
Cotton Knit Goods, total
dol.
2,546,822
13,080,445
20,894,098
France
If
30,892
1,179,364
254,805
England
"
911,886
9,030,468
11,436,065
All other cotton wearing
apparel, total
dol.
5,999,887
14,743,148
11,213,181
France
If
29,237
1,116,852
1,155,540
England
#
102,224
7,450,951
599,513
Wool wearing apparel, total dol.
2,148,235
9,108,900
19,368,501
France
If
15,140
5,235,029
1,034,468
Italy
If
4,741
4,639
8,529,351
Russia in Europe
If
421
770
3,207,092
England
If
50,639
1,631,376
719,010
Leather shoes for men, total dol.
10,117,965
17,679,931
36,959,966
France
"
252,188
5,007,340
1,175,194
Greece
II
364
1,542,661
121,568
Russia in Europe
"
158,539
2,863,466
9,249,523
England
"
512,349
666,461
1,171,913
Russia in Asia
If
271
1,631
2,797,594
Rubber shoes, total
dol.
834,289
2,053,560
1,046,102
France
#
22,579
1,254,228
71,448
Cotton, Unmanufactured
(upland and other), total dol.
608,855,454
372,068,490
364,710,378
Belgium
a
13,282,325
114,987
-
France
If
73,497,783
26,747,704
42,321,349
Germany
If
181,866,179
15,356,470
-
Italy
#
34,248,922
47,110,932
49,975,067
Netherlands
#
1,679,042
22,155,607
5,356,030
Sweden
"
3,392,854
31,333,389
3,873,935
England
#
226,719,114
162,661,637
169,494,746
Various Miscellaneous Commodities -
Horses, total
dol.
3,388,819
64,046,534
73,531,146
France
"
800
31,809,515
43,995,577
Italy
"
--
4,906,520
6,752,590
England
If
346,976
18,805,456
10,661,440
Scotland
If
7,350
1,980,990
-
Canada
IS
2,394,402
5,982,887
11,448,925
(COMPT
T
- 4 -
Miscellaneous Commodities (Continued)
1914
1915
1916
Mules, total
dol.
690,974
12,726,143
22,960,312
France
If
-
-
3,716,945
England
If
24,400
11,836,825
12,875,210
Italy
"
-
-
545,482
Egypt
"
-
178,000
3,435,850
Commercial automobiles, total dol.
1,181,611
39,140,682
56,805,548
France
#
5,070
13,523,843
17,709,579
Russia in Europe
If
5,322
7,666,883
12,544,258
England
If
189,099
14,042,325
18,723,403
Russia in Asia
If
I
1,903,221
3,546,435
Aeroplanes and parts, total dol.
226,149
1,541,446
7,002,005
England
"
30,088
724,555
6,325,794
Iron and Steel
Pig iron, total
dol.
2,859,830
2,071,308
5,846,989
France
If
8,805
818
374,251
Italy
"
261,832
629,171
2,093,823
England
If
267,830
595,133
957,591
Bars or rods of steel, total ddl.
7,392,163
10,829,699
37,693,359
France
a
673
2,158,111
13,092,375
England
If
436,130
2,318,201
5,961,769
Billets, ingots, etc. total dol.
1,042,854
4,815,233
42,409,704
France
"
I
51,165
30,079,143
Italy
II
-
-
1,857,420
England
If
549,885
3,824,775
5,924,919
Horseshoes, total
dol.
98,835
2,001,258
2,135,079
France
If
I
884,543
232,432
Russia in Europe
"
-
41,581
738,376
England
If
-
308,970
725,821
Russia in Asia
If
I
696,547
227,812
Barbed wire, total
dol.
4,039,590
7,416,389
23,909,209
France
If
I
1,470,471
4,024,596
Russia in Europe
If
-
923,452
9,273,640
England
"
33,954
663,199
1,033,755
Russia in Asia
"
I
1,093,656
3,832,155
All other wire, total
dol.
3,799,561
6,948,938
16,076,532
France
If
I
324,549
2,227,414
Russia in Europe
"
1,057
18,395
1,136,628
England
#
135,643
526,111
1,277,925
Japan
"
34,448
942,514
1,799,082
Russia in Asia
"
28
121,557
311,702
- 5 -
Miscellaneous Commodities (Continued)
1914
1915
1916
Manufactures of wire except
woven fencing, total
dol.
