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Volume 270, June 7 – June 9, 1940
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Volume 270, June 7 – June 9, 1940
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Henry Morgenthau, Jr. Papers
Diaries of Henry Morgenthau, Jr.
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DIARY
Book 270
June 7-9, - 1940
- A -
Book Page
Appointments and Resignations
Glasser, Harold: Trip to Ecuador in connection with
national monetary matters, et cetera, discussed
at group meeting - 6/7/40
270
141
- C -
Canada
See War Conditions
China
See War Conditions
- G -
Gaudin, A. (Department of Metallurgy,
Massachusetts Institute of Technology)
Offers services to Allied Purchasing Mission -
6/7/40
79,81
Glasser, Harold
See Appointments and Resignations
Great Britain
See War Conditions: United Kingdom
Guns
See War Conditions: United States (Surplus Materiel)
- I -
Italy
See War Conditions
- R - -
Rand, J. H.
See War Conditions: Airplanes
Renault, Jean
Renault, Louis
See War Conditions: Tanks
Revenue Revision
Comparison of present and proposed individual income
taxes on net incomes of selected sizes.
106
- T -
Tanks
See War Conditions
Taxation
See Revenue Revision
- U - -
United Kingdom
See War Conditions
United States
See War Conditions
- If -
Book
Page
War Conditions
Airplanes:
See also War Conditions: United States
(Surplus Materiel)
United Aircraft Corporation; Wright Aeronautical
Corporation: Agreement (proposed) and
correspondence concerning licenses to the
Government - 6/7/40
270
43,44,59,60,
61,62,63,65,66
Frank's (Jerome) suggestions with regard to
elimination of delay in plant expansion -
6/7/40
85,88
Rand's (J. H.) memorandum concerning spare equipment
which private air transport companies have -
6/7/40
104
a) White House asks HAJr to prepare answer
and Hhir asks Hinckley (Civil Aeronautics
Authority)
102,103
Canada:
Exchange of information through inspection: Difficulties
encountered by Army representative in visiting Page-
Hershey Tubes Company, Welland: Marshall-Purvis-HMWr,
et cetera, correspondence - 6/8/40
151,152,155,
156,157
China:
Tung 011 Exports, January-May, 1940: Report from
American Consul, Yunnanfu - 6/8/40
164
Exchange market resume - 6/7/40, et cetera
148,160
Guns: See War Conditions: United States (Surplus Materiel)
Italy:
Ships ordered to proceed to neutral ports - 6/7/40
94
Stock prices charts - 6/8-9/40
169,171
Machine Guns: See War Conditions: United States
(Surplus Materiel)
Naval Guns: Possible disposal of - Foley memorandum -
6/7/40
97
Tanks:
Rendult, Jean; Renault, Louis: Confer with HMJr and
Treasury group; wish to contact American manufacturers
concerning production of tanks - 6/7/40
111
United Kingdom:
Exchange Control: New regulations - 6/7/40
128,162
a) Instructions from Bank of England to Federal
Reserve Bank of New York
135
Military Situation: Reports from London transmitted by
Lothian
137-D,I,Li150-A
United States:
Surplus Materiel: Conference prior to FDR's press
conference; present: HMJr, Towers, Young, Nelson,
Marshall, Stark, Biddle, Furlong, and Foley - 6/7/40
2
a) Navy release in preparation for questions on
fifty surplus sirplanes turned back to Curtiss
Airplane Company, Buffalo
1
b) Marshall's statement on Army and Navy surplus
ordnance materiel quoting authority for inter-
change between Army and Navy, et cetera
40
c) Proposed release by Anglo-French Purchasing Board.,
42
d) Conference described by Schwarz
143
- W - (Continued)
Book Page
War Conditions (Continued)
United States (Continued):
Surplus Materiel (Continued):
Machine Guns: Bullitt again asks for 1000 a week -
6/7/40
270
95
a) HMJr tells Bullitt he may be able to
get 400 to 500 - 6/8/40
158
Naval Guns: Possible disposal of -
Foley memorandum - 6/7/40
97
1
C
0
P
Y
Proposed Release of the Navy Department Read
in Secretary's Office
7 June 1940
In accordance with an agreement with the Curtiss Aero-
plane Company of Buffalo, fifty airplanes from various Naval
Aviation Reserve Squadrons are being returned to that company
for replacement with planes of a superior type, equipped with
leak-proof tanks, and armor. These airplanes are temporarily
in excess of requirements, due to the fact that many of the
Reserve aviators normally attached to the Reserve Squadrons
have been ordered to Pensacola as instructors on account of
the large expansion of training at that place. It is expected
that the remainder of these planes at Reserve Bases will be
similarly turned in as replacements are received.
Dearaded
2
June 7, 1940
9:00 a.m.
RE ALLIED PURCHASES
Present:
Admiral Towers
Mr. Young
Mr. Nelson
General Marshall
Admiral Stark
Mr. Biddle
Mr. Foley
Admiral Furlong
Mrs. Klotz
H.M.Jr:
I am just going ahead. The most important
thing, the President of the United States
last night at 9:20 - this isn't what you think
it 1s but I am going to make use of these
gentlemen - wanted us to come over to his
office at 10:15 with a statement he can
use at his press conference at 10:30 ex-
plaining this, do you see, and then we are
invited to sit with him at his press
conference, and, as he put it, if something
happens he can say, "Well, ask Henry. He
will tell you." So I said to the President,
"Isn't this raw materials, don't you want
somebody else?" So he says, "No, I want
the three of you. We have a chance now
to do a statement and then if we get the
statement on the typewriter, I would like
to make use of these other gentlemen's
services on the bombs, etc. But I got word
last night to Francis Biddle
Ed, how would you start this thing for the
President? He wants that list of materiel,
the one the Army released. He wants to tell
the whole story, says he wants to do the
whole thing.
Foley:
Well, I should think we should start with
the list and the opinion and we can - the
Regraded Unclassified
3
- 2 -
opinion sets forth the two statutes, and we
can have a brief explanation on top of the
list and the opinion, and I should think if
he had a few minutes to go over it before
the press conference --
H.M.Jr:
He 1s giving us 15 minutes.
Foley:
That that would. be. sufficient for him to
absorb it in a way to explain it properly.
H.M.Jr:
That 18 why I wanted you and Francis Biddle
to help and go over with us when we went
over to see the President. I think that
would be best, don't you think 80, General?
Marshall:
Yes.
H.M.Jr:
I mean, if Mr. Biddle and Mr. Foley went
with us.
Marshall:
Yes.
H.M.Jr:
The Navy practically has the explanation.
Stark:
Well, these planes began to fly at the
Curties Company. The telephone began to
ring.
H.M.Jr:
I think you did a magnificent Job.
Stark:
And somebody had to take the onus. I thought
it was just as well for us to tell them
exactly what we were doing as to put the
load on somebody else. I AM willing to
carry it and let it go at that.
Now, I wrote up something, then I had
Admiral Towers come in and he wrote up
something and what he gave us was practically
what we released, put in such shape. I gave
it to the press room and told them they
could answer questions based on this which
W&B to the effect that we had 50 planes
which we didn't need at the present time
because they were usually used by the
reserves, that the reserves who flew them
were now in Pensacola as instructors, recently
called there because of the expanding program,
4
- 3 -
and that therefore the planes were temporarily
in excess and that inasmuch as we could turn
these planes in and get better planes, planes
which would be armored and have seal proof
tanks, that it was strictly to the interest
of the national defense to do it, that more-
over we had another 40 planes which later on,
if we can make a similar advantageous deal,
that we expected to do it. That will occur,
of course --
(Mr. Biddle entered the conference).
H.M.Jr:
Now, Just take a minute. Could we maybe
have Admiral Towers tell McKay to get a
I
copy of that statement?
Stark:
Yes, Jack, I think you had better. Charlie
has it.
(Mr. Towers left the conference).
H.M.Jr:
In talking with the President last night, he
asked me to get this group together to prepare
a statement for his 10:30 press conference
telling exactly what we have done, you see,
and we are to go over there at 10:15 for
15 minutes, and explain it to him in person,
and I asked you to come because I didn't know
whether Bob Jackson had had a chance to
familiarize himself with it or not, but I
knew you had because, after all, you are
Acting Attorney General and 80 the Admiral
was just explaining how he handled this
thing yesterday, the Navy thing.
Stark:
I might add to that - do you want me to
repeat what I said?
H.M.Jr:
I think if you would, please.
Stark:
Well, briefly, we gave our press section a
statement on which to answer questions, not
to release anything but on which they could
base their replies, which WAB to the effect
that we had recently - a number of our
reserve pilots who flew these planes have
been called to Pensacola as instructors.
Therefore, the planes were in excess for
5
- 4 -
the time being, and we don't need them.
The statement also said that we were making
a deal with the Curtiss Company to turn them
in to them, and that they in turn would give
us planes without edditional cost, but which
would be armored and have leak-proof gasoline
tanks. Now, another question that comes up
in that connection, Mr. Morgenthau, of
course, 1s the guns. I haven't had a report -
and the bombs. Now, the bomb situation, we
can hang our hat on this if they were able
to consummate it. I don't - if this goes
on the record it ought to be kept pretty
quiet.
H.M.Jr:
Well, there is only one copy, and that goes
to my safe.
Stark:
I just wanted to make sure.
H.M.Jr:
There 1s only one copy of this made, but I -
it 1s impossible for me - do you object?
Stark:
No, I don't object, but it ought to be kept -
one copy in the safe?
H.M.Jr:
There is only one copy and that is in my
safe.
Stark:
The bombs when I was in the Bureau of Ordnance
had a very light case. We made actual
experiments of dropping from different
heights on different thicknesses of metal,
and we decided we wanted a heavier case,
what I call jokingly B light heavy weight,
as a matter of fact, practically the weight
the Army was using. The percentage of TNT
was left in it, and the thickness of the
bomb was greater, BO if we could turn those
bombs in and get the heavier bomb case
again, we were on solid ground. That WAB
the 500 pound bomb.
The thousand pound bomb, I don't know just
what happened. Now, similarly with the
guns, what I asked the Bureau to be sure
that we were on technical grounds, legal
grounds, that if Colt could supply the
guns for these ships direct from orders
6
- 5 -
they had, it would be far better. Our guns,
as you know, have got "U. Navy" stamped all
over them. At the last analysis, we would
file off what we could and what we couldn't
we just couldn't let them have, because they
might fall in the hands of somebody else.
Admiral Furlong can bring you up to date
on what Ordnance did for equipment.
Foley:
May I ask a question? When were the bombs
and the mortars procured?
Stark:
I think Admiral Furlong had better give you
that.
Foley:
Did you have them on July 11, 1919?
Furlong:
Oh no, issued more recently.
Foley:
Well, I don't think we can do very much
with anything other than the airplanes.
H.M.Jr:
Well, they didn't have the airplanes in
July.
Foley:
I know, but the statute is different,
Mr. Secretary, insofar AS the airplanes
are concerned.
Marshall:
We can trade them in.
Foley:
We can trade in our airplanes just the same
as you can turn in the Buick down here on
another Buick. You can turn in the airplanes,
but insofar as the ordnance is concerned,
guns and ammunition - not powder, but bombs,
guns, I think we have to have them in the
possession of the United States on the 11th
of July, 1919.
H.M.Jr:
All right. Now, that is your legal thing
and you are working for me. Now, tell me
how we can do it. There 1s no use letting
them have 50 airplanes and not have any
bombs. Jacquin was there last night, and
he wants enough bombs to last him for 15
days. He sald he spent all afternoon with
you and there 1s no use loading this stuff
up unless they have got enough to last them
7
- 6 -
for 15 days. He wants 750 bombs. Is that
what he asked for?
Furlong:
That is the figure he gave me.
H.M.Jr:
And there is no use letting them have the
planes. You might as well, say, take out
the spark plugs and throw them away.
Stark:
I suggest Admiral Furlong --
Foley:
If General Marshall's legislation goes
through --
H.M.Jr:
You can't wait for that. Now, you fellows
are smart enough.
Foley:
Well, we can't write the statute, Mr.
Secretary.
H.M.Jr:
No, but you can find some way.
Marshall:
The weapon part is the - the guns and things
in the plane are in this doubtful situation,
but it seems to me you people might be able
to give a decision that we - you equip the
plane. Now, it becomes an integral organic
part of the plane.
Foley:
That 18 all right, but how about these --
Stark:
That 1s why Furlong --
Foley:
How about the bombs?
H.M.Jr:
Well, freeze it in.
Marshall:
I will turn that over to you.
Stark:
Admiral Furlong has wrestled with this
thing late into the hours of night before
last. Why not let him tell you what he has
done?
H.M.Jr:
Have you got an answer, Admiral?
Furlong:
Only --
H.M.Jr:
Rivet the damn bombs on.
8
- 7 -
Furlong:
Bo far as the guns are concerned, we have
been in touch with Colt and Colt - our planes
have flown there with the idea that every-
thing we could get into them was the plane
and WAB part of the equipment of the plane,
just as General Marshall says. That is the
basis we have been working on, 80 before
they sailed from their various stations
around here, we told them to load up with
everything they could possibly put in in 8.
military way of guns, bomb racks, sights,
bomb sights for these dive bombers, and
there are numerous small items and army wires
and a lot of things I won't mention. Well,
then we sent a man up there to be there
before the planes arrived with instructions
that he would rub out in the shops all the
"U.S.N's", take the name plates off. Also,
we have got in touch with Colt yesterday
and Colt will replace those guns of ours
by guns of his 80 that we won't actually
transfer --
Stark:
That will leave us clear on the guns.
Furlong:
We won't actually transfer guns that are
in Navy possession, but we will release from
Colt guns that he was going to give to us
later and he will put them in. Unfortunately,
these gune also have U.S.N. and an anchor on
them, but those will be ground out.
H.M.Jr:
They can use a cold-chisel, can't they?
Furlong:
Colt will grind them out.
Foley:
Those are guns the title to which has never
passed to the United States.
Furlong:
Yes, BO that lets us out on the guns.
H.M.Jr:
But you actually don't change the guns, you
take one out and out back another? I won't
ask you that.
Stark:
I hope they are making a bonafide change.
Furlong:
They will do it.
9
- 8 -
Stark:
I want them to make a change.
Furlong:
They are going to do it.
Stark:
I am on the firing line on the Hill on this
thing, you know.
H.M.Jr:
The President 1s going to explain it this
morning. He wants to tell the whole story.
Stark:
That doesn't make any difference.
H.M.Jr:
He says, "I want to tell the whole thing,
I want all the facts."
Furlong:
That 1s the guns. Then the question of
ammunition came up, and we didn't know what
to do about that and didn't see how we could
handle it, 60 finally the Frenchmen them-
selves said, "Well, never mind the ammunition,
we have got enough ammunition. We will do our
own ammunition."
Marshall:
May I interrupt there? Of that calibre?
Furlong:
So they said.
Stark:
They have large orders on hand.
H.M.Jr:
This was Jacquin said that.
Towers:
Jacquin said that in my press conference
yesterday.
H.M.Jr:
He knows his business. If he said it, it
1s okay. You have confidence in Jacquin,
haven't you?
Towers:
Oh, yes.
H.M.Jr:
He knows his business, doesn't he?
Towers:
Absolutely.
Furlong:
Then we came up against the proposition of
the bombs and the Curtiss man himself after
the conferences yesterday didn't want any-
thing to do with the bombs and didn't want
10
- 9 -
to take them, and we have those - we have half
the number of bombs that they want. They are
obsolete bombs at Yorktown, and before I was
called here I told my assistant to get in
touch with the Curtiss man and bring him
over to my office, and I WAB going to show
him how he might get release on the bombs.
What he WR8 afraid of WAB, he didn't know
whether the State Department would give him
an export license and all that sort of thing
for munitions, so I Was going to smooth that
way for him all right with the State Depart-
ment and - because I felt they would give it
quickly if I wanted them to.
H.M.Jr:
Sure.
Furlong:
And - but I still have to pursuade that chap
to take custody of any bomba that we would --
H.M.Jr:
Who 18 the fellow?
Furlong:
It is the Curties lawyer. I forget his name.
The Curtiss lawyer is in town, anyhow, working
on it, and I will have him over there.
H.M.Jr:
If you get hold of Guy Vaughan, he will tell
them to do it.
Stark:
You Bee, we can't turn these bombs back to
the manufacturer, 1s the enag I ran into.
They are Government manufactured, aren't they?
Furlong:
They are Government loaded.
Stark:
Those pieces are made in the Philadelphia yard.
Towers:
No.
Furlong:
No, these are cases made outside, but they are
Government loaded and the only thing you can
do 1s, they would have to be sold as part of
the equipment of the plane and you would have
to convince Curtiss to take them. He says he
doesn't want anything to do with them. So
what I want him to do is to take custody of
them at Yorktown and ship them however he
wants to to Halifax or wherever he wants to.
Regraded Unclassified
11
- 10 -
H.M.Jr:
He said at the house last night he would be
glad to take them up to New York if necessary.
They had better decide that themselves, the
bombs, I mean.
Furlong:
Yes. Now, there is one --
H.M.Jr:
Don't take that as final.
Furlong:
No. We have got some more work to do on
these bombs. There are some details of
fuses that have to be worked out that our
people are working out to see whether or
not - you see, Naval fuses are made and
designed to work against pieroing decks
and going through metal first before they
go off, which 1s not the thing the French
want, naturally, or anybody else wants.
H.M.Jr:
Wouldn't that be true if they were hitting
a tank?
Furlong:
Well, but they, I have an idea, in land war
have always wanted an instantaneous fuse.
H.M.Jr:
I said, "What are you going to use these for?"
and Jacquin said they were going to use them
against tanks.
Marshall:
Yes, but you see it 1s pretty hard to hit a
tank and if you hit near a tank you want it
to explode before it buries itself. Some of
them have a fuse that drops ahead of the
projectile 80 it is about that high (indicating)
when it hits, 80 the thing explodes before
it hits the ground.
Furlong:
What may have to be made - which could be
made within maybe a few days - an adaptor
for an Army instentaneous fuse, and we may
have to get some from the Army to put in
the bombs.
H.M.Jr:
I see.
Marshall:
Now, doesn't the law that we have as to
ammunition turn-in, can't that be applied
to bombs? That is ammunition. We are
12
- 11 -
turning in a hundred million rounds and more
of the cartridges to get back something else.
Part of those have been loaded in Government
plants. That 1s a perfectly legitimate peace
time operation, provided they have some buyer
for the ammunition. Now they have the buyer.
A bomb 1s ammunition.
Foley:
Well, if a bomb 18 ammunition --
Marshall:
Well, there would be no question about that
in the world. The bomb 1s ammunition. One
piece of ammunition goee up, and another
piece goes down, that 1s the difference.
Biddle:
This fellow has been kind of educating us
in the last week, hasn't he?
Marshall:
How was that? That 16 the only piece of
law we have got.
H.M.Jr:
He 18 paying you a compliment; left handed,
but it 1s a compliment.
Furlong:
I tried to give these bombs yesterday to
General Wesson.
H.M.Jr:
I haven't seen the Solicitor General go like
this (nodding head) yet. Are we going too
fast?
Biddle:
I will have to look at it, and I think we
can work something out.
H.M.Jr:
Comeon, boys, we are moving fast, you know.
These bombers are on top of the ground. You
don't want to wait until they get buried
in the lawyers.
Foley:
I think we can get over the hump on the
airplanes, perhaps the bombs and the powder
and the ammunition, but if they didn't have
the guns on the 11th of July in the absence
of General Marshall's statute which he is
pushing on the H1ll, I don't know whether
we can get them --
Furlong:
I have got the guns fixed up.
13
- 12 -
H.M.Jr:
He has got the guns fixed up.
Stark:
The bombs are somewhat of a stumbling block.
I am not clear on it yet.
Biddle:
Have you got a copy of our opinion?
Foley:
Yes.
Biddle:
Can I see it?
Foley:
Sure. I don't have it with me, but I will
get it. If we have got to prepare a state-
ment, we had better get started.
H.M.Jr:
Yes, because we have to be over there at
10:15 with a statement to the President.
Biddle:
Hadn't we better start?
H.M.Jr:
I think 80.
Towers:
Mr. Morgenthau, I would like to anticipate
one question and provide an answer. After
they hear the first statement, they will
probably say, "Well, why did you do this
in such a rush?" Once the decision was made
to turn these planes in for replacement, we
decided to make an exercise, a surprise
exercise out of this for the reserves. They
were on inactive duty, most of these reserves.
The dispatch didn't go out until after mid-
night. What we wanted to see was how
rapidly these reserves could concentrate.
H.M.Jr:
You fellows are marvelous. And they say it
without smiling. They don't even smile when
they say it.
Marshall:
Isn't this a possible answer? The only way
you can carry out - really protect the
Government's interests in a direct financial
way in conformity with the statute 1s that
there be a buyer for the obsolete material.
Now, the terms of the buyer are, he will do
this thing if he gets it immediately. He
isn't interested in it if it 1s two weeks
later.
Regraded Unclassified
14
- 13 -
Towers:
That 1s also a good answer.
Marshall:
He buys this old stuff.
Towers:
He wants quantity or not at all.
Marshall:
If we make quantity, he will take it, and we
get something good back. If we don't meet
the quantity and the time, he 1s not interested.
That 18 really the whole business.
Stark:
I still think the bomb situation 1s bad.
H.M.Jr:
Do you people, Mr. Foley and Mr. Biddle, want
to go back to Mr. Foley's office?
Biddle:
I think we had better draw this statement first
of all.
H.M.Jr:
Yes, and then after it 18 dictated, will you
come back?
Biddle:
Do you want us to dictate it?
H.M.Jr:
Yes.
Biddle:
Give me a little bit of the angle.
Foley:
I think, Francis, all we can do is to put
down --
H.M.Jr:
Why don't you dictate it here? Who do you
want to have?
Biddle:
Get a copy of the opinion.
Foley:
I will have to get this off.
H.M.Jr:
These gentlemen and I have got to stand by
the President. So has Mr. Biddle. We are
going to be at his press conference.
Marshall:
You have a law which covers the plane trans-
action. There is a turn-in law, a trade-in
law that is in existence. There 18 no law
which definitely covers the arms transaction
in which we are involved and which he recently
gave the actual numbers of. Now, it seems to
Regraded Unclassified
15
- 14 -
me a very important decision we have got to
make here now is, do we come out and definitely
state that there is to be proposed an amendment
up on the Hill to permit us to trade in this
rather than to merely declare it surplus and
take something in the Treasury for which the
national defense receives no benefit? That is
an issue that 1s up right there. We are hopeful
that all this procedure on the Army side that
we get something back for the national defense.
H.M.Jr:
Well, let me be frank with you, see. I am
quite sure that the President will decide
with me that if the whole decision rests on
whether the Army got this money or the Treasury,
I mean - if it meant that that decision, if it
was a question of the money coming back to the
Treasury and holding up giving this material
at this time to the Allies, I think he would
say, "Go ahead and give it to them."
Marshall:
He has already decided that. I am talking
about what he says.
H.M.Jr:
But I mean - now, I have just got to go back
a minute and come back to the questions here.
As I understand it, you have got the U. S. Steel
Corporation. General Watson called me last
night and the President told me they have
agreed to buy fifty million dollars worth of
this material. Is that right?
Marshall:
Something like that. They are going to handle
it for us though.
H.M.Jr:
They are going to handle it. So haven't you
crossed that bridge?
Marshall:
No, sir, I haven't made myself plain. We have
crossed it in that we can go ahead with the
President's instructions on the basis of
surplus. He has skated on thin ice in coming
up to the surplus business. How thin it is
will be determined by the Congressional pressure
and what they would accept. That 18 not the
issue in this plane thing. There 18 a definite
profit in that, to the advantage of the Navy.
They turn in something old and get back some-
thing new. If this thing goes into surplus,
Regraded Unclassified
16
- 15 -
there 18 nothing back to the national
defense. It could be used as any argu-
ment. It 1s purely the sale of the thing
that gets on the hairline of whether it
1s surplus or not. You are all right on
the ammunition part because there under the
law we derive a definite benefit. You are
on solid ground there, that any time there
is a buyer for deteriorating ammunition,
it 18 to our advantage to take it up, re-
gardless of Allied crises, but when it
comes to the weapon thing, we are starting
up, we will say, to the hairline of whether
the thing 1e surplus or not.
Take these cannon. They will Bay, "Well,
can you BAY specifically that there 16 no
use ever been planned for those guns?" I
cannot say that because we were going to
use it for a definite purpose. For all the
training of those people behind, we were
going to use those guns. Training 1s a
very important factor. So we have got to
determine very definitely what we say about
the sale of the surplus, whether we come
right out and say we hope to make this a
trade, but legally we can't do it under the
Act. Do we mention the fact that we are
trying to or do we say that this thing ie
still in a fluid state as to the basis for
the transaction?
H.M.Jr;
I think --
Biddle:
What have you got --
H.M.Jr:
Mr. Biddle ought to answer this.
Biddle:
If that goes through and you can do it for
trade, it is the same basis AS the powder.
Marshall:
We get a very definite return.
Biddle:
Have you got contracts out for most of this
stuff, for rifles and BO on?
Marshall:
We haven't accomplished any contracts at All
except they are going to it on the ammunition
but on the other one, they have got two bases.
17
- 16 -
They have agreed on the price if it has to
go in 8.8 surplus with Just a plain sale with
the money reverting to the Treasury.
Biddle:
I know that, but I meant, General Marshall,
have you got the contracts now for modern
machine guns and other kinds of material that
would be used, if you didn't have this surplus.
Marshall:
We have contracts for semi-automatic rifles
and new machine guns that are coming in, and
no 75 millimeter cannons, but for 105 mill1-
meter, which 1s better.
Furlong:
You are both talking about something that
has nothing to do with planes. This ammunition
18 going in the planes.
Biddle:
We are not talking about that.
H.M.Jr:
Let me clear a little bit. What the President
said was, he wanted to explain this thing
which was in the papers yesterday. I think
he put it, there 1s a leak somewhere in the
War Department and this story that Kluckhohn
wrote saying something about the 75 guns and
BO forth and he said as long as he has got
part of the list, he said, "I want to tell
the whole story." He didn't say anything
about the Navy planes, but I imagine there
would be a question on that, too, but he said,
"I want to tell the whole story as long as
part of the story appeared in the New York
Times yesterday." He said he wants you
gentlemen to give him & statement and then
he said, "If I am asked any questions I can't
answer, I am going to turn to you for help."
Biddle:
My impression of the way to do the job would
be to start out by saying since 1919, which
impresses the fact with this law, the War
Department has had on hand --
H.M.Jr:
Excuse me. Do you want this young lady?
Come up here and sit here, please.
Biddle:
Excuse me, I wasn't dictating.
H.M.Jr:
You might as well take this, or don't you want
her to take it yet?
Regraded Unclassified
18
- 17 -
Biddle:
No, I thought I would just beat it out. We
had all that material which was war stock
left over from the last war. In other words,
impress that this 18 left over stock. The
Secretary has had the authority, and from
time to time in the normal course of events
has exercised it, of selling & great deal of
this material, this surplus. Therefore,
knowing the needs of the Allies, I, the
President, I directed the Secretary of War
to increase the surplus and accordingly this
18 the form it took.
H.M.Jr:
That is forthright. If I were the President,
that 16 what I would say. It 16 a forthright
statement.
Biddle:
Does that sound well?
Marshall:
Yes, sir. I think I would modify that a
little bit by saying that he directed the
Secretary of War to survey very carefully
his materiel and see what portion of it could
be declared surplus that would in no way
interfere with our program.
Stark:
Wouldn't you say that I, knowing the needs
of the Allies, did this, knowing that there
was a need for our own Army to benefit?
Marshal 1:
The trouble 18 that the Army doesn't benefit
the way it stands. Here 1s an idea. We
can greatly profit by better ammunition, but
we don't want the ammunition unless they have
got the guns. Now, there 1a an argument.
We have 8 legal basis for turning in this
ammunition and getting back better ammunition,
but they don't want that ammunition unless
they have the guns to shoot it in. I believe
we have got it there, because that 1s & fact.
H.M.Jr:
Do you mind, General, repeating that?
Biddle:
I am very sorry.
Marshall:
I have thought of one statement that could be
made where the national defense from the Army
viewpoint correctly benefits as the Navy does
on this plane turn-in. We have this deteriorated
ammunition, World War ammunition. The Allies
Regraded Unclassified
19
- 18 -
don't want it unless they have something in
which to use it. Their guns are of different
calibre, except the 75, 80 if we turn over
the old machine guns which we have no need
for up to beyond several million men with
better machine gune manufactured and these
British rifles which we have more than we
can forsee any possible use for up to four
million men, the Allies having those, then
will take our deteriorated ammunition. Now,
that is the only way that I can gee that we
can say that we are profiting if there 1a a
plane surplus sale, because we don't profit
if it goes into the Treasury.
H.M.Jr:
In other words, they need a pair of - they
need the coat but they don't want the coat
unless they get & pair of pants.
Marshall:
That 1s right. In other words, we need the
coat but they won't take it without the pants.
They can't use the coat without the pants.
H.M.Jr:
They want two pairs of pants.
Biddle:
Do you want me to dictate this?
H.M.Jr:
Very much, because we are fighting time.
Biddle:
All right. Ever since the Great War, the
War Department has had on hand very - will
you stop and correct me, General Marshall?
Foley:
The Navy, too, Francis.
Biddle:
Yes.
Foley:
The U. S. Government.
Biddle:
The Army and Navy have had on hand very large
supplies - I think we can say that - of
ordnance material. Could we say most of
which is now old fashioned and not - how
would you describe it? I am trying to
minimize its value.
Marshall:
Which is gradually --
20
- 19 -
Biddle:
Gradually deteriorating and which has been
gradually deteriorating. Particularly the
ammunition. I thought I would describe the
ammunition a little later. Having in mind
the sale of this material, the Congress of
the United States shortly after the war, in
July of 1919, passed an act which gave the
Secretary of War the power to sell these
supplies as surplus. Ever since then, from
time to time, the Secretary has been
declaring portions of this - these supplies
to be surplus and has been selling them.
Foley:
Just before that sentence, don't you think we
ought to get in there the interchange between
the Army and the Navy, which was in the same
statute?
Biddle:
Well, was any interchange done in this
instance? You see, I don't know about the
airplanes.
Foley:
No, insofar as airplanes are concerned, there
won't be any, but there are a number of guns
that I understand the Navy had, some Lewis
machine guns --
Stark:
Our situation is that we couldn't do this
because the law applied only to the Army, but
we can transfer --
Foley:
The same statute authorizes the transfer.
Biddle:
The same statute authorizes an interchange of
surplus --
Foley:
Military stores, supplies, and equipment of
every character.
Biddle:
Of supplies and equipment of every character
between the Army and Navy.
Foley:
That is right.
Biddle:
Now, this is the way I have got it. I don't
know if this is the way you think it ought
to be put. Let's have a paragraph here.
21
- 20 -
Realizing the desperate needs of France and
England in the present situation, I accordingly
directed the Chief of Staff of the Army to
sell to individual buyers --
H.M.Jr:
May I interrupt you a minute? Does the
President want to say the desperate situation
of the Allies?
Biddle:
I don't know.
Towers:
No.
Stark:
Even if he did want to say it, I question the
advisability of the President of the United
States, who has made a law of neutrality, to
come out and deliberately --
Biddle:
I thought you would paint that..
