Volume 154, December 1 – December 5, 1938

DIARY Book 154 December 1 - December 5, 1938 Regraded Uclassified Book Page Annenberg, Moe Now that Campbell has succeeded Igoe a.e United States District Attorney, Treasury will not ask for special lawyer - 12/2/38 154 153 a) Corooran recommends highly; Campbell 18 Cardinal Mundelein's personal counsel 123 Antidumping Act of 1921 HMJr plans reexamination of responsibilities; group invited to advise him - 12/2/38 149 - B - Banking Legislation Eccles' bank plan: Gaston memorandum on questioning by Mike Flynn, et cetera - 12/5/38 258 Bonds Oliphant memorandum on Supreme Court case concerned with discharge of a bond payable, not in gold only but also in a named foreign currency at bondholder's election - 12/1/38 20 Business Conditions Haas memorandum on situation for week ending 12/3/38. 371 - C - China Conference with Chen - 12/1/38 1 a) HMJr suggests that publicity on purchases in United States may help with proposed loan; Chen agrees Suggestion that Freda Utley (Far Eastern correspondent of London News Chronicle) call on HMJr - 12/2/38 102 Conference with Bewley accompanied by Hall-Patch (British Financial Attaché to China); Butterworth also present - 12/3/38 212 Sketch map of Yunnan-Burma road 257 Memorandum on eventual truck selections for use on Yunnan-Burma road - 12/5/38 263 Burma Government states policy in regard to transit shipment of war materials - 12/5/38 265 Tung oil loan: Oliphant memorandum that arrangement does not violate United States Treaty with China of 1844 and International Treaty concerning China of 1922 (question raised by State Department) - 12/5/38 347 Comptroller of Currency Oliphant memorandum on authority for Office of General Counsel to take over legal work of Comptroller of Currency - 12/1/38 47,103 Regraded Uclassified ? Book Page Farley, James Discusses with HAJr over telephone political situation, advice to FDR, business conditions, et ceters - 12/5/38 154 365 Financing, Government 12/15/38: Suggestions by Discount Corporation, Salomon Brothers, et cetera - 12/1/38 6,64 Parkinson (Thomas) consulted - 12/1/38 34 Hass memorandum on probable yield bases and market prices - 12/1/38. 45 Sproul reports on market reception of announcement - 12/2/38 120,139 Burgess reports on proposed issue - 12/2/38 141 Conference with Treasury people and Ronald Ransom - 12/2/38 165 a) Conversation with Sproul - 12/2/38 174 Conference of Treasury group (Ransom, Piser, and Hadley join group later) - 12/3/38 179,219 a) Conversation with Sproul 181,186,208, 219,226 b) Conversation with Walter Cummings 191 e) If If Eccles (in New York) 202 d) Later conversation with Ransom 229 Announcement of offering - 12/5/38 255-A a) Sproul reports on market reaction - 12/5/38 361 Fiscal and Monetary Advisory Board Meeting; present: HMJr, Eccles, Delano, Bell, Currie, Ruml, Taylor, White, Haas, Sanford (Federal Reserve Bank of New York), and McReynolds - 12/5/38 282 a) Problems considered: Potential national income and probable Federal revenue; effect of budget items on national income; Federal fiscal operations outside the budget; flexibility b) Memorandum on railroad and automobile demands for steel 331 c) Memorandum on estimates of national income for 1939 344 France See Stabilization: Greet Britain - G - Germany White, with assistance of May (Treasury Attache assigned to Berlin office), instructed by HMJr to prepare comprehensive report on methods employed in carrying on foreign trade - 12/1/38 18 Gold See Stabilization: Great Britain Great Britain See Stabilization Regraded Uclassified - H - - Book Page Hanes, John W. HMJr warns Hanes on hatred of Krock for FDR - 12/5/38 154 349 Housing Keyserling (Leon H.) memorandum to HMJr concerning United States Housing Authority proposal to enlist private capital for larger participation - 12/2/38 178-A - I - Italy See Stabilization: Great Britain - J - Japan Arakawa calls on HMr; also present: Lochhead, Cochran, and Butterworth - 12/2/38 101 a) H/Jr amused at Arakawa meeting Chen on his way out 127 Suggestion that Freda Utley (Far Eastern correspondent of London News Chronicle) call on HMJr - 12/2/38 102 Conference on memorandum to FDR concerning discrimination against American trade and enterprise in Chinese areas now under Japanese control; present: HMJr, Gibbons, Taylor, Oliphant, Cairns, and White - 12/2/38 128 a) Actual memorandum 135 - K - Kennedy, Joseph P. Farley and HMJr discuss FDR's attitude toward - 12/5/38. 367 Krock, Arthur See Hanes, John W. - N - National Income Estimates for 1939 (unsigned) 87 Numismatists and Philatelists Oliphant memorandum on revision and codification of all laws in furtherance of FDR's interest - 12/1/38 19 P - Philatelists and Numismatists Oliphant memorandum on revision and codification of all laws in furtherance of FDR's interest - - 12/1/38 19 Poughkeepsie, New York, Post Office See Procurement Division Procurement Division Landscaping Division: HMJr upset about painting done at Poughkeepsie Post Office; asks investigation - 12/1/38. 28 Regraded Uclassified - A - Book Page ailroads Report on United States Railroad Equipment Authority (unsigned) - 12/2/38 154 108 - 3 - Stabilization Great Sritain: Letter to FDR from :[Wr concerning proposal to impose embargo on gold imports as a way to protect position of dollar against further depreciation of sterling currencies sent to Viner and Hansen for criticism - 12/1/38 21 Bolton ives market resure to Knoke: difficult and amtious times due partly to unpleasant French relations with Italy - 12/1/38 25 Cochran memorandum concerning conference with Sowley in which Bewley gave specific figures concerning goli holdings of exchange equalization account - 12/3/32 231 - I - Temporary National Economic Committee Oliphant memorandum on opening of public hearings - 12/1/38 42 Verbatim record of first public meeting; testimony of O'Mahoney, Arnold, Sorah, Labin, Oliphant, Douglas, et cetera - 12/1/38 177 - U - Unemployment Relief National income estimates for 1939 (unsigned) 87 Oliphant memorandum regarding letter to Acting Comptroller General asking reconsideration of decision concerning Torks Progress Administration relief workers sent to United States Employees Compensation Commission with regard to continuation of medical services - 12/3/30 231 United States Imployees Compensation Commission See Unemployment Relief United States Housing Authority See Housing - is - Works Progress Administration See Unemployment Relief Regraded Uclassified 1 December 1, 1938 10:45 a. m. Present: Mr. Chen Mr. Tei-mou Mr. Ren Mr. Lochhead Dr. White HM,Jr: I see a little break in the clouds. I don't want to be too encouraging, but I nee a little break in the clouds. And I am trying very much to help the sun come out. Mr. Chen: Thank you very much. I know you have been working very hard. HM,Jr: And I am trying to make the sun shine. It is difficult, but I have received & little enour- agement and I wanted you to know that. Mr. Chen: I am glad to hear that. HM,Jr: And I wondered if you care to tell me how you are getting along with your motor trucks. Mr. Chen: We have received all the bids from the manufacturers, I think seven altogether, and it will take about three days more to tabulate it. Capt. Collins, who has helped us to get specification ons, is helping us to tabulate it and then we will make deci- sion, probably next Monday. HM,Jr: I see. Mr. Chen: And then we will proceed to ship it to Rangoon. From Rangoon to Burma Road. HM,Jr: I think -- I want you to think this over -- I think it would be helpful to you -- and I want you to think it over -- that if and when you do decide to buy, thatyou give it publicity. Mr. Chen: Yes. Yes. Regraded Uclassified 2 -2- HM,Jr: I think it would be helpful to me in trying to get this loan for you. Mr. Chen: Yes. Yes. HM,Jr: In other words, the fact that China is spending money here plus the fact that you are getting trucks for this road, unless there is some military reason that they don't want it known -- there may be some military reason why they want to keep it secret; the Japanese might find it out. Dr. White: They know it already. HM,Jr: But I think with the public and right here in Washington it would be helpful to know that there are 1,000 trucks going over the Burma Road, be- cause I still can't convince the people that the Burma Road is open. Now, they keep telling me it isn't open. Mr. Chen : Well, the engineer is here. HM,Jr: I know. I told them that. So you think it over, but my own feeling would be unless there is some military reason Mr. Chen: I can see because when we decide the bids we have also transportation on commercial boats, to open this trade. HM,Jr: One other thing, if I may make this sug- gestion, which also would be helpful: that in shipping these trucks, you use American flag ships. Mr. Chen: Oh, yes! Oh, yes! That we have already decided to do that. HM,Jr: Because all that helps build up senti- ment for China. Mr. Chen: Yes. Yes. Yes. HM,Jr: I mean, that Americans are getting the shipping. Have we a line to Rangoon? Mr. Lochhead: There are two things, first of all, for instance, like the Eagle Line, it does not run direct Regraded Uclassified 3 -3- to Rangoon, but it ie just a question of whether it would be enough on one boat, otherwise they would trans- ship at Manila. And then there 1a, second, the Roosevelt Line. HM,Jr: There is & line? Mr. Lochhead: There 18 another line that runs there. HM,Jr: And if there 1s a ship -- Basil Harrie, Vice President of that line (he's United States Lines)... Mr. Lochhead: Two lines. One does more business on the Pacific. HM,Jr: Either one, if they knew there were 1,000 trucks to transport, they would fill up a boat and send it direct. Mr. Lochhead: Mr. Chen has spoken to me and in talking about it up in New York, the question of handling transportation oame up and decision was reached by Mr. Chen that they are to be American bottoms and, of course, the question 18 how deliveries are to be made. They probably won't get 1,000 trucks -- they probably won't be able to make deliveries Just as fast as that, but how- ever they go, they will go American bottom. HM,Jr: Is it your inclination to do business with just one company? Mr. Chen: We don't know yet. HM.Jr: Depends upon prices. Mr. Chen: Yes. So far, the General Motors has been completed, 80 we have not made any decision. HM.Jr: Is it 2 or 3 tons? Mr. Chen: Three tons. We had to change from 2 tons. Dr. White: How soon do you anticipate making a final decision on that? Mr. Chen: Monday. I think we will work on Sunday. Regraded Uclassified s -4- Mr. Lochhead: Mr. Chen explained the trouble 18 not Just a question of laid-down price on the trucks. The interesting part is what service these people can give them once they get over there. HM,Jr: You have asked all that? Dr. White: Such a big order, you could get & big story. Perhaps it would be & good idea to start now on the story if it is to be finished on Monday, start tomorrow or Saturday. HM,Jr: Oh, I wouldn't do anything .... Dr. White: Gaston mightdo this. HM,Jr: I don't think it should come from us. It should come from the Chinese. My feeling 1s -- - I may be wrong -- that it would be helpful to you. Mr. Chen: Sure. I think 80 too. HM.Jr: But I am working very hard on the loan thing. I am not discouraged. Mr. Chen: I am glad to hear that. HM,Jr: I am not discouraged, but, as I say, I do see a little bit of sunshine and I want you to know that and I wanted the newspaper men to see you were here. Mr. Chen: When we were in New York, we completed the organization of the new company and officers have been elected. HM,Jr: Fine: Mr. Chen: And we have some names, 80 that as soon as those are finished, we will have the operation of the company. HM,Jr: Good! You find Capt. Collins helpful? Mr. Chen: Very! Very! Our engineer had confer- ence with him yesterday. MM,Jr: Good! Anything else I can dol Regraded Uclassified 5 -5- Mr. Chen: You have been kind already. Thank you 80 much. HM.Jr: Let's hope one of these days I can go to China and have a visit. Mr. Chen: We will be glad to welcome you. o0o-o0o Regraded Uclassified S Has count Bays 60-65 H400, 3/4 2% 8½ #300, referen 1/8 notes your think / tellin of 2% 150-200 11/8 Dec/ 2t Regraded 7 Ecken -mets operation would take $25.millin Z₂ 0620/4 50000min of 9 yr. not interested in 5yr, Decl 2t Regraded Uclassified 8 Llevine 23/4 60-65 60 - 6 J 1015/8 6/4 2 9 years 1013 -101°N 1/8 for rights mly Lee 1 21 Regraded Uclassified 9 Levi. - Solamen Bros, 60-64 23/x _ - 14yr. 2'm June 1/8 5yr 1's would go does not like 8yr 2% Regraded Uclassified alaigh 10 /. note 2, 7yr. 3, bug term Bind said Bank of Frause Consulted Reich bank recently an exchange cruture - Brinkman adviced French not to canhol use So into exchange Lex1st Regraded Uclassified gamer 11 23/4 = 8'2 2 7-12-15 might give a note basked him about 2½ 1952-4 a little their jacket Regraded Uclassified n 3/4% $ 000 462-67 18/8-13/4 -ent % 12 1½ $200.00 Heal Regraded Uclassified - 200-14 250-18 300 we 200-2% 60r-2 700 300.07F 750-234 640 mill Repp 13 Dec 225 1/8 850 2 625 2 3/4 3 14 was Decl 15 200 5 year 1/8 100 200 9 year 2 500 300 606523/4340 700 942 Wills NeeT Regraded Uclassified 16 REB Nanking via N. R. Dated December 1, 1938 Rec'd 3:45 p. m. Secretary of State, Washington, 195, DECEMBER 1, 2 P. m. My 189, November 29, 3 P. m. The "National PEOPLES Representatives Congress" closed yesterday. The ongrass passed B. number of resolutions, including one recommending the constitution of a Confederate Government for China. During the "discussions" which were hald in the congress, it was Emphasized that a strong Central Government would not bE suited to present conditions in China and that a confederate form of government, with provinces retaining a large measure of autonomy, would bE preferente In issued a manifesto, which included a a Jhang Ka1 Shek and Communism, an Expression of of Japaness assistance, and a recommEndation ?? Invironment bz organized. in a IDEAY after the closing of the congress, Stang Hung This stated chan It WGB possible that the form of Regraded Uclassified 17 REB 2-#190, From Nanking, Dec.1,2p.m. of Central Government to bE established in China might bE determined at the third meeting of the "Joint Commission of the Republic of China" which hE said would probably bE hEld sometime in DECEMBER, but that a decision on the matter might bE postponed until the fourth meeting of the joint commission. Sent to Shanghai, Psiping. SMYTH CSB Regraded Uclassified 18 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE December 1, 1938 TO Miss Chauncey FROM Mr. White 20W Subject: For the Secretary's Record On Tuesday, November 29, 1938, the Secretary, after con- ferring with Mr. May, Treasury Attache (assigned to the Berlin office), called Mr. White and instructed him to prepare a comprehensive report describing exactly the methods employed by Germany in carrying on foreign trade. He assigned Mr. May to Mr. White and said that Xr. Miller would soon arrive in the Whited States and would be available as an additional source of information. If it were necessary to get additional infor- mation in Termany in order to complete the report he stated that Mr. May could return and send us the needed material. He emphasized that he wanted a complete picture of Cerman trade practices describing exactly how Cerman trade W&E con- ducted. He expressed the opinion that if the Daited States was to maintain or strengthen its hold upon foreign markets, it was essential that all the tactics employed by countries who were operating on clearing arrangements, barter arrange- ments, multiple currency, etc., be known and understood here. Regraded Uclassified TREASURY DEPARTMENT 19 INTER OFFICE COMMUNICATION DATE DEC 1 1936 TO Secretary Morgenthau FROM Herman Oliphant AH For your information You recall the President's interest in permission to repro- duce stamped envelopes, and in other problems of interest to philatelists and numismatists. The present statute law on these and related matters is unsatisfactory. Its purpose to guard against counterfeiting is carried to the extent that Treasury rulings on particular cases often seem highly technical and arbitrary. Consequently, I have asked Mr. Bernard, in charge of the Legis- lative Section, to revise and codify all of the law on the subject and put it into satisfactory form for enactment at the coming session. x0 Regraded Uclassified TREASURY DEPARTMENT 20 INTER OFFICE COMMUNICATION DATE DEC 1 1938 TO Secretary Morgenthau FROM Herman Oliphant MA For your information There has now reached the Supreme Court a case on how much must be paid to discharge a bond payable, not in gold only, but also in a named foreign currency at the bondholder's election. In the absence of any substantial Treasury interest in the status of outstanding private bonds on which the bondholders can demand payment in a foreign currency, we are concurring in what the Department of Justice's position will probably be, viz., that the Government should not get into this case. Regraded Uclassified flat 21 December 1, 1938 Dear Jacks I an enclosing draft of a proposed letter to the President which the Secretary has asked me to submit to you for coment. It appears that this suggestion has cropped up several times and apparently has in- pressed the President so such that the Secretary thinks it worth while to send him a brief statement of the Secretary's views on the proposal. The intent was not to include all the rumifications of the proposal but only the nore important ones in as abbreviated a form as the subject will permit. At the conference on Tuesday, November 27, that you were unable to attend, a letter roughly in this form was passed upon. As the Secretary wishes to send the letter off on Saturday, he would appreciate it if you would tale- phone your comments to me sometime before Saturday noon. Sincerely, (Signed) II. D. White B. D. White Dr. Jagob Viner, Mount Royal Hotel, Montreal, Canada. Enclosure HDW:Mh Regraded Uclassified 22 December 1, 1938 Dear Alvins I an enclosing draft of a proposed letter to the President which the Secretary has asked we to submit to you for connent. It appears that this suggestion has eropped up several times and apparently has in- pressed the President so much that the Secretary thinks it worth while to send him a brief statement of the Secretary's views on the proposal. The intent was not to include all the ramifications of the proposal but only the more important ones in as abbreviated a form as the subject will permit. At the conference on Tuesday, November 27, that you were unable to attend, a letter roughly in this form was passed upon. Às the Secretary wishes to send the letter off on Saturday, he would appreciate it if you would tele- phone your comments to ne sometime before Saturday noon. Sincerely, (815) II. H. D. White. Prof. Alvin H. Hansen, Harvard University, Cambridge, Vass. Enclosure HDWsmh Regraded Uclassified 23 I understand that a proposal to impose an entergo on gold imports has been suggested to you as being an effective measure to protect the position of the dollar ainst further deprecis- tion of sterling currencise. Such a step, in my opinion, might well have an effect on the exchan rates opposite to the one desired, and in addition would have consequences which would in- crease economic instability throughout the world. in enbargo on gold importe would probably increase the pros- sure against foreign currencies. During the past year the demand for dollar exchange has exceeded the supply arising from all inter- national transactions, other than gold shipments, by almost $110 nil- lion a month. The importation of shout $1,500 million of gold into the United States this year has been the means of supplying the additional dollars necessary to satisfy the demand at the prevail- ing retos of exchange. If the demand for dollar exchange continues to be in excess of the supply and if, further, dollars could not he sequired by the sale of gold to the United States, such dollars as Are available on the foreign e relange market would become more valuable. In other words, numerous currencies would depreciate still further vis-a-vis the dollar. Since there does not Been to be any immediate prospect of a substantial shift in the demand-supply relationship for dollars an embargo on the imports of gold at this time would be a step in the direction of aggravating the very condition the proposal ceeks to alloviate. Furthernore, the declaration of an embargo on gold imports would - quite spart from ite political repercussions both domestic and foreign - constitute a very disturbing factor in international economic relations. The Tripartite Accord would,ef-coures, /be auto- probably natically terminated and the instability in exchange rates muld be much intensified. Grave uncertainties with respect to international nonetary and comercial matters would be introduced, the full conse- quences of which cannot be entirely foressen. By curtailing the possibility of employing gold as a componse- tory mechanism in the settlement of international balances, 19 would be promoting greater reliance on substitute devices. The cushioning effect that gold novements exert on exchange rates would be reduced and still more countries resort to clearing agreements and the nore undesirable forms of exchange control for the purpose of unrrowing the flustuations in exchange rates. FILE COPY Regraded Uclassified 24 - 2 - Finally, an embargo on gold would deal a blow to the prestige of gold which now rests almost wholly on its use as an international medium of exchange. As a nation possessing more than half the world's monetary gold stock, and as the third largest gold producer, we have a vital interest in the future of gold. Any step which would underwine confidence in gold and endanger its use as an international medium of exchange should be taken only with the greatest reluctance and only after less drastic alternatives have been fully explored. HDW:lrs 12/1/38 FILE COPY Regraded Uclassified 25 12(e) FEDERAL RESERVE BANK OF NEW YORK FICE CORRESPONDENCE DATE December 1, 1938. CONFIDENTIAL VILES SUBJECT: TELEPHONE CONVERSATION WITH L. ". Knoke BANK OF ENGLAND. I called Mr. Bolton at 12:15 today. They had had a very difficult and anxious day, he said. The dollar had opened quite high and he had managed to pick up about $1,000,000 but shortly afterwards sterling dropped to 4.67 1/4 and they had to sell $5,000,000 in sup- port. Cariguel likewise had to support the franc and sold substan- tial amounts of dollars in Paris (I think he mentioned $5,000,000 but his subsequent cable asking us to convert $8,000,000 of his gold into dollars would indicate that his sales were in the neighborhood of the latter figure). As far as they could judge the sudden change in the market was due to the fact that French relations with Italy had become very unpleasent. " had, of course, in mind the scene in yesterday's Chamber of Deputies in Rome when after a speech by Ciano the Deputies staged a demonstration clamoring for the realization of Italy's as yet unsatisfied national aspirations in Nice, Savoy, Corsica and Tunisia. " escribed the sudden outbreak to the fact that the French Government is offering naturalisation in Tunisis to Italian Jews who want to leave Italy. Later on in the day, Bolton said, the demand for dollars dried up somewhat and the sterling rate recovered to about 4.68 where the market seemed to be steady at the moment he spoke. Their squeese, he thought, was beginning to take effect with 3 months dollars now up to 2 cents. People like Kleinwort, Bankers Trust, Regraded Uclassified C. 1.2.60M.0.38 26 FEDERAL RESERVE BANK OF NEW YORK FICE CORRESPONDENCE DATE December 1, 1928. CONFIDI ITIAL FILES SUBJECT: TELEPHONE CONVERSATION WITH M L. 1. Knoke BANK OF ENGLAND. 2 Swiss Bank Corporation, Lazard and others were all trying to buy forward dollars without success. The big naturities had not really started running off yet and we should be able to see the effect better towards the beginning of next week. The British Treasury had given Washington en outline of the steps contemplated in London and had pointed out that this was, of course, purely of 8 temporary character and could last only during the present conditions. They had asked the clearing banks not to refuse any forward business but if they received orders to execute them in the market rather than to use their own means for financing such sweps. I referred to our cable of last night offering to give them gold against our operations of the day at the approximate equivalent of the sterling rate obtained by us on our sterling sales rather than at his gold points. Bolton stated that he appreciated the gesture and that it was extremely considerate of us but hoped that we did not feel that " had created a precedent that we would have to stick to. Meanwhile, everybody was very happy about the set- up and thankful to us. I stated that the next renewal of our weekly gold order would be at what we now figured to be the exact shipping point from London to New York, that 15, 34.76 1/4 instead of 84.75 as heretofore. Incidentally, 24.76 1/4, Bolton said, was exactly the point according to their calculations. I think Bolton also appreciated Regraded Uclassified ISC 3.2 60M-6-38 27 FEDERAL RESERVE BANK OF NEW YORK FICE CORRESPONDENCE DATE December 1, 1938. CONFIDI TIAL FILES SUBJECT: TELEPHONE CONVERSATION WITH M L. 1. Knoke BANK OF ENGLAND. 8 this step of ours; he added that as long as he had gold in New York he would, of course, use that rather than fill us up with gold in London. LWK:KW Regraded Uclassified 28 December 1, 1938. 2:43 p.m. HMJr: Hello. Operator: Mr. Barton. Go ahead. HMJr: Hello. Leroy Barton: Hello. HMJr: How are you? B: Fine, Mr. Secretary. HMJr: Barton? B: Yes, sir. HMJr: I asked for the Admiral, he's up on the Hill. Miss Ann Baker made an investigation for me of the work done by a contractor in the planting around the Poughkeepsie Post Office. E: Yes. HMJr: And she found that the fellow did not live up to his contract. Now what I want 18, I want you to find out how many other jobs he did for us, the same contractor, see? B: All right, sir. HMJr: And then I want Miss Baker employed to investigate all the other work that he did, Bee? B: Yes, sir. HMJr: Is it clear? B: Yes. HMJr: Let's say that contractors Smith and Smith did the job at Poughkeepsie, well she found and they agree over there that his work, he didn't live up to his contract. Now I want to know how many other jobs the same con- tractor did for us, landscape fellow, and I want Miss Baker employed to go and visit all the jobs that he did and compare them against the specifications and see whether he cheated as badly on the others as he did at Poughkeepsie. B: All right. How far back would you go? Regraded Uclassified 29 - 2 - HMJr: Oh, well I'd 80 - B: About four years? HMJr: What? B: About four years? HMJr: No. Well let's go back - well let's take, let's - I don't know - it depends on how many he did, I don't think I'd go back more than two years. B: Two years. All right, sir. HMJr: What? B: All right. HMJr: And I wouldn't - I would say this, I'd put it this way, if they'd examine three other Jobs that he did. B: That makes it HMJr: If he's done three other jobs I'd examine three other jobs that he's done. B: Yes. HMJr: And frankly if I find that those are phoney then I'm going to have a complete investigation of the whole landecaping. I think there's something lousy in the landscaping department. I think there's something crooked there the way it looks to me. I'm very much upset about it. B: I'll get a hold of it and - HMJr: Take a look at Ann Baker's report and then - what it said. Now why do I have to employ somebody from the outside. B: All right. HMJr: There's something - there's something radically wrong in the landscape end of Procurement, and I'll start - if this contractor had three other jobe I want her to do those, and then if those aren't right, I'm going to have the whole thing examined. Regraded Uclassified 30 - 3 - B: All right, sir. HMJr: will you give it your personal interest? B: Yes. HMJr: And tell Admiral Peoples about it. B: Do it right away. HMJr: Thank you very much. B: All right, sir. Goodbye. Regraded Uclassified CORRECTED COPY, page 1. 31 PARAPHRASE OF TELEGRAM RECEIVED FROM: American Embassy, Paris, France DATE: December 1, 1938, 4 p.m. NO.: 2033 Today on the exchange market trading has been very active, with france being in large demand. The present rate for sterling is 178.20, at rates varying from 178.32 to 178.20 the fund has again been able to obtain substantial amounts of sterling. During the morning it acquired 2,900,000 pounds. The dollar-sterling rate has varied between 4.69 at opening and 4.67-5/8, the rate at present. One month forward sterling rate ranges between ten and six- teen centimes, and one franc for three months; following this movement the dollar-franc rate has been erratic, Our market contact has told us that the fund is controlling the present rate. Profit taking was in evidence on the security market today, showing a less favorable tendency. There are no important changes in the bank statement for November 24 which was issued today. No change in the gold reserves is shown; the portfolio increased by 562,000,000; there was a decrease of 500,000,000 in thirty day advances, deposits are up 340,000,000, and there was a decrease in note circulation of 550,000,000. Total of 3,915,000,000 for Treasury account. Gold coverage ratio moved up to 60.21 from the former ration of 60.15. General feeling here is one of profound relief, satis- faction and quiet optimism, as a result of the very important success of the Government yesterday in enforcing law and Regraded Uclassified 32 PARAPHRASE OF TELEGRAM RECEIVED FROM: American Embassy, Paris, France DATE: December 1, 1938, 4 p.m. NO.: 2033 Today on the exchange market trading has been very active, with francs being in large demand. The present rate for sterling is 178.20; at rates varying from 178.32 to 178.20 the fund has again been able to obtain substantial amounts of sterling. During the morning it acquired 2,900,000 pounds. The dollar-sterling rate has varied between ten and sixteen centimes and one franc for three months; following this movement the dollar-franc rate has been erratic. Our market contact has told us that the fund 1e controlling the present rate. Profit taking was in evidence on the security market today, showing a less favorable tendency. There are no important changes in the bank statement for November 24 which was issued today. No change in the gold reserves is shown; the portfolio increased by 562,000,000; there was a decrease of 500,000,000 in thirty day advances, deposits are up 340,000,000, and there was a decrease in note circulation of 550,000,000. Total of 3,915,000,000 for Treasury account. Gold coverage ratio moved up to 60.21 from the former ratio of 60.13. General feeling here is one of profound relief, satis- faction and quiet optimiem, as a result of the very important success of the Government yesterday in enforcing law and Regraded Uclassified 33 - 2 - order and because the strike was practically a complete failure. The Government is urged in the financial press to take advantage at once of the opportunity held out by the prestige which it gained, and to carry on its recon- struction program energetically. END MESSAGE. WILSON. EA:LWW - Regraded Uclassified 34 December 1, 1938. 4:10 p.m. Operator: Go ahead. HMJr: Hello. Thomas Parkinson: Hello Mr. Secretary. HMJr: How are you? P: Fine, thank you. I just got back from the President's meeting and found your note. HMJr: Right. We're going to sell seven hundred million dollars worth of Government merchandise on Monday. P: So I hear. HMJr: And I wondered how you felt about it. P: Well, we're in need of just such merchandise. HMJr: You do. P: Yes. HMJr: Well, we're kind of thinking of 8 two and three quarter long bond and we haven't gone much beyond that, I mean it'll be - we'll have something else, but we don't know yet what. P: I see, How long? HMJr: 60.65 that's what it looks like tonight. P: I see. With the usual normal tax exemption. HMJr: The usual. P; Yes. HMJr: Yes. P: Well, such 18 our condition that we'll have to subscribe to most anything you offer us. HMJr: You would. P: Yes. Regraded Uclassified - 2 - 35 HMJr: About what would you need, I mean not the way, what you put in for subscription, but about what do - how many would you want approximately? P: We'd be delighted to get about fifty million. HMJr: You would. P: Yes. HMJr: I Bee. Would 6. nine year two interest you? P: Nine year two. Yes. HMJr: It would. P: Yes. More than the five year tax exempt. HMJr: It would. a: Yes. HMJr: Well I mean would you, for instance if we offered both a nine year two and a two and three quarters 60.65, would you subscribe to both? P: Yes. HMJr: Would you take, what, about twenty - P: I think if you - I think if you made it - I think the banks would probably take that, HMJr: The nine year two. P: Yes. HMJr: Which would be more preferable to your company, the two and three quarter long or the nine year two? P: I think I'd prefer the nine year two. HMJr: The nine year two. P: Yes. HMJr: Uh-huh. P: But only on that old theory that some day you've got to come around to giving us a taxable three per cent coupon. Regraded Uclassified 36 - 3 - HMJr: I see. P: I don't want to load up too much with long terms under three. HMJr: I see. P: But we need the investments. HMJr: But the nine year two is a little bit more attractive to you. P: Yes I think BO, for us. HMJr: But if we offered both you'd take both. P: Yes. HMJr: Uh-huh. P: If I were in your position, if you don't mind my saying 80, I'd offer all three. HMJr: That 18 what? P: The five year - HMJr: The five year, the nine year and the long two and three quarter. P: Yes, this 1e going to be a pretty large amount you know. HMJr: It's a billion seven. P: Yes. HMJr: Yes. P: And we'd all be happy if it's thoroughly successful. HMJr: Yes, well it's got to be. P: Yes, that's it. HMJr: It's got to be. P: That's it. Regraded Uclassified 37 - 4 - HMJr: Well, that's what I want to talk to you about. P: Well I think that you can get away with that if your rates are as you always have made them, adjusted to the markets. HMJr: Yes. We can have them 80 that they'll sell at a comfortable premium. P: Well sir, we'll be on your list. HMJr: All right. Thank you 80 much. P: Not a bit. HMJr: If you come to Washington let me know, I'd like to have you have lunch with me. P: I'd like a lot to see you even for a moment. I'll do that. HMJr: Well, when you come down, let me know. P: I'll do that. HMJr: Thank you 80 much. P: Thank you. Goodbye. Regraded Uclassified CABLE 38 From: Bankers Trust Co., N. Y. London Office Date: December 1, 1938 DE CASTELLANE REPORTS CONTROL TOOK IN L2,000,000 THIS MORNING THIS AFTERNOON EXCHANGE MARKET VERY QUIET BOURSE WEAKER. ITALIAN DEPUTYS OUTBURST YESTERDAY CREATED UNFAVORABLE IMPRESSION. NEW FRENCH AMBASSADOR so FAR RECEIVED COLD RECEPTION FROM ITALIAN GOVERNMENT. ITALIAN CHARGE D'AFFAIRES IN PARIS DESCRIBED DEMONSTRATION AS NONSENSE AND CLAIMS ITALY'S ONLY ASPIRATION END SPANISH WAR. RELATIONS BETWEEN POPE AND FASCIST GOVERNMENT VERY UNSATISFACTORY. CHAMBER WILL PROBABLY MEET DECEMBER 9TH DALADIER'S POSITION DEFINITELY STRENGTHENED AND MAJORITY NOW ALSMOST ASSURED. WHILST PROBLEMS CONNECTED WITH EXTERNAL SITUATION STILL SERIOUS GENERALLY BELIEVED CORNER TURNED. LIQUIDATION LONG DOLLARS POSITIONS SEEMS ENDING AND SINCE NOON UNDERTONE DOLLAR RATHER WANTED. FORWARDS WANTED. DEMAND FOR FRENCH FRANCS ALSO SLOWING DOWN. FORWARDS INCLINED BE OFFERED. CONFIDENTIAL Regraded Uclassified 39 REB PLAIN Shanghai via N. R. Dated December 1, 1938 Rec'd 8:28 p. m. Secretary of State, Washington. 1456, First. November thirtisth Chungking. Concerning Admiral Oikawa's memorandum to senior Naval officer concerning movement of foreign naval VESSELS on the Yangtze. SHANGHAI TIMES commenting aditorially points out that Admiral Oikawa's memorandum leaves no doubt that the Yangtze will remain closed so long as Chinese resistance continues but EXPRESSES the opinion that is "a clear military duty of the Japanese to safeguard the arteries of communication which they have opened." The paper concludes that the foreign powers clear cut issue which must bE met either by concrete opposition or recognition of Japan's point of view. The SHANGHAI EVEVING POST and MERCURY described the Japanese Admiral's memorandum and the recent statement reported to have been made by the Japanese Vice-Minister of War as "a drive against foreign neutrality in China" and states that apparently the only way any foreign country can preserve its rights in China is bow before Japan. The Regraded Uclassified 40 REB 2-#1456, From Shanghai, DEC. 1 The CHINA PRESS remarks that the Vice-Minister of War has neither wasted nor minced words regarding Japan's atti- tude toward Great Britain while Oikawa has reaffirmed Japan's decision to keep the Yangtze closed. This journal states further that because of the inactivity and lack of co-operation among the democratic countries, Japan has gathered sufficient courage to speak out her mind regarding British and French interests. It concludes with the hope that these developments will stir Great Britain to firm action Either alone or together with other powers similarly situated. REPEATED to Peiping, Chungking Hankow. GAUSS ROW Regraded Uclassified 41 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION the DATE December 1, 1938 TO Secretary Morgenthau PROM Mr. White Subject: Meeting of the National Munitions Control Board, November 30, 1938, 2:30 P. M. The meeting was called to consider the procedure govern- ing the issuance of licenses for the exportation of tin- plate scrap during the calender year 1939. However, a repre- sentative of one of the de-tinning plante requested to appear in person before the Board in order to make a statement before a final decision was made on the procedure for the coming year. The Board voted not to hear the representative's testimony but to give him and all other interested concerns an opportunity to present additional written statements to the Board before a final decision WAB reached. The meeting was adjourned for two weeks, during which time an opportunity would be given for the presentation of statements by various interested concerns. A copy of this is being sent to Mr. Oliphant and Mr. Taylor. Regraded Uclassified 42 TREASURY DEPARTMENT AA INTER OFFICE COMMUNICATION DAVEDecember 1, 1938 TO Secretary Morgentheu FROM Hermen Oliphant For your information - The public hearings of the Monopoly Committee opened this morning with a full attendance and a large crowd. After an intro- ductory statement by Senator O'Mahoney, Lubin took the floor, and, with pointer in hend, stated the meaning of a multitude of charts on how our economic machine has not been operating at 8. rate sufficient to absorb the unemployed. He did not go into the reasons, but his exposition of the facts was impressive. The large crowd was silent with intent attention. The etmosphere of the whole proceeding was that of the first lecture in a first class university course in elementary, descriptive economics. Peoples was present during the forenoon, and was to attend during the afternoon in my absence. xx0 Regraded Uclassified 43 Regraded Uclassified Thursday afternoon, December 1st, the Secretary of the Treasury and Mrs. Morgenthan will be at home to officials of the Treasury Department, and all allied Bureaus. Two teas will be given, one from five to six, the other from six to seven, p.m. Receiving with the Secretary and Mrs. Morgentham will be Under- secretary of the Treasury and Mrs. John W. Hamen, Assistant Secretary of the Treasury and Mrs. Wayne Chatfield Taylor, Assistant Secretary of the Treasury and Mrs. Stephen 3. Gibbons. Those who will assist at the ton table include Mrs. H. J. Analinger. Mrs. Blair Banister, Mrs. Daniel V. Bell, Mrs. Preston Delano, Mrs. Eugene S. Duffield, Mrs. Herbert X. Gaston, Mrs. George 0. Bass, Mrs. A. W. Hall, Mrs. Guy T. Helvering, Mrs. Archie Lochhead, Mrs. Wa. H. McReynolds, Mrs. James H. Moyle, Mrs. Herman Oliphant, Mrs. Thomas Parran, Mrs. 0. J. Peoples, Mrs. Nellie Taylos Ross, Mrs. R. R. Wassche, Mrs. Harry D. White, Mrs. P. J. Wilson. Generally assisting during the course of the afternoon will be Mrs. Norman Klots, Miss Nell Channeey, Miss Mary R. Switser, Miss Isabella S. Diamond, and Mrs. Arthur 1. Forbush. ADDRESS OFFICIAL COMMUNICATIONS TO 4 THE SECRETARY OF STATE WASHINGTON, D.C. DEPARTMENT OF STATE WASHINGTON December 1, 1938 My dear Mr. Secretary: I acknowledge with thanks the receipt of your letter of November 30 forwarding for my confidential information copies of various memoranda and maps which have been furnished you by Mr. K. P. Chen. Your thoughtfulness in sending me copies of this material 1s very much appreciated. A Sincerely yours, Kalls The Honorable Henry Morgenthau, Jr., Secretary of the Treasury. Regraded Uclassified 45 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE December 1, 1938 TO Secretary Morgenthau FROM Mr. Haas With a total offering divided among three differ- ent securities, we would estimate the probable yield bases and market prices thereof substantially as follows: (1) 1-1/8 percent 5-year note, probable yield basis about #95, probable premium 27/32. (2) 2 percent 81-year bond, probable yield basis about 1.80 to 1.85, probable premium 1-6/32 to 1-18/32. (3) 2-3/4 percent 22-27 year bond, prob- able yield basis 2.65, probable premium 1-21/32. Regraded Uclassified An 46 TREASURY DEPARTMENT RO INTER OFFICE COMMUNICATION DATE December 1, 1938. TO Mr. Oliphant FROM Mr. O'Connell At by request, this afternoon Mr. Henderson asked stold box Dr. Lubin the following question: to has the "Did I understand you to 3ay this morning that in your opinion we have never produced too much wheat or cotton to satisfy our real needs?" question to asked Dr. Lubin's reply was substantially to the effect that he had not been speaking merely of whest and cotton, but that he did not think we could suffer from over-production in any field as long as there were people in the country who did not get an adequate share of the goods produced. In reply to 8. question from Senator Borah as to whether or not he thought that that situation existed to-day, Dr. Lubin answered "of course". This afternoon's hearing was uniformly quiet and followed along the same general lines as this morning, with Senstor King asking most of the questions. The Senator attempted to develop to some extent the thesis that our sconomic system did not break down in 1929, but rather that due to some certain external causes, particularly world indebtedness, it was prevented from functioning in & satisfactory manner. He also suggested the importance of speculation prior to 1929 88 being & major contributing cause of the depression. While 5 chart of cement production was under discussion Dr. Lubin pointed out that in recent years 50 per cent or more of all of the cement produced was for public works. Senator Borah asked Dr. Lubin whether there had been any reduction in cement prices during the period shown by the chart, to which Dr. Lubin replied, "You will have to speak to Mr. Oliphant about that." Dr. Lubin finished this afternoon, and Dr. Thorp goes on at 10.30 tomorrow morning. goer Regraded Uclassified 47 TREASURY DEPARTMENT he 11-28-38 INTER OFFICE COMMUNICATION DATE DEC 1 1938 TO Secretary Morgenthau FROM Herman Oliphant This opinion is for your files. Copies are being sent to p.103 Messrs. Hanes, Delano, Duffield, Upham, and Gaston. Regraded Uclassified 8 GENERAL COUNSEL TREASURY DEPARTMENT WASHINGTON NOV 2 8 1936 My dear Mr. Secretary: Consideration has been given to the authority for and the operation of Department Circular No. 595, issued by you on September 13, 1938. That Circular provides: "The operating control of, and responsibility for, the legal work of the Office of the Comptroller of the Currency is hereby tranaferred to the General Counsel for the Department of the Treasury. Respon- sibility for decisions on all legal matters, includ- ing matters of general legal policy, as well as on any legal aspects of specific Cases or instances shall rest with the General Counsel or those he designates for this work. "The Secretary of the Treasury shall pass upon all changes in the legal staff and in their salaries, upon the recomendation of the General Counsel. The General Counsel will be responsible for the assign- ment of work to various members of the legal staff and for other matters mentioned in Department Circu- lar No. 519, dated June 20, 1934. I am of the opinion that the Circular is in every respect within your legal authority ae Secretary of the Treasury. Stated in summary form, my conclusions are as follows: I. The Secretary of the Treasury has control over the administrative functions of the Comptroller of the Currency. This appears from: A. The debates in Congress relating to the legislation creating the office of the Comptroller of the Currency and establish- ing a system of national banks; B. The legislation itself, the interpretations thereof, and the interpretations of parallel laws. Regraded Uclassified 49 - 2 - II. The supervision and control of the personnel and the work of the legal staff are a part of the general regulatory powers of the Secretary. These powers include: A. The re-arrangement of the legal machinery of the Department and the general supervision of legal activities; B. The appointment of attorneys or the approval thereof. III. The foregoing propositions are fortified by a consideration of the statute creating the Office of the General Counsel for the Department of the Treasury. I. A. The Congressional debates which preceded the passage of the aot creating the office of the Comptroller of the Currency reveal the clear intention of Congress to invest substantial control over the functionings of that office in the Secretary of the Treasury. During the course of these debates there was a persistent effort made by a group in the House of Representatives to secure the independence of the proposed bureau from the authority of the Secretary. Repre- sentatives Brooks and Pruyn, the leaders of the opposition, did suc- ceed in having the House strike out a provision which made the appro- val of the Secretary a condition to the appointment of the Comptroller by the President. Thereafter, amendments designed to strike from the bill the various provisions for supervision and control by the Secre- tary were regularly introduced and as regularly rejected. The debates Regraded Uclassified 50 - 3 - make it certain that the question as to what should be the relation between the Comptroller and the Secretary was clearly presented to Congress and that Congress deliberately chose to make the Comptroller subordinate to the Secretary and subject to a considerable extent to control by the Secretary. Ultimately the House acceded to the Senate Bill and approved a provision making the Secretary's recommendation a factor in the appointment of the Comptroller. The understanding of Congress as to the relation which would be created between the two officers appears from the following excerpts from the debates: Rep. Pruyn in (1864) 64 Cong. Globe 1272: "I think that sufficient prominence and sufficient position is not given by this bill to the head of this depart- ment [Comptroller of the Currency]. It should be made, not & bureau of the Treasury Department--the Treasury has enough to attend to already--but it should be made B separate administrative Department of the Government, and it should be located at the commercial center of the Government, at New York, and not at Washington." Rep. Brooks (objecting to the requirement of the ap- proval of the Secretary in the case of the organiza- tion of banks, etc.) (p. 1288) "I suggest that, especially under existing circumstances, that 1s & power which ought not to be lodged in the Secretary of the Treasury, however safe it might be to lodge it in the Comptroller of the Currency. Indeed, it coems to me that the whole bill, undesignedly with- out doubt, concentrates extraordinary powers in the hands of the Secretary of the Treasury. This is a high and dangerous power to give to any one man, par- ticularly to the Secretary of the Treasury at this moment, standing in the peculiar relation to the country that he does." Regraded Uclassified E1 Rep. Stevens (p. 1350) pointed out that the "whole bill goos upon the supposition that the comptroller- ship is a part of the Treasury Department." B. The Act was passed on June 3, 1864, and section 1, 13 Stat. 99, provided as follows: .... there shall be established in the treasury department a separate bureau, *. The chief officer of the said bureau shall be denominated the comptroller of the currency, and shall be under the general direction of the Secretary of the Treasury." (Underscoring supplied.) The above-quoted language was reenacted with slight grammatical changes as section 324 of the Revised Statutes of 1873, and although that sec- tion has been amended, the language above quoted is substantially that found in U.S.C. title 12, sec. 1. The following interpretation of this provision is contained in Frelinghuysen V. Baldwin, (D. N.J. 1882) 12 Fed. 395, 396: "The Secretary of the Treasury is the head of the Treasury Department. Section 233 [U.S.C. title 5. sec. 244]. By section 324 [U.S.C. title 12, sec. 1] the Comptroller of the Currency is the chief officer of a bureau of the Treasury Department, charged with the execution of all laws passed by Congress relating to the issue and regulation of a national currency, secured by United States bonds. This officer, in Cases of the insolvency of the association, appoints & receiver, through whose instrumentality the assets are turned into the Treasury of the United States; but the Comptroller performs this, as well as all other duties, under the general direction of the Secretary of the Treasury." (Underscoring supplied.) In Bank of Bethel V. Pahquioque Bank, (U.S. 1871) 14 Wall. 383, 394, the court refers to: "the conceded fact that such associations (national banks) are created by an Act of Congress and that Regraded Uclassified 52 - 5 - they are instruments of the National Government intrusted with the power of carrying on the busi- ness of banking and of employing and circulating Treasury notes as & National currency, subject to the supervision and direction of the Comptroller of the Currency and of the Secretary of the Trea- Bury." (Underscoring supplied.) Other statutes containing similar language have been sin- ilarly interpreted. In the case of Knight V. U.S. Land Association, (1891) 142 U.S. 161, the authority of the Secretary of the Interior to set aside a certain survey and order a new survey was contested, and in deciding the issue it was necessary for the court to determine the meaning of a provision which placed the Commissioner of the Gen- wral Land Office "under the direction of the Secretary of the Interior." The court's determination is contained in the following language (at pages 177-178): "The phrase 'under the direction of the Secre- tary of the Interior' as used in these sections of the statutes, is not meaningless, but was intended as an expression in general terms of the power of the Secretary to supervise and control the extensive op- erations of the Land Department of which he is the head. It means that in important matters relating to the sale and disposition of the public domain, the surveying of private lands claims and the issuing of patents thereon, and the administration of the trusts devolving upon the government, by reason of the laws of Congress or under treaty stipulations, respecting the public domain, the Secretary of the Interior is the supervising agent of the government to do justice to all claiments and preserve the rights of the people of the United States." Continuing, the court quoted (at page 178) with approval the following statement made by the Secretary of the Interior: Regraded Uclassifi 53 - 6 - "The statutes in placing the whole business of the Department under the supervision of the Secre- tary, invest him with authority to review, reverse, amend, annul, or affirm all proceedings in the De- partment ..., The mode in which the supervision shall be exercised in the absence of the statutory direction may be prescribed by such rules and regu- lations as the Secretary may adopt ... The rules prescribed are designed to facilitate the Department in the despatch of business, not to defeat the super- vision of the Secretary It pointed out further that the powers of direction and supervision are given in general terms to the Secretary, in order to obviate the necessity of a statutory particularization of sach duty and power rest- ing with hrim. See also Stoneroad V. Stoneroad, (1895) 158 U.S. 240. The interpretation of this same provision was again involved in Orchard V. Alexander. (1895) 157 U.S. 372. In that case, the court said, at page 385: "Nevertheless the section contemplates that the proceedings shall not be wholly withdrawn from the control of the Secretary, and implies that they are but part and parcel of the general administrative system for the disposal of public lands. While it is within the discretion of Congress to segregate any particular step in the proceedings ... from the scope of the general system, and place it outside of and beyond any supervising control of the higher of- ficers, yet the courts should be satisfied that the language indicates an intention on the part of Con- gress 80 to do before any such break in the harmony of the system is adjudged From the interpretations contained in these decisions there would appear to be little doubt that the Buresu of the Comptroller is marely one division in the Treasury Department, and that the Comptroller is a subordinate of the Secretary quite as much 89 division and bureau Regraded Uclassified 54 - 7 - chiefs in the various executive departments are subordinates of the heads of those departments. Any other conclusion would do violence to the provision that the Bureau of the Comptroller of the Currency is a bureau of the Treasury Department, and would nullify that pro- vision which gives the Secretary "general direction" over the Comp- troller in the performence of his duties. Since, therefore, it may be taken 88 established that the Secretary has some control over the activities of the Comptroller, it becomes important to define the nature of that control. In an opinion to the President by Attorney General Wickersham, (1912) 29 Op. Atty. Gen. 555, it was said (at page 562): "It is true that while the Comptroller is per- forming quasi-judicial functions his discretion can not be controlled by you (Butterworth V. Hoe, 112 U.S. 50), yet this is not so of all his duties, other- wise the provision in the statute that he perform his duties under the general direction of the Secretary of the Treasury would amount to nothing. Certainly, broad general lines of policy may be laid down by you to be followed by the Comptroller; and you may direct him to malce inquiries along certain lines and to consider the data thus acquired in determining whether individual banks are in sound condition and are obeying the exist- ing law, and whether amendments thereto should be recommended." (Underscoring supplied.) Likewise, in Butterworth V. Hoe, (1884) 112 U.S. 50, the court, while recognising and applying a distinction between the "quasi- judicial" and executive or administrative functions of bureau officers, impliedly concedes that the head of & department, under his general powers of supervision, may direct the latter type of activity. (Fages 56 and 67.) Regraded Uclassified 55 8 1 I The statements contained in these authorities with refer- ence to the "quasi-judicial" functions of the subordinate bodies are of no relevance here; the important fact in each is the recognition of the control over bureau chiefe which rests with the heads of de- partments in connection with executive or administrative functions. II. The question may now be conveniently rephrased to read 8.8 follows: Is the action of the Secretary in issuing Department Cir- cular No. 595 anything more than an exercise of this recognized right to control administrative functions? Under the Circular, the legal staff and the legal work of the Bureau is transferred to the office of the General Counsel, and the power to appoint