1,740,622
2,473,614
7,692,198
France
If
7,231
290,163
1,361,059
England
"
262,168
656,815
1,448,384
Russia in Europe
If
746
49,252
854,599
Russia in Asia
If
1,482
16,028
230,132
"Other" manufactures of iron
and steel, total
dol.
18,230,560
20,397,835
138,916,816
France
"
217,695
803,911
7,021,618
England
"
898,484
4,201,015
94,585,346
Scotland
If
313,170
810,575
2,560,227
Russia in Asia
If
6,814
514,039
4,180,263
Machinery -
Traction engines, gasoline,
total
dol.
1,416,294
983,198
3,726,496
France
If
4,986
100,500
744,240
England
If
-
343,922
1,843,229
Steam locomotives, total
dol.
3,692,225
2,115,866
12,665,877
France
"
-
218,474
425,408
Russia in Europe
If
-
30,890
2,796,979
England
If
-
-
146,899
Russia in Asia
If
-
310,000
6,700,000
Metal-working machinery, total dol.
14,011,359
28,162,968
61,315,032
France
ET
1,771,525
8,695,826
13,316,702
Russia in Europe
11
1,333,644
2,123,195
10,280,566
England
If
2,988,684
11,842,842
19,925,934
Italy
11
421,603
511,134
4,779,178
Russia in Asia
If
1,381
365,389
2,052,170
Canada
If
1,199,356
1,813,188
6,464,332
"Other" machinery and parts,
total
dol.
21,750,386
17,773,245
31,971,774
France
If
676,172
702,409
2,563,881
Italy
If
139,532
230,534
1,728,669
Russia in Europe
If
186,106
158,737
1,577,589
England
If
2,071,178
3,453,684
6,154,535
Russia in Asia
If
40,496
227,436
1,338,673
Nonferrous Metals -
Brass, bars, plates, sheets
total
dol.
791,629
6,149,183
35,669,599
France
#
-
1,852,297
6,849,466
England
If
17,017
2,115,296
13,415,840
Canada
If
724,253
2,096,053
13,459,808
- 6 -
Non-ferrous
Metals (Continued)
1914
1915
1916
Articles made from brass,
total
dol.
3,966,645
12,819,373
128,331,820
France
If
53,230
2,176,258
13,585,518
Italy
=
17,569
54,317
2,358,203
England
u
596,787
5,591,655
93,453,896
Canada
"
2,066,660
3,227,559
12,773,842
Copper ingots, bars, rods,
sheets and wire, total
dol. 144,126,597
95,054,928
158,284,260
France
"
25,446,692
24,816,989
72,154,467
England
"
21,314,090
32,379,578
32,636,450
Manufactures of copper, total
dol.
1,327,037
3,319,230
14,458,176
France
If
3,450
68,869
1,706,225
Italy
"
2,581
718,863
609,720
England
"
124,651
946,851
4,130,800
Canada
"
610,031
963,372
5,799,935
Zinc in pigs, bars, plates
and sheets, total
dol.
247,864
20,067,306
44,658,730
France
If
---
4,025,449
12,284,299
Russia in Europe
Il
---
1,272,246
2,358,494
England
If
5,700
9,625,423
16,089,452
Russia in Asia
If
---
866,756
978,016
Italy
II
---
806,309
5,412,539
Automobile tires, total
dol.
3,505,267
4,963,270
17,936,227
Russia in Europe
II
1,168
6,480
1,125,733
England
Il
1,503,440
2,655,099
9,175,248
Italy
If
915
11,740
333,437
Instruments:
Medical and surgical, total
dol.
206,421
560,471
355,170
France
If
1,771
330,430
14,187
Russia in Europe
If
11,991
47,693
England
If
6,651
12,185
51,074
Optical instruments, total
dol.
865,074
1,018,016
2,593,509
France
If
4,692
3,559
112,401
Russia in Europe
If
1,423
19,975
120,072
England
If
472,202
583,400
1,318,486
Italy
If
639
582
48,968
- 7 -
Instruments (Continued)
1914
1915
1916
Other scientific instruments,
Total
dol.
689,366
852,647
2,919,476
France
If
8,644
39,643
198,194
Italy
If
3,828
11,564
308,198
Russia in Europe
If
9,166
98,349
297,336
England
If
47,371
179,493
843,292
Russia in Asia
If
149
389
521,001
Surgical appliances, total
dol.