Foley:
Let's put it on the basis that it is good
business to get rid of this old stuff and
get new stuff to take its place.
H.M.Jr:
Cross that stuff out.
Biddle:
Then you don't want to say anything about the
war?
Foley:
We can say that the --
H.M.Jr:
I don't want to recommend that he say that.
Biddle:
No.
H.M.Jr:
No.
Biddle:
I misunderstood the nature of the statement.
Stark:
I would recommend distinctly that he didn't
say that.
Biddle:
Then not mention the war at all?
Stark:
We have an opportunity now to benefit. We
are doing this for national defense in our
own interests.
Biddle:
Well, I didn't know, I thought that --
Regraded Unclassified
22
- 21 -
Stark:
Let them draw the inference they will, but
let's not go on record.
H.M.Jr:
You are right.
Biddle:
Then it would have no - he wouldn't come into
the picture, would he? Would he just say the
Secretary of War has --
H.M.Jr:
What 1s your last sentence?
(The stenographer repeated the last sentence.)
Stark:
My thought would be that they called me up
last night after they had gotten this information
and I said I distinctly understood that we are
not dealing with the Allies. We have an op-
portunity to benefit, and we are just carrying
it on in somewhat of a larger scale than we
have before.
Biddle:
That 1s what I had in mind. How would it do
to say, owing to the present opportunity of
being able to sell large amounts of this surplus
material at this time, the Secretary of War
took the benefit of the present market and
disposed of - do you want to give the 1tems?
H.M.Jr:
He said he wanted the list.
Biddle:
Yes.
H.M.Jr:
I wouldn't type them. I would just put -
you could just sort of paste them on, that
list. You haven't got time to type them.
Biddle:
No, no. And disposed of the list of items
attached.
Marshall:
I don't think we ought to say the Secretary
of War took advantage of this market. I
think we ought to do it in a different way.
The present tragic situation has provided
B. market for this material.
H.M.Jr:
The present what, General?
Marshall:
The present tragic situation - maybe you
don't want to say tragic situation, but
Regraded Unclassified
23
- 22 -
the present tragic situation has provided a
market for this material.
H.M.Jr:
I wouldn't use that.
Stark:
The world market, South America and everywhere
else. It might be brought up --
H.M.Jr:
Why not that the present world-wide demand --
Biddle:
Well now --
Marshall:
What he has got to watch there 1s the South
Americans tried to buy a part of this thing
and he wouldn't sell it to them.
Biddle:
What have you got now?
Marshall:
These fellows check and double check on
everything you say.
Biddle:
What have you got now?
(The stenographer read from her notes.)
Biddle:
We can't say very much more.
Foley:
Well, we can point out the manner in which
the sale --
Biddle:
Oh yes, but I meant --
Marshall:
I don't think that that part - I don't like
that language.
Biddle:
Cross it out.
H.M.Jr:
May I say this? The President isn't going
to give out any formal statement. He 1s
going to read this and soak it up and then
he is going to do it in his own language.
He distinctly said he didn't like a formal
statement.
Marshall:
The present situation has developed a demand
for this deteriorated material.
Biddle:
That is it.
Marshall:
The sale of which would not have been possible
Regraded Unclassified
24
- 23 -
a short time ago. It now has an immediate
value.
Biddle:
That 1s fine.
H.M.Jr:
Yes.
Biddle:
Now, we haven't mentioned powder yet.
Marshall:
I know the technical end of that.
Foley:
The law says that the Secretary of War is
hereby authorized to exchange deteriorated
and unserviceable ammunition or components
thereof for immediate use. That 1s June,
1926.
H.M.Jr:
Excuse me - that he ought to have. I mean,
I think the President would like to have
this book right on his desk.
Biddle:
And copy of the opinion.
Marshall:
May I try that little paragraph? In June,
1928, an Act of Congress provided that the
Secretary of War could turn in - does he
use the word deteriorated?
Foley:
Deteriorated and unserviceable ammunition.
Marshall:
Deteriorated and unserviceable ammunition in
return for --
Foley:
Ammunition in condition for immediate use.
Marshall:
Well, I don't want to get the immediate use
in there. In return for new ammunition.
Biddle:
That is it.
Marshall:
This has been done wherever there was a buyer
to absorb the old ammunition. There 18 a
demand for the deteriorated ammunition at
the present time, and it 1s to the advantage
of the Army to secure the better ammunition
to replace the deteriorated, which can no
longer - which cen for but a brief time be
continued in stock with safety. That is an
accurate statement.
Biddle:
That is very good.
Regraded Unclassified
25
- 24 -
Foley:
Which but for a brief time could be continued
in stock with safety.
Biddle:
Are you going to say anything about planes
here?
Foley:
Yes. We can Bay under the statute of July,
1918, airplanes, engines, and parts thereof
may be traded in just as an individual trades
in an automobile for a new model.
Stark:
Does that refer only to engines?
Foley:
That refers to motor-propelled vehicles,
airplanes, engines, parts thereof, balloons,
and appurtenances.
Marshall:
Hadn't we better leave out the biggest part
of it and just specify airplanes?
Biddle:
Yes.
Marshall:
Because the engines means the spare engines,
you see. We are talking about the airplanes
in & complete unit.
Foley:
Under a statute of July, 1918, the Secretary
of War may trade in airplanes just as an
individual may trade in his automobile for
a new model.
H.M.Jr:
May I stop this? I think you had better get
out and start typing this. The appointment
with the President is 10:15.
(The stenographer was replaced with another.)
Foley:
It is obvious that such a procedure is ad-
vantageous to the Government when buyers are
readily available. The progress of aviation
makes it necessary for the United States
constantly to replenish by trade-ins of the
airplanes it owns.
Stark:
Normally, we don't trade them in, we wear
them out.
Foley:
Well, I wanted to get in there the thought
that just as soon as one model 1s in production,
26
- 25 -
it becomes obsolete because another model,
better, more modern, more up to date --
Marshall:
But I think the thing you want to get crystal
clear there 1s this: It 1s to the advantage
of the Government to make a trade-in if there
18 a buyer. Today there 1s a buyer. That is
the whole thing.
Biddle:
I think I would drop that last.
Foley:
All right, drop that last sentence.
Towers:
That specific law, that law rather applies
specifically to the War Department.
Foley:
Well, what --
Towers:
As you read it --
Foley:
That is right. It applies to the Secretary
of War. Now, what does your contract provide?
Marshall:
A question that may come up as to these guns --
Foley:
Are you releasing planes before you take
title to them?
Towers:
No.
Marshall:
Any reference to the fact that we are trying
to secure legislation to permit us to do the
same thing with material as we do with --
Towers:
It wasn't done that way. There is another
way of doing it. I would rather get my lawyers
on it as to the planes and explain it to Kraus.
Foley:
All right.
H.M.Jr:
Why don't we just --
Marshall:
Senator Sheppard brought in the bill and then
incidentally they started the amendments for
their divisions, 80 we have never gotten any
amendments --
H.M.Jr:
I think it would help if the President says
80.
Regraded Unclassified
27
- 26 -
Marshall:
Beg pardon?
H.M.Jr:
I think it would help --
Stark:
What is that?
H.M.Jr:
If he says that he hopes to get this amendment
and then, of course, they might say, "Well,
then, why 18 he doing this waiting?"
Biddle:
Let's take it down and let the President use
it in his own discussion.
Marshall:
What I felt was that --
H.M.Jr:
Let's put it down on paper and he can use his
own judgment. I would put it on paper. Is
that all you have got?
Foley:
Yes, 80 far.
Stark:
The President, reading that last paragraph,
will draw the natural - he will conclude that
we are turning these planes in in accordance
with this law and in this particular instance
we are not - Jack, I think you had better
dictate some of this.
Towers:
I would like to try and get Captain Kraus.
He 1s right here in this building.
H.M.Jr:
I will get him.
Marshall:
This 18 a note regarding the sale of weapons
as surplus, the money to revert to the Treasury
and the possibility of amending the law to
permit trade-in as it now applies to airplanes
and ammunition. Here is the statement.
"An amendment will be proposed to the present
authorization bill now being debated in the
Senate, which would permit the same procedure
to be followed in the case of deteriorated
materiel, meaning guns and other equipment
of that character, that 1s now authorized by
law for ammunition. If such amendment was
enacted in law, then the Army would be in
the position of applying its own equipment
to such trade-ins for the purpose of obtaining
28
- 27 -
more modern equipment without further charge
against the Treasury."
H.M.Jr:
General Marshall, do you mind giving that
last sentence over? I don't think the young
lady got it.
Marshall:
Will you read it back?
(The stenographer read back her notes.)
Marshall:
In a position to turn in its old equipment
in the same manner that planes and ammunition
can now be traded in toward accumulation of
more modern equipment without a charge against
the appropriations.
H.M.Jr:
Have you got it all right? Don't say you have
it if you haven't.
(The stenographer read back from her notes.)
Furlong:
It says subject to the approval of the
Secretary of War these airplanes may not
be exchanged --
Foley:
That 1s what I am trying to find, the power
that enables you to go directly to conference.
Biddle;
Did you want to add anything to that, Ed?
Foley:
No, I don't think BO.
Biddle:
How about sirplanes, have you said anything
about airplanes?
Foley:
Yes, that was in the last part.
H.K.Jr:
Well, when the President 18 going to be asked
about the fifty airplanes for the Navy, here
18 the Navy release. Take a look at that and
see if that 18 adequate.
Biddle:
"In accordance with an agreement with the
Curtiss Airplane Company of Buffalo, fifty
airolanes from various Naval Aviation Reserve
Squadrons are being returned to that company
for replacement with planes of a superior type,
equipped with leak-proof tanks, and armor.
These eirplanes are temporarily in excess of
Regraded Unclassified
29
- 28 -
requirements, due to the fact that many of the
Reserve aviators normally attached to the
Reserve Squadrons have been ordered to Pensacola
as instructors on account of the large expansion
of training at that place. It 1e expected that
the remainder of these planes at Reserve Bases
will be similarly turned in as replacements
are received.
"Ever since the great war, the Army and Navy
have had on hand very large supplies of
ordnance material which 1s now old fashioned
and which has been gradually deteriorating.
Having in mind the sale of this material, the
Congress of the United States, shortly after
the war in July of 1919, passed an act which
gave the Secretary of War the power to sell
these supplies as surplus. Ever since, from
time to time, the Secretary of War has been
declaring portions of these supplies to be
surplus and has been selling them. The same
statute authorizes an interchange of supplies
and equipment of every character between the
Army and the Navy.
"The world situation has developed a demand for
this deteriorated material, the sale of which
would not have been possible a short time ago,
but it now has an immediate value.
"In June, 1926, an Act of Congress provided
that the Secretary of War could turn in
deteriorated and unserviceable ammunition in
return for new ammunition. This has been
done wherever there was a buyer to absorb
the old ammunition. There 18 a demand for
this deteriorated ammunition at the present
time, and it is to the advantage of this
Government to turn in this ammunition which
can, for only a brief period of time, be
continued in stock with safety.
"Under the statute of July, 1918, the Secretary
of War may trade in airplanes just as an
individual may trade in his automobile for a
new model.
"An amendment will be proposed to the present
30
- 29 -
authorization bill now being debated in the
Senate which would permit the same procedure
to be followed in the case of deteriorated
material, meaning guns and other equipment
of that character, that 1s now authorized by
law for ammunition. If such amendment was
enacted in law, then the Army would be in
the position of applying its old equipment
to such trade-ins for the purpose of obtaining
more modern equipment without further charge
against the Treasury.
Stark:
I think he has about 40 more, and if he has,
we will take advantage of that.
Biddle:
I thought there were 148. Are these the
Swedish planes?
Stark:
No, this is another bunch.
H.M.Jr:
I will let my Swedish friend, Sumner Welles,
handle that. General Marshall and I are
together on that. I will tell you about
that. He and I see eye to eye.
Furlong:
The Minister of Sweden has been after me for
some stuff.
H.M.Jr:
Yes. Well --
Foley:
Well, I think --
H.M.Jr:
If you have got any stuff, we know where to
sell it.
Foley:
We don't want to make this too complicated
for the President.
H.M.Jr:
That takes care of the Navy thing beautifully,
doesn't it?
Biddle:
Yes.
Foley:
I was looking for the basic power to do that.
Admiral Towers says he has got it. I don't
know where. I can work it out for him by
changing with the Army and then have the Army
do it under their statute, but I don't know
where the Navy statute is to dispose of
31
- 30 -
airplanes, and we haven't found it. He says
there 1s such a statute, and Captain Kraus
knows about it and he 18 going to find out.
Biddle:
Well, I think the President can say we under-
stand.
Foley:
The power 18 there and can be worked out, but
whether that specific authority to do what you
are doing there directly with the contract -
whether it is in the contract or 18 in the
statutes, I don't know.
Furlong:
Maybe the statutes are not necessary.
Stark:
Well, it seems such A feasible thing --
Foley:
He says maybe they do it without a statute.
Stark:
I don't see why we shouldn't --
Furlong:
Contractual --
Stark:
I never thought of any statute. It is Just
an advantageous thing. Why not go ahead
with it? There 18 nothing to prohibit us,
Bo far as I know.
Foley:
They have got the right idea, Francis.
Stark:
I do think, Mr. Morgenthau, you know the
way we talked about getting these planes
ready to go next day after we left your
office. I said let's see what the Navy
could do with this proposition. Those
orders were gotten out by one o'clock and
the planes were all there that day.
H.M.Jr:
Marvelous.
Stark:
It was kind of a nice job that Aviation did
on it.
Biddle:
Beautiful. Are they actually on the way?
Stark:
Those planes?
Biddle:
Yes.
Regraded Unclassified
32
- 31 -
Stark:
They were scattered all over the country.
Biddle:
But they are being concentrated?
Stark:
On reserve bnses.
Biddle:
To make port now?
Stark:
They will be delivered in Buffalo and the
State Depar tment will help us get them
across the line. That 18 the Curties
Company's job, as far P.B we are concerned.
E.M.Jr:
Well, Towers 16 looking for his lawyer.
Stark:
But 1sn't that a reasonable assumption, if
there 1s nothing to prevent us from doing
that, is there any reason why the Navy can't
make 8. contract of this sort? I never thought
of the statute myself.
Young:
You can't expect to get an answer to that sort
of a question.
Stark:
The only thing worrying me has been the bombs,
and if the ermy would take a certain amount of
material --
Furlong:
We will have to work with General Marshall to
take those boubs, so it will operate under
this law Mr. Foley read.
Young:
Is Wesson backing out on it?
Furlong:
Yesterday when we took it up, he said he
would have to declare them surplus and Maybe
he could use them.
Young:
What good to the Army is a Navy bomb? They
can't use it.
Stark:
We are working now so that our --
H.M.Jr:
Are the others coming? We have got to go
in five minutes.
Foley:
Yes, this 1s the only power you have got.
If they are worn out, you can change them.
But as I understand it, you take them to
Regraded Unclassified
33
- 32 -
the manufacturer and you ask the manufacturer
to rehabilitate them or modify them.
H.M.Jr:
All right. While there 1s a lull and you are
all in such good humor --
Marshall:
I don't know. I just took a crack at the whole
thing.
H.M.Jr:
Oh, you dictated something outside?
Marshall:
It won't be in turn, but I took a chance at
it.
H.M.Jr:
I say, while you are all in such a good humor
and 80 generous, what about these ninety-three
A-17-A's and the eighty-three A-17's?
Marshall:
They are being concentrated.
H.M.Jr:
Are you going through with it?
Marshall:
Yes. They are being concentrated in various
fields around here and they are going into
the question of the guns and calibre and
ammunition for them.
H.M.Jr:
You are starting with the ninety-three?
Marshall:
Starting with the ninety-three, because they
are the better plane and then this would be
the secondary procedure. These are the two
that we could do without.
Foley:
You can start without storage in safety.
H.M.Jr:
But you are giving orders. --
Foley:
Continue to stock with safety, instead of
storage.
Marshall:
What I propose 1s that --
Biddle:
Oh yes.
Foley:
Stock --
H.M.Jr:
What did you do, dictate over the telephone
to your office?
34
- 33 -
Marshall:
No, I got one of your girls.
H.M.Jr:
Now, where are we? Have you got a sheet? This
is No. 2.
Biddle:
That 1s July, 1919.
Foley:
The 1918 statute 1s the motor statute; 1919
is surplus material.
Biddle:
Oh yes, have you got a copy?
H.M.Jr:
No, I haven't. Is this page two? Here are
pages two and three.
(Mr. McKay entered the conference.)
H.M.Jr:
McKay, whoever General Marshall dictated
to, whenever the young lady is finished,
would you have a Secret Service man to stand
by to bring it immediately to General Marshall,
and if he 1s in the President's office, let
him bring it right to the President, but give
it to a Secret Service man.
McKay:
You will be over at the White House?
H.M.Jr:
He 1s going to the White House with me now,
and whoever the young lady is, see that it
gets to General Marshall even if he 18 in
with the President.
McKay:
We will get it there.
Regraded Unclassified
6/7/40
1:00 am
35
Proposed Release of the Havy Department Read
in Secretary's Office
7 June 1940
In accordance with an agreement with the Curties Aero-
plane Company of Buffalo, fifty airplanes from various Naval
Aviation Reserve Squadrone are being returned to that company
for replacement with planes of a superior type, equipped with
leak-proof tanks, and arsor. These airplanes are temporarily
in excess of requirements, due to the fact that many of the
Reserve aviators normally attached to the Reserve Squadrons
have been ordered to Pensacola as instructors on account of
the large expansion of training at that place. It is expected
that the remainder of these planes at Reserve Bases will be
similarly turned in as replacements are received.
Regraded Unclassified
36
Inc since the grost me, the Army and Maty have had as hand
very large supplies of entrance material which is - old fushived
and which has been gradually deteriorating. living is sind - mis
of this material, the Sengress of the United States, shertly after the
me in July of 1919, passed - net which gave the Secretary of Mar the
power to sell these supplies as surplus. - since, from time to time,
the Secretary of Bar has been declaring partiens of these supplies to
be surplus and has been selling them. the - statute authorises -
interchange of supplies and equipment of every character between the
Any and the Havy.
37 II
The world situation has developed a demand for this deberiorated
material the sale of which would not have be possible a short time age,
but 19 new has as impodiate value.
In June, 1986 to see of Congress provided that the Secretary
of For could turn in deteriorated and unserviscable agminition in return for
new ammunition. This has been done whenever there we 4 buyer to about
the old ammunition. There is a demand for this deterierated ammunition at
the present time, and 19 10 to the adventage of this Government to term in
this assumition which can, for only a brief period of time, be continued
stores
in storege with sofety.
Under the statustics July, 1910, the Secretary of Bar my trude
in airplanes just as as individual my trade in his automobile for a new
model.
38
An amendment will be proposed to the present authorization bill
now being debated in the Senate which would permit the same procedure
to be followed in the case of deteriorated materiel, meaning guns
and other equipment of that character, that is now authorized by law
for ammunition. If such amendment was enacted in law, then the Army
would be in the position of applying its old equipment to such trade-ins
for the purpose of obtaining more modern equipment without further
charge against the Treasury.
Regraded Unclassified
39
June 7, 1940
General Marshall wanted me to give
this to the President when we went
to see him at 10:14 this morning but
I didn't because I thought it would
only confuse him.
HM Jr.
40
Since 1919 the Army and Navy have had on hand
a tremendous supply of ordnance materiel which has
gradually deteriorated and become obsolete. In July
of 1919 the Congress passed an Act which gave to the
Secretary of War the authority to sell such of this
materiel which had become surplus to our respective
needs. From time to time such sales have been carried
out under the authority of this Act. The same Statute
permits an inter-change of supplies and equipment
between the Army and Navy.
Congress in 1918 passed an Act which authorized
airplanes to be turned in in the same manner old
automobiles are accepted by dealers as partial payments
on new equipment. There 18 also a law on the books
since 1926 which authorizes the Secretary of War to
trade in deteriorated ammunition against the procure-
ment of new ammunition.
of course in all such procedures there must be
a buyer for this old equipment or materiel in order to
enable the Government to secure any advantage from the
provisions of the law. Today this old equipment and
deteriorated ammunition is of immediate value to certain
countries and therefore there 18 a market, a buyer,
which will permit this Government to dispose of this
materiel.
Regraded Unclassified
41
- 2 -
A number of items of Army ordnance have recently
been sold to Brazil. Other South American countries
are in the market for similar materiel. The Allied
Purchasing Agent is desirous of obtaining as much
of this old materiel as is surplus to our requirements.
That is the situation in a nutshell.
Regraded Inclassified.
6-7-40
42
Dant has been reseived from the Angle-French Purchasing Beard
is New York indicating that that Board has reserved information tmails.
litted that certain quantities of var moterial
by the United States Government
equipment are about to be declared surplus/ and that this earplus is
being taken over by the United States manufacturers in exchange for 2070
up to-date supplies. The Augle-French Purchasing Deard 18 therefore
directly
negoticting/wish the assufacturers in question for the
purpose of getting this material for use by the Allied Covernments.
It hoped to complete the treasmation is the impliate furture to permit
the prompt shipment of this actorial at equipment.
The following are the main Items of optionals
(Omit from the statement any reference to detailed
amount of equipment being purchased)
Every offert is being más by the Purchasing
burd to offect imediate chiymest of the above myplies all of which
are in serviscable scadition.
6/7'40
This statement to be released by the Anglo-French Purchasing Board
(Mr. Purvis read to Mr. Foley - Miss Brady to McGuire for purpose of
transcription)
Mr. Foley told Miss Brady, Secretary to Mr. Purvis, that the statement was
okay with the suggestions typed hereon in blue type. Time: 1:18 p.m. June 7. 1940.
Regraded Unclassified
43
JUN 7" 1940
My dear - fleerstarys
Year letter of June 20 1940 relating to the drafts of
agreements persuant to which Wright Aeronautical Corporation
and United Aircraft Corporation would lieense the sumufacture
of circuaft engines is
the suggestion unde by you to the third paragraph of your
latter has been carried only - accordingly, 19 to w -
standing that the agreements are - in such from - to be
entinfactory to you
I - enclosing a revised draft of the agreement of the
Vrigin Acrosschical Corporation, together with 4 draft of a
letter from that corporation. a sindlar letter and agreement
both substantially in the - from will be submitted by
United Aircraft Corporation.
Your corporation in this nater to very - approciated.
I I
(hagned) H. Morganthau, Jr.
Secretary of the Treasury.
the Honorable
ORIGINAL FORWARDED TO ADDRESSEE
FROM OFFICE OF THE SECRETARY
The Secretary of the May
CEKst
By Messenger
6-5-10
Regraded Unclassified
44
AGREEMENT, made and entered into as of the
day of
I 19 , by and between UNITED
AIRCRAFT CORPORATION, a corporation organized and 03-
isting under the laws of the State of Delaware, with
offices at East Hartford, Commeticut, United States
of America (hereinafter referred to as "United"), party
of the first part, and
6. corporation organized and existing under the laws of
the
(hereinafter referred to
as the "Licensee"), party of the second part:
IN CONSIDERATION of the mutual covenants and
agreements of the parties hereto, each does agree with
the other as follows:
I. DEFINITIONS: The term "Licensed Engines"
shall mean
Wherever the term "engine" is used in this
Agreement, it shall be interpreted to mean the bare en-
gine, fully equipped, including magnetos, carburetors
and spark plugs or the like, but exclusive of all op-
tional accessories which are not necessary for the or-
dinary and usual operation of the engine.
Engine "type" shall be understood and defined
as referring to the general configuration of the engine
without specific reference to size or ordinary details,
as for example, "Yee" type, single+row radiel type,
double-row radial type, in-line type, air-cooled type,
water-cooled type, etc.
45
The word "model" shall be understood and de-
fined as referring to an engine of a particular type
with a given number of oylinders and a given piston
displacement.
11. NON-EXCLUSIVE LICENSE: United hereby grants
to Licensee for the term of this Agreement a non-exclusive
right and license to manufacture, assemble, use and sell
to the Government of the United States, or any of its de-
pertments, Licensed Engines and spare parts therefor, in-
eluding all features applicable to said engine covered by
United States letters patent or applications for patents
now pending or hereafter applied for which are owned or
controlled by United. As to patents under which United
is licensed but has no right to grant licenses to others,
United will endeavor to obtain such licenses for Licensee.
111. LESIGN DRAWINGS AND SPECIFICATIONS: United
will furnish to the authorized representative or represen-
tatives of Licensee at the plant of United at East Hartford,
Connecticut, United States of America, within two months
from the date of erecution of this Agreement, drawings,
specifications and information regarding assembling, test-
ing and servicing of the Licensed Engine as and to the ex-
tent indicated below:
(1) Assembly drawings of the Licensed Engine and
parts therefor.
(2) Drawings and/or acceptance specifications, to
the extent available, for component parts of the Licensed
Engine purchased by United from third parties in finished
form, and acceptance specifications and description, to
the extent available, of finished accessories, normally
purchased by United from third parties for application
to the Licensed Engine.
Regraded Unclassified
(3) Engine test specifications.
46
(4) Fuel and oil specifications,
(5) Engine operating instructions, overhaul and ser-
vice manuals, tolerance charts, drawings and specifica-
tions for special tools, accessories, etc., used in main-
tenance and overhaul activities.
(6) Installation drawings and data showing general
requirements for arrangement of cowlings, fuel and oil
supply systems, air intakes and heaters, ventilation of
accessory compartments and engine mounts.
(7) Drawings or specifications, to the extent avail-
able, of special tools, Jigs, fixtures, etc., designed by
United and used in the current assembly and test of the
Licensed Engine.
All drawings, specifications and data referred
to above shall be copies of current drawings, specifica-
tions and instructions and other data when designed or
prepared by United and employed by United in current
assembly and overhaul operations. Four copies of the
data shall be supplied. Two copies shall be delivered
in Van Dyke or carbon-back typewritten form, whichever
is appropriate to the particular information supplied,
in English text and dimensions as used by United, and
two copies shall be delivered in blueprint form. any-
thing herein contained to the contrary notwithstanding,
United shall be required to furnish drawings and written
specifications and instructions under this Article only
to the extent that such drawings, written specifications
and instructions are normally prepared by United for its
own use in current assembly, testing, servicing and over-
haul operations.
United further agrees to furnish to the author-
ized representative or representatives of Licensee at the
47
plant of United at East Hartford, Connecticut, United
States of America, at a compensation to be agreed upon
and within one month from the date of receipt by United
from Licensee of an order therefor, additional nots of
the drawings and specifications and other data referred
to in this Article.
Two copies of the drawings, specifications and
other data, similar to those above referred to, of it.-
provements, modifications and changes in Licensed En-
gines, shall, during the period hereof, be supplied by
United without additional compensation, it being under-
stood that changes in design and specifications made
during each quarterly period of three months shall be
delivered within one conth after the close of the period
in which such changes were Lade,
IV. DETAILED MANUFACTURING DRAWINGS AND PRC-
DUCTION DATA: United will furnish to the authorized
representative or representatives of Licensee at the
plant of United at East Hartford, Connecticut, United
States of America, within three months from the date of
execution of this Agreement, detailed drawings, specifi-
cations and information regarding the manufacture of cor.-
ponent parts, as zanufactured by United, for Licensed
Engine, and suitable information for the purchase of
parts not so ranufactured. Said manufacturing draw-
ings and information shall be as follows:
(1) Detailed drawings of engine parts including
tolerance specifications for finished parts.
(2) Material specifications including heat treat-
ing specifications.
(3) Bills of material, production drawings, process
sheets, material test specifications.
(4) Drawings and specifications of all special
48
tools, jige, fixtures, etc,, normally designed by United
and used in the manufacture, assembly and test of parts
in process.
(5) General inspection rules used in manufacturing,
including, to the extent available, drawings of inspec-
tion tools, jige and fixtures normally designed by United.
All drawings, specifications and data referred
to above shall be copies of current United drawings,
specifications and instructions and other data normally
designed or prepared by United and employed by United in
current manufacturing operations. Four copies of the
data shall be supplied. Two copies shall be delivered
in Van Dyke or carbon-back typewritten form, whichever
is appropriate to the particular information supplied,
in English test and dimensions as used by United, and
two copies shall be delivered in blueprint form. Any-
thing herein contained to the contrary notwithstanding,
United shall be required to furnish drawings and written
specifications and instructions under this Article only
to the extent that such drawings, written specifications
and instructions are normally prepared by United for its
own use in ourrent manufacturing operations.
United further agrees to furnish to the author-
ised representative or representatives of Licensee at the
plant of United at East Hartford, Connecticut, United
States of America, at a compensation to be agreed upon,
within one month from the date of the receipt by United
from Licensee of an order therefor, additional sets of
the drawings, specifications and other data referred to
in this Article.
Two copies of the drawings, specifications and
other data, similar to those above referred so, of
+
49
improvements in the methods of manufacture of Licensed
Engines, shall, during the period hereof, be supplied
by United without additional compensation, it being un-
derstood that changes in design and specifications made
during each quarterly period of three months shall be
delivered within one month after the close of the period
in which such changes were nade.
V. SERVICES C7 NONELRS I: LICENSEE'S FACTORY:
During the term hereof United undertakes and S/Tees to
render all reasonable manufacturing and technical assist-
ance and servicing information and data in connection with
the manufacture, assembly, testing and servicing of the
Licensed Engine, and to that end, and at the request of
Licensee, nited agrees to furnish Licensee with the ser-
viges of a reasonable number, net to exceed
( 1, of competent and experienced engineers to assist
Licensee in the manufacture, assembly, testing and servic-
ing of Licensed Engines and/or parts therefor.
Licensee arrees to pay to United in a tanner to
be agreed upon the cost of the services of any such en-
gineer or engineers, torether with all reasonable travel-
ing and living expenses from the time he or they leave
East Martford, Connecticut, United States of America, un-
til their return thereto, plus
per cent. ( 51
thereof. It is further agreed that all listility for
injuries to or death of any or all of such engineers, and
for denares of any kind and chargeable a-ainst United,
which may arise from any cause occurring in the course
of the employment of such engineers while they are with
or employed by Licensee, shall be paid by Licensee.
vi. TAX KTS: Licensee agrees to rake payments
to United at Test Hartford, Connecticut, United States of
America, as follows:
50
As Partial Payments:
(a) The sum of
upon delivery to
the authorized representative or repre-
sentatives of Licensee at the plant of
United at East Hartford, Connecticut, of
the design drawings, specifications and
information provided for in Article Ill
hereof.
(b) The sum of
upon delivery to
the authorized representative or repre-
sentatives of Licensee at the plant of
United at East Hertford, Connecticut, of
the manufacturing drawings and produc-
tion date provided for in Article 1V
hereof.
3. Royalties:
(a) Semi-annually during the first year of
this Agreement, whichever of the follow-
ing amountsis the greater:
(1) the sum of
, or
(2) the sum of
for each direct-
drive Licensed Engine manufactured,
assembled or sold by Licensee, and
the sum of
for each geared
Licensed Engine manufactured,
assembled or sold by Licensee.
(b) Semi-annually during the remaining years
of this Agreement, whichever of the fol-
lowing sure is the greater:
(1) the BUR of
, or
(8) the BUE of
for each direct-
drive Licensed Ingine, menuractured,
no
51
assembled or sold by Licensee, and the
012 of
for each geared
Licensed Engine manufactured, assembled
or sold by Licensee.
c. Other Payments:
Licensee agrees to reimburse United for
royalties which United is required to pay in the
amounts and in the manner shown on Schedule A
hereto attached.