and remove legal personnel 1s vested in the Secretary. In other words, there has taken place an intradepartmental rearrangement of legal machinery which coordinates the legal work of the Department and promotes its efficiency. A. Upon analysis it appears that this redistribution of work involves nothing more than an administrative question. Before the issuance of the Circular, the Comptroller. prior to reaching a final determination in any case lying within his jurisdiction, was advised by the legal staff of his bureau. Under the new arrangement, the Comptroller is advised by the legal staff of the General Counsel. Regraded Uclassified 56 - 9 - The power of the Secretary to effect this redistribution is expressly recognized in section 161 of the Revised Statutes of 1873 (U.S.C. title 5, sec. 22), which provides as follows: "The head of each department ie authorized to prescribe regulations, not inconsistent with law, for the government of his department, the conduct of its officers and clerks, the distribution and performance of its business, end the custody, use, and preservation of the records, papers, and prop- erty appertaining to it." (Underscoring supplied.) The Attorney General, in (1903) 24 Op. Atty. Gen. 697, interpreting this provision in an opinion addressed to the Secretary of the Treasury, has said (at page 698): **** I do not think that Congress, in en- trusting you with certain machinery to be employed in executing the laws, desired to restrict your freedom in designating the divisions of what was of course intended to be an organized Executive Department and not a mere gathering together of distinct institutions." B. That the appointment and removal of members of the legal staff is the exercise of an administrative or executive func- tion has been frequently held by the courts. Myers V. United States, (1926) 272 U.S. 52, 161 ("The power to remove inferior executive of- ficers, like that to remove superior executive officers, is an in- cident of the power to appoint them, and is in its nature an execu- tive power."); State V. Denny. (Ind. 1889) 21 N.E. 252; State V. Rose, (Wis. 1909) 122 N.W. 751; People V. Griffing, (App. Div. 2nd Dept. 1915) 152 N.Y.S. 113. Such officers are employed in the administra- tive branch of the Government, and their appointment or discharge is the exercise of an administrative power. Regraded Uclassified 57 - 10 - In the absence of an express provision for the appointment of particular subordinate officers of a bureau, the authority to appoint such officers will be presumed to be in the head of the da- partment rather than in the head of the bureau. Nishimura Eldu Y. United States, (1891) 142 U.S. 651, 663. The same thing undoubtedly is true with respect to the fixing of salaries. Having those powers as head of the Treasury Department, the Secretary of the Treasury may, of course, require the recommendation of the General Counsel. In those limited situations with respect to which there are specific statutes, the legal position is substantially the same. Only three such statutes have been found. Section 328 of the Revised Statutes of 1873 (U.S.C. title 12, sec. 8), provides: "The Comptroller of the Currency shall employ, from time to time, the necessary clerks, to be ap- pointed and classified by the Secretary of the Trea- sury, to discharge such duties as the Comptroller shall direct." (Underscoring supplied.) Section 5240 of the Revised Statutes of 1873, as amended (U.S.C., Sup. III, title 12, sec, 481), as it appears in the Code, provides, in part, as follows: "The examiners and assistant examiners making the examinations of national banking associations and affiliates thereof herein provided for and the chief examiners, reviewing examiners and other persons whose services may be required in connection with such examinations or the reports thereof, shall be employed by the Comptroller of the Currency with the approval of the Secretary of the Treasury: (Underscoring supplied.) Regraded Uclassified 59 - 11 - It will be observed that both of those statutes expressly refer to the power of the Secretary of the Treasury. Since the first statute expressly gives the power of appointment and classification to the Secretary. the language, "The Comptroller of the Currency shall employ," is intended to direct the Comptroller to make use of the services of persons who are appointed by the Secretary. There can, therefore, be no question about the Secretary's power to appoint and fix salaries, insofar as that statute refers at all to members of the legal staff. The second statute expressly requires the approval of the Secretary of the Treasury for the employment of the persons man- tioned, including, by clear implication, the fixing of salaries. Thus, with respect to persons employed under that statute, the Secretary clearly may "pass upon all changes in the legal staff and in their salaries" and may do 80 "upon the recommendation of the General Coun- sel", as provided for in Department Circular No. 595. Section 209(b), title II (providing for National Agricul- tural Credit Corporations), of the Agricultural Credits Act of 1923, 42 Stat. 1467 (U.S.C. title 12, seos. 9, 9(a)). provides, in part, as follows: "The Comptroller of the Currency is hereby author- ized to employ such additional examiners, clerks, and other employees as he deems necessary to carry out the provisions of this title and to assign to duty in the office of hie bureau in Washington such examiners and assistant examiners as he shall deem necessary to assist in the performance of the work Regraded Uclassified 59 - 12 - of that bureau. The salaries of the Deputy Comp- trollers of the Currency and of such additional examiners, assistant examiners, clerks, and other employees shall be fixed in advance by the Comp- troller of the Currency." It should be noted at the outset that that statute has a very limited application, vis., to persons employed to carry out the provisions of law relating to National Agricultural Credit Corporations. Moreover, section 77 of the Farm Credit Act of 1933, 48 Stat. 272 (U.S.C. title 12, sec. 1151a), provides: "After the date of the enactment of this Act, no national agricultural credit corporation shall be formed under the provisions of the title II of the Agricultural Credits Act of 1923." It is understood that all the National Agricultural Credit Corporations have been liquidated except one. The liquidation of that one has been almost completed, and it involves no legal work. Thus, section 209(b) of the Agricultural Credits Act of 1923 1s no longer applicable to mem- bers of the staff doing the legal work of the Office of the Comptroller of the Currency. In any event, appointments under that section had to be ap- proved by the Secretary of the Treasury. Section 1 of the Act of June 30, 1876, 19 Stat. 63 (U.S.C. title 12, sec. 191) and section 5234 of the Revised Statutes of 1873, as amended (U.S.C. title 12, sec. 192), authorizing the appointment of receivers in certain cases by the Comp- troller, do not refer to the Secretary. In spite of this omission, the conclusion resulting from a line of holdings is that the approval Regraded Uclassified CO - 13 - of the Secretary is a prerequisite to the valid appointment of re- ceivers. Frelinghuysen V. Baldwin, (D. N.J. 1882) 12 Fed. 395; Price V. Abbott, (c.c. D. Mass. 1883) 17 Fed. 506; United States V. Schlierholz, (E.D. Ark. 1905) 137 Fed. 616; Gibson V. Peters, (1893) 150 U.S. 342; In re Chetwood, (1897) 165 U.S. 443; Auten V. United States National Bank, (1899) 174 U.S. 125; United States V. Weitzel, (1918) 246 U.S. 533. The question in these cases was whether re- ceivers are "officers of the United States" for the purpose of juris- diction of the lower Federal courts, and it was held that appointments of receivers are to be presumed to have been made with the concurrence or approval of the Secretary, and, therefore, are made by the head of & department within the meaning of Article 2, section 2, of the Con- stitution. Such a presumption would be unjustified except upon the ground that the Secretary had the power to approve or disapprove ap- pointments. The theory of the courts apparently is that powers of this nature vested in the Comptroller are modified by section 324 of the Revised Statutes of 1873, 88 amended (U.S.C. title 12, sec. 1), which provides, as it appears in the Code, as follows: "There shall be in the Department of the Trea- sury B. bureau charged with the execution of all laws passed by Congress relating to the issue and regula- tion of a national currency secured by United States bonds and, under the general supervision of the Board of Governors of the Federal Reserve System, of all Federal reserve notes, the chief officer of which bureau shall be called the Comptroller of the Currency and shall perform his duties under the general direc- tions of the Secretary of the Treasury." (Underscor- ing supplied.) Regraded Uclassified 61 - 14 - The same theory applied to employment under section 209(b) of the Agricultural Credits Act of 1923, with regard to salaries as well a.B appointments. Since, then, employment and salaries under this stat- ute were subject to the approval of the Secretary, the same conclusion follows as was reached above in connection with the second statute discussed. It should be observed that the result reached in the fore- going cases leads to the conclusion that the Secretary also has regu- latory powers over administration, since his control over appointments is predicated upon his general supervision of the Comptroller's func- tions and the administration of receiverships is one of these. III. By section 512 of the Revenue Act of 1934, 48 Stat. 758 (U.S.C. title 26, secs. 1720-1726) there was created in the Treasury Department the office of General Counsel. That it was the intention of Congress, in enacting this provision, to include the legal work of the Comptroller's office within the scope of the General Counsel's control and responsibility, clearly appears both from the report of the Committee on Finance of the Senate and the report of the Committee on Ways and Means of the House. The Senate report contains the fol- lowing statement ((1934) Sen. Rep. No. 558, 73d Cong., 2d Sess. 50; to accompany H. R. 7835): Regraded Uclassified 82 - 15 - "The legal activities of the Treasury Depart- ment are now handled by separate, uncoordinated legal units in the various divisions, bureaus, and offices of the Department. A single responsible law officer, having the necessary power, can co- ordinate the activities of these distinct legal units and prevent inconsistency of action, dupli- cation of effort, delays, and waste of public funds." (Underscoring supplied.) é similar statement appears in the House report ((1934) H. R. Rep. No. 704, 73d Cone., 2a Seas. 40; to accompany H. R. 7835) "Section 512. General Counsel for the Trea- sury: At the present time a number of the bureaus and divisions of the Treasury have separate legal staffs. operating independently of each other. Although the law provides for & Solicitor of the Treasury, he is vested with power only over a limited field, not assigned to other legal offi- cers in the Department. There is no responsible legal officer in the Treasury with power to coor- dinate the legal work of these separate groups of lawyers and to prevent waste and duplication of effort among them." (Underscoring supplied.) Section 512, as finally enacted, provided, in part: "The General Counsel enall be the chief law officer of the Department, and shall perform such duties in respect of the legal activities thereof as may be prescribed by the Secretary or required by law." Pursuant to the authority of this section, the Secretary of the Trea- sury, by Department Circular No. 519, of June 20, 1934, provided as follows: "The General Counsel is hereby authorised to perform all duties and functions incident to the administration of the legal activities of the Trea- sury Department, including the signing of letters and approval in my stead of such documents as may come before him in the legal course of his admin- istration of the Legal Division of the Treasury Department, and such other duties as may be assigned to him by me from time to time. Regraded Uclassified 83 - 16 - "All matters relating to personnel in the Legal Division, including recommendations for new appointments, transfers, promotions, or other matters relating to changes in personnel, and all matters relating to the purchase of books and sup- plies for the Legal Division shall be referred to the General Counsel for approval bafore any action is taken thereon." This order of the Secretary placed in the General Counsel's office the active supervision of all Treasury legal matters and re- ferred to the General Counsel the appointment of all personnel in the Legal Division for approval before final action by the Secretary of the Treasury. Since the effective date of this order, the General Counsel has supervised the legal work of the Bureau of Narcotics, the Coast Guard, the Bureau of Customs, the Procurement Division, etc. It seems obvious that the control of the General Counsel was properly extended by the order under consideration, Department Circular No. 595, of September 13, 1938, to the legal business of the Bureau of the Comp- troller of the Currency, since, in its relationship to the Treasury Department, that bureau would seem to occupy a position no different from any of the other bureaus enumerated above. Very truly yours, General Counsel. The Honorable The Secretary of the Treasury. Regraded Uclassified C4 TREASURY DEPARTMENT WASHINGTON December 1, 1938 CONFERENCES IN THE SECRETARY'S OFFICE REGARDING THE DECEMBER 15 PINANCING (The Secretary, Mr. Allan Sproul of the Federal Reserve Bank of New York and Mr. Bell. present.) Mr. Levy, Salomon Brothers and Hutzler 9:15 a.m. The Secretary asked Mr. Levy what he would advise the Treasury to do in connection with the forthcoming financing. Mr. Levy said that he would have three issues, a 2-3/4% bond of 1960-64: a 2-1/2% straight 14-year bond: and B. Treasury note, either an additional issue of the last June notes or B. 4-year note maturing December 15, 1942. He said that the insurance companies will take both the 2-1/2% and the 2-3/4% bonds and the banks will certainly take the 2-1/2e. Mr. Sproul asked him how much there is in the investment market for & 2-3/4% bond. Mr. Levy said it was his opinion that the amount was relatively emall compared with the total investment funds available. He thought the savings banks would take the 2-1/2% bond rather than the 2-3/4% The Secretary asked Mr. Levy if be thought there would be any market trouble in the 2-3/4%. He said absolutely none. Then the Secretary asked him about a 5-year note. Regraded Uclassified 65 - 2 - Mr. Levy said be had not considered B. note at all, but looking over his yield sheet he thought we might want to go to as much 88 1-1/4% for five years; that 1-1/8% would go but it is not quite rich enough, while the 1-1/4% might be considered 8 little too rich. He said a 2-3/4% bond would certainly go and every one would subscribe to it, but there 18 always the question of subsequent redistribution, which makes a bad market for a period of two or three weeks following an issue. The Secretary then asked him if we could sell a 25-30 year bond at 2-3/4%. Mr. Levy did not feel that such a. bond would be certain of success although the insurance companies would take an issue of this kind. He thought it would be much better to reduce the period to 20-24 or 22-25 years. Mr. Sproul asked how much the market would absorb in long- term bonds, whether the market would take as much as one billion dollars of & 2-3/4% issue. Mr. Levy seemed to evade the question and said it was hard to tell, he did not know whether it would go as much as a billion or not. -000= Mr. Aldrich, Chase National Bank 9:45 a.m. The Secretary told Mr. Aldrich that he assumed he had seen the announcement in the morning papers to the effect that the Regraded Uclassified 66 - 3 - Treasury was offering some kind of new security for $700,000,000 in cash and exchange offerings to the holders of the March maturities in the amount of $942,000,000. He said he would like Mr. Aldrich's advice on what would be proper for the Treasury to do, not only from the standpoint of the country but from the standpoint of the banks. Mr. Aldrich said that from his observation the commercial banks would certainly prefer a relatively short-termed obligation. He was quite familiar with the current talk in New York and he was inclined to agree that a three-way proposition is the better course to pursue; that is, a note of some kind, a 7-year bond and B. long- term bond. Às an alternate, the Treasury could certainly get by with a long-term bond and an intermediate bond. He does not feel that the note should be issued. As a matter of fiscal policy he thinks the Treasury should make every attempt to extend the present maturities and get the present heavy debt program in the next five years extended over a much longer period. Be said there seemed to be no question about B. 2-3/4% bond and that a substantial amount of subscriptions for this security will come from insurance companies, while the banks would be heavy sub- scribers in an intermediate bond if one is offered. Mr. Aldrich asked about the deficit. He said be thought that VAs an uncertain factor and when I told him that the latest official Regraded Uclassified 67 - 4 - estimate indicated that the deficit for the current fiscal year would be about $3,985,000,000, the only uncertain factor in that estimate being the additional funds required for the Works Progress Administration program for the period from February 1 to June 30, 1939, he said he thought the figure was too low. Ee felt it would be nearer 41 billion dollars. In reply to hie question as to the estimate of revenues, I told him $5,000,000,00 He seemed surprised and said be had a figure in mind of about 43 billion for revenue. The Secretary asked Mr. Haas to come in and bring the 60- called "bubble charte" which he explained to Mr. Aldrich. They showed that for the first four months of this fiscal year the receipts are about 8% above the estimates and the expenditures about 6% below. Mr. Aldrich then went into & discussion of deficit financing. He said he believed that the responsibility of those who buy Govern- ment bonds and advise others to buy them is about as great as the responsibility of the Secretary of the Treasury in carrying out the fiscal policies of the Administration. With a program of deficit financing and no possibility in sight of a balanced budget, be questioned whether the banks should buy long-term Government's. He said he did not believe in the pump-priming theory and he was quite certain that it had not produced the results which its advocates had promised. He believes that the influx of gold will continue and that there will be some pressure in the next Congress for further Regraded Uclassified C8 - 5 - devaluation of the dollar. These will have a tremendous influence on our economic situation. Mr. Aldrich said he is amazed at the amount of money that continues to flow from abroad. His bank has from 50 to 60 new accounts every month, many of which are opened by German refugees, and sub- stantial amounts of money are constantly being deposited to the credit of these accounts. Foreign deposite with the Chase National Bank today stand at about $256,000,000. Then he went into a rather lengthy discussion of the foreign situation as he viewed it from his trip this fall. He said he had B number of conferences with high government and banking officials and came away with the feeling that it 18 only a question of time until the situation in central Europe will be brought to & crisis, which may result in B. much better situation than has prevailed in the past. He said he was surprised when he got to France to learn that French officials had conferred with German officials on the question of how to handle the French situation. The advice given by the Germans urged the French not to put on any kind of exchange controls because that was the first step that Germany took, which, in the opinion of these officials, later led to the various steps that were taken, namely, regimentation, control of the Jews, control of prices, control of production and prohibition against free speech, all of which in turn led to larger expenditures for national defense. Regraded Uclassified 89 - 6 - Another point stressed was the feeling abroad of every country watching the experiments being made in the United States and the urge on the part of many politiciens over there to adopt many of these experiments. It was his opinion that the United States can not go on indefinitely with deficit financing; that if it does the day is certainly approaching when we also will drift further towards regimentation and control of the whole economic situation, which in turn will have a far-reaching effect upon the European situation, each country following what we are doing, and eventually all will go over the precipice together. He said he assumed that the Secretary was just as worried about the situation as he is and that he probably 1s constantly thinking about it. Ee feels that something will have to be done to stop the very definite trend in this country toward regimentation and control. Mr. Aldrich continued by saying that he realizes the next Congress will have to air ite political views and make some attempt to carry out some of the many political promises made during the last campaign and that there will be a great deal said about Social security programs such as the Townsend Plan and others. However he hopes the Administration will be successful in opposing all of these Utopian schemes. After we got out in the corridor Mr. Aldrich handed me & memorandum covering the December 15 financing. A copy is attached. Regraded Uclassified 70 MEMORANDUM to Mr: Aldrich Re: D. 8, Treasury December Financing The Treasury Department has announced that the December financing will include the sale of $700,000,000 of securities for cash and the refund- Ing of $342,000,000 1 1/2% Notes due March 15, 1939. This latter issue is now selling at approximately 101 18/32, which theoretically establishes the price of at least one of the issues to be offered in the refunding operation. Various opinions are given 8.8 to the types of new issues to be of- fered both for cash and in exchange for the notes to be refunded. Combinations of at least four types of securities are being discussed. 1. A five-year note having a coupon of 1 1/8% or an additional issue of the notes presently outstanding due in four and one- half years having a coupon of 1 1/8%, now selling at 101 6/32 to yield .85%. 2. A 2% bond due in eight or nine years. Bonds optional in seven und one-half years are presently selling at about a 1.87% basis, and bonds optional in nine years at approximately 1.96% This obligation and the issue next described, it is thought, would be in demand on the part of commercial banks. 3. A 2 1/2% bond due in 1952 or 1953. This bond at 100 would com- pare with a 2 1/2% bond due 1952/50, which was sold at 100 in September and is now selling at around 102 to yield 2.30%. The 2 3/4'e due 1954/51 at 103 1/2 now yield 2.42%. 4. A 2 3/4% bond due in the neighborhood of twenty-five years. There is an issue outstanding of 2 3/4's due 1963/58 which was given in exchange in June, 1938, and is now selling at 102 6/32 to yield 2.60%. This type of bond would probably be more suitable for insurance companies. The general discussions of the various combinations of the four above- Ationed securities include a combination of the note issue and the 2 3/4% bonds Rue in about twenty-five years, both of which would be exchangeable for the Issue to be refunded. Another program includes the sale for cash of equal amounts of 2% bonds due in eight years and long 2 5/4% bonds, these two issues to be offered also in exchange for the 1 1/2% notes, with an additional offering on an exchange basis only of 4 1/2 year 1 1/8% notes. A third program would consist of three securities offered for cashi (1) 1 four and one-half or five-year 1 1/8% note, (2) a bond due in fourteen Regraded Uclassified - 2 - 71 years, or in place of this issue a 2% bond due in eight or nine years. As the third part of the program, they could offer a 2 3/4% bond due in approximately twenty-five years. All of these issues would be exchangeable for the 1 1/2% notes due in 1939. I feel that a good program for the Treasury to follow would be to offer for cash four and one-half or five-year 1 1/8% notes and 2 1/2% bonds due in four- teen years. Both of these issues would be offered in exchange for the 1 1/2% notes due March 15, 1939, and this latter issue could also be turned in for the 2 3/4% bonds due 1963/58 which are presently outstanding and sell at 102 1/8 to yield 2.60%. Nov. 30, 1938 Sheldon R. Green Regraded Uclassified 72 - 7 - Mr. Garner, Guaranty Truet Company, 11 a.m. The Secretary asked Mr. Garner what he would do if be were sitting in his chair with respect to the December financing. Mr. Garner said he had given the matter quite a bit of thought and had talked with people in New York, and if he were writing the ticket he would have three issues: (1) e 2-3/4% 1960 - 65 bond (possibly the maturity date could be brought down to 1964 or 1963 and would go better); (2) an 8-1/2 year (June 15, 1947) 2% bond; and (3) a note, possibly 1-1/8% for 5 years. The note, however, is not essential. Mr. Garner said there is a good but somewhat limited demand for long-term bonds. Insurance companies. savings banks and some commercial banks will take the long bond, and no doubt it will be many times over-subscribed as it will command B. premium of from 1-6/8% to 1-3/4%. He feels that the commercial banks will take the 8-1/2 year bond and that it will be largely over-subscribed as it will sell at a premium of from 1-1/2% to 1-5/8%. This latter bond 1a in line with the longer bond and would not throw a larger per- centage of the offering to one or the other. Ee thought the sub- scriptions might be on an even keel. To offer 8. note in connection with this program is not essential but there are always note buyers in the market and he believes the Secretary should satisfy the Regraded Uclassified 73 - 8 - market to that extent. It is necessary to bear in mind that we are eliminating from the market some $942,000,000 in notes and it is only fair to replace them in part by a emall note issue. Mr. Garner continued by saying that if the Treasury should desire to issue a long-term bond and a note, he was quite satisfied that we would get an over-subscription for the note for cash but we would get very few exchanges; that B. large part of the exchange subscriptions would go into the long-term bonds even by those who would not hold them but would take them for sale in order to get the premium. This would raise a rather serious problem of subsequent distribution, whereas if we have an 8-1/2 year bond this would fit in very nicely with the banks' portfolios and would give the banke a nice maturity for which they would exchange the notes, the majority of which are held by commercial banks. By issuing a 2% bond and a 2-3/4% bond the effect would be to eliminate the speculator from the market because the issues would go exactly where they belong and would be kept and not disposed of. The Secretary then asked Mr. Garner how far the Treasury could go with a 2-1/2% bond. He said We could probably go to 1952 and might even extend it to 1953 with & definite maturity. To could make it & 1951-53 bond but he would not put out a 2-1/2% and & 2-3/4% bond. He believes the 2-1/2% would very definitely detract from the 2-3/4% and might give rise to an even more serious Regraded Uclassified 74 - 9 - problem of distribution. He believes there are two distinct demands in the market one by the banks for the shorter bond and one by the insurance companies for the longer bonds. The Secretary then asked him whether, if the Treasury put out three issues, a 2-3/4%. a 2% and a 1-1/8%. it would be taken by the market as a. sign of weakness. He said he did not think 60 but on the other-hand would be interpreted an an attempt on the part of the Treasury to meet the desires of the investors. The Secretary requested his opinion on an offering of & 2-3/4% bond and a 1-1/8% note. He said there would not be any question about its success, but the majority of the exchanges would certainly go into the bonds. There was then quite & discussion of how & program of $300,000,000 2-3/4% bonds, $200,000,000 2% bonds and $200,000,000 1-1/8% notes, all for cash with the privilege to the holders of the March maturity of exchanging for any of the three issues, would go. Mr. Garner said B. program of this kind in his opinion would exactly fit the situation as it exists today and would be pleasant news to the whole market. We then discussed the length of bond we could issue with & 2-3/4% coupon. Mr. Harris, who had just come into the room, thought 15 might go 8.9 far a9192-67 and that it might command & premium of from 1-3/8% to 1-3/4%. Be and Mr. Garner both agreed that it might be weak. They thought a °60-65 would command a premium of 1-5/8% and might work up to 2%. Mr. Garner said he preferred, if the Secretary Regraded Uclassified 75 - 10 - wanted to get beyond the 1960 period, a 1961-65 and we might even go to 1962-65. He did not feel the Secretary ought to go beyond 1965 as a maturity date but that he could fix the call period any place between 1960 and 1963. He was then asked how he thought the exchanges would go on the three-way proposition. He said be did not think the notes would get any exchanges to amount to much but that the two bonds might split evenly within a range of from $350,000,000 to $500,000,000. Mr. Harris raised the question of how the exchanges would go if the note issue bore a rate of interest of 1-1/4%. Be said that would make some difference but he still thought the large majority of the exchange subscriptions would go into the bonds. The Secretary then said he was very definitely not in favor of a 1-1/45 note. Such a security would command a. premium of almost as much as the two bonds and he did not think the Treasury should pay that much for its money when it could get it at 1-1/8%. -000- Dr. Burgess, National City Bank, New York City Luncheon conference. Others present were Under Secretary Hanes, Assistant Secretary Taylor and Mr. Hass. The Secretary asked Dr. Burgees to give his views on the forthcoming financing. He started out by saying that the Treasury Regraded Uclassified 76 - 11 - could sell almost any kind of security as the market is in excellent condition. He thought, however, that we ought to arrange our issues no that they will just about fit the market requirements. What V6 should try to do is to arrange our maturities and rates 60 that not more than $750,000,000 will go into any one issue. He thought & 2-3/4% bond of 1960-65 and B. 2% bond of June, 1947 (8) years) would Just about take care of the market requirements. He said that we could open up the notes of last June to satisfy those who want to continue their investment in notes, but he did not think we would get more than $50,000,000 in exchanges. Making this statement, Dr. Burgess was under the impression that the total financing, in- cluding the exchange offering for the maturities in March, would aggregate about 1-1/2 billion. He was told that the total financing would be about $1,700,000,000 80 that the $750,000,000 limit pre- viously referred to would probably have to be raised to around $850,000,000. Dr. Burgess was quite certain that if the two bonds indicated were issued, the insurance companies and savings banks would be heavy subscribers to the long-term bond, while the commercial banks would be the heavy subscribers in the shorter-term bond. Furthermore, he thought We would not have & subsequent redistribution problem as both insurance companies and the banks would take these bonds for permanent investment. He thought that if we confined it to & longer Regraded Uclassified 77 - 12 - term bond, such as the 2-3/46 1960-65 or 1-1/8% 5-year note, the banks would subscribe to the bonds, not with 8 view to holding them permanently but with 8. view to selling them on the market as soon as it was possible in order to realise the profit. The Secretary then said that in the morning conference he had thrown out, just for discussion, the suggestion that we offer 8. 2-3/4% 1960-65 bond in the amount of $300,000,000: an 8-1/2-year 2% bond for $200,000,000; and B. 1-1/8% 5-year note for $200,000,000. all for cash with the option to be granted to the holders of the March 15 maturities to exchange them for any one of the three issues. He asked Dr. Burgess what he thought of this suggestion. Dr. Burgess said he thought it was very good and that it would suit the market perfectly. He did not think we would get many exchanges on the notes, probably $50,000,000. Of course we would get the cash subscriptions which would make B. note issue of about $250,000,000. He thought the exchanges for the other two issues would go about fifty-fifty. The only objection he had to this pro- posal was the maturity date of December, 1943. He called attention to the fact that we already have in this year a $600,000,000 note maturity in June. It is also the call date for the 1943-47 bonds in the smount of $450,000,000. October is the call date for the 1943-45 bonds in the amount of $1,400,000,000. He thought it might be well to consider selling a. 4-year note. The Secretary stated Regraded Uclassified 78 - 13 - that he would like to have the December, 1942 date kept as it is with the small maturity. Dr. Burgess and Mr. Sproul both indicated that the Secretary's suggestion of a three-way issue of new securities would suit market conditions perfectly and that there is not much argument between the 5-year note, the 4-year note and reopening of an old issue. Regraded Uclassified 79 - 14 - Mr. Devine, Devine and Company, 3 p.m. Mr. Hanes and Mr. Taylor also joined this conference as well as the one following. The Secretary asked Mr. Devine what he would do with the forthcoming financing. He said that he would issue a 2-3/4% of 1960-65, a 2% 9-year bond all for cash and allow the privilege to the March holders to exchange into these securities, and in addition, he would reopen the 1-1/8% 5-year notes for exchange purposes only. He says there is some talk about a 21% bond, period 51-53, but he does not feel that this is the proper place to put a bond as there are already heavy maturities in this period, Es says the market is now just right for the program he has suggested. The banks are staying out of the market and have been for two months and cash is piled up and there will be ready investors 88 soon 88 the December financing 18 out of the way. He thinks that a 9-year 2% bond will sell at about 101-3/8 to 101-1/2. He believes that you might get as much as $600,000,000 conversion and if on Saturday morning the term seems & little too long the period can be reduced to 8-1/2 years. He says there has also been some suggestion in the market that the short bond be an 8 year obligation but he thinks this is ridiculous and entirely too rich. Regraded Uclassified 30 - 15 - The Secretary then explained to him that during the day we had discussed the possibilities of an issue for cash of $300,000,000 2-3/4% long bond, $200,000,000 2% short bond and $200,000,000 1-1/8% notes with exchanges in all three. He asked Mr. Devine how many exchanges out of the $942,000,000 maturing notes he thought we would get and how would they be divided. Mr. Devine said that he believed that possibly as much as $500,000,000 of the long bond would go into exchanges, $400,000,000 of the short bond, and a negligible amount, 50 to 75 million dollars, would go into notes. The Secretary than asked him if there was involved any question of confidence in this program. Mr. Devine said he did not believe that was a serious factor although he did not believe the Treasury would show a great amount of confidence by issuing notes for cash. He thought it would be much better to have $400,000,000 long bonds and $300,000,000 short bonds for cash, both of which would go well. The Secretary then explained that the note market was thin. We would take $942,000,000 of notes out of the market and that the people who have purchased notes have been very good to the Treasury in the past and he did not 860 why we should not put out something in this financing, particularly in view of its size, that would please those who would prefer notes. Furthermore, the Secretary said there is a large Regraded Uclassified - 16 - C1 maturing issue in June, $1,294,000,000, and we may want another 500 or 600 million dollars in cash in which case it would make & total financing of about $2,000,000,000 and that he might want to try this three way proposition again either at that time or in March. Mr. Devine said that the market, he thought, would be quite surprised to get three issues and for that reason he argued for the reopening of an outstanding issue but in this connection the Sec- retary was adamant. Mr. Devine said that if the Secretary would issue $500,000,000 in long bonds and $200,000,000 in short bonds to & fixed date it would help a great deal. It would also have the effect, in his opinion, of not getting too much on & fixed maturity date and, at the same time, not getting too large an amount into the long maturity which might come back upon the market. The Secretary then asked him if there was any question in his mind as to the success of the three issues he had suggested. Mr. Davine said there was none whatever, that it would go and go big. Mr. Mills and Mr. Repp. Discount Corporation, 3:30 p.m. The Secretary asked these gentlemen what kind of a program they had mapped out for the Treasury in the forthcoming December financing. Mr. Mills said the market certainly expected 8. 2-3/4% Regraded Uclassified 02 AT . # bond 1960-65 period. It seemed to him about the only question in- volved with respect to this issue was to how many long term bonds the market can absorb. We certainly don't want a large bond of this issue to be indigestible later one Be said the insurance companies will be in the market for bonds although their balances are not quite as large as they were in September, declining possibly $100,000,000. Savings banks and trust companies will take the long bonds and so will many of the other banks as they are now interested in earnings. He thought there were several sources of this character which would certainly take the long bond. Ee also thought we would have to write the ticket of the long bond in such fashion that we would get about the amount we would like to have outstanding in this issue then couple it with a short bond, say 2% for 8-1/2 years. Then he would have a note issue pos- sibly for exchange purposes only and for this purpose he thought the reopening of an old issue would be preferable. Specifically he recommended $400,000,000 2-3/4% long bond, $300,000,000 2% short bond, all for cash with exchange privileges, and a reopening of the 1-1/8% of last June for exchange purposes only. He thought this program would give us possibly a large conversion into the 2's. In writing down the figures he thought we might get as much as $600,000,000 in exchanges and $200,000,000 in cash on the A. $400,000,000 in cash and $300,000,000 in exchanges on the 2-3/4% and on the 1-1/8% notes the conversion would be negligible. Regraded Uclassified 83 - 18 - The Secretary then explained to them that be would not want a billion dollars falling due on & fixed maturity date and that something would have to be dons to hold the short term bond down to 5, 6, or 7, and not more than $700,000,000. Mr. Mills suggested that we have the note for cash and that might take the pressure off the intermediate bond, The Secretary then asked him what he thought of the proposition that we had been discussing throughout the day, namely, $300,000,000 2-3/4% long bonds, $200,000,000 16 9-years, and $200,000,000 1-1/8% new 5-year notes, all for cash with ex- change privileges. The Secretary asked him what the Treasury would get under this program. Mr. Mills said he thought we would get on cash and exchanges $300,000,000 on the notes, $700,000,000 on the 2% bonds, and $640,000,000 on the 2-3/4% bonds. Mr. Repp thought we would get $250,000,000 on the notes, $600,000,000 in short bonds, and $750,000,000 in 2-3/4% bonds. Mr. Repp's esti- mate would be ideal if we could get that division. Mr. Milla said that he would not, just speaking in a. broad way, offer the financing in 8 three way proposition. He would put out $300,000,000 in notes and $400,000,000 in long bonds for cash and then an intermediate bond for exchange only. The Secretary said that was new and very interesting and wanted to know what he thought we would get on exchange if we offered A 2% 9-year bond. There was a great deal of discussion about this last suggestion. The Secretary asked then to consider Regraded Uclassified 84 - 19 - this suggestion of Mr. Mills in its relation to the other maturities and other securities that would have to be offered and come to his house at 8:30 p.m. for B. further conference. He made it plain before they left that he doesn't particularly like a fixed maturity date: that he wants to satisfy to some extent the note holders and asked them to keep these things in mind for the 8:30 discussion. Messrs. Mills, Repp, Hanes Sproul and Bell, 8:30 p.m. Mr. Mille said that they had considered the matter for about an hour and then had had dinner with Mr. Sproul and further discussed it. Mr. Milla went on to explain at great length why they thought that the Secretary ought to put out two bonds for cash. He stated that putting the cash on the long term bond and no cash on the note might have the effect of pressing the prices on the long term bonds and throwing the conversion rights into the shorter term bonds and might get & large proportion of your notes converted into the short term bonds. After a great deal of discussion on this point the Secretary stated that there were two things that he did not want. He did not want as much as a billion dollars maturing at a fixed date and he did not want more than $750,000.000 Regraded Uclassified 85 - 20 - of long term bonds to be put out at this time for the simple reason that Federal Reserve System representatives feel that that is about the limit the market can absorb and anything in excess of that would no doubt be thrown back on the market for asle. This would have an adverse effect on the market and would require the Federal Reserve System to support the market. He wanted the cooperation of the Federal Reserve System in supporting the market. He wanted to confine the long term bond to about the amount suggested by the Federal Reserve au- thorities. Mr. Mills said they had considered the proposition of the Secretary and had come to the conclusion that he could put out B. 2-3/4% bond 1960-65 which would sell from 1-12/32 to 1-20/32 premium. a 2% 9=year bond, without cash, which would sell just about on the same basis, and a 1-1/8% 5-year note would sell about 1 point premium. Mr. Mills thought that this program would produce about $640,000,000 long term bonds with $440,000,000 cash and $200,000,000 exchanges, $380,000,000 notes with $330,000.000 cash and $50,000,000 exchanges, and $690,000,000 of short terms on exchanges. Mr. Repp thought this was a fairly good program but he thought you might get as much as $300,000,000 exchanges on the long bond. Regraded Uclassified 86 - 21 - The Secretary then called Dr. Burgess of the National City Bank of New York on the telephone and made the suggestion to him and asked his advice on it. Dr. Burgess said he thought the 9-year 2% bond was & little thin and it would probably throw more weight toward the long term bond. The Secretary answered that by saying he thought we possibly could stand another $200,000,000 on the long term bond without in any way hurting the situation. Dr. Burgess also questioned the compilations made by Messrs. Mills and Repp that the short bond for exchange purposes only would sell on about the same basis as the long bond, namely 101-12/32 to 101-20/32. The Secretary said that in conclusion he was satisfied in general with the program and that he intended to announce before the market opened the next morning the following: The Treasury would offer $400,000,000 2-3/4% long bond and $300,000,000 5-year note, all for cash, with the right of the March maturity holders to convert into either one of those securities, plus the right to convert into a 2% short bond. He then called Mr. Haas on the telephone and told him what he had decided and requested that he get Mr. Seltzer and Mr. Harris together the following morning and discuss the relative yields of these various securities and then discuss it with him at nine o'clock. DueB Regraded Uclassified approved date 87 ESTIMATES OF NATIONAL INCOME IN 1939 It is estimated that national income produced will be approximately $68 billion in 1939. This compares with an indicated $62 billion in 1938 (on the basis of date available for ten months only) and #70 billion in 1937. On this basis approximately three-fourths of the loss from 1937 to 1938 should be recovered in 1939. The above estimate 1s based upon analysis of underlying conditions and current trends. This analysis indicated B. probable average of 106 for the Federal Reserve Index of Production in 1939. In December of 1938, the index is expected to be in the neighborhood of 100 and after 8 levelling out, or perhaps even a small decline, in the early part of 1939, to increase rapidly in the later part of the year. The estimated rise in national income produced from $62 billion to $68 billion 18 approximately ten percent, which reflects in part the improved position with reference to business savings. This item, after payments of dividends and withdrewals by entrepreneurs, 18 expected to show only e small net loss in 1939, 8.8 compared with an estimated net loss of more than $2 billion in 1938. National income paid out 1s expected to rise approxi- mately six percent from $64 billion in 1938 to $68 billion in 1939. Since income payments are running at about an annual rate of $66 billion at the present time, tt will be necessary for them to increase to an estimated rate of approximately $71 billion at the end of 1939 in order that the 05- timated average for the year can be attained. Regraded Uclassified 38 Estimates of National Income in 1939 8. The accompanying table summarizes the above estimates and gives the comparable figures for 1937 and 1938, the latter being partly estimated also. 1937 1938 I 1939 National Income Produced 69.8 62.0 68.0 Business Savings +0.5 -2.3 -0.3 National Income Paid Out 69.3 64.3 68,3 Compensation of Employees 45.4 42.1 44.6 Manufacturing, mining, con- struction 15.9 12.9 15.1 Transportation and utilities 4.8 4.4 4.6 Trade and Finance 7.9 7.6 7.9 Government, Service, Other 15.0 14.9 15.1 Work Relief 1.9 2.2 1.9 Dividends end Interest 9.5 8.2 9.0 Entrepreneurial Withdrawals 10.4 9.8 10.3 Net Rente and Royalties 2.5 2.6 2.6 Social Security Contributions, etc. 1.4 1.6 1.8 *Partly estimated I- Estimated Regraded Uclassified U. S, GOVERNMENT RECEIPTS AND EXI /DITURES 11 KERAL AND SPECIAL ACCOUNTS ONLY) (Fiscal Year Ended June 30, 1938--Dollar Amounts in Willions) 89 RECEIPTS EXPENDITURES Visible Budget Invisible Budget (Dollar Amounts) Visible Budget Invistile M (Dallar invests) a Multiplier (Dollar Amounts) Multiplier Bultiplier (Dollar Amounts) I. GENERAL INTERNAL REVENUE Departmental 3 644 Individual Income Tax 1,938 Net income under $5,000 3 1/2 63 220 Net income of $5,000 and under $25,000 3 271 813 Public Buildings; Highways: River and 2 1/2 203 508 Harbor Work and Flood Control Net income of $25,000 and under $50,000 21/2 310 545 Net income of $50,000 and under $150,000 2 352 704 Net income of $150,000 and over 1 397 397 Social Security Act (grants to states for needy persons, etc.) 3 1/2 272 950 Corporation Income and Capital Stock Taxes 21/2 1,476 3,690 National Defense 2.1 974 2,653 Datate and Gift Taxes 0 417 o aver, Veterans Administration 3.4 582 1,789 1,071 3,749 aver. Alcoholic, Mofrs. Excise, and Misc. Taxos 3 1/2 Agricultural Adjustment Program 3 1/2 362 1,266 2 1/2 568 1,430 Tobacco Taxes Livilian Conservation Corps 3,2 326 1,035 1 aver, Employment Tax (Title VIII--Old Ago) 257 890 Interest on Public Debt 11/2 926 1,389 Tax on employees 3 1/2 2 1/2 257 643 Tax on employere II. RECOVERY AND RELIEF Tax on Employers of 8 or More (Title IX-- 3 90 210 Public Highways; River and Harbor Work, and Flood Centrol 2 1/2 118 296 Unemployment Railroad Employment Compensation Taxes 3.5 1,473 5,122 3 1/2 75 263 W.P.A. ever. Tax on employees 2 1/2 75 188 2.6 224 592 Tax on employers other aver. 3 359 1,078 IL CUSTOMS 3.2 240 778 1,2 311 342 Add to Home Owners (including Farm Security aver. III. ALL OTHER RECEIPTS (inc, adj.) Administration ever. III, REVOLVING FUNDS (NET) Public Works--Loane and Grante to states, etc. 21/2 134 335 601 0 o IV, TRANSFERS TO TRUST ACCOUNTS, ETC. 366 610 1.7 V. ALL OTHER EXPENDITURES ever, Total expenditures (excl. debt retirement) 7,626 19,891 Total receipts 6,242 15,207 Visible Balance (Deficit) -1,384 Invisible Balance (Income Effect) + 4,684 Regraded Uclassified U.S. GOVERNMENT RECEIPTS AND EXPENDITURES (GENERAL AND SPECIAL ACCOUNTS ONLY) (Piscal Year Ended June 30, 1937-Dollar Amounts in Willions) 90 RECEIPTS EXPENDITURES Visible Budget Invisible Budget (Dollar amounts) Visible Budget Invisible Budget x (Dollar Amounte) Multiplier (Dollar Amounte) Multiplier) = Multiplier (Dollar Amounts) Multiplier) DITERNAL REVENUE I, GENERAL Individual Income Tax Departmental Net income under $5,000 3 1/2 54 169 3 560 1,680 Not income of $5,000 and under $25,000 3 229 687 Public bldge.; highways; river and hartor Net income of $25,000 and under $50,000 2 1/2 172 430 work, and flood control 21/2 264 660 Net income of $50,000 and under 150,000 2 299 598 Net income of $150,000 and over 1 337 337 Social Security Act (grante to states for needy persons, etc.) 31/2 21/2 167 corporation Income and Capital Stock Taxes 1,220 3,050 585 National Defense 2,8 057 Tride and Gift Taxes o 306 o 1,356 ever. Veterans Administration 3.4 580 decholic, Infrs, Expise and Kies, Taxes 3 1/2 1,124 1,983 3,934 aver, Agricultural Adjustment Program 3 1/2 527 2 1/2 1,845 Tobacco Taxes 552 1,380 Civilian Conservation Corpo 3,2 306 1,233 moloyment Tax (Title VIII--01d Age) aver, Tax an employees 3 1/2 97 340 Int at on Public Debt 1 1/2 866 1,299 Tax an employers 2 1/2 97 242 II. RECOVERY AND RELIEF "xx on Employers of 8 or More (Title II-- memloyment 3 58 174 Public highways, river and harbor work, and flood control 21/2 355 889 ESTOMS 3 486 1,458 W.P.A. 3.5 1,896 6,606 ALL OTHER RECEIPTS (incl, add.) 1 263 263 aver. aver, Other 2,6 384 1,007 aver, A1d to home owners (inc. Farm Security Ada.) 3.1 298 932 aver. III. REVOLVING FUNDS (NET) Public Yorks, loans and grants to states, etc, 21/2 221 553 IV, TRANSFERS TO TRUST ACCOUNTS, ETC. 0 868 0 V- ALL OTHER 2.3 213 498 aver. Visible Balance (Deficit) - 3,145 Invisible Balance (Income effect) + 9,044 Total receipts 5,294 13,082 Total expenditures (arcl, debt retirement) 8,442 22,126 Regraded Uclassified ? 91 Summary 1. On a reasonably optimistic estimate, industrial production may rise to 106 by the second quarter of 1939, and about 115 to 120 for the fiscal year 1939-40. 2. If such 8 rise in industrial production does take place, it would reduce non-farm unemployment from about 8.6 millions now to about 7.3 for the 1939-40 fiscal year. S. To continue to provide relief to the same proportion of the unem- ployed now covered, W.P.A. expenditures of one billion fifty million dollars would be needed for the first half of 1939, and 1.85 billion for the 1939-40 fiscal year. 4. 600,000 cases now certified to W.P.A. are not DOW employed because of limited funds. Their families are without support except for direct relief, which is usually very meager. Increasing unemploy- ment insurance payments offset only a portion of this deficiency in W.P.A. To care for these cases as well as those already covered, W.P.A. funds would have to be increased materially above the amounts stated. 5. On a very optimistic forecast, industrial production might rise to 116 by the second quarter of 1939 and to about the 125 to 130 level for the fiscal year 1939-40. Even in that extrems case, W.P.A. expenditures needed to maintain merely the present level of adequacy would be one billion dollars for the first half of 1939, and 1,6 billions for the 1939-40 fiscal year. 6. Judging from past periods of recovery, industriel production for the 1940-41 fiscal year might everage between 105 end 130. Such a level of production would reduce unemployment to between 5.7 and 7.8 millions, and require W.P.A. appropriations of between 1,45 and 2.0 billions for the 1940-41 fiscal year to maintain the present level of adequacy. Regraded Uclassified 92 How much will it be safe to reduce W.P.A. during 1939, 1939-40, and 1940-41? How fast can W.P.A. rolls be reduced without increasing the number without food and clothing? The answer depends on our appraisal of a number of subordinate questions, as follows: 1. How fast and far will industrial recovery go? Careful appraisals of the immediate prospects, and a reason- ably optimistic appraisal of the possible speed of continued recovery over the years ahead, based on similar recovery periods in the past, give the following forecasts as a basis for our estimates: Forecast of Industrial Production (Federal Reserve Index, 1923-25 E 100) Actual to date Index 1929 average 119 1937 average 110 1938 June 77 November (preliminary) 102 Estimated 1/ 1938 4th quarter 101 1939 1st quarter 100 1939 2nd quarter 106 1939-40 fiscal year 120 Estimated by Agricul tural Industrial Relations Section, Division of Program Planning, A.A.A. These forecasts, in comparison with the annual data since 1920, are shown in the upper portion of Figure 1. Regraded Uclassified - 2 - 93 2. How rapidly will employment rise? In the past, changes in industrial production have been re- flected in employment in non-farm employment, with some lag between them. This is also shown in Figure 1, by the employment data charted. On the basis of previous relations between production and em- ployment, the non-farm employment which would be produced if the fore- casted production is realized has been estimated, as shown below: Actual to date Industrial produc- Non-farm employ- tion index 1/ ment 2, (Seasonally adjusted) Millions 1929 average 119 36.1 1932 average 64 27.7 1937 average 110 34.6 1938 June 77 31.8 1938 October 96 32.7 (Preliminary) Forecasts 1938 4th quarter 101 3/ 33.5 1939 1st quarter 100 33.3 1939 2nd quarter 106 34.4 1939-40 fiscal year 120 35.3 1 Federal Reserve index, 1923-25 = 100 2 Department of Labor. Excludes W.P.A., C.C.C., and other relief employment. The reduction is due to the usual seasonal decline in em- ployment during the winter. These estimates are also shown on Figure 1. 