1,288,467
4,418,303
3,166,718
France
If
2,910
1,678,109
47,693
Italy
If
559
46,823
409,830
England
II
313,655
945,834
783,310
Russia in Europe
If
755
104,115
40,766
Chemicals:
Sulphuric acid, total
dol.
125,892
516,436
1,990,532
France
"
-
99,190
110,898
England
#
---
205,392
819,041
Canada
II
2,963
2,953
557,535
Scotland & Ireland
If
---
102,796
183,214
Other acids, total
dol.
357,035
2,611,741
22,717,335
France
If
---
734,931
13,790,937
Italy
II
----
3,333
1,299,592
Russia in Europe
#
--
1,830
1,014,256
England
If
71,588
1,200,584
3,249,236
Japan
If
---
70,672
1,078,233
Dyes and dyestuffs, total
dol.
356,919
1,177,925
5,102,002
France
If
2,228
47,263
246,884
Italy
If
11,012
51,731
904,792
Russia in Europe
#
3,366
72
290,240
England
If
57,061
409,504
646,263
Canada
#
128,879
354,111
1,813,220
Japan
If
---
72,048
166,574
"Other" chemicals, total
dol.
9,019,582
22,476,269
56,222,337
France
#
165,179
2,722,008
10,579,428
Italy
If
40,515
506,811
4,105,029
Russia in Europe
II
15,432
814,460
2,920,609
England
If
904,861
4,953,656
11,536,135
Canada
II
3,296,384
3,619,843
8,648,364
Russia in Asia
II
2,941
1,336,051
507,684
Japan
If
210,549
2,065,757
4,194,277
UNITED STATES DEPARTMENT OF COMMERCE
Table 6
Buresu of Foreign and Domestic Commerce
STOCKS OF IMPORTANT RAW MATERIALS
(As of June 30)
Commodities
1929
1933
1936
1937
1938
Minerals:
Anthracite, in producers storage yards - thous. short tons
3,496
533
1,240
1,483
1,757
Bituminous coal, industrial and retail
dealers -
do.
33,100
22,472
28,753
43,936
33,452
Copper, refined -
short tons
-
-
228,817
111,020
358,971
Lead, refined -
do.
-
193,005
230,481
113,370
163,346
Petroleum, crude 1/ -
thous. bbl.
564,497
498,279
410,755
410,965
411,511
Zinc, et refineries -
short tons
38,832
122,891
84,855
14,081
149,671
Other commodities:
Cotton, domestic -
thous. bales
2,664
7,708
5,514
4,640
11,113
Cottonseed -
short tons
65,091
317,623
36,049
45,841
391,367
Rubber, crude, total -
long tons
289,084
613,055
520,255
434,250
585,952
United States only -
do.
96,347
341,213
245,544
172,193
305,612
Silk, total visible supply -
bales
85,625
187,733
135,609
130,256
133,157
Vegetable oils:
Crude -
thous. lb.
481,446
478,142
630,110
587,563
738,102
Refined -
do.
483,112
784,932
491,893
617,942
661,879
Wood pulp -
short tons
-
-
140,061
164,619
249,784
Wool, scoured basis -
thous. lb.
I
--
147,057
142,554
139,423
Index of 19 commodities (volume) -
1923-25=100
119
160
102
91
146
INVENTORIES OF MANUFACTURING CORPORATIONS (Based on dollar figures)
Index of inventories of all manufacturing
Corporations (value) 2/ -
1929=100
3/100
3/64
3/79
3/95
89
Comprises heavy crude oil and fuel oil in California, and refinery and tank farm supplies (in-
cluding oil in pipe lines) east of California.
2/
Data for 1929 and 1933 reported by U.S. Treasury; figures for 1936-38 projected on basis of data
supplied by Dun and Bradstreet.
3/
End of year.
PSF
(COPY)
war
MALACANAN PALACE
Manila
Confidential
October 16th
1938
My dear Mr. High Commissioner:
I take pleasure in sending you a copy of my
instructions to the Vice-President who is going
to the United States as my special representative
to confer with the President on the contemplated
legislation amending the economic provisions of the
Independence Act. I am sure you will agree with me
that the recommendations of the Joint Preparatory
Committee do not offer reasonable opportunity to
insure the future economic stability of the Philip-
pines, nor, indeed, do they fairly safeguard the
interests of the United States.