D. Conditions of Payment:
-B-
VII. REPRESENTATIVES OF LICANSEE AT UNITED PLANT: Dur-
52
ing the term hereof Licensee my send not more than
( ,
technicians or representatives to the plant of United at East
Hartford, Connecticut, United States of America, to observe and
study the methods employed by United in the manufacture, assembly
and servicing of the Licensed Engine upon the following conditions:
(1) Licenses shall pay all salaries and wages of such tenchicians
or representatives and shall bear all traveling, living and other
expense which may be incurred in this connection; (2) United
shall not be required to admit such techniciens or representatives
to portions of its factory where work of e secret or confidential
nature 18 in process or where prohibited from doing so by virtue
of requirements made by the Government of the United States in
connection with contracts for the building and developing of air-
oraft engines end/or accessories therefor; (3) whenever such
technicians or representatives are stationed for instruction pur-
poses, they will be under a responsible and capable leader who
will secure conformence to the rules and regulations of United;
(4) United will not be liable for injuries to or death of any or
all such representatives while at the plant of United, or for
injury, damage or loss to their property, end (5) Licensee will
indemnify end hold United harmleas from any such liability.
VIII. RESTRICTION ON PATENTS: It is understood between
the parties hereto that no patent will be obtained or applied
for by Licensee or by another with its inducement or consent,
on United engines, or my drawings of parts thereof either as
existing at present or as they may hereafter be improved or
developed by United without the express written consent of
United.
IX. ASSIGNMENT OR TRANSFER: Licenses shall not easign,
transfer or sell, or permit the use of the rights hereby granted,
without the written consent of United and shall not disclose or
suffer to be disclosed to another (except to the Government of
-9-
53
the United States) any information or any designs, drawings or
other date which it receives or is entitled to receive hereunder,
and will, at its own expense; use every effort and take the noo-
essary proceedings to protect United against such disclosure:
provided, that nothing in this orticle shall prevent Licensee from
furnishing drawings and specifications of individual parts to sub-
contractors supplying such parts.
X. MAINTENANCE OF RLCORDS: Licensee shell at all times
during the continuance of this Agreement, keep accurate and
separate accounts containing full entries and particulars of sales
of all Licensed Engines and parts provided for hereunder, and of
all Licensed Engines and parts fabricated and/or assembled.
United shall have access during reasonable business hours, not to
exceed two investigations per annum, to the books and records of
Licensee that pertain to the subject matter of this Agreement, in
order to determine what sums, if any, are due it hereunder.
II. PREVENTION OF PERFORMANCE BY UNITED: United shall
not be deemed to have breached this Agreement by reason of its
failure to perform any of its obligations hereunder, provided
such failure shall be due to strikes, fire, aots of God or 6
public enemy, riots, Incendiaries, interference by civil or
military authorities, CO. pliance with order of the President of
the United States or other governmental agencies, delays in
transit or delivery on part of transportation companies or any
act or failure to act of Licensee or other cause of the same or
different nature beyond control or without rault of United.
III. CANCELLATION OF AGREEMENT: United may revoke or
terminate this Agreement if Licensee shall fail to make payment
of any sum required under this Agreement and shall not remedy
and mke good such failure or failures within thirty (30) days
from the date of the mailing to it by United of a written
notice of such failure.
-10-
54
In the event of wh? such revocation or termination of
this Agreement, United scall be entitied to receive any and all
moneys due it up to the date or such revocation or termination;
and such revocation or termination shell biso be without prejudice
to any cic!m which any party hereto may have against any other for
damages In respect to any prior breaches of this Agreement.
In the event that this Agreement shall be so revoked or
so terminated, Licensee further agrees forthwith to deliver to
United any and all working drawings, blueprints, specifications or
ther popers or data, and all copies thereof in its possession or
under its control, applicable for use in connection with the manu-
facture of the Livensed Engines, and which the Licensee is not
obligated to deliver to the Government of the United States or
any of its departments,
XIII. CONSTRUCTION OF AGREEMENT: This Agreement shall be
construed and the respective rights of the parties hereto upon its
expiration or cancellation pursuant to its terms, shall be determined
under and pursuant to the laws of the State of Connecticut, United
tates of America.
XIV. INFORMATION TO BE SUPPLIED BY LICENSEE: In the event
that Licensee shall perfect any improvement, modification or
Inve tion which may be used In connection with the manufacture of
the Licensed Engine and/or parts therefor, It agrees forthwith to
communicate the seme to United, to grant to United, its successors
and assigna, the right to use and apply the some in the manufacture
of the Licensed Engine and/or parts therefor, whenever the some are
or muy thereafter be conufactured, by United, its successors or
statems, and the right to include the same in any engine offered
for sale by United or its successors or assigna, without charge
or account thereof, and to execute any and all necessary instru-
ments to effectuate this purpose, the cost of such instruments, if
any, to be borne by United; but there shall be no additional cost
to United on account of the use of any such improvement, modifi-
cation or invention, and any of the same may be used by Licensee
-11-
Regraded Unclassified
55
in connection with products manufactured by it without payment
of any kind.
XV. NOTICES: Notices required under this Agreement
shall be sent by registered mail to the respective parties at
the following addresses:
United Aircraft Corporation
East Hartford
Connecticut
U. 5. A.
(Licensee)
XVI. LIMITATIONS: Licensee shell not have power to bind
United by any guarantee or representation that it ray give or in
any other respect whatsoever, or to incur any debts or liabilities
in the name or on behalf of United; end the parties hereto shall
not be deemed partners or Joint adventurers.
XVII. EXPIRATION OF AGREEMENT: Unless sooner terminated
pursuant to the provisions of Article XII hereof or extended by
mutual agreement, this Agreement shall cease end terminate three
years from the date first above written and upon the expiration
thereof all obligations of United and Licensee hereunder shall
cease and terminate. The provisions of this Article XVII shall
not relieve either party of any obligations existing pursuant
to the terms of this Agreement at the expiration date thereof.
XVIII. GRANT TO VENDORS: United hereby agrees to rent to
vendors of all raw, semi-fabricated, end/or fabricated materials
used or applicable to the herein Licensed Engines the right to
use, for a compensation to be mutually agreed upon, ell patterns,
dies, jiga, and/or fixtures owned or controlled by United which
are necessary for the purpose of such fabrication at the plant of
the vendor at which such patterna, dies, jigs, and/or fixtures
are generally losated, whenever such fabrications of materials
Regraded Unclassified
56
may be desired by Licensee, provided Licensee gives United
reasonable (30 days where practicable) notice prior to the com-
mencement of the fabrication of such material, and provided such
use by Licensee does not conflict with United's requirements for
materials fabricated by such patterne, dies, Jige, and/or fixtures.
It is understood and agreed that United has the undisputed right
to change at any time and from time to time any or all of the
above-mentioned patterns, dies, Jiga, and/or fixtures to provide
for normal changes in design and/or manufacturing processes
instigated by United.
XIX. ARBITRATION: Any dispute arising hereunder shall
be submitted to arbitration at the election of either of the
parties hereto, upon written notice given to the other party
hereto asking for such arbitration and designating an arbitrator
selected by it. Within two (2) weeks from the giving of such
notice, the other perty hereto shall select an arbitrator and
notify the first party of euch election. The two arbitrators
so selected shall select a third arbitrator within one month
from the giving of the first above mentioned written notice. In
case either of the parties fail to appoint an arbitretor within
the time as set forth above, the other party shall have the right
to appoint the second arbitrator, and in case the two arbitrators
first appointed are unable within the time set forth, to agree
upon the third arbitrator, the third arbitrator shell be chosen
by the Arbitration Association of America or its officers or
board or committee authorized to not for it in such matters.
The arbitration shall be conducted in New York City under the
rules of the Arbitration Association of America. The decision
of the arbitrators shall be final and binding on the parties
herete.
n. MARKET Licensee will suitably mark all
Licensed Engines manufactured or assembled by it, as being
manufastured by it, by - under licease from United, setting
forth the applicable patent numbers end dates as specified by
-28-
Regraded Unclassified
United.
57
XI. CHANGES IN DISIGN on CONSTRUCTION: Whenever
Licensee shall make any cherages in the design or construction
of Licensed Engines or any part thereof, Licensee shall, as
soon as practicable thereafter, furnish to United, without
cost to it, full particulars of such changes, together with
drawings und specifications completely disclosing the same.
when such disclosure shall have been made all rights in and to
such changes shall, subject to the rights granted by this Agree-
ment, but without any other act of either of the parties hereto,
pass to and vest in United to the same extent for all intents
and purposes as if such changes had been made by United.
Nevertheless, if deemed necessary by United to protect its
interesta therein, Licensee shall, upon United's request, make
prompt and due applications for United States patents covering
any such changes and shall diligently prosecute such applica-
tions to a conclusion, and upon the granting of any such
patents shall (unless they be granted directly to United or
its nominee) duly assign the same to United or its nominee with-
out requiring the payment of any fee or royalty with respect
thereto; provided, that the cost of obtaining such patents
shell be for account of United.
XXII. RECOGNITION OF LICENSE: Licensee shall not
make, munufacture, license, sell, lease or otherwise dispose
of, during the term of this Agreement or at any time after
its termination, any type, model or design of aeronautical
engine or part thereof embodying any one or more of the basic
principles of design or manufacture employed in and peculiar
to the design or manufacture of Licensed Engines or parts
thereof, other than such engines or parts thereof as may be
manufactured either under this Agreement or pursuant to
other rights, if any, expressly granted in writing to Licensee
by United.
IN WITNESS WHEREOF, the perties hereto have caused
-14-
Regraded Unclassified
this Agreement to be signed in their respective corporate
58
names by their respective officers thereunto duly authorized,
and their corporate seals to be hereto affixed, and to be
attested by their respective Secretaries or other officers
thereunto duly authorized, as of the day and year first above
written.
UNITED AIRCRAFT CORPORATION
ATTEST:
By
LICENSEE
ATTEST:
By
RUIL a
2 MI I
53302
REGUELVER Ok
OLEICE
10AM
№18
59
1940
My dear Mr. Wilsons
I have your letter of June 4, 1940 in which the United
Aircraft Corporation offers to grant to corporations to be
designated by the Government nan-exalusive liemses to
manufacture for and sell to the Covernment any aviation engine
of any type or model which it unmfactures for comercial or
governmental purposes, and in which the United Aircraft Corpora-
tion grants to the Government a non-exelusive right to MIS-
facture, assemble, use and, in time of war or - war is
instruct, to sell any aviation engine of any type or mode)
which it nanufactures.
I 4a turning this letter and the draft of agreement
which vosa enclosed with 1% ever to the Advisory Commission for
the Council of National Defense which has been established for
the coordination of industry and resources for the national
security and valfare.
Your cooperation in this matter is very much appreciated,
Sincerely yours,
Secretary of the Treasury.
Mr. B. & Wilson
President
United Aircraft Corporation
limot Eartford, Connecticut
CLKst
6-6-40
Regraded Unclassified
60
JUN 7 1940
By dear m. Venghan,
I have your letter of June 5, 1940 in which the Wright
Aeronautical Corporation offers to great to experiations to
be designated by the Government non-exclusive licenses to
namafasture for and sell to the Government any aviation engine
of any type or model which 10 namifactures he comercial or
governmental purposes, and in which the Wright Asromutical
Corporation greate to the Government a non-emelusive right to
naminature, assemble, we and, in time of w w when me to
insinent, to sell any aviation engine of my type or model.
which it unmufactures.
I an turning this letter and the draft of agreement
which me enclosed with 12 over to the Advisory Comission for
the Council of National Defense which has been established for
the coordination of intustry and NAME for the national
security and welfare.
Your corporation is this matter is very such approciated.
Sincerely yours,
(Signed) LL Morgenthau, Jr.
Secretary of the Treasury.
M. e, W. Venshen
Procident
Wright Acrumentical Corporation
Paterson, Nov Jersey
CLK:*
6-6-40
Regraded Unclassified
Regraded Unclassified
JUN 7 1540
aty dear Mr. Wellaynolds:
I an enclosing & letter dated June 4, 1940 from the United Mr
craft Corporation and & letter dated June 5, 1940 from the tright
Aerumautical Corporation pursuant to which these corporations respect-
fully offer to grant to corporations to be designated by the Covern-
next non-exclusive licenses to namifacture for and sell to the Covern-
sent any sviation engine of any type or code) manufactured thereby.
In addition, each of these letters contains a great to the
Government of a non-exelusive right to manufacture, assentle, IN and,
in time of war or when war is invinent, to call any aviation engine
of any type or model which the United Aircraft Corporation or the
Wright Aeronsutical Corporation (as the 02.80 may be) manufactures tur
commercial or governmental purposes.
Both offers and grants are subject to certain terms and conditions
which are not forth in the letters and in drafts of agreements amozed
thereto.
In view of the fact that the Advisory Commission for the Council
of National Defense has been established for the coordination of
industry and resources for the national security and walfare, I an of
the opinion that the acceptance of the offers and grants made by these
two aviation engine manufacturers and the carrying out of the program
thereander are matters to be considered and handled by the Advisory
Commission from this point forward.
Sincerely yours,
(T.
Secretary of the Treasury.
Ben. William 1. MoRaynolde
Secretary, Advisory Commission toe
the Commail of Antional Defense
Federal Reserve Building
Mashington, D. c.
CLEst
6-6-40
62
UNITED AIRCRAFT CORPORATION
EAST HARTFORD CONNECTICUT
DIFICE or THE
PRESIDENT
June 4, 1940
ity dear Mr. Secretary,
Confirming our oral understanding, the United Aircraft
Corporation (herein called "United") offers to grant to a corporation or corporations,
to be designated by the Government of the United States, a non-exclusive license or
licenses to manufacture for and to sell to the Government any aviation engine of any
type or model which United manufactures for commercial or governmental purposes at
any time that the Government finds it necessary in the interest of national defense
to request United to grant a license or licenses for such purpose.
It is understood that any agreement to be entered into be-
tween United and any licenses so designated will be substantially in the same form
and contain substantially the same provisions as the attached draft of agreements,
with such other and further provisions as may be mutually agreed upon between United
and any such licenses and which are satisfactory to the Government. It is further
understood that the amount of compensation or other payments in any such agreement
shall be mutually agreed upon and shall be satisfactory to the Government.
United also hereby grants to the Government a non-exclu-
sive right or license to manufacture, assemble, use and, in time of war or when war
is invinent, to sell any aviation engines of any type or model which United manufac-
tures, and in consideration of payments (it being understood that consideration
shall be given by the Government in such payments to royalties which United is requir-
ed to pay to third parties on United States patents) to be fixed by mutual agreement,
hereby dovenants to furnish technical data and technical assistance to the Government
substantially in accordance with Articles III, IV, v. VII andXVIII in the draft of a-
greement attached hereto.
Nothing in this letter shall be construed to affect in any
way licenses granted to and agreements entered into with the Government by United
which exist on the date hereof.
Very truly yours,
UNITED AIRCRAFT CORPORATION
3.
The Monorable,
E. E. Wilson, President
The Secretary of the Treasury,
Washington, D. C.
Regraded Unclassified
WRIGHT AERONAUTICAL CORPORATION
63
PATERSON, N. J.
U, s. A.
If -
ESIDENT
June 5th, 1940
The Honorable Henry Morgenthau, Jr.
Secretary of the Treasury
Washington, D. C.
Yy dear Mr. Secretary:
Confirming our oral understanding, the Wright Aeronau-
tical Corporation (herein called "Wright") offers to grant to a
corporation or corporations, to be designated by the Government
of the United States, a non-exclusive license or licenses to
manufacture for and to sell to the Government any aviation engine
of any type or model which Wright manufactures for commercial or
governmental purposes at any time that the Government finds it
necessary in the interest of national defense to request Wright
to grant B license or licenses for such purpose.
It is understood that any agreement to be entered into
tetween Wright and any licensee so designated will be substantially
in the same form and contain substantially the same provisions as
the attached draft of agreement, with such other and further pro-
visions as may be mutually agreed upon between Wright and any such
licensee and which are satisfactory to the Government. It is
further understood that the amount of compensation or other payments
shall be mutually agreed upon and shall be satisfactory to the
Government.
Wright also hereby grants to the Government B. non-exclusive
right or license to manufacture, assemble, use and, in the time of
war or when war is imminent, to sell any aviation engines of any type
or nodel which Wright manufactures, and in consideration of payments
(it being understood that consideration shall be given by the Govern-
sent in such payments to royalties which Wright is required to pay to
third parties on United States patents) to be fixed by mutual agreement,
hereby covenants to furnish technical data and technical assistance
to the Government substantially in accordance with Articles III, IV,
V, VII and XVIII in the draft of agreement above referred to.
USE THE AIR MAIL"
Regraded Unclassified
The Honorable Henry Morgenthau, Jr.
6/5/40.
64
Page Two.
Nothing in this letter shall be construed to affect
in any way licenses granted to and agreements entered into with
the Government by Wright which exist on the date hereof.
Very truly yours,
WRIGHT AERONAUTICAL CORPORATION
G.
GWV/bm
June 1940.
My dear Mr. Secretary:
Confirming our oral understanding, the Wright Acronmutical
Corporation (herein called "Tright") offers to grant to n corpora-
tion or corporations, to be designated by the Government of the
United States, e. non-oxclusivo license or licenses to manufacture
for and to coll to the Government any aviation engino of any type
or model which Wright manufactures for connercial or governmental
purposos at any time that the Government finds it necessary in the
interest of national defense to request Tright to grant R. license
or licenses for such purpose.
It is understood that any agreement to be entered Into between
Tright and any licensee 80 designated will be substantially in the
sace form and contain substantially the same provisions 88 the
attached draft of agreements, with such other and further provisions
DE nay be nutually agreed upon between Wright and any such licensoe
and which are satisfactory to the Government. It is further under-
stood that the amount of compensation or other payments in any such
agroement shall be cutually agreed upon and shall be estisfactory
to the Government.
Wright also hereby grants to the Government A non-exclusive
right or license to manufacture, assemble, use and, in time of
WAT or when war is imminent, to sell any aviation engines of any
type or model which Tright nanufactures, and in consideration of
payments (it being understood that consideration shall be given by
the Government in such payments to royalties which Wright is
required to pay to third parties on United States patents) to be
fixed by mutual agreement, hereby covenants to furnish technical
data and technical assistance to the Government substantially
in accordance with Articles III, IV, V, VII and XVIII in the draft
of agreement above referred to.
Nothing in this letter shall be construed to affect in any
way licenses granted to and agrooments untered into with the Govern-
ment by Fright which exist on the date hereof.
Very truly yours.
WRIGHT AERONAUTICAL CORPORATION
President.
The Honorable
The Secretary of the Troasury.
Regraded Unclassified
66
Draft of June 6, 1940
AGREEMENT made and entered into as of the
day of
, 19 #
by and between WRIGHT AERONAUTICAL CORPORATION, a corporation organized
and existing under the laws of the State of New York, with offices at
Paterson, New Jersey, United States of America, (hereinafter referred to
as "Wright"), party of the first part, and
,
& corporation organized and existing under the laws of the
,
(hereinafter referred to as the "Licensee"), party of the second part:
In consideration of the mútual covenants and agreements of the
parties horeto, each does agree with the other as follows:
I. DEFINITIONS: For the purpose of this agreement, the Wright
engine is defined as the current single row radial-air-
cooled goared and/or direct drive Model
engine such as is
now being sold by Wright to the Unitod States of America, designed in
the English inch measurement system, and in accordance with specifica-
tions antisfactory to the Government of the United States.
Wherever tho term "Engino" is used in this agreement, it shall be
interpreted to mean the bare engine fully equipped, including magnetos,
carburetors and spark plugs or the like, but exclusive of all optional
accossories which are not necessary for the ordinary and usual operation
of the engine.
Engine "Type" shall be understood and defined as referring to the
general configuration of the engine without specific reference to size
or ordinary details, as for example, "Yee" type, single row radial type,
double row radial type, in-line type, air cooled type, water cooled type,
etc.
The word "Model" shall be understood and defined as referring to an
engine of a particular type with a given number of cylinders and a given
piston displacement.
II. NON EXCLUSIVE LICENSE: Wright hereby grants to Licensee for
the term of this agreement a non-exclusive right and license to manu-
facture, assemble, use and sell to the Government of the United States or
Regraded Unclassified
67
- 2 -
any of its departments, agencies or instrumentalities Wright
engines and spare parts, including all features applicable to said on-
gine covered by United States letters patent or applications for patonts
now pending or hereafter applied for
which are owned
or controlled by Wright.
III. DESIGN DRAWINGS AND SPECIFICATIONS: Wright will furnish to
the authorized representative or representatives of Licenseo at the
plant of Wright at Paterson, New Jersey, United States of America, within
two months from the date of execution of this agreement, drawings, speci-
fications and information regarding assembling, testing and servicing of
the Wright
ongine as indicated below:
(1) Assombly drawings of the licensed engine and parte therefor.
(2) Drawings and/or acceptance specifications for all component
parts of the licensed engine purchased by Wright from third partics in
finished form, and accoptance specifications and descriptions of all fin-
ished accessories, normally purchased by Wright from third parties for
application to the licensed engine.
(3) Inspection instructions for finished parts.
(4) Assembly instructions, assembly inspection specifications and
engine test specifications.
(5) Fuel and oil specifications.
(6) Engine operating instructions, overhaul and service nanuals,
tolerance charts, drawings and specifications for special tools, ao-
cessories, etc. used in maintenance and overhaul activities.
(7) Installation drawings and data showing general requirements for
arrangement of cowlings, fuel and oil supply systems, air intakes and
heaters, ventilation of accessory compartments, engine mounts.
(8) Drawings or specifications of all special tools, Jiga, fix-
tures, etc. designed by Wright and used in the current assembly and test
of the licensed engine.
All drawings, specifications and data referred to above shall be
copies of current drawings, specifications and instructions and other data
Regraded Unclassified
when designed or prepared by Wright and employed by Wright in current
assembly and overhaul activities. Four copies of the data shall be
00
supplied. Two copies shall be delivered in Van Dyke or carbon back
typewritten form, whichever is appropriate to the particular informa-
tion supplied, in English text and dimonsions as used by Wright, and
two copies shall be delivered in blueprint form.
Wright further agrees to furnish to the authorized representative
or representativos of Liconsee at the plant of Wright at Paterson, New
Jersey, United States of America, at a compensation to be agreed upon
and within one month from the date of receipt by Wright from Licensee
of an order therefor, additional sets of the drawings and specifica-
tions and other data referred to in this Article.
Two copies of the drawings, specifications and other data, similar
to those above referred to, of improvoments, modifications and changes
in Wright
ongines, shall, during the period hereof, be sup
plied by Wright without additional compensation, it being understood
that changes in design and specifications made during each quarterly
period of three months shall be delivered within ono month after the
close of the poriod in which such changes were made.
IV. DETAILED MANUFACTURING DRAWINGS AND PRODUCTION DATA: Wright
will furnish to the authorized representative or representatives of
Licensee at the plant of Wright at Paterson, Now Jersey, United States
of Amorica, within three months from the date of execution of this agree-
ment, detailed drawings, specifications and information regarding the
manufacture of conponent parts, as manufactured by Wright, for the
engine, and suitablo information for the purchase of parts not BO nanu-
factured. Said nanufacturing drawings and information shall be as follows:
(1) Dotailed drawings of engine parts including tolerance speci-
fications for finished parts.
(2) Matorial specifications including heat treating specifications.
- la -
(3) Bills of natorial, production drawings, process sheets,
69
material tost specifications.
(4) Drawings and specifications of all special tools, Jigs, fix-
tures, etc. normally designed by Wright and used in the nanufacture,
assembly and test of parts in process.
(5) Inspection specifications used in nanufacturing, including
drawings of inspection, tools, J160 and fixtures normally designed by Wright.
All drawings, spocifications and data referred to above shall be
copies of current Wright drawings, specifications and instructions and
other data normally designed or prepared by Wright and enployed by
Wright in current manufacturing activities. Four copies of the data
shall be supplied. Two copies shall be dolivered in Van Dyke or carbon
back typowritten form, whichever is appropriate to the particular
information supplied, in English text and dinensions as used by Wright,
and two copies shall be delivered in blueprint form.
Wright further agrees to furnish to the authorized representative
or representatives of Licensee at the plant of Wright at Paterson, New
Jersey, United States of America, at a componsation to be agreed upon,
within one nonth from the dato of the receipt by Wright from Licensoe
of an order therefor, additional sets of the drawings and spocifications
nade during each quarterly period of three months shall be dolivered
within one nonth after the close of the period in which such changes
were nade.
Two copies of the drawings, specifications and other data, sinilar
to that above referred to, of improvements in the nothods of nanufacture
of Wright
engines, shall, during the period hereof, be supplied
by Wright without additional compensation, it being understood that
changes in design and specification shall be delivered within one nonth
after three nonths' periods of accumulation.
Regraded Unclassified
5 - #
V. SERVICES OF ENGINEERS IN LICENSEE'S FACTORY: During the term
=70
hereof Wright undertakes and agrees to ronder all reasonable nanufactur-
ing and technical assistance and servicing information and data in con-
nection with the manufacture, assembly, testing and servicing of the
engine, and to that end, and at the request of Licensee, Wright
agrees to furnish Licensee with the services of B. reasonable number, not
to exceed
( ). of competent and experienced engineers to assist
Licensee in the manufacture, assembly, testing and servicing of Wright
engines and/or parts therefor.
Licensee agrees to pay to Wright in B. manner to be agreed upon the
cost of the services of any such engineer or engineers, together with all
reasonable traveling and living expenses from the time he or they leave
Paterson, Now Jersey, United States of America, until their return there-
to, plus per cent ( %) thereof. It is further agreed that all
liability for injuries to or death of any or all of such engineers, and
for damages of any kind and chargeable against Wright, which may arise
from any cause occuring in the course of the employment of such engineers
while they are with or employed by Licensee, shall be paid by Licensee.
VI. PAYMENTS: Licensee agrees to nake payments to Wright at
Paterson, New Jersey, United States of America, as follows:
A. Partial Payments:
(a) The sun of
upon delivery to the authorized
representative or representatives of Licensee at the
Plant of Wright at Paterson, New Jersey, of the design
drawings, specifications and information provided for
in Article III hereof.
(b) The sun of
upon delivery to the authorized
representative or representatives of Licensee at the
Regraded Unclassified
- 6 -
:71
plant of Wright at Paterson, Now Jersoy, of the manu-
facturing drawings and production data provided for in
Article IV hereof.
B. Royalties:
(a) Semi-annually during the first year of this agreement,
whichever of the following anount is the greater:
(1) the sun of
or
(2) the sun of
for each direct drive
engine manufactured, assembled or sold
by Licensee, and the sun of
for each
geared
engine nanufactured, assembled or
sold by Licensee.
(b) Semi-annually during the remaining years of this agreement,
whichever of the following suns is the greater:
(1) the sum of
or
(2) the sun of
for each direct drive
engine, manufactured, assembled or sold by Licensee,
and the sum of
for each geared
engine manufactured, assembled or sold by Licensee.
C. Other Payments:
Licensee agrees to reimburse Wright for royalties which
Wright is required to pay in the anounts and in the manner shown
on Schedule A hereto attached.
D. Conditions of Payment:
-7-
72
VII. REPRESEPTATIVES OF LICENSEK AT WRIGHT PLANT: During the term
hereof Licensee may send not more than
( ) technicians or
representatives to the plant of Wright at Paterson, New Jersey, United
States of America, to observe and study the methods employed by Wright
in the manufacture, assembly and servicing of the
engine upon
the following conditions: (1) Licensee shall pay all salaries and wages
of such technicians or representatives and shall bear all traveling, liv-
ing and other expense which may be incurred in this connection; (2)
Wright shall not be required to admit such technicians or reprecentatives
to portions of their factory where work of a secret or confidential
nature is in process or where prohibited from doing so by virtue of re-
quirements rade by the Government of the United States in connection
with contracts for the building and developing of aircraft engines and/or
accessories therefor; (3) whenever such technicians or representatives
are stationed for instruction purposes, they will be under a. responsible
and capable leader who will secure conformance to the rules and regulations
of Wright: (4) Wright will not be liable for injuries to or death of any
or all such representatives while at the plant of Wright. or for injury,
damage or loss to their property; end (5) Licensee will indemnify and
hold Wright harnless from any such liability.
VIII. RESTRICTION OF PATE TS: It is understood between the parties
hereto that no patent will be obtained or applied for by Licensee or by
another with its inducement or cousent, on Wright engines, or any draw-
ings or parts thereof either as existing at present or as they may here-
after be improved or developed by Wright without the express written con-
sent of Wright.
IX. ASSIGNMENT OR TRANSFER: Licensee shall not assign, transfer or
sell, or permit the use of the rights hereby granted, without the written
Regraded Unclassified
consent of Wright and shall not disclose or suffer to be disclosed to
another, (except to the Government of the United States), any informa-
73
tion or any designs, drawings or other data which it receives or ia
entitled to receive hereunder, and will, at its own expense, use every
offort and take the necessary proceedings to protect Wright against such
disclosure; provided, that nothing in this article shall prevent
Licensee from furnishing drawings and specifications of individual
parts to sub-contractors supplying such parts.
I. MAINTENANCE OF RECORDS: Licensec shall at all times during the
continuance of this agreement, koep accurate and separate accounts con-
taining full entries and particulars of sales of all onginos and parts
provided for herounder, and of all ongines and parts fabricated and/or
assembled. Wright shall have access during reasonable business hours,
not to exceed two investigations per annum, to the books and records of
Licensoo that portain to the subject matter of this agreement, in order
to determine what sums, if any, are duo it horounder.
XI. PREVENTION OF PERFORMANCE BY WRIGHT: Wright shall not be
docmod to have brenched this agreement by roason of its failure to perform
any of its obligations hereunder, provided such failure shall be due to
strikos, firo, acts of God or a public onemy, riots, incondiaries, intor-
ference by civil or military authorities, compliance with orders of tho
Prosident of the United Statos or other governmental agencies, delays in
transit or delivery on part of transportation companice or any act or
failure to act of Licensee or other cause of the same or difforent naturo
boyond control or without fault of Wright.
XII. CANCELLATION OF AGREEMENT: Wright may rovoke or torminato
this agreement if Licensee shall fail to make payment of any sum required
under this agreement and shall not remedy and nake good such failure
or failures within thirty (30) days from the date of the mailing to it
by Wright of & written notice of such failure.
Regraded Unclassified
In the event of any such rovocation or termination of this agree-
nont, Wright shall be ontitled to receive any and all moneys duo it up
74
to the date of such revocation or termination, and such revocation or
termination shall also be without prejudice to any clain which any party
heroto may have against any other for damages in respect to any prior
broaches of this agreement.
In the event that this agroement shall be so revoked or 00 termi-
nated, or upon its oxpiration undor Article XVII hereof, Licenseè further
agrees forthwith to deliver to Wright any and all working drawings, blue-
prints, specifications or other papera or data, and all copies thereof in
its possession or under its control, applicable for use in connoction with
the nanufacture of the licensed engines, and which the Licensee is not
obligated to deliver to the Government of the United States or any of its
departments, agencies, or instrumontalitios.
