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Volume 654, August 5 – August 9, 1943
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Volume 654, August 5 – August 9, 1943
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Henry Morgenthau, Jr. Papers
Diaries of Henry Morgenthau, Jr.
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DIARY
Book 654
August 5-9, 1943
g'
- A -
Book Page
Africa
See Occupied Territories
Agriculture
Farm Land Prices - boom in: See Inflation
Alien Property Custodian
Again "raiding" Foreign Funds Control - Paul reports to HMJr -
8/5/43
654
105
a) HMJr says he wants to "get Rosenman back into
discussion" - 8/12/43: See Book 655, page 213
1) HMJr's note to FDR: Book 655, page 293
2) Rosenman's letter: Will arbitrate whenever necessary -
9/3/43: Book 661, page 216
b) Alien Property Custodian decides to accept Treasury's
point of view - 9/7/43: Book 662, page 182
Appointments and Resignations
Welch, Roy D.: Asks to be relieved of assignment with War Savings
Bonds - 8/6/43
124
a) Decides to remain - 8/17/43: See Book 655, page 193
- B -
Business Conditions
Haas memorandum on situation, week ending August 7. 1943 -
8/9/43
204
- C -
Celler, Emanuel (Congressman, New York)
See Financing, Government: War Savings Bonds
(3rd War Loan Drive)
China
American Embassy, Chungking, reports on Japanese treatment of
Admiral Yang's agents - 8/5/43
96
Correspondence
Mrs. Forbush's mail report - 8/6/43
133
- E -
Ethiopia
Financial assistance discussed in State-Treasury correspondence -
8/6/43
170
- In -
Farm Land Prices
See Inflation
Financing. Government
War Savings Bonds:
3rd War Loan Drive:
Congressman Celler's baseball game discussed in HMJr's
memorandum - 8/5/43
37
FORTUNE Magazine
See Post-War Planning
Regraded Unclassified
- I -
Book Page
Inflation
See also Revenue Revision
Farm Land Prices: Possible boom and its control - a study
by Department of Agriculture - 8/5/43
654
56
- L -
Lend-Lease
United Kingdom:
Federal Reserve Bank of New York statement showing dollar
disbursements, week ending July 28, 1943 - 8/5/43
45
Aircraft flight delivery as at August 3, 1943 - British
Air Commission report - 8/9/43
218
Aircraft despatched. week ending August 3, 1943 - British
Air Commission report - 8/9/43
220
- o -
Occupied Territories
African Program: Report of purchases, August 2-8, 1943 -
8/9/43
215
(See also Book 656, page 86, for August 9-15 report)
French Africa: Occupation Costs - Bernstein memorandum based
on New York Herald-Tribune article - 8/5/43
51
- P -
Post-War Planning
Currency Stabilization:
FORTUNE, August 1943, comparison of United States and
British proposale reviewed in Bernstein memorandum -
8/5/43
44
Keynes' reaction to White's letter of July 24 reported by
American Embassy, London, as favorable - 8/5/43
95
- R -
Revenue Revision
Conference planned with some of people on Vinson's committee,
Nelson, Forrestal, Patterson, etc. - 8/5/43
28,32
a) Ways of raising money and combatting inflation
discussed
b) "Dress rehearsal" - 8/10/43: See Book 655, page 12
1) Agenda: Book 655, page 28
Conference; present: HMJr, Jesse Jones, Vinson, Eccles,
Cohen, Nelson, Currie, Lloyd Garrison, and representatives
of War, Budget, Social Security Board, Internal Revenue,
and Treasury - - 8/10/43: Book 655, page 29
Spendings tax plan proposed by Fred Smith as anti-inflationary -
Paul-Blough memorandum - 8/7/43
184
Regraded Unclassified
- S -
Book Page
Smith, Fred
See Revenue Revision
Stabilization Fund
Status on June 30, 1943 - White memorandum - 8/5/43
654
50
- T -
Taxation
See Revenue Revision
- W -
Welch, Roy D.
See Appointments and Resignations
1
August 5, 1943.
At eight o'clock last night Ambassador Halifax called
me to give me the information that he had cabled to his govern-
ment a report of our conversation and that he had followed it
up with a recommendation himself. I asked him what the recom-
mendation was and he hesitated and then said, "Well, it supported
your position." But that was confidentially for me only. Further-
more, he telephoned through to his Treasury and told them to be
sure and get this telegram on the desk of the Chancellor of the
Exchequer by eight o'clock this morning and to notify everybody
to be there with the Chancellor at eight o'clock. I also under-
stood him to say that they should have an answer on my desk at
nine o'clock this morning. That 18 with the difference of time
of six hours. I don't think he would have telephoned me if he
hadn't really supported my position. Anyway, we will know this
morning what the results are.
Regraded Unclassified
2
August 5, 1943
9:30 a.m.
GROUP
Present: Mr. Paul
Mr. Smith
Mr. Gaston
Mr. Sullivan
Mr. Gamble
Mr. Thompson
Mr. Haas
Mr. Blough
Captain Kades
Mr. Bernstein
Mrs. Klotz
H.M.JR: Bernstein, last night at eight o'clock
Lord Halifax called me up to say that the cable had
gone.
Then he said in the strictest confidence, with the
recommendation from him backing me up.
MR. BERNSTEIN: There is no news over the press that
the paper was released, 80 I imagined it hadn't been.
H.M.JR: We had a three-hour battle here yesterday.
I will just tell it to you in passing. It was sort of
amusing - if it hadn't been 80 dangerous. The Chancellor
of the Exchequer was going to issue a statement on Lend-
Lease in Reverse, and it would have, I think, been a
terrible boomerang because it was so disappointing.
I had to take the position on that and the raw
materials that he shouldn't do it, although he was going
to do it at six o'clock this morning our time.