The Filipino members of the Joint Preparatory
Committee for a long time declined to join the Ame-
rican members of the said committee in their rec-
ommendations, and with my approval they had announced
their intention to submit a separate report contain-
ing what they felt was the proper solution to the
problem which they were asked to study. When the
President of the United States sent me a message
urging me to join him in efforts to secure an early
agreement along the lines proposed by the American
members, realizing that my refusal to yield to the
President's request might be misinterpreted both
in America and in the Philippines with harmful con-
sequences, I felt it my duty to defer to his wishes,
and so I instructed the Filipino members of the Com-
mittee to give their assent to the proposals of
their American colleagues.
In the conference we had yesterday, I expressed
to you my fear that the President may misunderstand
me and think that I am trying to break away from my
commitments. I request you, therefore, to state to
the President that if after due consideration of the
representations that the Vice-President will make in
accordance with my instructions, he should still feel
that he has to indorse favorably to Congress the rec-
ommendations of the Joint Preparatory Committee, I
shall abide by his decision and will offer no objec-
tion to the legislation that may be enacted in ac-
cordance with those recommendations.
- 2 -
In the instructions that I have given to the
Vice-President, I have stated frankly my views on
the whole Philippine question. I want it clearly
understood, however, that, notwithstanding my views,
I am willing to follow the decision of the President
without mental reservations, confident that he has
the interest of my people at heart no less than the
interest of the American people; and that being in
a better position to know world conditions, I con-
sider his judgment better than mine.
You have been in the Philippines long enough
to be intimately familiar with the situation here
and desirous as I know you are to find a just and
intelligent solution of the problems confronting
our two countries, I trust that you will do your
part in securing the best legislation possible,
bearing in mind both the interests and rights of
your country and mine.
Very sincerely yours,
(Sgd.) MANUEL L. QUEZON
His Excellency
Paul V. McNutt
United States High Commissioner
Manila
pSFWar
MALACANAN PALACE
MANILA
October 16, 1938
My dear Mr. Vice-President:
I have decided to request you to go to the United
States and to present to the President my views not only
on the report and recommendations of the Joint Preparatory
Committee on Philippine Affairs, but also on the whole
question of the future of the Philippines regarding both
its political and economic aspects. The present condition
of the world is such that no responsible Filipino leader
can fail to have serious misgivings, because of the effect
which the trend of international events may have on the
future well-being and security of our people. It is my
desire, therefore, that you present to the President,
fully and candidly, my apprehensions concerning the fate
of our people if the provisions of the Independence Act
were allowed to take effect without revision.
Referring to the economic provisions of the Indepen-
dence Act, it is evident - as borne out by the conclusions
of the Joint Preparatory Committee - that if the trade
relations between the United States and the Philippines
after the year 1941 are to be governed by the terms and
conditions imposed in that Act, even before the date for
the grant of independence shall have arrived, the whole
economic structure of the Philippines would probably be
so disorganized, that the new Philippine Republic would
come into being in the midst of almost chaotic conditions.
Such a situation would be wholly unfair to the Philippines,
the responsibility for which the United States can not
properly evade. I know that the President has foreseen
this eventuality and for that reason he appointed the Joint
Preparatory Committee, composed of Americans and Filipinos,
to study and submit recommendations concerning the changes
that may be found necessary in the economic provisions of
the Independence Act.
I em committed to support the recommendations of the
Joint Preparatory Committee, and you may assure the Pres-
ident that, if after giving due consideration to the re-
presentations that I am hereby instructing you to make, it
should be his decision to recommend to the Congress the
enactment of the law in accordance with said recommendations,
I shall give them my support without any qualification. I
feel it my duty, however, to lay before him frankly my
- 2 -
views regarding the recommendations of the said committee
and to state that, in my opinion, while the said recommend-
ations propose to continue preferential trade relations
between the United States and the Philippines until the
year 1961, for all practical purposes the Philippines will
be unable to take advantage of these tariff preferences
after we are made to pay more than 50% of that tariff. In
other words, we shall entirely lose the American market,
as far as our products dependent upon the protection of
the American tariff are concerned, after the year 1951.