XIII. CONSTRUCTION OF AGREEMENT: This agreement shall be con-
strued and the respective rights of the parties hereto upon its expira-
tion or cancellation pursuant to its terms, shall be determined under
and pursuant to the lews of the State of Now York, Unitod States of
Anerica.
XIV. INFORMATION TO BE SUPPLIED BY LICENSEE: In the ovent that
Licenseo shall perfect any inprovement, modification or invention which
nay be used in connection with the nanufacture of the licensed engine
and/or parte therefor, it agrees forthwith to communicate the sane to
Wright, to grant to Wright, its successors and assigna, the right to use
and apply the sano in the namufacture of the licensed engine and/or parte
therefor, whenover the sano are or nay thereaftor be namifactured by
Wright, its successors or assigne, and the right to include the sano in
any ongine offored for sale by Wright or its successors or assigns,
without charge or account thereof, and to exocute any and all necessary
instruments to effectuate this purpose, the cost of such instruments, if
any, to be borne by Wright, but there shall be no additional cost to
Regraded Unclassified
-10-
Wright on account of the use of any such inprovenent, modification or
5
invention, and any of the same may be used by Licensoe in connection
with products nanufactured by it without payment of any kind.
XV. NOTICES: Notices required under this agreement shall be sont
by registered nail to the respective parties at the following addresses:
Wright Acronautical Corporation
Paterson
Now Jersoy
U. S. A.
(Licensee)
XVI. LIMITATIONS: Liconsee shall not have power to bind Wright by
any guarantee or representation that it may give or in any other respect
whatsoever, or to incur any dobts or liabilities in the name or on bohalf
of Wright, and the partios horeto shall not be deened partners or joint
adventurors.
XVII. EXPIRATION OF AGREEMENT: Unless sooner terminated pursuant
to the provisions of Article XII hercof or oxtended by mitual agreement,
this agrooment shall cease and terminate three years from the date first
above written and upon the expiration thoroof all obligations of Wright
and Licenseo hereunder shall coaso and torminato. Tho provisions of this
Article shall not rolievo either party of any obligations existing pur-
ouant to the terms of this agreement at the expiration date thereof.
XVIII. GRANT TO VENDORS: Wright hereby agrees to grant to vendors
of all raw, scni-fabricated, and/or fabricated naterials usod or appli-
cablo to the horein licensed engines the right to use for a componsation
to be mitually agrood upon, all patterns, dios, jiga, and/or fixtures
owned or controlled by Wright which are necessary for the purposo of such
fabrication at the plant of the vendor at which such pattorns, dies, jigs,
and/or fixtures are generally located, whenever such fabrications of
Regraded Unclassified
materials may be desired by the Licenses, provided the Licensoe gives
76
Wright reasonable (30 days where practicable) notice prior to the con-
nencement of the fabrication of such material, and provided such use by
the Liconsee does not conflict with Wright's requirements for materials
fabricated by such patterns, dies, jigs, and/or fixtures. It 10 undor-
stood and agreed that Wright has the undisputed right to change at any
time and from time to time any or all of the above-nentioned pattorns,
dies, jigs. and/or fixtures to provide for normal changes in design
and/or nanufacturing processes instignted by Wright.
XIX. ARBITRATION: Any dispute arising hereunder shall be submitted
to arbitration at the election of either of the parties hereto, upon
written notice given to the other party hereto esking for such arbitra-
tion and designating An arbitrator solected by it. Within two (2) weeks
from the giving of such notice, the other party hereto shall solect an
arbitrator and notify the first party of such election. The two arbi-
trators BO selected shall select a third arbitrator within one month from
the giving of the first above-mentioned written notice. In case either
of the parties fails to appoint an arbitrator within the tino no set
forth above, the other party shall have the right to appoint the second
arbitrator, and in case the two arbitrators first appointed are unable
within the time set forth, to agree upon the third arbitrator, the third
arbitrator shall be chosen by the Arbitration Association of America or
its officers or board or connittee authorised to not for it in such
matters. The arbitration shall be conducted in New York City under the
rules of the Arbitration Association of Anerica. The decision of the
arbitrators shall be final and binding on the parties hereto.
XX. MARKING: Liconsee will suitably mark all licensed engines
manufactured or assenbled by it, as being namufactured by it, by name
under license from Wright, sutting forth the applicable patent numbers
and dates as specified by Wright.
Regraded Unclassified
-12-
77
XXI. CHANGES IN DESIGN OR CONSTRUCTION: Whonover Licensee shall
nako any changes in the design or construction of licensod engines or
any part theroof, Liconsoo shall, as soon as practicable thereafter,
furnish to Wright, without cost to it, full particulars of such changes,
togother with drawings and specifications completely disclosing the sano.
Whon such disclosure shall have boon nado all rights in and to such
changes shall, subjoct to the rights granted by this Agroement, but
without any other act of either of the partios horoto, pass to and vost
in Wright to tho sano extont for all intonts and purposes as if such
changos had boon nade by Wright. Novertholoss, if dooced necessary by
Wright to protect its interosts therein, Licensee shall, upon Wright's
request, nako prompt and due applications for United States patents
covering any such changes and shall diligontly prosecuto such applica-
tions to a conclusion, and upon the granting of any such patents shall
(unless they be granted diroctly to Wright or its noninoo) duly assign
the same to Wright or its noninoe without requiring the payment of any
foo or royalty with respect thoroto; provided, that the cost of obtain-
ing such patents shall bo for account of Wright,
XXII. RECOGNITION OF LICENSE: Licensee shall not nako, nanufacture,
liconso, sell, lense or otherwise dispose of, during tho torn of this
Agreement or at any tine after its tornination, any type, nodel or
dosign of aoronautical ongine or part thereof embodying any one or nore
of the basic principles of dosign or nanufacture employed in and peculiar
to the dosign or nonufacture of licensed engines or parte thereof, other
than such engines or parts thereof as nay be namufactured either under
this Agreement or pursuant to other rights, if any, expressly granted
in writing to Licensee by Wright.
IN WITNESS WHEREOF, the parties heroto have caused this agreement
to be signed in thoir respectivo corporato nanos by their respective
officors therounto duly authorised, and their corporate seals to be
Regraded Unclassified
78
-13-
horeunto affixed, and to be attested by their respective Secretaries
78
or other officers therounto duly authorized, as of the day and year
first above writton.
WRIGHT AERONAUTICAL CORPORATION
By
ATTEST:
LICENSEE
By
ATTEST:
73
Ims 7, 1940.
Dear Mr. Purvis:
Dr. Karl T. Compton, President of the Massachusetts
Institute of Technology. has written to tell - of a
member of their staff, Professor 4. Gendin, of the Depart-
sent of Metallurgy.
During the last World Var Professor Gaudin's father VAS
on the French Purchasing Commission to this country. and at
that time the Professor, who vas a young French ongineer,
case with his father as as assistant. Be is now a naturalised
American, and according to Dr. Comptem, is probably the lest-
ing authority in the United States on the subject of flote-
tion and other methods of ore beneficiation is the sining
industries. He has two brothers in the French Army and is
anxious to be of help in the present emergency.
Dr. Comptom has suggested that the Allied Purchasing
Commission might wish to svail themselves of his services is
some vay and says that the Institute would be glad to 00-
operate in midag It possible for Professor Gendin to under-
take such work.
I - passing this - for any use you may wish to sake of
the information.
Sincerely,
'Stament' R Mongwather fr
Mr. Arthur 3. Purvis,
Anglo-Preach Purchasing Board,
15 Bread Street,
You York, New York.
Regraded Unclassified
so
June 7, 1940.
Dear Mr. Purvis:
Dr. Karl T. Compton, President of the Massachmeetts
Institute of Technology, has written to tell - of a
member of their staff, Professor 4, Gendin, of the Depart-
meat of Natallurgy.
During the last World War Professor Gaudin's father vas
on the French Purchasing Commission to this country. and at
that time the Professor, who VAB & young French engineer,
came with his father as on assistant. Re is new & naturalised
American, and according to Dr. Compton, is probably the lead-
ing authority in the United States on the subject of flota-
tion and other methods of ore beneficiation in the staing
industries. He has two brothers in the French Army and is
anxious to be of help in the present energency.
Dr. Compton has suggested that the Allied Purchasing
Commission sight vish to svail themselves of his services in
some vay and says that the Institute would be gind to 00-
operate in making it possible for Professor Gendin to under-
take such work,
I - passing this - for any use you my wish to sake of
the information.
Sincerely,
(Signed) H. Morgesthau Sr.
Mr. Arthur 1. Purvis,
Angle-Freach Purchasing Board,
15 Bread Street,
New York, New York.
Regraded Unclassified
Kn. 81
I'me 10, 1940.
Door Dr. Comptoms
I want to thank you very such for your letter of
June Sth, which tells - of the background and experience
of Prefessor Gentin, of your Department of Netallurgy.
I - passing on this information to Mr. Arthur 3. Pervis,
of the Angle-French Purchasing Beard, and feel sure that
he will be interested to know of Professor Condin's smil-
ability.
I also have noted your further suggestions and
comments. I shall remember your effer of cooperation
as the Presurement program develops.
with thanks and all good vishes,
Sincerely,
(Signed) H. Morgenthau, Sr.
Dr. Earl 9. Comptom,
President, Massachusetts Institute
of Technology.
Cambridge, Massachusetts.
GEF/dre
Regraded Unclassified
82
June 10, 1940.
Dear Dr. Comptoms
I vast to thank you very such for your letter of
June 5th, which telle se of the background and experience
of Professor Gradin, of your Department of Notallurgy.
I - passing on this information to Mr. Artime 1. Purvis,
of the Anglo-Prench Purchasing Board, and feal sure that
he will be interested to know of Professor Candin's svail-
ability.
I also have noted your further suggestions ml
commints. I shall rember your offer of cooperation
as the Procurement program develops.
with thanks and all good vishes,
Sincerely,
(Signed) H. Morgenthau Jr.
Dr. Earl T. Comptom,
President, Massachmeette Institute
of Technology,
Cembridge, Nassachmsetts.
GEF/des
Regraded Unclassified
Thank sug lim getern and to al refer
83
Paran's
sin
bein
ADDITIONAL 5)
OFFICE OF THE PRESIDENT
June 5, 1940
Hon. Henry Morgenthau, Jr.
Secretary of the Treasury
Washington, D.C.
My dear Mr. Secretary:
We at M.I.T. are preparing shortly to submit to you
and to several other governmental officers who have
orincipal responsibilities in the national defense program
surgestions regarding the lines in which we believe that
our facilities of staff and equipment might be most
effectively used in a defense or war emergency if our
cooperation in these matters should be desired. There are
certain lines in which these facilities are somewhat unique.
In the meantime, however, I am venturing to offer
two suggestions which may perhaps be pertinent to the
present situation, and if they are not please entirely
!isregard them.
The first suggestion has to do with the allied
purchasing commission. We happen to have on our staff
in the Department of Metallurgy, Professor A. Gaudin
A
Minag father was on the French purchasing commission in
the U.S. during the last world war. At that time our
Professor Gaudin, then A young French engineer, accompanied
his father as his assistant in this work. Following the
WAT Professor Gaudin took out his naturalization napers
and has become probably the leading authority in the U.S.
on the subject of flotation and other methods of ore
beheficiation in the mining industries.
Professor Gaudin has two brothers in the French
army and 1s very anxious to be of help to the allied cause.
Because of his previous experience in purchasing in this
country for the French, he suspects that it might be useful
for the French delegation of the present purchasing commission
Regraded Unclassified
84
-2-
to have the services of 8. French engineer with this
background of experience and with a very good knowledge both
of the French and American psychology and procedures. If the
French delegation of the allied purchasing commission feel
that his services could be of real help to them, he would
like to offer his services and M.I.T. would be prepared to
make it possible for him to undertake such work.
The second suggestion has to do with advice in
connection with personnel, industrial facilities, labor
skills, etc., in the leading industrial centers. Our
M.I.T. alumni are widely distributed and diversified and
we have an unusually close contact with them. A number of
them in prominent engineering or production positions have
suggested to me that our Alumni Association might select a
small group of particularly reliable and influential men
in the various production centers who would be in a position
to give confidential and disinterested advice with regard
to the suitability of various locations or plants for
production of various types of war materials. If there 18
any way in which such groups could be useful to you and
your colleagues in this procurement program I should be very
happy to assemble a small list of men in such centers as
Chicago, Detroit, Philadelphia, Pittsburgh, New York, Hartford
and Boston, who could be relied upon in case you should wish
to call upon them.
With best regards,
Very sincerely yours
Karl T. Compton
KTC/L
President
TRUCABLE 10
OLDER
INEVENSI
mu J 7 BECD
Regraded Unclassified
in 85
JUN 7- 1940
Dear Jerome:
Many thanks for your letter of May 31st,
outlining possible methods for the elimination
of delay in airplane plant expansion.
I have read your ideas carefully, and your
thoughtfulness in passing them on to as is highly
appreciated.
Sincerely,
Henry
Honorable Jerone 1. Trank, Chairman,
Securities and Exchange Commission,
Washington, D. C.
Ff:bj
6/6/40
hig
Regraded Unclassified
in 86
JUN 7° 1940
Dear Jerome:
Many thanks for your letter of May 31st,
outlining possible methods for the elimination
of delay in airplane plant expansion.
I have read your ideas carefully, and your
thoughtfulness in passing them on to no is highly
appreciated.
Sincerely,
Henry
Honorable Jerone N. Frank, Chairman,
Securities and Exchange Commission,
Vashington, D. c.
PY:bj
6/6/40
Regraded Unclassified
so 87
JUN 7 1940
Dear Jerome:
Many thanks for your letter of May 31st,
outlining possible methods for the elimination
of delay in airplane plant expansion.
I have read your ideas carefully, and your
thoughtfulness in passing them on to no is highly
appreciated.
Sincerely,
Henry
Honorable Jerome 3. Frank, Chairman,
Securities and Exchange Commission,
Washington, D. C.
Ff:bj
6/6/40
Regraded Unclassified
where Phil SECURITIES young AND an EXCHANGE COMMISSION I-would
88
WASHINGTON
amct of
THE CHAIRMAN first then la him May 31, 1940
CONFIDENTIAL
M
The Honorable
Henry Morgenthau, Jr.
Secretary of the Treasury
Dear Henry:
I have been told that airplane manufacturers
can easily finance, through the cepital market,
all necessary plant expansions as soon as they
have orders, but will be reluctant to undertake
to do so, or to build such plants, until they had
such orders. Delay in beginning such plant con-
struction might possibly, therefore, occur.
I have heard that it has been suggested that,
to avoid such delay, the government should build
the plants and lease them to the companies. But
it may well be that there would be considerable
objection by the companies to such a proposal.
It occurs to me that another way to meet it
would be for the government either (1) to guarantee
to the plane manufacturers 8. return of some figure
representing a fair percentage of return, on the
cost of new plant expension or (2) to guarantee
that they would receive orders of a certain volume.
With such B. guarantee they would almost surely
be willing to begin to construct the new plants
forthwith. The government would incur very little
liability on any such guarantee since we may assume
that, of course, orders will be forthcoming before
long.
It would seem that to have the companies
themselves finance new plants would be far more
Regraded Unclassified
89
- 2 -
desirable than to have the government build them.
For the former process would employ the normal
methods of financing and would tap savings for
investments, using the capital markets-- all of
which would indicate that, as far as possible, in
this crisis, the government wants to adhere to
normal business processes.
It may be that this idea is neither novel
nor worth considering.
Sincerely yours,
Jerms Jerome N. Frank
Chairman
so
May 31, 1940
CONFIDENTIAL
The Honorable
Henry Morgenthau, Jr.
Secretary of the Treasury
Dear Henry:
I have been told that sirplane manufacturers
can easily finance, through the capital market,
all necessary plant expansions as soon as they
have orders, but will be reluctent to undertake
to do so, or to build such plants, until they had
such orders. Delay in beginning such plant con-
struction might possibly, therefore, occur.
I have heard that it has been suggested that,
to avoid such delay, the government should build
the plants and lesse them to the companies. But
it may well be that there would be considerable
objection by the compenies to such a proposal.
It occurs to me that another way to meet it
would be for the government either (1) to guarantee
to the plane manufacturers 8 return of some figure
representing a fair percentage of return, on the
cost of new plant expansion or (2) to guarantee
that they would receive orders of 8 certein volume.
with such a guarantee they would almost surely
be willing to begin to construct the new plants
forthwith. The government would incur very little
liability on any such guerantee since we may assume
that, of course, orders will be forthcoming before
long.
It would seem that to have the companies
themselves finance new plants would be far more
Regraded Unclassified
91
- 2 -
desirable than to have the government build them.
For the former process would employ the normal
methods of financing and would tap savings for
investments, using the capital markets-- all of
which would indicate that, as far as possible, in
this crisis, the government wants to adhere to
normal business processes.
It may be that this idea is neither novel
nor worth considering.
Sincerely yours,
Jerome N. Frank
Chairman
Regraded Unclassified
OFFICE OF
92
THE SECRETARY OF THE TREASURY
June 7. 1940
TO:
General Watson
FROM: Lieut. D. E. MoKay
The Secretary asked me to send this
over for the President's information.
S3
June 7, 1940.
MEMORANDUM FOR THE SECRETARY:
The Italian steamer EURO, after loading a cargo
of scrap iron in gulf ports, put into Newport News for
bunkers and sailed from Newport News for Italy June 2nd.
This vessel returned to Newport News this morning.
BH:de
Regraded Unclassified
ARREIS THE COMMANDANT. u. = COAST GUARD
94
AND REFER TO no. IOF-64
TREASURY DEPARTMENT
UNITED STATES COAST GUARD
HEADQUARTERS
WASHINGTON
7 June, 1940.
CONFIDENTIAL
MEMORANDUM FOR CAPTAIN PULESTON, U.S.N.:
No Italian ship weather reports were transmitted by Coltano
Radio on June 6th nor have any such reports been broadcast by
Coltano on June 7th up to and including the 1400 (G.M.T.) schedule.
It is rumored in New York that Italian vessels have received
orders to proceed to neutral ports. A circumstance which indi-
cates that this may be correct is that a number of Italian vessels
have received code messages marked "Urgent". Some of these messages
are identical and have been transmitted to different ships on suc-
cessive schedules.
Hillis
F. E. POLLIO,
Lieutenant, U. S. Coast Guard,
Chief Intelligence Officer.
Captain W. D. Puleston, U.S.N.,
Room 196 Treasury Building,
Washington, D. C.
Copies to:
Mr. Saugstad, State.
Captain Nixon, ONI
Regraded Unclassified
95
WASHINGTON, D.C.
7 JUNE 1940.
FOR THE HONORABLE SECRETARY OF THE TREASURY:
WHEN WILL I GET THOSE THOMPSON SUB MACHINE GUNS X
EVEN A THOUSAND THIS WEEK WOULD HELP ENORMOUSLY X CONGRATULATIONS
AND THANKS
(SIGNED) BULLITT.
TOR: 2330/7TH.
Regraded Unclassified
96
WAR DEPARTMENT
OFFICE OF THE CHIEF OF STAFF
WASHINGTON
June 7, 1940.
My dear Mr. Morgenthau:
I received the statistical data
on airplanes and airplane engines, which came
with your note of June 6th. Thank you very much
for trusting me with this exceptionally valuable
document. I know it is going to be of consider-
able help to us.
Faithfully yours,
Honorable Henry Morgenthau,
Secretary of the Treasury,
Washington, D.C.
lave 20% 9 VIN à 11
BECHEITSA 05
copy to help 37
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
P. Young.
Act 6/7/46
DATE 6-7-40
TO
Secretary Morgantham
1. Я. Foley, Jr.
FROM
Subject: Disposal of Naval Guns
(1)
World War Stocks
Guns owned by the Navy Department on July 11, 1919 can be disposed
of in substantially the same manner as the Army's World War guns.
It is my understanding that the Navy is willing to dispose of the
following guns which my serve the same purpose as the Thompson Machine Gums:
3,000 Lewis Machine Gune, ground type (a few need a little
overhaul work)
$50. each
3,000 Lewis Machine Guns, aircraft type (good condition;
need slight modification for ground use; can be used
in short bursts on ground in present condition)
$50. each
4,093 Browning Automatic Rifles (some require a little
overhaul
$90. each
The mechanics of disposing of those guns is indicated by the follow-
ing two statutory provisions. The Act of July 11, 1919 (41 Stat. 132) provides
that:
"The interchange without compensation therefor, of military
stores, supplies, and equipment of every character, including
real estate owned by the Government, is hereby authorized
between the Army and the Navy upon the request of the head
of one service and with the approval of the head of the other
service."
The other provision of the Act of July 11, 1919 (41 Stat. 104, 105)
provides as follows:
"That * * * the Secretary of War be, and he is hereby,
authorised to sell any surplus supplies including motor
trucks and automobiles now owned by and in the possession
of the Government for the use of the War Department to * **
any corporation or individual upon such terms 88 may be
deemed best."
Regraded Unclassified
98
- 2 -
Translated into practical action, the World War guns of the Havy
call legally be disposed of under these two statutory provisions as follows:
(a) The Secretary of War requests the transfer of
the gune to the War Department and the Secretary
of the Navy approves the transfer. Or the
transfer can be ordered by the President as
the Commander in Chief of the Army and Havy.
38 Op. Atty. Gen. 293 (1935)
In either event, & formal or informal arrangement can be entered
into between the Army and Navy providing that: (1) If the Army is
expowered by the enactment of pending legislation to and does exchange
these guns for other equipment it will give back to the Navy other
material, to be agreed upon, of the same money value; or (2) If the
Army is not authorized to exchange the guns but sells them then the
Savy is not to be reimbursed with material or cash.
(b) After the transfer is made to the Army it declares
the guns to be surplus;
(c) The Army then agrees with a private corporation
to transfer these guns to it upon the condition
that payment be made in cash in 20 days unless
prior to the payment date legislation is enacted
authorizing the exchange of surplus guns. In that
event the War Department is to have the option to
take payment in materiel rather than in cash.
(d) Upon acquiring the guns the private corporation
can legally sell them to the Anglo-French Purchasing
Board if it sees fit.
Legislation is now pending to authorise the War Department to
exchange gune and other surplus equipment for material of which there is
a shortage. It should be definitely known in less than 20 days whether
it will be enacted. Pending this determination, the transaction need
not be slowed up.
(2)
Thompson Machine Guns
It is My understanding that these guns were recently acquired and
were not owned by the Government on July 11, 1919.
The Attorney General has held that, under aristing legislation, the
War Department can only sell those surplus guns which were owned by the
Government on July 11, 1919. Thus, even though the Havy 18 now empowered
to transfer the Thompson Gune to the Army they cannot M sold or exchanged
by the Aray.
Regraded
99
- 3 -
However, legislation is pending to authorise the Army to exchange
surplus, unserviceable, deteriorated or obsolete guns and other equipment for
other material of which there is a shortage. This proposed exchange power is
not limited to military equipment owned by the Government on July 11, 1919.
It applies to all equipment owned at any time. In all probability, the fate
of this proposed legislation will be determined within the next week.
If the legislation is passed and the Aray declares the transferred
Thompson Guns to be surplus or unserviceable for its purposes, then they can
be disposed of for the use of the Anglo-French Purchasing Board in the same
manner detailed above for World War Guns.
E.,. E.11.74.
100
June 7, 1940.
Mr. Donald Nelson,
Assistent to the Secretary,
Treasury Department.
Doar Kr. Nelson:
You are hereby designated to serve as a member of a
committee appointed by the President to study and make
recommendations to the President concerning the general
problem of purchases to be made by the Federal Government,
looking to the desirability of further consolidating re-
sponsibility and authority for such purchases through the
Division of Procurement, Treasury Department.
Mr. Edward R. Stettinius, Jr., has been appointed by
the President to serve 08 Chairman of the committee.
I attach for your information 6 photostatic copy of
a memorandum of June 5th addressed to ne by the President
on this subject.
Very truly yours,
(Signed) H. Morgeuthau. Jr.
Secretary of the Treasury.
File to Mr. Thompson
Regraded Unclassified
101
June 7. 1940.
MEMORANDUM FOR THE PRESIDENT:
In accordance with your memorandum of June 5th, I
have designated Mr. Donald Nolson to serve as « member
of the committee created by you to study and make recom-
mendations to you concerning the general problem of pur-
chases to be made by the Federal Government, looking to
the desirability of further consolidating responsibility
and authority for such purchases through the Division of
Procurement, Treasury Department.
(Signed) H. Morgunthau, Jr.
Secretary of the Treasury.
File to Mr. Thompson
By Messeager 145 pm
UNT: ame
Regraded Unclassified
102
June % 1940.
Dear HPs Ninokleys
General Watern has - - a which
I - enclosing herevith. I would appreciate 18
If you would propare the regly to
1 É
Sinserely,
(Signed) B. Morgesthau, Jr.
É d Tohers
THIS Instruction
Firth Floor, Commerce Building
s &
GEF/dbs
Enclosure.
103
House
THE WHITE HOUSE
WASHINGTON
June 6, 1940
MEMORANDUM FOR
SECRETARY MORGENTHAU
The attached is self-explanatory. Will
you please acknowledge to Mr. Rand. Thank you.
EDWIN M. WATSON
Secretary to the President
Enclosure
Mrs Kloty:
Please ask
Mr. B. Hurckly to purpose
ano, to this new
And
104
THE WHITE HOUSE
WASHINGTON
c/c
MEMO POR DEN. WATSON:
Mr. J. B. Bano of New York (heud of Remington
Rund) telephoned the following message for the
1. #Private air transport companies have much
spare equipment, also many planes which COUIC
LA taken off regular flights. The French
We 10 desperate need of planes. It is my
that the French would be willing to either
purchase such planes or agree to turn over to
SHE companies, In the future, planes now on
of for the French Government. Undoubtedly
Uir sreach would De willing to indemnify the
(In Ilnes for revenues lost.
"1 state there are 350 to 400 suen transport
--110, chpanie of 200 miles an nour or more,
could be equipped with bomb racks in
vruer.
Insure the Govt should turn over to the
many of the pursult ships which the
0 sau Navy have. They could De traded
manufacturers as credit against purchase:
"1 bodern planes; the mandlacturers would
PLA them to the French.
-150 Je possible to give Idaves of
UV to our pllots and mechanicisms a0
Liey could fly such ships, practically
reight, to Canadian territory -- possibly
fly the air transports to Enginna or
K
èll Lee Morgath
Regraded Unclassified
THE WHITE HOUSE
WASHINGTON
0/6
MEMO FOR GEN. WATHON:
Mr. J. H. Bana of New York (head of Remington
Rund) telephoned the following message for the
President:
1. "Private air transport companies have much
spare equipment, also many planes which couio
be taken off regular flights. The French
are in desperate new of planes. It is my
thought the French would De willing to either
purchase such planes or agree to turn over to
such companies, in the future, planes now on
order for the French Government. Unuoubteuly
the French would De willing to indemnify the
air lines your revenues lost.
"I believe there are 550 to 400 such transport
ships, capable of 200 miles an hour OF more,
which could be equipped with bomb racks in
short order.
2, "I think the Govt should turn over to the
French maly A tue pursuit snips which the
Army and Nuvy nave. They could we traded
in to manufacturers as credit against purchases
of new, modern planes; the manufacturers would
then sell them to the Frenen.
3. "It mignt 0150 DE possible to give leaves of
avrence w OQP pilots 0110 mechanicians 50
that they coul: fly such snips, practically
cramight, to Canadlan territory -- possibly
even fly the air transports to England or
Trance. If
K
l
dec Margine
Comparison us present and proposed individual income takes on not income of sul octed
SINCLE PERSON, NO DEPENDENTS
Net income:
Amounts of tax
:
Effoctive rates
:
Increaso in tax
before :
:
Proposal
:
=
Proposal
I
Acount
:
Percent
personal
:
Present
:
Wishout
:
With
T
Present
:
thout
:
with
: Without
:
With
: Without
:
With
commution
:
les
: oupertox
: supertar
t.
lew
#
supertax
:
supertax
:
supertax
:
supertax
:
suportex
:
supertax
2/
:
:
3/
:
3/
#
:
:
3/
:
:
3/
:
3/
:
3/
$ 1,000
I
$
4 3
4
-
à
$
8
4
-
1,500 $
14
22
24
%
1.5
1.6
cos
10
57.1
71.4%
2,000
32
10
44
1.6
2.0
2.2
8
12
25.0
37.5
2,500
50
58
64
2.0
2.3
2.6
8
14
16.0
28.0
3.000
68
76
84
2.3
2.5
2.8
8
16
11.8
23.5
4,000
104
112
123
2.6
2.8
3.1
B
19
7-7
18.3
5,000
140
156
172
2,8
3.1
3.4
16
32
11.4
22.9
6,000
216
232
255
3.6
3.9
4.3
16
39
7.4
18.1
7,000
292
312
343
4.2
4.5
4-9
20
51
6.8
17.5
8,000
378
408
449
4-7
5,1
5.6
30
71
7.9
18.8
9,000
464
508
559
5.2
5.6
6.2
44
95
9.5
20.5
10,000
560
524
686
5.6
6.2
6.9
64
126
11.4
22.5
12,500
815
948
1,043
6.5
7.6
8.3
133
228
16.3
28.0
15,000
1,104
1,342
1,476
7-4
8.9
9.8
238
372
21.6
33.7
17,500
1,439
1,838
2,022
8.2
10.5
11.6
399
583
27.7
40.5
20,000
1,834
2,424
2,666
9.2
12.1
13.3
590
832
32.2
45.4
22,500
2,209
3,100
3,410
10.2
13.8
15.2
811
1,121
35.4
43.0
25,000
2,804
3,866
4,253
11.2
15.5
17.0
1,062
1,449
37-9
51.7
30,000
3,914
5,512
6,063
13.0
18.4
20.2
1,598
2,149
40.8
54-9
40,000
6.384
9,164
10,080
16.0
22.9
25.2
2.700
3,696
43.5
57-9
50,000
9.334
13,372
14,709
18.7
26.7
29.4
4,038
5.375
43-3
57.6
75,000
19,484
25,892
28,481
26.0
34-5
38.0
6,408
8,997
32-9
46.2
100,000
33,354
40,244
44,268
33.4
40.2
44-3
6,890
10,914
20.7
32.7
250,000
129,204
136,196
147,576
51.7
54-5
59.0
6,912
18,292
5-3
14.1
500,000
305,224
312,148
330,933
61.0
62.4
66.2
6,924
25,709
2.3
6.4
1,000,000
680,184
687,116
718,404
68.0
68.7
71.8
6,932
38,220
1.0
5.6
5,000,000
3,790,164
3.797,100
3,917,390
75.8
75.9
78.3
6,936
127,226
.2
3.4
Treasury Department, Division of Tax Research
June 7. 1940
1
Under the proposal personal exceptions are reduced from $1,000 to $800 for a single person and from $2,500 to $2,000
for a cerried parson, and the attached surtex schedule is substituted for present schedule.
Marimum earned income assumed.
The supertax is 10 percent of the tax computed under the proposal but is not to exceed 10 percent of the not income
after deducting the tax under the proposal.
106
Regraded Unclassified
2
Chaparison of present and proposed individual income taxes on net incomes of selected sizes
MARRIED PERSON, NO DEPENDENTS
Net income:
Amounts of tax
:
Effective rates
:
Increase in tax
before :
:
Proposal
:
:
Proposal
:
Amount
=
Percent
personal
:
Present
:
Without
:
With
: Present
:
Without
:
With
:
Without
:
With.