3. How rapidly will unemployment fall? Figures on the persons available for non-farm employment have been compiled from previous data on employment and age composition of the population. Comparing these with the estimates of non-farm employment, the numbers of non-farm unemployed may be projected as follows: Regraded Uclassified 84 Non-farm unemployment (in millions) Actual Non-farm labor Non-furm Non-farm supply 1/ employment unemployment 1929 average 37.7 36.1 1.6 1932 average 39.1 27.7 11.4 1937 average 41.3 34.6 6.7 1938 June 41.8 31.8 10.0 October 41.9 32.7 (p) 9.2 (p) Forecasts 1938 4th quarter 42.0 33.5 8.5 1939 1st quarter 42.1 33.3 8.8 2nd quarter 42.2 34.4 7.8 1939-40 fiscal year 42.6 35.3 7.3 This excludes the number of wives or deughters seeking work because their husbands or fathers are unemployed. Biggers' census indicated that in November, 1937, there were over & 1/2 million such persons looking for work, in addition to those ordinarily available for work. The changes in the number of persons actually employed at any one time reflect many other factors besides industriel production. If these estimates are fulfilled, non-farm unemployment will chenge from its present levels (for the 4th quarter of 1938) about 00 follows: 1st quarter, 1939 3,5 per cent increase over present 2nd quarter, 1939 8 per cont decrease below present 1939-40 fiscal year 14 per cent decrease below present 1 In addition to industrial production, the number of persons actually employed will be influenced by changes in the usual work week, in the output per person employed, and in the extent of part-time or over- time work. If it were possible to account for these factors as well, the above forecasts might be modified somewhat and made dightly more reliable. Such perfections of the data, however, would probably be amall compared to the total unemployment shown below, and therefore would change the estimated relief needs only slightly. Shifts from part-time to full-time will tend to increase the average hours worked per week, but the wages and hours law and other pressures toward 8. shorter full-time week will work in the opposite direction. The estimates presented are on the basis of the present levels of pro- duction and the present average hours. Regraded Uclassified 4 - 35 4. How rapidly will the need for relief decline? Aid to the unemployed and needy is provided through public assistance, old-age assistance, and unemployment compensation. Unemployment compensation payments are taking care of an in- creasing number of the unemployed, as more and more states reach the stage where their outpayments begin. The cases taken care of and the suma disbursed, however, represent as yet only a very mall fraction of those in need because of unemployment. At the peak of their fall program, W.P.A. had 600,000 cases certified for W.P.A. employment who could not be taken on because of inadequate funds. Increasing unem- ployment insurance payments in 1939 may close about one quarter to one half of this gap between needs for W.P.A. jobs and funda available, but that is about all they can be counted on for in the immediate future. Old-age assistance has expanded until 1,735,000 persons are now receiving old-age payments, while aid to the blind and to dependent children is providing for an additional 330,000. These special types of public assistance care for only a. small portion of the distress due to unemployment, however, and will continue to expand regardless of business conditions. General relief, although presumably for non-employables, shows some tendency to vary with business conditions. It expanded rapidly in the winter of 1937-38, before the increased W.P.A. appropriations became available, and shrank again as W.P.A. began expanding. Since July, however, general relief expenditures have remained relatively constant at about 36 million dollars B. month. C.O.C. expenditures, too, remain 1/ Old age insurance may have reduced the number of persons over 65 who are seeking employment by about 100,000 to 200,000 cases, judging from Biggers! This may make the following estimates high to this slight extent. If further studies confirm this shift, the estimates of persons employable will be revised accordingly. Regraded Uclassified - 5 - 96 relatively stable, showing little reflection of business conditions. W.P.A. has constituted the most important source of relief for the unemployed since it replaced F.E.R.A. This is evident in the follow ing tabulation: Estimated non- Estimated undupli- W.P.A. employ- Period farm unemployment cated relief cases ment Thousands Thousands Thousands 1933 11,841 4,812 - 1934 9,738 4,706 - 1935 8,943 4,677 - 1936 7,654 4,116 2,530 1937 6,744 3,262 1,785 1938 nine mos. 9,733 4,297 2,562 September 9,478 4,567 3,111 Excludes assistance granted under the Social Security pro- gram and under some other smaller programs whose recipients, in general, are not employable. Also, excludes emergency drought relief in 1936. 2 Excludes N.Y.A. employment. W.P.A. thus constitutes the major method of relief, now caring for 33 per cent of the unemployed, or for two-thirds of all relief cases. The proportion of the non-farm unemployed on W.P.A. jobs dropped from 33.1 per cent in 1936 to 26.5 per cent in 1937, and then rose again to 32.8 per cent by September, 1938. The drop in 1937 was explained in part by the sharp cut in the budget during that year. The number needing relief in 1939 and 1939-40, may be estimated on the assumption that W.P.A. will continue to be needed for the sare pro- portion of the unemployed as in 1936 and in September, 1938. These fore- casts are 08 follows: Non-farm W.P.A. employ- Period Unemployment ment Actual Millions Millions 1938 September 9.5 3.11 Forecest 1939 1st quarter 8.8 2.90 2nd quarter 7.8 2.57 1939-40 fiscal year 7.3 2.41 Regraded Uclassified - 6 - 97 These estimates are based on the assumption that as employ- ment rises the same proportion of the unemployed, 33 per cent, will continue to need W.P.A. help. In the past the major relief to the un- employed has been provided from their own resources or thatoof relatives, end that is why as low a per cent as 33 have been on W.P.A. As unem- ployment decreases, it may be that the proportion of the unemployed who can get along without relief help will increase, so that the proportion in need of W.P.A. will diminish. On the other hand, the long duration of heavy unemployment for many may so exhaust their resources as to make still a larger proportion in need of relief. In the absence of any clear basis for judging between these two alternative possibilities, the 08- timated need has been based on the existing coverage. 5. What Federal W.P.A. funds will be needed to meet the 1939 needs? Total W.P.A. expenditures during recent calendar years have varied from $847 per relief worker down to $770 per worker for September, 1938. Assuming that this latter rate 18 maintained over the period, Federal W.P.A. funds will be required as follows to provide for the cases estimated: Actual Federal W.P.A. W.P.A. employment expenditures (annual equivalent) Millions Millions 1936 $2,069 2.53 1937 1,510 1.79 1938 September 2,400 3.11 Forecasted 1939 1st quarter 2,230 2.90 2nd querter 1,980 2.57 1939-40 fiscal year 1,850 2.41 Regraded Uclassified 88 - 8 - For the first six months of 1939, this would require W.P.A. expenditure running at about 2.1 billions ennually, or about $1,050,000,000 for the six-month period, to maintain the present level of relief, com- pared to unemployment. For every $100,000,000 that W.P.A. expenditures are out below this level during the first half of 1939, about 260,000 families in need of relief will be cut off W.P.A. rolls. That means that 800 to 900 million dollars in addition to present funds will be needed by W.P.A. for the rest of the current fiscal year, to continue relief meraly on the present level. Even more would be needed to enuble W.P.A. to care for the several hundred thousand families certified to it which it cannot now employ. For 1939-40, W.P.A. appropriations of about 1.85 billions will be needed if production, employment, and relief needs develop as es- timated here. Effect of a more rapid recovery These estimates are based upon a reasonably optimistic fore- cast of continued recovery. Even if the recovery should go much faster than that, however, the relief problem would still be heavy. For ex- ample, if industrial production should exceed that previously estimated by B. full 10 points throughout, the forecasts would then be as follows: Period Industrial Non-farm Non-farm W.P.A. W.P.A. ex- production employ- unemploy- cases penditures ment ment (annual rate) Millions Millions Millions Millions 1939 let quarter 110 33.6 8.5 2.80 2,160 2nd quarter 116 35.0 7.8 2.38 1,830 1939-40 fiscal year 130 36.4 6.2 2.04 1,570 Regraded Uclassified - B. - 33 Even on this most optimistic basis, W.P.A. expenditures of just about one billion dollars for the first half of 1939, end of 1.6 billions for the succeeding fiscal year, would be needed to maintain unemployment relief on its present level of adequacy. Fossible relief needs during the 1940-41 fiscal year The 1940-41 fiscal year is 18 to 30 months ahead, and any forecast now as to conditions then will be necessarily largely con- jectural. In past recovery periods following sharp depressions like that of 1938, however, industrial activity two to three years later hes varied widely, the most rapid progress showing over 50 per cent recovery from the low year, and the least, less than 25 per cent re- covery. If this time the recovery falls within the same pattern, it would result in a level of industrial activity for the 1940-41 fiscal year somawhere between 105 and 130. Such production in 1940-41 would mean e non-farm unemployment of between 5.7 and 7.8 million. W.P.A. expenditures of between 1.45 and 2.0 billions would be needed to care for such unemployment, on the present basis of adequacy. Regraded Uclassified de uissejon Regiraded Figure 1. Industrial Production and Non-farm Employment Product- ion Employ- ment t Employment 120 34 No 32 Production so 30 co NO JTD Forecasts, for fiscal years " 2.8 46 101 December 2. 1938. MEMORANDUM At 3 P.M. December 2, 1938, Mr. Shoji Arakawa, Financial Commissioner of the Imperial Japanese Government, Financial Attache to his Imperial Majasty's Embassies at London, Paris and Washington, was received by the Secretary of the Treasury. Also present were Messrs. Lochhead, Cochran and Butterworth, whom the Secretary presented to the caller. Mr. Arakawa began the conversation by telling the Secretary that he had talked with Mr. Taylor, and by asking that the Secretary learn of the conversation from the Assistant Secretary rather than have him repeat it at this time. He explained that he was assigned to the three capitals of London, Paris and Washington, but spends most of his time in London. The Winister of Finance of Japan, whose friendship the visitor enjoys. had instructed him to visit the United States at this time and he is consequently spending ten days in New York and ten days in Washington. He stated that the Minister of Finance, a Harvard man well acquainted with the United States and enjoying & splendid reputation in his own country, was interested in hearing from the Secretary of the American Treasury in regard to the general situation in the United States. Secretary Morgenthau replied that it was difficult to know where to begin in describing the American situation. Re would gladly be helpful but the Treasury itself had such a variety of activities and wide range of interests that to undertake to discuss them was impossible. There were no problems up between the Japanese and American Treasuries to discuss. The visitor said that his Minister would be especially interested in the broad lines of the American impressions of the Sino-Japaness war. The Secretary said this was not in his field to discuss and that the Press gave the American reaction fully. Again the Secretary said there were no Treasury problems between the two countries. There had arisen at one time a question in regard to Japanese gold shipment, but this had been satisfactorily adjusted and the Federal Reserve Bank of New York, the fiscal agent of the Treasury, and the Central Bank of Japan and were in touch with each other and cooperating. This reminded the visitor that be had failed to thank the Secretary for this cooperation in the past. In this connection he seid he be that American Ambassador Grew was informed by the Minister of Finance of Japan as to the latter's interest in having the cooperation of the United States in the development of territory which the Japaness occupied in China. Secretary Morgenthau said it would be interesting to 100 what might transpire in this phase of the matter, but this was a. subject for discussion between the Japanese Ministry for Foreign Affairs and our Department of State. Regraded Uclassified 102 7 TREASURY DEPARTMENT Jom 12 INTER OFFICE COMMUNICATION DATE December 2, 1938 TO Secretary Morgenthau FROM Herman Oliphant burns says; Miss Freda Utley will be in Washington on December 12 or 13, and it occurred to me that you might welcome the opportunity to talk to her. She is the Far Eastern correspondent of the London News Chronicle and is now on her way to London from China. She is the author of Japan's Feet of Clay (1937), Japan's Gamble in China (1938) and numerous other books. She is also a frequent contributor on Far Eastern subjects to journals of foreign affairs. She is coming to Washington to address the National Press Association and for a conference with Mrs. Roosevelt. She is deeply sympathetic to the Chinese cause. I hope that she will be available for discussion during the lunch hour, but it is possible that she may be free only in the evening. do Regraded Uclassified 103 December 2, 1938 To: Mr. Oliphant From: Mr. Duffield The position of the Comptroller of the Currency and his Office as units within the Treasury Department is clearly set forth in the law, debates of Congress, opinions of the Attorney General and court decisions. The law sets up "in the Department of the Treasury a bureau" to be headed by a Comptroller of the Currency who "shall perform his duties under the general directions of the Secretary of the Treasury. This language is similar to that used in setting up other bureaus within the Treasury Department, as, for instance, Bureau of the Mint. That the Congress intended this law to mean that the Comptroller's Office should be B. unit within the Treasury was further demonstrated by the debates which preceded enact- ment of the National Banking Act. Amendments to the Act which would have struck from it various provisions of super- vision and control of the Comptroller's Office by the Secretary were introduced and rejected except one making the Comptroller the appointee of the President rather than of the Secretary. This appointment feature is also typical of other Treasury officials, such as the Commissioner of Internal Revenue, the Regraded Uclassified. 104 - 2 - Director of the Mint, the Surgeon General, all of whom are clearly under direction of the Secretary. A district dourt has held that the Comptroller performs his duties under the general direction of the Secretary of the Treasury," and the Supreme Court has spoken of the national banks as being "subject to the supervision and direction of the Comptroller of the Currency and of the Secretary of the Treasury." The Attorney General informed the President in 1912 that, although the Secretary can not control the Comptroller's discretion in performing quasi-judicial functions, the Secretary must obviously superfise the administrative and executive functions of the office if the law is to have any meaning when it says that the Comptroller performs his duties "under the general directions of the Secretary." Since the Comptroller's Office is by law a bureau within the Treasury, the Secretary has authority to provide for "the distribution and performance of its business" under the laws which give each Cabinet Officer the power to operate his own Department. The action of the Secretary on September 13th, placing the legal work of the Comptroller's Office under the General Counsel for the Treasury Department, was an action providing for distribution and performance of the business of a unit of the Treasury Department. Regraded Uclassified 105 - 3 - The portion of the September 13th order providing that the Secretary shall pass upon all changes in the legal staff and upon salaries paid that staff is not prohibited by any specific portion of law. Therefore, it is within his power because appointment of executive officers and employees of a unit within the Department remains with the Secretary unless otherwise provided. The authority for this action is further supported by the law creating the position of General Counsel for the Treasury Department which states that the General Counsel shall be the chief law officer of the Department and shall perform such duties as the Secretary may require of him. Regraded Uclassified TRIPLICATE NO.150. AMERICAN CONSULATE Rangoon, Burma, December 8, 1938. subject: Shipments of War Matorials. strictly Confidential. The Honorable The Secretary of State, Weshington. Sir: I have the honor to report that the war supplies for China brought from Odessa to Rangoon by the British steam- or STANHALL have been unloaded at this port, end that, with the exception of explosives, they have been placed in warehouses of the Port Commission, where they are being guarded by Military Police. The explosives are being held on a barge in the Rangoon river below the port. The supplies in the warehouses are being checked by the Customs authorities. A manifest of the cargo was not obtained, and detailed Customs inspection WGB ordered. No Customs statistics are yet available. The STARHALL arrived here on November 8th, but un- loading was not commenced until November 21st, pending attempts to obtain B manifest, the preparation of a re- port by the Customs for the Government, and the Govern- ment's decision in the matter. The ship was granted elecrance and left this port yesterday. Report of American Supplies. There is a report that some motor-truck parts and Regraded Uclassified 187 - 2 some munitions of American origin are included in the supplies brought by the STANHALL, all of which were load- ed at Odosse. This report has not yet been verified. All of the cargo from the STANHALL will be trans- ported to Lashio by the Burma Railways. Some special freight cars for the carriage of ammunition and explosives have been built in the railway shops, and others are build- ing. It is planned to establish a transit depot at Lashio, on ground owned by the Burne Railways, the required storage facilities to be provided by the Chinese, together with a garage and repair shop. In order to reduce the danger of explosions and at the same time to obtain & lower freight rate from the Burma Railways detonators are being removed from shells, preliminary to shipment. Shipment of the supplies now stored here will not be commenced until notor-transport arrangements are completed and it is apparent that trucks can get through from Leshio to Yunnanfu. Chinese repre- sentatives are now at Lashio in connection with trans- portation arrangements. Respectfully yours, Austin C. Brady American Consul Distribution: 1. Original and four copies to the Department. 2. Copy to the American Embassy, London. 3. Copy to the Consulate General, Calcutta. 800, A true 000g $ the mismed original uh Regraded Uclassified 108 Confidential December 2, 1938. UNITED STATES RAILROAD EQUIPMENT AUTHORITY Proposal: Establish a railroad equipment authority, with capital stock owned by the Treasury, empowered to issue guaran- tead debentures for the purpose of contracting for the purchase of new reilroad rolling stock to be rented or leased to railroads. 1. The Stimulation of Recovery Expenditures of some $500 million on railroad equipment could be assured in the first year of operation. Apart from the stimula- ion this would afford the economy in general, it would provide work for the railroads' own car shops and increased traffic for the roads themselves. 2. The Removal of Future Bottlenecks Preliminary estimates indicate that in order to handle the volume of traffic consequent upon the continuance of recovery at 8. desirable rate, yearly expenditures on rolling stock of about $800 million at present prices would have to be incurred in the period 1939-41. From the standpoint of the national economy it would obviously be to our interest to utilize idle plant and labor in the immediate future in order to relieve the shortages, stoppages, and bottlenecks that will arise in freight traffic, the railroad equipment industry and in the steel industry with the continuence of recovery. 3. A Contribution to Future Stability The railroad equipment field has traditionally a feast and famine character and is consequently an important source of economic Regraded Uclassified 109 -2- instability. A federal authority, not pressed by financial consider- ations or immediate profit considerations, could level off the peaks end valleys of railroad equipment buying. In addition, variation in rental rates for equipment would offer 1) highly desirable alternative to variations in freight rates as a means of bringing about grester stability in railroad net earnings. 4. National Defense A modernized supply of rolling stock adequate to handle the volume of traffic incident upon war appears to be an indispensable element in any comprehensive program of national defense. Morsover, experience in the handling of a national car pool will be invaluable in the event of war. 5. Betterment of the Financial Structure of Railroads The gradual substitution of rented and leased rolling stock for owned equipment would permit B. reduction in the debt of railroads and a substitution of variable for fixed charges. Moreover, the pro- posal offers B. means whereby the Government could stimulate private expenditures without getting deeper involved in the complicated finan- cial structure of the railroads, 6. Improved Efficiency The proposal, through making possible continuous buying, greater standardization, end more liberal provisions for research, should per- mit very substantial reductions in costs to be achieved. It should also permit more efficient utilization of rolling stock in the hand- ling of empties, etc. Regraded Uclassified 110 -3- 7. Relation to the "Railroad Problem", The proposal could be adopted independently and without prejudice to any comprehensive program of reorganization and consolidation of the railroads, which may take a long time to accomplish. Regraded Uclassified Objections to the Pronosal: 1. Govermment Ownership. The proposal does, of course, involve H degree of Government ownership, so far as rolling stock is concerned. It my be pointed out here, however that (a) 1: 1e only 6 degree removed from the present prac- tice of msking louns to financially shaky roads, (b) it 18 far removed from the actual Government opera- tion of railroads as 1s practiced in cortain other democratic countries such 88 Canada and Sweden, (c) it is proposed that the Goverment operations be confined to research and ordering, renting or leasing equip- ment and that no construction or repair be undertaken in Government shous. 2. Loss to the Government It may be objected that the Authority's equipment will be used only during peak periods and years 05 exceptionally high traffic volume and that for the reat "the Government will be left holding the bag." This objection can easily be disposed of by pointing out that this all depende on the terms of leasing or daily rentals. If they are set sufficiently low, it will pay the railroads to use the Authority's equipment, and rely on old high - repair- cost equipment for penk requirements. Low rental rates will also Regraded Uclassified 112 $ constitute en inducement to retire old equipment. This way out, however, raises another objection. If rentals are set too low, the revenues of the Authority will be inadequate to service its obligations and keep its equipment in good repair. It should, however, for the following reasons, prove possible for the authority to set sufficiently low rentals to induce the rail- roads to use its equipment and yet not suffer a loss: (a) it will have the advantage of borrowing at lower interest rates than the railroads can secure; (b) being a very large and continuous buyer of standard- ized equipment it should be able to secure greater price con- cessions than any individual road could obtain; (c) there should be economies consequent upon the growth of a national car pool; (d) it will be in a position to charge higher rentals in good years to recoup any losses sustained in bad years. Finally, it must be kept in mind that even though the Authority should actually show a loss, this would not be incompatible with a large net national gain in more stable and higher national income, production and employment. 3. Technical Difficulties The proposal has been examined by a number of operating rail- road men and although problems have been pointed out in connection with repairs, zoning, storage, etc., it appeared to be the general Regraded Uclassified 113 -6- consensus that the problems would be similar to those now encount- ered in connection with "foreign" cars and the private leasing COMO nies, such as Pacific Fruit Express, and various ways of meeting these problems were at hand, In connection with the determination of the volume of new equipment of various types, it would appear feasible to make far better national estimates of the number of different types of frei ht cars and locomotives that 8 certain volume of traffic will require than could possibly be arrived at as the sum or individual estimates made independently by the various roads. 4. Inequities as Between Roads Some companies have normally an excess of cars and others Il deficiency. Some companies, therefore, would be in 8 better position to take advantage of low rentals on new equipment while others might suffer a loss of revenue now derived from the use of their cars by other lines. Again, many roads now build a substantial amount of equip- ment in their own shops and individual hardships might result from the inevitable changes in the location of work consequent upon national bidding for a single buyer. These changes might be tempered by policies of the Authority in distributing new sonirment, repair and reconditioning work. Regraded Uclassified 114 -7- Alternatives: The alternatives appear to be either to do nothing or to stimulate railroad equipment purchases through loans to railroads from the R. F. C., on favorable terms. It is said that if the R. F. C. should announce that it was prepared to purchase equipment trust certificates (a) up to 100 percent of the cost of new equipment, (b) at 8. 22 percent rate, (c) for comparatively long maturities, (d) the offer to be available for a limited period only, a very large amount of anticipatory railroad equipment buying would be induced. While this alternative is far better than doing nothing at all, it appears inferior on various counts to the proposal under discuss- ion. 1. It Lacks Flexibility. The chief objection, from the compensatory fiscal policy view- point, is that an emergency loan operation does not provide a mechan- 1am through which the Government could operate continuously, and outside the budget, to smooth out fluctuations in expenditures in an important field. With reference to the immediate situation, it 18 almost impossible to forecast the extent to which a favorable loan offer would be taken up. Once announced, it would be difficult to change the terms. If EL big rush of orders ensued, deliveries would have to be spread over a future period, or else a temporary bottleneck would occur, If few Regraded Uclassified 115 -8- orders came in, the terms could not be lowered further or the offer extended without arousing a sense of grievance on the part of those who hud already availed themselves of the offer. 2, There are definite obstacles in the way of offering terms that will really be effective. The R. F. C. must consider the soundness of each individual loan and cannot explicitly rely upon averaging and upon higher interest returns in good years offsetting low returns in bad, as could the proposed Authority. The most favorable terms offered to date by the R. F. C. were in connection with the purchase of equipment trust certificates or the Southern Railroad for 100 percent of the cost of freight cars, at 4 per cent, and for fifteen years. In bad years, when on national economic grounds. expenditures on reilroad equipment are most desirable, the credit of the railroads is weakest and, confronted with surplus equipment on the one hand and financial difficulties on the other, they would be most reluctant to borrow and purchase new squipment even on the most favorable terms. 3. A loan operation does not offer a good possibility for securing cost reductions and efficiencies. Each loan being an individual loan, there does not exist the same opportunity to derive the economies arising from large, contin- uous orders of standardized equipment, or from research, or from car pooling. 4. Other implications Further large loans to the railroads would involve the Government still more in the complex financial structure of railroads, end would Regraded Uclassified 116 -9- result in a further increase in railroad debt and fixed charges. Moreover, it would be difficult to refuse to other borrowers the particularly favorable terms that would have to be offered to the railroads. Regraded Uclassified 117 December 3, 1958. 9:30 a.m. Operator: Operator. HMJr: Allan Sproul, Fed. New York please. O: Right. HMJr: Hello. O: Mr. Sproul. Go ahead. HMJr: Hello. Allan Sproul: Good morning Mr. Secretary. HMJr: Good morning. You have an audience here. 8: Yes. HMJr: Including Mr. Ronald Ransom. S: Yes. HMJr: How do you feel this morning on what we did last - talked about last night? 8: I feel all right about it. HMJr: Now, I tell you what I'd like you to do a minute, supposing you talk to Mr. Ransom, will you? I think he'd like to talk to you. S: Yes. Ronald Ransom: Allan, I Just raised a question with the Secretary as to the three way plan as being somewhat different from what we were discussing in the Board room, when we were there & day or two ago. S: Yes. R: He says that you think the three-way plan is entirely satisfactory. S: That's right. R: And you share Wayne Taylor's view that he's just expressed that it's Just right. Regraded Uclassified 118 - 2 - 5: The way we figured out the prices again this morning, and it looks as if it would be Just about right. R: I see. S: The two and three-quarters, the long two and three- quarters and the nine year too, on the basis of present markets would sell for about the same premiums, the trading arrangements could be about 101.8 to 101.30. R: Yes. SI But on both of them. R: Yes. S: And 60 that there would be no great advantage in going into either one from a speculative standpoint. R: Yes. 3: with four hundred cash on the long bond, but conversion there of anything up to eay four hundred million, you wouldn't get an unwieldy amount of long bonds in the market and yet you'd achieve the objective of putting out & substantial amount for as long a period as possible of this good market. R: Yes. S: The two per cent nine-year bond on that basis would be around five hundred million, a little more, satisfying what all our checks indicate 1s a strong bank demand for that sort of obligation. R: Yes. and S: And the five year note with three hundred cash, perhaps fifty conversion would give you a decent size issue in the five year note and it looks as if the prices there would be around - the price there would be around 101. R1 Yes. 8: So that the whole thing seems to fit together pretty well. Rt Yes. The Secretary wants to know how many long bonds in all you think you would have on this. Regraded Uclassified 119 - 3 - S: well, it looks to me as if you'd have about three- quarters of a billion to eight hundred million on it. R: Uh-huh. Seven fifty to eight. S: What's that? R: From seven hundred and fifty to eight. S: Yes. R: (aside) (Does that answer your question. Is there anything else you want to eay.) - The Secretary says he 1s going to put this right on the ticker. Now did you have anything else Allan? S: Not & thing. R: O.K. The Secretary says many thanks. S: All right. R: All right. Regraded Uclassified 120 December 2, 1938. 10:55 a.m. HMJr: Hello. Operator: Mr. Sproul. HMJr: Hello. Allan Sproul: Hello Mr. Secretary. HMJr: How did the market take the announcement please? S: Very well, 80 far. HMJr: Very well. S: Yes. HMJr: Uh-huh. 8: The - there's been a little moving around, but not 8. great deal, there's a two way market in most obligations and in the rights. HMJr: I see. 8: The notes have gone off - went off a sixteenth about at the opening and then some buying came in and they've come back a little, HMJr: Uh-huh. 8: The intermediate - the bonds in the intermediate areas have held with a firm tone. HMJr: Uh-huh. S: The long bonds are off about a sixteenth, there's been some selling of the long bonds and buying of rights. HMJr: Well that's good isn't it? That's all right isn't it? S; That's all right. Yes. HMJr: I say that's all right. S: Yes, I think it 18. The rights are quoted now at 19.21 and that's up a little. HMJr: You mean & hundred - one nineteen twenty one. Regraded Uclassified 121 - 2 - S: That's right. HMJr: They're up a little bit. 8: A hundred and one nineteen to twenty one, That's up a little from last night's close. HMJr: They're up A little bit. S: Yes. HMJr: Well, that's the best answer isn't it? S: I think it's been taken very well 80 far. HMJr: Now - S: The one thing the market seems to be talking about and figuring on 18 just where these twos fit in and whether it's going to be an eight and B. half or a nine year and I think that's what we'll watchtoday to see how the market finally dopes that out and what sort of an answer it gives and then that will give us 8 cue as to what should be done. HMJr: That's - well that's really the only thing we've left for the market to guess on, isn't it? S: That's right. HMJr: The reason that I gave as much information as I did was on account of that leak yesterday. S: You didn't want - you mean favored individuals around. HMJr: That's right. Now on going over it I found that we also told Garner yesterday that it was 322. 5: Garner, yes. That's right. HMJr: He knew that in the morning when he left here. S: Yes. HMJr: So - there's two people it could have come from. It could have come from either Garner or Devine. 8: That's right. Regraded Uclassified 122 - 3 - HMJr: And I didn't want to leave the impression that it might only have come from Devine. S: No. Well, I think we might keep that in mind on both of them next time. HMJr: Yes. One or the other must have talked. S: Yes. HMJr: Well, I think it sounds all right for eleven o'clock. S: It does. HMJr: And you fellows will all have to sharpen your pencils and find out on the two. S: That's right. HMJr: And Ronald Ransom 18 perfectly happy. S: Good. HMJr: Yes. S: That's good. HMJr: Well, I'll talk to you again between four and five. S: All right, and I'll have a full check up made after the close of the market. HMJr: Thank you. S: All right. Regraded Uclassified 123 December 2, 1938. 3:28 p.m. HMJr: Hello. Operator: Mr.Corcoran. Go ahead. HMJr: Hello. Tom Corcoran: Mr. Secretary, this is Tom Corcoran, sir. HMJr: No, really. C: Harry Hopkins talked to me the other day about a talk you had with him about the present District Attorney in Chicago. HMJr: Yes. C: The new one, HMJr: That's right. C: That fellow 18 the Cardinal's personal counsel. HMJr: So I understand. C: Is absolutely straight. HMJr: Grand. C: And absolutely honest. HMJr: Fine. C: And has got the nerve of a lion. HMJr: He'll need it. C: Now, what I wanted to suggest was this. What you were talking about 1s such precious freight that you don't want to take any chances unless you're absolutely eure. HMJr: Right. C: I'm going to meet the Cardinal on that cutter that's being sent out to meet him on Sunday. HMJr: Fine. Regraded Uclassified 124 - a - C: I'll bring that fellow back here on Monday. HMJr: Fine. O: To 800 Bob Jackson and to see Ickes about some other things, and I wondered if without your telling him what you wanted, I could bring him in to you, and you could take a look at him and talk to him long enough to get your own feeling of him, and then you can talk with Bob and with - Operator: Hello. C: Hello, please. You could talk with Bob and with Harold Ickes, and get an idea of whether you want to take your chances. HMJr: Well, it's very funny that our minds should be running in the same channel because this morning I told Herman Oliphant to get in touch with Bob Jackson. C: Yes. HMJr: And tell Campbell to come down, I wanted to get acquainted. C: Yes. HMJr: I wanted to have a heart to heart talk with him. C: Well, he'll be in on Monday, sir. HMJr: Fine. 0: All right, sir, and I'll call you when we get in? HMJr: Will you? ⑆ Thank you. HMJr: Now wait a minute, you'd better let me give you an appointment now, because - C: All right, sir. HMJr: I've got, I've got a very tight day on Monday. C: What I thought was you might want to make the appoint- ment pretty late 80 that you could get a check on him from the other two people that talked to him before you talked to him. Regraded Uclassified 125 - 3 - HMJr: Well, it's a question of - I can see him around - you mean late? C: I thought you might want to sir. I mean anytime, of course, that you want to see him, but I thought you might want to have & telephone contact with Bob Jackson and Ickes after they'd talked to him. HMJr: Oh! C: Before you talked to him. So you'd have a pretty decent judgment of what other people thought of him before you spoke to him. HMJr: Well, I've got to do business with him anyway. C: That's right. HMJr: And what I want to do 18 to paint the picture to him. C: Yes. HMJr: And show him that inside of twelve months if he will take this opportunity which I'm putting on his doorstep. C: Yes. HMJr: He - his name will be 8.8 well or better known than Tom Dewey. C: That's right. HMJr: It's entirely up to him. C: Yes, sir. HMJr: But if he will play along with us and 800 this opportunity his name will be known ae well as Tom Dewey, inside of twelve months. C: That's right, it's the greatest chance he's ever - & fellow has ever had. HMJr: If - and we need a Democratic Tom Dewey. C: Yes. HMJr: Right? Regraded Uclassified 126 - 4 - C: And there he 18. He's handsome and he was the head of the Youth Administration out there and an excellent trial lawyer. HMJr: I'm very glad he's handsome. C: Well I mean that helps. HMJr: (laughter. ) C: That helps like the deuce. HMJr: All right. C: In front of a jury, sir, - HMJr: Listen, you're a little serious tonight. C: (laughter) HMJr: That's better, that's better. Listen I can't be serious all day long. You fellows come in here, I tell you what you'd better do, it'll be either three-thirty or four-thirty. C: All right, sir. Either one. HMJr: You call up Monday morning. C: All right, sir. HMJr: And has he got blue eyes? C: He's got blue eyes. HMJr: Wonderful. C: (laughter) HMJr: All right, that's better. C: All right. Thank you, thank you. Regraded Uclassified 127 Mr. Arakawa's visit. December 2, 1938 3:30 p. m. Present: Mr. Gibbons Mr. Taylor Mr. Oliphant Mr. Cairne Dr. White HM,Jr: I have just seen Mr. Arakawa and I made the poor fellow sweat by not answering any of his ques- tions, and as he went out he bumped into Mr. Chen. And Mr. Arakawa said if I will just tell him what I have on my mind, he will be glad to communicate it to the Minister of Finance, who 1s & very important person. So I said, "You write out some questions you want to know and I will be glad to consider it. I think it would be nice for you to meet Mr. Butterworth, who was our Finan- cial Attache in London, and Mr. Cochran." And then he goes out and trips over Mr. K. P. Chen! (Note: The above group came in to discuss a mem- orandum addressed to the President on the possibility of imposing German counteryailing duties. That meeting 1s transcribed separately.) Regraded Uclassified 128 December 2, 1938 3:30 p. m. Present: Mr. Gibbons Mr. Taylor Mr. Cliphant Mr. Cairns Dr. White HM,Jr: (Reading memorandum to the President, at- tached hereto). "In the course of the Treasury Department's ad- ministration of the customs laws, there has come to my attention, particularly in reports made available to the Treasury by the Departments of State and Commerce, evidence that American trade and enterprise in the areas of China now under Japanese control are being discriminated against If you don't mind, Mr. Cairns, if you wrote this, I would like to start it definitely. Instead of saying "In the course of the Treasury Department's administration" I would like to say about my responsi- bility under the law. Mr. Oliphant: I worked that formula up there and the reason for putting it that way is as follows. What you are doing 1s calling the President's attention to facts, on the basis of which he may want to exercise his pwoer and authority under the law. This is the case of the policeman on the beat. HM,Jr: It's not up to me to act, like we did on the German situation? Mr.Oliphant: No. It's different. You observe these facts. HM,Jr: Right. That does make a difference. Tell me -- oh, here are instances. Here 18 the appendix. Mr. Oliphant: Referred to as an appendix in page Regraded Uclassified 129 -2- one. "Instances of the foregoing. HM,Jr: And have these never been called to his attention? Mr. Oliphant: No, not in this form. I suppose they showed him before the note was sent to Japan. HM,Jr; Well, now, let me put myself mentally in the President's place. Aren't we putting him sort of on the spot when I send him this thing? I will put the question another way. In the case of Austria, or any other, have we ever followed the procedure to bring it to the President's attention this way? Mr. Cairns: Not that I am aware of. The Pres- ident 18 not required to act upon receit of this memo- randum by any duty imposed on him by Statute. He has to be satisfied it's in the public interest. Mr. Oliphant: And you are not authorized to act even though you have the information. The only thing you are authorized to do is call it to the President's attention 80 he will have a chance to make up his mind whether he wants to act. HM,Jr: You mean to say in the whole world there has never been any occasion like this before? Dr. White: Many instances where there have been discriminations and Tariff has cooperated with the State Department and the State Department has had discussions with the respective Governments and it has never been necessary to invoke this and modification made consequent upon the discussion usually satisfied the State Depart- ment and action usually not taken -- has never been taken under 338. HM,Jr: In no case? Dr. White: No negotiations have taken place. Mr. Cairns: Section 338 was not enacted until 1922 and when it was enacted even the situation as it exists in China was unknown to the legislators. In Regraded Uclassified 130 -3- drafting 338 they had no situation in mind. It's unique. HM,Jr: Where is it unique? Mr. Cairns: Japanese operations in China. HM,Jr: 338 was not passed with that in mind be- cause it did not exist at that time? Mr. Cairns: It had not existed and you can see it was not in mind in 1922. Dr. White: No precedent. There is a distinction -- if communication of that kind were made public, that would definitely put him on the spot; if it 1a merely between you and the President, if he does not want to take action, it dies. HM,Jr: I ought to hand it to him. Mr. Gibbons: I think you ought to hand it to him. HM,Jr: "Do you want this, Mr. Prsident?" Mr. Gibbons: When will he be back? HM,Jr: Tuesday. Mr. Taylor: Funny situation here, haven't you? Be- cause you have got all the puppet States, eto., which sup- posedly have an entity of their own. No one has recog- nized them as existing, but they supposedly have. Actu- ally they will be the people who would be discriminating against our commerce. Mr. Cairns: The law covers any foreign country, county, subidivision, part. We had up to 22 discriminations in & country against another country. Japan in Japan against the United States. Now we have Japan in North China against the United States. Mr. Taylor: Which, supposedly, has an entity of its own. Regraded Uclassified 131 -4- Mr. Gibbons: The State Department has not recognized the Japanese. Same thing in Ethiopia, the State Depart- ment does not recognize the ..... Dr. White: That's true and that's the interpretation of the Legal Department. HM,Jr: I think the thing to do is show it to the Pres- ident and show him there is such a thing as Section 338, BQ when he gets into the discussion he can or cannot use it if he wants it. But I would not want to send it down to Warm Springs cold, especially when we know this thing 18 coming to B. head. I Just think, hand it to him and say here it 1s; if you want it, it 1s available. Mr. Cairne: It's a powerful weapon. Dr. White: If they withdraw the most favored nation clause it would have no effect against Japan because all imports thereby affected is less than 1% of our imports from Japan. HM,Jr: Why should that not be included? Why this 18 more preferable than to impose the most favored nation. It seems to me the argument, when he sends it over, Well this is all too drastic. The thing to do 18 the most favored nation clause. That there is no reason for doing that be- cause it a ffects only 1% of the goods. Dr. White: We can put it in one paragraph and include it in the appendix. Very important also, would be a study, if he 18 interested, how we would be affected, how our econ- ony would be affected, and we have a study partly prepared and can easily finish it in two or three days. HM.Jr: He only gets back on Tuesday. I have no plans, but the earliest I could see him would be Tuesday. Could you have it all by Tuesday? Dr. White: Have that ready in case he asks for it? HM,Jr: Yes, the whole business. Say this: Mr. Pres- ident, here are alternatives. If you are going to act, you can invoke the most favored nation clause which would only affect 1%; (2) you can use Section 338. This is what it Regraded Uclassified 132 -5- will do to Japan and this 18 what it will do to us. I think you have the whole thing complete. And put a little cover on it and give him the whole thing. Mr. Taylor: Haven't you got enough cases about Japan? It's discriminating. Dr. White: Just one, possibly one good case. The State Department may have more. We didn't want to go there for additional information. Mr. Taylor: You did send over some stuff sometime ago about the Japanese themselves. Dr. White: It was their discrimination in Manchukuo and North China. One case in Japan. Strength of the case would have to rest on the interpretation that Japan 1s re- sponsible for what's happening in North China, despite, or in view of the fact they are puppet Governmets. They might technically claim that if Manchukuo does something, it's not their fault. HM,Jr: Have we recognized Manchukuo? Dr. White: No. Even our import statistics still call it Manchuria, but that does not weaken the case; it strengthens it. HM,Jr: Anyway, I would get it in, wrapped with pink ribbon for the outside. Dr. White: (presenting list of names) Those namesof men are selected from the list given us by the Tariff Com- mission. Mr. Oliphant: What's the idea? Dr. White: To get a group of men down, leaders in their field, who will come to an opinion of economic cri- terion. In most cases we are not finding injury, and we want to protect the Secretary against any future claims that he is not acting legally. Regraded Uclassified 133 -6- Mr. Oliphant: There 1s a question, I think, of the wisdom of calling in a group of outsiders for your own protection. HM,Jr: That's all right. I will walk part way home and you (Dr. White) can explain it to me. I will be ready in 10 or 15 minutes. o0o-o0o Regraded Uclassified 134 Note: Appendix 1, referred to in first paragraph of this memorandum, 1s attached to complete memorandum for the President dated 12/5/38. 135 C 0 P Y MEMORANDUM FOR THE PRESIDENT In the course of the Treasury Department's administration of the customs laws, there has come to my attention, particularly in reports made available to the Treasury by the Departments of State and Commerce, evidence that American trade and enterprise in the areas of China now under Japanese control are being die- criminated against, directly and indirectly, by Japan through ex- changecontrol, the establishment of monopolies, the granting of special preferences and by the imposition of restrictions upon American trade and shipping, all of which operate to favor Japanese commerce and to hamper American commerce. Instances of the foregoing are set forth in the attached list marked Appendix A., This evidence having come to my attention, I deem it my duty to lay it before you in order that you may consider its suf- ficiencey end, if deemed sufficient, to determine whether to take that action you are authorized to toke in the premises. Insamich as those reports show that Japan discriminates in fact against the commerce of the United States in Bress of China under Japanese con- trol, there is occasion for you to determine whether, under the authority of section 338 of the Tariff Act of 1930 (U.S.C. title 19, sec. 1338), new or additional duties should be imposed upon Japanese products imported into the United States. The Treasury Department construes this section to mean, in its applicability to the present situation, that whenever the President finds that Japan discriminates in fact in Chine against the commerce of the United States, directly or indirectly, in such manner as to place the commerce of the United States at a disadvantage compared with the commerce of Japan, or of any other country foreign to China, he shall by proclamation declare new or additional duties upon articles wholly or in part the growth or product of Japan if he finds that the public interest will be served thereby. Section 338 further provides that, if the foreign country maintains or increases its discrimination against the commerce of the United States after the issuence of the proclamation authorized by section 338, the President, if he deems it consistent with the interests of the United States, may issue 8 further proclemation directing that such products of the foreign country or such articles imported in its vessele as be shall deem consistent with the public intereste shall be excluded from importation into the United States. Regraded Uclassified - 8 135 In addition, it seems clear that the acts and policies of Japan in evidence tend to defeat the expension of foreign markets for products of the United States. Therefore, there is elso occasion for you to determine whether, under the authority of section 350 of the Teriff Act of 1930, BB amended, (U.S.C. title 19, sec. 1351), the application of the reduced rates of duties established pursuant to the trade agreements entered into under that Act should be made inapplicable to the products of Japan. You have exercised this authority on fourteen occasions in connection with discrimination by Germany and the higher duties so imposed are still in effect. It was exercised in the case of Australia on five occasions. The discrimination in this case has been discontinued. Confirmatory of my impression of the existence, the wide extent, and the serious effects of the practices to which I have referred 1s the text of the note of October 6, 1938, in which the United States protested to Japan against the direct and indirect discrimination now being applied by Japan to American commerce in the areas of China under Japanese control. The intention of Jajan to adhere to the policies und practices complained of by the United States in its note of October 6 1s evidenced by the Japanese reply of November 18 to that note, as published in the press. Attached 16 a list of: (a) Leading items of import from Japan that would be affected if all goods imported from Japan now free of duty were made subject to 50 percent ed valorem duty under section 338 of the Teriff Act of 1930. (b) Leading items now imported from Japan under existing tariff rates which would 08 subject to B duty of 50 percent ad valorem under section 338 of the Tariff Act of 1930 in addition to the duty now imposed by law. (c) The percentage of Japanese imports that would be subject to higher rates if trede agreement rates were withdrewn from Jepan under Section 350 of the Tariff Act. (d) Items imported fr G Japan indispensable for the United States and difficult to obtain directly form sources other than Jepan. HC/cp 12/2'38 Regraded Uclassified 137 December 2, 1938. 4:09 p.m. HMJr: Hello. Operator: Mrs. Wathey. HMJr: Oh. Mrs? 0: Mrs. Yes. HMJr: Hello Mrs. W: Hello. HMJr: : Mrs. Wathey? W: Yes. HMJr: This 18 Mr. Morgenthau. W: Yes Mr. Morgenthau. HMJr: I'm 80 sorry to hear that my dog stepped on your dog. W: Yes. HMJr: And if the dog is at all 111, or there's anything that I can do, I'd like to do it. W: Well, that's awfully kind of you Mr. Morgenthau. So far the dog seems to be all right. HMJr: Yes. W: I took her to the doctor immediately afterwards and had her examined. HMJr: Yes. W: And other than the scratch and a little sprained ligament in her side that he says will be all right unless it absoesses. HMJr: Yes. W: And 80 far there has been no signs of anything else. HMJr: Well if anything turns up I wish you'd let me know, or if there's anything that I can do. Regraded Uclassified 138 - 2 - W: Well that's quite nice Mr. Morgenthau and Mr. thought that you'd like to know about the dog. HMJr: Yes. W: So I appreciate you calling and I think the dog is going to be all right. HMJr: Well I hope 80. W: Thank you 80 much. HMJr: Goodbye. Regraded Uclassified 139 December 2, 1938, 4:21 p.m. HMJr: Hello. Operator: Mr. Sproul. HMJr: Hello. Allan Sproul: Hello, Mr. Secretary. Sorry I wasn't - couldn't get on the phone before. HMJr: I supposed you had somebody with you. S: That's right. HMJr: I wanted to go home. S: Yes, HMJr: Tell me, how does it look tonight? S: Well the market acted very well today I think. There's no question about it. It took the announcement very well. It was strong in all parts of the market. HMJr: Good, S: And it looke good to ne tonight. HMJr: Good. S: As I see it tonight we could go ahead on the basis we discussed last night. HMJr: Nine years? S: Yes. HMJr: You still think BO. S: Yes. I could take another look at it in the morning, but that's the way I Bee it now. HWr: Good for you. I thought maybe somebody had been giving you the works today. S: Well I've heard 80 much talk on the other side I must admit. HWr: Well you're a better man than I thought Gunga Din. Regraded Uclassified 140 - 2 - S: (laughter) AlJr: It's all right. 8: There's been some pressure on the other side but I still see it that way. HMJr: Good for you. I thought you might succumb. S: Well, I haven't yet. HWr: All right. Well, we'll be talking in the morning. S: Right. HMJr: But certainly everything that happened today makes the thing - the proposal that much sweeter. S: I think BO. I think it was taken very well. The market acted very well today. HiJr: Did you hear anything about the leak, about yesterday afternoon? S; No, I stirred around here a. little but I haven't been able to/cover anything on it, HMJr: All right. Well I'll be talking to you in the morning. Ae of tonight I haven't changed. S: Well, neither have I. HMJr: Fine. S: All right, HMJr: Thank you. 8: Goodbye. Regraded Uclassified 141 December 2, 1938. 