It would be impossible for the Philippines to readjust its
present basic industries so as to enable them to survive
the proposed tariff impositions, nor to create new indus-
tries to take their place, before that time. I hope, there-
fore, that the President might find his way clear to recom-
mend to Congress a plan whereby the gradual imposition of
tariff duties upon Philippine products may not reach 50%
of the American rates of duty, until the tenth year after
the establishment of independence, and, thereafter, such
trade preference to continue for five years, at the end
of which time either government, upon one year's notice,
may denounce that trade arrangement and thereby terminate
all trade preferences between the two countries. This was
the view of the Filipino members of the Joint Preparatory
Committee which they maintained up to the time when, upon
instructions received from me, they were compelled to agree
to the proposals of the American members of the committee
which are now embodied in the recommendations of the com-
mittee. The President will remember that I gave these ins-
tructions to the Filipino members of the committee only in
deference to his wishes, and with great reluctance.
If the President should insist in supporting in its
entirety the recommendations of the Joint Preparatory Com-
mittee, then I would ask that he consider the advisability
of urging the Congress to include in the proposed legisla-
tion, or in a separate resolution, a provision authorizing
the Filipino people to hold & plebiscite shortly before the
date of independence, say in 1944, to give them an opportu-
nity to express their preference either to allow the law
as passed by Congress in accordance with the recommendations
of the Joint Preparatory Committee to take its course, or,
to maintain indefinitely trade relations with the United
States on the preferential basis obtaining at the end of
the transition period, that is in 1946, under such a political
relationship between the two countries as the Filipino people
may desire and the Congress may approve; or, that the pro-
posed legislation provide for the creation of a non-partisen
10807 03 awatv bas
- 3 -
committee to further study the future political and econo-
mic relations which should exist between the United States
and the Philippines, and to submit its report not later
than 1944.
The reason for my suggestion that, if the President
should insist in supporting the recommendations of the
Joint Preparatory Committee, the door be left open for
further discussion of the whole Philippine question, is
because I fear that under the recommendations of the Joint
Preparatory Committee we are not afforded & just and rea-
sonable opportunity to prepare properly and adequately for
our future security, both politically and economically. I
assume that by 1944 the conditions of the world will have
been sufficiently stabilized so as to enable the Filipino
people, with full knowledge of actual conditions and the
problems facing them at that time, to decide the best
course for the Philippines with due regard for their po-
litical and economic security.
Above all, you will please make it very clear to the
President of the United States that I wish to defer to his
judgment on these matters and, therefore, that I am willing
to abide by his decision as to the final action that should
be taken on the recommendations of the Joint Preparatory
Committee.
I am sending you 8. copy of a memorandum which ex-
Secretary Yulo and ex-Speaker Roxas, who were members of
the Joint Preparatory Committee, have submitted to me in
confidence, regarding the attitude of the Filipino members
of that committee, which you may show to the President.
Sincerely yours,
(Sgd.) MANUEL L. QUEZON
The Honorable,
The Vice-President
Manila
eug mto committee $0
MEMORANDUM FOR
HIS EXCELLENCY, THE PRESIDENT:
We are informed that within a few days the Vice-
President of the Philippines will leave for the United
States on a special mission for the purpose of presenting
the view of the Commonwealth Government on any proposed
legislation designed to effectuate the recommendations
contained in the report of the Joint Preparatory Committee
on Philippine Affairs. Not having been 8. member of said
Committee, the Vice-President is probably unawareof many
important details and incidents connected with the nego-
tiations and discussions leading to the agreement reached
by the Committee, a knowledge of which is essential to a
proper appraisal of the commitments accepted by the Fill-
pino members. Some of these incidents and details might,
likewise, not have been brought to the attention of Your
Excellency. In order, therefore, that there may be 8.
clear understanding of the position taken by the Filipino
members throughout the course of these negotiations, we are
taking the liberty of presenting these matters for Your
Excellency's consideration.
The functions of the Joint Preparatory Committee on
Philippine Affairs were outlined in a Joint Statement
issued by Your Excellency and Assistant Secretary of State
Sayre, which read as follows:
"Arrangements are being made for the
appointment shortly of a joint preparatory
committee of American and Philippine experts.
The committee is to study trade relations
between the United States and the Philippines
and to recommend 8. program for the adjustment
of Philippine national economy. This announce-
ment followed conferences between President
Quezon of the Philippine Commonwealth and the
Interdepartmental Committee on Philippine Af-
fairs, which is acting on behalf of President
Roosevelt in the preliminary discussions. As-
sistant Secretary of State, Francis B. Sayre,
is Chairman of this Committee.