: Without
:
With
exemption : law
: supertax
:
suportax
1
law
:
suportax
:
supertax
:
superter
:
supertax
:
suportax
1
supertax
2/
:
:
3/
:
3
:
:
3/
:
3/
:
3/
:
3/
:
3,
:
3/
$
2,500
$
$
10
$
11
,4%
4
$
10
$
11
-
-
-
-
3,000
8
28
31
.3%
09
1.0
20
23
250.0%
287.5%
4,000
44
64
R
1.1
1.6
1.8
20
26
45.5
59.1
5,000
80
100
110
1.6
2.0
2.2
20
30
25.0
37-5
6,000
116
136
150
1.9
2.3
2.5
20
34
17.2
29.3
7,000
172
212
233
2.5
3.0
3-3
40
61
23.3
35.5
8,000
248
288
317
3.1
3.6
4.0
40
69
16.1
27.8
9,000
329
384
422
3.7
4-3
4.7
55
93
16.7
28.3
10,000
415
480
528
4.2
4.8
5-3
$
113
15.7
27.2
12,500
$
780
858
5.2
6.2
6.9
130
208
20.0
32.0
15,000
924
1,144
1,258
6.2
7.6
8.4
220
334
23.8
36.1
17,500
1,234
1,589
1,748
7.1
9.1
10.0
355
514
28.8
41.7
20,000
1,589
2,124
2,336
7+9
10.6
11.7
535
747
33.7
47.0
22,500
2,004
2,764
3,040
8.9
12.3
13.5
760
1,036
37.9
51.7
25,000
2,489
3,494
3.843
10.0
14.0
15.4
1,005
1,354
40.4
54+4
30,000
3.569
5,104
5,614
11.9
17.0
18.7
1,535
2,045
43.0
57-3
40,000
5.979
8,684
9,552
14.9
21.7
23.9
2,705
3,573
45.2
99.8
50,000
8,869
12,844
14,128
17.7
25.7
28.3
3,975
5,259
44.8
59.3
75,000
18,779
25,244
27.768
25.0
33-7
37.0
6,465
8,989
34-4
47.9
100,000
32.469
39,524
43,476
32.5
39.5
43-5
7,055
11,007
21.7
33.9
250,000
128,294
135,404
145,864
51.3
54.2
58.7
7,110
18,570
5.5
14-5
500,000
304.144
311,284
330,156
60.8
62.3
66.0
7,140
26,012
2.3
8.6
1,000,000
679.044
686,204
717.584
67.9
68.6
71.8
7,160
38,540
1.1
5.7
5,000,000
3,788,994
3,796,164
3,916,548
75.8
75.9
78.3
7,170
127,554
.2
3-4
Treasury Department, Division of Tax Research
June 7. 1940
1/
Under the proposal personal exemptions are reduced from $1,000 to $800 for a single person and from $2,500 to $2,000
for B. married person, and the attached surtax schedule is substituted for present schedule.
2
Maximum earned income assumed.
The supertar is 10 percont of the tax computed under the proposal but is not to oxcoed 10 percent of the net income
after deducting the tax under the proposal.
107
Regraded Unclas
Comparison of present and proposed individual Income taxes on not incomes of selected sizes
MARRIED PERSON, ONE DEPENDENT
Not incose :
Amounts of tax
:
Effective ratos
=
Increase in tax
before
:
:
Proposal
:
:
Proposal
=
Amount
:
Percent
personal
:
Present
I
Without
=
with
:
Present
(
Without
:
With
= Without
:
With
: Without
:
With
exemption
:
law
:
supertax
:
suportax
:
law
:
supertax
2
supertaz
:
supertax
:
supertar
:
supertar
supertax
2/
:
:
3/
:
3/
:
:
3/
1
3/
:
3/
:
3/
:
3/
:
3/
$
2,500
-
I
-
-
-
-
-
-
-
1
3,000
- $
12 $
13
-
.4%
4% $
12 $
13
-
#
4,000
$
28
48
53
-7%
1.2
1.3
20
25
71.4%
89.3%
5,000
64
84
92
1.3
1.7
1.8
20
28
31.3
43.8
6,000
100
120
132
1.7
2.0
2.2
20
32
20.0
32.0
7,000
140
180
198
2.0
2.6
2.8
40
58
28.6
41.4
8,000
216
256
282
2.7
3.2
3.5
40
66
18.5
30.6
9,000
293
344
378
3.3
3.8
4.2
51
SR
17.4
29.0
10,000
379
440
484
3.8
44
4.8
61
105
16.1
27.7
12,500
610
724
796
4.9
5.8
6.4
114
186
18.7
30.5
15,000
876
1,080
1,188
5.8
7.2
7.9
204
312
23.3
35.6
17,500
1,182
1,513
1,664
6.8
8.6
9.5
331
482
28.0
40.8
20,000
1,529
2,035
2,240
7-6
10.2
11.2
507
711
33.2
46.5
22,500
1,936
2,652
2,917
8.6
11.8
13.0
716
981
37.0
50.7
25,000
2,405
3,370
3,707
9.6
13.5
14.8
965
1,302
40.1
54-1
30,000
3.477
4,968
5,465
11.6
16.6
18.2
1,491
1,988
42.9
57-2
40,000
5,879
8,536
9,390
14-7
21.3
23.5
2,657
3,511
45.2
59.7
50,000
8,745
12,668
13,935
17.5
25.3
27.9
3,923
5,190
44-9
59-3
75,000
18,591
25,028
27,531
24.8
33.4
36.7
6,437
8,940
34.6
48.1
100,000
32.233
39,284
43,212
32.2
39.3
43.2
7,051
10,979
21.9
34.1
250,000
128,030
135,140
146,626
51,2
54.1
58.7
7,110
18,596
5+6
14.5
500,000
303.856
310,996
329,896
60.8
62.2
66.0
7,140
26,040
2.3
8.6
1,000,000
678,740
685,900
717.310
67.9
68.6
71.7
7,160
38,570
1.1
5-7
5,000,000
3,788,682
3,795,852
3,916,267
75.8
75.9
78.3
7,170
127,585
02
3-4
Treasury Department, Division of Tax Research
June 10, 1940
Under the proposal personal exemptions are reduced from $1,000 to $800 for a single person and from $2,500 to $2,000
for a carried person, and the attached surtax schedule is substituted for the present schedule.
Maximum earned incone assumed.
3/
The suportax is 10 percent of the tax computed under the proposal but LE not to exceed 10 percent of the not income
after deducting the tax under the proposal.
108
Regraded Unclassified
5
Comparison of present and proposed individual income taxes a net incomes of selected sizes
MARRIED PERSON, THREE DEPENDENTS
Net income 1
Amounts of tax
I
Effective rates
2
Increase in tax
before
a
a
Proposal
:
1
Proposal
1
Amount
I
Percent
personal
1
Present
a Without
:
With
3
Present
& Without
&
With
% Without
1
with
I Without
=
with
exemption
a
law
I supertez
I supertax 2
law
: supertax
:
supertax
# supertax
: supertax
#
supertax
:
supertax
2/
I
I
3/
I
3/
#
1
3/
I
3/
a
3/
:
3/
1
3/
:
3/
$
2,500
-
-
-
-
-
-
1
-
-
-
3,000
-
-
-
-
-
-
-
-
-
.
4,000
-
$
16 $
18
-
à
.5% $
16 $
18
-
-
5,000 $
32
52
57
.6%
1.0
1.1
20
25
62.9%
78.1%
6,000
68
88
97
1.1
1.5
1.6
20
29
29.4
42.6
7,000
104
124
136
1.5
1.8
1.9
20
32
19.2
30.8
8,000
152
192
211
1.9
2.4
2.6
40
D
26.3
38.8
9,000
228
268
295
2.5
3.0
3.3
40
67
17.5
29.4
10,000
307
360
396
3.1
3.6
4.0
53
89
17.3
29.0
12,500
530
626
689
4.2
5.0
5.5
96
159
18.1
30.0
15,000
787
956
1,052
5.2
6.4
7.0
169
265
21.5
33.7
17,500
1,080
1,511
1,662
6.2
8.6
9.5
431
582
39.9
53.9
20,000
1,409
1,860
2,046
7.0
9.3
10.2
451
637
32.0
45.2
22,500
1,800
2,449
2,694
8.0
10.9
12.0
649
894
36.1
49-7
25,000
2,251
3,128
3.441
9.0
12.5
13.8
877
1,190
39.0
52.9
30,000
3.293
4,696
5,166
11.0
15.7
17.2
1,403
1,873
42.6
50.9
40,000
5.679
8,240
9,064
14.2
20.6
22.7
2,561
3.305
45.1
59.6
50,000
8.497
12,316
13,548
17.0
24.6
27.1
3,819
5,051
44-9
59-4
75,000
18,215
24,596
27,056
24.3
32.8
36.1
6,381
8,841
35.0
48.5
100,000
31,761
38,804
42,684
31.8
38.8
42.7
7.043
10,923
22.2
34+4
250,000
127,502
134,612
146,151
51.0
53.8
58.5
7,110
18,649
5.6
14.6
500,000
303.280
310,420
329.378
60.7
62.1
65.9
7,140
26,098
2-4
8.6
1,000,000
678,132
685,292
716.763
67.8
68.5
71.7
7,160
38,631
1.1
5.7
5,000,000
3,788,058
3,795,228
3,915,705
75.8
75-9
78.3
7,170
127,647
.2
3-4
Treasury Department, Division of far Research
June 10, 1940
Onder the proposal personal emptions are reduced from $1,000 to $800 for a single person and from $2,500 to $2,000
for a narried person, and the attached surtex schedule is substituted for the present schedule.
2/
Macrimom earned income assumed.
X
The supertax is 10 percent of the tax computed under the proposal but is mt to exceed 10 percent of the get Income
after deducting the tax under the proposal.
109
Regraded Unclassifie
Comparison of present and proposed individual incose taxes on net income of solected sizes 1]
6
MARRIED PERSON. FOUR DEPENDENTS
Net Income :
Amounts of tax
:
Effective rates
:
Increase in tax
before
:
:
Proposal
:
1
Proposal
:
Amount
:
Percent
personal
I
Present
:
Without
:
with
:
Present
:
Without
:
With
: Without
:
With
: Without
:
With
exemption
:
law
I supertar
:
supertar
:
law
: supertax
:
suportax
: supertax
:
supertax
1 supertax
:
expertar
2/
:
:
3/
:
3/
:
:
3/
:
3/
:
3/
:
3/
:
3/
:
3/
$
2,500
-
-
-
-
-
-
-
-
-
-
3,000
-
-
-
-
I
-
*
-
-
-
4,000
-
-
-
-
.
-
,
-
-
-
5,000 $
16
$
36 $
40
3%
-7%
.8% $
20 $
24
125.0%
150.0%
6,000
52
72
79
,9
1.2
1.3
20
27
38.5
51.9
7,000
88
108
119
1.3
1.5
1.7
20
31
22.7
35.2
8,000
124
160
176
1.6
2.0
2.2
36
52
29.0
41.9
9,000
196
236
260
2.2
2.6
2.9
40
64
20.4
32.7
10,000
272
320
352
2.7
3.2
3.5
48
80
17.6
29.4
12,500
490
578
636
3.9
4.6
5.1
88
146
18.0
29.8
15,000
743
900
990
5.0
6.0
6.6
157
247
21.1
33.2
17,500
1,032
1,288
1,417
5.9
7.4
8.1
256
385
24.8
37.3
20,000
1,351
1.772
1,949
6.8
8.9
9.7
421
598
31.2
443
22,500
1,732
2,349
2,584
7-7
10.4
11.5
617
852
35.6
49.2
25,000
2,175
3,016
3,318
8.7
12.1
13.3
841
1,143
38.7
52.6
30,000
3,203
4,560
5,016
10.7
15.2
16.7
1,357
1,813
42.4
56.6
40,000
5.579
8,092
8,901
13.9
20.2
22.3
2,513
3,322
45.0
59.5
50,000
8,373
12,140
13,354
16.7
24.3
26.7
3.767
4,981
45.0
59.5
75,000
18,027
24,380
26,818
24.0
32-5
35.8
6,353
8,791
35.2
48-8
100,000
31,525
38,564
42,420
31.5
38.6
42.4
7,039
10,895
22.3
34.6
250,000
127,238
134,348
145,913
50.9
53.7
58.4
7,110
18,675
5-6
14-7
500,000
302,992
310,132
329,119
60.6
62.0
65.8
7,140
26,127
2.4
8.6
1,000,000
677,828
684,988
716,489
67.8
68.5
71.6
7,160
98,661
1.1
5.7
5,000,000
3,787,746
3.794.916
3,915,424
75.8
75.9
78.3
7,170
127,678
.2
3.4
Treasury Department, Division of Tax Research
June 10, 1940
Under the proposal personal examptions are reduced from $1,000 to $800 for a single person and from $2,500 to #2,000
for a married person, and the attached surtax schedule La substituted for the present schedule.
2
Maximum ourned income assumed.
3
The suportax in 10 percent of the tax computed under the proposal but La not to exceed 10 percent of the net Income
after deducting the tax under the proposal.
110
Regraded Unclassifie
111
Notes on Conference in Secretary's
Office. Friday, June 7, 1940, 11:45 A.M.
Those present, Mr. Louis Renault, Mr. Jean Renault (son),
Xr. Mercel Guillelman, Mr. Dumaine (from French Embassy).
Secretary Morgenthau, Mr. Cochran, Mr. Nelson, and Mr. Young.
Xr. Rensult, after duly felicitating the Secretary of the
Treasury, stated that he had been sent to the United States to
neet the various Governmental officials. Further, that he came
not MB n politician, not ne A financier, only as a manufacturer.
Ra VAS just a boy who had gone Into the manufacturing business in
Pronce and nade good.
As EL manufacturer for his Government, he came solely to
accomplish B. technical objective, namely, to help the technical
production of tanks. He had built the amall French tank which
and been used during the World War, and AS he was the foremost
trak expert of France that was why he had been sent to the United
States. He added that the French tank was far superior to the
Terman tank, but that, unfortunately, the French did not have
enough of them,
Hr. Renault wished to make personal contacts with American
connfacturers who might go into the production of war tanks. He
pointed out that speedy production would be necessary in order
to ston the blood of France running over the country. He knew
that the United States was sympathetic and that its people under-
stood. He added that we all hope this war will be the last one,
for, certainly, we who fought in the World War do not want to see
another.
To the foregoing speech, Secretary Morgenthau responded with
R. Velcame stating that Ambassador Bullitt had already informed him
that Mr. Renault was coming to this country. However, since
Kr. Bonault had started this trip, the American situation presented
15 different picture. The promilgation of our own National defense
program had necessitated the organization of A suecial commission
by the President: Mr. Kmudsen of this commission had been specifi-
cally naked to look after American production problems.
The Secretary asked if he had talked with either Mr. Purvis
de Mr. Bloch L'Aine as they were the two persons with whom this
Government had been handling all Allted purchasing. Kr. Renault
Regraded Unclassified
112
- 2 -
replied that he had talked with both of them and that they were
fully acquainted with the situation.
The Secretary pointed out, very diplomatically, what when
Mr. Renault had decided on the type of tanks he wished to produce
in this country and the manufacturers who seemed to be fitted to
produce then, he should come back again and bring with him either
Kr. Purvis or Mr. Bloch L'Aine. The Secretary said that there
had been the finest relationship between the Government and the
Anglo-French Purchasing Board end that he merely touched on this
factor in order that the lines might be kept straight.
Kr. Rensult replied that he and Mr. Bloch L'Aine were in
absolute agreement and that he understood the situation perfectly.
The Secretary added that he wanted to help bring Mr. Renault's
mission to a successful conclusion.
The conference adjourned with the suggestion by the Secretary
that Mr. Nelson make an appointment for Mr. Renault to meet with
Mr. Knudsen that afternoon.
This group, with the exception of Secretary Morgenthau and
Herle Cochran, reconvened in Mr. Nelson's office. In talking over
Kr. Renault's request in a little more detail, Mr. Nelson and
Mr. Young came to the conclusion that Mr. Renault would save &
good deal of time If he could talk with Colonel Burns of the Var
Department before interviewing Mr. Enudsen.
This conference with the MAI Department would give Hr. Rensult
the opportunity to work out with the Army's tank experts the types
of tanks that the French wished to build in this country, as well
as the names of potential manufacturers.
Mr. Renault was very pleased with this arrangement, and it
was agreed that after his discussion with the War Department
Kr. Nelson would personally take him to Mr. Knudsen in order to
work out the production problems involved. An appointment was
subsequently arranged for Kr. Renault to meet with Colonel Burns.
ooOoo
P4
PT:bj
Regraded Unclassified
113
June 7, 1940
8:40 a.m.
H.M.Jr:
Hello.
Operator :
Dr. Mead is at the Federal Reserve Board
and I have him on the line if you'd like
to talk to him there.
H.M.Jr:
Yes, please.
Hello.
Dr. George
Mead:
Hello.
H.M.Jr:
Hello, George.
M:
Good morning.
H.M.Jr:
How are you? Monday if you and those
associated with you'd come over, I'd like
to say a sort of formal thank you and good
luck.
M:
Well, what time?
H.M.Jr:
Oh, you call up McKay Monday and some time
that's mutually agreeable we'll do it. See?
M:
All right. Well, I hope you're not going to
throw us out bodily because we haven't any
place to live yet.
H.M.Jr:
Oh, no, no. no. Well, then let's -- I tell
you how we'll leave it. We'll say the formal
good-bye when you go off of the payroll.
How's that?
M:
All right. Well, we just haven't been able
to get any offices. It's terrible.
H.M.Jr:
Well, don't worry. Ah -- I'm (Laughs) I
have no ulterior motive in calling you other
than I don't like people who have worked as
closely as you and I did just to kind of
disappear in the mist.
114
- 2 -
X:
Well, that's awfully nice of you and I'll
certainly bring it to McKay's attention when
we're set to go.
H.V.Jr:
You keep the rooms that you have. You have
some rooms down on -- stairs in my building?
V:
Yes,
H.V.Jr:
Well, don't worry. We have -- if and when I'm
pressed, I'll tell you, but we're not pressed
right now.
Mi
All right. Well, that's a great relief because
over here in the Federal Reserve, we don't seem
to be getting any accommodations even for the
few of us that are trying to work together.
R.M.Jr:
Well, I'm not pressed and when I am, I'll tell
you.
M;
All right.
E.M.Jr:
It was purely one of the heart, not of the
head, my calling you.
Well, I certainly appreciate it and one thing
I'm sorry about is leaving your association.
H.M.Jr:
Well, I am too, but I'm terribly glad that
Mr. Knudsen was smart enough to take you fellows
over bodily.
M:
Well, he seems to be glad to have us BO we're
glad to go along as long he can keep on the
track.
M.K.Jr:
Well, I'm under terrific pressure from the --
I don't know what he 18, but he's
......
X:
The Canadian?
R.M.Jr:
The Canadian.
M:
Well, I've got the man coming in that's making
those engines this morning
Regraded Unclassified
-115
- 3 -
H.M.Jr:
Good.
M:
And we're going to talk to him. It's the
quickest thing we could do and we'll let you
know as soon as we've done that.
H.M.Jr:
Well, George, there's no reason why it's
this -- ah -- while the Army's making up
their mind why it isn't perfectly in tune to
let this fellow have -- concentrate on one
engine, 18 there?
M:
Not a bit, and I think that's a good thing to
do.
H.M.Jr:
Isn't that a good thing?
M:
I think it is.
H.M.Jr:
Well, I thought BO. After all, that's what
you taught me while you were here.
M:
I think it's all right.
H.M.Jr:
Now -- well, that's that. But you will let me --
you or Knudsen will let us know by noon?
M:
Oh, yes, I'm quite sure. The man 16 due here
at 9:00 o'olock and we should have the information
and be able to come to a decision.
H.M.Jr:
Did you see the story in last night's Star about
engines?
M:
That's damnning. I don't know who did that.
H.M.Jr:
(Laughs)
M:
That's awful.
H.M.Jr:
I got a good laugh out of it.
M:
Well, I had a laugh and a cry, both.
H.M.Jr:
Well -- well, it sounded like what did they
call it in Hawaii, golden sunshine, or something
like that, when it rains.
116
- 11
Yeah. Well, of course, that's hitting a little
too close to the truth in one or two places.
Yeah. George, did you have a good meeting with the
Pratt, Whitney and Wright yesterday?
We had a good meeting with the latter, but not
the former. They're sitting right here.
H.M.Jr:
You had a good meeting with the Wright?
Yeah.
I thought 80. Well, if you could give this
Jacobe fellow the green light, it would take
me off the spot and I don't see why it isn't
just along the lines that you and I talked.
I think it is and I wondered under those
circumstances who would be placing that order.
Would you place it from the Treasury direct?
H.M.Jr:
Oh, no, no, no.
The Allied Commission would place it.
H.Y.Jr:
Yeah. And you see the Allied Purchasing
Commission, Purvis, represents England, France
and Canada and are officially accredited to me
but they do all their own buying.
Therefore, all we do 18 Bay yes and they go
ahead with the machinery.
H.M.Jr:
All you do 18 to let Don Nelson know that as
far as the Government 18 concerned they've got
a green light and he calle up Arthur Purvis
and says, good, go to it and that's the end
as far as we're concerned.
Fine.
We do no negotiating here except on Baby Bonde.
Fine.
Regraded Unclassified
117
- 5 -
H.M.Jr:
Every Friday we have a sale.
M:
All right. Well, I hope the next time I'm
over there and it's convenient that I can
meet Nelson. I, of course, haven't seen him
yet.
H.M.Jr:
oh, for heaven sakes, you want to meet him.
M:
All right. I'll do that.
H.M.Jr:
Good-bye.
M:
Good-bye.
118
June 7, 1940
11:21 a.m.
H.M.Jr:
Hello.
Operator :
Mr. McReynolds 18 busy talking. I'm waiting
for him.
H.M.Jr:
Right -- as soon as he's free.
Operator:
Right.
11:25 a.m.
H.M.Jr:
Hello.
William
McReynolds:
Yes, sir.
H.M.Jr:
Mac?
MoR:
Uh-huh.
H.M.Jr:
Mr. Nelson is eitting across the desk from
me and you're on the loud speaker.
McR:
Yeah.
H.M.Jr:
This morning Mr. Knudsen called me and I web
on my way over to the White House and 80
Mr. Nelson talked to Mr. Knudsen.
McR:
Yeah.
H.M.Jr:
And he put this up to us that he's been told
by the airolane fellows that the Army's work
was being held back because they could only
work 42 hours on the Army's stuff. When that
time was over, then they'd walk across the alley
and work on the Allied stuff for A8 long AS
they wanted to, and that was holding back the
Army stuff.
119
- 2 -
McR:
Yeah.
H.M.Jr:
And he put that up to me. Now I ask you, why?
MoR:
He had no business to put it up to you.
H.M.Jr:
Right. Well, who should it go to?
MoR:
Well -- ah -- I think that -- I think that
what's happening -- that question was raised
yesterday when we were over there, and the
President's the only one that's sitting on the
lead with respect to this number of hours, and
he talked to me about it quite at length, but
certainly the Secretary of the Treasury
couldn't be charged with that responsibility.
H.M.Jr:
That's what I thought.
McR:
And you certainly shouldn't take it.
H.M.Jr :
Just -- just -- Mac, Mr. Nelson wants to say
something ...... (Pause) ...... Oh. It's 8.
question of time and a half which -- in our course.
Well, that comes down -- that isn't Walsh Healy
thats Vinson Trammell.
MoR:
Yeah, I know.
H.M.Jr:
Well, Mac, as one old Treasury employee to the
other, somebody ought to tell Knudsen aside now
He got hold of Leon Henderson and wanted him
to talk to me on depreciation.
McR:
Yeah.
H.M.Jr:
Now, this evidently -- the fellows have gone
after him on Vinson Trammell and I am not
going to change unless the President tells me
to and quite the contrary, he wants me to
interpret it in a very strict manner.
MoR:
Yeah, I know.
H.M.Jr:
So, both that, and he's also talked to me about
the 42 hours and he's not going to change on that.
120
- 3 -
MoR:
Yeah, I know. He BO told me yesterday.
S.M.Jr:
So -- and I'd be very glad any time to ait
down if Mr. Knudsen had B. half an hour and
explain my attitude on the thing 80 he gete
it direct.
McR:
Yeah.
R.M.Jr:
But I think he ought to know both where the
President and I stand.
MaR:
Well, the President said yesterday in his
presence how -- where he stood.
H.M.Jr:
Oh.
McR:
Uh-huh.
H.M.Jr:
Well, now, Mac would you -- why don't you do --
what would you suggest if Knudsen calle me up.
I don't want to leave it up in the air.
Me R:
Well, if Knudsen -- I think it would be
desirable for you to take the time when you
can to tell Bill just what Treasury attitude
16 and what you understand the President's
attitude 18.
H.M.Jr:
Well, I'd better have -- I tell you what I
think I'll do. I'll arrange to have him sit
down with me and John Sullivan and Foley for
lunch and we'll explain just where we stand.
How would that be?
McR:
That would be fine.
H.M.Jr:
What?
McR:
That would help him a. lot. Bill's really
trying but he 16 a babe in the woods as far
as this Government procedure is concerned, and
he's trying. He'll do, and he's intelligent,
and that would be A tremendous help to him if
you could do that.
S.M.Jr:
I'll do that. Thanks, Mac.
M
Yeah. Good-bye.
Regraded Unclassified
121
June 7, 1940
11:50 a.m.
H.M.Jr:
Hello.
William S.
Knudsen:
This 18 Knudsen.
H.M.Jr:
Good morning. How are you?
Knudsen:
Good morning, sir. On the plane order,
the Canadian plane order, it will be all right
for you to clear it -- for you to put that
in here
H.M.Jr:
Oh, swell.
Knudsen:
but with the understanding that the
engine manufacturer that you selected
H.M.Jr:
Yeah.
K:
he'll not be able to fill that order
until the end of '41.
H.M.Jr:
Now, let me just see. You mean, that's a
stipulation that he will not be able to?
K:
Yes. Ah -- doing everything we can to
expand his facilities, but they're very small
at the moment.
H.M.Jr:
Yes.
K:
By the end of .41 he can have the 2,000 jobs
out.
H.M.Jr:
But as far as your concerned, the Allies can
go ahead with Jacobs
K:
Yes, sir.
H.M.Jr:
......
who they selected. I didn't select
them; they selected them.
K:
Yes, sir.
Regraded Unclassified
122
- 2 -
H.M.Jr:
I mean, they selected Jacobs, but it will be
all right to tell them to go ahead.
K:
Yes, sir. I thought you ought to know that
you'll have to wait that long before the order
18 filled.
H.M.Jr:
Well, you know, all of their stuff runs until
September of '41.
K:
I see.
H.M.Jr:
I mean, the stuff that they have with Pratt
Whitney, the stuff that they have with Wright,
they don't get final delivery until September,
'41.
K:
All right, dated December.
H.M.Jr:
December.
K:
Yes, sir.
H.M.Jr:
Now, one other thing. I -- through your office
I suggested that if you were free that maybe
you and Stattinius could have lunch with me
Tuesday.
K:
All right, sir.
H.M.Jr:
And then at that time, we'll go over some of
these things like Vinson-Trammell and
depreciation, obsolescence and that sort of
stuff.
K:
All right, sir. Thank you.
H.M.Jr:
Well, thank you for clearing this, and I'll
get word to Arthur Purvis right away.
K:
All right. Good-bye.
H.M.Jr:
Thank you.
123
June 7, 1940
12:08 p.m.
H.M.Jr:
Hello.
Operator:
Mr. Purvis.
H.M.Jr:
Hello.
Arthur
Purvis:
Good morning.
H.M.Jr:
How are you?
P:
Very well, thank you.
H.M.Jr:
Slow but sure Morgenthau.
P:
What 18 that?
H.M.Jr:
I'm slow, but sure.
P:
(Laughs) No.
H.M.Jr:
Yes.
P:.
(Laughs) I don't agree with the -- I don't
agree with that statement at all.
H.M.Jr:
Incidentally, the Navy has done the most
amazing thing on delivering those 50 planes.
P:
I think it's simply remarkable.
H.M.Jr:
It's the most amazing thing, I think, I've
ever seen done.
P:
Well, as a matter of fact, you know, the -- ah --
I have an idea that the Navy will never be late
anyway Judging from what I've seen.
H.M.Jr:
No, and -- well, the thing that I called you
up -- Mr. Knudsen just called me. They've
had a conference with the Jacobs manufacturing
company and they'll be very glad if the
Canadian Government wishes to place the order
for the 2,000 engines.
124
- 2 -
P:
Place the order.
H.M.Jr:
You can go ahead.
P:
Good.
H.M.Jr:
He said he Just wanted me to point out that
Jacobe will not be able to complete the
delivery until December 141,
P:
Yeah.
H.M.Jr:
I take it, you know that.
P:
We know that, yes.
H.M.Jr:
Well, you can go ahead and place the order.
P:
I'll telephone Howe straight away.
H.M.Jr:
Yes. It was cleared ten minutes ago.
P:
Good.
H.M.Jr:
I say, they cleared it ten minutes ago.
P:
Thank you very much.
H.M.Jr:
And the President made a magnificent explanation
today at his press conference on the sale of
this surplus material.
P:
Did he?
H.M.Jr:
Oh, excellent. Yes.
P:
And now I have Just received a message from
Lothian -- I told him I was immediately going
to ring you and then I learned just two minutes
later that you were going to ring me.
H.M.Jr:
Yes.
P:
London authority 18 very anxious to get something
out about this which will -- the British public
18 a bit excited, rather naturally, at the
reports that have come over from here, and I
think the suggestion was there was the hope
that something would be made officially from
here.
Regraded Unclassified
125
- 3 -
Well, the President has done it now.
P:
Oh, has he?
The President did it this morning at his
press conference about an hour ago.
P;
Well, now, I tell you, just now -- only ten
minutes ago -- six minutes ago, Lord Lothian
rang up and said that he felt that he should
come to me because he knew that I wanted -- I
would want to talk with you, but he had just
had word from Secretary Hull
M.Y.Jr:
Yes,
Pt
suggesting that they could do nothing
more than had been done already, and that on
the other hand, 8 statement -- they would
welcome a statement being given out by the
Anglo-French Purchasing Board. I had hastily
dictated a message with 8 view to reading it
back to you to see whether it would be all right.
Instead of doing that -- it's just being typed
at this minute -- 1f the idea 1s et all
agreeable to you -- the reporters of course
have been bomberding us and we have simply been
stone-walling completely
Yes.
but I was wondering whether I could read --
have read off to
what we thought might
be put out and get such corrections or such
views as you might have, end then -- then I
suppose I'd know or not whether I could tele-
phone him back what you felt about it, with
a view to his finding out -- making sure
that that 18 what Secretary Hull wanted.
Well, that I don't know, but instead of Sohwars,
I'd call up Mr. Edward Foley.
Yes, yes, I agree.
Much better to call Foley
Regraded Unclassified
.126
- 4 -
P:
All right, I'll call him and have that read
through ......
H.M.Jr:
Yes, and I'll tell Foley that it's coming
and if he thinks it's all right -- he knows,
he's been in on this whole thing with me, and
if it's all right -- he says it's all right,
you needn't bother calling me.