4:26 p.m. HMJr: Hello Operator: Dr. Burgess. Go ahead. HMJr: Hello. Randolph Burgess: Hello Henry. HMJr: How are you? B: I'm pretty well. HMJr: What did you hear about our proposed issue? B: Well the market - the market says that it likes it. HMJr: Yes they do don't they. B: That 18 all the prices went up. HMJr: Yes. B: Right along the line, almost frightens me, it went up too much. HMJr: You don't frighten as easy as all that do you? B: Well I don't really, not really frightened about it, so they'll take - they'll take it all right. HMJr: Well the only really place for an argument right now 1s, as 16 between an eight and a half and a nine year. B: Yes, that's the only question I should think. HMJr: Have you got any feelings? B: Well, I'd lean toward the eight and a half, Henry. HMJr: Uh-huh. B: Because I think it's a little bit safer. HMJr: Yes. B: As far as the long bond 1e concerned. HMJr: How do you mean? Regraded Uclassified 142 - 2 - B: That is I think with the nine year you might get too heavy subscriptions for the long bond, HMJr: Yes. B: That 18, a lot of people would figure it out, say, well, the long bond 16 worth & hundred and two. HMJr: Yes. B: And the nine year 18 only worth a hundred and one and a quarter. HMJr: Hh-huh. B: So I'll take the long bond and then sell it again. HMJr: Uh-huh. B: Just thinking what we'd do for example. HMJr: And what would you do? B: With a nine year I'm inclined to think we might take the long bond and try to make three quarters of a point. HMJr: Uh-huh. B: Or a point. HMJr: Uh-huh. B: So there's a little danger of getting too many of the long bonds. HMJr: I see. B: I think they like the short one pretty well. There'd be a llt of fellows who'll take it even if it's nine years in preference, but I think you'd be just & little bit safer on an eight and a half, and then you'd avoid the possible danger of too large a subscription for the long bond. HMJr: Uh-huh. B; Which might he a little bit subject to some sort of a Jam if something happens. I don't think it's a great matter, but I would think the eight and B. half a little bit safer. Regraded Uclassified 143 - 3 - HMJr: Are you going to be in your office tomorrow? B: What's that? HMJr: Are you going to be in your office tomorrow? B: I wasn't going to be but I will be if you'd like me to. HMJr: No. No. B: I'll be at home, I'll be in touch with things. HMJr: You will be. B: I'll be in my apartment, yes. HMJr: Well, I may give you a ring. B: All right. Fine. I'll be in touch. HMJr: But the market certainly took the thing awfully well, didn't it? B: Oh very well indeed. HMJr: Yes. I think it's all right. B: So it's going to be a success either way you do it. HMJr: Oh yes, it's Just a question - B: That's right. HMJr: - of, I mean eight and a half or nine, which way we throw it. B: Yes. That's right. HMJr: Righto. B: All right, sir, HMJr: Thank you. Regraded Uclassified 144 CABLE From: Bankers Trust Company of N. Y. London Office Date: December 2, 1938 Friday #369. No pronounced tendency spot dollars forwards strongly wanted. Spot forward Paris wanted. Estimated Benque de France obtained about 8,000,000 pounds. Spot forward belgas strongly offered on rumors possible Cabinet crisis and suggestion Belgium might enter sterling bloc. De Castellane reports sanctions taken by Government against strikers causing agitation by Left Parties to create unrest. Gold beginning flow to banks exchange being sold by all classes including individuals and commercial firms. Bourse stocks and bonds very strong call money 1/2-0-0. Talk further lowering bank rate. CONFIDENTIAL Regraded Uclassified 145 REB GRAY London Dated DECEMBER 2, 1938 Rec'd 3:03 P. m. Secretary of State, Washington, 1385, DEGEMBER 2, 6 P. m. FOR TREASURY. After yesterday when the British fund operated both ways but lost dollars on balance the rate falling from 4.69 to 4.68, today some support was given to sterling until gold fixing when the rate was 4.67-1/8. Since the fixing the British fund has apparently not operated, the dollar being offered around 4.67-1/2 to 3/4 most of the afternoon and latterly going to 4.68-5/8 on NEW York dollar sales. Gold turnover was heavy today 546 bars bEing sold as compared with 267 yesterday. The price was increased by four and a half pence to 148 shillings 11 pence giving a premium of one-half pence. 208 bars were married the remainder being supplied by the British fund. About 340 were taken for arbitrage. The French authorities bought probably over pounds 6,000,000 of sterling today moving the price from 178.18 by stages Regraded Uclassified 146 REB 2- #1385, From London,Dec,2,6p.m. stages to 177.80. The rate reacted, however, slightly after the Bank of France's operations closed down in the late afternoon to 177.93. The treasury bill rate at today's tender was about 18 shillings 1 penny per cent as compared with 17 shillings 7.8 pence per cent last WEEK. KENNEDY WWC HTM 147 PARAPHRASE OF TELEGRAM RECEIVED FROM: American Embassy, Parie, France DATE: December 2, 1938, 4 p.m. No.: 2036 On the Paris market today there was again a very strong demand for france because of the covering of short positions in france and substantial French capital re- patriation. This morning at the Bank of France it was learned that before 11 a.m. almost 3,000,000 pounde had been acquired by the fund. It was also learned that about 3 billion francs in gold had been retrieved since the beginning of the present favorable movement. The Bank could not foresee that there would be any immediate slackening of this movement. The rate for sterling is now 177.80, having been 178.20. The fund is the principal supplier of francs. One month sterling is par and the rate for three months is 50 centimes. In today's transactions the Lelga showed some weakness. Good tone for security market. Fair progress in rentee and other French securities. December 8 is the date for the reassembling of Parliament. It is believed that by that date the prepara- tion of the budget for 1939 will be sufficiently advanced to permit discussion. However, it is not believed that Parliament will give final approval before the end of 1938. It will be necessary, under euch circumstances, to Regraded Uclassified 148 - 2 - to get parliamentary approval of one or two "provisional monthly credits" for the Government. In financial circles the opinion appears to prevail that when the Government appears before Parliament it will secure a comfortable majority; nevertheless, the press is urging the administration as well as private employers to avoid harshness in applying sanctions to strikers as it is feared that otherwise there may result troublesome labor unrest. Today a decree was published reducing the interest rate for 75 to 105 day ordinary Treasury bonds to 2-1/4%; it was formerly 2-3/8%. The new rate is 1/4% under the official discount rate. END MESSAGE. WILSON. EA:LWW Regraded Uclassified (brost.) 12/2/38 149 Tear Sir: The Secretary of the Treasury is reexamining his responsi- bilities under the Antidumping Act of 1921. To aid him in the Cormulation of policy with respect to the administration of that ct, he is calling to Washington a small group of experts and insinessmen whom he feels would be helpful in advising him. The Secretary has asked me to invite you to participate in a conference to be held at the Treasury on at o'clock. A copy of the Antidumping Act of 1921 is enclosed for your information. You will note that Section 201(a) of that Act re- quires that when the Secretary of the Treasury "finds that an in- duptry in the United States is being or is likely to be injured or is prevented from being established" by reason of the importa- tion of merchandise of a kind which is being sold or likely to be sold at less than its "fair value" (as defined in the Act), then he shall issue a public finding of dumping. This conference is being called to consider only those problems concerned with the determination of injury to the domestic industry. The Secretary desires to keep highly confidential both the fact of the conference and the nature of the subject matter. Regraded Uclassified 150 prof. Melvin G. de Chazeau - University of Virginia Proj. Alvin H. Hansen - Harvard University Prof. Frank A. Southard - Cornell University Prof. Jacob Viner - University of Chicago Sewell E. Avery, Fresident, Montgomery Ward Company, Chicago, Ill. Tresident, U. S. Cypsum Co. Member of Board, U. S. Steel Corp. Col. Harry L, Bailey, Wellington, Sears Co., 65 Worth Street, New York, N.Y. Is in charge of operations of this firm which reputedly processes about 5 percent of domestic cotton crop. An outstanding figure in the industry; is generally fair-minded but inclined to a protectionist view. Is very active in the Cotton Textile Institute and in activities bear- ing on relationship of the cotton textile industry to the public. Company a leading exporter of cotton textiles. Carl F. Danner, President, American Hide and Leather Co., Boston, Mass. An outstanding personality in the tanning industry and highly respected in the business world. Has been president of his company since 1925. Mechanical engineer by training, was in the steel business until called in to reorganize Continental Leather Co. Was president of the Tanners' Council of America in 1936-37. The industry with which Mr. Danner is connected is both an important importer and exporter of hides and leather. The Commission has found Kr. Danner well able to understand both sides of the import question. C. Donald, Managing Director, National Electrical Manufacturers Associa- tion, 155 E. 44th St., New York, N. Y. Progressive trade association executive. Leader in his field. Enjoys the highest reputation among manufacturers and trade association executives. Wide knowledge in problems of domestic production, import and export. Canadian by birth; naturalized American citizen. Ph.D. in economics, University of Chicago, 1914. Curt & Pfeiffer, President, National Council of American Importers, New York, N.T. Although the designation given here is that of a trade association, Mr. Ffeiffer is more properly identified as a businessman. Tas for many years vice president of George Borgfeldt and Co., New York City, one of the largest houses in the United States importing general lines of merchandise. He had studied practically all phases of the import trade and is also familiar with conditions in domestic manufacture. Is very well informed on tariff problems and matters of customs administration. Regraded Uclassified 151 - 2 - Q. F. Walker, Economist, Macy Department Store, New York, N.Y. Well versed in merchandising problems. Familiar with import problems and also conditions in domestic industry. Able; fair. Walter S. Tower, American Iron and Steel Institute, 350 - 5th Ave., New York, N.Y. Secretary, American Iron and Steel Institute since 1933. Former professor of economics at the University of Chicago. Trade expert, U. S. Shipping Board, 1918-19. Served with Peace Commission, 1919. Commercial Attache, American Embassy in London, 1921-24 Advisor, Consolidated Steel Corp., 1919-21 Executive, Bethlehem Steel Corp., 1924-33 Republican Commission believes Mr. Tower one of the best informed persons on general conditions in the steel industry in the United States and foreign countries; his opinions are fair and well balanced. Vr. Oscar Ryder - Tariff Commission Mr. Leslie Wheeler - Department of Agriculture Hon. Francis B. Sayre, Department of State Mr. Alexander V. Dye, Department of Commerce. Regraded Uclassified 152 GROUP MEETING December 2, 1938. 9:45 A. M. Present: Mr. Oliphant Mr. Gaston Mr. Taylor Mr. Haas Mr. Duffield Mr. Hanes Mr. Gibbons Mr. Lochhead Mr. White Mr. McReynolds Mrs. Klotz H.M.Jr: Herman, I may - I think I am responsible for this. Hanes isn't here, is he? Duffield: He's coming in. (Mr. Hanes comes in.) H.M.Jr: I'll read it out loud. "Treasury to offer 2 3/4 per cent bonds and five year notes for cash in December financing program. "The Treasury announced today that it will offer 2 3/4 per cent long term bonds. "The Treasury announced today that it will offer 2 3/4 per cent long term bonds for 400,000,000 dollars of the new cash to be borrowed in the December 15 financing and five year notes for $300,000,000 of the cash required. "In connection with the conversion of the March 15 note maturities of 942,000,000 dollars the Treasury is making a three-way offer including the 2 3/4 per cent long term bonds, the five year notes and in addition a bond of a shorter maturity bearing two per cent. "The final announcement of the financing program will cover the term of the bonds and the interest coupon on the notes. Regraded Uclassified 153 - 2 - "The coupon on the 2 3/4 per cent bonds offered for cash is 1/4 of a per cent greater than the interest given on the 10-12 year bonds sold in the September financing." That is O. K., Herbert; a good job. Here is the U. P. Gaston: Not one and a quarter; it's a quarter per cent. H.M.Jr: "The Treasury announced that the cash offering ..." That is U. P. " of its December financing program will consist of $400,000,000 two-and-three- quarters They've just got a "bee" in it here. Dow Jones is all right. That 942, that is O.K. Just a nice little job. What I wanted to say was this, Herman. Is Hanes here? Hanes: Yes sir. R.M.Jr: I asked, some time ago, - this is one of these triple confidential things - to get me a lawyer, who could try the Moe Annenberg case, and that was when Mr. Igoe was still United States District Attorney. It was on that assumption I asked for someone. Since then they have designated Mr. Campbell. I suppose Campbell doesn't take office until - when? Oliphant: I think he has taken office. H.M.Jr: All right. Therefore, the reason I had to get a special attorney, I think, has disappeared. Well, this fellow isn't - who is - who's going to appoint the other fellow? Oliphant: Well, they have appointed him Special Assistant Attorney General. The other fellow is a nice man, a capable young fellow, but this requires a technical, criminal H.M.Jr: I don't want, if you don't mind, - this is the way I'd like to and I'd like to talk to Bob Jackson. Regraded Uclassified 154 - 3 - Oliphant: That requires a technical lawyer. H.M.Jr: I'd like to tell Robert Jackson to invite Camp- bell to come down; I'd like to meet him next week; I'd like to sit down with him and tell him the whole thing; I'd like to paint the picture of it, and explain to him that in a year he can be an international figure in law enforcement; and let him pick his own assistants. I want to tell him that Henry Morgenthau, Jr. is counting on Mr. Campbell to do this, and I don't want to put anybody in his hands. I want to appeal to him, this being his first case, he can be as good or better than Dewey in one year. I want to put it right up to him and not tell him who his assistants should be. "No one told Dewey who he should pick as his assistants; you don't want me to tell you who to pick for your assistants." I say, let Bob Jackson bring Campbell down here next week. I'd like to talk to him personally. The whole picture is changed since Igoe is out. I want to appeal to him, "This is your responsi- bility; you go to it," and not have us pick special fellows, and I don't like the fellows you picked, anyway. I don't want some fellow who is a partner - even though he is not a partner, he was on the payroll Mrs. Klotz: You talking about Anderson? H.M.Jr: I want to appeal to Campbell in that way, and I want to get to know Campbell and work with Campbell and show him the horizon. Gibbons: You know anything about Campbell's political background? I don't. The only thing I know, he's head of the National Catholic Youth movement. H.M.Jr: Not only that, but he is the President of .... (organization not heard); he's a grand young fel- low. Gibbons: The only thing I had in mind was the fact that any- body might get in on his former practice and bring pressure to bear on him. Regraded Uclassified 155 - 4 - H.M.Jr: They tell me he's as clean as a whistle. Of course, time only can tell. This having a special attorney was my idea. I want to withdraw it; I want to meet Campbell and talk to him. Gibbons: I think you can get a good idea, based on his antecedents. He's all right. He is not a trial lawyer. H.M.Jr: In other words, I want to withdraw my suggestion. Does it make sense? Oliphant: Yes, it does. It is subject to this qualification. You have to bear in mind, in order to win a case you have to have a technician. It's like picking a man for a formal appendix operation; a groceryman just can't do it. Regardless of how good Campbell's heart is H.M.Jr: All true, but the Superintendent of the hospital doesn't want a surgeon forced on him. Oliphant: Yes. H.M.Jr: I want to talk to the Superintendent of the hos- pital, and when he comes down, in a very nice way, we can say, "We'd appreciate it if you let us go over with you who you are going to have, because it means so much, but we are looking to you, Mr. Campbell." Oliphant: I think it's a good idea and I'll talk to Bob as to when he can be down. H.M.Jr: (To Mrs. Klotz:) And will you tell Irey I've changed my position on this idea. Everybody happy? And Hanes, this comes under you. Hanes: Yes, fine. Oliphant: The more reports we get about Campbell, the better they are. Regraded Uclassified 156 in I I H.M.Jr: (To Mr. Taylor:) Remember the fellow at your house? Taylor: Absolutely, and he mentioned to me - for instance, I think I told you, or Dan - no, Herman it was, that Bill Douglas knows him extremely well and thinks he is just tops, and that's good enough for me. H.M.Jr: Right. Well, I think - well, I am going to put myself in the position - I wouldn't want to start out and have him feel the Treasury is suspicious of him, which we are not, but if we have him come on down and take him into the Treasury family Oliphant: We ought to visit with him a while, and maybe have lunch with him. H.M.Jr: Check, Herman? Oliphant: Sure; I'll have lunch with him and arrange a dinner for him with some of the lawyers. H.M.Jr: If he will be here next Thursday I'd like to have him for lunch - next Thursday. (To Mr. Gaston:) Merger accepted? Gaston: I didn't telephone him; I wrote to him. I expect to hear from him today. I also sent him that other material. H.M.Jr: Mr. Bell? Bell: I have nothing. H.M.Jr: Aren't you a little nervous, with all the people down at Warm Springs? Bell: No, I have kind of gotten used to that. H.M.Jr: All right. Mr. Oliphant? Oliphant: (Nods "Nothing.") H.M.Jr: I hear there were empty seats yesterday afternoon. Were you there? Regraded Uclassified 157 - 6 - Oliphant: Not in the afternoon. H.M.Jr: Just as the papers said? Oliphant: It was just like a university lecture, elementary. H.M.Jr: Wasn't what they expected. Being strictly in the room, I preferred Professor Lubin's lecture to Professor Eccles' lecture. He did 8 much better job than Professor Eccles. Oliphant: Yes, I think so. My only objection was, he crowded into one day what should have been spread over three. Bell: Both got their figures on the air. H.M.Jr: That is the way they make nitrates. (Laughter) Taylor: That's what was expected, I think. N.M.Jr: Wonderful, Dan. That takes - we ought to have a prize for the week. (H.M.Jr. pins paper clip on Mr. Bell's lapel.) Bell: Well, I certainly ought to get one of those springs. Gaston: That is clipping; that isn't allowed on the 1938 rolls. Klotz: You have been decorated. Bell: All right. Oliphant: All right. H.M.Jr: (Points to Mr. Gaston.) Gaston: I have a letter from the Treasury Correspondents Association on the subject of Mr. Wilcox. H.M.Jr: All right. Gaston: And they went over the situation with Mr. Wilcox, with the result Mr. Wilcox made certain changes and he says - and he has a letter from his Regraded Uclassified 158 publisher saying this is not his private venture; that it is a publication of the American Banker. They have changed the title of the thing to show it is by The American Banker, and not by U. B. Wilcox and associates. He has agreed to give ne copies, and anybody else in the Treasury who wants copies; he has agreed to post copies on the Treasury bulletin board in the press room. I had a talk with Mr. Wilcox and he agreed he would give me a chance to talk with him about anything he proposed to include, which was questionable, and he would let me see it regularly, and he would be very careful in what he said. The Treasury Correspondents Association, in view of these changes, recommends that - says that they believe Mr. Wilcox is still entitled to a status as a reporter and representative of the American Banker in the Treasury Department and that this letter, in the new form which he is getting out, is not any violation of ethics or rules. And I think that in view of Wilcox' different attitude and the changes made in the publication, it would be better to let him go along with it and see how it works out, rather than to throw him out and make a real enemy. H.W.Jr: What will the new letter be called? Gaston: It is called the same as it has been called. The November 27 is the first sample of the new style issued from the Washington A. B. Bureau and is still called "Weekly Review of Washington Banking Trends and Backgrounds", and he tells me it is their purpose, eventually, to print this thing. It 1s not going to be secret any more; it is going to be available to anyone who wants to see it. It is practically a weekly publica- tion. H.M.Jr: And you recommend we let him stay on? Gaston: I recommend we let him stay on. I cautioned him on this paragraph (indicating) - sald it was a dangerous thing. It isthe last thrust at Ciannini; that's what made Giannini mad. Regraded Uclassified 159 - 8 - H.M.Jr: Well, I accept your recommendation. Herbert, read this, will you, and see what it is all about. Excuse me just a minute, will you, and let me read these. (Pause) Gaston: 0. K. H.M.Jr: Uh huh. I'll talk to you about that afterward. Oliphant: Can I get copies of that, Herbert? Gaston: Yes; yes. H.M.Jr: Is U. P. all right? Gaston: U. P. is all right. The last sentence is all right; it says, "The term of the two per cent bond in the conversion offering, a Treasury official said, obviously will be shorter than the one offered for cash." H.M.Jr: What is that? Gaston: The term of the two per cent bond in the Treasury will be shorter. That is, a two per cent bond is bound to be shorter than the two and three/quarters. H.M.Jr: (Aside, to Mrs. Klotz.) Klotz: Yes, uh huh. H.M.Jr: 0. K. Anything else, Herbert? Gaston: That is all. H.M.Jr: George? Haas: I have nothing this morning. H.M.Jr: (Nods to Mr. Duffield.) Duffield: Nothing. Regraded Uclassified 100 - 9 - Taylor: It seems that the nineteenth is a Monday and the twentieth is & Tuesday. H.M.Jr: That is right. Taylor: So I said the twentieth. H.M.Jr: Tuesday; that is all right. Taylor: Right. H.M.Jr: Tuesday. Did you ever take up with Agriculture the question of this mang-.- how do you pronounce it? Taylor: Manganese. E.M.Jr: Manganese. I am always thinking of magnesium. ..... the question of swapping. Have you opened that up at all? Taylor: I didn't push it; I just mentioned it in this rather long conversation I had. 9.M.Jr: Can you give it a little push? Whether they are talking to them or not? Taylor: Yeah. H.M.Jr: Huh? Taylor: I think you're going to be disappointed on it. H.M.Jr: Well, I'd just like to find out whether they are or not, you see. Huh? Taylor: Yes. H.M.Jr: Will you ask them? Taylor: Uh huh? H.M.Jr: Let me know? Taylor: (Nods "Yes.") H.M.Jr: (Nods to Mr. Hanes.) Regraded Uclassified - 10 - 161 Hanes: (Nods "Nothing.") H.M.Jr: (Nods to Mr. Gibbons.) Gibbons: Monday the C. I. 0. crowd is coming in - another conference on this training by the Coast Guard for the Maritime. I am having Waesche and Gardner Jackson, preliminary, for lunch tomorrow. M.M.Jr: Good. Good. Gibbons: I don't know where we will get, but Waesche hasn't been able to find anybody agreeable to both sides; one crowd says he is no good and the other crowd says he's fine. H.M.Jr: Just do the best we can. Gibbons: It is a very delicate thing; we don't want to move too fast on it. White: Pome time ago you spoke of having a group of men down to consider our responsibility under the Anti-Dumping Act. I have drawn up a group of names and a letter, and I'd like to check with Gaston and McReynolds; then, if you'd like to see the list that emerges after that, it will be ready to go forward. H.M.Jr: Let me see it now. No, not today. But before we do that, when are you and Oliphant going to be ready on the Japanese dumping? Oliphant: Today, or any time you want. White: Today. Oliphant: You said Monday. H.M.Jr: Are you ready today? Oliphant: Yes. H.M.Jr: How would three thirty be? Oliphant: Fine. H.M.Jr: Three thirty. White: (Nods assent.) Regraded Uclassified 162 IT 1 I Gibbons: I got a letter yesterday from Max Wold, which I sent Oliphant, through Johnson, to be acknowledged, asking how soon we could have anything on this situation that is going down to the President - you know. Oliphant: I didn't see it; if you'd send it to me it would be a little better, Steve. Gibbons: I sent it to Cairns' office. 2.1.Jr: We'll do Japanese dumping at three thirty. Wayne, you'd better be here. Gibbons: Three thirty, today. H.M.Jr: And (Mr. White) bring up that thing at that time. Will you, Harry? White: At three thirty. H.M.Jr: Yes. I mean, that is my last appointment today. White: Archie may have told you about the continued in- flow of capital for the weekend of November 23; it was thirty-eight million dollars. It keeps rising. Lochhead: I have 3 report on it. White: If you are interested - increasing continued. H.M.Jr: All right. Mr. Aldridge told us yesterday that the Chase was averaging sixty or sixty-five new accounts a week. White: Foreign? H.M.Jr: Of refugees, that average from a hundred to a hundred fifty thousand dollars a piece. Sixty or sixty-five accounts a week - new accounts, averaging from a hundred to a hundred fifty thousand dollars a piece - refugeed. Gibbons: (Simultaneously) How do they get out? (Laughter) White: Taylor: Sounds like that thing you gave Dan the clip for, doesn't it? Regraded Uclassified 163 12 I I Lochhead: Refugee money? H.M.Jr: Refugees' money. Gibbons: How many a week? H.M.Jr: Sixty to sixty-five new accounts a week - sixty to sixty-five. Lochhead: I think I'll have Knoke check with that, because if that is German refugees' money they probably want to carry it on-refugee ledger; it won't show up in "Foreign Capital." H.M.Jr: He told me his foreign deposits were Bell: Two fifty-six. R.M.Jr: Two fifty-six. You were here; was my figure - what did he say? Bell: That he had sixty or sixty-five; I thought it was a month instead of weekly; I may be wrong. H.M.Jr: Get this: He was here; two hundred fifty-six million was the aggregate of the foreign deposits at the present time in the Chase National Bank. And did he say sixty or sixty-five? Bell: That is right; I thought he said a month; you said a week. Definitely German refugees. Lochhead: My experience has been, in banking, that a fellow over there in Germany who puts his money over here, he's beating the laws and regulations of Germany; he takes care it is not listed as a German account. He comes in and gives a New York address, sets it up as a New York address so it can't be reported back. That is why I say I'd like to check on that. White: We'd also like to find out, if possible, how that transaction is consummated. H.M.Jr: Well, anyway, we are passing it along for what it is worth. Without saying which bank - I don't like to tell one bank from another - I asked Burgess, but Burgess didn't seem to know. Regraded Uclassified 164 - 13 - For you Bank of America fellows - check me on this -- Aldridge told me that the Chase National Bank has a very large loan to Transamerica, and the col- lateral for this loan is National City Bank stock. But he said a very large loan - a frozen loan. It is a frozen loan - been on for years. And I pass that along to you fellows. Aldridge was swell on everything except the Govern- ment bond market. Bell: And policies. H.M.Jr: We are just one step behind France and he is not sure we are not abreast of them. White: He and Viner ought to get together. Taylor: Maybe they have. Oliphant: Got any more clips? H.M.Jr: (Nods to Mr. Lochhead.) Lochhead: No change in the rates; sterling is still at about 4.67 3/8. France is still making their rates strong, but can't prove yet whether they are getting exchange in today, but the rate is strong; and Merle Cochran arrived this morning. H.M.Jr: Hurray! I'll see him. Lochhead: I did tell him we found what we wanted in France, and that was Merle Cochran. H.M.Jr: I'd like Oliphant, and Gaston to stay, please. Regraded Uclassified 185 December 15th Financing December 2, 1938 Present: Mr. Hanes Mr. Taylor Mr. Bell Mr. Haas Mr. Seltzer Mr. Harris Mr. Hadley Mrs. Klotz Mr. Ronald Ransom Mr. Gaston Mr. Haas: Start with $400,000,000 cash. That's fixed. And the rest of the cash is in the $300,000,000 note. Then you have $942,000,000 to divide. We divide the $942,000,000 this way: $100,000,000 only in the 9- year. HM,Jr: What? How much? Mr. Haas: Only $100,000,000. And $642,000,000 in the long bond and $200,000,000 into the note. Mr. Bell: I can't see that. Mr. Murphy: That's chiefly because you have such a big spread in the premiums. Mr. Haas: These other two are just alike. HM,Jr: I am listening, but they don't agree with you at all on the 9-year. Mr. Harris: I don't see how under any circumstance you can expect a 2% 9-year to sell at less on the basis we have. It will probably go to a point, but I oan't see a 2% 9-year going. If you give a 11% 8-year, the bulk will go into Regraded Uclassified 166 -2- HM,Jr: How many points do you give to a fixed maturity? Now these people figure 15 or 16 points ex- tra to the fixed maturity. Mr. Haas: That's about right. Mr. Seltzer: But on the curve -- we took alower curve for those. What 18 the basis, George? Mr. Haas: 190. Mr. Bell: I figure 182. Mr. Haas: We are allowing 19 points below the curve for maturity. HM.Jr: They figure 16. Do it once more, George. You figure on the conversion we are giving people the right to convert into three things. Mr. Haas: That's right. HM,Jr: And you figure $100,000,000 will go into the note. Mr. Heas: No. $200,000,000 into the note. Mr. Bell: No, $100,000,000 into the bond, Mr. Secretary. HM,Jr: How mich to the note? Mr. Haas: $200,000,000. $100,000,000 into the 9-year bond and the balance in the long, $642,000,000. HM,Jr: Tell you how the Discount people figured. That 18, before they talked to Burgess. They said: the note, $50,000,000. They said: into the long, $200,000,000 and the balance into the $652,000,000 9-year. Mr. Heas: I would agree on the st, but not on the 9. HM.Jr: I have Ronald Raneom coming in at 9:30. (Mr. Gaston came in at this point.) This is what I can say at 9:30, because there was a leak on the street yesterday. I can say at 9:30 that for cash, $400,000,000, Regraded Uclassified 167 -3- 2-3/4% bond. You don't have to give the years. This le what I am proposing to announce at 9:30. (Mr. Ransom came in at this point.) Ronald, the reason I asked you to come, this picture shifted up to 11 o'clock last night and this 18 the way the picture looks now. We are proposing for cash to offer $400,000,000. This 18 what I propose to have Gaston say to the newspaper men at 9:30 or a quarter of ten: $400,000,000 for cash, 8. 2-3/4% long bond. I will leave the yearage open. Could make it a 60-65, if everything looks all right by tomorrow. That's what we have in mind. $300,000,000 cash, a 5- year note. Then on the conversions, the fellows can convert into 8. 2-3/4% long bond, into a 5-year note and either an 81 or 9-year 2% bond. Now the reason for that 18, in my announcement, I will just say a 2% bond. Mr. Hanes: "new". HM,Jr: New. The reason we are doing that 1s to please you fellows (Federal Reserve) and the rest, to keep the number of long bonds down, but not to ex- ceed three-quarters of a billion, because that was the sentiment of your people. I want your support and help. There 1s complete disagreement between Burgess, the Dis- count boys, my people, your people, as to the effect of whether it's an st or 9. They are off $600,000,000 in their estimate. One crowd, the Discount boys, said on a 9-year bond the conversions would be $692,000,000, into the 2%. These boys have been here since 8 o'clock and say that into the 2% I will only get $100,000,000. So we all have to re-sharpen our pencils, because the whole purpose of the 2% is to keep faith with you fellows (Fed- eral Reserve) and to try to keep it down. So on this announcement, if I just say & 2% bond we have until to- morrow to argue and fight over whether it's an 01 or 9. But I am trying -- I want to keep you fellows happy 80 that we don't get over three-quarters of 8. billion. If it $800,000,000 or $850,000,000, you are not going to get excited, but if it's $1,000,000,000 you are not go- ing to like it. Check? Mr. Ransom: Yes. HM,Jr: As to the 9:30 announcement, leaving it open whether it's of or 9, 8.8 I have explained? Regraded Uclassified 188 -4- Mr. Ransom: I think it's all right. HM.Jr: It's different from anything we have been talking about. Mr. Ransom: Yes, entirely different. HM,Jr: Entirely different. And the reason why I am doing three things, it's $1,700,000,000. It's B. lot of money. Herbert, phone your office and tell them to have the men in your office at 9:35. Then come back. But with such a difference as between of or 9, these fellows have got all today: you fellows (Federal Reserve) have time; the Fed in New York have time. They can play with that from now until 11 o'clock o' tomorrow. Mr. Ransom: I don't see why there 1e that wide difference of opinion. HM,Jr: Niether do I. Mr. Seltzer: The reason for the discrepancy was the 11 point premium against the 7/8ths point. Both the note and short bond you gave 7/8ths of a point; on the long bond, 11. And we figured that was too great for people to take the short bond. Mr. Taylor: The 81 one figured that? Mr. Seltzer: On the Bt, 0. k. HM,Jr: Well, I am not going to sweat between now and 9:30, because on our announcement I am all right, Mr. Seltzer: You don't commit yourself on any of this. HM.Jr: I am not committing myself as to the length of the new bond and BO you fellows have got to get together. We can't be $600,000,000 off, I mean, as between this office, the Federal Reserve office here and the one in New York. They have got to get together. Mr. Ransom: I should think they could. Regraded Uclassified 189 -5- Mr. Beltzer: I wonder if you would consider one other point: making your note a little sweeter by giving overlapping interest on the refunding. You want some pretty good note subscriptions on the refundings. HM.Jr: You mean pay double interest? Mr. Seltzer: Amount to about 11/32nds. The coupon is only 1-1/8th. Mr. Bell: 11. HM,Jr: I don't think 80, but that also would not in any way interfere with my announcement. That's a re- finement that could go in. The main thing I am trying to get is this: the Federal Reserve would rather not Bee more than three- quarters of & billion of this long bond out. I have got to rely on this man (Ransom) to help me. Therefore, I want to keep it as near three-quarters of a billion as the human brain can forecast. Right, Ronald? Mr. Ransom: Yes. HM.Jr: Knowing the picture, see what this does to the market, we can come back tomorrow morning and get our pencils out between 10 and 11 and take another look at it, but knowing what the picture 18 we can all do some figuring. Somebody is wrong. Somebody 18 off. Be- cause here's the Discount fellows figure on the 9-year bond the bulk will go into the 2%. You fellows figure on the 9-year note, the bulk will go into the long bond. Somebody is wrong. Mr. Haas: We think the 9-year makes it too narrow in the premium. Mr. Harrie: I think the market, after this an- nouncement, ought to help us get the answer. HM.Jr: Herbert, see If I can word it properly. Mr. Gaston: Do you want me to eay it? HM,Jr: Please. Mr. Gaston: You want to announce that the offering Regraded Uclassified 170 -6- for cash will be divided between a long term bond and a five year note. $400,000,000 cash ..... HM,Jr: Herbert, will you wait & minute, please. I want to give the coupon. Mr. Gaston: Yes. I was going to add that. You want to give them the coupon rate on the long bond, which is 2/34s. You don't want to give them the coupon on the 5-year note. There will be three ways. They will have the opportunity to take this long bond, also the opportun- ity to take this note and also the opportunity to take & shortern term bond, 81 or 9. HM,Jr: No. No. Mr. Gaston: A 2% bond and you don't want to say anything about the term? Mr. Bell: "A 2% new short bond." HM,Jr: It's 8. new 2% bond. Mr. Hanes: "Short"bond. HM.Jr: A new 2% short bond. Mr. Gaston: of course, a bond can be 5 years. HM,Jr: & new. Mr. Bell: We said new short bond. Mr. Gaston: What I said -- a shorter term. You have already talked about long term. HM.Jr: I want to say 2%. Mr. Bell: I think that's fine when things are normal. But I would like to take you back to September when we were afraid to let loose everything on Saturday and have it lie in the mails Monday and announce Tuesday, 80 we deferred our announcement. Here you are in effect announcing Friday morning and you have Saturday and Sun- day and you announce it officially Monday and you are tying yourself to your rates. I an afraid of giving the market everything we can in normal conditions, but Regraded Uclassified 171 -7- I am afraid something might happen over the week-end and you might want to change it. HM,Jr: Suppose I say 2% and we go an 8 year. Mr. Bell: Yes, but you say 8. long 2-3/4s. HM,Jr: Right. Mr. Taylor: That's all right. Mr. Bell: Supposing you wanted to come down to 2b. HM,Jr: I don't. Mr. Bell: of course you don't. I am thinking of the worst. HM,Jr: The reason I am doing this is unfortunately there was a leak and I want to give the market the most accurate information I can. Mr. Bell: I realize that. HM,Jr: On account of the leak. That's why. It was all over the Street it was to be 300, 200, 200. I am willing, with the way it 16 now, to Bay this, Herbert: that we are going to offer $400,000,000 long 2-3/48 bond for cash; we are going to offer $300,000,000 5-year note for cash .... Mr. Gaston: Not naming the coupon. HM.Jr: ... not naming the coupon. And on con- version they will have the right to convert into the long B-3/4 bond, the right to convert into the five-year note and the right to convert into B. new 2% short bond. Do you have to put in "short"? Mr. Gaston: It's a shorter bond. HM,Jr: I am very much annoyed over this leak and, therefore, I want to get this thing out and I am not worried about this week-end, because if the market goes to pot today or tomorrow, I can make it & 7 year or make it 55-60, anything within that range, at 2-3/4e. Regraded Uclassified 172 -8- Mr. Gaston: There is no 2% issue. Leave out the word new. HM.Jr: Leave it out. Is that all right with you? Mr. Ransom! Leave out the word new? That's all right. HM,Jr: Do you think I am taking an undue risk by naming the coupon? Mr. Ransom: I don't think 80. I don't B66 why that you are taking & needless risk. HM,Jr: You see, the reason Dan 1s asking -- last night we all agreed we shouldn't, but on eleeping on this over night I want to give the market all the infor- mation we had last night because when the Discount fellows go up they don't know anything we don't know and the other way round, everybody knows what they know. The Discount boys were there until 10 clock, Haven't got an ad- vantage over anybody. I want to kill any advantage for them. Mr. Ransom: I want to ask one question. When we met, the other morning, before the Committee came over here there was discussion 8.8 to whether there would be a three-way choice or not and I don't recall anything that was said at our meeting particularly on that subject. My impression was that the weight of opinion favored only two issues as a choice rather than three, BO I don't know what took place over here in your conference with the Committee. MM.Jr: I am going to get Allan Aproul on the phone. Last night he was at the house and you can hear him. At 9:30 the next voice will be Allan Sproul! Mr. Bell: I raise one question. On the note you are going to give the 5 year note with norate; in the other cases, you are going to give them out with no rate? HM,Jr: I thought that through purposely, because I am B. little doubtful about 1-1/8. I want that much flexibility. I can put it up to 1-1/4. Unfortunately Regraded Uclassified 173 -9- my brain has been working all night. When this is on the ticker, the fellows in the street will know Just as much as the Discount boys. Mr. Bell: That's right. That's very good. HM,Jr: And I am not mentioning the rate on the note because it is Just a possibility I might make it 1-1/4. Mr. Haas: That's right. HM,Jr: You fellows got any doubts? Mr. Hanes: All right with me. Mr. Taylor: I think it's Just right. (At this point, HM, Jr and Mr. Ransom spoke to Sproul and copy of their conversation 18 attached. HM,Jr: Anybody got any last doubts? Mr. Ransom: I have none, Sir. HM,Jr: As I say, my fellows don't agree and they have to figure, and will you have your people figure? Mr. Ransom: Yes, I will. HM,Jr: But you are perfectly satisfied? Mr. Ransom: Yes. HM,Jr: If he (Sproul) 18 right, $750,000,000 or $800,000,000, it will get you just about what you want. Last call as far as the announcement goes. Mr. Gaston: We are giving the coupon on both bonds, but not the term. We are giving the term on the note, but not the coupon. HM,Jr: That's right. Mr. Ransom: Do you want & conference tomorrow? HM.Jr: I think if you will come over here tomorrow about 10:30. Mr. Ransom: I will. o0o-o0o Regraded Uclassified 174 December 2, 1938. 9:30 a.m. Operator: Operator. HMJr: Allan Sproul, Fed. New York please. 0: Right. HMJr: Hello. 0: Mr. Sproul. Go ahead, HWr: Hello. Allan Sproul: Good morning Mr. Secretary. HMJr: Good. morning. You have an audience here. S: Yes. HMJr: Including Mr. Ronald Ransom. S: Yee. HMJr: How do you feel this morning on what we did last - talked about last night? S: I feel all right about it. HMJr: Now, I tell you what I'd like you to do a minute, supposing you talk to Mr. Ransom, will you? I think he'd like to talk to you. S: Yes. Ronald Ransom: Allan, I Just raised 8. question with the Secretary as to the three way plan as being somewhat different from what we were discussing in the Board room, when we were there a day or two ago. S: Yes. R: He says that you think the three-way plan 1e entirely satisfactory. S: That's right. R: And you share Wayne Taylor's view that he's Just expressed that it's Just right. Regraded Uclassified 2 175 S: The way we figured out the prices again this morning, and it looks as if it would be just about right. R: I see. S: The two and three-quarters, the long two and three- quarters and the nine year too, on the basis of present markets would sell for about the same premiums, the trading arrangements could be about 101.8 to 101.20. R: Yes. S; But on both of them. R: Yes. S: And BO that there would be no great advantage in going into either one from a speculative standpoint. R: Yes. 8: With four hundred cash on the long bond, but conversion there of anything up to say four hundred million, you wouldn't get an unwieldy amount of long bonds in the market and yet you'd achieve the objective of putting out a substantial amount for as Long a period as possible of this good market. R: Yes. S: The two per cent nine-year bond on that basis would be around five hundred million, a little more, satisfying what all our checks indicate 18 a strong bank demand for that sort of obligation. R; Yes. and S: And the five year note with three hundred cash, /perhaps fifty conversion would give you a decent size issue in the five year note and it looks as 1f the prices there would be around - the price there would be around 101. R: Yes. S: So that the whole thing seema to fit together pretty well. R: Yee. The Secretary wants to know how many long bonds in all you think you would have on this. Regraded Uclassified 176 - 3 - S: Well, it looks to me as if you'd have about three- quarters of a billion to eight hundred million on it. R: Uh-huh. Seven fifty to eight. S: What's that? R: From seven hundred and fifty to eight. S: Yes. R: (aside) (Does that answer your question. Is there anything else you want to say.) - The Secretary says he 18 going to put this right on the ticker. Now did you have anything else Allan? S: Not a thing. R: O.K. The Secretary says many thanks. S: All right. R: All right. Regraded Uclassified 177 TREASURY DEPARTMENT PROCUREMENT DIVISION OFFICE OF THE DIRECTOR WASHINGTON chammely December 2, 1938 MEMO. TO MR. MC REYNOLDS: Subject: Meeting of Temporary National Economic Committee The first public meeting of the Temporary National Economic Committee was held at 10:30 A.M. in the caucus room, Senate Office Building, December 1, 1938. The meeting adjourned about 4:00 P.M. The entire day was taken up in the presentation by Dr. Lubin. of the economic situation as presented in the accompanying minutes. The Committee adjourned to meet at 10:30 A.M. today and adjourned at 5:15 P.M. to meet again tomorrow, Saturday, December 3. The entire day was devoted to a testimony of Dr. Willard L. Thorpe, Advisor on Economic studies in the Department of Commerce as shown in the accompanying minutes of the proceedings. Director of Procurement Regraded Uclassified 178 Verbatim Record of the Proceedings of the Temporary National Economic Committee Lot 1. No. |-Section 1. WASHINGTON, D. C. Dec. 1, 1938 ] THURSDAY, DECEMBER, 1, 1938. hibit No. I" and is Included in the appendix to this issue THE TEMPORARY NATIONAL ECONOMIC COMMITTEE MET AT 10:30 (The resolution was received in avi- A M. PURSUANT TO CALL ON THURSDAY, DEC. 1, 1938, IN THE OLD dence and marked "Exhibit No. 2" CAUCUS ROOM. SENATE OFFICE BUILDING, WASHINGTON, D. C., and is included in the appendix to this Issue) SENATOR JOSEPH C. O'MAHONEY, PRESIDING. COMMITTEE MEM- The President In his message. declared DENS PRESENT: that: ERNATOR JOSEPH C. O'MAHONEY, OF WYOMING CHAIRMAN. "Generally over the hold of industry REPRESENTATIVE HATTON W. SUMNERS, VICE-CHAIRMAN. and finance We must revive and strengthen competition If we wish to MR THURMAN W. ARNOLD, ASSISTANT ATTORNEY GENERAL. REP- preserve and make workable our tra- RESENTING THE DEPARTMENT OF JUSTICE: ALTERNATE: MR. dillonal system of free, private enter- WENDELL BERGE, SPECIAL ASSISTANT TO THE ATTORNEY prise." GENERAL. TWO METHODS SENATOR WILLIAM E. BORAH, OF IDAHO. To accomplish this purpose, the Presi- MR WILLIAM O. DOUGLAS, CHAIRMAN. SEC, REPRESENTING THE dent, in his message, rocommended: First, SECURITIES & EXCHANGE COMMISSION: ALTERNATE JEROME N. an increased appropriation to enable the FRANK, COMMISSIONER. SEC. Department of Justice to enforce more effectively existing anti-trust laws: and, REPRESENTATIVE EDWARD C. EICHER, OF IOWA. second, a comprehensive study of concen-" MR. GARLAND S. FERGUSON. CHAIRMAN, FTC, REPRESENTING THE tration in industry, of industria) price pol- FEDERAL TRADE COMMISSION ALTERNATE: MR. EWIN L. DAVIS, letes and of existing Government policies, COMMISSIONER, FTC. and the effect of both of these policies SENATOR WILLIAM H, KING, OF UTAH upon trude and commerce. With the Arst of these recommendations DE 13ADOR LUBIN. COMMISSIONER OF LABOR STATISTICS, REPRE- -the better enforcement of existing anti- SENTING THE DEPARTMENT OF LABOR: ALTERNATE A. FORD trust laws-this Committee has nothing BINRICHS. to do Law enforcement is the function MR. HERMAN OLIPHANT, GENERAL COUNSEL, TREASURY DEPART- of the Department of Justice, not of this MENT. REPRESENTING THE TREASURY DEPARTMENT: ALTER- Committee, though we are authorized 12 NATE BEAR ADMIRAL CHRISTIAN 3. PEOPLES, DIRECTOR OF PRO- make recommendations with respect lo CUREMENT DIVISION. anti-trust policy and procedure, The function of the Committee is merely LO MR MICHARD c. PATTERSON. JR., ASSISTANT SECRETARY OF COM- study facts and to make report thoreon MERCE REPRESENTING THE DEPARTMENT OF COMMERCE, with us findings and recommendations. EPRESENTATIVE B. CARROLL REECE OF TENNESSEE The Committee is comprised of twelve members, six from the legislative and six MR LEON HENDERSON, EXECUTIVE SECRETARY. from the executive branch of the Govern- ment. The Executive Departments and ALSO PRESENT Chmmissions represented on the Commit- RNATOR JOHN G. TOWNSEND, JR., OF DELAWARE lee are, by The resolution, directed to ap- pear Infore the Committee, or its designer, INECTORS OF STUDIES: DR. WILLARD THORP-COMMERCE; MR. and present evidence or reports on mai- HUGH B. COX-JUSTICE: MR. WILLIS J. BALLINGER-F.T.C. MR. term wame sheir jurisdiction under exist- THOMAR e BLAISDELL-S.E.C. MR. J. J. O'CONNELL-TREASURY. IDE law. It la this phase of the work which is now beginning. STATEMENT BY dont Frummending the study which La SOURCES OF EVIDENCE now in progress. and second. the lext of SENATOR O'MAHONEY, The presentation of any evidence or re- the resolution rtself. 1. offer these documents no that there port by any agency of the Government Chairman of the Committee does not, of course, exhaust the priwar may DO, at the outsel. a clear understand- ing of the nature and the function of this of the full committee. It may receive evidence on the same subjects from any UNITHMAN. I will call the meet- Committre as well as of the purpose for other source or from any other witnesses which It was called into existence. In due collrae, that will De done of This, the pub- (The President's message was re- In the meantime, it should be clearly Temporary National resert in evidence and marked "RX- inderstood that no Department or Com- which was formally mission, no member of the Committee uo of Congress. Ap- employe or agent. no witness apesks for DIE, n. is appropriate See Last Page Far the Committee. Such evidence as IN pre- be miniporated in the mineed M either on the authority of the meange of the Presi- INDEX OF CONTENTS agency which offers It or is received be- (Published by Bursou of National Affatts, Inc., 2201 M St. N.W. Washington, D. C.) Regraded Uclassified 2 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE Dec. 1. 1938 the Committee belovee 10 will Bn like- lecting official information with respect to our economic structure. measured in terms of our national fül in newsoping the taeta which are later IN OF analyzed when the Committee under- The question, which It is now to be come, you will note that OUR national takes in make Its report undertaken to answer with the testimony come increased from $2,000,000,000 in the Whether this mudy will be Truitful of of Dr. Lubin and then of these olber to society or allogether futile de- gentlemen (a) "What exactly has been the for the year 1938 Bit the signing to $61,500,000,000. which In our May pende largely upon Two tectors: effect of our industrial and economic nys- thing there agalo is that between the 1. The manner in which It LA conducted. tem upon the community life of the and 1919 the average annual national and nation?" come was $42,500,000,000. Between 2. The manner In which it in received 1 now introduce Dr. Lubin BA the first and 1920, however, the national 110mg witness of this public hearing. averaged $69,000,000.000 per year my by the public increase in that period of len years is If COMMITTEE OBJECTIVES approximately 55 per cent, Let me MAY therefore, to the fanguage TESTIMONY OF DR. ISADOR INCOME DEPINED of a resolution unanimously adopted by LUBIN, COMMISSIONER OF the Committee at sta last session: The CHAIRMAN Dr. Lubin. word N LABOR STATISTICS, DEPART- for the benefit of all who may han That " is the unanimous sense of this Committee that its function and MENT OF LABOR, WASHING- read what is testified here, give - purpose IM to- collect and analyze, definition of the national income? I'M through the medium of reports and TON, D. C. sometimes that that phrase Is confiss with the Income of the Government public hearings. available facts per- taining to the Items specified in Public Dr LUBIN. Mr. Chairman. Members Dr, LUBIN. The national income is the Resolusion 113 (Toth Congress?. in an of the Committee: Any attempt to meas- Intal amount of goods, namely, emith objective unbiused. and dispassionale are the performative of our economy automobiles, tood, houses, and things « manner. and that is IF the purpose of must be in terms of meeting the re- that sort, the cocal sum of all the the Committee to pursue die work quirements of our citizens: To maintain plus the total sum of all the across milely team this point of view." our standards M our population grows which means laundries. garages, electric The members of the Committee are we must increase the output of the goods otilities. and every service cold-the le deeply actualdo of the responsibility that and services produced at least propor- total of all the goods and services pc sexts sepens Unem to willin the broad tionately with the inconting population. duced In the United States in any - powers with which they have been ID- I sholl attempt to portray the growth year, and in terms of dollars this then version setely for the public good. No per- of our population and attempt to meas- portrays what has happened to the wig sonat pertice in factional program in ure the amount of goods and services of all of those things that were made 450 concrolling here The processes of the that have been available to that popula- all the things- Committee will not be used for any pur- tinn over a period of years for which Senator KING (interposing). Includes poss ERYP in develop economic facts which official and unofficial butt authoritative agriculture, of course in the VPTY nature of things must be data are avaiable. Dr. LUBIN. Goods, of course. widely comprehended before any con- Senator KING. Agricultural commos structive recommendations may be out- POPULATION OROWTH ties and production. and 1 want to Arm turn to this chart, which Dr. LUBIN. Anything that is profirm WIDE LATITUDE deals with the population of the United The CHAIRMAN. That covers all mis- The Committee has approached the taxk States, and I want to point out a few Ing production, all agricultural prodoctina WITH an open mind and with the in- significant facts. all industrial production and all the 10/- tention In efford to interested persons the (The chart referred to was received vities of trade and commerce. wides possible Include for the presents- in evidence and marked "Exhibit No. Dr. LUBIN. Yes. tion of evidence or suggestions 4" and is printed on Page 3.) As I was saying, between 1920 and DE The heavings begin today with a pre- If you go back to 1850, the middle of the average annual Income was M (If paratory presentation to be made by Dr. the that century. you will note that the cent greater than it was in the - Invoice Lubin of the Bureau of Labor Sta- increase in population from there to 1935, preceding. He will be followed by Dr. Willard the last year for which official estimates DECLINING TREND Therp. who has been essociated with the Department of Commerce. and by Mr. of the Department of the Census are If you MO from 1930 to 1938, that nacises Leon Henderson, Exemptive Secretary of available, was from 23,000,000 people at Income averaged $50,000,000,000. In che the Committee. Next week the formal this polat to 127,000,000 in 1935. and such words, there was a decrease in the - presentation of evidence will be begun entimates as are available place the pop- available, goods and services protatt by the Department (M) Justice Illation in 1940. two years hence, at Ap- available to the American people. (na Wisess that presentation is undertaken. proximately 132,000,000 people, average of $69,000,000,000 per year the Committee will to actions under The significant fact that should be 20 and 29. to $50,000,000,000 per of procedure which were adopted at the brought out IX that between 1850 and 1880 between 1930 and 1936. Task impeting of the Cremittee to epply our population doubled. Between 1880 Of course we want to bear in in there portions of the hearing which are and 1910, Unity years later, population that In 1937 our national Include carried on under SM 2(f) of the reso- increased by 80 per cent estimated by the Department of OF fullen tt Meins appropriate that these FUTURE TRENDS merce all $69,000,000,000. For this Tiles of procedure should also be Aird me Usis point in the coord. Briween 1910 and estimated 1940 a the estimate in about $62,000.0 similar period of thirty years 1t. is enti- roughly. 40 that despite the fact the "The rules referred to were received national income was relatively not in exideme and marked "Extime No mated OUR population will have increased , and ATT included in the appendis 43 par cent and the estmated increase compared to the past when you take un that in population from 1940 to 1960 will be consideration the drop 57% national - lews than ten per cent. In other words, come during the early years of the The pretatory sintement which LA about to be made by Dr. Lubin was undertaken the rate of increase of our population you find that mark fell from $69,000.000 because in the Judgment of the Com- has been stendily going downward. so 000 to $50,000,000,000. that in 1960 It Le estimated that there THE CHAIRMAN. How reliable mittee a vill desirable that there should will be but ten per cont more people in those estimates? be from an analysis of the facts of nur Dr. LUBIN. They are the most result in the *artom government Durreus mum M they have Appeared the 1940 United States than there will be in estimates that are available. They and by the Department of Commerce and As everybody connected with the Gov. A chart depicting growth in na- efoment and most of United connected with Monal income was received In evidence accepted by economists. statisticiant business understand the Department of and marked Exhibit No. 5' and is business people of the country as is Commerce and the Department of Labor, printed du Pay- 4.) reliable figures that are available. wi with M offer departments in The Day. Contrasting that growth of population BABIS OF ESTIMATES - Date tor many years been col- with the goods and services that are The CHAIRMAN. What " the - available for that population, which in the various estimates? Regraded Uclassified Dec. 1. 