- 2 -
"Inasmuch as the Independence Act pro-
vides that complete political independence
of the Philippines shall become effective on
July 4, 1946, and inasmuch as President Quezon
has suggested that the date of independence
might be advanced to 1938 or 1939, it was
agreed that the joint committee of experts
would be expected in making its recommendations
to consider the bearing which an advancement
in the date of independence would have on fa-
cilitating or retarding the execution of a
program of economic adjustment in the Philip-
pines. It was further agreed that preferential
trade relations between the United States and
the Philippines are to be terminated at the
earliest practicable date consistent with af-
fording the Philippines a reasonable opportunity
to adjust their national economy. Thereafter,
it is contemplated that trade relations between
the two countries will be regulated in accordance
with a reciprocal trade agreement on 8. non-pre-
ferential basis,"
It should be noted that this Joint Statement bound
the Committee definitely to the instructions that "pre-
ferential trade relations between the United States and
the Philippines are to be terminated at the earliest prac-
ticable date consistent with affording the Philippines a
reasonable opportunity to adjust their national economy".
Early in the deliberations of the Committee, the
American members interpreted this part of its terms of
reference as requiring a complete termination on a fixed
date of preferential trade relations between the United
States and the Philippines. They also drew the conclusion
that the process of elimination should proceed at a uniform
rate in the shortest possible time. The Filipino members,
on the other hand, maintained that this part of the Com-
mittee's instructions did not require either a uniform
rate of elimination or a definite termination of trade
preferences to take place automatically on a certain date.
We claimed that the termination of trade preferences
could as well be provided by permitting either government,
by unilateral action, to denounce after a specified period
of time the trade agreement that may be adopted, In
consonance with this interpretation, the Filipino members
proposed a plan whereby the process of elimination might
- 3 -
proceed at a certain progressive rate until the tenth
year after the proclamation of Philippine Independence,
when only 50% of the then existing tariff rates would
be levied; thereafter, the duties to be imposed at
the same rate for a period of five years, at the end
of which time, either government, upon one year's notice,
might denounce this trade arrangement and thereby termi-
nate all trade preferences between the two countries. We
propose this plan for the following reasons:
1. Philippine exports vitally dependent
upon American tariff protection constitute more
than 30% of the national income of the Philip-
pines. The production of these articles, the
most important of them being sugar, coconut oil,
cigars, and cordage, was stimulated by the estab-
lishment of free trade between the two countries.
It took about twenty years, since the establish-
ment of free trade for these industries to reach
their present level of production and efficiency,
and it will require, under the most favorable
conditions, many years before they could be placed
on a competitive basis. Present production costs
are so high that unless economic factors change
materially, these industries could not be expected
to withstand more than 50% of the American tariff
during the next 15 years. In fact, substantial
portions of the respective industries are not
expected to bear the imposition of even a small
fraction of the American duty, as in the case of
cigars and coconut oil.
2. The imposition of 8. rate higher than
50% of the American duty would establish a trade
preference which would be ineffective, and, based
upon present conditions, it would bring about the
liquidation of these industries.
3. In order to afford the Philippines EL
reasonable opportunity to adjust its national
economy, it is necessary to grant the Philippines
a sufficient period of effective preferences, so
that through experimentation and improved methods
of production, costs may be reduced, and in the
case of products that cannot be placed on a com-
petitive basis, substitute crops may be found.
While this process takes place, it is essential
that the Philippines may be able to continue to
bascord
- 4 -
receive the income derived from the industries
that now enjoy preferences in the United States,
in order to finance the readjustment in each in-
dustry and to bring about the production of sub-
stitute crops on an economic basis,
4. It is neither prudent nor wise to fix
a date so far in the future for the termination
of trade preferences between the United States
and the Philippines, considering that some years
from now, this trade may become so reciprocally
beneficial that it might be to the advantage of
both countries to continue that trade. Under
the proposed plan, should the arrangement not
prove to be mutually advantageous, after the
lapse of five years, the arrangement could be
terminated by ex parte action.
5. The United States now maintains pre-
ferentialtrade relations with Cuba. In the case
of sugar, the preference granted to Cuba is in
excess of 50% of the American duty. If the United
States is willing to grant this preference to
Cuba for an indefinite period of time, subject,
of course, to the usual denunciation clause, there
seems to be no reason why a similar arrangement
could not be agreed upon in the case of the Phil-
ippines.