P:
Thank you very much, indeed.
H.M.Jr:
But I'll tell Foley to stand by. Will it be
coming between -- the next half hour?
P:
It will be coming in the next -- they've Just
put it on my desk, and the minute I've read
it, I will telephone it through to him.
H.M.Jr:
Thank you.
P:
And 16 there any hope on that very important
thing I talked with you about?
H.M.Jr:
Not today.
P:
Not today. All right, sir. (Laughs)
H.M.Jr:
All right. That just means I haven't discussed
it.
P:
I understand fully.
H.M.Jr:
I want to let it simmer a little bit.
P:
Yes, yes.
H.M.Jr:
We're doing pretty well by you.
P:
You are.
H.M.Jr:
Right. You'll know
......
P:
Thank you very much
that Young spoke
......
about yesterday, which of course we took with
the greatest pleasure.
H.M.Jr:
Well, you know that we're going to get you 93
of these Northrop attack bombers?
127
- 5 -
d.
No!
E.M.Jr:
on, yes.
P:
932
5,1r:
93.
Oh, thank you!
From the Army. Now, these are old ones, I
mean, I don't know, they maybe a year or two
old.
P:
Yes. Well, my heavens, I think just now they
want everything.
And they've already begun to assemble them.
Well, I'm hanged!
They've already begun to assemble them, 93
Northrop attack bombers.
All right, sir.
I spoke to Bob -- to Jacquin at my house last
night and told him to sit tight, but they're
in the works now.
In the works.
Yes.
All right. Thank you GO much.
Right-o.
Right. I'll ring Foley in PL minute.
Thank you.
Regraded Unclassified
128
JR
PLAIN
London
Dated June 7, 1940
Rec'd 2 p.m.
Secretary of State,
Washington.
1549, June 7.
FOR TREASURY FROM BUTTERWORTH,
1. BECAUSE of the rumors of Extensive changes in the
British Exchange control system and the behavior of the free
market in NEW York yesterday the British Treasury has this
afternoon made public the new regulations.
2. The practical Effect of the revolutionary powers
which permit the British Government "to require all persons
to place themselves, their services and their property at
the disposal of His Majesty" reported in my 1326 of May 22
have been largely of a confidential and hidden nature but
the important STEDO which have so for been publicly taken
in the sconomic field include (=) the Minister of Labor's
order which prohibits strikes and lockouts, compels
arbitration, gives powers to move labor geographically and
as between industries; (b) the Minister of Supply's order
Empowering him to take over or supervise firms Engaged on
government orders if not efficiently run; (c) the Board of
Trade order reducing to two thirds (in value) of the June-
November 1939 supplies to retailers of a large number of
products
Regraded Unclassified
129
-2- #1349, June 7, from London.
products including clothing, household goods and luxurits;
(d) another order by which machinery purchases are to be
licenced (E) an order Extending import restrictions to all
goods; and (f) when last April's order cutting home sales of
cotton, wool and rnyon textiles to three quarters of last
year's totals expires in September, the reduction will bE
made to one quarter.
These moves to release productive copacity for arms
and export manufactures will tend also to stimulate savings
but without wider rationing measures they may produce
shopping queues and hoarding or even in some ORDES price
increases in spite of the Chancellor of the Exchaquer's
statement that all the products are covered by the prices
of goods act. Thus the measures do not Entirely
Eliminate the need for staps to restrain the Effects of
now rapidly increasing purchasing power resulting from
overtime and increasing Employment.
In the financial field the British Government's
intentions C.B to its use of the new powers have not yet
been defined. HOWEVER apart from the statement regarding
bank rate reported in the second paragraph of my No. 1517
of June 5 it is known that many meetings of bankers and
officials have been held about which considerable mystery
is maintained. One announcement indicates that banks will
bE
Regraded Unclassified
130
-3- #1349, June 7, from London.
bE EXPECTED to furnish needed credit to firms working on
Government orders to an increasing extent and in ways
usually regarded as outside their customary banking
practice--s.g. for capital Equipment or for longer than
the usual periods. There has been much talk of interest
rate reductions by halving the banks' call loan rate to
the pre-war level which would also reduce the Treasury
bill rate but no such step has been announced.
3. The second successive jump in the note circulation
shown in this week's bank of England return in generally
regarded C.S. due to probable official instructions to banks
to increase and geographically spried their till money
reserves as well as to increased demands for overtime
wages and Evacuation needs. The increase was offset by
= rise in Government securities in the banking department
and bankers' deposits remain at a high level. The upward
trend of the note issue will probably necessitate an
increase in the fiduciary issue but as much of the "active"
circulation is in fact inactive in branch bank tillo the
increase should not be considered 28 inflationary.
4. As a concession to pleas for complete exemption
from death duties of estates of persons killed on active
service the Chancellor of the Exchequer yesterday moved an
amendment to the finance bill providing that death duty
shall
131
JR -4- #1349, June 7, from London.
shall not bE payable on property passing more than once
owing to death in the war; the provision appliss to Estates
of merchant seamen and persons on fishing VESSELS Engaged
in war duties as well as to the fighting services.
KENNEDY
CSB
TEA
IBNO THE 1 be 20
BECEINED
LO If
132
JUNE 7, 1940.
MEMORANDOM FOR THE SECRETARY:
Shipping Situation.
The export freight lightered to steamers loading in the
Port of New York during May averaged 736 cars per day against 676
in A pril.
Continuing the upward trend reported last week the
railroads handled on June 6th, 821 cars of export lighterage freight
and had on hand on June 6th 4272 cars awaiting delivery. In addition
there were 4800 cars of export freight in railroad-owned or controlled
storage facilities, out of a total capacity of 10,800 cars.
Indicating the liquidity of the situation is the fact that
there were only 68 railroad-owned lighters on demurrage in excess of
48 hours on June 6th.
The grain situation is unchanged, with approximately 8 million
and a quarter bushels in railroad cars, boats and elevators at New York.
Some of the vessels fixed for grain from Australia are due to arrive
shortly and will be discharging their grain into elevators awaiting
transhipment to the United Kingdom.
It is expected that most of this
business will be handled at ports other than New York.
The full cargo charter rate on grain from Australia fell from
$17.00 to $15.50, the latter rate having been taken by the American
steamer "DELAROF", July-A ugust loading.
Another indication of the softening tendency in charter rates
is the fixing of the American steamer "SAHALE" for June-July round trip
in the South African trade at $3.75 per ton.
West Indies time charterers, having done business recently at
$4.50, expect to knock the rate down to $4.00-
An American steamer, the "PETER KERR", will take 8. full cargo
of coal to Lisbon, Portugal for $11.60 per ton. Coal rates are essier
In other directions.
Regraded Unclassified
133
-2-
June 7, 1940.
The first of the week two vessels were reported to have
been fixed from the Gulf to French Atlantic ports, June loading,
at a rate of 28¢ per cubic foot, net form. This represents a drop
of 3¢ under the last reported fixture.
The Red Cross will load a full cargo next week on the
American steamer "MC KEESPORT" to Bordeaux. The movement of traffic
for this and other relief organizations will assume increasing
importance and may have some steadying influence on the market.
For the week ending June 1st the railroads report the
carloadings as having declined 48,000 under the préceding week.
As every classification, with the exception of ore and livestock,
showed a decrease the drop can probably be attributed to the
Memorial Day holiday.
One of the many curious effects of the war is the advance
in price of waste paper, due to active demand from exporters who are
sending large quantities to Spain and the United Kingdóm where it is
presumably ground up and used in lieu of Scandinavian woodpulp for
making pasteboard, etc.
Steel production is running almost 50% in excess of this
time year.
last It is estimated that there will be exported from
the United States in 1940 at least 9,000,000 tons of steel products,
far in excess of any previous years, including those of the past war.
The French government is continuing to place large orders
for shell steef.' Comparatively little of this French steel has
reached seaboard but the movement is expected to become heavy in B.
very short time.
134
-3-
June 7, 1940.
At the moment the French Maritime Commission have 8
surplus of ships here and profess to be unable to provide the cargoes
to load and sail them promptly. The British are still utilizing
a disproportionate share of vessel's capacity for the carriage of steel.
The general outlook is that lines outside the jurisdiction
of the several belligerent ministries may encounter difficulties in
securing full cargoes at compensatory revenues. One favorable angle
to this change in the situation is that the non-Conference operators
are finding the going pretty rough and are gradually dropping out or
drastically curtailing their activities.
Imports from the belligerent countries are naturally pretty
thin when spread among all the vessels seeking homeward cargoes after
taking the war materials, etc., eastbound.
One bright spot 1s the
official assurance to the United States Department of Commerce that
despite a reduction of about one third in the production of Scotch
Whiskey, the stocks in warehouse are sufficient to last for the next
four years and no drastic increase in price need be anticipated.
Efforts will be made to increase the quantity shipped to the United
States so as to provide the needed foreign exchange for the purchase
of armaments.
Basil thanis
Regraded Unclassified
HALL 1 BANK
RESERVE
INFORMATION COPY FOR
of NEW YORK
the Gobran
135
INCOMING CABLEGRAM-SERIAL NO,
3899
RECEIVED ON June 7, 1940
London, June To 1940.
Federal Reserve Bank of New York
New York
No. 535/40 CONPIDENTIAL POR KNOKE
ONS A program will be put into force immediately to ensure that
sterling will continue to be used as far as possible for
compretel and current financial payments between the
sterling area and other countries but in the future at
official rate of exchange instead of being partly covered
in foreign markets at the free rate. This aim has already
been largely achieved by our present arrangement with the
Canadian French and Dutch controls governing transactions
with the areas they control.
TWO in propose to require that all exports to U.S.A. and
Switzerland shall be invoiced in U.S. dollars and Swiss
france respectively or paid for with official sterling
obtained against those currencies from our control.
This will reduce the demand for sterling in foreign markets
but at the same time we shall reduce the supply by providing
their own currency to residents in those two countries at
official rate for all trading and current financial purposes
for which a transfer in sterling only has been permitted
hitherts. The general scheme is thus to put all transactions
between the dollar and sterling areas on the basis of official
FLE DIVISION
rate of exchange.
Regraded Unclassified
NEW YORK
RESERVE
BANK
INFORMATION COPY FOR
136
INCOMING CABLEGRAM-SERIAL NO. 3897
RECEIVED ON June 7, 1940
-2-
THIS
In almost all other countries wit which " have important
financial relations some degree of exchan control has been
imposed and in those 08306 We shall proceed to make payment
reements or to institute & procedure fr clearing all
transactions in sterling at official rate through special
account. Into those accounts all payments for imports and
current financial transactions will be made and from them
payments to the sterling area only will be allowed.
PO FOR
The only important source or supply that remains will thus
consist of capital transfer. These in turn are to be
reduced by suspending the granting of licenses to non-
residents for the sale of their securities here and refusing
permission for other transfers of a capital nature unless
quite exceptional consideration applies.
FIVE
The final result should be that
A) over the whole area covered by the Aritish rench Dutah
and Belgian impires starling md the currencios associated
with it will circulate interchangeably with the minimum
of restriction under the seleguard provided by co-ordinating
controls and
B) all normal current transactions of the ares with
other countries will be completed at fixed rates
established by those controls
4 DIVISION
Regraded Unclassified
1 E
BANK
INFORMATION COPY FOR
137
KW YORK
INCOMING CABLEGRAM-SERIAL NO. 3899
RECEIVED ON
June 7. 1940
+
SIX The regulation which requires certain exports (rubber
jute etc.) shall be invoiced in hard currencies or paid
for with official sterling will be revoked with immediate
effect (but ace Paragraph TWO above) and in due course
replaced by the separate arrangement to be made with
various countries covering all commodities and transactions
SEVEN Pollowing upon our recent discussion we are endeavouring
to make arrangements with the London branches of the
American banks to ensure a quotation of sterling at official
rate in New York.
It will be difficult to provent some abuse of racilities
of this nature and 80 we shall confine the arrangement to
transactions in sterling bills with documents attached
covering trades between the sterling area and the U.S.
dollar area. The arrangement will be extended as soon as
we can take sufficient precaution.
10 ДНЕ Boltoms ECHELY
LECHNICVT V2212 ил
GHT 10 301170
BW nu 10 VN 10-01
DELIVERENT
BECEINED
YY TEST CORRECT
H
DISION
Regraded Unclassified
Confidential
137-A
June 7, 1940
dy dear Mr. Ambassador:
Taank you for your letter of June 6
inclosing the report dated June 5 from
London from the General Staff about the
military position. I have read this with
rest interest.
I appreciate your offer to make these
daily reports available to me as they are
received, and I should indeed be pleased
to receive them. I recognize their confi-
dontial nature and I assure you they will
be for my own personal information.
Yours sincerely,
(Signed) H. Morgenthau.Jr.
H1g Excellency,
The British Ambassador.
By Messenger 1225
Regraded Unclassified
Confidential
B
June 7, 1940
Ky dear Mr. Ambassador:
Thank you for your letter of June 6
inclosing the report dated June 5 from
London from the General Staff about the
military position. I have read this with
great interest.
I appreciate your offer to make these
daily reports available to no as they are
received, and I should indeed be pleased
to receive them. I recognize their confi-
dential nature and I assure you they will
be for my own personal information.
Yours sincerely,
(Signed) H. Mongwathau. 17.
His Excellency,
The British Ambassador.
By Messenger 1225
Regraded Unclassified
confidential
187-C
June 7, 1940
Hy dear Mr. Ambassador:
Thank you for your letter of June 6
inclosing the report dated June 5 from
London from the General Staff about the
military position. I have read this with
great interest.
I appreciate your offer to make these
daily reports available to me as they are
received, and I should indeed be pleased
to receive them. I recognize their confi-
dential nature and I assure you they will
be for my own personal information.
Yours sincerely,
(Signed) H. Moreenthau Sr.
His Excellency,
The British Ambassador.
By Messenger 1225
Regraded Unclassified
:
137-D
BRITISH EMBASSY,
WASHINGTON, D.C.
PERSONAL AND SECRET
June 6th, 1940
Dear Mr. Morgenthau,
Mr. Purvis suggested to me yesterday
that you might be interested in seeing copies of
the daily, and sometimes twice daily, reports which
we are getting from London from the General Staff
about the military position.
I am sending copies to the President,
Mr. Hull and the War Department for their strictly
confidential use and I shall be delighted to send
them to you at the same time on the understanding
that they are for your own personal information
only.
I enclose herewith copies of the reports
which came in this morning.
Lolazon
The Honourable
Henry Morgenthau, Jr.,
United States Treasury.
Regraded Unclassified
E
Telegram despatched from London
on the afternoon of June 5th.
Nothing added to evacuation figures
given in my immediately preceding telegram but
aircraft search last night and this morning
resulted in two motor boats containing 36 French
troops and rubber float with two Royal Air Force
officers being found. Enemy entered Rosendaal
immediately cost of Dunkirk early yesterday.
Beaches were under fire at 10.30 hours and
enemy DOW reported to have reached sea front in
this area.
One British division and two French
divisions attacked south of Abbeville yesterday
reaching Meanil Bois de Cahon. Enemy counter-
attacked and retook Meanil but failed at Bois de
Cahon. Intense enemy road movement reported in
area of Peronne - St. Quentin - St. simon.
Last night Whitleys, Wellingtone and
Hampdone attacked oil refineries and plants in
the Ruhr district and northwest Germany with
reilway marchalling yards as alternative targets.
No reports yet received. One aircraft missing.
Royal Air Force fightors patrolled yesterday over
British, French and Belgian coasts. À Blenheim
shot down & Dornier 18 off Fair Isle. No other
interceptions./
Regraded Unclassified
137-F
interseptions. All our fighters returned.
Considerable enemy air activity
reported over English Channel and northern
France particularly in Montreuil area.
British steamer sunk off Cape
Finisterre on June 2nd. French steamer sunk
by mine off Margate early yesterday.
Regraded Unclassified
1.7-G
Telegram despatched from London
late on the evening of June 5th.
at 04.00 hours today violent artillery
and air bombardment reported on French positions
from Anisy to the cast of Amiens, also on 10th
Army front west of Amiens. Reports indicate that
this attack has met with some success and enemy
tanks reported at Wilesout west of Piequigoy and
at Fransert (14 miles southwest of Peronne). It
is thought that another attack may be launched
further eastward with Rheims as first objective.
Every indication that this attack will be
supported by armoured fighting vehicles end
infentry not hitherto employed are available for
this offensive. Estimated that over 70 divisions
including armoured formations can be made available
for whole southward attack moross the Somme and
Aisne.
British fighters patrolled in Abbeville
area today but details Dot available. Attacks on
oil targets in Ruhr and Frankfurt districts last
night were successful. Direct hits registered OD
refineries and plants at Preckfurt Mappheim Reishols
and Monheim and a number of fires storted.
German air activity yesterday undiminished.
Bombing attacks last night at Le Usvre and south of
Dieppe. Attacks also southment and moutheast of
Paris/
Regraded Unclassified
137 - H
Paris. Considerable transport activity con-
tinues to Guise, Brussels, St. Quentin and
Amsterdam. Much transport activity also from
Wiesbaden to Charleville and to Phillipeville
in Southern Belgium, latter places probably
supply depots.
Much training activity in eastern half
of Germany during the past few days.
No raval information of importance to
record.
Regraded Unclassified
137-I
BRITISH EMBASSY,
WASHINGTON, D.C.
Secret
June 7th, 1940
Dear Mr. Secretary,
I enclose herein for your
personal and secret information a copy
of the latest report received from
London on the military situation.
Believe me,
Dear Mr. Secretary,
Very sincerely yours,
Loluzan
The Honourable
Henry Morgenthau, Jr.,
United States Treasury,
Washington, D. C.
181-J
Telegram despatched from London
on the afternoon of June 8th.
1. German attack appears to be general
from Anisy to mouth of Some with two main thrusts
at Peronne and Amiens. Tanks penetrated between
poste in places to a depth of ten or twelve miles
but French strong points appear to be holding out.
300-400 tanks reached Pransart and at 12-30 hours
yesterday were attempting to widen gap between
Pertain and Harbonnières. At 14-15 hours armoured
troops reached :ssertaux and Grattepanche. At 11
hours an attack on left bank of Oise had reached
Ouny-Beame-Bretigny. In general enemy infentry
appear to have penetrated two or three kilometres
but French appear to be well organized in depth and
their infantry are holding out. Double columns of
tanks on road to Peronne-Roye (head at Roye) and
Amiena-Montdidier (head at Montdidier) were later
attacked by French aircraft. British division
attacked by enemy, strongly supported by air bombard-
ment and retired to line Hoquincourt-Limeux-Audis-
Achoux-Hautebut on which line their front is intact.
2. Yesterday evening and last night
Blenheims Whitleye etc. attacked targets Cambrai,
Le Catesu, Peronne, Albert and Bepaume area. All
aircraft have returned in spite of intenes anti-
aircraft fire during evening attack and attack by
Messerschmitt 110s one of which was shot down at
staples/
Regraded Unclassified
+
Staples. No reports yet available. Wellingtons
and Hampdens also attacked last night railway targets
in Rhine-Mouse area and oil refinery west of Memburg.
No information yet available. Two aircreft missing.
3. Considerable enemy air activity last
night between Orkneye and Isle of wight. Aerodromes
at Driffield, Thorneby, Burchem Newton. Melmswell,
North Coates and Grimaby attacked but only damage 10
far reported is at Thornaby where two Hudson aircraft
destroyed and four personnel wounded. Incendiery
bombs and flares also dropped at North Fleet (Gravusend)
without imposing damage. Aircraft apparently attacked
singly or in pairs. /ighters sent up but no intercep-
tions made. Anti-airoraft guns in Humber area CREW
into action.
4. Two small cosating-vessels were sunk by
mines in home waters yesterday.
Regraded Unclassified
107-L
BRITISH EMBASSY,
WASHINGTON, D.C.
June 7th, 1940.
Secret
Dear Mr. Secretary,
I enclose herein for your
personal and secret information copies
of the latest reports received from
London on the military situation.
Believe me,
Dear Mr. Secretary,
Very sincerely yours,
Loberan
The Honourable
Henry Morgenthau, Jr.,
United States Treasury,
Washington, D. C.
Regraded Unclassified
1.7-M
M
Telegram desputched Geops from London
on morning of June 7th.
have thought probable that three Corrier
ermies and at loost one armoured division are
taking part in Corman attack between Animy and
mouth of some. Four main thrusts came from
Channy, peronne, Amtone and st. Valery. Present
situation far from clour but farthest points of
ponetration by appoured elements 00 for reported
are Veresses (southoest of Seyon), Boye, Nontdicier
and Ault (vest of Abbeville). Marlier report that
tanks are reached Contdictor one not however been
confirmed. Pronch peport that mithough onewy have
crosse) clas Teral platesu south of liver Aillette
10 still Hold. Croset Canal opposite River Some
to rest of Targe 0200 held by Veench. Totwoon Amions
and the BOU Termo Infantry Level blarge bridgehead
at Antone infiltrated between Ailly and Pont Seay
end from Abterills to 000 edvance of 5 to a miles
south of river. Tritish division holding 18 miles
on west of this 11as is being continuously horecard
by tanks and air busting.
Menhcine scorted VI fightere bombed
energy troops In Auxy Le Chatesu area this moreing.
Direct hite scored on three enemy columns. Pive
Blecheime missins. Four 109 shot
down 001 firmed and too unconfirmed. Two Turricones
missing./
Regraded Unclassified
257-N N
2
missing. Further attack on enemy troops noving in
Abbeville area this afternoon. The reports yet
available. Righters also shot down three enemy
boobers confirmed and three unconfirmed, also one
additional Resserschmidt 110 coofirmed and 000
unconfirmed. One Burricase pilot killed, four
Burricenes damaged. Tes direct hits scored in
attacks last night on rellway targets and Besture
power station received five direct hits.
German atr fores operattons yesterday
continued on widespread seale. to Sevre, Souen,
comunications in Fario area and three acrodromes
120 mileo south of Parie were attacked. Panchlate
dropped in Rarne, Nozelle and Ardennes 0700 and
parsobutists reported In Taris area and hormandy.
Dive bombers motive DD Homeo successfully.
Considerable bomber recommiseance sctivity over
back 87000 of Come front, Phonoagne, Lorraine,
the Youter and 1/2 Alance. purther reconusissance
this morning over southemstern France probably
indicating further bomber attacks in Phone Valley.
Little information regarding Serman fighter aircraft
but about 250 were operating from asrodromes in
northemsters France. Transport activity continues
between #iosbaden area northeastern Pronce southern
Belgium. Reneal of transport activity in Baltie
area. Cermen 01- force are eequiring large scele
maps of Tritten coostel torne. Alro reported that
parachutes 020 already assembled in northern Germany
for employment against United Kingdom.
Regraded Unclassified
137-0
Telegram despatched from Leaden
on the afternoon of June 7th.
Enemy pressure continuee OD line
Leon-Boissons. st 1 Delle yesterday French
10th army held from Vilers-Bretonneux round seath
of Amiene to Dissement, thenee along Failway to
Gamaches. on left of above line British division
supported by armoured division bas now been fight-
ing continuously for 3 days and suffered heavy
casualties. This division was forced yesterday
to withdrew to river Breale on line Gemaches-
Treport. Enemy reported to have infiltrated into
woods south of Eu but later message reported
British tanke counter-attack had improved situation
in this area. At least 50 prisoners taken. Bridges
on river Bresle are being blown up.
Wellingtons attacked enemy communications
lest night in Abbeville area. All aircraft returned.
Whitleys attacked rellway targets in western
Rhinelend last night. Preliminary reports record
large explosion at Medau (Ruhr). All aircraft
returned. l'empdene bombed oil refineries and
plants at Hamburg and Ostermoor (west of Bremen).
All aircraft returned. But no reports yet available.
Last night large numbers of enemy aircraft
crossed east and south coasts of England, air-raid
warnings/
Regraded Unclassified
187-P
a
warnings being sounded at 26 places from
Middlesborough to Portsmouth. Preliminary
reports record bombs on two steel works in
Lincolnshire and at Upwood aerodrome, south
of Peterborough. lio major damage however
appears to have been caused. No interceptions
by fighter aircreft.
One British ship mined yesterday and
one British ship torpedoed today in home waters.
Regraded Unclassified
138
June 7, 1940
11:30 a.m.
GROUP MEETING
Present:
Mr. Young
Mr. Haas
Mr. Thompson
Mr. Gaston
Mr. Harris
Mr. Graves
Mr. Schwarz
Mr. White
Mr. Foley
Mr. Cochran
Mr. Bell
Mrs. Klotz
H.M.Jr:
I just thought we would get acquainted.
Also, I see that I have given out a security
order or Treasury has, on postal things. I
thought the President held it up.
Bell:
No, he signed it last night.
H.M.Jr:
oh, I sent it back.
Bell:
You sent it back and he signed it.
H.M.Jr:
Wonderful.
Bell:
It wasn't delayed at all. He apparently
intended to sign it all the time. He
approved it.
H.M.Jr:
Phil, will you look through my files? We
have Purvis first - you know, he said he
had been waiting ten or fifteen days, a
week or ten days. I want the actual date.
Klotz:
On that general order, I got it last night
and --
Bell:
Well, I will get it.
H.M.Jr:
I am going to ask everybody to confine them-
selves to just the stuff I have to sign or
the emergency stuff.
139
- 2 -
Norman?
Thompson:
I have Mr. Doughton's memorandum about that
man Rivers, who wants a job in the Treasury.
I talked to him and explained to him the
situation as developed by the report.
H.M.Jr:
Did you do it nicely, what A great job he has
done?
Thompson:
Yes, but this has happened now. Doughton
phoned this morning and wanted me to see you.
He has gone to the Internal Revenue Bureau
and filed his delinquent income tax return
which developed no tax due.
H.M.Jr:
Well, he 1s 8. drunk. I don't want the man
in the place. Doughton will be re-elected,
BO what the Hell.
Klotz:
You promised.
H.M.Jr:
I promised and I winked at Doughton and
Doughton said okay. After all, Doughton
promised him this Job after the primary.
Klotz:
He went and paid up his back taxes.
H.M.Jr:
Yes,
Thompson:
Well, there was no tax due.
H.M.Jr:
Certainly don't give him the three thousand,
Make it twelve hundred.
Thompson:
Oh no, it wasn't three thousand.
H.M.Jr:
But Doughton - Harold Graves has his tongue
hanging out looking for men. What do you
recommend? Talk fast now.
Thompson:
Well, I think the new situation probably
justifies our going along with Mr. Doughton,
H.M.Jr:
Okay. It is between you and Mrs. Klotz.
Here 18 the thing Watson gave me, and I want
you to talk about it to Sullivan. I am sore
Regraded Unclassified
140
- 3 -
about it. And also, let Chick Schwarz see
that. He has got no business talking that
way. Let Bell read it. Let things from
Guy Helvering go direct to the President
on the press releases. It is on the new
Collector of Internal Revenue for Kansas.
General Watson says he just acts like an
Army Colonel.
Schwarz:
I will take care of that.
H.M.Jr:
Well, you (Thompson) and Sullivan. Just
gently; not too much, but just gently. Dan,
have you anything to sign?
Bell:
Yes, I have this letter to the Bank of
New York about the British. It is one you
sent to the President yesterday.
H.M.Jr:
Did he approve it?
Bell:
Yes, he approved it. I have got a number
of things.
H.M.Jr:
To sign?
Bell:
To talk to you about and sign.
H.M.Jr:
I will sign but I won't talk.
Bell:
Norman Davis called you yesterday and I
talked to him. He was a little hesitant
to discuss the matter. He said he was
embarrassed by being pushed by his people.
They have no contributions from the airplane
companies, Red Cross. He Just wondered if
you could do anything about it and I told
him I didn't think you could in your
connection here with them. He said in
the past it had been the policy of whatever
the contributions were lacking, to get the
Secretary of the Treasury to make some
statement.
H.M.Jr:
Now look, we are here in the family. I
don't know what is the matter with the
people. Mr. Knudsen sends Leon Henderson
over here to talk about depreciation.
141
- 4 -
I explained to Leon - of course, that ends
it. This morning he calls up - I didn't
talk to him - what can they do about - 80
that they can pay time and a half and put
it in the cost of the Army plane to get
around the Vinson-Trammell Act. I called
McReynolds and said, "Mac, why did they
call me about it?" He said the President
told him yesterday he wouldn't do anything
about that. He told them positively he
wouldn't do it. Now, the sooner these
people find out that all of the social
legislation that Mr. Roosevelt got through
1s going to stock, the sooner the better.
I Am having Mr. Knudsen and Mr. Stettinius
come over for lunch, and Ed Foley and
Sulliven will be there and be up on
Vinson-Trammell and depreciation and
everything else.
Foley:
At lunch?
H.M.Jr:
Tuesday at lunch.
Bell!
Well, I told him I didn't think you could
do anything about it, I thought it WAB
something --
H.M.Jr:
It 18 crazy, it 1a just crazy. Come on,
next, Dan.
Bell:
The State Department 1e pushing Harry White
for a Treasury representative to go to
Ecuador for the national monetary banking and
economic matters.
H.M.Jr:
I thought Harry went to Atlantic City last
week.
White:
I am not going to go this time.
H.R.Jr:
Oh.
Bell:
Harry 18 willing to send Glasser.
H.M.Jr:
I see.
Bell!
It in n. year's --
Regraded Unclassified
142
- 5 -
White:
It 1s a year's leave of absence and they are
eager to have him go. It 1s very important.
H.M.Jr:
Harry, whatever you and Dan and Herbert Gaston
decide on, I will abide by it. You three
decide. Whatever you decide, I will abide
by it.
Bell:
I will save these other things until some
other time.
Klotz:
He knows better now. That 18 smart.
H.M.Jr:
Well, I Am Just fighting time.
Bell:
Well, I can see your --
Foley:
Here 1s a press release.
H.M.Jr:
Harold?
White:
Nothing for you to sign, but I think you
would probably be interested in this. It
will only take a minute. The Inter-American
Bank is in the final draft and it is going
to have the authority rest with Treasury,
State Department, and I think the Export-
Import Bank, that is the way it 1s drafted
now. Or the RFC. Certainly in response to
your letter to Welle e and his reply of
finding other ways of financing Latin-
American expenditures, etc., Danny Bell had
8. suggestion which I think is an excellent
one. We are working on it, and I think it
1e very important and it will come to you
after we write it out.
A Miss Harriet Elliott, whom I don't know
but whose name 18 in the papers called to
know whether I would be able to attend the
meeting tomorrow at ten o'clook. Do you
know anything about it?
God Almighty! Tell Mac that when they want
people - now here the President writes me B.
very nice formal letter about Mr. Nelson.
McReynolds calls me up first to ask if he
1s all right. Now when they want people
from the Treasury staff, it is up to Mac
143
- 6 -
to see that it comes from Mao to you to me,
see.
Thompson:
Yes.
H.M.Jr:
I can't let Harry run around with a lot of
strange women.
White:
My wife thanks you, if I don't.
H.M.Jr:
Wait until you see her. You will thank me.
White:
I don't know, I got 8. glimpse of Floyd Odlum's
wife, and I don't know, maybe there are more
of them around town.
H.M.Jr:
Are you through?
White:
I am squashed.
H.M.Jr:
Take care of it, will you, through Mac, please?
Thompson:
Yes.