1938 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE 3 (Exhibit No. 4) UNITED STATES POPULATION MLLIONS OF MILLOW OF PERSONS PERSONS 150 150 100 100 50 50 0 o 1850 60 70 80 90 1900 '10 20 30 40 50 60 NATIONAL RESOURCES COMMITTEE ESTIMATES America's population is increasing much more slowly at present than in the past. From 1870 to 1900 population doubled, increasing at an average rate of two and one-third percent 6. year. From 1900 to 1920, just before the now immigration laws became effec- tive, the average annual rate of increase was one and two-thirds percent; from 1920 to 1935, slightly over one percent. From 1940 to 1960 it is estimated that the rate of gain will be only one-half of one percent per year. Regraded Uclassified 4 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE Dec. 1, 1938 Dec. 1. 1938 THE TEMPOHARY NATIONAL ECONOMIC COMMITTEE 5 (Kabitit No. 5) pr. LUBTN WHA the Department amount at deplication la relatively DATE- DD-20 1,299,005 UNITED STATES NATIONAL INCOME If LA get such Agum as are smille the 1330-34 36000 / de - pud out ID with The question sue as to visa: the the - port más je (be amnunt mile in national (conne has meant to Representative SUMNERS Thank por nur people in terms of the amount of Yes) much ent - dividends and things of that both - in use emmits paid TOTAL that tru term available to " The Dr. LUMN. Belween 1930 and 1233 BILLIONS BILLION OF DOLLARS OF DOLLARS 1 to number the unal aminina of a lower dart shims the trend of national from there la them indicating on that - paid - me - part nut a income in verms of the people of the that pre copits income, the amount of 90 90 nel always equal iv the INDUCT product. namely, how much La available goda and services available to our people account / of If is assed by corpora- for eith person in the montry - Individuals. Tell to an EVETAGE of SENT. (MM) and atterment What they de >> THE AVERAGE INCOME The CHAIRMAN That su from 1930 80 60 Md value of everythics the know to- of that bes (evo produced, the value of There resia you e(D note (DA) briween INF represent manufacturing 1919 and 3919 the average was sei par Dr. LUBIN interposing una 70 70 person. Between 1920 and 1930 that at- The CHAIRMAN, 19307 end MI Inth. Tim CHAIRMAN. Oirt what person eract eu MM. per In other Dr. LUBIN Yes. In 19€1 the per - 11th Department of bate words. the werme available for every empital national incime of this mentry 60 60 am, ecean and child. were If equally und failen to 5120, which you will notice DMF distributed, immunted 4b DET negt ave a BY LUBIN I Think they relairelly in emsiderably less than it had been in fen-year perind, as appoined is . TOTAL in- Dre decide from INTO DE 1910 and the de- 50 www. in 1999 BAM. they einked tack- here of a pre ent. In other 50 wither 31 - 31-100 have WHO exping dide 1920 ao 1929, words, part of Used Increase the differ- Today far this year, it was estimated 11 sure ence between the two, was due to the CENSUS FIGURED that that lasome pri capital the account 40 40 faci that the population was increasing evaliable in terms of moods and envices winte KING The Control Nurmi You bed to divide your belional Income far every man, woman and tra the has mill à 10 the de- among more prople, The Insult - that cuuntry will be about #472. which LA almo 30 30 immigation will The income your antial total income increased, ce 1 Mill Mail that was last year and Dr. LUME Very - of MM, by 5 per cant, whereas are amount $130 more than was available En naz the - M Manufacture and promis that WM available for each penart IA- Congression SUMNERS You raland 20 20 of Apriculture treased by to per mail. By: The signin- the question about girles. What we Save Security KING Terry make up a 102- earnl thing w notze, however. M that we done herr is try LI elimimate une changes FTIO - years - formaly five, were increasing our output than in state take thart 1 base here that were 10 10 out seriore that tan or ente merialing our population In caused DE prior changes. All I said you Dr. LUBIN. Attes all, - thing should other words, there were mark and name mughs have exactly che same smount of - name in mind, that the national 18- posts available far our despite prots available. but If prices the o o NMF an INCYMANT without more sende the fact that the number at those du- national Income smold Miss crudived 12 the smide end the were increasing, What are have in anveried this DOLLARS PER CAPITA not DI as high et prices DOLLARS have your up you prt mi. the national The CHAIRMAN, Have am late a IRM dollar and thrown out all 700 700 tirmine gom up 100 DET aml, but the goods of this staracter been made with respects charges us national income caused by in the esualry de not uncrease to national price changes. Vna 4/2 noin although (1) these - a sharp Time. dechite this fact amount Dr. LUBIN. There are very fran Mr. SUMNERS Mar 1 MK the consis were not 43 great as as- 600 I have some Gurm for the year 1934- www.in please? Take the peared en the presiding shart. In elter 600 nos that abows the per capita. words, between ARIO and 1.118 the increase of 1 texas der imme The panple who all the be that b income, M 117 Representative SUMNERS Dr. Eribin, In the national Internor in terms of physi- IN. LURUM That is our of the na- you just stated that The charts show there cal goods DON-SE are dospelling the 500 FINAL in other words, the sine more and more goods New dran prices - 10 per mL Between 1020 500 that mean beceuarily more and intice tip and 100 to was 34 1MT cemt. In other valid at IM tree. Representative SUMMERS When the volunte and more and more in days work wards, WE almost deshied line amount 400 I/VE " madulacium min benef and the does the value of labor and the value of of word products-t am torry, yes, D4 per-otal Pully-nane as Unis point to 400 HAURT D and e a nal value of the commodities enver in AL with Rai that bere broken dewn MI FOR ean resilt aprile 10 up here-alment devisied the amount lumber usuned in in informe? of over that period sen years. m. LOBIN. If a UN amount added is quantity? Dr. LUBIN. This of murse. LA entirely (Chart tio 1. -National fincente as 300 300 Or value ni the une vum 11 H in the in dollars issue My chart will show Cinuitant was received in evin from of [umber. denice and marked Exami No. a kou what is means in terms of actival and M printed - Page El DUPLICATION AVOIDED physical goods in get the chacge of Between 1534 and 37 the difference was 200 Representative SUMMERS. Do Ley prices DD 200 ab Increase of not = per vent trom the pruse at the humber the Representative SUMMERS wave you nf the tree! Representative SUMMERS Dr tubin. are intermibled would EXIM mind indicat- do yma have anything a indicate the rele 100 W LOBIN, Yes log. If you have the tigures. to what extem alive amount of carry-over tram year id 100 MEMNERS There a no the of immignization and 17w polle) your? I suppose you wooldn't of this Government with regard to Em- De LIBIN I umnk there are some (7) WITH No there la TMI duplication. migration laws had to de with the Increase Reuten: of of unreado types of o 70 0 SUMNERS Wine ou of pripation? De you have Inst? products. FF have certain inventors N- ISSO 60 90 vota 4 titule, the DREAM W worth MAY Dr. LUBIN We have the figures, that ure for pertain 80 1900 10 20 30 from au that is not maridal M income is. thoughting the relative per rent el in- (Char) No representing National ill 'mair effase in the population that 18 attribut- income annually 1919 La - INFORMAL MEN none NEWO MD exteg in LUBIN No In nume words, IDel able Le natural ergeth and the perrentage reserved in evidence and mind B: - soprary is the picture in lhe MBM sitributes (o immignation ESTAL Nin T and 19 printed on PAPP 11 The national Income Le . reasonably of the Se - lune the the plus the value Representative SUMNERS You have Trus chart given you the please at the la total sech net volume of goods and services sede available ascurate to measure the in dollar of the terms Called State# - IE White live IIIM pine that down? answer KM shat you ME in the WAY the dropped off Inture and Ln per capita nailonal income. 1850 until 1929 both figires total pase. There - 40 almost uninterrupted increase from people both to IN The ⑉ edded - labor WHA En LUBIN 3% If in as frainms: NHI Ibro did. surt is give you beih cum in % will - has immigration ind THE Bidine 1910- this Black JUIP beme the change In una - Mother KIND There are to le of the surrimi (RE) ind. the quat pm lomine Le miss sharply for and tari Ln DO year approached After the 1929, 1929 however, level. Eyes if ai- LETA information or of physical suits pression me impressive. unless charges, the decline in national Income during the recent de- " Leary The la - no that - 000-19 $ 310.000 forgetting wbat reppened 10 the pro 1% PRIM) FOME like w. levi tim BY mithers to 2013-19 $17,000 1.008.000 gename KINO, Waulds it De FINE Regraded Uclassified Dec. 1, 1938 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE 7 6 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE Dec, 1, 1938 is identify your charts the first one No. 1. nation " in the United States as com- than many of these forwign countries. As (Exhibit No. 4) pared with other countries. The most and - el a matter of fact If we tout the figures Dr. LUBIN I think this la No. 4. I recent authoritative data of other Fourt- for 1937, this line would be even larger. WIE viestiff them: 1 have A list of them tries are for 1924-5, and they are only Senalor KING. Wouldn't you striks out available for four enuntries. You will cun No. 1. representing per cap- the word "many" sod may "All"? national income. 1934-35, in U.S., note the average income in 24 and as in the United States ww HEI, M com- Dr. LOBIN. : think these are the jour par General England and France. was pared to $401 in England, $345 in Ger- important received in evidence and marked "Ex- just No r and is printed on Page LI many, 8321 in Aweden, and 8267 in Mr. CLIPHANT. Has the price factor After portraying what had happened France. In other words, despite that timen eliminated? @ INT excional income in this the- marked décline in the amount of goods Dr. LUBIN. They are adjusted In exp that sook place in contrast and services available to our people over other words. you adjust your relative to the tremendous rise in the last des- the past nine years in terms of individ- price levels between your different coun- ade. is is interesting to see what the sit- usis, we are still la & far better position tries, but 15 is for one year. We adjust (Kuhihit Nn. 73 NATIONAL INCOME NATIONAL INCOME IN CONSTANT PRICES 1926-100 HYDEX ADJUSTMENT FOR PRICE CHANGES 120 RODEX 120 BILLIONS BILLIONS OF DOLLARS of DOLLARS 100 100 100 100 90 90 80 80 80 80 60 60 40 70 70 40 1929 PRICES 20 60 60 20 o CURRENT PRICES 1850 1870 0 50 1860 50 1880 1890 1900 1910 1920 1930 SOURCE us DEPARTMENT OF COMMENCE. NATIONALBUREAU or ECONOMIC RESEARCH, . LEING, AND BUREAU OF LABOR STATISTICS 40 40 ISIS 1920 1925 1930 1935 1939 Prepared by the staffs of the Central Statistical Board and the Napional Resources Committee Source-National Bureau of Economic Research Regraded Uclassified THE TEMPORARY NATIONAL ECONOMIC COMMITTEE 1938 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE 9 8 Der, 1.1938 Der. 1. (Exbibit No. 9) LIVE Number for not of the nine years, all of jam 185 the suo et the exclusive nos di via we the might 8º I.. no mailer fure providing an de Use <<<<<<<<<<<<<<<<<<<<<<<<< TVR or 1 que (§ sould months take and & и vecation would have les . less - al - TM the - are your jurget organis DIME in the Vell- - upon in - national fin who form the (re Wordbox All (MM) ammion of Clue - actually Date as . the di they lbs " la EMPLOYMENT LOST IN DEPRESSION - authoritative with dell relating with - Lound the EMPLOYMENT THE ARMAMENT PROGRAM IN NON-AGRICULTURAL OCCUPATIONS mil same (live, The - true " to who There the term a - New know or caltupal receive nas of decumento, la ibe - 43,435 PONETOR WAME SIRVETS enems in lbs regard 3 DUE Il ⑉ se - cire TM Summer KIND - - had employes Pveryble - - will - I foo di TO diffine for namel include upon the working to = omitanily different the - Is and attil animal written of the rountry. sies have your work att stage wire - YEARS di THE - (De and during - in m played ne and malaried 17Am any - country And an A HAVE 40 40 EMPLOYMENT all eridince LIMIA time " in work (1) ermaments Tim 4 THI: - - You could en - market B/O 9 und sur two unotro end the THE vithe - EMFLOYMENT LOST New national incomn world Ram Mmg down the of (II) stant the new - TAX the Boys ⑉8⑈ to to each INC ano that there of time NEW to Now - ni - that THE Bepresentative SUMMER DI "My - of - nail una maan was there . prote the in Or - - au to Jull that ni people was warked int de - de - I no - - - pie wise lateral BY any the - 3 Jug That the home - mail- that All Don't ! Usi 1 Has - M it De LUBIN. am - - - 100 - - - = HEO We LIMIT New that Date E nent not, Mr. - 30 E - NO - - - the what das liée los of employers) - 30 Cordition 9 8 I 8 comminer ni pumple will are live IN faill- in forms of end address request - is superminately two The charge starting Miza - a LUBRE Yrs miller amalor YOU AT SHAT time. vago law in appression - MI 11 tel a igre a withing populatime collural occupations EM noted e five - vms Born that if you and Mill 4: - the lust in - 11. 12 167 sud 18 printed no Page SD / The DIFC Bat ! - 1038 the The und el map The is iun All - del Diring of line - siming that the ints) stand el "Den inlinee, und Disdred mus. are - paid out in no bet that for - une in INMIT verdo unchargerd and the - 5M memied È If who (LAIM musicil IIL 1020 - that the total loots fiat expos - sinsins THE employees during the goal would have bott: paid our in dillan . 20 20 (Ealube No a) PER CAPITA NATIONAL INCOME, 1934-5 UNITED STATES 432 10 10 ENGLAND 401 GERMANY 345 0 o 1929 1930 1931 1932 1933 934 1935 1936 1937 1938 TOTAL LOSS 1930-38 SWENED 121 area IF LAKER surence The reduced level of Industrial activity eince 1929 is equal to the loss of than one full year of employment for the entire working population anguged is son-egricul- 267 It Soas not aller for the addition since 1929 of about 5 aillics to the potential working tural occupations. The loss items, . full year's work for 43,000,000 NO, Le conservative. FRANCE SOURCE TM STATEMS of nil 4pml population par for the nearly 2 sillice persons unesployed In 1929. Regraded Uclassified THE TEMPORARY NATIONAL ECONOMIC COMMITTEE 11 I'm 1. 1938 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE with the other. M. the example, the - all into the price level of . sogie pair. 10 Dre: 1, 1938 al where porking port this would a insured by investors as compared with Benefer KING Your figures are not the ips incurred by wast 44 based april the quantity of production, - prespared will the X by 0411 upon prices. un (Interposang). gow CHAIRMAN (armare? E Dr. LUBIN. We haven't eich a chart. GROSS FARM INCOME MEM (UDIN One houred and loin but I could early add them together. We Dr. LUBIM. This la throwing und all peter shanges; this in quantitative. Ben- SALARIES & WAGES LOST IN DEPRESSION (P sollars. Is ollet words, auf of have them all. MP - years ⑉51 240 per sent in The CHAIRMAN. 11 could unly be ator Borab, in reply to your question, the grmes care include at van $11,741,000.- Lost usal - that val paid out Ins read from the charta? (@ unt hape in up. and that total Dr. LUBIN You If you add ASI those 609; to 29 E was $11.941.000,000 to 1930 IN NON-AGRICULTURAL OCCUPATIONS game # per Drill patri than the together the losses to tabor the lower it was $9,600,000,000, NAT that in 1526 and 12 agriculture. the Crease to lovestors. - 1924 unry were about una a par. In -30 - yeahl paid to farmets and DIF and suming all the time that me maintain the the ano drop. came. 119,354 Anim and - no and later level of lass. is amounts to $133,000,000.000. Benause BORAH. The point D. if you overytaily sie in IP which compares with a national income to permit me, that ton 1228 and 1920 the By: To CHAIRMAN Let nie MA n this 1939 of $80,005,000,000. This la . edmin- some of was Twill fisc NI Wast well the total national B- lative lass, and incidentally in this chart I agriculture to maintain timels. have eliminated the effect of prior Iir. LDBDI, Exactly DO In ather and - III May changes; to other words, I am desling in come. Approvantaly eighty-offe you have got a doubér I you bare EN now in terms et physical units et goods, a low that existed is - and 26 m the eliminations sush changes in the autional sche, as you AT that there was will- TYP CHAIRMAN And what la this Income as APORE Inno prior changest. ficient insume so maintain the whole seri- unal of De last - (The chart refetred La, National cultural arma, plus a further toma that took Di. LIMIX. OM hundred and under Iccome Lost Im Depression. was : place because of the Scalle for grown moves SALARIES AND WAGES Miller in wage and salaried workers served as "Exhibit No. y and is that arme in thom years. printed on Page 14.1 Benetor KING. I MIDDOR poul payment SALARIES AND WAGES LOST store, The CHAIRMAN. to is is DDR hundred Benator BORAE Dr. Lobin. have you attempted to diteresibe-it probably would - willin compared with eighty the farm insure or agricultural income be beyond the soupe of your activities- for 19387 the contributing factor to the decline in sume, you AMT Dr. LUBIN. for Dr. LUBIN. YEL right here, air. agriculture resulting from dissinution in Benater BORAH. And them in 1939 our threign market. The tarmen were pretty nearly as bad The CHAIRMAN. Eighty-com billine the Dr. LUBIN. That question, Benator. off in as they were in "10. levent single year 5 the history of the will probably be discussed later on to the CHANGE IN THE DOLLAR bestings, but I don't want to give any marks DI- LIBON Exacity right and this a Benalet KINO. That last snawer you for why happened. All I am made I didn't quite understand. Did you trying to do La to my what cad actually the you only to wage earners and sal- take into account in determining these happen aim2 worker. prices the Incl that we had changed our Benator KING Speaking objectively. The shart divide ordende lost deliar? Dr. LUBIN. Getting back to state enars, in a-pression was received in evidence às I said the total national income was and cares No. 11" and 18 Dr. LUBIN. 1 did here, YAA definitely $81,000,000,000. The loss in national income united où Page 12.1 This la a stable dollar, the 1020 dollar, accumulated over this period of years INVESTORS. PARMERS' LOBSES in terms of the purchasing power of the *** $133,500,660,000 which means you have B dollar. accomulated loss ebich - information 16% No. is trems of losses to investors, M- The CHAIRMAN New you are re- - BILLIONE verifities again you could turn maintained of the 1229 level Bowever, I want to point farring to Use ebart entitled "National out one thing In VISIT wo almost and back - RELLARS view 1/09 level of dividends paid est. Incure Lest in Depression?" 50 50 the sumilative loss M nineted billion to the 1929 level. The great Locane pacte Dr, LUBIN. Yes here: they bename constantly Jess and TMPS hundred million.which a three Senalar KING. Taking Into account Line the amount that actually and - almost got back ta that point, and that the gold dollar had a certain quan- on in a the prat year at large divi- again you bad this loss In 1828. tity? It has been inflated as that thirty- 40 dend fienater KINO. la that vulume of pro- five dollars as paid for an ounor of gid 40 Dr. LOBIN. Taking into secount ou doction ar pricent The chart showing par farm in- - LOVE a dependenti vas received that tach Benaler, but the fact of to Dr. LUMIN, This is vehicle Laking the to evidence and marked No hew morn A dollar buts as compared to prices out If you exteried that ente IF and is printed =5 Page II.) 1928. by other words, is la the purchasing Use amount el goods available ER. the 30 If - ium le the the lotal pwer of Mal prices of the dollars (hat people of this country. this has over the 30 APP in valatence (ode), in 11, and un 29. last nine years 18 equal to . thousand las in (be gree treams that went to imm anting M) of their as Representative SUMMERS Dr. Labin. dollars urer the period for every man. w visi they gel. fire 3. was to nating the figures fur "29 M M have, sur word und chuld in the In Million, its mundred mill- three prim and incomes and Agures Inr other words, if their amount of work in 20 20 lie studi la Intere the the amount a above anrmal. the general serma of physical gooda had ant tured last 15a all the gel. for everything there would have been validable. as . situalism? May and to the me 1029. In other present La every cas, and child, Dr. LUMIN. Weil, of pourm I wouldn't If - wanted la give IL, a thousand dollars les est - our as prived of want to date the of pormal: note than - actually available during 10 your " equal la three time the amiust 10 they were higher platively than they had in edually goi in 1928 that period will nine years. been FARM vs FACTORY Recremiative BUMMERS Il down) Representative SUMMERS Would you la take instedy is doing very vil. penit a clarifying claiment? If as è Representative BOUNKES Would ss maller of fact in 7 pricel sini sum- interred you $ ask this quation. o 1930 o II: LUBIN. The full la this that shei 1929 1931 1934 - estional Inivens, " doem't liked beyond where the ought to in Waether or DEI you have - ebset an study 1932 1933 1935 1936 1937 TOTAL LOSS would et be # structural last upon which that would indicate the relationship - 1938 - PARA soles to are laiting about were the breaking sizenti of the purchase 1930-39 (if (Twige affected and Upril se the to calculate the eibet changes? Dr. LOBIN n down make much all- me power at SOP group auf the peneral Inc the krewn, interery and teresse, which year you effect open the shole group for the geal? $120,000,000,000 1929 from 1930 to 1938. This squale two and me-thire servings et The PV lass to American and salaried workers vale nearly und What I un to du > - this the relative las in tach at pick as log as you kerp the thing de Dr. LUBON We de bell that mislimi- stant. In albet wordly BE cruid late ship between the amount paid as to allow pay for retails the and 1929 lovels of employment and yet Le a conservative years' figure. IL does not THE three eroope addition since 1929 of about 5 allion to the potential working population. the CHAIRMAN, Have you made a lakin % and golden us sume result, If within in factorias and pas form In- D it 31. The 1004 e to servers them some. That - do Date 1 haven't AMC, - the loss of not group Regraded Uclassified 12 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE Dec. 1, 1938 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE 13 Her 1. 1938 Amount a we in del - . than strat seri an primarily livry are very the infusting where the - - Hard or dedate BE to unal Ha a 199 smate use recente That las pelio pu old AY the Department by surid prum. same seme and the - of - - HVF vera weitten - that of and abuws à and - new - 10 sapply? prepartion of this incomé et ours per in Dr. LUBIN. TM to 1937 al or nb- imprestative SUMMERE But the the different matid 10 BE ST per evol. The medi a Tax DE (#) ter agreemicant a which producer for agreement export. say swing MB dairy trucking and Dr LUBIN No Vince lan't The D will is - - your un aux words - pay mail - - . $ thing you can do, however 48 to Direct my (Tile dus representing Marting en entrepreneural visa B+ Imm of wans - nein in agresture lime abouts and mil form Payments nai received in cluded, as 1 said. Equipment meile taren- that en all Thrme I dail. want to get - MIT argument about 14. Dell LE makes those Additions to affirm and - - midence and gared BMI No 14° and se fath - your mational income, as - have - GUMRERA One point and is ADDRESS an Page IN The basicies got. with willion. M payment - - N I duot want an What you are Dring. chart Las seres or proved orilia The This " gad pour are anto that suit 400 smill pm III las noed - You el miler there to boen a VIII (hal agreedivire al that time, mary quine MM/ The nem la umpus account port sur the receid I in marked shilt ORT à person of you in In 1837 they ent atridi filled tillen Our REFRANCE tre agrandium) DE LUBIN / would like le point out un maintain The people who remited end IF TM Time Run and - IM EFFECT OF DIFLATION the tital pictina of the animal moistif nas - tall The important thing - (aff - THE print of that La going far different internst reseired above 11.3 billion in 17. larget single group to Dos United suw una in times di that are evailable Senator KING, Inn: u . lad Usi IN then MI line that Tm CHAIRMAN Mar I intirnit 3ml and lork year they - to reselve about are me und subscred ent M the IM james they da more up and duwo with INCOME go % of man write Ket heart MI on THE monetary allustion lbs mointage Mine IRIT His of nw jum la make a suggarim limi you us billing The balance (Piru know. is TF- the of dollars available to our COTY COMP fires by tiere firm products, - yes un - II - are 16 o new dari. # (a) will to ust and payments 1/1 yeterens The euror which give you same lété of the the term a my dut impresso Dr. LUBIN, E am MI. Name MY - power of A.O. <trentainty identify tue chart a fiel II will appar adunt thing LA that the pine part the delitable market playo in nur se an authority on prices - this Du personal M so the recent eta) durt you in you as I 193. from 31.5 58 EFFICT OF WORLD PRICES moomy, Benktor KINO, DI - II par in pays at the M - en returning 10? MT billion: men and farmark. Representative EUMNERE De Genärer RING I our want to Liter- have inflation 1000 prum will - - EM - cal pam MA para part. N° PM Binsion KING That y the 1 time DI to 10.4. Envidends and Interest, farmer) munare nedition. howh, de na to - и al. Tast however, comp De LUBIN Yes that is visa) Will - to - - put - 10 sibra that the be minimi 11.8 to 12 which is into (bien a. sixth of person a no w pror - by turt for mine PERTY prior TM the Dan in. Dr. LOBIN Tim shart 100 the total and the aminit being paid out MI - name quantay? disorvery at goid, the un Callfor- Mr. OLIPHANT I like la e: Dr AL - miller of taxi. en Month Incanse Payment from 100 M in direct relief, of course, growing Turger Dr LUBIS. Il la and MY loss the has. what three was - pur output of provis if any # A products are debt- e little Partiber indormation VII the - lum last prepared Inc the date: in niner world. the indice of adult the years although you nele there sold error metali, prices had America nut each month to lacts. in - an Uchi et and other- par up and and them had term ot You the THE - a jusible WVM né meria and stried iii the word in That you could have elimiosted lbs enter 40th WHAT has experient furner invined men and chuntry min- ww-in Tipo years had. prise et other liten redios, and material changes in 001 only fater be checking any other me. MOT - premi. fur last handred THERE charter simmits the (MI) en interest Smiler KIND. I didn't ovile wader- registration mill und daty products et une the volume of profections W: #: the pree and of ann lider DE 42 Due from the standpoine of the por and TE sum Den 1923 amount paid not as are win, and III dand your M to the processitage M the - there pe 64- mary indicines will the largest dase, and Il - (544) ou . use amount paid out la by the Gol- in wases and valaries for 1835 Bank. as - ducum the commette Back in 1029. EX prr em of Did you no Half (Exbibit Na 11) eque or pine that ammunt well is labor fail was Dr. LOBIN, No. IL sex ALA pine need in 1929 later and as billien dollars; in DIVIDENDS LOST IN DEPRESSION Representative SUMMERS 1 hope you 1984 Tital CHAIRMAN. in aber wonts this 1938, Octiber, the rate would be abom NOT purílic tue to fail dias 14 an scalysis of the distribusion el In- M billion . year. BLLANS Dr. LIBREN due the question was GGF payments during the years Irum Breaker KING In presentage would DOLLARS SLUDE 20 OF 00LLMB (Exhibit No. 12) 20 198 DIVIDENDS GROSS FARM INCOME LOST IN DEPRESSION DIVIDENDS LOST BILLIONS BILLIONS OF DOLLARS DOLLARS 40 40 38.6 6 GROSS FARM INCOME GROSS FARM INCOME LOST 12 12 4 8. 8 . 2 4 4 0 1929 1930 1931 1932 1933 0 1934 1935 1936 1937 1938 TOTAL LOSS - 1930-38 denda in Use The para tar st, 29,0-11 Us right if the them bei signature have received 20 dollars ours Ln divi- o have not less adjusted fax Fin up (ste) of 159 dividend billim The figure o allowing for prin crasses, Plugs una 1534, - adjustment which sould des más bess the emintaired. loss mallar. Even 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 TOTAL LOBS 1930-38 an printly 4078 Mac letter Main total United inter - in au 199, period from Lie relative instituty of injustry possest - MAY 0 Regraded Uclassified 14 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE Der, 1, 1938 THE temporary NATIONAL ECONOMIC COMMITTEE 15 est expo and Addition greathi N ein! latter namber a I would BII sheed Dec. 1. 1938 of the total - and make mur national or Injure Cuord by Declaries farm are - Dr Its JNVI u was et About bein of la Value - PVS the phine #. and - torth-this M Lodernal produc- been in 189. the abover of course ming I sen - MMC atterwares the iscome much usen only and units agriculture AIMIT m- Char industry TM proving at a 4m . are - If - time M fyr * the le the IM - - M ins his requirements lie mail - sure importable the (LBIT hand, vos. there is a peter duscries in 1936 produced a relatives nure repid rase Chan pegulation with the BONG The imm - THE CHAIRMAN If United la - de- and II of (m the QUIT enst be terme in asind small proportion of the total (4) compared result that you had gutten to the point to the year 189; but there was a very where each person had more goods. have - TO MI - permit Dr. Linbio E pro- to producers 42 of physical Date - By 1928. the per: la quality M offer prom A isi of rither public will raint don't en down as marked Increase in the growth of man- In 1929 our manufacturing industries efacturing and mining during that pe- were producing approximately three time MY LUMER will - and without unles a should - part - 1 DE - - for same reale amos constigue. Der and the ing vp No. prime (in pel go dose an quickly ried et time. As a matter nt Tack, the at much a they had bend in 1999. дол (It Leurs Now enn Litus check in ni- WIND - M. - Wish la their program of the bei increased latter than being resuredity prices, and the result is in the total goods produced by deopite the increase to our population. the i - - the tital bere contier than our Industries was treat about 100 the 1599 per capisa preduction also increased with House income with the FORIER « signature nuruse How - THE - too as- al getto that law breis available to DOI line or Mr Rine vimit - 36 per resit By the Miss - industries breatine to 157 ⑉ 1910, whereas the DEL espital the result that Leice as enich poda - Inbuted to ou nasinnal many to Mill arreint relatively to the tetal value there output of our industries increased from being produced for asch person in the unople - current sen declare abilt in have leve 100 to 195. In other words, our factorize Urbano las a year IKIP 14 that perm produced for ad to Legume You - - + un person pou- M our commy And the INDUSTRIAL PRODUCTION and INSURE were groming at 4 rate much - - - - - Clite lignims les for 29 per rent of the MAE (a) in 1894. states - now incaine by of - - CAR Employer the reive of the things produce form you I exit plue ce minjore un this EASAPT than thit population. with the re- la 1932 DOWNTER, our total pretunion of industry the a may poot ar the no-caling enter - - de production of industries, sult that to 1918 every suprument ID the fell back the 171. which put us back 20 use « the relative importuber of the eventry vu uning about 35 pre cent mure just where we had heren in 1914. The Dr. Laure - inscritives no INCL Lived INVET in per not MT the Visal In - à total ann . per capital basis. goods than Xp. 180 in uther words, the - whitten - - united - a Me A to All other industries - protoso some paper, Date and other weres. there and form the - (Chan Blates It- In terms of pwr capisa. the amount at anount of goods available to the individ- - - - te IM M industries had Mouns - durines Production" and reserved B nais of this per espata. was as production tell trom 197 ⑉ 1909 to 192 1 el - - nel TII - use proportionalely BY the e review and market No. 18 per cent greater, at Dease in terms of prod- in 1991. - that to urma of the products - - questionship Assent -Chart Above (Mistreal Inserv como of the ownlry. and and or PMS 17. ugla of mánes and faciums. than is had of one factorias and our mines the are INC. Premise, LA means - une bir Type or Industry 5m received ID Our undiatry minime If to and (Tim. mail without and marked EVIME NiL LAP On thing unserver should la here a La for EFTIM - 1. - and - 40 Page TO raind, Was yes hitre a depress IN (Exhible No. 34) prote " - 11 - art. You Val active kg definitely that in partau the curput HADY llan LA - other business I usan, prigir ME, - 1830 - half of Ne value of things ROBAH - u - - product In Live United States mere pro- they will the and the le MONTHLY INCOME PAYMENTS Member ault la you per 4. eleme (Exhise No 131 INDFX NUMBER 1929 100 (Adjusted for Seasonal Variation) NATIONAL INCOME LOST IN DEPRESSION BILLIONS 110 DOLLARS BLLIGIS 135 OF DOLLARS 135 1331 100 NATIONAL INCOME NATIONAL INCOME LOST 90 PAYMENTS 9 VETERANS PAYMENTS 10 VERDANNE 60 80 60 - RELIEF 60 70 60 DIVISENCE - INTEREST 50 ENTREMENTATIVAL INCOME 40 so 40 40 COMPENSATION or EMPLOYEES 20 20 30 20 0 (929 1930 1931 1932 1933 o 034 10 1935 - a chestry 1936 1957 1936 TOTAL LOSS 1950-38 - 18 - Md. la 109, The Lie If 42 of the Titles thatry NAL well Natures tara " effectively la the nine years Proo 2930 La 19,34 as 14 414 0 1929 1930 1931 1938 1934 1935 1936 1937 1930 1933 Riced in 1329, which people less the let Ltd 132 - Ullia Vaus Wallars - month ega givils real and services than they as actially est per SOURCE-U/ DEPARTMENT of COMMENCE Regraded Uclassified 16 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE Der, 1, 1918 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE 17 Dec. 1. 1938 (Exhibit Na. 14) 489 citizen an this union tad - M of De By Desember, 1936, how- available - 2 at ID LES Lit ever WY and regalned virtually all of the any Now, goods durable as We defice as outrit werds se ware NET back less from 1500 and - were within three of that are amount - . 5 per ema of de prait uf 1929. Then fülr automobiles for Consumers - years or print of time it) Re UNITED STATES INDUSTRIAL PRODUCTION thirty-chree years lb sema of Lbr (co- discuss of ver mins and ami lowerds another osline in physical produc- 1899*100 liven curium etuca the artical ainnunt pm- direct NIL to live level of things that surt, houses, of - of the genale they produced (hat NAME mallable 10 euro of - parcia. We DEL back have, and for this year - - ing the - of b le- resctived INT MASE pre-and at the present of things being und timely by lieur - TOTAL INDEX - APT deem in about LES when finate that the Md will 748 something state % or - All a máini at faci, even et then below a In- INDEX 350 pur badt, at the level of about us. durine other gode NOT last mench is is estimated se pro- (Cheri amaricy Physical Value « MIS DVT card of etat se formerts [ II All failur - 350 Endoctrial Production Via did during this persis here (1923-25) quie the relative increasing ⑉ in eridetion end exam No which was MIKE ME les a prined at the the so-called d'utroble (205) in the 4 300 17" and VII united 10 Page 19. las decade can Yis will cole (nat Immo 300 to come un "Plusibil Volume M SING Physical production? goods Industries which n 1,078 and 192/, the Insurance un - Endustrial Profiscion ! have assempted - CORIN Physical production the repist Lest preceding mart in - BEDE of our is 78, hag - PT is 250 Now the question M what named these party it in unter that you mglo - mase the point where They an produces LL- 250 drops - in unma of what was respons discription the Une that have most half of our magul, 11 X - able tor (be dreps but what made that lisitim showe decrease Qe Dart (eenty years By 1613 bowner, the Eurlee a The new of phonest production lad 44 it dus. had failm relative entry ! 200 If you start WVD: 3519, white 18 IDe (The chart showing Datgui of ABOUND ANY their importation E ml 200 Name year - you will tusties that sur Communities was received in evi- my that (be Amitimt they produced FULL production - in HED) droce and market Exister De 18° ADDICITS Far that other drop la the - by the @ no, related ABHD proted 00 Page facturing cours. 150 and by 1800 We over as per Have E to break down the 150 cant min good Usan - - producting 1 mustil way The like ment Mr. Chair- at - Pectories and - minis EST in was was 100 Home this as per met, that une a ma A - tas termi of the relative la Am- and mus to un DIT emit it was propared by the National 100 arean eueums of Lim d'anable between when " ME et the nonde Barvey of Entiteme Resure is 100 soulds and the se-cailed non-gurable goods. New York, and made available to a by (Exhible No. 15) 50 50 NATIONAL INCOME BY TYPE OF INDUSTRY o 0 PERSENT 100 PRINT 100 PER CAPITA 350 350 300 80 300 80 250 250 6Q 200 60 200 150 150 40 100 40 100 50 50 20 o 20 o 1853'65 & 70 75 80 8 90 95 1900 05 10 15 20 25 30 35 o From the the Civil far with the exception of A few scattered years. 1900 Since total out- dea- to 1929 output of factorias and mines increased much 1929, nore 1919 20 21 22 23 24 25 '26 0 repidly than population, production has been emallar. From 1870 to curve). Tram 27 28 29 30 31 32 33 34 1935 36 37 put pite (upper an increasing curve) multiplied population, five three-fold, times) per and capite early output doubled a) 8 time a per (lower expite basis. than in In STATE NATIONAL REVEAU OF COMME SEARCH COMMODITY PRODUCING INDUSTRIES 1900 the nine to 1929 years, output 1930-38, increased industrial production has availaged nearly 15% smaller the ALL OTHER INDUSTRIES (EXCL Dovt) preceding nine years. Regrade Uclassified 18 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE Dee, 1. 1938 Der. 1. 1938 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE 19 of the (ower wire and sie propertionate la the siber altrough the to approximately a.cón walks CHF year. but de Directo, B) Weirg e Michell and Nim compare this Ene here of the out- 1 (be) should et credit for this DAS of - and mines were and really I tas maintain trair Mandach of week lave attempted to AM THE - durside goods failure the (De had tero not so met and " ACF a gradually solon NO. You will pollor - back (1) the point where we are produma the oller hand. that the Bodyu a maing first tou here which aboves the nt ( other line' approximately 2000 - Name faMer relairely than the Nurther The new - Tabrid the factory, production, durable no No. spote to the - in the of am privid is brook tast De live whe land, the jumber NE were JU pes innuice Yw will And that Via Chart Above United Blated 198 win noily house will in the United Bister Nurth Central Bales dier to some plan - all Production valid . enter AIRP mains Agricultural Production FM received durable, agriculture, and - with No. EF and - groupo - - evidence and macket "Eanibh Kn. portant that application has is. itepresentative REFICE Il ou - - you con = stat that is all vurually am It la to small that between the Nartheast and UV Somb. by et can birdly une Il there in terms of the spred of development Uu Fyp D. an euro se provided DO Puge 30.1 - - to other winde farmers dont dari pro- nich and industry has produced the las No % DISPHANT That u. the effice As a milki of the the actual number Bould la moving tuter ta DEW hourng DURABLE noons anate demand for BODÉA the - the In other words, Wither the Inc. INST 0 o misit and mady after- of two-family bourer ball in 1934 was Uun all other part of the United Acales when prople stop producting 101 1801 TM actual number of Coming tuck again M this question of the due pillion 0 Brought - more M 4 maiser or fact. terror has tem a, supplied - under Hoplied. to :verN. Yes in 1931 193 only 1,00 100 desiling the CHINE of production in various india- fun M your manufactures ANY INCYRAME with lissie decibers the Two outo you - god- and Date - accuration 5 - Ban Dr. LUBIM or course. 1 don't - KJNG. 11 I auf to pardensä, units in spartment bown. where one- line as expend enter indivery as . one wild asswer that was reletted 15 agrinatural family have cover fell below 39,100 unim where, you will bete here upsin Mr. Oil- me laús is DET criu, a receive in the del We SECURE in your investigation au and in 133° ID of phant the curre of production from taxe the while unread of Alpre Hosever, - condection. a drup here dur- for this reason: The Presco - 20,001 la rement DE the period 1994. 13. 76, seain may agear have anduce tou Rx) suf as ENF agoria of apricultural con- Chart entitled Probection and 5 the insure include with a total colput in Le Dirause Uness other telks are Phone miles with - singl, roin and It might te interesting iv sumpare the Capacity of Partland Cament Mills, Live too bille, or vise veha 1 dei) Lis that und of so had being required trend of heasing in verious (arta of the 1010-1937. www. remived and marked - primary resert as a - 1937 was ASSOURE (4) men -- - had in grants - aus previox use that one rao MAY Chat as any Limy - anne Lieu per instit or (60 years? country, You ed pole that the No IN and B printed on much la produced Brace they la a/- got far the mil el the country, to Prip B) Compare - Mi mai Breaue KINO. The Le am Polume? ways e possibility of increasing the Mind- Dr (I/BIN) Very very Tue and The - Like Date Dr LIPBIN. Yes and ni living DE sourse there bay la Anibility anys Ind MY Tiwre is going la hwis made un this Reportemiative INSPOR. Is " your m- a limits to types of parts the deal mir the export and unport problem (Exidate No. 38) (Ma). divip Brie to explain what CR/CAPS the a- people win the I dent. RICE Tar CHAIRMAN Have you made à the DE ne of past lure - Dev: For lacture the - have aver control that stage Ole short the DEC explis production para - will - that anu remained Imm ave for goods in cotten. whent or way of Une the of coundilint OUTPUT OF COMMODITIES Titulary statte - - vmw. INFORMATION and the their give de- au- Use United States by Immes of - - Inr maner They musa contrume if they WITH Dr. LUBOT We have Eyens I we white) afferted the Wall to to maintain, A Mandard of living me came belt * when of their I could just them PERCENT PERCENT wher wede - she - Di. LUBIX I - non intered LA explain ne as an American slandard nf live Insul. 5 a 80 60 is . dépensions the d. Today Due 1 HOME service a the - - - and with vodem M the that question Mr OLIPHANT. I have 4 - - Tim CHAIRMAN Dun't you this that institutes are line Brui this, a further word of explanation e would M as intenting thing is show in in and toto The All I - at- pevule apparently burne. just the the significance of the chart braded Two the sumpling so an en story have the - two Block instruction sugs thiseling MI sere MMS DIA failled to to - Reserve ladex of Manufacturing Dr. LUBIN. Yes It will follow that equipment and plant Production." Are Lime particular - produce the ands that w/d to (Indes at and agricultural preduction). durable gnnds, the volume of abide - The rusve will keep streight up Mr. Others reland the question H to (Exhibit No. 17) types of industries and whether prime dellows time palleto at the 40 GO Industries as # whole Time M the partiro for ser lizal teelly PHYSICAL VOLUME OF INDUSTRIAL PRODUCTION Type of ennstruction. and you wis milk the (or pask - in 13 where / form ADJUSTED FOR SEASONAL VARIATION the prais in was us Fl - 1923-25-100 INIT Name Date of All Contruction" AM reserved and marked Exmoit No. 11" and MI promos on Page BL) To will name that Bir low para in 40 w 1000 provider 992 resented (2) 32-34, 40 un - IDV 300 punt in industrial pro- desim we muched in HDS You sut pre final, - the utiner fund. yas prok e of beliding - enched about IM Iss wind UM the periz a local institutions NO lie MAKE in privite non- nut elack faciones plants 30 FOR -) DATE must magard until three We ema the feak - gandle 20 a 20 IVR warr) reserved unet 1936 In uther even in the building industry you & Mir pillern of autord pro- lumi NP Fluit smittled Dolla Provided Two in New Non-Farm Cun- & via received and marked No 23" and a printed a # Page III o Il you use this fature of registration o 1879 IBB9 1904 1909 1914 1919 6925 1929 1958 N which after an a the must 1699 NON-OURABLE COMMODITIES - live in the build- DURABLE COMMODITIES N IM univery, you will ont some rather - --- If - underst Things You will Date that the mad outrier of residence that ans tax are yours, - Languir ad the remit of - duratie - increased la - - / as 40 NO in from 302/80 units 10 1672 10 /M/ Hallb in 1991, Your industrial production. - - - e - for - insurative - administra, almentic expenditires - MI - Awar have an an no INDS AM if never Inveled all such terriffic att. peril 100% use SAM - . are to UMPR checking. au IM IN BY we Even in 1987 it is only up 5 201,00M. purchases of - 100 Paint - I: - of une-fanily units, the drop, WAS Regraded lassified 20 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE Dec. 1, 1938 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE 21 Dec. I. 1938 (Ezhibit No. 19) Tel sill use that statung out with the Batterid out Production varied up and SENATOR KING. Then was deniande dowo, reached a peak of 42,000,000 grou from abroad. from the warring nations, espacify of approximately A hundred mil- ID- line turrela . year that capacity kroi lane in 1999, fell from 43,000,000 to 0,000,- and this BY took it R survives FEDERAL RESERVE INDEX OF MANUFACTURING PRODUCTION musice deadly up through 1912. when 000 by 1951. end is is now back to 37,000.- THE CHAIRMAN. My throght was repartly var 325,500.000 barrels I year. 000 for Text year and for the first ten how could production excend capacity On IM Lie caber hand. the production reached months of this post will probably be class to produce? ADJUSTED FOR SEASONAL VARIATION to 14,000,000. Dr. LUBIN. My amistant also that la a part in LES went down then and has MA une tack as pus M industry as . THE CHAIRMAN Dr. Labin, what la "prictical" sapacity-in other words, así = INTERNE FOR TOTAL as POINTS while came tack. where just note your explanation of the fact that this working efficiently, this is what produe- / I came but almost tu the level of 1929. chart would Indicate that some time tm would be 3 - pie iron la each the name in 1010 of 11 production exceded capacity? THE CHAIRMAN. I I essidn't are the wurd "practical" from this point date Dr. LUBIN War orders. You had a (Chart No. 25, "Anmisi Production (Chart estitled Ple Iron Produc- tramenders for steel, with war of Automobiles." was received in evi- sien: and Capacity of Blast Purnaces orders from all over the country, and denoe and marked "Rabibit No. 25" su named and marked respecty was stepped up to take care of and la printed en Page 24.) E a No. 34" and la printed 8 them. They opened blaut furnames that Dr. LUBIN. You and the same thing 2TAL - Page 31/ had been about down fut years in order true of automobiles, rising trom less than These capacity kept Increasing and then to fill the unders. 2,000,000 in 1519 to 5,350,000 to 1929, fall- - - (Exhibit No. 21) VALUE OF ALL CONSTRUCTION BILLIONS OF DOLLARS BILLINE or DOLLARS Hill ASSIN PER MAX 12 12 18 " TOTAL 10 - Proje 10 #2 is 6 8 - I AF is 6 6 4 4 . - - - - - - an - , - an # AM - - - IRM - - - - 2 # 0 a 6 5 (Eshibit No. 20) REPRENTIAL 4 48. UNITED STATES AGRICULTURAL PRODUCTION 1925-25-100 2 8. - - ISO HOLY - a 0 o 6 6 BOD 100 4 4 AIRCULTURE PROMITE so 00 2 2. 40 o 1 o (x) 4 4 8 PUBLIC 2 2. 40 o o was - INS as 1920 1859 1925 1830 1935 mes 425 seo 605 - - . - - - - - - - - - - - I I % I I I . that - . - Regraded Jclassified 22 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE Dec. 1, 1938 - Mi MMP 1,270.00 LA 1942 with -- (Extibit No. 22) THE TEMPORARY NATIONAL ECONOMIC COMMITTEE 23 Der. 1. 1938 - user genetured - to us, - your premium and bate spain RESIDENTIAL UNITS PROVIDED FOR - un to - must - them - IN NEW NON-FARM CONSTRUCTION in (he industries 1 DATE the (Exhibit No. 21) Now fun TM 1 year. 400 Service KUMA The L'WVI charge share - part ducuble grade India at the - la para you. which produce for as PRODUCTION AND CAPACITY OF PORTLAND MONTH EARY 40) . die - No production this produced tar seri comes 29. CEMENT MILLS - 1910-1937 all - ires and Unit an the pro- soo adaby we and T than produced even in MILLIORS OF BARRELS MILLIONS of MARRELS of I - I THE - you have à non-turable consumer gode - that sign on fast. plus 250 250 De EUDIN There lest really a. - - EDG to jain that (here has been a very mind condition für De - that 8 during - of Card de- pyin : in the industry. if you want - - sevel - - FIAMI onle bill TV wear out - show fail, change the sigle 100 200 200 I (Lat ow galekb. and they auto- - not XXX - mile e new demand: there we - DIE WATER all and of wirt. Your production of e der tax - . tremindine rinange in - et a much taster a 200 to of shormaking the prim at sain missivels. the increased de- NORTH CENTRAL los phuls orteto prim are available, and the 150 150 PRACTION comment les las so - e new CAPACITY sim euromabile redowns 19 increasely noo we OLIPHANT Do you use of any - as a in and goods that will follow that lime? presention theire - - long period bene & KING There la less leather 100 100 sive - played a lismers 100 * und in the manufacture at the than PRODUCTION - - in the production (if yes age in - when industries ERE Back LO the - Mr HENDERSON. 1 thank if you tud a of - of This à 300 retriguez shart. that would be ingline Live advise EN will be even SOUTH 200 50 50 tal lin ascarible in durable less Heart Is M et - present time Dr LUBIN, Visa - the INCIP the a goods 200 a she - is Mismines oral. 200 Dr. LUBIN. Yrs It la a pie predios reside Inte the paren. C (Chall No. 24. Presention 0 at Examineus Coal. NAS reserved ao 100 serve BORAN What are the figures 00 RD 1915 1920 M25 1930 1955 PMG and marked TORTUGEL No 21" isen at importations? AGE a pricted 40 Page - o Dr. LUBIN. The la 36 and Il 1 dan't Yes have a. withi, in 1920. any a kny the del figures but I hare la implian in Onited States Manufac- whether un aut that Increase of production proposed TMDS of to 800 BX INT. vien by any bolding hearings caren, 1810-197° WAS received too avt- in sur of three years added to the carry- 1925 when antivity PM far an DE the was and Hour am. the gestus dence and marked "Sabibit No 29 over, addrd to the surplus? lo we product 30. if above TM rated and I and is printed de Page 2) IDO Dr LUBIN. There - surpise too - la cile ve the the can IN task R et that Ume that II Vill 60000 Here la the care of cotion, another mm- tories la textiles very definitely, this past insury - probasing resulting like 1,800.00 (ain per year the they wire in- darable gooda made into cloibes. We an- fall as [HT netili luste gards. EIN nege the a sivere ISITY La at liber in as EW 1 parting. while an the other hand R with sumed pare to the year 1937 in TV our tastaries than in use other pear in Representative SUMMERS. I sm straid - mi and Udage of that en. projents la non el 400/100,- - our history. riespike the fact Usi at the I didot me my question property. La tisere ) Im the La productive ni - 000 pin noo une time MIK ww going up and rayon any way w sture wire percentage of thome not Vall M when M. sugnas - KIND, And is tas tires n- - ww taking this jump here. increases added to the surpins? Do you - thin bill - the DI had been. in durd daring the past year) a imports sture whether care greta su be . mames- IWN n. TO 440,000.000 are are billinge % (m) particuaria. and word also, - expanding in terms of cum nil production EXT that you ran your te 1538 D: LUBIN We code e e Ihrough surpion up beyond what your consumption Tin thine a shas paystes) 1. while arte of live Representative SUMMERS. Mar : for over . given period. - - km up during the No 2, Textile Plant Cittle you, please. have you any Quites to show Dr. LUNIN. I think very definnely Chat pervent times an VII un bill the case happened in 199, in We were not in did net nume - abj- stanching date production. I usink u was (nar Unit asse nile - (Rabibit No. 24) also true in word. or - visa Tarier to - soc PIG IRON PRODUCTION AND CAPACITY OF (Chart No. zu *Annual Production libe et neil usiline. son BLAST FURNACES - 1910-1937 of Cigarettes, --- normal la exi- The hut - - 13 derive and marked No 10 - MI - - MI - - - of - Ima e - rivi. HOLDERS of 480.53 TOMS MILLIONS OF GROSS TOMS and - printed ou Page 38.7 50 50 Now I would the su go te une coure Plant No all Photogram a - Wire medical - Milline 800 600 FRACTICAL consumers goods. namely, regarethes, where - maising Reduction Nn IF and M CARICITY, you have the assume utilation shas in in Page 1929 BY used 119,000,000 DE of - Nove a ensiter infustry that 40 40 making them: we prestored and Furty-ane Million the same amount in 1900, and year Persi - Rubber - produce 5 us we uned 100.000.000 - As . matter of wave Twis - ------------------------- e mup « 15 400 400 fact. there La . stight. deup in them two JAPP FIVE LE IRD. and in HGT BY - 10 50 para has unere utherwise has bern a DATA the - back a Vw lici ind, Trues feesly straight line in cigarette - is and that internations differred ten tion. and I of EVER more pop-derable and titus compile Uu lact: Unit Inquiry - comminer grands than cigarettes. as . whole - MD hery or Founds build- - los a the the Twette Bev nn lumber United BY PRODUCTION Finally in contrast with what DAS- 20 20 prond in the manufactoring docum and BE supe Lierre la Unle other we have Unis shart, with this No that there have been ADMINITUTES - up and abowing ruor department and and perficiary La paper tax- since salm Let's torget OF red lines Dire have almost enternity displance Insued buse LD: Use DATE firm) 10 which are Christmas and this - August a ID and assenter. Chart No. 26, "Artiual Production - of Whites received to Charl No 29. swre Prepared by the statts of The Central Statistical Board was received un evidence and Evided on Page - and markid Exhibiti the IF and la and the National Resources Committee 0 marked Expirate No 11 and B o petisted an Pap 20.1 Scorce-National Burney of Economic Research 60 65 1920 1925 1930 1955 1940 The CHAIRMAN. You are graw ni Regraded Uclassified 24 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE Der, 1, 1938 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE 25 Der. 1. 1938 (Exhibit No. 26) THE e Use un an Department sure mil (tone and drus (5) acuvities ut which applir By for bito trucks of course is . person Dr. LOBIN Yes You will ne the - very amaila is the law to years? THE In CHAIRMAN It n ANNUAL PRODUCTION OF BITUMINOUS COAL wire gni tack la the STATE or has no LOAIN Re, LE - Gnising 12 THE Labin " will la el this time und 2 velock 600 - - = and 3 All . maile of A an DM BM time ACT certain Missio - tuck vers lat. NEW- takeni, Wherever, at 11:00 - I Miss by - of the present - BY Titul Owi or 600 480 rima (MM) simul 16 per emi - 10 LAS chain - siles adil also time H solume of aire, sure in anlier má ader - Time an unly Gepuri- related them BY IRRTE delog decise the for experation of the rices The Pricess at 3.85 a - new surve las which dilla in (be we person Hustrer, shall and mean BY ivy which sare last repuiding ever - Lime name to Under We in 4a Tim CHAIRMAN The - VS 500 are-villing Use much Lew goads private << post 00 the Pederal Resirve mare has - A sharge in Dal POI begin, Dr. Lubini 500 prom That dure REDCE The Mine of KING When de two arve the Time items and emil- - - beve a very vila- Testimony of Dr. Isader Labia, department alures, U I - - that ex- Commissioner of Labor Statis- 400 suvelup se The tital wine provide, de VENEL - antima un - Dr LUMIN Smilate para have liere Lies, Department of Later, 400 en charge activitive to director Dr. LUBIN The Beiro of goods Washington, D. C-( Resumed). of Use Ma . DEL (Chart No 30. Thank N Present- Dr. LUBIN Mr Chairman BI Revil 300 of Depresentative department name in Car - received to +1/- pass - up this marnings - 1 cities the - the New and marked Exhaut No an would LINE vos moch MY proplemise the 300 There o made Draw their end - provided on Page an taci Net the purpose the far has is Brite XINO Would - include The - et on la under What the have nas Dem in the Allent- Thein com? have will or DUE ins persondage sue people as a result DO the failure el 12 200 Di LUUIN No. THEY missi - As - relle Tues - artime - and vectimin to Funetain amountily ime - - the affict - - importable of required Ad I pointed end. the - 200 wind loclude San las and insurers super the you- time in paisonal income edjured to 4 The CHAIRMAN As E " reads La stown ENTE 1017 definitely, where price level, Will 4122 - over that than 4 INFONTED in the TRAI drep is simver 1/9 the the purse of other 1995 I - tax Rente Binim and a - type/mi Crip in Upr heavy IDENTIFIER with in paint missing further share in FOR Siders 100 thart this an allmipi to ibr - IN rase following prote closely the - make the allowance for the change , 100 time in There prodi INSURER(E) and that drup peteo town that Begare - RETUE I dian Income Unle drop. Wescher BC NM - COLLAGO. 