6. With regard to American products imported
into the Philippines, the same considerations are
applicable. American products now imported into
the Philippines free of duty could no longer enter
this market after the progressive rate has reached
50% of the Philippine tariff.
This proposal of the FilipBno members was rejected
by the American members of the Committee. We believe
that we are justified in stating that, at least in the
case of some of the American members, their refusal to
accept this plan was prompted mainly because of the
belief that our terms of reference compelled the Com-
mittee to formulate a program which should bring about
the termination of trade preferences on & fixed date
to be determined arbitrarily at this time, and not
leave that termination to depend upon future negotia-
tions or decisions.
- 5 -
The Filipino members for several months insisted
in the approval of the proposed plan by them. When the
American members persisted in their refusal to accept
that plan, the Filipino members, in an effort to reach
an agreement, modified their proposal so that the maxi-
mum rate of American duty be 60%, instead of 50%, upon
the tenth year after Independence, this rate to continue
for five years, and thereafter, indefinitely, until the
agreement is denounced by either government. This pro-
posal was likewise rejected by the American members.
They insisted in the plan finally approved by the Com-
mittee providing for a uniform progressive elimination
of trade preferences at the rate of 5% every year, so
that at the end of 15 years after Independence, or on January
1, 1961, the Philippines would be placed in the same posi-
tion as any other foreign country. We argued that, where-
as this plan contemplated preferential trade relations
between the two countries to continue for a period of 15
years after Independence, as a matter of fact, after the
process had reached EL point when 6 50% or 60% of the Ameri-
can tariff was to be levied upon Philippine articles ex-
ported to the United States, the preferences would become
ineffective, and that as far as we could visualize the
future, they would not permit the continued exportation
of the most important Philippine products to the United
States.
Being convinced that the American proposal did not
grant the Philippines a reasonable opportunity to readjust
its economy, the Filipino members felt constrained to
reject the American plan. A deadlock was created in the
Committee as a result of these differences of opinion.
This deadlock continued for several months. In view of
the necessity of presenting a report, the Filipino members
advised the American members of their intention to file
a minority report, or to state their reservations in &
joint report concerning the program of elimination of
trade preferences. The American members at first accepted
the plan to permit the Filipino members to state their
reservations in the body of the report. Subsequently, the
American members intimated that a reservation which would
directly assail the program of elimination of trade pre-
ferences would greatly weaken the report in the estimation
of Congress and, therefore, they advised the Filipino
members to refrain from making such reservations. The
Filipino members informed their American colleagues that
they could not sign a report recommending a program which
inelg
wbb
480
the
eds
fust
VEGLI
III
=
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they were convinced would be inadequate to attain the
objectives sought and that, therefore, they preferred
either to declare a definite deadlock or to file a
separate report.
At this juncture, President Roosevelt sent & mes-
sage to Your Excellency dated March 22, 1938, urging
that "the work of the Committee should be pressed to
an early and mutually satisfactory conclusion" and sug-
gesting that Your Excellency join with him in making
public the common desire to have the Committee approve
the American plan. Your Excellency replied to President
Roosevelt in a message dated March 25, stating that the
Filipino members were being instructed to accept the
American proposal. The Department of State issued a
press release dated April 5, 1938, outlining the sub-
stance of these messages, as follows:
"On March 22, President Roosevelt tele-
graphed to President Quezon an expression of
his feeling that the work of the Committee should
be pressed to an early and mutually satisfactory
conclusion. The President recalled that he had
already made publicly known his own readiness,
with a view to affording the Philippines ample
opportunity to adjust their economy to the non-
preferential status of political independence,
to approve of a general plan by which the elimi-
nation of trade preferences would proceed by
uniform annual accretions of 5 per cent from 25
percent at the date of independence; but he
indicated that, except for certain alleviations
which he understood the Committee would be pre-
pared to recommend, the export tax provisions
of the Independence Act should remain substantially
intact as constituting a necessary part of the
program of Philippine economic adjustment. The
President furthermore suggested that President
Quezon join with him in making public their com-
mon desire to have the Committee proceed along
these lines with a view to reaching an early
agreement upon recommendations which would have
the whole-hearted support of both sides.