White:
You let me know then.
H.M.Jr:
Well, Norman Thompson will. It is in Norman's
hands.
Basil?
George?
Haas:
I have nothing.
H.M.Jr:
Lote of compliments on this piece of work that
you (Haas) did in the airplane business.
Haas:
Thank you very much.
H.M.Jr:
Did you go to the President's press conference?
Schwarz:
Yes, sir. He talked about the committee to
look into consolidating purchases, and he also
said that all military planes become obsolete
darned fast.
H.M.Jr:
Did he get away with his explanation?
- 7 -
144
Schwarz:
Very well.
H.M.Jr;
The reason I Am asking, General Marshall,
Admiral Stark, Solicitor General, Foley,
three former admirals and I started at
nine o'clook trying to prepare this state-
ment for the President. He saw us at
10:30 and gave us what, ten minutes? And
he absorbed it all, you see, in order to
handle it, and that 1s why I am exhausted.
Schwarz:
He has two laws, 1919 and 1926. He talked
about them in detail.
H.M.Jr:
He got away with it all right.
Schwarz:
Yes. They pressed him a little about new
equipment. He said, yes, these planes had
Just been delivered but they are obsolete.
H.M.Jr:
He should have told them they were biplanes
and not monoplanes. The Navy really did the
most remarkable thing. Wednesday night at
my house if they could have these planes -
1s that right, Phil?
Klotz:
That 1s right. Today 1s Friday.
H.M.Jr:
Phil was there. It was Wednesday.
Young:
Yes, it was Wednesday, Wednesday night
at 6:40.
H.M.Jr:
And Stark went out and telegraphed that
night and those planes began to arrive,
half of them arriving at Buffalo yesterday.
He made it an emergency mobilization and
the stuff began - half of them were at
Buffalo yesterday. It Was & magnificent
job. He 18 just blazing the way for the
Army.
White:
Danny wants to get in on the ground floor
with the suggestion you form & private
corporation to handle used planes.
Bell:
Finance them.
White:
Used planes.
145
- 8 -
Bell:
Just like financing an automobile on the
installment plan.
H.M.Jr:
We move too fast. We haven't got time for
that. Okay?
Schwarz:
Yes.
H.M.Jr:
Phil?
Young:
No problems. On this, you talked with Purvis
on Monday, May 27th.
H.M.Jr:
Well, then it wasn't - May 27th?
Young:
Yes. He first spoke to you about it on
Saturday, May 25th, and he was in on Monday,
May 27th, and you talked about it at that
time. I'm not specifically certain yet AB
to whether on that day you told him to
wait, but you discussed it on that day.
I can give you that information.
H.M.Jr:
Would you call him on it or not? I mean,
saying he had been waiting a week or ten
days.
Young:
His written memorandum on that question
came in on Monday, May 27th.
Klotz:
That is right. That 18 about ten days.
H.M.Jr:
That is right. He 16 right. Okay, we will
not call him. You are to see him at &
quarter of twelve, aren't you?
Young:
Yes.
Cochran:
I have nothing.
H.M.Jr:
Does he speak English?
Cochran:
He has B. man with him who speake English,
one of his engineers. At least the Ambassador
told me he did.
H.M.Jr:
Do you want to be here?
Coohran:
It doesn't matter, just as you wish.
Regraded Unclassified
146
- 9 -
H.M.Jr:
Just to make sure the fellow translates
correctly.
Cochran:
All right, fine.
H.M.Jr:
That has been done before. I've seen
them do it.
Cochran:
All right, I will stay.
Foley:
We have the letters from Guy Vaughn to
General Wilson agreeing to turn over the
models and agreeing to enter into the
licensing arrangement saying that the
form that we gave them is satisfactory.
Now, do you want to answer those or do you
want to turn them over to the Council for
National Defense?
H.M.Jr:
Knudsen. Don't you think so?
Foley:
McReynolds.
H.M.Jr:
McReynolds, yes. What time did they get
you last night?
Foley:
They got me about eleven thirty.
H.M.Jr:
I told the girl I tried to get you.
Foley:
I had a note on the door when I came in.
H.M.Jr:
I said, "Call every ten minutes."
Foley:
I didn't know you tried.
H.M.Jr:
Yes, I tried. I wanted to explain. I
thought you might want to get down here
earlier and get started on the thing.
Foley:
I am sorry I wasn't there.
H.M.Jr:
That is all right, no reason why you should
be.
Foley:
I took my mother out to dinner.
White:
What did you do?
H.M.Jr;
Who?
Regraded Unclassified
147
- 10 -
Foley:
My mother.
Klotz:
That is his story.
Foley:
It was the maid's night off.
H.M.Jr:
You did a good job, Ed. I still look to
you on the boats.
Foley:
Thanks.
Gaston:
Everything under control.
H.M.Jr:
Did you OK that statement for me on Sullivan?
Gaston:
I did.
H.M.Jr:
Was it a good statement?
Gaston:
Very good.
H.M.Jr:
Well, I am still cheerful and I am still
alive and still doing business, a little bit
outside the Treasury but somebody has got
to do it. Thank you all.
148
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE June 7. 1940
TO
Secretary Morgentham
FROM Mr. Cookran
CONFIDENTIAL
The rate for sterling moved in an orratic manner today as 8 result of the
reported new British foreign exchange regulations which were expected to deprive
the free sterling of its utility as mentioned in the report of yesterday. At
wonting, 8 Dow Jones news item from London appeared, which stated that the British
Covernment had established & drestic exchange control. The new control measures
accounces wore as follows:
À. No sales will be licensed in the United Kingdom of securities
owned by persons residing outside the storling-frano bloc.
B. All exports from Great Britain to the United States and
Switcerland must be paid for in sterling obtained at the official rate
or with United States dollars or Swiss france.
C. Normally, residents of the United States and Switzerland will
receive payments in commercial transactions or interest or dividends
La their own respective currencies.
D. The mid-March restrictions concerning payments for British empire
exports of tin, rubber, jute, Turs, diamonde and whisky were repooled
except in the case of exports to the United States or Switzarland.
The despatch further stated that similar action was being taken in other countries
578 no11 that British authorities proposed to achieve the same control by extending
la the sterling area. In connection with countries outside the sterling crea, it
= system of payments agreements, and that one such agreement was signed with
yesterday.
It that all transactions between Great Britain end this country. after the effective
The meaning of these new regulations so far as the United States is concerned
take of the measures, will be settled on the basis of the official rates of
4.02-1/2 and 4.03-1/2.
In Yes the rate for sterling experienced wide fluctuations. After opening It
at 3.60, which York, clso last night's close, it declined to 3.35 within After one hour. the
then was around which level it was quoted at coontime. the
recovered to 3.70, item mentioned above, the rate dropped to 3.51 during moved next
hour's appearance of the A. news firm tendency subsequently appeared, however. and sterling quotation
steadily trading. upward to a high of 3.87-1/4 just before the close. The final
3.81,
Regraded Unclassified
143
- 2 -
Sales of spot sterling by the six reporting banks totaled L493,000, from
the following sources:
By commercial concerns
1121,000
By foreign banks (Europe, Far Last and South America)
6372,000
Total
L493,000
Purchases of spot sterling by these banks and by the Federal Reserve Bank
of New York amounted to L397,000, as indicated below:
By commercial concerns
$228,000
Py foreign banks (Europe, Far East and South America)
L114,000
By the Federal Reserve Bank of New York (for Belgium)
1 55,000
Total
L397,000
The following reporting banks sold cotton bills totaling 27,000 to the
British Control on the basis of tae official rate of 4.02-1/2:
$6,000 by the Bank of Manhattan
1,000 by the Guaranty Truet Company
67,000 Total
Spot sterling in the amount of 627,000 was purchased from the British Control
at the official rate of 4.03-1/2 by the following banks:
122,000 by the Guaranty Trust Company (for rubber)
5,000 by the Irving Trust Company (for rubber)
27,000 Total
Developments in the other currencies were as follows:
The French franc moved with sterling. After reaching a high of .0219-1/2,
It closed at .0216.
The Canadian dollar, which experienced an improvement yesterday to
20-1/4% discount, weakened today to close at 21-1/2%
The Swise franc was steady at .2242 until late in the day, when it essed
to close at .2240.
The lira and reichemark were unchanged at .0505 and .4000 respectively.
The Cuban peso improved today. As against yesterday's discount of
10-9/16%, today's quotation was 9-7/16% The Mexican peso was unchanged at
.1672.
The yuan in Shangnai rose to 5-13/16# today, up 1/24.
confidential
150
- 3 -
We purchased the following amounts of gold from the earnarked accounts of the
benks indicated:
$15,000,000 from the Bank of France
176,000 from the National Bank of Belgium
$15,176,000 Total
The Federal Reserve Bank of New York reported that the South African Reserve
3nnk whipped $3,300,000 in gold from South Africe to the Federal, for account of the
Bank of Sweden. The disposition of this shipment is unknown et the present time.
The State Department forwarded to us cables stating that the following gold
shipments would be made:
$2,636,000 from Yugoslavia, consisting of gold coin, shipped by the National Bank
of Yugoslavia, Belgrade, to the Federal Reserve Bank of New York,
disposition unknown. This gold was part of the lot that was stored
temporarily in Athens.
36,000 from England, shipped by Sharps and Wilkins, London, to the Central Hanover
Bank and Trust Company, New York.
21,000 from England, shipped by Sharps and Wilkins, London, to the Chase Rational
Bank, New York.
$2,693,000 Total
The shipments from England will be sold to the U.S. Assay Office at New York.
The Indian gold price fell the equivalent of 404 to $35.40.
The Bombay spot silver quotation worked out to the equivalent of 44.36/, off
1/8/-
In London, spot ailver was unchanged at 23-3/8d. Forward silver, however, fell
5/16d to 21-7/8d- The U.S. equivalents, calculated at the open market rate for
sterling, were 37.87# and 35.194 respectively. On the basis of the official sterling-
dollar rate, spot silver was equivalent to 42.50d.
Handy and Harman's settlement price for foreign silver was unchanged at 34-3/44-
The Treasury's purchase price for foreign silver was also unchanged at 35d.
Tie made two purchases of silver totaling 150,000 ounces under the Silver Purchase
tes, both of which wore new production from foreign countries, for forward delivery.
Re also purchased 400,000 ounces of silver from the Bank of Canada under our
Meular monthly agreement.
RMP.
CONFIDENTIAL
Regraded Unclassified
151
WAR DEPARTMENT
OFFICE OF THE CHIEF OF STAFF
WASHINGTON
June 8, 1940.
The Honorable,
The Secretary of the Treasury.
My dear Mr. Morgenthau:
I have your letter of June 6th,
enclosing a letter from Mr. Purvis, relative to
certain inspection difficulties encountered by
the Army.
Thank you very much for giving
me this information.
Sincerely yours,
150-A
BRITISH EMBASSY,
WASHINGTON, D.C.
June 8th, 1940.
Secret.
Dear Mr. Secretary,
I enclose herein for your
personal and secret information a copy
of the latest report received from
London on the military situation.
Believe me,
Dear Mr. Secretary,
Very sincerely yours,
holican
The Honourable
Henry Morgenthau, Jr.,
United States Treasury,
Washington, D. C.
Regraded Unclassified
150 B
Telegram despatched from London
on the evening of June 7th.
Germans attacked continuously today on whole
front between River A₁ane, south of Laon and the sea,
Thirty German divisions identified, all either active
divisions or trained Rhine divisions, formed on
mobilisation.
Pressure continued in Laon-Soissone
area, but not much enemy progress made. Ground south
of River Ailette remains mostly in French hands.
Yesterday evening six armoured and two motorised divisions
previously employed in Fjanders attacked on either side
of Amiens. Enemy tanke reported pressing French west-
wards from Poix towards Aumale. Presence of German
active divisions north east of Rheims and other signs
indicate further attack likely in that area.
2. Blenhsime today attacked enemy concentrations
in Abbeville-Amiens area.
One Blenheim missing.
One
Messerschmidt 109 shot down.
Wellingtons attacking
enemy communications last night reported successful
attacks on troops, as well as railway sidings. Number
of fast small craft observed last night near Boulogne
also many small lights between Le Treport and St. Valerie.
Today Hurricanes operating in battle area shot down
nine enemy aircraft confirmed and four unconfirmed. Two
Hurricenes missing. During June 5th to 6th B.A.A.P.
shot down eight aircraft confirmed and six unconfirmed,
One of Hurricanes missing.
Battles from this force
also attacked enemy columns and batteries.
All
Battles returned.
3. Gorman air force operations continued
yesterday on widespread scale.
Many bombing attacks
carriRegraded Unclassified
150-C
-2-
carried out on troops and communications in
rear of front on Aisne and Somme.
Considerable
bomber reconnaissance activity in northern and
southeastern France, also mine-layings last night,
aircraft continued operating between western Germany
and southern Belgium, and to Cambrai and Rheims.
Regraded Unclassified
11 152
June 6, 1940.
Ky dear General Marshall:
In connection with your memorandum
to me of May 23rd. with regard to certain
inspection difficulties encountered by the
Army, I have received a letter from Mr.
Arthur Purvis, a copy of which I am enclos-
ing for your information.
It and seen the difficulties which
have existed will now be overcome.
Sincerely yours,
(Signed 1 H. Morgesthau, Jr.
General George C. Marshall,
Chief of Staff, U.S.A.,
War Department.
By Measonage 2nd 6/7
Regraded Unclassified
RI 1:53
June 6, 1940.
My dear General Marshallt
In connection with your memorandum
to no of May 23rd, with regard to certain
inspection difficulties encountered by the
Army, I have received a letter from Mr.
Arthur Purvis, a copy of which I an enclos-
ing for your information.
It ould seen the difficulties which
have existed will now be overcome.
Sincerely yours,
(Signed) H. Morgeathau, Jr.
General George C. Marshall,
Chief of staff, U.S.A.,
War Department.
By Measenger M 2 15 2/7
154
June 6, 1940.
My dear General Marshall:
In connection with your memorandum
to ne of May 23rd P with regard to certain
inspection difficulties encountered by the
Army, I have received e letter from Mr.
Arthur Purvis, 8 0007 of which I am enclos-
inc for your information.
It cild seen the difficulties which
have existed will nov be overcome.
Sincerely yours,
(Surned) H. Morgemthau. Jr.
General George C. Marshall,
Chief of Staff, U.S.A.,
Var Department.
By Messenger 2 205 45 6/7
Regraded Unclassified
155
ANGLO-FRENCH PURCHASING BOARD
NEW YORK:
WASHINGTON:
15 BROAD STREET
725 15th ST., N. W.
This letter from Washington, D.C.
June 5, 1940.
Mrs. H.S. Klotz
Room 280
Treasury Department
Washington, D.C.
Dear Mrs. Klotz,
I promised to return the attached
to the Secretary today.
I have been in touch with Mr. Howe,
the Dominion of Canada Minister of Supplies. He
is giving an order this afternoon on the Page-
Hershey Tubes Co. 50 that Colonel Campbell of the
Frankford Arsenal can witness the manufacture of
the 6" shell forgings.
I have undertaken to handle the
difficulty on the British end. Actually it will
be impossible for me to do this until I can get to
New York but it will be done first thing tomorrow
morning. In the meantime, Major Gullet of the
U.S. War Department's Air Corps will be advised
by Mr. Howe that he has instructed Page-Hersley
Tubes Co. to admit Colonel Campbell.
Yours sincerely,
A.B.Puris A. B. Purris
per C.T.B.
156
WAR DEPARTMENT
OFFICE OF THE CHIEF OF STAFF
WASHINGTON, D.C.
no 120/8/
May 23, 1940.
MEMORANDUM for the Secretary of the Treasury:
Dear Mr. Morganthau:
Apropos of Allied Purchasing Agents comments on
the embarrassment their inspection service was suffering due to
our restrictions in Aircraft plants, I would like you to read the
attached one-page letter from Major Gullet, of our Air Corps, in
Ottawa.
A concern in Canada has what is believed to be
an excellent process for the manufacture of 6" forgings. Our
Chief of Ordnance wished to have one of his officers witness the
process. Colonel L.H.Campbell, of Frankford Arsenal, thought he
had a personal arrangement to permit him to witness the process,
but General Wesson thought it better to go through the usual
formalities.
In view of the critical situation of the moment,
the attached letter is very interesting.
Chief of Staff.
encl.
P.S. Incidentally, the British Missions have been permitted to
visit all of our arsenals and have seen practically every-
thing they asked to see.
157
MAY 18 1940
2257-33-296
DEPARTMENT
No. 31 JSG:m
Ottawa, Canada
$1
5
May 13, 1940
RECEIVED B/2 W D. MAY 1940
subject: Authority to visit the Page-Hershey Tubes
Co. at Welland, Canada
MAY 1940
639
TO:
Col. J. A. Crane, Military Attache Section, G-2,
War Dept., Washington, D. C.
WARDEPT.
1. This will scknowledge receipt of your first
indorsement following request of the office of the Chief
of Ordnance dated April 22, 1940 for authority for the
visit of Lt. Col. L. H. Campbell to the Page-Hershey Tubes
CO., Welland, Can. for the purpose of witnessing the manu-
l'acture of 6" shell forgings.
2. Efforts to coordinate this subject were begun
immediately upon receipt of this communication. Complete
cooperation was extended by the Dept. of External Affairs
of the Canadian Government and also by headquarters officers
of the Army General Staff. The latter advised, however,
that the matter was one for decision by the head of the
Supply Ministry Section of the British Supply Board since
the operations of the Page-Hershey Tubes Co. were in be-
half of British contracts.
3. The subject was presented to the chief of
the Supply Ministry Section referred to and after due
deliberation that office advised that it would be
necessary to refer the subject to Washington. This date
we have been advised that the Military Attache in Washing-
ton had been unable to obtain a decision and that a cable
nad been sent to officials in Great Britain from whom a
reply might be expected in due course.
4. This office will be advised 30 soon as a
decision has been rendered following which an immediate
despatch will be forwarded your office.
JOHN bull S. GULLET
Major, Air Corps
Military Attache,
158
ES ST. June 8th 1940
Herryto Bullet Leasked Are to
net him IV macline
and send them at nee by
Ife also caked about madine
Funch Said the it was
- done. Jold him svleets
Cetwan 4004500 Y save
ich Jold liner Mat
206 had.
us is Jel Columbers 5- 4611
- 5-4967
Envis to 7
lary Places
To ACC 345
I E gened - 7ssuch Euslidh
t 48 sent to The
be
Regraded Unclassified
159-o
90kg from adminal stark.
Planes OR
Holding conference one
gues this moving
S.H.
160
TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION
DATE June 8, 1940
TO
Secretary Morgenthau
FROM Mr. Cochran
confidential
In contrast to the very wide fluctuations during the past two days, sterling
moved within a ten-cent range today. The opening quotation was 3.76, as against
yesterday's closing rate of 3.81. Within one hour, the pound touched a low of
3.67, a high of 3.77, and returned to 3.72. The rate then moved steadily upward
to 3.76 just before the close. The final quotation was 3-75-
As indicated by the reported turnover figures, foreign banks were the chief
suppliers of pounds. In all probability, the New York banks themselves absorbed
part of these offerings, in the endeavor to even up short positions in sterling.
Sales of spot sterling by the six reporting banks totaled 6314,000. from
the following sources:
By commercial concerns
L 13,000
By foreign banks (Europe, Far East, So. Amer. and Near East) 6301,000
Total
L314,000
Purchases of spot sterling amounted to L137,000, as indicated below:
By commercial concerns
1 89,000
By foreign banks (Far East, South America and Europe)
1 48,000
Total
6137,000
There were no reported sterling transactions effected at the official rates
of 4.02-1/2 and 4.03-1/2.
Developments in the other currencies were as follows:
The French franc moved with sterling and closed at .0212-1/2.
The Swise franc was steady all day at .2243.
Only nominal quotations were made for the Canadian dollar. It closed
at a discount of 21-3/8%.
The lira and reichsmark were unchanged at .0505 and .4000 respectively.
The Cuban peso improved slightly to 9-5/16% discount today. The Mexican
peso was unchanged at .1672.
Regraded Unclassified
161
- 2 -
In Shanghai, the year was quoted at 6-1/80. & gain of 5/164. This
currency has shown little movement in terms of the British pound during
the last few days. The current quotation against sterling is 3-7/88.
According to a U.P. despatch from London, the British Treasury announced today
that B. tri-partite agreement was signed in London yesterday to regulate monetary
and financial relations among Britain, France and Belgium. The agreement fixed
an official rate of exchange on the Belgian currency and in effect brought Belgium
into the fiscal partnership established between France and England last December.
A surprising feature of the pact is that the Belgian franc will be fixed at the
same level as the French franc rate of 176-1/2 france to the British pound.
(Five Belgian france equal one belga.) This represente 8 depreciation of 32-7/16%
in the Belgian currency as compared with its pre-invasion value in terms of
sterling and French francs. The London despatch added, "Treasury officials also
announced that similar action is under vay to include Holland in the financial
'combine'. Full agreement in principle already has been reached with the
Netherlands, it was stated, and a formal pact is expected to be signed within the
next few days."
We purchased $50,069,000 in gold from the earmarked account of the Bank of
England.
The Federal Reserve Bank of New York reported that the Bank of Canada, Ottawa,
shipped $8,317,000 in gold from Canada for its account to the Federal, for sale
to the U. S. Assay Office at New York.
The State Department forwarded to us & cable stating that the following ship-
ments of gold were made from Hong Kong, all of which will be sold to the U. S. mint
at San Francisco:
$ 589,000 shipped by the Chartered Bank of India, Australia and China, Hong Kong.
to the Bank of California N. A., San Francisco.
260,000 shipped by the Chase Bank, Hong Kong. to the Chase National Bank,
San Francisco.
258,000 shipped by the National City Bank, Hong Kong, to the American Trust
Company, San Francisco.
$1,107,000 Total.
The equivalent of the Bombay gold price vis $35.35, off 5#.
The Bombay spot silver quotation worked out to the equivalent of 44.51#. to
1/84. The Commerce Department's daily statements of silver exporte and importe
for June 6 and 7 reveal that shipments of refined silver bullion are still being
exported from the United States to Bombay, India. On the two days mentioned, a
total of 132,000 ounces left this country for that destination.
M.S.S.
CONFIDENTIAL
Regraded Unclassified
162
MA
PLAIN
London
Dated June 8,1940
Rec'd 7:15 a.m.
Secratary of State
Washington
1552, June 8.
FOR TREASURY FROM BUTTERWORTH.
The new Exchange control regulations appear in this
morning's press and meet with wide approval which is not
surprising because recently a tightening of the control
has been increasingly urged.
The FINANCIAL TIMES considers that the future trend
of the free starling rate can hardly bE foreshadowed and
suggests that after the first up-swing it may plumb fresh
depths or it may move nearer to the official rate. The
MANCHESTER GUARDIAN financial aditor suggests that it
cannot bE julged whether the sources of supply of sterling
to the free market will have been stopped to the same
extent as the sources of demand and that the immediate
reaction which was due to covering transactions is not
necessarily an indication of the future course of the
freemarket. The TIMES city Editor suggests that "it is
possible that when Effective isolation has been achieved
further measures may have to bE envisaged to take care of
the free
Regraded Unclassified
163
MA -2- tel # 1552, June 8, 1940 from London
the free sterling balances, but this is a matter that is
probably best left to ad hoc treatment at the time".
Meanwhile he considers that these new steps will so
curtail the free market that it will CEQSE to have much
practical importance. The FINANCIAL NEWS in an Editorial
headed, "Exit Free Sterling?" points out that any
further depreciation of the free rate may involve a
loss of Exchang= in respect of financial obligations and
other invisibles expressed in terms of starling, a loophole
not easy to close but possibly not important. "In any
case it is hard to say what the ultimate Effect on the free
rate may bE".
KENNEDY
00 8A we - Ctay
7120
1015
164
No. 88
AMERICAN CONSULATE
Yunnanfu, China, June 8, 1940.
CONFIDENTIAL
SUBJECT: Exports of Tung Oil, January -
May, 1940.
The Honorable
The Secretary of State,
Washington.
Sir:
I have the honor to submit, as a matter of probable interest to
the Department, a tabulated analysis of confidential monthly statements
of the tung oil position of the Foo Shing Company in Tunnanfu, which
the company has been supplying to this Consulate regularly. Prior to
January, 1940, similar reports had been obtained regularly from the
Tunnanfu office of the Foreign Trade Commission and a summary of its
operations for the year 1939 was submitted to the Department with my
Despatch No. 13 dated January 11, 1940.
As the enclosed table shows, during the first five months of 1940
the Foo Shing Company exported a total of 8,432,050 kilograms of tung
oil, distributed as follows over the entire period:
Month
Kilograms
January
909,206.5
February
1,053,445.5
March
2,902,466.5
April
1,689,008.5
May
1,877,923.0
Total
8,432,050.0
Regraded Unclassified
165
- 2 -
In addition to the above quantity of tung oil, the company has exported
112,496 kilograms of "huang shui" oil, which 19 described as a. king of adulterated
tung oil which must be refined before it can be marketed.
It should be noted that the total quantity of tung oil exported by Foo
Shing from Yunnanfu during the first five months of 1940 is almost equal to
the total tung oil exports (8,819,442.5 kilograms) of the Foreign Trade
Commission from Tunnanfu for the entire year 1939. Against this must be
set the fact that the Foo Shing Company controls not only transit shipments
from other provinces, but also exports from Tuanan itself, which in 1939
amounted to about 3,668 metric tons; while during most of 1939 the Foreign
Trade Commission was able to control only transit shipments.
Even taking this into consideration, however, exports from Yunnanfu this
year have run far ahead of exports for the corresponding period of last year.
On the basis of Foo Shing's figures, exports have averaged about 1,686 metric
tons per month; and if allowance is made for the fact that the Tunnan-Indo-
china Railway was out of commission for approximately six weeks in January
and February because of Japaness bombings, during which time only about 1,200
tons were exported, the monthly average is seen to be even higher. Should
exports be maintained at the rate prevailing during the first five months,
total exports of tung oil from Yunnanfu during 1940 should reach a level of
about 20,000 metric tons.
A point to be noted is that Foo Shing has been steadily drawing down'
its stocks in Yunnanfu. Present stocks are about 409 tons. and it is planned
to keep about this quantity on hand here at all times; so that henceforth ex-
ports from Yunnanfu are likely to be limited by monthly receipts. This is
indicative of the increased efficiency in handling shipments here which has
reduced considerably the time in transit between the points of origin in China
- 3 -
166
and the market in the United States.
By far the larger part of total exports has been shipped to Haiphong
by the Yunnan-Indochina Railway. From the first of January to February 12
8. total of about 1,200 tone is said to have been exported by highway to Burms:
but although it has been reported that regular shipments of 500 to 1,000 tons
monthly would be made by this route, I have recently been informed by the
local manager of Foo Shing that subsequent shipments via Burza have never
exceeded 400 tons monthly. It is said that a shortage of steel drune for
use as containers limits the quantity than can be shipped over this route,
as vessels calling at Rangoon do not as a rule have deep tanks available for
oil cargoes and the drums have to be shipped to the United States. Moreover,
on a transport cost basis the Burma route is improctical 90 long as adequate
facilities are available on the Yunnan-Indochina Railway.
I am informed that the use of pack trains for the export of tung oil to
the Indochina border is being abandoned because of the high transport cost
involved. It is said also that, contrary to expectations, the use of pack
traine has facilitated rather than hampered the smuggling of tung oil out of
the country. as the muleteers find it very easy to mix "contraband" oil with
Foo Shing's oil and take both lots out together.
With reference to the question of controlling the export of tung oil, I
Bm informed that Foo Shing's purchase price in Tunnan will probably be increased
soon in an effort to eliminate smuggled exports as far as possible. It is
thought that this may help considerably. since the National Government agencies
do not feel able to take direct steps to enforce a rigid control because of the
political situation in this Province. It is difficult to see, however. how
Foo Shing can avoid a general increase in its purchase price if it increases
its price in one province.
Regraded Unclassified
- 4
167
SUMMARY
The enclosed analysis of the Foo Shing Company's monthly reports of
tung oil exports from Tunnanfu indicates that a total of 6,432 metric tone has
been shipped in the first five months of 1940. This is almost equal to the
total quantity of tung oil exported from Yunnanfu by the Foreign Trade
Commission last year. At the rate prevailing during the first five months,
total exports from Yunnanfu this year should approximate 20,000 metric tons.
The bulk of exports 60 far has been shipped by railway to Haiphong.
Since February, exports by highway to Burma have never exceeded 400 tone in
any month. The use of pack traine for transporting tung oil to Indochina has
been abandoned due to the high cost and the facility it gives to smugglers.
Foo Shing's purchase price in Yunnan will probably be increased in the near
future in an effort to gain control of the oil now being exported by smugglers.
Respectfully yours,
Troy L. Perkins,
American Vice Consul.
Enclosure:-
1/- A table.
In sextuplicate to the Department,
original and two copies by air mail.
Copies to the Embassy, Peiping and Chungking.
Copy to Commercial Attache.
Copy to Consulate, Rangoon.
Copy to Consul, Hanoi.
869
SCB:Epy
168
Enclosure to Despatch No. 88, dated June 8, 1940, from
Vice Consul Troy L. Perkins, Yunnanfu, China, to the
Department of State, entitled: "Exports of Tung 011,
January - May, 1940".
Tung Oil Position of Foo Shing Company,
Yunnanfu Branch.
(In Kilograms)
Month
Stocks
Receipts
Exports
January
894,996.0
2,686,865.5
909,206.5
February
2,672,655.0
1,131,534.5
1,053,445.5
March
2,750,744.0
1,363,820.0
2,902,466.5
April
1,812,097.5
1,274,095.0
1,689,008.5
May
797,184.0
1,489,929.5
1,877,923.0
June
409,190.5
Note: The figures for stocks relate to stocks in Yunnanfu
on the first day of the month. They have been
derived from Foo Shing's monthly reports of receipts
and shipments, and should be regarded as approximate
only.
Source: Confidential Monthly Reports of the Foo Shing
Company at Yunnanfu.
june 8
169
ITALIAN STOCK THICES
(Milan)
Daily*
Weekly
1940
1940
APRIL
MAY
JUNE
JAN.
FEB.
MAR.
APR.
MAY
JUNE
JULY
6
20
27
4
11
18
25
1
8
15
22
PER
PER
PER
PER
CENT
CENT
CENT
CENT
SATURDAY FIGURES
270
270
300
300
260
260
280
280
250
250
240
240
260
260
230
230
240
240
220
220
210
210
220
220
200
200
190
200
200
190
180
180
180
SHARES
180
SHARES
THOUSANDS
THOUSANDS
200
Volume
200
160
160
100
100
o
140
140
0
6
13
20
27
4
11
18
25
1
8
15
22
JAN.
FEB.
MAR.
APR.
MAY
JUNE
JULY
APRIL
MAY
JUNE
1940
1940
SATURDAY FIGURES PRIOR TO MAY 20.
FO- 141 - 2
- the Secretary of the Treasury
- of Resers and Statistics
Regraded Unclassified
No. 100
170
American Foreign Service, Henoi, Indochina,
June 8, 1940,
Subject:
Wood 011 Shirments.
The Honorable
The Secretary of State,
Washington.