2n esher werds, u 1°M XXXXX will the Time may fato gys the point sure the will the total Invoice for men year and MAM said by son of the titure persons Das - - mum, frogght to LEGINE of Ibim (mpither, and del as Adique - o the dari N/A by five-and-tem- and or - ear Indive License this No inr changes a price Sevel, pour would 0 for revil of the and the really that require 1919 20 21 '22 "23 24 25 26 27 26 29 30 31 # 33 34 35 36 (937 38 39 '40 - B MASS (Extible No 25) (Exhibit No. 27) ANNUAL PRODUCTION OF AUTOMOBILES ANNUAL PRODUCTION OF LUMBER - - HET - will - 50 - HET 6 # - 50 6 5 40 5 40 4 is 4 30 30 3 3 20 20 2 - 2 10 I 10 - o o di9 20 21 22 23 & 25 26 27 28 o o 30 MEDICAL - AND - EMA COMMERCIAL VEHICLES 12, 32 33 34 35 36 1937 38 39 40 198 20 21 22 24 28 29 30 31 32 33 34 35 36 1937 38 39 40 28 23 25 26 27 invoice - NO the - Regraded Uclassified 26 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE Dec. I, 1938 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE 27 The CHAIRMAN What not - M DE shou - upturn and then Lise downlura - that leg 193N we have 12- a here actually treltig an Increase loday As Der. 1. 1938 ambund M De LUBIN n - people employed In these Indus- I allempted - - - Tursher what paint. between them Peo Inc - et a 4a tance signity Miller then 1 Mar as rempired with 17,000,000 people SING il a fact that (Chart 90. 3. "Employment di Pay there was . motantly dermine number Dalla. all Manufacturing Industries of persoda preemary to produce - 010- - at the - Inited - is in Ihree industries IN 1929. In- The IN the proprietors in more than 2,000.000 permanent rolla - received in evidence and marked stant calput. employees com an the government pay "Exhibit No 34 and a printed an Dr LUBIN. Butly that Tennunning end attempled to paras out LIVE Deuos desi with the same end casisal workers month in = as in 1948. se MY eathing of the entirmous Page no SENATOR KING That constant out- line the Sum --- divided in W P. A. and the ether organ- - ever und of DE Ein the wher hand, Lhe dissance he- The CHAIRMAN May nail, before GOVERNMENT EMPLOYEES number - (pail the increase in the nam- I am SIFE? I haven't A latger chart on put, and any improvement in = was the employment and pay rolls in manufactur- result in part of bew technology. - In And the investion - nere and here. which representa I pound - turner that in - memore the number or people verployed - trade, leave to that, whether you have TAGE no - of persons nn the government pay or paid cuiv of the gatdle treasury inc. but 1 want in shill now, from this Dr. LOBIN New technology, new meth- ods of doine things industries Gu press - DO arten and the government the break-doep ut the tniddle Prio - 193. the distance between Am KEY mill B very much greater than it was in 1929 group here to what bis happened to m- SENATOR KING. Gresier use nf - extral AN - divisible duales insurent the line and that line. trade, Surance and enveronment Time - or AAY grvending perind? playment in the manisfacturing industries namire - products of Have commines- Dr ward. That a para air. but there in this mountry during recent years For elimery. Dr. LUBIN. And greater - of man- LA aliposi love name -- IL D today In other Line visit are store to Mail THE of - than I have in mind a whenker BY - do not include W. P. A or C. c. C. the sake of mathematical simplicity - agement procedure, not normally put- words, un of ustal numser of people members plant employed in trade Enance and numbers meployed by Unime hasp's tem a lerge - le M Will THEY (peture regular government em- have Lasto these three years. = 24 and the in & DEF manhine, but reorgamizing aurable - plassions on the regular pay rolle of the = as an average, to compare them. and the actual flasire in your flow of goods and processes and as and thage 1509, --- when 11,000,000. and the Dr. LUBIN, We have the adress Name of the curobers employed There hu - government. and eit) governments. state the thing 1 like to point DUE is that de- things of that and NOT that - acturns- as ont not sociode tisse em relief - county. memberipal, and wpite the fact that our undex of physical SENATOR KINO. Better distribution, Dewn traday M about 12.300,160, virtually - perceptible increase in the - production rese vers perceptibly, revise by THE CHAIRMAN In other words, The effect of 15/Hr snifis un the FROM- - rhone in live actual number ni perple ployed by DIFFERENT los las Vol the 25 per cent. during the decide of the what you are demonstrating is that both - M you lbs different employed in those aclivities, payes Mt. ARSOLD Your point is that u twenties, the total number of people eas- the capacity La produce and effectory of of POLICY is one in this In of the upper coup. Cream in envorsement employment M - chan extinal Employ- and casual there small We have the exact Regure, pared with this total has - relatively intel the same manker of people to gel. played in the manufacturing industries production have been Increased hardly FORE as all (R-ferring La Dr. LUBIN. Examily. mm/ in the Valid Blain" Hall particular you dism Chers No Q Suppressive REECE What does No. TO Aa e. matter at (act, unly entio Now, the question arinch town to account Employment to lbs third BLUIN," workers' mesn? the exception of - short period to IED for the employment elluation during this GOVERNMENT EMPLOYMENT Dr LARBIN Longshuremen, domestic the manufacturing Industries of the period of time when production ess go- TM EM and marked la Total Employment Delivery (to MO. people she do not leave country were employing just about the log up. employment in the manufacturing No D and - primel Mill Nigh 1126 Mar 18D employment in the sense that they same number they were earlier in the Industries remaining more or less stable. Pier THE Reps. in Regular - SEPTUR 4kg A decade, slibough for a short period they and all the same time se wire adding to 1426 Out 1584 I This luner jan DITE give you the - - maintes* I'ver 74 454 Please WORK most after mansh in the same 6 MII reached e point shire they vere resplay- our labor supply-by that I mras people (m) of respiral is far actual and 1138 AND TIME - 1233 - industry The CHAIRMAN. How shout the non- line 10 por cent more workers then they of working up-4 DEL instease after you lining mining construction, tranigora- THE pm aux zur A good desl of that did earlier ID the seade, state the indes deduct people who retire and die, of some- 4dd UNITED membres, and you DAN a of physical productions went up very thing like 600,000 people every year. +6 - that them was . medical deciba Patrial State wod TWA suit la - Burree N States Dr. LOBIN. Same of that a included markedir. Benator KING to part somen? The CHAIRMAN. in other wards, Dr. LUBIN Proportionalely sheet the MM. (Exhine No 28) /Ryhihir No. M TEXTILE FIBRE CONSUMPTION ANNUAL PRODUCTION OF SHOES BY U. S. MANUFACTURERS 1870-1937 MILLIONS MILLIONS 500 1000 500 500 600 600 400 400 AMIMIRENT was COMPUMPTION ACTUAL was 100 400 400 200 (ANINDS) 100 100 no 00 so 3 40 300 40 300 20 01 way NIF SUN IMPEWIFE 6 a 8 200 e 6 200 6 4 4 - a 100 2 COTTON (BALES) - 100 - 4 e 6 4 4 o / 19:9 20 21 22 N 24 of 26 27 28 29 o the uses 30 31 32 2 one) 34 1 35 36 1937 38 39 '40 i 50 900 405 IRO 1920 1925 HAD " FMO I 1914 1075 ISSO 1889 1890 Regraded Uclassified 28 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE Dec. 1, 1938 Dec. 1. 1938 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE 29 (Exhible No. 30) number el some as in me previous the this increased available lainr population? perind a the rarly part of the desde. Dr. LUBIN n did et . pretty good In other words, as far as the wase earn- ANNUAL PRODUCTION OF CIGARETTES will That wgt the as growth in who rate up unill 103. Since 1999 If bis nit sew there more getting. in - of prople of verkins NET world visid e to work after ther tech dolog that et all actual pay rotts each were approximately e pm rent tesa than they had sem get- public a age. If I (M) point for 4 mement to what time la the 1939-25 periot MILLIONS (IF POUNTS Inc CHAIRMAN, Haw use) per year? happened to that employment disalted The CHAIRMAN. In other words. the IBO @ POLICY De LEBIN. Approximatels and alter 19, 50 we may tollow It (brough, compensation of industrial workin. fax- ISO ihm vere nil bring by medux It resched a park of 110 in no Is fell tary workers, dropped to A mush greater - industries to IL at the bottom of the depreisión in extral that the number of persons 10% To CHAIRMAN. That is . net in- 182 In when words, for mery 156 per pluyed. 160 pie who had jobs in factorias in 1929. Dr. LUBIN. Tm. That of DRIVE IGO me? Dr. LUBIN. Nel nover The unwer only di hed jobs a the bottom el the de due in part tit wage staties. trat for the is 130 ml to the prip. beauty par- Thise workers were absorbed. most part to irregular employment. The - aveng and and last fist - were employing in our man via had . job had only one or two 140 los WE developed - while factorias just about the same number of days. where farmerly be worked six, 140 grim of SIN which added is our people M W employed et the pur of The CHAIRMAN. Apparently from Used standling it living that period and 1529 In wher words. the manufactur- chart the compensation remained far bei 120 (umund the unr supply Im 11 through ing indestries of the mustry tud got tack law the employment seveil for several this sume that TM enteribe the later se the point where they were soing is years, 120 parket each pear. well in terms of employment M they tod Dr. LUBIN Yes. VRCY delinitely AA Brown KING tool it customéed that teen dolor in On the other hand, a matter of fact. it remained below 11 unus livere um should eightren are insustrime 100 developed during the para too years which your pay mils which had as up to a early in name storted several million employees? pour winn they were 14 pm cast above Benatet KINO. Visita am spesides of the 100 DI. LOBON, I world of (IVER the last the average period of =, 24, 25, tell aggregate number of employees rattier 80 a and I half yes, to 38. which meant that our factorias than the unmpensation per unit? The CHAIRMAN NM the expansion BITY paying out 18: each vick tax every Dr. LUBIN Yes. As I said. we did got ao dellar that The sere paying nus in this back in employment. We alas and hark of the service paip of admitive united 60 60 (Behibit No. 52) 40 INDEX OF FREIGHT-CAR LOADINGS 40 INDEX 20 WORK 120 20 120 o 1919 20 21 22 23 24 25 26 27 28 29 30 31 32 33 0 34 35 36 37 38 39 BOUND OF INTERNAL REVOLUE 40 100 100 - (Extibit No. 31) PER CENT DEPARTMENT STORE SALES 200 HORX, RAWED on DOLLAR unes -25-100 80 PERCENT BO IED 200 180 160 60 (SO 140 60 120 140 120 40 100 40 80 100 60 DD 20 20 40 80 20 ADVISITE FOR - VARIATION 40 *ithout MARINAL ADVARTMENT o o o 20 1919 20 2) 22 23 24 5 Rs, 27 28 29 30 3. 32 33 34 35 36 37 38 39 40 1920 - - - 1922 1924 OF THE FIDERAL REMIRE EVETEM mes 0 BOARD OF GOVERNORS OF FEDERAL CEM BOARD 1928 1930 1932 1934 1936 1930 Regraded Uclassified 30 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE Dec. 1, 1938 ther. I, 1938 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE 31 (Exhibit No 34) 14 MAY la Inc. - - last. Representative TERCE I inderstand, - - Continue - main am woodering if your pay mit salares, here - which includes M information - the aser progressed hand other at wiert, i - and lie June the MICHT M the - - - - the employment Tab there a The These Include may If - indoviras were (MMP - (ec) nith in useir out- EMPLOYMENT AND PAY ROLLS ver You not georralize. DURABLE GOODS GROUP - - -150- - moise em- weily to manaticturing me give A/F important informe - - -MAT - - - ME - - - - provided, washington an - part-time baser, EMPLOYEE COMPENSATION minitalin billominess onl mining per - n in she output un per HIT - FINES pas not line returns the pour - --- - - and and would amenting, that 15, $4) KING This me instructif. and mail mining per man-bour, - 6 OF - an taxe to that probable ] INSURANCE Live delle vage - Ind name in actually un e Tear. Dr. LUSIN This LV the Mtal are - INC per Fir missine BY laund in the testile ID- as Two - a - --- KING And The Inis) daily une a period at swell years - - - LUMIN If may 4PF - the any DI LUBIN 4a 1 attempted to was for the you United 50mg to NU parted increase in origal per - Employment um Dran. The resson why this That shall <Very plant in the AT - - was An and liwer than that Sension KING. Bo that Dr. LUBIN. Yis Did low Not law . REPORT They THAT - induits but instruct or output To TIME line - - - HAVE wager, - AM lu . via in MF Do OMIO sun MODE Del 100ml Tan paid in Pages 420 clients MB SINTE against were the ones glants that had modernized and put in so eo - FIME but EDF wajor / Wat the milli-five billion. Dr The - um was - fino tive lines completer whis were wereing que the the picture. As a that- - Maria - Pum all in um ente working part thus - Dr LUBIN, I know vun Retre It of Two- WF fund (tat If you took $ caving cirey were full lime, où That be is referring le there Empiry DE. 40 product - MY If - - procession was Infly-one - MM as plant B in (br al. I'mé ni sin wine the amount the carried. you - TWP missinar Insure Visa Aftershere billing ay which was aquipped with the beit HEETX The Lest sume machinery igenti in them days and com- Jd en - - - Use - - - EXXX would - fu view HT that Service BING That be the ! to. perma n. will - giam II: 1004, unity years - ME what you - and NO that as (in M per are - with for tiest machinery P LOVED in 38. - casid art almos su (MIT = nevir 1000 - on - 1895 MMS valid - Personality Milk 1 information: your tar volume instructions - pvid - DE M E as - - the - What The - Mamela Little users I am no; 4. - any any and - each sulter than you - . des - DI Nel - lbs - - - - meh mi nive brand MONT cal- Dr. LIBEN pc: and - wild this your preventiy. bill that more Date mis - - device - - and then ni IM39 Line entre wid vary trum plant tal plant. as compared to . drup in duraide goods bare fost baking, wather I à 1 : magne - THE sepind. tux which has been at so per cent trum the level pocia and shoes papert, pulp, rulsier pu- - and an IND - Kid.- LABOR SAVING DEVICES BY quite because You will find that pay relia dropped in desta, tentiliza. toberns, strangs ut Used will wordbox - - as - for uw and Dius show the (9)- Representative MNKRS Das- It nel hrees this line up BM the two gooda 10 Lite poins af just Tax CHAIRMAN In the noodorable (PM. - The ten have you anything if 3 THE - in important page e manufaciuring a- april half what (be) nao been; bere pay group go all ot the information of life. and that Full LEXAS - to Inner [ ments Givins exch ne me war- - VISM PRIVIDED 1419 and and to indicare now puich live divelopment marry, the digrature group and rulls in the derable goods tell. to about in Une durante group N° prectically all the - attend - - le The - If THE later invite ánice - reflective to - für pre-durable po. end that I Surve - quarter of what they had been, again cusures. - Name UNITY brind - 190% - the The and in wages in minute of productions and *upor to du otre emphasizing the part the durable goda Dr. LUBIN I emit agree that fursilare - - with (will) - yes Dr. LUBDI. I *vuld MY be - a. Card entitled T=ployment and addistrim play la kerping the machine and automobiles or electric refrigeration - gold mail its were that au end was significant factor une WY de by Por Mille Duratile Ocoda Group." VM working emonihly. are - in terms of part history. available desting *dh - received and marked Mo. 11" The CHAIRMAN Don't you think Il things which in the part DATE um non- and is prisited. on Page ILI sould be well so give a list of exactly sidered takurses and un nas You will note that employment (ell su what you all durable goods? You have bey would ni that defullines (Rehible No. 333 the point where people vor mentiumed Unrel of fruir different types The CHAIRMAN I gave " as , - reployed lot every (00 that lad term You have associoued redine time end not o a statement. NON-AGRICULTURAL EMPLOYMENT maluel in 1821-25. If you take the and DE LUBIN. Agen. WT emphasize the teste para indiviry yuu will find only De LUMN. El Includes all machiners of DUE duralión grods indus- o mái of 100 were employed is use and industres all of the meisle and materials tries, and : want to prina nus use for- 40 IN THE UNITED STATES BE reth tell to the peus that unly that en into making thome machines word ther fact that in MAY of INST 2% via being paid out in the durable are producer durables, all transporta- to Employment end Par Holds in Durable 40 and industries o amjund with Tax tago equipment. all insure all automo- Goude the durable goods indus- for all bür: the and steel end dei products tries were employee about Use MMP Chart milled Employments and like handware etc. tunber and ailded pro- number of people the - sur 1829 seil Pay Sign-Durable Coods MM duda. including himiture: marnisety. lbes sere paring out un par rulle assided and unred No 24" tocioding agricultural, electrical, engicas. be sur apposit will muties then had term and a printed (if) Page no foundries, de: day and das paying mil in IND. However, in the 30 If compare their with the nändur- We: transporsation resipment, ID- nondorable goods referring to Explain- sale prés you WE find that employment cluding all unly railreds tail. medi and Pay Rolls. Nondurable Mill mily by approximately a per sent niles And emile the penderabies you you will :nite that after the and of - 30 #1 were en 4 with this period - (Exhibit No. 15) form the argendum. that un August 38, et ware back to where WY gli Howp EMPLOYMENT 8 PAY ROLLS prak of 3. and thai in August of 3017 4vt. 1 ALL MANUFACTURING INDUSTRIES we were above 1939 in che employment of penple in INF that made 15-mir 20 + so-called production However - never got back le the point where are 20 et VI paid nus as many dollars in pay roils in these Industries 48 - 4M in IFS all 1 this paint the index name 114. and at y or this point une indes prek bring 100. which for the - part, to that - at - teast M a significant Tarier in the - a 10 that it dome refind - United with - part. to - rate* - The or - wage yelas increased Our Taximit in - 10 (a) Build distrible goda industries in 36 1 yr. al +V TM CHAIRMAN The figure you name fornished as ed far - united that - : resil a production to - N R nandurable indission bas - . consume book Profestion - she D 1929 e durable industries EVAN - - great 1930 - 1931 1932 1933 A IVV - - in are - not diff - AND E is - - - decline Now you are giving - Chie et- 1934 1935 193£ 0 termer between LIVE wages and the - 1937 1938 1939 Regraded Uclassified 32 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE Dee, 1, 1938 Dec. 1. THE TEMPORARY NATIONAL ECONOMIC COMMITTEE-Section 2. 33 1938 That (Rebibit Nn. 36) m (Exhibit No. 36) EMPLOYMENT & PAY ROLLS PRICE OF CEMENT 5 NONDURABLE GOODS BOUND DORAH Did the price of - EMPLOYMENT AND PAY ROLLS no sharma uggificantly? LUMBER: SAWMILLS - Dr. UVBIX Mr. Oliginant, I think, CAR - I i (A) NW tell you more sendt that g EMPLOYMENT The CHAIRMAN. What " the to IM decident guestion? - - ? DE LOWIN. It (lidm') change. To CHAIRMAN. it a Incl that - e not Ad # (44) TATE: proporum of the output of (emmi is use insig gaid in the cur- AT an de under of mude? " PAY POLLS Dr. LORIN Air - mailer of but your 4d - Ad Public Wath Program and W. P. A. pro- - 5 , jem gre Mg af remient even Employment of (oas) 2 2 M The CHAIRMAN 50 chat this dut on As Pay winn chould DDC be taken to indicate no 2 (hat commusion has come back to the - NO i - NM - : that the we - emeti has leck him Nu # sed is un Page o an NY - - - - - - VWSA VII 314 NOT ap nie MAD Benause KING. Days If the timem Dr. LUBIN We want to hear in mind Dr u gas up le about or what that is un Jule in compare homeve that patier mate (ederal and The is Invoice Company that with CERTIFIE end the in this producion with Mr. ARNOLD. Have pirtses dropped on pak - never got adexom 180- the other insustries because the being (Exhibit No. 39) cigarettes? of where Ches - Cm use notice hand. here winne at. Industry? la * very nick Industry. 4am transpersation Dr. LOBIN. Tothnically, yes. In niber ourbed TAP pre-deprission Delik. Dr LUAIN That a the this I NO EMPLOYMENT AND PAY ROLLS words. your two-for-a-quarter price sent 15% CEMENT tator effect during the early part of the entilled Empinyment and trying to bring odi. the De PRIMOSS to INCI -100 - I depression and stating in effect in . good To Pixo Cemrat and Employment the varialines have a definite DM ? many parts of the country, the Two and Par Ratte Cillen were ship to specific problems in you - invertid Non. 39 and am and MCW do Page DE The les cament flavors did DEL El Senaior KING. I might my the gov- man ed up - because WE never got back to las- emiment gets nearly $650,000,000 in taxes - there is live and Worsteger mit of the tobacco industry threath the Except 42 nn Page 201 where. age Ax a matter of Incr. in SAMES vita ADER the of coment in the United States 8 tax DD cigarettes nach year. the period 1985 uned year. uns purchased elther by the Dr LUBIN. On the other hand. bake any wax aboved of where they had this in mind. that your pay roll leval has Dr. any Limne price to 1926 DE by a contractor engueed en govern- M All truens construction other goor buck to where 16 was This Employment pay roll line has kept consistently below, No. 372 in 2 with the exception of that point there, eberess, It moved slong with employment EMPLOYMENT AND PAY ROLLS V prior to that time. di Now, if se more from the specific B+ LOCOMOTIVES PM Awo dustries back to the general economic pro- % e ducine system. sexin, 19 have these fig- 1923-25-100 - une in terms of not only what has hap- 200 = pened to the number of people at work $ F a È I 5 9 as IM are : au are INI - are 2 but in time of the amount of work that HM) Date got to do, and their hours of 40 has always luen a relative MD - portion de the total. But a YYYY Im- persons - at the (Exhihir No. 40) The fies) contrast Benstor, a your MD cigims and cigareties EMPLOYMENT AND PAY ROLLS MO Chan 42 and Par COT GOODS ao Bivis, Cigin and Cigarettes var 15. - (923-25-00 - rinned in and marked Ps- 40 NOO shis No IT end printed pa Page 3U Il wild sou what happened to eigar and 7 de NO as cigarette production Here B your mi- 2019 It has never gm tack to lu MI de an 1931 IMI Despite the Tact that outpui tood leve email 4p. Some of this in ec- - 8 for by cigits goung from hand Employment w were la machine 10% a & No Mr You have Dr. La- No. Un charge on production of cigarettes AT will Sicure RINO. This is the most en $ Employment I i of all indostrias and 127 45 20 Name IN per cest of the production is 40 e éven in the hands of ala or seven me pro- 20 to 601 WE 9M are Dr. LITBIN, Hoe a your production 1930 class and bere in HAT employment and P HDF IN $ $ e EXP an NE - - de rest THE on : 5 PA) Regraded Uclassified 34 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE Dec. 1, 1938 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE 35 Dec. 1. 1938 (Exhibit No. 41) TUP not Livel the dill undustry Dueta- almosi 38 hours of work a werk; natay sum and TOU to 120 approximately as the chan No u acid AMOUNT Washin HAIR to Manufac- - - past Truite will by . gross som. A suid will be enrital the the MAY are Averaging 11 hours . work Toty pesis of year, and are tack $13.37 EMPLOYMENT AND PAY ROLLS atenuged at a. year age last gring enen now. IMPIRE Mining and No of and - printed in CIGARS AND CIGARETTES sinu - member has been designed Industry vu moving at a. they taxt rale. Siguator KING. Where de 50M disave the was revenued in and marked time beineen wage earners, - - 1973-23-100 - - word le operate and many will which means, then, that lbis decrease in Hg - - god the morkims wills En to representatives diffectors we are taking Page 35.1 besere in primarly by the I il it minor agrilicant 1581 the NM veich next open and et- put in the acciveres of the day's work? of work available. because, when work Dr. LOBIN We have to leave that up BEAUTY in in ciming unt number of - in son United IN will - to review the industry was there they as work as much M 41 to the employer summelf We LIC the 4 Lei - poster tm Texas - hours a week HD the average fun all man- - DO 100 would capert to find. employers to pre us the number of - underse industries laes year. In many 1 our ne lbr ⑉ et produc- - actualis un their DAT rull as wase TEAM 1914 end (826 BY 39 email Three D - of these Industries Use was paying time warners. and leave out certain types of (1. NO This var Line paic-war todo. - - discussion and finalls Une arying -ID - shat the would be and one-half for évertime over M (A) and sever - pack spain In nie prefessional supervisary Inform and -- The massfacturibe minide and " 1 not to production whereas a these warty can they weren't have in this their jodement as la whom Employment 4 - ner pos bank - angre and of haus worked dolne that That change in lbs amount they think la a with marker or supervisory IA EMP employment of 198 Tie of boars worked. plus the sicrease in the official en - LDLY ENC to M NBC IN 100 in 199 " Du LUMIS of - that La M wase rate from In than nnw cente an Senatir KING Have your investige- -presity visa in 128 -MA to THE Pay Milt - et all dialine with - hour on the AFTICE in DE to any- Unna demonstrated total that classification IN 1030 4) - The same All the of seven certify on the average last year, at has term generalla fair? 2 Bensier KING The var beaue of - quality ni the the bigh polor nt quoduction failing down Dr. LUBIN Yes or coune every D/DW the end the piff-war problem. - the I my pu worked - You again to artivi afficied and from we uy tu RES extra data - est- Di LUNIN Exectity. A! IDF MOT time N At Look that only fail will Benalir. the werkly income if and INF M. biun wild by au all Tin am 1 word. to paint. aut LA families. Willins they mera serning Benster KING. You don't include sel- their perigin pm to givil 101 an - ANY alla ITME - line Sum polvs at the depressione a. work in wir 1911 their tad arvid workers le the figures you have pass - 104 e M BY APC UNIT MIN MMP Mack in that level accomed for in - - : OF 14. de to OMF Dutorier wire averaging fallen to $15.70 - week during the dipres- ben giving? of mumie, by IDP INCIET workmek UM have lailen or 28 per will in are anou Uwy DARI III work a in (Chart siwwing All delibe this pervid them nit is other with = add in other neb 40 Industries" received in -vide AND Benaus KING. Fines H them diver taxies Out to the Techniques is the de- marked Extribit No 45° 400 LA your. ed un Page 30.1 (Exhibit No. 43) M a manil for povientive You will noties Dr LUBIN Beinz a non one mide IMI sived 21 and R there TM en The distinctive. tewever, that del than ther. paris of the print vone in the worked que lo the be made e That this la has aus yes et CHARTI - and maning insure minist as hert nut live F38 more work to be done, en hour, this 15 hire mureh PIN e: 15 new as e mure Printing le required and the men worked longer hours. brair times use number of 3 - minine permited 50 work this being - This IV amount 1 HE to transible that into the earn by the Tige rais and lhe e - EMPLOYMENT AND AVERAGE WEEKLY HOURS the By the Dart, Unit vol- work im . fugetira if the tours available, this belog affected où e a milario sgreed is . PIL in have To simp hours sorked per werk, vaje rates. el 1 availatio nas such rinit and ume howir Senator KINO. Doubtism you ron IN MANUFACTURING, MINING AND STEAM RAILROADS 1914.100 (Eshibit No, 42) INDEX INDEX 140 140 EMPLOYMENT AND PAY ROLLS AVERAGE NUMBER WOOLEN AND WORSTED GOODS OF WAGE EARNERS - - 140 1923-25-100 120 120 110 - 100 100 100 00 Employment 80 as AVERAGE WEEKLY HOURS 80 80 60 60 TOTAL MAN-HOURS 40 no 60 60 Pay Rolls 20 20 40 40 any 8N We e INN nes 1914 1919 1924 1929 1934 1938 1933 IN AM any 1934 038 1939 ISAD 1914 to 1928 Deta for 19/9, M 9. BUREAU OF LABOR STATISTICS Regraded Uclassifie 36 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE Dec. 1. 1938 Dec. 1. 1938 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE 37 (Exhibit No. 45) Dr. LITHIN These are vase (Evbilit No. 461 mis, The quastion la, how EM D Decome p+ Mile in par the higher TYP Nim per and lie unread la researed DATE in REAC bak reported le the of ALL MANUFACTURING INDUSTRIES people auf a Inday. Chart deliving - Me- OUTPUT PER MAN-HOUR HAVE NM service - muleure and Dellare AVERAGE WEEKLY EARNINGS market No. If and # Covers product - TAXP 31. 40 1923 25-100 40 You will boliee - the INDEX MANUFACTURING industry as a. wiude the get - - nurmied from - - 140 which la ao 30 30 o 20 40 60 80 100 120 140 160 - of Law per cant become LAF years 1998 wind THE in years the - nan and unite than disclided, 20 20 1909 DI lind - TVP get to 1997 . was news . - in will tremim- 10 1914 10 prester that E NM name personals THERE indications 1923 in and your increased D 0 1929 Date WY las 122 to il increased I - to iss Tim Bank (beir 1932 Reserve IM the lerse two - any Mist AVERAGE HOURS WORKED PER WEEK I'm un are turning etil sire PM imp Hours 1936 60 60 Photo they and in inmer (YW) - del le- ISSM al like INSURE of Lie and 1937 and - 44 the mine base ben 50 50 amo lims un participatos in miliracir. BITUMINOUS-COAL MINING OF mile unex La line une où are the last alow The - 40 40 1909 train TM nives is ID DELIVE mices will ID- per THAT) por 1914 - with 5 That e trais in para et line 30 30 - - 1923 trave KING- Beture (a) Issue that, min the Taxi e un insure producting 20 20 1929 le MUT due to the res milibés el MIC- - well Have las muse has 1932 and (lie willing - - not, 10 10 1936 in (NI) yes the sure ⑉ the largeri les in - great as all 1937 a (gie la - lowis AIF 0 a De warm in ANTHRACITE MINING to un you time the - der and mino Can AVERAGE HOURLY EARNINGS com have seve ou down and The have ally 90 so 1909 serve - letter - par the use 1914 et - initial No Bin la comme war sur Things pur for so as 1923 (May - did - hair 2 1929 70 allathones 1932 - Mai MA en- your The Ey- um IM IMB and une - 60 ES 1936 (») - The that Doral live chow mine larre any 1937 it The number - tom of MILA and 50 sa RAITEMADE STEAM RAILROADS De LUIBN The is - 40 40 to our relimane to - lite 1914 - the 76 m His VI 545 in 1992 30 30 1923 - an of - Vw. than - Imm Email very have for 1929 - Trader 20 20 - - Afficient How 1932 any - of tool - KING Before 10 NO 1936 Dr And everything der une 1937 Amix weir 0 KINO Twill If in the to 0 1932 1933 1934 made De of addels 1935 1936 1937 1938 - TMP - - inform - ano nt name wijo U.S. Buarau ar LANDO Sterishes us BUREAU OF LABOR STATISTICS MINU indive are a Regraded Uclassified 38 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE Dee, 1, 1938 Dec. 1. 1938 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE 39 - se is the pro- ted IF Box or four time as high in wager and rash Page are (Kahibit No. 47) grink as unry were in 100? - - Dr. LUBIN. to was what 032 would wages are up, as Fight are Injury mi De LUSIN The selual amount of any 9 1914 # taket $14.30 to but today, they were in 1020. And while you valid - Texas - failur Mr. ARNOLD No. 2va. been showing this you have Alan indicated they this . - - MP aumunt Jun are 1 Dr. LUBON No the differente Between that produción to greatly otr in ab of REAL WAGES downt - - lerge is in Hue If MI a logor the will can wages und wengly mi Wages durable, TXP practically all of the 1 the requires of what - - of this prite increases The actual up. diren while the raise have bren - industries so That make - IN MANUFACTURING, MINING, &STEAM RAILROADS - to - - manu- Squir is this. that $144 " required today recuring - und you - M buy what BLOW wind buy in 1014, Dr. LUBIN. Yes And to quality - THE Had OF 1814 for average - Mr. BENDERSON, Pulot out the as- in one way, Mr. Beneto, or - - DOLLARS DOLLARS --- use unit 15 assigned in - - sificative Insured that for the person $16.45 is the weekly earning) of the Now 26 26 1929. - Pull - . pre - - 124 in slip does taxe a were wage are the she has the Jou, in regil wages; or, le your will - an higher this they have 11 in the terms DE $24, IL in the workly - XINO Yes/ all service and - - any peral cash comings of the mac who has the - of De LOWN You he can gri more with It is nie the average of all with to the Dr. LEMIN name DAY workly THE DUE than be could be- country, including the unemployed - sentitued. was up- Tury. incluse the value - goods all ao much Representative SUMMERS Dr. Tain insured IM Imp a Investino include Inc apre then at any other surt the will you have any RESTRIES In - 24 24 AEL a 1914 - - en in 1921 survise to the rost of living has instance, the relative plans or application However, N. just (ather e&e these quian been us per emt. It jumped EIP 173 per commodities in this break-up? will DUE Lise INVEIVE - what IDe evided and is square OF This une to in 1019. Dr. LUBIN, Oh, yes, The = de that WEEKLY CASH WAGES averda PAIN punped tree na - Bension KING 1 vah you could fur- Mr. HENDERSON. I hope " will the - Abr IMMEI figure telos DE nish. If you do have them in the office, a whole hearing devuted to the signa in DD Part mos and up - auch 1 number at articles, take the various of prima Mr. Chairman end Mr. Ext. TIFTE 22 22 lanter that FAM - of the forms of taxtile and ention goods and perio the would the that mome - and cimbing and articles and com- Dr. LUBIN, We can do Inst The las FIVE SIN una and $15 00 of - that ente Into DET daily Sives a. we de break them down into Maria pared with new - 1911. ACRÉ are the prices to a number of years clothing. etc., and ID the prices The CHAIRMAN, Does this that PT- lack. we evec. break foods down inco process reserve aveuy wign? Dr. LUBIN. We will bresie this dawn and nomproceised Foods Dr. LUBIN. There are nal in térms of stothing foot, renta. and Representative SUMNERS In the 20 20 agricultural breakdown. of entrie, Users wages. In ethic words. wages did po up charge at that ggt. Instru line prime bic net wry much taster because, se I sald, MI vor min la INTIMATED ANNUAL AVERAGE INDESS OF COST OF GOODS PURCHASED BY Trans a the (ints me Fould buj, any AND LOWER-SALABIED WORKERS IN 22 LABOR CITIES COMBINED m THROUGH 1837 415.00 M required tu lbr they for- (Attrage werls NOT getting to lerms of dollars, Thrir checks wire made out bir BE Pul AND 18 18 All Nos Prod' Classing Bel light por I The CHAIRMAN De I rest lhis chart HU 374 0.1 SET 514 es 47.7 MI DIA su no mi vages N ema to Indi- HA a EA 34.3 492 91 005 M4 09 37.4 ELP M.S. 31.2 as main this in 1914 the average CARD vages, (2)5 0: 11.7 as en 34.4 PJ a THEY, received. la all manafacturing, INT RA RA 754 41 410 88.3 mining and vem callreads, TM DU es INT nos R3 THE MI THE na 001 1393 127 : TRA MBC 5 texas than na. and that that were up until - usa un 90 4 811 1,219 B1 16 16 in una is resched 122 a VIVE, and in use - lide 1018 DU X14 NO 111 # ISI 80 a NITE trut that Use mil TABEL dur- as 07.3 81.0 IMA MA ULA BIT ISD WO no (11) Vi 3 1893 161.3 a FOR title name permit increased from ⑉ ISI WI M.D. 100.4 THE 14,1 1001 B.F. - eyes to $55 in 1929 - HILE 145,1 se 101.3 WD IMA Dr. LUBIN And La BA $10.40 in POAJ line ICA 183 ITS 100.5 una sea 100.1 JOY 100,0 Nongra of with les than RI. ass RI 1918 - BILT HAS i 103.3 NT W.S in E 1513 NMI MV NEW of visa three S24 will buy ⑉1 INT N.T HJ M.2 NO 2 IELT a 14 14 H will the fram adoq) 43646 worth M are : DO.7 VIT 97.3 473 1833 us growts - comunition to what 511 would bave III ALT in nu 78.2 168.7 Jall THE CIN 753 YS # NIA as 1982 Imugin (Age - INK IRD: 11.6 054 74.9 NTA 97 % mo #4 BORAH In who Wirds, Lien no 93 TU THE E BIG 34.8 00.2 WEEKLY REAL WAGES DES MY MJ T7.2 no THE 1 mustip u B instructions tought that DON DE E.L. ILI 43 ans STA MJ 181 843 M: ELA i 34.6 34.0 P1A Dr LUMIN They etc. as this point, 12 12 The belower 129 and then the Curry " citige either Tune 1000 er. Lahrn difference WIN and REMA. - The W a that the folita who - Seculor KING. If event to me la many will in nut entr LB+ question of price Uter enviro aid neil have to DAS firther commodities the prices now so M low but a restriction on the ammunt of pm- Mine to like Mage Ihry include tou DE NE law M they were years ago, duetiso which is now being I the Amazor BORAN T5H reve likely are Dr. LOBIN. There has been a consider- termera el the cominity- able décline, The decline has here from Dr. LUBIN. or course, Live 10 KINO Dr. Trates, have you 173 to 144. That la quile a décline, but if thing as that point a that assign CBAT 10 1929 1934 1939 the pine of # considerable restriction. of you take all application I964 1999 1924 yes e back th the before the price Time of immoditive that the andimus - - wills Ue prem the quares during the was period. the will products together, the sum total product - mimber or this Back - the taxe line have Due - mach amp (If H per cent all together, st man't reme dirm ADT. - Visa you thre Tabon? more in get tack to that level, taking The tast M. this year is probility BUREAU OF LABOR ETAPIETICS De LUBIN Yes Time la - upon vierything into biggest is ever bas been a of - For those who bed jobs in rectories, alsos and on railrones, average weekly de actual - or We take What The CHAIRMAN. Now, Dr. Lubin. the or curse, BY value if in down. earnings in 1937 were not for below the level of the 1920's, although hourly working - milar was May - - of food, chich- incidente what you have shown this Ear. Chart shirwing "Real WAS to achedules were sharter. Since the cost of living as lower in 1937 than is the 1920's. ing - corretion and If 1 understand litere charia cirrectly, you Manufacturing. Mising and - Throse et that - Inday 4a compared demonstrated that the average werkly Railroads. was reserved in widness the and mass of those the actually bed john (L.w. earnings adjusted for the cost of 11v- - and INA marnings is up, that the average hourly and marked "Eshiest Nn. IT and in 1ng) ware Use highest In the history of American industry. AS the SABS time there ware - main (Rat - - were KING Would - the Date: rate of pur is up, out that the average printed on Page a to 10 million people unesployed. number of lours per week is slightly your real veignt. do you give a - Representative REECE In activity all does. You have also shown that real Regraded assified 40 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE Dec. 1, 1938 ity the same relative weight un the con- and above, do you unclude the children sideratinos which make up the real Who are working OR the form, or do you unemployed well as Industrial if they registered as weight as n bears to the cost of living. exclude (hose? that to AAY 50 per cent of mas wägen Dr. LUBIN. Those are people who Senator KING. Were there many goes for rent and food. La reilt and food actually came and registered as uhem- say? litered (LE unemployed bitween LA and reg. SA, given e 50 për cent relative importance ployed when the census was taken, which in your real weights? includes people in agricultural areas as of this total 1,245,000 of males Dr. LUBIN. A relatively small number Dr. LUBIN. Relatively so. Rent gets a weight. foud gets a weight, recreation (Exhibit No. 48) gets a weight, ehurch activities and edu- cational activities gei a weight We tate ESTIMATED NUMBER AND AGE OF THE UNEMPLOYED 18 everything in the terms of lts Importance. 6-HUMBER or FERMIONS EN UNEMPLOY MEXT CLASSES, DYREX AND AGE, FOR THE Mr. HENDERSON. Was 42 your opin- IMMIPLATED DEPARTMEY - lon this morning as expressed that we BALE have never produced los much cotton to 12 FEMALE satisfy our real needs? Dr. LUBIN. The question was raised as to whether is was too much as tural production us 100 little industrial production. I and that as far as I was E concerned I couldn't conceive of too much - of anything being produced as far as there was a portion of the population : that wasn't getting enough of those 0-0 things Representative REECE. This 10 beside 40-H the particular phase of the question which you are DDW discussing. but Is n your in- 19-29 tention to Include in your discussion any 36-16 figures to Indicnte the percentage of em- playment that is 30 occasioned by the d-ll large corporations compared to the ansaller corporations? Take for inslance the number of people employed by cor- 36-18 porations who have a net Income of less than a hundred thousand dollars is that 1,300 I/We - - - ano . - and - - question going to be envered? Email at - a - Dr. LUBIN. Yes; it is not going to be same con of caben - come covered in the introductory hearings, but Senator KING Is there any Indication sure. The extent to which that la true that is coming Into the picture definitely. as tu Unetr habicat. Whether they were in Now, If you add up all these factorn la so Insigntficant that I wouldn't dy you urban or suburban dissriets? together and ask what does It all meall ease 12 very much. The igniticant prop- In terms of loss of national income in Dr LUBIN. We have them by states as lem is right there. These are the folks, well as counties. terms of loss of employment, and 30 forth, between 15-19, who are going to be our I suppose that the question that you MI- The CHAIRMAN. This chart is pre- future citizens. They are the folks whose Unitely ask yourself la what AN happen- pared by the statistics on the unemploy- morale we have got to maintain. ing to the people of this country and ment censua? Dir LUBIN Yes, Now that raises M The CHAIRMAN. An effort a Deng what effect has IL Ind upon the number of unemployed people. question as to what this all has meant in made, of course, to provide education for terms of the part that government playa those in the group under 20. and un- (The chart showing "Esumited Number aud Age of the Ubemployed." in attemptime 46 maintein our population. spective of any effors upon the part of government, ist)t 11. true that A murli was received III efidence and marked "Exhibit No. 48° and u phinted DD PEOPLE OVER 60 inrger proportion of young people go to Page 40.1 The CHAIRMAN. Before you go to that school today than did ten years ugo? la this chart we Have allenged La Other court. may 1 usk D:, Lubin, If it Dr. LUUBIN, Definitely so, If you show the number of surniployed as shown this il Tuet that a a larger percent- had kept the same rate that you had ten by the certify of unemployment last No. age of our people 0100 60 years of RICO now Vember. We not only shure Die than M any time in our history? years ago, there would be more unim- ployed. of unemployed, but the number at 4170 Dr LUBIN Yes, med the number 18 The CHAIRMAN So that the resi that have been del int les the more las kriji thereasing standity for the I think It la rather that you DEX Comily reas. no that by 190) 1 think question of unemploynent begins with the have kot in this group of 13:10-m The will LM: of the popu- 20-year group rather than will the 15- The CHAIRMAN TW fation, OT something like that, I want to year group. Le the Age group 13-13 Clirric that Influm But The estimated unade Dr. LUBIN. No. I would say U began Dr. LUBIN. Yes, and min You have 100 the Social Security Board shows that even below that because even more of got in the group approximalety 1.000.000 BURRET $5 increasing definitely because of them are going 10 school than ns the people With ALL improved subjety conditions. and so forth part. out there are an plenty of timen In the 20-24 age Group aplong the The CHAIRMAN What 19 the fact with who still gead work. I will say this The males, the number is signing larger request 10 time age workship below 207 problem is not AS bad as If would HAYP 245,000. Here you late little COPY 801000 Lb: LUBIN. That Number is gesting been otherwise. males between 2-2, ant you MISIT Singtor KING. Has your department the number jour abrig the sure AMOUNT sendice Recause of the Loss that between 30 and 34 and then the numbers the Dirth rate Than been failing stendity mede any inquiry or any survey as to the number of women. if any who have taken becomes smuller as the 44- croup an CHE the Mimber of people becoming 1b the place of males, and to that extent You casi expers It to le sinalier breause up year a Amaller, The CHMERMAN Bo that the prob- have placed of the That of untersployed of that age lo existence of the Inc) Unit there are fewer people lem of finding Replayment for chose, any. A larger number of males than otherwise Above 40 be consuming growing greater. would have been in that category? Sensior BORAH What about 4ge 00? 000 males and 184,000 females. Dr. LOBIN Between » and 64. 15.- Dt LUUBIN Well in a wense, yes, On Dr. LUBIN. Buch data as are available The mm/ bend, with fewer and fewer from the census shows that the rate of Senator KING. In that loave Line, 13 people coming Into the labor market to increase of women in industry during the take that jobs oway, you chase that pres- past, up to 1930, anyway. was no greater, in fact, it wasn't as great as compared EST Regraded Uclassified Dec. 1. 1938 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE 41 the total number of people in the country would get $156 a month under the pension plice only to the lower line, Is that our- , had beeill in the "TO's TO'S, and plans that were set up by & large number rect? - RL In other words, although more TO- of employers, and that they opposed the Dr. LUBIN. Exactly. them FOR CODE to work. there were more Social Security because they would only get The CHAIRMAN, And the Agures en women in the country to go to work. but for the same kind of work, $69 to $75 a the other side refer to millions of persons the proportion to men wasn't any greater month. I was wondering If your organiza- and they apply to the upper line, In other words, (here wasn't a trend for tion had any data showing the number of Dr. LUBIN. Yes, more and proportionalely more and more employers who did have provision for re- The CHAIRMAN. So that you are women. What has happened in the last Grement of their employees. telling M that while there are about six ux or seven years we won't know until we Dr. LUBIN, Yes, there in a study made and a half million of households directly get our census for 1940. by the man who is now head of the Rail- affected by some phase of the emergency Senator KING. There are new melds road Retirement Board for the Industrial program. there are in excess of twenty- of employment (1 will call It industry) Relations Councillors who are advisers to two million persons benefiting directly open naw to women which did not extet firm and managers. of that sort of all the by that program. 10. 15. or 2ª years ngo, You montioned plants in existence as to their financial Dr. LUBIN. That La right. cas marking the beauty pariers. COP- status, and things of that sort. The only The CHAIRMAN. May I ask what re- merology stenography and typing, and answer one can give to an employer when lation does that twenty-two million of per- (A) on. be MAYS, "I am giving more than anyone 6005 affected there have to the number of Dr. LUBIN. On the other hand. will else." is, "Keep on giving It. If you say 16 employed? When we speak of the number night to bear in mind during 1920 we had a host of opportunities for women 14 going to coat too much, out your plan of unemployed, we are speaking of wage by an amount equal to what you are going earners, chiefly. which disappeared after the war. They and doing all kinds of work that women to have to pay the Government- Dr. LUBIN. They are looking for work. The CHAIRMAN. Available for work. nover dul before, Some stayed on bus Senator KING. But when he refuses to and when we are speaking for the number others dissppeared. We used to have do that we stated if they continued their of persons who are directly affected by If- women " street one conductors, and plan. they would have to continue to make lief to households, we are referring not things of that will their payment to the government, nione to the wage earners, but all the Binator KING, Many women were ac- Dr. LUBIN. True, but with 5 difference members of their familier. tively employed la conducting railroad in their payment, they could MELTI continue. Dr. LUBIN, Yes, everybody as the family, stations If they were paying two dollars a week, including the baby. Representative SUMNERS, Dr. Labin, now they are paying the Government A The CHAIRMAN, or course, you are Name the dispositions OF polley of employ- dollar a week, they could Mill continue not referring to pensions which are paid en of Jarge groups of people to dis- paying that extra dollar. There le nothing to ex-soldlers. charge employees after they get along to stop them from continuing it. Dr. LUBIN. No. about 45 or 50 years have anything to Senator KING. The Government policy. Bennior KING. Going back for many. do with those Agures there? 1 am afraid as I recall, (IL has been a year or two many years, and for other forma of relief T am anking my question wrong. What aince we had the matter before the Pt- that are given that do not fall under the 1 INTERNAL to ask Is, is there any increase nance Committee) our plan was bostile to term "emergency relief". In (Im disposition of employers to Old- theirs. and they felt they could not assume charge their employees when they get both responsibilities. COST OF RELIEF along about 45 or 507 Dr. LUBIN. They could continue to as- Dr. LUBIN. It doesn't include any of Dr. LUBIN, We are right in the sume part of it. Some firms did. the private reliefs or anything of that midm. now, of a study of that very prob- The question In, what has this meant in port. less, We have surveyed a group of in- terms of the tax system and in terms of (The chart showing "Estimated Tv- distral) centers In New England and we cost to government. tal Funds Used for Relief and Work have had the cooperation of other (Chart showing estimated not (otal Programs" was received In evidence firms in geiting their actual employment number of households and persons re- and marked "Extubit No. 80" and ap- remains in are what has happened not. ceiving relief, work program employ- pears on Page 43.) only to the employed but who M first ment and emergency employment was Now in terms of cost, the eximate (êr find of fise people who are left and who received in evidence and marked 80 hibit No. 49" and is printed on Page 1938 carries these programs on M $1,618,- " hired first, Some time between now and 42.1 000,000-and incidentally, this Gure 111- the and n/ there hearings we will have cludes all state, Federal and local anoney that study Marked up and we will know THE RELIEP FIGURES that la used either for direct assistance on the basis of authoritative Informa- I have here one chart showing the num- which LE the upper line, or for the works Has There la very little authorative m- ber of households and persons who are R- program: the striped, or for public works formation It la R. EVENS. and statements relving relief under the works program and which includes not my the PWA bot that name hears everywhere. but nobody the emergency employment You will mile also such public work IM in undertaken has AND checked a through the cor- it is estimated that rapprosimately 6,190.- directly by the Pederal Government. parations. Incidentally, Benator King, 000 households are ut the present time at- The sugnificant thing In this chart is you island that question about theme 15- fected by either the works program. спит- that we reached our peak of public works year-old youngsters here. There were 20 geney program, or direct relief programs in 1936, We came down in 1937 and IL Limes as mardy at 10 as there were me of The Federal Government That many Wills was 18 years of age in that group. just about held Its own in 1938, On the families are gouine wine income ID one other hand. in terms of work programs. Senator KING May I interrupt again. of those three releguries at the present we were spending in 1038 about cwo and in Tiew of Oie question of Judge Sumners," time. In terms of the number of persons two-thirds billion dellars, and in 1936 We When the Sorial Security Dill was under effected. 11 la estimated that approximately consideration. a number of employers of 22,230,000 people are affected. are spending just about the same, whereas Wine, na Well as some of the employees. The CHAIRMAN. What that in 1037 It wes somewhat lower. brought the attention of the Committee of Agure again? The way Unit money Bas bren spent for Pinance to the fact that they did not ngs= Dr. LUBIN, Twenly-two militon, two the most part will roughly be shown to prove of, or rather they preferred to Der- hundred thirty thousand. unia chart esti the monufacturing companies, the Senator KING. That those (The chart of "Persons Employed by employers, (e continue their policies un- who would get social subst. the Federal Government and on Work for which they had large reserves, which Dr. LUBIN. Their are must widows. Programs" was received in avidence Rere held by the leading insurance com- mothers and unemployment Insurance and marked "Exhibit No. 51" and IP Publics and other trustees, ao that when recipients Public assistance under the pears on Page 40 Hocial Secirity Aet does como into this This includes. nowever. 150 mill H. Diving got old, there WILL a pension or picture. on entergency PWA retirement privilege for them. Some of The CHAIRMAN May I interrupt? On WPA. but also all Pederal expenditures The who came before us represented this aide of the chart are the Aguies the such as the Army and Navy. cm) nu- That provisions were made so that they lines millions of households, bill that 4pr ployes, construction from regular Federal Regraded Uclassified 42 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE Dec. 1, 1938 1938 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE 43 Dec. 1. (Exhible No, 49) (Rahbir No. say ESTIMATED NET TOTAL NUMBER OF HOUSEHOLDS AND PERSONS RECEIVING RELIEF, WORK PROGRAM EMPLOYMENT ESTIMATED TOTAL - FUNDS USED FOR RELIEF AND EMERGENCY EMPLOYMENT AND WORK PROGRAMS, BY MAJOR PROGRAMS MILLIONS MILLIONS OF PERSONS OF HOUSEHOLDS (CALENDAR YEARS) 12 BILLIONS BILLIONS 30 OF DOLLARS OF DOLLARS 6.0 6.0 DIRECT ASSISTANCE 25 10 5.0 WORK PROGRAMS 5.0 PERSONS PUBLIC WORKS 20 8 4.0 4.0 HOUSEHOLDS 15 6 3.0 3.0 10 4 2.0 2.0 1.0 1.0 5 2 o o o 0 192 1934 1935 1936 1937 1938 1939 1933 1934 1935 1936 1937 1938 1939 - worrs PROGRESS ADMINISTRATION 1034 INCLUDES FEDERAL, STATE AND LOCAL FUNDS. PRIMACIA will Regraded Uclassified 44 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE Due, 1, 1938 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE 45 Dec. 1. 1938 (Exhib) No. ni this murting an monthly meme (My a the measure of 14 real significance TO part and - had the CWA. That IWA 000 and entergicy du- pental (Extibit No. 14.1 a har a ministing effect lo keep Chear PERSONS EMPLOYED BY THE FEDERAL GOVERNMENT N/A is WAS (altet) in pur jor Representative SUMNERS I will things pains, used I wind any that the new nier Test was embitions like M ML a question befon FL lasse - lan't Mi very great if fur every dollar AND ON WORK PROGRAMS this chan Dr. Lobin, you put a you pus nur up bere of ein- WPA or voter programs; e mm replacative name Limit. 