"In a telegram dated March 25, President
Quezon replied that he was sending to the Fili-
pino members of the Joint Preparatory Committee
fuel
- 7 -
8. radiogram to the effect that he had, after
Considering all the attending circumstances,
come to the definite conclusion that the best
interests of the Philippines would be promoted
by their concurring with the American members
of the Committee in the plan outlined in the
President's telegram."
Upon receipt of the instructions of Your Excellency,
the Filipino members of the Committee, although they were
convinced and, we believe, are still convinced, that the
program of elimination of trade preferences outlined in
the report of the Committee is unfair, not only to the
Philippines but also to the United States, and does not
grant the Philippines & reasonable period to adjust its
economy, accepted the American plan and signed the report.
we are constrained to bring these matters to the atten-
tion of Your Excellency in the belief that, although the
Philippine Government is formally committed to the program
recommended in the report, Your Excellency might perhaps
feel justified in bringing these considerations to the at-
tention of President Roosevelt before his recommendations
on the report of the Committee are sent to Congress. It
is the desire of President Roosevelt, we believe, to grant
the Philippines every opportunity necessary to establish
and maintain an economy which will be sufficient to pro-
vide our independent government with its fiscal require-
ments and also preserve and improve social standards now
prevailing in our country. This, Your Excellency will
agree, the Philippines has a right to expect from America.
The United States, we are sure, will not enforce a program
which will jeopardize the attainment of her noble under-
taking in the Philippines by a failure to grant to us
during the last stages of our relationship certain econo-
mic concessions which mean so little to America but which
are so vital to our existence as 8 nation. The conces-
sions required in the plan proposed by the Filipino mem-
bers do not involve a sacrifice of principle on the part
of the United States. They merely mean a continuation
for a reasonable period, in a modified form, of our eco-
nomic relationship with that country until we can adjust
our economy. They mean that the economic relationships
now existing between the United States and the Philippines
are not to be severed merely for the sake of an arbitrary
formula, but will permit the Philippines to continue what
- 8 -
may prove to be a reciprocelly beneficial trade relation-
ship with the country that has assisted her on the way
to liberty and social and economic well-being.
Respectfully submitted,
(SGD)
JOSE YULO
(SGD)
MANUEL ROXAS
Vice-Chairman and Member
Joint Preparatory Committee on
Philippine Affairs
Manila
October 14, 1938
PSF
war
CIVIL AERONAUTICS AUTHORITY
WASHINGTON
October 24, 1938
Mr. Robert H. Hinckley:
Memorandum re: Airplane production
In compliance with your recent request, there is attached
a table on the number of domestic civil aircraft manufactured
during the first nine months of 1938 compared with the same
period of 1937.
This report shows that during the first nine months of
this year there were 1,313 domestic civil airplanes manufac-
tured, which is 508 less than were manufactured during the
same period of last year. Part of the decrease is in the more
expensive private owner type of planes, such as those manufac-
tured by Stinson, Waco, Beech, etc. These planes sell in the
price class of from $7,500 to $20,000. Piper (Cub) manufactured
nearly 100 more than last year, however, Taylor-Young (Taylor-
craft) and Aeronautical Corporation (Aeronca) manufactured less
than the previous year. These small plane companies ($1,600
to $2,000) have recently released new models which use the new
50 horsepower engines (last year's engines were 40 horsepower)
and the selling price of these models has been increased sever-
al hundred dollers.
Arrow Aircraft Corporation, Lincoln Nebraska, last year
manufactured 102 airplanes. These planes retailed for a little
over $1,500 and were powered with a Ford V-8 type of engine
converted for airplane use. This company has not, according
to our records, manufactured any planes for domestic civil use
this year. The Stearman-Hammond Aircraft Corporation last year
manufactured 14 planes of the tricycle landing gear type, which
caused considerable interest in the industry. We do not have
a record of any planes being manufactured by this company during
1938.
Supplementing the figures on domestic civil production, we
have included in the table attached, data on planes exported and
military deliveries. Airplanes exported increased from 452 in
the first nine months of 1937 to 616, the same period of this year.
This was an increase of 36%. There were 944 military planes de-
livered this year which is an increase of 95% over the deliveries
for the same period last year.
Please let me know if there is any further information that
we can prepare for you.
Stafford Kernen, Chief,
Att.
Statisvical Section.