Sir:
I have the honor to refer to By despatch no. 87 of May 12, 1940,
reporting wood oil shipments via Indochina by the Foo Shing Trading
Corporation during the first 4 months of 1940, and to report that similar
shipments during the month of May totalled 1,001 tons. Accordingly,
shipments during the first 5 months of 1940 aggregated 4,124 tons.
The Haiphong manager of the company believes that the comperatively
poor showing during 1940 is in part due to the slowness in arrivals at
Kunming, which in turn may be attributed to poor transportation facilities
in China as well as the inadequate price given to producers.
Since July 1, 1939, shipments of wood oil via Indochine by the Foo
Shing Trading Corporation have amounted to about 15,824 tons. With but
1 month remaining to complete the year, the total will probably fall some
8,000 tons short of the quota of 25,000 tons established on July 1, 1939.
(despatch no. 92, May 23, 1940)
Respectfully yours,
For the Consul at Saigon,
Charles S. Reed II,
American Consul.
In triplicate to the Department (By air mail)
Copies to Embassy, Chungking and Peiping
Copies to Consulates General, Hongkong and Shanghai
Copies to Consulates, Kunming and Seigon
869/815.4 CSR:csr
COPY
Regraded Unclassified
171
June 9
ITALIAN STOCK PRICES
(Milan)
Weekly
Daily*
1940
1940
APRIL
JAN,
FEB.
MAY
MAR.
JUNE
APR.
MAY
JUNE
JULY
6
PER
13
20
27
4
11
18
25
I
8
15
22
PER
CENT
PER
PER
CENT
SATURDAY FIGURES
CENT
CENT
270
270
300
300
260
260
280
280
250
250
240
240
260
260
230
230
240
240
220
220
210
210
220
220
200
200
200
200
190
190
180
180
180
180
SHARES
SHARES
THOUSANDS
THOUSANDS
200
Volume
200
160
160
100
100
o
140
140
o
6
13
20
27
4
11
18
25
1
8
15
22
JAN.
FCB,
MAR.
APR.
MAY
JUNE
JULY
APRIL
MAY
JUNE
1940
1940
SATURDAY FIGURES PRIOR TO MAY 20.
Office of the Secretary of the Treasury
FO - 141 2
Division of - and -
Regraded Unclassified
172
Sunday June 9
8:45 p.m.
(At the Secretary's home)
Present:
Secretary Woodring
General Marshall
Admiral Stark
Mr. Nelson
Mr. Foley
Mr. Cox
Mr. Young
(Before the group arrived, HM,Jr took Admiral
Stark into the dining room for a talk alone. When
HM,Jr returned and while Admiral Stark went to tele-
phone, HM, Jr said: "I told the Admiral it was ridio-
ulous to give me 68. I wanted 750 and none less than
750 and he's now calling Admiral Furlong to see how
many he has got. He does not know.")
HM,Jr: I think we might as well wait until
Mr. Woodring comes.
Why don't we start? Do you know whether Mr.
Woodring is coming?
Mr. Young: He is.
HM,Jr: The first thing I asked you gentlemen
for -- I gathered the formula is worked out -- is to
get these bombs for these 50 ships. As I understand,
as of tonight 68 have been passed. Is that correct?
Mr. Young: That's right.
Mr. Nelson: 68 are being loaded tonight.
173
-2-
HM,Jr: And what the French want is 750 and
that's what I cabled the President last night.
Admiral Stark: If I had been tipped off this
morning -- I may be able to get it tonight.
HM,Jr: Frankly, I did not know until I saw my
men tonight. It did not clear until tonight.
Mr. Nelson: It wasn't finished at 7:15.
HM,Jr: The formula is worked out. They also
told me that 68 were to be loaded tonight at Yorktown
so if there are more, wouldn't the people at Yorktown
know how many are there?
Admiral Stark: Yes, but our people in my de-
partment have a record of every bombwe have, but if I
don't have a call back shortly I will call Yorktown.
Mr. Nelson: Captain Wright is handling it at
Yorktown.
HM,Jr: The other thing I wanted to ask was
how soon these 93 planes would be ready for delivery --
these Northrups?
General Marshall: I think they will all be
concentrated by tomorrow, but we have a bomb problem
there that 1s much more difficult than this one.
These planes that we are bringing in, we are trying
to find some way to swap the ordnance as you did on
your Navy planes, but up to the present time we have
not been able to find an adjustment on that so we have
to go ahead and consider the ordnance as an organic
part of the plane.
(At this point, Secretary Woodring joined the
meeting.)
HM,Jr: Harry, the only thing we have been
talking about -- these people, working all day today,
finally worked out a formula on the bombs for the 50
174
-3-
Navy ships, but they have only been thinking in terms
of 68 and I have been talking with the President in
terms of 750 and Admiral Stark 1s now asking his people
how many they have got and expects to hear momentarily,
but the formula was worked out at 7 o'clock tonight --
I gather to the satisfaction of everybody -- and also
everybody has been very busy today trying to help.
Secretary Woodring: Henry, are we involved?
Do you (General Marshall) have your own bombs?
General Marshall: The trouble was they were
trying to turn them in as surplus and there WILE a legal
complication.
Mr. Woodring: It's not 2 straight trade in?
General Marshall: It's not a straight trade
in. And the other problem is to get more of them, which
is purely a Navy thing. The number you approved were
in pencil.
Admiral Stark: If we get a trade in we will
get something back.
Mr. Woodring: I think it will be much better
to do 1t as a trade in. I think the psychology of it
is better. It's not lost. It 1e lost if it goes back
to the Treasury.
HM,Jr: Of course, I differ with you. I love
these people who say "It's lost. It goes to the Treas-
ury." (Laughing.)
General Marshall: You mean psychology before
Congress.
Mr. Woodring: That's what I mean.
General Marshall: Mr. Morgenthau was asking
about the 93 A-17-A's. I thought they would all be
concentrated by tomorrow, but I told him the real
problem there was bombs and this time it 16 not ns
easily soluble for this reason: I will read you a
memorandum from the Secretary to the President which
175
-4-
I understand the President has not yet seen. They did
not -1ve it to him. I went over before he left, but
Watson wanted him to have & quiet week-ond and did not
turn it over to him. It's regarding the release of
:ircraft.
"Tentative arrangements have been made to ex-
change 93 A17A attack bombers. Bomba to make the air-
plane immediately effective must be of our type. Two
to three months would be required to rework these planes
to accommodate foreign type boubs. In order to supply
bome it will be necessary to consider the bombs as an
accessory of the airplane. Whether or not this can be
legally sustained is questionable. To furnish approx-
imately 1/15 of the number of bombs desired by the Allied
Purchasing Agent, it w111 be necessary to release approx-
imately 1/7 of our entire boub stock in the two sizes
required, that 19, 30 and,100 Irst pound bombs. Additional
bombs are under order, but deliveries will not be made
for nnother six months. In view of our shortage of bombs,
I request your decision in the natter."
HM,Jr: May I interrupt. What is 1/7 of 1/15,
or vice versa?
General Marshall: We reduce to 1/15 what they
ashed for and if you gave them that it was 1/? of every-
thin they neked for.
Mr. Woodring: And that 1s only - that 1/15 re-
quest 1s only the request 5.8 to Army bombs, 1sn't to it?
General Marshall: This 18 for 93 planes. Te
30 more planes coming up.
HM,Jr: I did not cet what the 115th mennt.
General Marshall: I can ret that tomorrow. "Fe
took 1/15
Mr. Nelson: It was 1200.
General Marshall: I have had so many figures
in here, but it comes out 1/7 of our entire supply. These
are not old bombs. These are new bombs. No problem of
Regraded Unclassified
176
-5-
surplus. No problem of deterioration. No question
of surplus and no question of deterioration. There
also is no question but what we are very seriously short
in bombs when you take these old planes which have these
types of bombs, 30 and 100 pounds. We have such a 11m-
ited supply that for that little group of planes that's
all we have left, BO there is something very serious.
HM,Jr: Why, General, does it take six months
to make these?
General Marshall: It takes much more than
six months because these contracts were started last Fall.
The money was made available in July, but you take delays
in connection with fuses, all the various things that go
into 1t. Anyway, the first delivery does not come for
six months so we have a tragic shortage in bombs.
Secretary Woodring: We use the Younghouse
fuse and they use the Tevara?
General Marshall: They can use our bombs,
but they have to use a bomb that goes into the rack, BO
the only way those planes can be immediately services for
them, unless they dump things into the raw, 1s to make rough
bombs, which they could do. I presume they are of no par-
ticular avail without bombs, but that's our situation.
HM,Jr: But you put that up to the President
as of Saturday and he did not get it to him?
General Marshall: There is time to operate
on this anyway. But that's your issue -- whether they
want planes without bombs, whether the President 1s willing
to take a chance on the bombs, because it cuts into us so.
Te have such a limited supply.
HM,Jr: The one I wanted to press on tonight
80 hard are the ones for the 50 ships. That's the only
thing I really wanted to get a decision on tonight.
(Admiral Stark returned from phoning.)
Admiral Stark: If I can't get it from the
Bureau shortly I will telephone Yorktown.
177
-6-
Secretary Woodring: Has the Curtise Wright
man finally said -- has the attorney for the Curtiss
Wright finally said it is legal to trade in? Will
he accept that?
General Marshall: Yes, he accepts that. The
question was to negotiate the arrangement.
Mr. Nelson: He agreed.
Secretary Woodring: On bombs?
Mr. Nelson: Yes. Under the Act Mr. Cox
showed him.
Mr. Cox: The 1926 Act.
Secretary Woodring: He agrees with us on that?
Mr. Nelson: Yes. He took the bombs from the
Army. He exchanged that for T.N.T. which he bought
from Du Pont. Du Pont will turn the T.N.T. over to
the Army.
Secretary Woodring: The last I heard he had
held that he would not let Curtiss Wright under the
old Act
Mr. Nelson: That's right.
General Marshall: In other words, they could
not be surplus.
HM,Jr: If you ever get stuck, you could use
one of Harold Ickes' trading posts.
Let me ask you something. You might give
us
a decision tonight about this powder machinery.
Mr. Nelson: Have you that memo, Phil. You
had a memo in your brief case.
Mr. Young: Yes. I don't believe we need it.
The situation on that is where the Army has
178
-7-
stored a certain amount of machinery of three types,
(1) ammonia exidetion for nitric acid; (2) for making
nitrocellulose powder and (3) for making small arms
ammunition, 30 caliber cartridges.
It was my understanding, through Colonel
Burns, that the War Department would be willing to
release, if a legal way could be found to do it, what-
ever machinery they had which was stored over and above
that amount of machinery which the War Department would
need itself for its new powder plants.
Secretary Woodring: For all three types?
Mr. Young: For all three types.
Secretary Woodring: Harris, you (Marchall)
know, objected to that. You remember.
Mr. Young: And I called Colonel Burns back
subsequently to find out what that excess amounted to
over and above what you were going to use in your new
plants and he told me that the small arms machinery
was a set of miscellaneous machine tools which were
already second-hand and incomplete.
Secretary Woodring: Burns said that?
Mr. Young: Yes.
With respect to nitrocellulose powder machinery,
you have four sets of powder machinery which -- I am
sorry, three sets of powder machinery of which you are
going to use two for your new plant and could release
one. That would be extra. On the ammonia oxidation
equipment, you had a surplus -- Just one incomplete
set of equipment which, I gathered, you would be de-
lighted to have completed and out into the factory,
into production, somewhere so it would be available in
case you should ever need it.
We have done some work on the legal end of
that and the leasing arrangement seems to be perfectly
179
-8-
feasible and perfectly legal.
Secretary Woodring: To manufacture for them
in this country?
Mr. Young: Yes. Five years.
Secretary Woodring: One set extra on the two
Mr. Young: On the nitrocellulose there is one
other set.
Secretary Woodring: But on the first, how many
are extra to our needs?
Mr. Young: All you have on that -- you have no
machinery on the 30 caliber cartridges and you have a
collection of second-hand tools which you would be very
glad to get rid of, according to Colonel Burns, and on
the ammonia oxidation you have one incomplete set.
I asked General Harris about it this afternoon
when he was working with us on this bomb question and his
only reaction at first was could we find a legal way to
lease the stuff out and, secondly, question of policy
involved inasmuch as you have been attempting to justify
appropriations for purchasing evidently this type of
machinery, more new machinery of this kind, as to whether
any of that machinery could be let go even though you
might not be using all of it in your own new powder plant,
which was a question of policy.
General Marshall: Isn't it possible to lease
that to a plant with certain restrictions in the lease
which seemingly protect us against its future use? In
other words, the machinery in place is an asset to us.
In other words, you don't have to indulge into & subter-
fuge to prove that. Isn't there some legal way we could
find to draw a contract
Mr. Cox: One 1s to provide in the contract
that if the United States Government needs powder produced
in preference to the foreign Governments, you can exercise
that preference. The other is under Section 120 of the
National Defense Act of 1916 which gives the President
power to commandeer a plant and to exercise priorities.
The simplest way is by contract.
180
-9-
General Marshall: Then it is definitely
to our advantage to have it set up. I was wondering
about the powder plant.
Secretary Woodring: Decoration Day morning,
after we came back from Henry's office, it was in the
list of stuff you gave us that morning. That meeting
in your office when Harris objected very strenuously
to the release of any machinery at that time.
General Marshall: Was he speaking of it in
relation to the new powder plant?
Secretary Woodring: He WAB speaking of it
to go abroad.
General Marshall: In other words, we are
talking about machinery in this country. I was wonder-
10g the time basis there. Did Burns express himself there?
When they would have to install that in new plants?
Mr. Young: You have two time elements to
consider. One, the Allied plant at Memphis 1s going
to be ahead in construction, ahead of the Army plant,
BO they will have more immediateuse of the machinery
than you. Secondly, on the question of delivery of
new equipment, the manufacturers have refused to guar-
antee any delivery dates to the British and French
Commission on new equipment, primarily because they
are afraid of their own national defense program and
the demands to be made upon them through that.
Mr. Yancey's opinion -- of Du Pont -- I
asked him how long he thought it would take to get
one set of nitrocellulose machinery from the manu-
facturers and they thought six or seven months.
Mr. Nelson: About six months.
Secretary Woodring: How soon would they
be ready for our set? If made available tomorrow,
how soon to put it in the British plant at Memphis?
Mr. Young: Certain parts no in at a time.
They have already started construction.
181
-10-
Mr. Nelson: On nitric acid, they would
start right away.
Mr. Cox: General Harris said wasn't this
the occasion which would best authorize leasing and
he said his personal opinion was yea, but it was a
question of policy. On the legal end, Young and I
checked with the Judge Advocate's Office and they do
that every day and the only question was pay in cash
or take in kind.
Secretary Woodring: On leasing, I don't
think it would make any difference to us.
General Marshall: We could lease against
new machinery for us.
Mr. Young: Could I throw out one additional
thought in connection with that? Purely as represent-
ing the British and French, the Army has three sets of
nitrocellulose powder equipment. Each of these new
plants - the Allied plant and the Army plant -- are
about the same size. Each plant will require two sets
of equipment. There are three and it will take six
months, according to what was said today, to get more.
Therefore, representing the British and French, in that
capacity I say would it be possible for the Army to re-
lease two instead of one, purely on the basis that the
Army can get delivery on a new set probably in 50% of
the time in this country that the British and French
could possibly do it.
General Marshall: I think the first part
is all right, but the second part isn't, because they
get it quicker than we can. They have no legal re-
strictions. They have money and can do business.
I think, however, there is something to your first
part.
Mr. Young: Their plant would go into oper-
ation first undoubtedly.
General Marshall: I will go after that, if
it is agreeable to the Secretary, the first thing in
the morning.
182
-11-
Secretary Woodring: I don't think there
will be any trouble on that.
(Admiral Stark returned from telephoning.)
Admiral Stark: I have an answer. Not too
good. In Yorktown we have the bombs. It's a question
of fuses again, immediately available. We have in
Yorktown 180 - 1,000 pound bombs and 170 - 500 pound
bombs which could be made immediately available. In
Hawthorne we have 1,000 - 1,000 pound bombs and 2,000 -
500 pound bombs. Now we have fuses available, 800
pairs in Hawaii. I think we can solve it.
(At this point, Admiral Stark was again
called to the telephone.)
HM,Jr: Which are the ones they want?
Mr. Young: 1,000 pound.
HM,Jr: As I understand it, one 1,000 pound
and two - 100 pound.
Mr. Young: That's right.
(Admiral Stark returned to the conference at
this point. )
Admiral Stark: We also have 350 pairs in
Cocoasola. We use two fuses in each one of our bombs.
That 350 pair would give you 700 fuses. Using a single
fuse, our experience is about 35% effective, but out in
the extra fuse to make it 100%. So in Cocasola you have
700 fuses normally used
(Admiral Stark was called to the phone again.)
General Marshall: I had a transport plane
ordered into Mare Island to bring in some of his fuses.
But I thought I was getting more than 15 pairs of fuses.
(Admiral Stark returned to the meeting.)
183
-12-
Admiral Stark: Admiral Furlong called me
to say everything was all right at Yorktown.
In our modern fuses we have none. They
are on order. I don't Just know the date of delivery.
But as fast as delivered, they have been put on carriers.
But the older fuses, which are perfectly good fuses for
what the French want, have been put ashore, but we have
plenty of 100-pound bomb fuses which will explode in
these bombs except it will be necessary to make an
adapter to hold those. The whole in the large bomb
is a different size from what it 1s in the 100-pound
bomb. Drawings for that adapter are completed. While
I am guessing, if we told the gun factory to 80 full
speed, they could probably turn those adapters out in
two days, so that might be the answer.
HM,Jr: Let me go back. I was asking for
750 - 1,000 pound bombs.
Admiral Stark: We have 180 at Yorktown and
1,000 at Hawthorne.
HM,Jr: Where 1s Hawthorne?
Admiral Stark: In Nevada. That's our big
storage plant behind the mountains.
HM,Jr: Instead of giving them 68, could
they have the 180 tonight out of Yorktown and then
move out the difference from Nevada, say to New York?
Admiral Stark: Yes, we can start those 180
...
HM,Jr; Tonight. I understood from Nelson
they are loading tonight.
Admiral Stark: They told me they were load-
ing tonight.
HM,Jr: Could we let them have 180 additional?
Admiral Stark: That's the 180 additional?
I Just asked them how many more available.
HM,Jr: 180 plus 68.
184
-13-
Mr. Young: Don't those planes carry some two -
100 pound bombs?
Admiral Stark: These planes will carry two
500 pound bombs or one 1,000, but they dive with the one
1,000 pound bomb.
HM,Jr: They want them for diving?
Admiral Stark: That's the 1,000 pound bomb.
HM,Jr: Wouldn't it be better to give them
the 248 1,000 pound bombs and then make up the difference?
Admiral Stark: 180 you mean.
HM,Jr: Have you got fuses for them? I am
adding 180 plus 68.
Admiral Stark: Yes. We have the adapters
made.
Yes, we have fuses available.
HM,Jr: 30, roughly, they could have 248.
Admiral Stark: That's right.
HM,Jr: And that could go tonight.
Mr. Foley: You would need two days to get
the adapter?
Mr. Nelson: The bombs could be loaded and fly
the adapters up to Halifax.
HM,Jr: And if they knew the difference of
1,000 pound bombs were coming, they could go to New York
or hold the ship. I suppose it would take three or four
days to come from Nevada.
Admiral Stark: Yes. They would have to come
by freight or they might put them on fast trains.
HM,Jr: .think they would pay for & special
train.
185
-14-
HM,Jr: Could we say this? That 240 would
be londed tonight?
Admiral Stark: I will check that to make
sure.
HM,Jr: And the factories would start the
adapters.
Could these things be flown to Hallfax?
Admiral Stark: Yes, sir. I think SO. They
will not be very large.
HM,Jr: What do you think, Nelson and Young?
Does that sound all right?
Mr. Nelson: That sounds all right.
We
will TO back to the hotel. "Ye can get Hotchkiss and
change the numbers on the contract.
Admiral Stark: That will make a total of
248 from Yorktown and the total number required is
750. And 248 from 750
HI,Jr: If you want to be generous, we will
take the whole thousand at Hawtborne.
Admiral Stark: Yen, we can spare them.
HM,Jr: All right. Let's take n thousand
Vants at Hawthorne. Let's take all of then,
Lir. Young: Those bombs don't fit the Army
planes, do they?
General Marshall: I vould be nerely thinking.
I can find out in the corning very quickly, but I am
fearful to ask the question.
HM,Jr: What the deuca 1a there SQ difficult
about anking & bomb? Is it something that takes six
months? Do they make them by hand?
General Marahall: Took 1) lorg time to make
the case and then they developed a process which cut
Regraded Unclassified
186
-15-
that down from a year to 8 months or 6 months. Takes
a long time too to get fuses, apparently.
HM,Jr: More than one company make them?
Secretary Woodring: We have educational
orders out to two other companies, but we are making
fuses ourselves. There is the Younghouse fuse.
I
tried a year ago to get the Tavara. You would be
surprised to know that Senator Nye was interested in
having us use the Tavara fuse, which the British and
French use. I begged Ordnance to do 1t, but they
would not do it. It's really E. better fuse, but
Ordnance was fearful that we would be switching over
to Tavara and we have $1,500,000 in machinery and prob-
ably $2,500,000 in royalties that we have paid on the
Younghouse and I think Ordnance was a little fearful
of their having adopted it in their opinion in comparison
with Tavara.
General Marshall: How did Nye come into it?
Secretary Woodring: Somebody had been to see him
and sold him on it.
General Marshall:
Ours 16 the Younghouse.
Secretary Woodring: I know why he was inter-
ested. The Younghouse is a German patent. The Tavara
is Swiss.
HM,Jr: Do we make our fuses at more than one
place?
Secretary Woodring: Not ours. I think the
Navy uses Younghouse. We have orders out for education-
al. One may be at the arsenal at Springfield. I think
we have one educational order with the Elgin Watch Com-
pany. The other with Waltham, I think, up in Massachusetts.
General Marshall: Educational orders have just
begun to come in. A year are they did not appropriate
anything. Just squeezed out $2,000,000 to get started.
They did not appropriate that, but agreed to a diversion
187
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of the money, off the record, and then we got how
many?
Sixteen last
Secretary Woodring: Half of -- we asked
for $25,000,000. Got $12,500,000.
General Marshall: Something like that.
Secretary Woodring: The President did
not want to approve the money for the educational,
you remember that.
HM,Jr: No. I wasn't in on that. In
those days I had nothing to do with the Army.
General Marshall: I remember when we were
battling for the $110,000,000 we did not get anywhere
until we made this point -- everybody was talking about
the number of planes the Germans were turning out. At
that time our opinion was, in the late winter of 1939,
that for over three years they had been accumulating
2,000,000 rounds of artillery ammuntion a week and we had
gotten $375,000 worth a year to replace that we used in
target practice.
Secretary Woodring: You sat in on that.
That was in the oval room at the White House.
HM,Jr: I don't remember that. I do remember
I wrote a letter four or five months ago, last November,
recommending $90,000,000 for strategic war materials.
Secretary Woodring: This was when Craig was
still here.
HM,Jr: I don't think I was in on that.
General Marshall: That was on the build-up
to his message of January 1939.
Secretary Woodring: I think we could follow
that Navy bomb thing, fitting it on our racks. It's a
funny thing to me that the Navy and Army don't have the
same bomb racks.
188
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General Marshall: I say I would be afraid
to ask.
HM,Jr: I would be amazed if they did.
Is there anything we want out of the Army
tonight while we are waiting on the Navy?
You (Young) have done a good presentation
on the machinery.
We talked about 93 planes which Mr. Woodring
will work on tomorrow.
I know one other thing, but I think that's
Navy. Thompson machine guns. They are up in Phila-
delphia. Not the 12. Are you 801ng to take care of
him on that?
General Marshall: We have had the grandest
Jam on that. We had them delivered to La Guerdia Field.
Eleven. We got five out of Springfield and captured
six et West Point. They have been turned over to the
Communication Man of the State Department, but the trouble
was Early talked to me last night and I tried to tell him
of -- he was talking about the difficulties of Pan Aner-
ica, letting off mail and letting off important passen-
gera -- and I was trying to tell him that he was dis-
cussing that with the wrong person, but I did not get
very far. And at 7:30 he told me why 1t was a terrible
thing for Pan America. In the first place, it displaced
mail and important passengers. Next thing it we.s larger
than anything they had before. It jeopardized their con-
tract with Portugal. There was & wholesale list. I
tried to interrupt once, but finally he did hit D. period
and I said, "Hr. Early, you are repeating what the State
Department told you. Why don't you tell Mr. Welles that
because he's the fellow who gave me instructions to do
it." 30 then they went across to the State Department.
The State Department was ordering it on one side and ob-
Jecting to it on the other side. They are there because
they wanted them. So then I put An officer on it and
Smith was in it. He arranged it in the first place.
And Smith told me that the thing had -otten to the point
where Mr. Welles was trying to persuade the President
189
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not to do it because when his people got to him they
were talking about the illegality, but this was sitting
right in his lap. We have turned them over to the
State Department representative at La Guardia Field.
They have them stored there.
HM,Jr: Bill Bullitt called me and I got
word to Herbert Gaston and he called up Mr. Welles and
Welles said, "That's the third person who has asked to
do this, BO I kind of gathered he was beginning to
turn a little sour. I would be amazed to have the
Clipper carry arms.
General Marshall: I think it is a deadly
thing.
HM,Jr: Would the George Washington carry
arms?
General Marshall: If the Clipper carries
arms they can be shot down.
(At this point Admiral Stark returned to
the meeting.)
Admiral Stark: I think we have them there.
General Marshall: You took them from a ship
over there?
Admiral Stark: Yes.
HM,Jr: I was going to take them from the
White House guard!
Admiral Stark: We sent a courier down to
get them. We did not have Thompsons, but we had some
Lewis. That will answer his purpose.
(Laughter among
the group.)
HM,Jr: Where are we now?
Admiral Stark: I am working through a third
person. He has to go to the Bureau. I told them to
let the 180 go tonight and he will check back with me
190
-19-
tomorrow to make certain they are able to do that,
but send them right along with the others. I told
them we wanted & minimum of 502 of the 1,000 pound
bombs at Hawthorne and check and see whether all the
thousand were available.
The fuse situation 18 not as simple as I
thought it was. They gave me a guess of 24 hours
to manufacture the fuses. I doubled it and made it
2 days and the gun factories think it may take 4 or 5
days if they have the stock. They are not sure they
have the proper stock for them. They will find that
out first thing in the morning.
Incidentally, those are brand new, which
are not obsolete or anything else. If the President
orders it, we will do it but we are on very thin ice.
HM,Jr: I will send one of my boys down and
take a chip off of them.
General Marshall: Better chip it just lightly
or you won't see the boy around again.
Admiral Stark: I checked on those at Cocoa
Sola. They will give us 750 fuses.
Mr. Foley: How about the fuses in Panama?
Admiral Stark: With the 350 in Cocoa Sola --
it's an old type but a good fuse -- it would give us
700 and that would take care of their original order
of 750. We would strip Panama. Pretty well take
every fuse they have got down there. of course, ships
are carrying their own fuses, but I am checking up on
that to see 1f we can't take that chance. Then we can
malte the adapters and send some down to Panama. They
could get those up here -- in about high speed, four or
five days.
HM,Jr: I am going to report to the President
tonight that the matter is well in hand. 248 are going
to be loaded tonight, on their way to Canada, and you
191
-20-
are working out some way or other to have the fuses
go with them and you are thinking of 502 more out
of Hawthorne and possibly another 500.
Admiral Stark: The fuse situation -- for
the additional 500 -- if they only asked for 750, let
it go. If you want that, we will give the order.
Where do you want them shipped. From Hawthorne.
HM,Jr: My guess is, as of tonight, I think
if agreeable to the Army, ship to the same arsenal.
General Marshall: Raritan.
HM,Jr: You check tomorrow and if they want
it anywhere else
.....
Mr. Nelson: What are these?
HM,Jr: Bombs from Nevada.
Mr. Nelson: They had better go to Halifax.
Mr. Young: They are not putting any ex-
plosives into Raritan.
Mr. Nelson: No explosives going to Raritan.
HM,Jr: You could have that by tomorrow morn-
ing.
Do two things: ask, one, where do they want
them to go. Will they be by special train -- and I
would be very much surprised and disappointed, after
all the work you have done, if they don't have a special
train.
Admiral Stark: I will send a telegram tonight
to Hawthorne to prepare immediately 502 bombs for ship-
ment and report when they will be ready.
General Marshall: We have a $350,000 freight
bill on deficiency on the stuff we are shipping now.
HM,Jr: What do you mean?
Regraded Unclassified
192
-21-
General Marshall: Transfer of ownership
has not taken place. The stuff is rolling and the
freight bill is $350,000. I am hopeful they can
gather that up and withdraw the Government Bill of
Lading and just pay it.
HM,Jr: I don't know anything else.
Secretary Woodring: Let's ask one question.
Admiral, would the Navy bombs fit in our racks?
Admiral Stark: Our later ones do. Our
older ones are interchangeable.
Secretary Woodring: What Puse do you use?
The Younghouse?
Admiral Stark: I don't know who makes them.
Some of our fuses are French.
Secretary Woodring: That's what I thought.
HM,Jr: I am ever so much obliged and I
will report the things accomplished tonight.
193
June 9, 1940
10:02 pm
HM,Jr phoned Mr. Purvis and the following
18 HM,Jr's end of the conversation:
"We Just got through this minute. They
only got the formula signed up at 7 o'clock tonight.
They worked all day long. Had the darndest time.
Nelson, Phil Young, Cox, our lawyer, finally got the
thing and they were to get 68 and they were loading
those tonight at Yorktown, but I wangled another 180
out of them 80 that makes 248 and we are going to get
502 more out of Nevada. So you get your 750. And
these are all 1,000 pound. The damn fuses are down
at Panama. But they will fly them up in a seaplane.
"Nelson and Young told me the number of
Generals and Admirals they talked to today would make
a regiment, but we did get this through and then to-
morrow morning the first thing they will want to know
where those 502 bombs from Nevada should go to and
whether you want a special train. I should think they
would.
"Well, I think the thing to do tomorrow 1s
have your man come in and talk to either Nelson or
Young, either one.
"Well, Just 80 they could let us know in
the morning, first, whether you will pay for a special
train. I should think you would.
"Well, I will tell them this. But they
will want shipping instructions on whether this should
go to New York or Halifax. The 502. They have ship-
ping instructions on the others.
"That takes care of your getting 750 - 1,000
pound bombs for the 50 planes and then tomorrow we start
"I think Phil (Young) did a swell Job on
machinery for powder factories. I think we are going
to get it. I think you will have an answer on that
tomorrow.
194
-2-
"Right!
"That would be for t..e 03.
"Now, the Army will have these 33 assembled
somewhere tomorrow, but the bis question on that is
Licmbs, but maybe -- they think -- they EA10 maybe by
accident they are the same bomba na the Havy uses.
So by accident it may be the same bombo. And we have
nome more bombs out At llevada, 1000 pound. But that's
another story. But this one thing now is really an
accomplished fact.
"I THE sure it 1s and we are doin- everything
WE can within and -ithout the Law.
"Well, Unit "111 be nico.
"I really an.
"Well, thank you. Sool night."
++ + +) +
He and you can't tell what this neans abroad.
It just teans everything to then. Just nonne every thin.
Regraded Unclassified