1034. Two players/. yvu Increase this two or three mile year para the mily an- or two I think that La the only criterion. UXM - an fall of LET and an their two courts topriber. In 1934 then we on un in judging whether of not these the tasi number of persons &- vere about 27,900,00 people belog bron- - - (6) BY abroad teday brice expenditions should to made del. and moving to Mis other line Segalar KING. If you adopt. a policy MILLIONS MILLIONS which n° mane, every of the crimiles huspetd in whole a les than 14.060.000,000. willersas in under the terma of which ae ta 40 per cent (here are abrui 22.000,000 proceda and lat e EMPLOYEES OF EMPLOYEES of the ETOMP income of all the people of the in - BY the yours 6 provir RUNT I interstred you le salf expense la und United Dates a takes) by the Government, 6 nal De hgare wideb you have para 110- Dr. LOBIN The answer. they will DIF, to Be espended as Congrest and the execu- - allowment made is they us paying there more EIVE may determine 3a IL not a tack-T " - thair pullical Representative SUMNERS Would you doo't want to Le argumentative-that put some expirmation inf ore drying up the ed private last- - Dr. LUMIN E did (M) this shart (No Benalor KING. TW fact is Due et dustry which would give employment to o 5 paying some el them very must wart larger number of people? Email KING Winds that Use than they did R. short the AN BD ihr Dr. LUBIN I will only this: If by spend- company with Tune - for ground they am experis e. well. various me thirty billien dollars-you - M per by Name Yers Client THE have other reasons assigned or anawillmed. Increase the national income by 5 5 tas there or 1 regally and A war The CHAIRMAN. Now, (hro, Dodor, Tutty billion. I would ay M. Vas . well - which is und to INDIR- If 1 may cell your la this other involved medi the appropriations of IN READE and chart Eximit No. 10. I ww Impressed Because KING You think by the Pederal made by the Federal by your discussion of the chart entitled Government spending nhy billism n would in COUTH. Definity any "Persume Employed by LAE Pederal Dev- have to take 11. away from the people? SIMEL It meludes limit emergence and m Werks Programs" and Dr. LUBIN 1 shouldn't have UE LUBIN Yes their a recounded save of Bis chart which firty, I said If by spending tilly you internation KINO Do - ligue you declared this maining, which could DETAILS the national Income trp muntie of intervelly with the me- in terms of the totim monthly income easty and gel . prodit. is la . seall the - and States and m- payments the proportion which Covern- vertral In other words, by apending 4 4 fixes edi the expenditures mani expenditive for include payments netr have you added sisty on theme work- May now NAME for relief purpose under reduct and otherwise indes to the profits and dividends. and no forth Dr. LATRIN. The Works Progress A3- total amnunt of limove parments. Do Liven 1 would AAI It la a. very good jevent- information has you thank IL would be a reasonable their ment. 1 em not saying how far st wall The CHATIMAN Dr Lubin is there to NY, upo the sims of the two charte, result that way. but 1 MY If is does surs na EO additions before the ng- that they indicate the enpreme Impact- that way It M a good Investment. PA AND OTHER inflices IMI the lower line el the ADEP of se stimolating the tocome pay- Semitor KING, Do 1 understand you WORKS PROGRAMS that united DAIL Total Num- ments try private industry, to take up to mean the mm the Federal Govern- en - Amisshows and Persons use and the slack # we Are ever soing in selfe mens takes trum the people and opends. you be the that entilled "Bar- the question at unemployment? the teller is a (Ce the people? 3 3 - Employers 5a the Fidersi Govern- Dr LUBIN I think # a with signati- Dr. LUBIN It depecida 50 time mindi- EMERGENCY INSILE and en Weres Programs to on tant that the here, although it time If everybably If working I would WORK RELIEF - is increasing, la sun a very small (acive or no. If the Government remin in and Dr LUBIN Yes (titre Le a difference as compared ta this total referring to compates with private industry, but u - Peg. I think there are Exhibit Nu 20). In other wede the par- then are people unemployed and the fax= - ter 1 The here contage of the total national income pay- lorks unlied and 11 by spending mones ******** give sim homber of people effi- name that went EN direct relief. IBF Government ean sreate form to there in these vilities when includes menta to veterace and things of that sott. factorier MT that not only will wages be alliers and the emil Than are the bas been requirely small mine pientirai, DEL profits and dividenti. - of insividuals. On the The CHAIRMAN la other words, all it 15 good. 2 2 silum hand: 18 as for une méi- that the Federal has ex- Senter KING You are por assomite - ⑉ Irelin Two nn three prodid D) way of work relief and PWA that the unger the expenditere By LES miss file nos merber AS well and payments tu a socially int) Government the larger will un CCC - like FAMILY-plaz the fact that - drup in the burket compared with she the expenditure by entrapreseura and BY do nnt include direct result national income which we ned to postone three who até a manufacture pass by cibes arsus and EYES) lise 1029 digne of prosperity. Dr LUBIN a depress entirely - CONSTRUCTION FROM - first and the one - Dr, LUMN. Very although etail millins are under which Lbs so- REGULAR FEDERAL FUMDS The GRAIRMAN This includes per there are, Al Nure the PWA propie willo P.W.A. would be in here. The are working Iv: penditures are mufir. the estent La which nas NY citime and states and di- 149 have complement. answed espacity. I (WEL our refer by all ligencies and this private contractori, VENTUAL Na 51/ EIVEN onl) actual em- Stratar KTHO. Isia IL - tool, the if and things of that an Without followed ⑉ whole DI part a you should mike a proper appraisal of Beater KING We are ententing . finid "Se From Dovernment the amount which is oill of the of aprollation and argamenti pue rather Pederal Treasury for relitt than objersive study CIVIL DC LUBIN Yes through the PWA and the Wwis Prog- The CHAIRMAN Dr. Lom. Date you PRIVATE FUNDS res and through de and cauntre and covered all for starte? Dension KING Wind thue figures in- Blaim. and then further appropriations fir LUBIN, 1 have covered all the (sire? time la - which the Ched nb- by the Pederal Government (im the Army thank and T would like ten evinuses to and for the Naty ant for increased dis- (um up. MILITARY o Dr LUBIR No gards. ant enal DAL it would be A (my The CHAIRMAN. 1 var going Lis sug- o large part DE the national income? gest that you an that 1 ⑉ going tu are 1933 1934 Frame BLNO, Fur instance this city 1935 1936 1937 D: LUBIK. Well, of DATE "lune" a If you wouldn't in . few momenta give 1938 1939 orders to tile 195 milian interes die the Agriver word nel in- a relative term. It to a systificant amains, your use of what all el (Dat meins in visite what le has rused sery definitely or name (be question a of uving standards and Dr LUMN No net unly how lignificate in of del- and the peneral - THE the - - sury . THE - - THE - - COMMITTEE last but both signature a mading positive Dours Tre CHAIRMAN Dr. magns [ join down Bere (II) compensation of ID. POPULATION TREMS - you to have one of para assistants picyman and prufits in entrepreneurs) in corrare the chart that pm and tome and dividind in ben. That to - Dr. LUBOR T - not - ca propri- Regraded Iclassified 46 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE Dec. 1, 1938 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE 47 Der. 1938 cage I ao active Till leave Ibst. to overtieds. exos LIFE VIII a THLICE Dam- - ne 5 $4.10, trans AND escreding twenty-five trundred have found in industry PAY rails - eiber of the commitive line Nur. indend. DMG American If you take all of the amilia are golog up. The todal of production 1501 E Brink signaturent thing that by matelled: on Bhe so the them $1,250 - Tess and you SAVE each - - from DIE family au ap- THE BURFLUE PROBLEM will touch about un this manth as com- mass De are MAL first, rhas - have wome eroup that receives or more reached the - eluere AMIXI population Them families. these $2500 na invire tam- clothes line expenditions to Liat Nu - in Fresen . little older 12 a Oar, the - - across $12500.00 yest. The to . = Chell below motion 3 uning the Andidas to your stumion. pared to Fl this submitt. That la Re- at, because tala brief outline is whil Increase la - guing to keep Interesting AL * every compriée less then ta per sens nd Secustor BING. You are willing would lbs NIN milliou dellare - you turnare class et would tappen to American industry If How less that a pain a continue MP* repid Fate, and et our and in numbers - no credit for saving any Yes the - - to (ber Livese smalls families had insome only ward I durt bm and : wouldn't each Prier IM The fast decisión - ou - within e approximately equal groducine more and route - NOF in that of the State of New York In assiming Dr they are guing to name a 401 "WIND - rise truel $4.14 LBS DE of. SAY, (1.3) mare il bay to agent IL to formal. but If I might Lin up that LUBIN. We lice ming % in 42 per family for movies. weuld DATE . tremendom effect upon the question with a. general conclusion of all taxe - Dad coure and DATE provide ⑉ Temal other words. will of the families in the We name too. What I - may/bay - its - income in sale of tackels production at industry and upon unem- : sm trying to bring not I would MP their and more penple is and HAMPY Mill United SERIAL put together: who receive appreximately $45'000- Turne taken hundred I this playmant I might gs a stop further and that the perhlem that - have got to as insure persile la clothe That a. 100mlf was samón at mine, wouldn't A pop- Dunties exeming $1,330 and less Brow NAT That if there were moderate DETAILS is non of ecority, and by - # generate upon industry, created . Master --- pronter than the State or de and name drewer Licente families carning $1.000 By aly in the of all. facilies NE single maile security I ont mean only far work- for individual within is valid in 28- The York Well INC twenty years never ** they spend thair money as their - de united in en instrare of BILL- individuals resiring )nie than 13.500. all (D) We have gui 5 tave M for the In- Il à there within teat mass wedersing ID TROT depend en Upf nt 1L La mind *We 2nd will manufacturers of nectric no- expets en nil that group som below, you wild expres vesior and we have gut to have il for the DATE SAP Land les name market, I on . growing Birth MII . werer State= - : for Defr very définite patern They will buy - a Automobile distributions neold that of your surplus capacity in the larner. I thank that la the ânt problem card et LIVING inr prople aiready have clothes, Herry definisely, They will LETTERN querent segregatima United State would disappear, and in R tax got to tue, and the carité prib- Even in an insure of $3,258 and above. many et that Industries our present di- lem we have get to taxe is not of A That a when - industrial production - - tooch approximately one-Tosif of their expenditures do food, Their MA standard of living. treature our Mandard got in any OUT families per cent, RESERVE aome things Duey woo't Decrease last ++ sign that mas pacits would run for short of the demands may band upon three pet capital Insurve Num Dre a the millipos of a total of more than expenditures - al all 187 may to altributed by the population of this country. figures. thows that all have & somiderable INVOICE in * - Die one millines at BHP families 180 We cold por down this while in of compaigns and to tue eñe- KINO. The aggregate surplas distance ta e if we are going to et tack Well WV have - Income level In ather eleminate the consultute the DAte line 44 the gerali et distary knowl- repecity la about 2) per amt, 00% NT to the amount of goods and cervices arati- Lives durante promis - así was batt our market in this and standace of living of the Actrias the oder Unit save 10 DE As les industries that produce three on the all of United jume M Ter the to increase 10 Dr. LUBIN AS the peak, but today SL able for with man, email and child in wage PRODUCT familias We as expect à would probably par evore than a third this Questry in termi at production that the Mo INU risers and employee our Inborera line in ne of de millim déllars in halls rive treat to Inter- denator KINO. There time been a great - had in firmer yours. Linder all Manufacturing Professional vis Jämilles You! nard Use 1,200 , year. for rent. We can expect a TIM of a INVOICE end suggestive of the EDDT- dest of anse the park, you INCREASING PRODUCTION name to nu MY the - million dollars in their expenditures für of MMI. Emergement Mily Now. time are nine mile Now fuel, Ught and refrageration We EAC n- while aux sisalizity of Dr. LUMIN. Il LM custome bow suddents TV and Main negarity and to Use Mie - - the bucdinet thromand wigh earnes peut A rise ni 214 million dellars if las der and provide appareta is particularly ubsplesserice when you get. ges this (De at of living I think then things are immived II mesas mev a different - - in The United Suices in 1935 and Increase le a little over #2 . day, is - Indent & emparient of the and/or and ymu don't DATE HAVE 10 may 36 une I. - taking that year Docume with - exeraging around and more production. We have - and pared laha the (ivid) industries unid furnishings equipment and charge que the FIGHT earning Timila with DEW machines. The comum Usen referring IN de su Use no me edulty wrot in LAS of that sort. Senator KIND. Mr. Fund had this - to produce more and more, and of counse chart - that Provided für lare dide families were spriving their et can Above line $2200 wage The expenditures of the la New Man-Parm Construtions", as la summing family a are times M much obsolessence- scrapped several plants If has et in be belanced les ICE say NO who received no direct un work that east fifty or suary million dollars. that you world for con type must during the minths covered family twing that bas an Items if in - as the $1500 family goes, what Industries WC mught ent lie - $1,250 or less, in the wast F4 and scitte of the asher plants. smellers of customodity and mderproducing another mediately 1 think the spares - by the study " surde or three nine CHE twice " mere the medicine and not-ball trailion wage einer fact- le about $30 a year an theraportation beil delas, DATE than two and a United and mills which www. have In the West get Unper of commodity. 11 PMI this line with that Naw, and R in primarily automobile Loss - musts Tin simnet unree obsolete (ME M your clothes get obsoline. Secondly and equally as impartant. "I you BE se Hat housthe Eas a. tremen- Ca, represimentaly Dive or MII- time A must has med's desben milken Dr. LUBIN. Very definitely. I think the not more inspertant is somi squirable tation. which includes repairs and pie- different M en XM to BYT anvelver file - neel had invides oz 11,200 or ber ans and three as important thing Benalor De you have of that income which will chara of new tare. That expension ner - she Mates indivious) mo- sarr. wull rise La 4117 1. family if their - Chail BATHE that you have en case pitroit 115 5 whent these producia of - electite a - the United I. thank VPIT -- pas HOUSEROLD BUDGETS increases 12 a day. meaning an - of line question et the availability of e agrinalture and of industry. In other THE SUMMARY I asted invarif IDA question, what would (2) expenditure ou actumabiles of warkned an in When - words, a discribution of that national to- une of the minkres, M year No- 000,000, Expenditures Fate Supporting etal eln increase at $2.20 good and you can máke an in- cume which win keep all ext these goods with was nuis BY low 4u If every which DOB lakes sur of the a verage vap dan will live una industry. efficient worker IN . grand Investment morning. and - have got *o produce more the inn milled end termis Del has DNC been on cellet in the the AUTHORITY - made available to marger family, couse be expected N - when la lead and priork any bad and more - have a higher standard of renting no #0 yes sur IL In - of . HENT lind name 61.250 or Insd. to 47% with a net Increase in antimal - inming STAMI OF MAIL the pic- NEW wants the bell worker and even Lben DVIDE - not fine salne that United-lad de income ID- of them familier le Due - Full commissing Bike this They a la hard to maine money, I think Lite You bake a higher considere of income en list received - - - Any N.B. & day in other place of recreation of a tea worth of food mure same 5 true when visoleisence living underse well produce more and more Willin that - unerr ner - Ten AND - If every Then in miles rould million drivars . year. - non nime they wered UNDERAGE Rension KING with the new woods. With NEVER gonte se go around Enne love a - give Two Hat more in spend each day, In the field of medical are iv we - el rimhtsing by $414,000 your can't live IMI well. taking the nation the world Payment tri American Industry? with corposer their purchase of fogical development ther would loss mone?- line - - чале MI. in sur of - approximately 832 3 contribuied to IM - is they Dr. LUBIX. We do Scriow in un - we 6 work No withen there and more goods. Desire =(d) Ue individual community, average wage earner family 150), - - $213,000,000 DATE un ruel. laita portle of the industry that had This vesitable in turn - BANK 1041 745 - IN more un the comise em - is that - unto the finalis bud- envid expect almost - 2 per - - both NOM down sime une WAT end sever -I will pini IL this way: this increase - This would vend Per - la . live - the error sum M food. Our any cream to signature the amount pur name ⑉ transportation, aum- intended to be upmint ERAID ent gosting statidied of avus and the stand- This That our - une with of 512MI to doctors and medicions incoment be Has wind spend $73,000.00 end made amo maney. use el ovdie meson definitetr valer "Name are R/W are flist - - de us - talse und ANDE 44 per CPO: of 200 milling dellars. name. the woold Mr RENTIRREON 1 have - Income incal EN up from act - and I - (A) NO line - for (Inst the velual delines This brandly gives . rough a al - responsion: they пр. which I will la glad to 000.000,000 post (E) to ⑉ of - - Criss - - au or 11,230 For Upone five what industries might be expected a pain 5500.00.000 nien on medical at - IAMT time in Lbe Instries to et lewit $15.000.000,000. think the - Luins the am- milline and . out that I men- fine à rise in the national insurar. shad The CHAIRMAN The survey which U. rint is SMT elundare es Indy will supe - que la . os have TUI Nmo who have nel would interesto the amounts available " THE CRATHMAN, Our III this - mage number families in the 129 = EM you have just given DA ta an indication living for the country at - whole 19 game American - 9 insuré la lets mp. não, itoms has been mants in know whether they of what might be expected If the naisries to be MA gund M IL - in- 1429. taking male Information and. - - That lest, 41.00 m Issue in of approxi- Income group by elightly para 9 -prill anything more en naingupers. or wages rold to the town income group an increasing population into " - depend - markey that Time must 119 . ANY in Date imme willid P. day. ti might be smill within - der LUTTEN As a maiter of tach, yes was increased tion: you have more people to feed, eighthe. (Per winn The in Limi rependitiques of ap- the effect of such an Internal . figures for all reading male- Dr. LUBIN. I AM whing anly about entertallo and crep beath but with our 40 founding dellars incrime open producers of epecific compt and them with me liere the emo base nas been on relief, I present If the vm to be THE INFOME FACTOR * they Time *** imy loss much mine An interesting CAST at point. is main entire KING What newspapers? em talking steut the families living DD avauable - the country M much goads Have Advertion - were live M Das had ND Mt line . das in The American average vige server twill 5 EVIN. I would were Lei know what their own. per capital and of such service or unere in the 41250 or tess group - wine I world answer walted to Used of sur Mat TM . year an the averner on oranges the THE PRESENT TREND no la 120, we world have in abo imo No withings of love and - une of firthing 13- and numai as I say true MI- has licennes of - than Are INSURED total expenditure for the group here M* - be time is eand that The CHAIRMAN. What tan you ay DE in amething prom the American vage That MORE w net provimaly four eillien At (amily > to al with regist to what the und laming their Nm 11,250 un ima oner the Areu of the new - to a year firm dath. come increase, is La toond that at 124 a as indicated by the Agures which you Artiven $75,000,000.00 Má numbers - 94,00 NACE nou, Trave of vote a limited bath- Vaniation only 5,200,000 faint have presented ham reday? Are -- muir The CHATRMAN : Bave observed, tom E) 1MI exit an le the me, An BETHEM Unit Increase of . Illue $1500 Insi the amandi expended - me 07 à day on De repected to mise their tranges non than trigine, 00 und the typend liss. Increased losime for Doctor, that througham your lettimeny Ilims et the I - - tame belng $2.00 With this increase of # - at withoutle) families these particular groups le Are w ENT you have bem reterring le 199 as . purm. di I may Tiles o - and 51 TIME for this to strand 1162 over 12 a do. in these families, the - and they don't include DL LUBIN. At the present moment - a a MITE. in Uus maining Have Office at Dre theu- for Pean Ib obr words, the expenditures Up (an - single individuals are muving in that direction. in other Dr. 1081% 1 and pacher al all e salud dellare as - suit cloining em /ump from tie to sie) spend for oranges will increase of are illime (sarventes EVEN words, aper states this jumanet the thend . name AU 1 can any la that for this dustry. glaved AM have procession III- year it their initime la included by . little a milling dollete . year. - just that - and a half Button dollars. or bas been word increasive employment. year are an UNITE more of oct una and me as 4). Item et froit. Producers of and was peper prople who have incomes, MI 1 sometiding approximating a million persile wasting les, What I have completed ta Regraded lassified 48 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE Der. 1, PMB THE TEMPORARY NATIONAL ECONOMIC COMMITTEE 49 Dec. 1. 1938 - VISAT - Wind - have - al o vase higher than at the present time, FIED so gel tuck to where things it with näher and DATE than EM it lie bat - His The CHAIRMAN En 1429 BY had - FITY la 1900. Appendix reevivo INF Nates of mailimal In- BING. I am in agreement - We luit - emporyment that at It a little the of as Admorral NM File SUMNER That sun your sestement. We have give to I 1 withdres that - = L (Kahibit No. 1) ent unle MACE Die ten't " 4 Tick Time increase posternally the productivity el were to hurry along, le 1020 these - alon . - mines und ferms and our manufacturing - profiss? De. LORIN Box I Transed to insurations E wanted to mil your atten- Dr LUBIN Well. il a there from le que That I think might were stard . - bundred them- production. You want to - E this thing ous on this care e unhalm Diag need A little You state that that you had an upward tread 21 - Message From the President of the United States and people no que Average the Brouse down - 1928. That la e AN DEDA: Time for me la not an unimploy- abnomal in e COMP trul. the 5 at - PROGRAMIE re with -- of lie WILLIED kxpt going eining at . relative Into lad of TRANSMITTING RECOMMENDATIONS RELATIVE TO THE STRENGTHENING - preblem. The CHAIRMAN. Two Stare were that Time may - a calamily ge calantamphe AND ENFORCEMENT OF THE ANTI-TRUST LAWS How about De Invoices of lo a mailen when- LE bur . good WALKEL There were their of PROBLEMS OF CARH (LECEIVED BY THE CONGREM APRIL 30 (CALENDAB DAY APRIL 20), flies of that limit INTERNATIONAL which VONENT 20 produce a Representative BUMMERS REFERRED TO THE COMMITTEE ON THE JUDICIARY OF THE BENATE DISTRIBUTION PROBLEM tall a our progrem Por ID- 1 Was voice to withher the - LURIK That 5 may 1 MAX lt и not assue Unio --- The world indebledness tion. There la n/n thing. - (tat noty producing unave FOR more our 18 ADDITIFY MAMIL TE were uning our ex- I believe while the Dector la to the - To the Cangress of the United Stain: of Duge corporations le not ne- erties in in danger justified by the facily distribution That any MINI there part market. Three materially the members of the weuntifie - duest = eliminated. - 28 sometimes Today's asser on the part of average was la No - familier to Taken constituted DD a ball ID our production, evense strond have relassible by Law wide public autribution of - and eumen in every part of the rensider, and that is = the - Lime pluins - MMT - Mit of LINE fec- 140 - craitle abmit the liberty of . that securities. The more number of - try M far more accurate Unit II would end nt charas, an me our develop- picture this expenditure by a Promi people carity-bolders gives little E the use have been to 1829-for (Ext very simple New il TMI are la mainsain mens wf our cauntry SC 1 don't une that Ouvernment of money which " - nul en Agencies - - - with The not M (bat use liberty of . of their individual boldings 0 la Out reason that during the past nine years the matem per se becher dawn trut there Unner - and - you lave EN collecting. We speak of Be - were conditions which arime that later- democracy и not all If the people latter- setual abdity to Date a voice in the man- we have bera doing - tos of - to have The of . millions some. and - facture in That - asso Lim growib of private power tal & paint agreemi. In fact the socumiration of MIMI thinking. Truit answer la that # evalved - progress. NAM number income TMV too average Income human And all wither things - above W incultine atronger than Unit stock ownership of corporations in the there is that danger it. names frem that To Texp active. - MM - - THE CHAIRMAN In citiura words we NTD not liquid 1 you maily E in date stall That to Ma Bi- hands of a uny minarity of time papula- occountrated private power and - - FAME, and der has a that wasn't A breakdown the tax collector and give has a Mine - consership of govern- Intion matches the at or which in struggling - hard to masser wur - mains Junnred was the Beneier KING. Well 1 dmv't know. If you have got to, MP whe et $ an Indivational by . EFIND. or by perate demorratic government It will - LOVER - proper known to Reice what was doe of the the money UMS. of all this to - - mermilize private power, The year 1920 the a baciner year in as same by R means all of the pólata- The CHAIRMAN Will I suro as principles oz The ereah. 15 VAE the felity und give the las I the The India la that Live Liberty distribution of stock ownership, But in MAPS of that private power would make the INC. lb America proprier in sumbling in 18 would Tru means as . - - studied st our I dans's best Mar - al a democracy 15 = siúle if to Qualities that year people believe-Frim NUT democratic BOY- the market throughout the Delived the Dividg of I/We - ede- are spending money times the ILITE expense que don not provide employment and luell. States and borrowing some emdore and poods in such e three-tentha of 1 per cent of our the ness generation to pay la then the hanka in Order to buy stocks- anything in be suggested M to lov NE was to 16 sustam as approtable standard pepulation reselved 70 pit cent of 11. Financial Control Over Industry HF LIFER Nu Tax very Fact that - the dividends reported by Individ- and laterers and show shiners' - transace down with the discribution sao ration Unite modes and Kevgi . use of living, unle. This bas renghly Wis same d- Eyes these statistics 1 have class do DAIS and everybody visa embiling propend- more - - the used Issuenal bit boor, feel 44 If. not of every 300 persons the actual degree of - Grere 44 la wilders of she Back least distribution is A gentiem. - 5 DATT with the of the craim organization or is Life Increase - ARMINE MM - ut in our population, one peraus a- time of contral uver American Industry. Everhape san Hommarias vrus up Like FOREIGN TRADE wiching this in all Due tel- gasete priver website equal in Natery la relived 78 cents out of every dollar of Class financial matral through inter- indeblectness o Ihrest to 5 - curporate dividende while the acher locking aphares of influence over chan- which sale ⑉ 40/- Illia - Representative SUMMERS Dr. Tailin growing 299 geratina divided up the atter a - la the (tom au anoue (tabinty of the emergy? neis et investments, and through the use the order that 1 may have . Hille mare This in impair- rents between thren. of Grancial devices Bis the helding - anvior . mean a la - a security information te the Dr. CUTIN. You are ARE for i X Da the effectivement of privid The effect at this commination la n- - of haver exerimedy in gend picsire 4, - L Bard the that firsted in the distribution el national in- pacies and atrategic interesia, scael opinion in . - I thank nur NIC- exempter - a. way at providing employ* creates clime tentrol ed the bustome pai- and gird. - Unite M incre a goal deal of our person - Incline miller La anothing to have tat helt - - num Le lature and capital and M a way come cive of enterprises which manuerade - Change Than 3 the - - abroad and I calieve we ame whole question al a more equilable distribution A rent study by lbe National Re- mm in M a. of known Uline Representative SUMMERS I within of inforce exe esminga emorg the pruple indegendent units. Insoing . givel ded of chargey sn the pen- subress Committee above that In 1933-38 That heart had at integraind - of Phis - marrine - pie to buy will -uo Below paid it beräß. the question. E thank FU - et Days payido as A whole. IT per, sens of all American families and management control live upon large - direct - deil Aux - Dr. LUBIN We PAY arrive a The CHAIRMAN Are there KEY NOVIT 1. The Growing Concentration of and slagie individuals thing alone and strategic areas of American industry. way of - vemi in - Continuing that - that in mult KING The 1 délivre qualificant Tr these are be wibre - Dad invoices of im then 11,000 für The mail build - la unfortshald tions. the will - está 10- Economic Power ram - the jear; being driven mic . les and less tade- this the manufuld of live merning M. 10.30 De That Statistics ut the Revenu of Internal and as The other and of the how THE - - this Dr. LUBIN M) own inting is we will oppear WE that time & me im than 15 DE cest of the prodent poduce in American life. You reveal Un following amazing Unio this externation and en would Les un il ww os entitle ⑉ give Whereapon, all 4:10 . - nátion's familiar received (permes and I must semit that. Teurre Private enterprise la neasing to be true norm. wfush - Qualitive has avi - sum - - is smarg our own retire are taken unsta Friday, which in dollars and centa resched prode - they sould welche su buy Elisse Overship el responsis asseta the will M the locumes of the und M becoming it cluster of 2, 1399; 42 10:20 a. m.) OI - corperations reporting trens 17 pm sent as the tellom: private masking dell' as . TIME part of the nation, Puribersors, to drive the point basir, system of [Ine enterprial after the Amer- si pri cent of them used 02 DIT the Dorreat of Intenial reports loss model. it to in bei (soiming . 2011- INAL of the anto of all of then: and a clusch the point: that estate tax reiurns in 1930 show that: casied artil (ymem after the European 11 per est of the property which model. Or all rorporatione reporting less VM pured by inheritance var We all canti efficient industrial growth # per uma of Hero owned IT per lien. MISL ni all the meta of all of found in von + per email of all the and (be advantages of mas production regarting retains, (And the figures No or suggesta that we resurn to the Insure and profita of corporations: of would be far use hand joilli or hant forge A serve of or all the corporations reporting impressive. if ve included all the endir estate which under lat lov. personses involved in timing evi . given fort HIPTY part of the country, one- manufactured product mail well require PMS or Der cent of them namel de not have to repress.) are or - hour 2080 production plants, la per real of the net Instrum of all Wi believe in . way of living a waich pelitical declarars and trel private en- Modern efficiency may call too this But Appendix Will Be Found on Page 49 - to Clinch the terprie for prodi about are and pro- modern effeient DAS production is not Or all the manufacturing corpura- tell each a masting numbered by a central sentral which de- Uma regorting, less this 4 per est at human liberty not (ie a per bet for all strups compitition between Industrial if there earong 14 per unt of all the plants cach capable of efficient was mes produ of all of them D has been will sald that "The termit production while operating a exparate Tie history ut moint time government it Il gould exist. would nit DE inita Industrial efficiency dose not have Phone that la time of depression overm- long acceptable, If the tendency of the to neen industrial empire building. Date of trustmess speeda up. Bugger laws were su crvate . capé aerumulation And Industrial ampire building, unter- than Base larger opportucity is ut properis in a few hands, and to ren- der the giral DAMA of (De population de- unstrir, has evoired into banker control are sall mayer at the expense of analler of We oppiter that visa are weaknet by Anab- and pentitiess" Such control does not offer safrig for de adversity, Today many alt Line disney Flie nagger of this contralization in a question: La the vocification that our lib- the investing pablic Investment joda: Regrade Uclassified 50 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE Dee, Dre. 1. 1938 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE 51 - requires the discrimented apprainal The contractor more for materials: of ather people management a Dr. the home pays more for his house; information duntim that WES) during Us - hurred and dislorted if M a clims use tenant pays were rent; and the worker markets of more goods this The - The study abmid in and (a) Investment Trusts - with the condictive duts all page in ADIC werk, can pasicly M the Wis VL A Program adequately financed. E recommend BA tos the - a # supposed is Even for luell is cashier lode) dimolation of denerrous lange 4a Investment crasts should be beaught Il for which there is no - - Madiumal supposer. SI the prob- apprepriation of not less than $500,000 for under attick control to insure their - in a live rune of materials to virain I have sucured nas bero through the consurt of each study competiture INDIA Il # represted - Tata to the lewi M the is, of was approvary in Politive one um P musiness pain. That approach IFE ea operations in the Interesta of their Interkeking Americal may by the Federal Trade Commission. the Dr. taken trum Addition - of Trushed aun bide address Le He tue propise tax Da abe contraxy, partment of Justine, the Becurities and investors reiber than that managers. las varility, marpensmo, must rise 5 put ou per - prices such as RETIRNED prin. Yills we must récognize the Inade- Exchange Commission, and such other The Amounties and Exchange Com- rent. and Carica-vilieut FIMIT Our housing shirtinge is e perfect a- nt iss exclaine laws. se seek 10 of government as have special minsion is is make a repart to Dan- ATTN on the results of a comprehen- productive advantages The have MM engle of jum ability is medical prices is- more workable balance wind inkle the lets burden more Many to -- enjoire them - 1381 the public shall oui experimente in various pluses of the to- wiven : seability (De) present - diviried of such protection as they are statuty of Investment traits and thriemic with the attills of primite enter- quart income - HPW neality probye prines are DUE too by poss to - the finalida of the community affire 74 them grower requires 1 seme of the thems that their operations which is has carried and the Utat numes train the n. may as times to in (in investigation not unl) 16 dis- Abould or ambrand in the proposed and on for cearty EMPO years The EDWLIG- diversions affirms independent judgement and previde surplayment for expirat and special treatment to ALX common instructions M may FRIM bus to The Were like not to Do all-ins ment trust. Não the boiling sampany, Labor and virmant M. Upon Od las our hand - have lines dustries which have delemorated lb & to and par and mine prosentions clussive Our or - of the items, such pdas hage separations et the exp- shousands of will of any and small which are tor natural revival emperially the mo a and government alike, TO pro- as bene hilding pumpanies and Invest- Ital of the pablic et the directivo of a The Individual ISALER Be DD have . butille en qual-public change TMP lus the progre and DATE enforement - crusts. have already been the sub- form managers. Unless property re- exercise fullo uwn and MY accounty respective Often the com- But generally over the Brid M udain of the comme and-truit taxis I shall sub- Hert of spécial andy and legislation sop- sirected DI bas of struse his HIM - vange, not in / - private industries must boy their basic and Quanre - must review 404 Employer DEL the maget. recumenda- cerainig IDENE need DUE te delared wound unly TM the holding company as Ulina inil to Dew entergeus investement. less menopolistic industry. the competition If We with TM presents ud une lar . appropriation OF e device for the further centralize- Meg end More - campete weating mm. Insure and - Lis public 10 - a $230.00 the the Department of Justice (1) Improvement of Anil-Trust make workship me traditional We if une of control over American industry - sustive Large por, of the berefit of their from private emicryme Bei Me existing anti-trust laws in in- Procedure and American floance. commissione policy. Purthermer in times The justification of paid 2d- importantly Decause of A revision of the anti-trust The Investment funds 111. The Decline of Competition el the practices of THE risk. We clubol milely name Am - (Inancial sognamic conditions with laws should make them asceptible of controlled by DID areas instrance cum- And Its Effect sum Employment insures make is difficult Far lew safe fur the business man REN tool and 10m are previsio to expe: proctical enforment by easiling supers. paties have e certain to in- or apticulture which La competitive and - initgue per man use biething - en which not current production below not want to Take the butden as risks Tep Bermisn ACL was passed nearly those charged with violations the our- vestment trades, in that these enm- of belog . business no 40 rear age The and Federal den or proving facts pecullarly within panis invest - instres LIVE savings of Un reserve on curmai a find . maxim for (Am world Trade Commission Acia singe persod OVER their knowindge, Prenti by Die Govern- millions of our peoble. Tite Reporities la Lien matters 04 complete - - plade even at médicid prece For as such V. The Choice Before I's a years APP We have ned ment or Identical blde. uniform pelos - end Excluative Commission should be unes a surge number customers of agrie el ESENCI wod. Under -- are experience coder the acia. in the - one misber domestic authorised to make an investigation assume the least number and competitive Industry are beling Examination of methods of profecion meansime 17 have had e chance to nb- than export prices, or other specified price or the CASER relating ha these Invrst- Khre difficultion at employers LABRY and car of work BY those nontrapell- and sontrolizing private intergine with - (ime prictical operation or large-scale vigidative reletit be appropted BE prima ments eith particular relation le worked are not nes We Prime TOME them filse industries which aboose to 561d their keep it from furnishing jobs an Shall or addition and in Iran DIAGS things about evidence of activities their dae M ao instrument of eco- time govt the SAYE BALL tax the TM move their gruds opportunity for stre-third al the pou- the miem which on did not The Department at Justice and the name power- West el the Term - the septures. They end so employ their than is Img overding 6 Line than of the Enive in the days Federal Trade Commission should for - nast before - understand - If enterprise, Left Le 110 own de- who suncerely want to preside Lie - We hare without the merging-out of prin sdequate and effective (h) Bank Uniding Companies 000 for pulley - in are Inter - will 1 bettames half-resemented and half- of private entergries for prode competition En many Belde of power to investigate whenver UIET 28. DI a harily to point out impresation This PITE issued Date my IN- immpetitive and half-tree as 11 enterprise. We have instrud that the a reason to belaeve that wordstions that the great ecodemic posser CASE No people, fedel of all - democratic - - by The Name *Dole la - D. adjust limit called sompetitive system works differently or precises prevail which riolate the pro- mayti Be wishhed by . group which pla, will be antent 18 @ withing wort If assume the bin part star wants and the demande of in en mountry VISA there are many 15- visions or defent the dejective at the DMY antered in auquiring demination the scrept NORP Mandard el living which attil-trum Law. u Investignation TOTAL Tim of understand - - - the manth dependent mits, frau the WAS It works over banking means in AND - outsomily and worfully falls above of Myd. in an Industry where . fee large pro- border-Une cases where infilimate cm Idea - our not - without siderable area of the country That Mini or viclaimes et the capitity 10 produce No people, last if son deminate the mutit. ngerative efforts to aliminate ancially and By - Liver forwern after - happ power becauses particularly dangerous laws are curre by budress men all a people with our traditions of personal We have also harmed that . realisite enonomically harmful methods of com- when IS MI eserciand from a distance. - to admiss 1% - m United allive am Even the liberty, will voduce the doe erain of - of Natore regulation has to reach petttion to particular industries are and ao winen effective control Resore and - within - Memb business mas disp- purionity for the - - the & zon Chan commonaly immoral & The therarted by That of presible sectionical and in materialised without Libe responsing (Parts nf all completes bei this own WL presive better of helpicance under a (minicality le interested in esocomic - viclations of the enti-trict INNE, remedial " you invisions #60 TRUE - - Elina at complete metership, Bye You TM rvans of tome wills as line below an manjie of . Pre. which an - - D must M protected From remannie Argistation should be considered We have sesn the multiplied evits of namen nature mo ax nimnot laugh our winds exchomic de as well as moral anose We must find AS . resily adective deferred to per- - ED Hont - which have than the holding was Vie Each far the crentained effect of A discoming migazine at tax process over blind email arrong-doing. 1. sould suggest that - Ves mind ado Me - controle which each sus. times - will as over himily men, where - corporation is enjoined frim Vine company statem lo the care of poblic will line - of Visa - editorially printed auf this bis - nes group for IMA one benefit in- in industry nample an alti- Octernment EAS casi and apouia qui isting the law. the wares might Le PRI- INSURED WINTE somili minimity tran- Summy of of PRIMARES the being power ur the male nojlectivism in government RUS finaly settle min. Blue that is a previred les enjoin the corporation for . ership has has above to doesinate . and wiren industry 4. amail Gunder nation as all - The (ower of a tew to manager the - companisive small peri-the rustr part specified period of time trom giving any for-Ques agreem. Ore of The promary at SMP - hemic Tife nit the nation mail be advent - (6) problem. The larger, more im- We del not want the mesis repraind remunative employment or any official IV. Competition Dues Not Mean aming the many or be to (he position to any perso she the IMEO En the tasking field, and sie should and more diffinell part of QUI ens a - - 100 Exploitation public and the democratical) responsible providem is to cui with men who are nat frund to bear a responsability Frie the take eleps now to - that they are price competion in - - vom and who an and bat wind workful meparate action. not Belda implement . - Commission or Tware, Like all other government Il prices en in te Willine - and administered @ the - hinnal MY the vicial and con- As . further determal la curponents It is nei. a service me em - carries to exver. of their actions in a modern the Government misht well againm (be roume la any that nar Tituel - Kium name - Commission Navia DM effreg to Dilde is is in allested by plan gid nel by - Illien, Limit power should par by valid a Interdependent community - authorised to withhold great exit bas yes resulted hom hold- pay mile (D) - Macuged - - Ivans bud social and The del tu the of - - The expiritacion any private group of and - purchases trum compabins guilty of enfair me company operations 10 use new if our most vital most via en revolut professions profess in is RE monopolisme practive. The possibilities of great baran are la la no william NMC @ Indian of sima of workern' wase ther see them interent to the situation. Uses Tike - - - - are Page the HOLDING of workers hours Three people. in and out di the bells of on LB the light of their nwo persicial 11. (3) Mergers and Intertocking Re- I recoment that (De Congram en- have tal the Tame - . NO- The densions, THE have Two 1hir or proper methods government who If printi Prime and nil in perspective the lathenship. act at this unwoo legisistion Lisat will of compension have occusionity unged restriction of competition either If user MT the men and other Indus- More right the Prégrai effectively, control the corration at must - 90 Mid N pm - - T4g a hars TM Cash the efforts ge by pusitive resistant (4) service True They therefare, fail to MY these Trade Communion and the Becurities and bank balding companies: prevent menths Nor La I: - New - of life for the work- allemple to change the LIF Novi- for the nation As a while Exchange Commissión of corporatir more- bilder companses. from auquiries and prese - Due and of the beld of dering a terriffic responsibilità - To AM the diustina I have Onseribed m. and acquisition that control at any more bunket directly If adjust quicko - - - selevaly or the 4/F we there should be a thermigh study of the that provided by the Claylon Act to present banka to mani, SAME mas and ------------------------- Trace 0 a ME more far upirate the the für sentralized business and information of foûnomio pre in privent their when BCA holding companses tran establishing been for belief maintaine " - < tree ellerprise a. control Conscivation if inconclusive Villatity and the effect of that Dearly in the public mures; mont effec- any more and make is 0- WY INVAIL of course, MM The The There la service la market far they are therefore either SOLD NW - the indice ni nimp- Live antivate for breaking up tur a bolding resident. or MTF workers and I The - - % - like the turmers, nel of the government will or - - Turn should by 4/1 examination Ing relationships and the are for be- corporation or in which jt Waru Ere - el BY - liver 40 - information of lie price system sod the pare stawing by fayor La to border growing consentration et public print a and finance or the other of insury la determine their N° - un all 30 . trank in délivre Nine word - " Bin Come are to Lime DWD amirca- the gevernal to cape with - you Im VDGO the level at trade, upon ($) Financial Controls. - mar and our - / Berica - that They may en wus know)- edica N- sterk missing para W Time - upon ling-term prifits and The nt Snancial consistions use of over-producion pro- ao The should not I research USM UNM certration of private plaint requid to directed to MTYP the ments The entricement of tor . le in the Traditions) Anti-trust latire - providen for the grade - la by discominating cap of independent business cod rescribed the best regulation business as upsi Main, The forcis of las, pater and wither gat argaration of usable Error hairing que the which gromote policies renning be given pass at pnser over American Industry company number at Uclassified 52 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE Dec, 1, In Die: 1, THE TEMPORARY NATIONAL ECONOMIC COMMITTEE 53 1938 wing a Line for Unle so- (1) Bureau of Industrial Ren- em of policy and procedure ence memoranda, contracts. agreements. proprieted under CAX, not to requirement enrough the in 5. namies airt, of le And as from to male - 96 living work may effectively - el national stand- or our records and documents before the exceed $100,000 shaw be avail- - (DIP - en entert) manager and Creative of a Burrau of Industrial Etc- This program wholle supeal le de enraged in cummerce abter for expiraditure hr the committee in examine - meles which should be endowed with business cing BIAE intermied THE est - Artize di up 00 - and NOTA foreign Bei. $ (a) There la bereby sulturjand carrying out its functions and not to a by coldins - to 20 appropriated. dal of abli moors ID card $400.000 shall las available As libe adriguate puero to supplement and miger- para bis olen at . mé COMMUTTERS POWERS the Treasury not otherwise appropriated. President smill direct, Among the depart- Time the reliection at industrial statistics (4) Trade Associations. men, than in controlling the business el nie the Bir 3. - The shall bavé the sum of 3501,000 IIF AD eisch uperent ments and combins represented oe the by trade Such a Bureau in la attent as mar be Decemary, to carra our the pro- committee 5 shable them to curry out should perfirme for trainées men None- and effective publicity of time umilar to there performed for the n is not insured as the - part > in to surit The members visitant of the joint resolution. thair under this joint resplution. - within of Crade associatime, and a. by the Burren of any The - M. 2 fa - and MSYF wilnout andi- 131 or the funds authorized to be ep- Approved. June IS 1508, and of (Dell' Injit- Economica. which lacks proper by - unit - hiji stall De reins- of activity which will en- pomic results. und for trans united and other unter MI meser unfair of It shmild disseminate purpent It is & programs a preserve police is- aption incurred in them a (Exhibir No. 3) bac which will quard against and other information imparting market and be to , position to each terpirate for profit to kempling B Im write di Die constitute vested - the with legitimate compete- against the dangers of temporary GENT- ebough to in able to the MI R mi give produces sinduction and expensive inventones M of capital and labre M missing committi till Tb Department di Depart- Procedure Adopted by the T. E. It is & program where blue payable went of the Travelle, Department of La- (3) Palent Laws, well N system the dempers of storiages to stop the progrem of . trin Department of Owner the de- Procedure With Respect In Hear- represented be the be - de the patent Lawy le pre- and and to en- businesse and tirm back is > main of Exchanger Commission. and dusted in the fullicwing mander. - sheir 11AP a suppress inventions. and postage The mamimance at anderly mar- democratic competitive under R* Indial Truir Commission are directed ings Before Temporary National Rela 21. should study trade A. These heartnes will be before the hill 10 Provide ciduncial or redit facilities and the readitions which It is . program whe basic Umits is of approved before the or as Economic Committee Conducted Committee or e 14 the - in amendment should that affect the reliare of the average bisiness nes that the tratem MT tree mb. written and eridence by examine- man #1. be able la help small- prior for pront Bax failed le the POST un at - (e the misoduction of cas may and presented by the repre- entry the instruct of ha 20/may rights Application husine persons than, but that is bes - 101 lanen the incremie and reports The evidence por- by Various Member Departments of the department en commis- might be puble available Tur - us ans insurance ineo to keep - well One is is realted that holders miles united by mich ut Chest shall and Commissions Under Section sien which DM conducted toe investige- perment at appropriate regultion informed about trade conditions de LAPU of in America paralyses the you el your Une subject of this inquiry than Ourn BRANK prede have been My true on which e la at whirf 18 within its administrative your 3 (h) Joint Resolution No. 113, TEL The of ellances la be railled por United ⑉ 4 - of is as fatul a the who minipable n. - under Law III which may 751h Congress. will be direpared and by the - review DE to with by - - No man of sood feith will misinterpres as las the pepir wão suffer a department or which has criti- büre March luck under is authorized (4) Tax Currentives. action by the Commons ta discled the investigation. Utime They Berive from the olders American traditions Concentra- tistitute these ertificial matraines WE le M result Use persive EM with veh del such METICY mas require for 1. Heartings on Reports. c. Each WITHING will appoint under sub- Tax possume Self devised to give Times ni. remonic passer in the les and the wellomed by indivity lbs ⑉ for of and the no- If is the new or the Karcutive Commill- poens and tenalty under paid). le competative missing of labor and the of and regito. les that M a general practice, in will not D. to all examination of the - expiral are interpable problems for . Per sale factories end late proto REI The have gown EM be DECEMENTS = desirable to ben public rates of efidence shall be enserved. BUS Aliminar might directed ME INITED private enterprise democracy: no man. employ and fin (be compensation of bearings - reports submitted to the Tem- construed. - Albert dividend the dis- E do TAX believe that we are so Mick- PRANKLIN D ROOMEYEST idem experts, and employers as D divims porary National Committee by E. will net to allowed to - murser billing companies and to further The in stability that We will Invoice faith in The White House, minestry the the performative of the varjous departments and commissions. abtute prepared statements for assismany: weducing the Increase tax SUE wern way of living just because we April = 1998. sum To: consitier la submitted to Certainly as respects reports assed un nor will propared acaling with working De Mary The shadnated CAR HIRO - the - information facilities, material deduced at poblic a fanta be allowed to be increduced wt. the PM. - all M vu mave - in- (Exhibit No. 2) and personnel ni the departments and public benefits - with a repart wered hearthings except with Ltre compt of the might - modgle to of De Government by whelly All tespects. sta- wake demonstriete 20 allerged - Joint Resolution Creating the Committee department : commission meking the PRELIMINARY REFORTS Vasical and general economic reparts. the possentation. unless the Committee in a person efficience. same othellawn seems abvidus There - € TAI Prior the company of the persicular Instrume otherwise ovdres W. have beere must strut the unde- IPURTSC RESOLUTION-NO. 10-TH other such member to and and vale la no Dr. nowever MOIE type of regurta CONDRESS to - of the Congress E AL e later Mage in Lbs hearmes, op- probits Witherty u - surcive time in his A required in TM or which there should or gablic hearinge IGHAFTER ess -34 SESSION) - sõen M MI practication the portunity will De adorded internated pre- Date am de Dispective WAS the shall after the per all the remaining members se the - shall reasonit to lite President to with CAMP Il in recommended that us hr directly related is the problem et new- IS 4. Rev. your time to in time Committee san in the Cougres preleminary repirts procedure to presentation of the repart can AE e what solution or solutinna of fail - under and . The Pill- JOINT RESOLUTION To Create . functions of the committee end Mail . will file - investigations carried on at . public therms - world UMA is the Perspers National Kodnanic Committee filled in the NSI DISTRIPT as Ca you particular problems would be desirable or . and by the departmento and agencias Committee case b) The agrida ter presintation 1. Personal Was ind unly : - relection, 5a five dennee and Nume of number there with the n. Bearnics - Investigations of such te prepared in - mere - COMMITTEES DUTIER and of the the Signature Revenue From exceping Il - our conclusion unal DRATINES burd the pm instance un the corpective de- or Mail United States of America LA Congress That Bec. 2. It shall be the any of ve - NONE 4Dd shall attent! le Las President ml - Omerne - as practicatile NIL data and endebot, milected M a result parimante end and presented provided - be imming Their INFER M. Amete established & temporary milter- - - - - untimal Befeihalter during or prim la the of intelligation and assembled by BA in the Cremittee Inr approval before such (M) To make . full and cougles not Tul - - vian an end investingtion with is the del- - il the Comptex tur- retious departments and commissions heartina are and the M - promo - infromed to M the MI ne Ders reierred lies in the Presidents - vol Rhal IMMO al the studies and that The sould Date - of de (bree Members of the Williams winne Time - ⑉ Benause, a Las approved by the President of April = 1008, on missipaly and to - excred mill pursoant so this un the Smale, (2) Vales Members - the centration of power la AND B+ medicial Tumlines with the Andicas and Time supplied SANFBELL Rosue of Representative to be appoiltised namelal cuistrol over production and - of Line committee, " 400 that The MI The IXM No the Speaser of the House ne Repor- Embusion of goods and services and a se: to A signts of the committer shall For Extra Copies of the - Maur months - ---- # - - or the and or title representative end receive endrase thereof, with & no quarium. and lie powere - Imag or the Prinming departments la determinios. but without filend - them by this JOINE restation VERBATIM RECORD I - Time - in NM be disignated by the No 11F the coums of such construction and may be be # expirity voir specifice Dende Department id cmore sod their effect upm - AU informaty conferred by this your - - - MF the of Justice, Department of the Treasury, De- OF the effent of the give - - mum well - signs or of Later. Department of Care- Fem and the price pation of industry gift - reminate upno the expire- of the Proceedings of the the general level of trade, on - (ue of the Congress. - - the unin the Benefities and Exchange Com- - - Applicant - missing. mustion and the Prderal Trade Date- ment. upon long-term prefits - 6% 1. Per the puper of (bii jolni TEMPORARY NATIONAL the mmmittes, OF any rub-com- be no commissions - requesption: and ECONOMIC COMMITTEE Phe anyo di adminis - of Buch may % di the of as pini Rullie by II, shall be multed I/We jurney - the nonth no HE and N.L. für blue - the and other Government - - Place Max powers and rights The M so understand an missine in has Any mob al- petition, pare levels. conformé vpen for Becuritim and profits, and Drivings Omeriss by subsettion ISI Address the Official Reporter: - - YEARS - mare worke - weing shall have the - 4.0 que - and delies M are and shall investigate the of et - 19 of Live Act of August 28 una in wares THE has A, Fest) and imported 1500 - membre cristocisal adjustment of the parting - IF for end la privisions of ab- - - a reporting Table power of the dollar NO of TM - The Bureau of National Affairs, Inc. of Line committee by this joint di and lei of with Metion thall Term return - a - end In lame of Ans limited appained under claims de memodity prior levels: and and a YEAR when unable in attend . a To main recommendation @ or M X - is sil by Shine if otherwise IS sitend and (ell) 2201 M Street, N.W. Washington, D.C. careline el the maintage emherize an- Bergoing subjects, including the - with repet to - BY in loss, papers, correspond- Regraded sified 54 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE Dee, 1, 1938 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE 55 Dec. 1. 1938 Date DISTRIBUTION OF FAMILY INCOMES 1935 1936 GROSS DURABLE CAPITAL FORMATION BILLIONS OF DOLLARS OF DOLLARS [ 30 30 - 20 20 0 TOTAL Geosa DURABLE CAPITAL FORMATION 10 10 $$$ o 11. o 10 10 EACH POSLAP MARK 1,000 DOLLARS tale FAMILY I I VAICE FAMILITÉ Gross ADDITIONS To House o 0 - - 10 10 Dross ADDITIONS To Crew COMMER DURABLE Goops NATIONAL RESOURCES COMMITTEE o o Is 1935 and 1936 industrial production everaged 20% less than in 1929. In those yours over twilve million families, or more than forty per cent of the total mmber of femilies in the United States, had In- coses of less than $1,000. Eleven million nore had between $1,000 and $2,000 to spend. Even if the national Income were again at the 1929 level, most of the families in the Lowest Income group would receive tos little 20 20 for the standard of good living Americans expect. 10 State ADDITIONS To BURNERS PLANT Ano EQUIPMENT 10 EMPLOYMENT AND PAY ROLLS IRON a STEEL 8 THEIR PRODUCTS, NOT INCLUDING MACHINERY - i I - o o de or no 10 N 10 an At Maile N - Gross ADDTIONS To Pueuo Buldmas AND OTHER DURABLE IMPROVEMENTS 4d o 4d No - 0 40 1985 1930 1955 1939 E ra BREAU OF ECONOMIC RESEARCH e AUX - mes - INT N/P AVF so as sur all su all an am NM air - Regraded ssified 56 THE TEMPORARY NATIONAL ECONOMIC COMMITTEE Dee, 1, 1938 Index of Conten Is of This Issue Pup Page production. D. 8. dont 30 Income defined 2 he Autnmebiles productions chart 24 Portland cement mills, 1910-1937, m. Income payments, monthly, chart, 15 durtion and capacity, durt = Cement employment and par rolls Industrial production. physical vot- President's message chat R - of dart 18 study recomendas e Cearties, animal production chart in Industrial production. United States 17 Production and capacity if Partians Can and replicaired and Locomotive employment and pay ciment mills, 1910-1937 shart FI pay rells. dur! 34 mll, durt 22 Production, output per Cosi, bituminimies annual production Libit Dr. Isador, Comminioner of chart man I chart 14 IT Labor Statistics, Department of Railroads Commitire members promi - Labor 2-48 Congresrimal photoing Lumber, annual production. chart 25 Railways in manufacturing, mining, (114) 49 Lumber uvmili, employment and and steam railroads, chart 5 Construction Talge, dell 21 par rolls chan 31 Relief: Estimated number of have- Dat of missing portiant in was Maesfacturen industries, chart 36 holds and persons receiving mist. nitzers and with work program employment of table 38 Manufacturing, mining and steam emergency employment, chart o rallronds, employment and overage Collen goods, employment and pi) weekly hours, chart 35 Estimated total funds used for relief mills, chart n Manufacturing production. Federal and work programs, chart 42 Department VOT uln that a Reserve index 20 Residential units provided for in new Directors of study I Miring employment and average non-farm construction, chart If weekly hours, chart 35 Dividends lost in depression, dan 12 Resolution adopted by the committee Monthly Income payments, chart 15 on tax function and purpose 1 Duratie gueds. employments and my rells, dart Annually, 1019 is 1233. chart 31 T Resolution authorizing study 54 National Income Roosevelt, President, message recem- Employment até strate weekly timirk mending study e in manufariums mining and Constant prices, chart 6 Rules of procedure il firsm milmidi, CHATT as Definition 2 Salaries and wages lost in depression Employment and Pay mils Effect on vage and salaried work- in non-agricultural occupations All manifacturing industrime chart 11 chart If 8 Cremi chan as Growth Sawmill employment and pay roll, . chart 11 Caps IN = Test IS rirpression. thart 14 Scope of the hearings, opening Cotton suale viami 31 Per expita 1984-25, in U. 8., Ger- = SUBT, England etid Prance, chart ment of Chairman : Durable Instite rhan e Trge of industry, chart 14 Shoes. annual production, than a a Wretten and United Blate, shart 4 Steam railroads, employment and First H average weekly hours, chart 35 Non-apricultural employment chart 20 Matoury Ben. Jeseph C. Chair- Textile filire consumptio. by D. B manufacturers. 1870-1937 chart FL trus, comise statement on scupe nt 1-2 Unemployed estimated number and # in Computer of commedities that nge of, chart Prim 19 date Conjut per man-hour, chart United States agricultural production. 37 20 chart Indival Dec Lmile - Employment and pay 1 United States population chart hig comployed by Federal Govern- Value of all construction. chart 11 Emeign attes: una (m www programs. chart. 44 Wage and anlaried workers. effect of I R Physical chart colume of Industrial produc- decline in national income Functer 18 Wages, real, in manufacturine. mining Pv and steam railroads. chart - futures 1910-1937. and capacity chart of Woolen and worsted goodi. copies B X However, ment and pay mils, chart Missions Immigration authorizable to increase in Immigration Work programs, presons employed IF à et 1954 Growth Federal Government : Blacia chart Workers. wage and salaried -ffect of I a decline in national income on Regraded Uclassified Treasury Department Office of the Under Secretary Date: 12-13-38 To: Mr. Foley From: Mr. Hanes ackn. Will you please prepare answer for Secretary's signature. a - se -6 1 AL Regraded Uclassified DEPARTMENT OF THE INTERIOR Haved B UNITED STATES HOUSING AUTHORITY WASHINGTON December 2, 1938 My dear Mr. Secretary: At my conference with you on November 15 regarding the procedure by which this Authority proposes, as intended by the Statute under which we operate, to enlist private capital for a larger participation in the public housing program, it was understood that me would submit to you our rough draft of the Agreement providing for the payment of the annual con- tributions authorized by the United States Housing Act. I em enclosing two copies of this Agreement and of a local housing authority bond form, together ith a memorandum which I received from my General Counsel describing some of the se- curity arrangements which will be made for the protection of the holders of local authority bonds. These documents are being submitted to you 30 that the Treasury Department may have the same basis for determining the value of these securities as the private purchasers who are ready to buy the local housing authority bonds at an average interest cost to the local authority of less than 3 per centum. As you know, at least 10% of each local authority bond issue must be sold to private purchasers and our Act requires that these bonds be secured by a pledge of the pay- ments under the Annual Contributions Agreement. In view of our Act and its history and in view of the consistent policy of other Government lending agencies, this Authority has at all times emphasized its determination to follow a policy of permitting local authorities to raise as much more of the project cost as is possible by the sale of their bonds to others, provided that private capital could be obtained at an interest cost to the borrower as low or lower than the minimum rates we can charge. It now appears that it will be possible for local au- thorities to sell (at public sale with full opportunity for competitive bidding) their bond issues to private purchasers at less than this minimum interest rate which we can charge. Certain prospective purchasers, who have had wide and exten- ive experience in dealing with securities, have evaluated the risks involved in the proposed local authority bonds and Regraded Uclassified -2- 865 tre convinced that these bonds are worth the price reflected by the contemplated low interest rates. In the marketing of these bonds, we have every assurance that their true nature will be fully and fairly represented. We are advised that the prospectus will call attention to the conditions in the Annual Contribution Agreements and to the provisions made to protect the bondholders with respect to these conditions. Te are greeable to obtaining and submitting for your approval, 8 copy of the proposed prospectus. From the enclosed draft of local housing authority bond, you will see that the bond ex- nressly states that it is not an obligation of the United States Government or any of its agencies. In view of all of these facts, we see no reason to issume that the truth about these securities will not be told, nor do we feel that it is fair to assume that these securities cannot be sold at the interest rates which responsible rospective private purchasers are offering. In fact there is no justification for any such assumption of misrepresenta- tion, carticularly since this Authority will exercise the closest scrutiny over all matters relating to the sale and description of the bonds, including the prospectus, the bond Sord, =nd other relevant documents. There is no reason to feel that the Government's financial program will be prejudiced because of an assumption that these local authority bonds can- not be sold at the contemplated low interest rates. These local authority bonds are to be offered at public sale under rovisions for alternate bidding on 10 percent of the issue DD on substantially the entire issue. If the expected low interest rates are not offered for the larger block of bonds, Tile Alternate bids will be accepted for the smaller part of the issue. Since these local authority bonds are in no way in obligation of the Government, the failure to receive the anticipated low bids for substantially the entire issue can- not possibly be construed as a reflection on Government credit. With respect to the question of tax exemption of the bonds of public housing authorities, these bonds are in the same ostegory as to tax-exemption as municipal and other local government honds, and in addition have been made expressly exempt from Federal taxes by a provision in the United States Housing Act. It was suggested that since the President looked ith disfavor on tax exemption of the bonds contemplated by the so-called Lambert Housing Plan, a similar view should be taken with respect to the bonds of local public housing au- thorities. However, there 1s no similarity whatsoever between Regraded Uclassified -3- the bonds contemplated by the Lambert Plan and those to be sold to finance projects aided under the United States Housing lot. Under the Lambert Plan, the bonds would be those of a private limited-dividend corporation and their exemption would represent an extension of existing exemptions and would necessitate Congressional action at a session when repeal of tax exemptions of public securities is contemplated. On the other hand, the bonds sold to finance projects aided under the United States Housing Act would be issued by local hous- ing authorities which have been declared by state legisla- tures and courts to be public bodies in every respect. hile it 1s desirable to remove tax exemption from all municipal and Federal securities, there does not seem to be any reason why the Government should, through administrative policy, discriminate against the sale to private purchasers of local housing authorities bonds. No such policy has been in effect to discourage the outside sale of public obligations which would otherwise be purchased by the Public works Administra- tion or the Reconstruction Finance Corporation. If it is argued that the private financing of public housing projects should be held up because of anticipated Congressional removal of tax exemption, then the Government should logically dis- courage all local government and other financing involving tax exempt securities. This is clearly not the policy which the Government is pursuing, for public works and other projects involving such financing continue to be undertaken daily with Government assistance and encouragement. The bonds of local public housing authorities now have the same tax exemption as other local government bonds and, therefore, are in no way comparable to the private securities involved in the Lambert Plan. In accordance with the discussion at our conference, it is my understanding that you now propose to refer the enclosed material to Mr. Foley, so that my General Counsel may continue his conferences with him. I am confident that when this matter has been fully studied by the Treasury Department you will cgree with the procedure which I am proposing to follow. Respectfully A yours, NATHAN STRAUS, Administrator. The Honorable, The Secretary of the Treasury. Regraded Uclassified. DEPARTMENT OF THE INTERIOR UNITED STATES HOUSING AUTHORITY WASHINGTON December 2, 1938. MOBANDUM to the Administrator: Subject: Attached rough draft of Proposed Annual Contributions Agreement and suggested Terms, Covenants and Conditions to ac- company such Agreement. Introduction In our discussions of the financing of local housing programs through the sale to private purchasers by local housing authorities of their bonds in the amount of 95% (instead of 10%) of the cost of their projects, the Treasury Department raised some questions regarding the possibility of a sale of such bonds (if the true nature of the bonds vere fully represented to the purchasers) at an average interest rate of less than 3% per annum. These questions were apparently based upon a feeling that the local housing authority bonds could not be made sufficiently attractive to justify such an interest rate. In order that the Treasury Department might have the same basis for determining the value of these securities as the private purchasers who are ready to buy these bonds at the above low interest rates, you are submitting to that Department a rough draft of the proposed Annual Contributions Agreement the payments under which are pledged as security for the local authority bonds. It is also recommended that you submit this memorandum to that Department as it describes various arrangements which will be made for the protection of the bondholders. Before entering upon a consideration of the details of the attached Agreement, we should consider this matter in relation to the functions and duties of this Authority under the United States Housing Act. That Act requires the financing of part of the development cost of projects by others than the Government. This Authority is limited to a maximum loan of 90 percent of the development cost of projects Aided by annual contributions. (Sec. 9). The local authorities - 2 - are proposing to raise all or part of the remaining 10 percent by the sale of their bonds to private pur- chasers or other investors. Many of the local authorities have indicated their intention to raise as much more of this cost as is possible by the sale of their bonds to others than the Government. Congress was anxious to assure that all local author- ity bonds, whether sold to private purchasers or the Government, would be sufficiently attractive investments to induce the low interest rates which are necessary to achieve projects of & low rent character. In 1938, the United States Housing Act was amended for the purpose of improving the attractiveness and marketability of these bonds, the following provisions having been inserted in the Act for that purpose: "payments under annual contributions contracts shall be pledged as security for any loans ob- tained by a public-housing agency to assist the development of the housing project to which the annual contributions relate (Sec. 10(f), Underscoring added). It should be noted that this amendment makes it mandatory that payments under annual contributions con- tracts be pledged as security for local housing authority bonds. The desire of Congress to assure that the Govern- ment loan participation in housing projects be reduced as Quickly as possible is evidenced by the following statements in the report of the Senate Committee on Educa- tion and Labor which considered and approved the 1938 amend- ments: "The proposed amendment also contains provisions which would aid the resale and marketability of bonds purchased by the USHA from local housing agencies. This follows from the fact that the addition of the new sub- section (f) to section 10 of the act makes it clear that payments under the annual contributions contract may be pledged as security for any loan obtained by a public housing agency to assist the development of the housing project to which the Regraded Uclassified 3 - annual contributions relate; also by providing that when bonds of local public housing agencies are resold by the Authority, they do not lose the pledge of the annual contributions but continue to have the benefit of this pledge on a parity with the bonds re- tained by the USHA. Such a pledge of annual contributions will substantially aid the market- bility of the bonds purchased by the USHA, because under the act the faith of the Government is now solemnly pledged to the payment of all annual contributions contracted for (Page 5, Report of Above Committee, Dated April 20, 1938). From the foregoing it is clear that at least 10 per- cent of the local authority bond issues must be sold to private purchasers and that these bonds must be secured by a pledge of the payments under the annual contributions contracts. This Authority has no discretion to waive this requirement of at least 10 percent outside participation or to weive the requirements regarding the oledge of pay- ments under the annual contributions contracts as security for local authority loans. It also seems evident from the Act and its history that this Authority should take those steps (consistent with the Act and other Federal laws) which are necessary to make it possible to reduce the USHA loan participation in the development of projects. It is significant that most of the Congressional discussion con- cerned the USHA loans in the amount of $800,000,000 and that many provisions were included in the Act to protect the Government against loss on such loans. It is certainly clear that Congress was most anxious to reduce the Govern- ment's loan participation to the smallest possible per- centage of the project cost. The 90 percent maximum was allowed only because Congress was led to believe that the localities would be unable to raise more than 10 percent of the project cost. Congress refused to increase the maximum USHA loan to 100% by expressly rejecting a proposed amend- ment to that effect. It has always been the policy of Government agencies lending money to public agencies to encourage borrowing of private capital on reasonable terms. Thus, PWA and the Regraded 4 RFC (even though they had binding contracts for the purchase of bonds) have never insisted that public agencies sell their bonds to the Government when they could find g private purchaser at the same or a lower interest rate. On the contrary, these and other government lending agencies have always been glad to step out of the lending picture when private capital was willing to come in. Again and again, this Authority has emphasized its determination to follow a similar policy and to make every effort to en- list private capital at even lower interest rates than the minimum which we can charge. Lower interest rates on local authority bonds will mean lower rentals and lower income tenants. In view of the provisions of the Act and its history and in view of the practice of other Government lending agencies, this Authority can hardly refuse to permit local authorities to sell 95 percent (instead of 10 percent) of their bond issues to private purchasers at a lower interest rate than that which we can charge. There is certainly nothing in the Act which expressly or impliedly requires the USHA to lend 90 percent; rather, the whole tenor of the Act and of Government policy has been to reduce Federal loan participation in favor of private loan participation. Regraded Uclassified - 5 - I Annual Contributions as Security Upon Which Bondholders May Rely is explained above, the annual contributions must be piedged as security for the payment of local authority bonds issued to assist the development of the housing projects to which the annual contributions relate. (Sec. 10(f)). With respect to the risk taken by prospective purchasers of the bonds of local housing authorities, it is, of course, evident that there are no risks SO long as the annual contributions are sufficient to cover debt-service requirements on bonds of the local authorities and so long as such annual contri- lutions are paid. First, let us consider the question of the sufficiency of the annual contributions to cover completely the debt-service requirements on a bond issue to finance 100$ of the cost of a project. If 95% of the bond issue is solo to private purchasers, the average proposed interest rate on the local authority bonds will be low enough to permit The debt service to be fully covered by the Federal annual contributions. In fact, it is expected that a small part of rich annual contribution will not be needed for debt service nd may be applied to the payment of part of the operating openses which would otherwise, together with part of debt- wrvice requirements, have to be met from rentals. This brings us to the question as to whether the annual contributions will be paid. Sec. 10(e) of the United States dousing Act Amendments of 1938, provides in part that: "The faith of the United States is solemnly pledged to the payment of all annual con- tributions contracted for pursuant to this Section, and there is hereby authorized to be appropriated in each fiscal year, out of any money in the Treasury not otherwise appropriated, the amounts necessary to pro- vide for such payments." This language was apparently modeled after the provisions of that act relating to obligations of the United States which provides that "the faith of the United States is solemnly pledged to the payment IT of such obligations. (Sec. 731, Chapter 12, Title 31, U.S.C.A.). The report of the Senate Committee on Education and Labor (Report No. 1944, Seventy- Fifth Congress, Third Session) with reference to the United States Housing Act Amendments of 1938 contains at the top of page 6 a statement to the effect that: - 6 If the faith of the Government is now solemnly pledged to the payment of all annual contributions contracted for, and appropriations are authorized in each year to meet such payments (thus recognizing that the Government's obligation under an Annual Contributions Contract is the same as the direct obligation of the Government on its own bonds) and, ES mentioned above, Sec. 10(f) requires that such annual contributions be pledged to the payment of the local authorities! bonds. Because of the foregoing provisions in the United States Housing Act and the Committee Report on the 1938 Amendments thereto, no prospective purchaser of bonds of local authorities has questioned the obligation of the Government to pay annually the amount due to a local authority under an Annual Contribu- tions Agreement, nor has any such prospective investor question- ed whether such amount would be paid when due under such an Agreement. From a study of this matter, it is our opinion that e local authority (and presumably the bondholders to whom the Annual Contributions Agreement is pledged as security for the bonds) may obtain a judgment against the United States if annual contributions are not paid when due under the Agreement. It is true that payment of the judgment will depend upon an 4 propriation by Congress, but this is true of all claims against the Government including claims representing principal or Interest on direct obligations issued by the Treasury in the form of bonds or notes. II Annual Contributions Agreement and Conditions Therein The Annual Contributions Agreement contains provisions permitting the termination of the Agreement under certain conditions or the withholding or reduction of annual contri- butions under other conditions. It is the primary purpose of this memorandum to discuss and analyze these conditions and the provisions relating thereto in the Agreement or vollateral documents. The attached Annual Contributions Agreement has been drafted in a manner which is designed to achieve the Congress- ional objective of maintaining the low-rent character of proj- ects. It is clear that the continuance of annual contributions is essential to the maintenance of the low-rent character of 7 - 3. project, for the termination of such contributions would make it necessary to increase the rentals to an amount suffi- cient to meet debt service and operating expenses with the result that the project would serve the higher income groups mich private enterprise now serves. It is, therefore, erroneous to assume that the continuance of the low-rent chracter of projects can best be assured by a contract which would permit USHA to terminate all annual contributions on any breach -- for if we are to have and use this threat of termination, we must be prepared to exercise the threat; yet the very exercise of the right would result in the complete defent of the low-rent character of a project and its loss to the low-income group intended to be served. The attached Agreement provides methods of payment, remedies, and controls which this Authority has determined will achieve the greatest degree of maintenance of the low- rent character of projects. Under this Agreement, the USHA retains at all times effective controls to assure the continu- ance of the low-rent character of housing projects. At the same time, this Agreement reduces the possibilities of loss to prospective purchasers of local authority bonds to the extent that the Interest rate on such bonds will be low enough to aid in achieving the low rents contemplated by the Act. While we are fully convinced of the validity of the attached draft of the Agreement, there are certain legal questions concerning its provisions which (because of the importance of this matter) are being referred to the Attorney General for his opinion and which it is therefore not nec- essary to discuss in this memorandum. As explained above there are certain conditions in the Annual Contribution Agreement permitting the termination of the Agreement or the withholding or the reduction of the annual contributions. It is to these conditions that he must turn our attention in order to determine whether they present any real risks to the bondholders for which adequate protection will not be provided. The conditions to which the annual contributions are subject are contained in Part III of the attached Terms, Covenants and Conditions. These conditions are: failure to let contracts; failure to complete project; failure to eliminate unsufe or insanitary dwellings; destruction of project; failure of local contributions; breach of covenant; substantial breach of low-rent character; and acquisition of project by third party. These conditions will be discussed in the order mentioned. Regraded Iclassified 8 - 1. Failure to let contracts (Sec. 3.01). The Agree- ment provides that it may be completely terminated by the USHA in the event all the contracts necessary (as determined by the USHA) for the substantial completion of the buildings in the project have not been let to such contractors, in such forms and with such security, as shall be approved by the USHA within one year from the date of the bonds or within such longer period as the USHA shall have approved. In the Agreement, the local authority makes an enforceable covenant that it will proceed promptly with the letting of these construction contracts and the construction of the project. It is proposed that the prospective purchasers of the local authority's bonds will deposit the purchase price of the bonds in escrow, and that none of these funds will be released until such time as the USHA has actually given the approval of construction contracts provided for in Sec. 2.01. During the period prior to the release of such funds from es- crow, the USHA will finance the development of the project by the purchase of notes, which are exchangeable for definitive bonds or payable in cash at the option of the USHA. Interest on the bonds will be treated as other interest during construc- tion and will be paid as a development cost from the proceeds of the loan. Thus, the bondholders will be fully protected, as they will receive interest on their money while it is in escrow and, in the event that the project should be abandoned for any reason after the bonds have been sold, but before the money in escrow has been released, the principal amount of the bonds will be returned to the holders thereof. Based upon the experience of PWA, we are confident that there will be no projects abandoned after the bonds are sold, particularly since the sale of bonds will be approved by the USHA only at such time as a project has progressed sufficiently (through optioning of land and preparation of plans and specifications) SO that no difficulties are anticipated. 2. Failure to complete project (Sec, 3.02). Under the Agreement, annual contributions may be withheld in case of the failure to complete substantially the entire project within two years of the date of the release of the bond proceeds from escrow. The local authority will make an enforceable covenant to complete the project within this specified time. However, the actual completion time whichbas been specified in construc- tion contracts averages somewhat less than 12 months with respect to the contracts let under USHA's decentralized program, and partial occupancy, at least, should be possible before that time. The average period specified for completion in construc- tion contracts for PWA Housing Division Projects was 12 months. Regraded In the case of some of the PWA Housing Division Projects, extensions were granted totalling about 3 months. These were largely due to strikes. On the USHA Projects, the hazard of strikes has been very greatly reduced because of the agreements we have sponsored between local authorities and labor unions and building trades councils, Under these agreements (such agreements have been obtained to date in 83 cities), labor agrees to continue to work throughout the construction of a project at the same wage rate as the one in effect when contracts are let; also to submit all juris- dictional disputes to arbitration and to avoid strikes or other work interruption. The two-year completion period allowed in the Agreement is, U.S. & matter of safety, automatically extended in the event of delays beyond the control, and without the fault or negli- gence of, the local authority (the reasons for such extensions being the same as those provided for in the construction contracts). In addition, the completion time may be extended in the discretion of the USHA for a longer period. In the event the project is not substantially completed within the time limits permitted, even with all the assurances mentioned above, and the USHA withholds annual contributions as provided by the Agreement, it nevertheless agrees that when the project becomes substantially completed in its determination, the annual contributions which have been withheld will be restored to the local authority. The bondholders will be fully protected against this contingency of failure to complete within the period permitted under the Agreement. The contractor will be under 8 contractual obligation to build within about one-half the time specified in the Agreement. This obligation will be secured by a performance bond of a surety company guaranteeing performance of the contract. The performance bond will be in an amount at least sufficient, in the opinion of the USHA, to assure completion of the project in any event, and the surety company will doubtless be one of those appearing on Treasury List No. 356 (List of companies acceptable as sureties on Federal bonds). Moreover, the bond proceeds will be held intact and released from time to time only as funds are needed to pay for work already done. These bond proceeds will be released from the Bond Fund into the Development Fund only as requisitions are approved by the USHA. Funds will be paid out of the Development Fund only for work done, and there will always be a retained percentage of contrac- tors! estimates. In view of these facts and the further fact that the contractor's work will always be approximately 30 days ahead of his estimates, the amount remaining in the Bond and Development Fund at any time should be emple to complete the Regraded Uclassified - 10 - 178M project even if a new contractor has to take over the job. In case any deficit should arise due to the failure of a contractor, the surety company would be obligated to meet this deficit and cause the project to be completed. As a practical matter, there is no risk to the bondholder. On no PWA Housing Division Project has it been necessary to call upon the surety company, even in the case of the Indianapolis project which involved certain work the Govern- ment claims to be defective. 11 - 3. Failure to eliminate unsafe and insanitary dwellings (Sec. 3,03). Under the Agreement, annual contributions may be withheld in the event the demolition, condemnation, vacation, compulsory repair, etc., required by the Act is not completed within the time (which is usually one year after the completion of the project, but is sometimes two or three years after such completion) prescribed in the Equivalent Elimination Contract between the local authority and the city in which the local authority is located. In the Agreement, the local authority makes an enforceable covenant to accomplish this elimination within the prescribed period. In some cases, the requisite equivalent elimination has been accomplished off the site prior to the execution of the Agreement or will be accomplished on the site or sites in the course of the development of the project. In the other cases where the elimination will not be fully accomplished in this manner, the Equivalent Elimination Contract described in the attached Agreement will be re- quired as a condition precedent to the purchase of bonds or the payment of annual contributions by the USHA. Under the terms of this contract between the local authority and the city, the city will agree to accomplish the necessary elimination within the time prescribed therein, which period will be satisfactory to the USHA and will be consistent with the period permitted in the Agreement. The bondholders may properly rely on the Equivalent Elimination Contract. In the event of a threatened breach of such contract, the bond- holders may force the local authority to compel the city to com-ly with its contract. The validity of such a contract has been sustained by the highest courts of Florida and South Carolina (Marvin V. Housing Authority of Jackson- ville, et al, 183 So. 145, July 27, 1938, and McNulty V. Owens, et al, 199 S.E. , October 13, 1938, respectively) These Equivalent Elimination Contracts have been made only after a careful study of the local situation. A survey has frequently been made by the WPA or some other fect-finding agency to determine the existence of a suf- ficient number of unsafe or insanitary dwellings which would permit the accomplishment of the required equivalent elimination within the prescribed period. Moreover, a study of the city's past record of demolition or other elimination is frequently used to help us make an accurate forecast of the time when the city may be expected to per- form the necessary equivalent elimination obligations. Regraded Iclassified - 12 . Statistics of past demolition and slum elimination are usually available in the office of the city building inspector or some other city official. These statistics, together with other data regarding existing housing condi- tions and shortages, must be furnished to us in connection with the application for financial assistance. Since the Equivalent Elimination Contracts are based upon a careful analysis of the problems of the particular community, we are confident that it will not be necessary for us to resort to the remedy of reducing or withholding annual contribu- tions in order to compel the performance of those contracts, particularly since those contracts and the Annual Contribu- tions Agreements have been made sufficiently flexible to enable adjustments to meet any changing circumstances. If there 15 a substantial change in conditions in a city to the extent that deferment of elimination becomes necessary because of 8 sudden growth in population, a major fire or other unforeseeable circumstances, the USHA is authorized to extend the time specified in the Annual Contributions Agreement within which the local authority must accomplish such elimination and, in turn, the local authority may then extend the time in their Equivalent Slimination Contract with the city. If for any reason the equivalent elimination is not accomplished within the time fixed by the USHA, the USHA may withhold future contributions until such time as the elimination has been accomplished, at which time the contributions to withheld will be restored. 4. Destruction of project (Sec, 3.04). Under the Agreement, annual contributions may be withheld in the event that more than half the dwelling units originally in the project are destroyed or rendered untenantable, and are not restored within two years after all insurance claims have been established by litigation or by settlement approved by the USHA. In the Agreement, the local authority makes an enforceable covenant to carry insurance to the full insurable value of the project against all losses which it is customary to insure in the vicinity of the project. If such insurance is not carried, the USHA or the bondholders may place it. The local authority also makes En enforceable covenant to proceed promptly with the repair or restoration of any dwellings destroyed or rendered un- tenantable. - 13 - Because most of the low-rent housing projects are designed with one or two-story buildings, with large open areas in-between, with fire-proof or semi-fire-proof construction, and with ample fire protection, it is extremely doubtful whether a major fire or other catastrophe is likely to occur. In addition, the extent of such projects over several city blocks and the presence at all times of a large number of tenants and of janitors or watch- men should prevent the spread of any fire. If any loss should occur from fire or other hazards, it will be fully covered by insurance. The insurance companies are to be satisfactory to the USHA, and the USHA will make a review of insurance coverage at least once a year. As you know, the USHA has just executed a contract with an association composed of practically all the stock fire-insurance companies in the United States, by the terms of which contract local authorities will be able to obtain complete fire and supplemental insurance policies under which all these companies will be jointly and severally liable. In view of the joint liability of all these companies, there 15 no risk of inability to collect insurance claims due to the financial condition of any particular insurance company or companies. Each insurance policy will carry an endorse- ment for the benefit of the bondholders. A period of two years after settlement of insurance claims should be ample time for restoration of the project to the extent of 51% of the dwelling units originally constructed. However, if such time should prove insufficient for some unforeseeable reason, the annual contributions withheld for failure so to restore would be paid to the local authority if the project is subsequently restored. In the meantime, the bondholders and the USHA would be exercising their rights to force the local authority to comply with the local authority's covenants to restore and render safe and sanitary any dwelling units whatsoever which are destroyed or rendered untenantable. 5. Failure of local contributions (Sec. 3.05). Under the Agreement, annual contributions may be withheld to the extent that the State and its political subdivisions have not contributed 20% of the Federal annual contribution, such 20% to be in the form of cash or tax exemptions or remissions. In order to achieve the necessary low rentals, it is the policy of the USHA never to enter into an Agreement with reference to B project unless the project Regraded Iclassified 14 will be entitled to tax exemption under the State Statutes or a self-executing provision in a State constitution. Thus no bonds will be sold except on projects which are exempt from taxation. These exemptions are based upon a well-recog- nized custom to grant such exemption to public property used for public purposes--a policy which has been expressly adopted with respect to public housing projects by 31 of the 33 states having housing legislation. (No projects are being under- taken in the two states lacking tax exemption legislation). In addition, such tax exemption provisions have been considered and upheld by the courts of last resort of 8 of the 31 states mentioned above. (Spahn, et al V. Stewart et al, 103 S.W. (2d) 651, Kentucky, 1937; In re Opinions of the Justices, 179 So. 535, Alabama, 1938; Marvin V. Housing Au- thority of Jacksonville, et al, supra; Williamson V. Housing Authority of Augusta, et al, 199 S.E. 43, Georgia 1938; State ex rel. Porterie, Attorney General V. Housing Authority of New Orleans, et al, 182 So. 725, Louisiana 1938; Wells V, Housing Au- thority of Wilmington, et al, 197 S.E. 693, North Carolina 1938; Dornan V. Philadelphia Housing Au- thority, 200 Atl. 834, Penna. 1938; and McNulty V. Owens, et al, supra.) There have been no adverse decisions on the constitutionality of local tax exemption of public housing projects. In addition to the statutory or constitutional provi- sions under which tax exemption is granted to public housing projects, the USHA obtains a cooperation contract between the local authority and the city in which the project is located. Under this Cooperation Contract, the city recognizes the tax- exempt character of the project and agrees to furnish, without cost or charge (or, for a relatively small service charge), to the project and the tenants thereof municipal services and facilities of the same type ordinarily furnished to other dwellings and inhabitants of the city. The Cooperation Contract extends over the life of the bond issue and is expressly au- thorized by the provisions of state enabling legislation. with respect to the amount of the contribution represented by this local real estate tax exemption, we have found that it averages about 60% of the Federal annual contribution. In other words the local contributions represented by real estate tax exemption (apart from the local contribution represented Regraded Uclassified - 15 - by cash capital donations, and exemptions from sales taxes, special assessments and other local taxes) is generally about three times the 20% statutory requirement. The attached A (reement provides for an accumulation of this excess over 20% and 8. subsequent credit in later years so long B.S no other burdensome taxes are substituted. This provision 18 designed to take care of situations where the amount of real-estate taxes may be reduced or where such taxes are replaced by other taxes, In such cases, the local authority will be able to apply the accumulated surplus of local contributions (as well 09 the exemption from the new taxes) to match future Federal contributions so long as the total taxes and service charges collected from the project do not exceed 5% of the total rentals collected for dwellings in the project during the preceding year. From the foregoing explanation it is evident that ade- quate provisions are made to assure that local annual contribu- tions will be available in an amount sufficient to meet the 20% requirements of the Act. If for any reason such contribu- tions are not available on an annual contribution payment date, the sole remedy of the USHA is to withhold future contributions in proportion to the insufficiency of the local contribution. When the deficit in the local contribution is cured, the Federal annual contributions 30 withheld will be restored. 6. Breach of Covenant (Sec. 3.06). Under the Agreement, annual contributions may be reduced for B. breach of any cov- enants in the Agreement, but such a reduction will not be made below the amount of the Allotted Annual Contribution. Since the Allotted Annual Contribution is the level amount necessary to meet principal and interest requirements as the same become due and payable, it 1s clear that this provision cannot affect the bondholders in any way. This provision is designed to en- courage compliance by the local authority with all the covenants of the Agreement, no matter how minor. The amount of the penalty for these minor breaches of covenant has properly been fixed at B. small sum--small enough so that the exercise of this right will not change the nature of the low-rent character of the project by necessitating a substantial increase in rentals and 8. consequent change in the tenancy. Regraded Uclassified - 16 - 7. Substantial Breach of Low-Rent Character under the Aireement (Sec. 3.08). Annual contributions may be reduced or terminated for B. substantial breach of the low-rent char- acter of the project, the amount of the penalty being related to the severity of the breach. If the local authority violates its covenant to operate the project without profit, the re- sulting available profit from excess rentals is deducted from the annual contribution next payable. This provision, although involving a real penalty upon the local authority which is well adjusted to the severity of the breach, will not harm the bondholders, since the available amount of profits will be required to be applied first to the debt service on the bonds. To the extent that such profits are applied to debt ser- vice, the annual contributions will not be necessary for that purpose. As an additional assurance that such profits will be applied to debt service on the bonds, the USHA and the bond- holders will be authorized to withdraw an amount equal to such profits from any funds or reserve accounts of the local author- Ity and to deposit such amounts with the local authority's fiscal agent for application to debt service on the bonds. Substantially similar provisions are made so far as Ineligible Tenants are concerned. If the local authority violates its covenant to exclude Ineligible Tenants from the project and more than 5% of the tenants in the project are ineligible, annual contributions may be reduced or terminated by an amount equal to the Available Ineligible Tenancy Refunds. As in the case of available profits from excess rentals, this provision (which provides for a penalty similarly adjusted to the severity of the breach) will not harm the bondholders since the Available Ineligible Tenancy Refunds will be required to be applied first to the debt service on the bonds. Verious provisions are to be included in the documents 6.5 an assurance that the Ineligible Tenancy Refunds will be collected and available. The USHA and the bondholders will be authorized to withdraw an amount equal to such Refunds from any funds or reserve accounts of the local authority and to deposit such amounts with the Fiscal Agent for application to debt service on the bonds; also, the USHA and the bondholders will have all of the affirmative remedies in the Agreement to effect the collection and deposit of such Refunds. Furthermore, the local authority will be required to obtain 8. lease from each pros- pective tenant containing 8. covenant to the effect that such tenant is eligible and that if subsequent events disclose such tenant to be ineligible, the tenant will be liable to repay to the local authority the proportionate share of the annual con- tributions which WAS applied to the reduction of his rent. Regraded - 17 - In other words, the tenant will be obligated to restore the part of the Annual Contributions which was diverted from its purpose of benefitting eligible low income families; such pro- visions in tenant leases will "take the profit out of Ineligible Tenancy" and thus help remove any motive for ineligible fami- lies to seek admission to the project. The collection of such damages from ineligible tenants will be required and such monies (along with the other monies mentioned above) will be the source of the Ineligible Tenancy Refunds to be made by the local authority. If in any year the total amount of Excess Rentals plus Ineligible Tenancy Refunds then available exceeds the amount of the annual contribution in such year, the USHA 18 author- ized to terminate the annual contribution in any such year because, in such event, the project will have lost entirely its low-rent character for such year. This provision, like those described above, will not harm the bondholders, since the Excess Rentals and Ineligible Tenancy Refunds must first be available for application to the debt service on the bonds. It should be noted that in addition to these remedies (and the remedy described in 6) for maintaining the low-rent character of the project, the USHA vd. 11 have ample affirmative remedies under the Agreement to enforce the covenants of the local authority to operate the project without profit or excess rentals and to exclude ineligible tenants. 8. Acquisition of project by third party (Sec. 3.09). Under the Agreement, annual contributions will be terminated in the event the project is acquired in any manner including a bone fide foreclosure or other lien held by a third party) by any third party other than a public housing agency 8.8 such agency is defined in the Act. This provision does not involve any risk to the bondholders because of the steps taken to assure that the project will continue in the ownership of the public housing agency. The resolution providing for the issuance of the bonds will contain a covenant by the local authority that it will not convey or mortgage the property so long as the bonds are outstanding. Such 6. covenant is expressly authorized by the state enabling housing legislation. The passage of such e resolution con- stitutes public notice of such e covenant but, in addition, the covenant will be placed on record in the usual office for the recording of conveyances or incumbrances relating to real estate. - 18 - For a breach of such covenant, the bondholders will have B. right to force an immediate re-conveyance. In view of the fact that the project will be owned by B. public agency and that these notices will be made 8. matter of public record, 1t seems inconceivable that any third party would purchase or otherwise acquire the property from En hous- ing authority. AS you know, no bonds of the housing authority are to be secured by B. mortgage or other foreclosable instrument. With respect to each of the eight conditions listed above, the local authority will covenant to comply with such condi- tions precedent to the payment of the annual contributions. In accordance with the objective of the Act to assure the con- tinuance of the low-rent character of projects, the USHA has retained many affirmative remedies which will make it possible to compel the continued maintenance of such low-rent character, including the remedies of mandamus, injunction, appointment of 6 receiver, taking of possession, etc. These remedies are cumulative and not in substitution for the remedies relating to the reduction or withholding of the annual contributions. Our experience with local housing authorities to date leads us to feel confident that these authorities will be con- scientious in the observance of their duties, particularly since the state laws almost invariably impose duties similar to those contained in the Annual Contributions Agreement. We merely wish to mention this in passing, since 1t is our belief that 08 B. practical matter there are likely to be few occasions for using remedies to compel observance of the statutory and contractual duties of local authorities in the operation of their projects. CONCLUSION From the foregoing discussion, it is evident that although the payment of the annual contributions is subject to various conditions in the Annual Contributions Agreement, adequate pro- visions are to be made either in that Agreement or in collateral documents to eliminate any material risks or otherwise to pro- tect the bondholders. Private purchasers who have had wide and extensive experience in dealing with securities have evalu- ated the risks involved in the proposed bonds of the local au- thorities and are ready to buy those bonds at the low interest rates mentioned above. - 19 - It is, of course, contemplated that any prospectus will call attention to the conditions in the Annual Contributions Agreement and to the provisions therein or elsewhere made to protect the bondholders with respect to such conditions. In our conferences with the Treasury Department, we have indi- cated that we are agreeable to obtaining and submitting for their approval the proposed prospectus. A rough draft of the proposed local housing authority bond form 18 being submitted to the Treasury Department. From the face of this bond, it appears that there is an express statement that the bonds are not an obligation of the United States Government, or any of its agencies. Certainly this Authority is interested in taking every atep necessary to assure that the prospective purchasers or repurchasers of bonds of local housing authorities will be fully advised of the facts regarding such securities. We see no reason to assume that the true nature of these securities will not be fully and accurately represented, and we are pre- pared to take every step necessary to assure that this will be the case. Deputy Leon Huperling Administrator LEON H. KEYSEREING, and General Counsel. Regraded