Of course, Stettinius and Acheson, who have been
pressing for it, were very keen to have it. But Halifax
is a very direct fellow and a very satisfactory fellow
to talk to, and I convinced him.
Regraded Unclassified
3
- 2 -
Then the amazing thing, which I don't think you
people know, is that as they left Stettinius said - now,
they had a paper they had worked on jointly with the
English to give out this morning patting them on the
back, and so forth, and so on. Stettinius said, "I
think I ought to tell you, Henry, that I never saw that
release until I came over to see you, and when I read
it here in your office - it was the first time I read it,
and I never was so embarrassed in my life."
Oscar Cox was here. He just picked the thing to
pieces - the most gawd-awful statement you ever saw.
It is inconceivable.
Anyway, I think we must have stopped it. Don't
you think so?
MR. BERNSTEIN: I think SO. No news has come over
the Treasury--
H.M.JR: The British Treasury man said, "To be
blunt, Mr. Secretary, this is a matter for the British."
I said, "To be blunt, Mr. Waley, I think this is a
matter for the United Nations." Evidently it came out
all right, but they boiled it all down, I mean, what they
had given us. It doesn't look so good.
But anyway, anybody that is worried about what I
was doing last night, that is what I was doing.
MR. THOMPSON: I have nothing. I will have & report
today on that little leaflet. It was a War Finance
Division project, and they got out about twenty-eight
million copies. It was cleared by Internal Revenue.
H.M.JR: And the Commissioner didn't know it?
MR. THOMPSON: I am getting the papers.
H.M.JR: It was cleared in Revenue?
Regraded Unclassified
4
- 3 -
MR. THOMPSON: It was cleared as to the accuracy of
the tables and the information, but it is not clear that
it was cleared as to the purpose for which it was to be
used.
MR. SULLIVAN: Which is that, Norman?
MR. THOMPSON: It was a little leaflet that went out
with the pay checks - one that War Finance got out.
MR. SULLIVAN: They sent over several tables, and
there was a lot of material that was cleared. What was
used was an excerpt from the material. The leaflet
wasn't cleared there.
MR. THOMPSON: No, the material was all cleared.
MR. SULLIVAN: Not the material on the leaflet.
MR. THOMPSON: Peter Odegard says he has a memorandum
from Cann clearing it.
MR. SULLIVAN: Not the leaflet. He cleared the
statistics in there, but the heading on it which caused
the trouble wasn't on it when Peter saw it.
H.M.JR: I think it started at twenty-seven dollars,
and that is what the Commissioner was complaining about.
MR. THOMPSON: Peter said Cann wanted it started at
twenty dollars.
MR. SULLIVAN: But those were entirely different -
it was entirely different material, though.
MR. THOMPSON: Cann apparently didn't know the purpose
for which this leaflet was being prepared. That was the
difference. I will have a complete report for you.
H.M.JR: Blough?
Regraded Unclassified
5
- 4 -
MR. BLOUGH: Nothing.
H.M.JR: I am seeing you and Paul at eleven.
MR. PAUL: Yes. I have to see the Comptroller
General at ten-thirty, but I can be back by then.
H.M.JR: If you are not back I will start reading
Blough's memorandum, which I haven't read yet.
MR. PAUL: I will be back within a few minutes unless
something happens there.
H.M.JR: Do you have something on a piece of paper
on taxes?
MR. PAUL: No, Blough's memorandum wouldn't--
MR. BLOUGH: You have something though, if you want
to use it. (Laughter)
MR. PAUL: We always have a tax plan in our pocket.
(Laughter)
H.M.JR: Bring it in. I will try to read Roy's
if you are not here.
MR. PAUL: Roy's will keep you busy for any con-
ceivable delay that I will have. (Laughter)
H.M.JR: Bernstein, supposing they say to us, "All
right, we have held up this raw material business," now who
is going to do the negotiating with them on that? Whose
job is that?
MR. BERNSTEIN: I don't know, but I should think the
Treasury started this business, and apparently we are the
only ones who seem to care very much how this comes out.
H.M.JR: Can you and White take it on with Waley?
MR. BERNSTEIN: I haven't any doubt Mr. White could
do that.
Regraded Unclassified
6
- 5 -
H.M.JR: Supposing you do. Leave it that way,
because I am afraid I might lose my temper at Waley.
He made an awful poor impression here yesterday. Then
I will leave that with you.
MR. BERNSTEIN: Yes, sir.
MR. PAUL: Bernstein, you had better make a point
about--
MR. BERNSTEIN: Mr. Smith called this morning about
the lira currency. I don't know whether you want to say
something about that now.
H.M.JR: He has explained it to me. We will let it
go. There is a little piece in the New York Tribune.
I think that as we go along in this thing, inasmuch
as Mr. Winant seems to be taking a keen interest in it I
think we ought to keep him posted. Have you a committee
on this thing? Is there a committee?
MR. BERNSTEIN: On the Lend-Lease?
H.M.JR: Yes.
MR. BERNSTEIN: You mean within the Treasury? There
is a committee that looks over these balances and decides
on the policy to pursue on Reverse Lend-Lease - inter-
departmental.
H.M.JR: Don't you think once we know that I ought
to tell Stettinius we will take up this thing so that
he doesn't do it, too, on raw materials? He might do
it himself.
MR. BERNSTEIN: I don't think he will.
H.M.JR: Anyway, when it comes in, you come and see
me. We will call up Stettinius and have a talk with him.
Regraded Unclassified
7
- 6 -
MR. BERNSTEIN: Yes, sir.
H.M.JR: If we are to do it, then I want to keep
Winant informed.
Where is that analysis on the Fortune article?
MR. BERNSTEIN: It ought to be in today; it hasn't
reached me yet.
H.M.JR: George?
MR. HAAS: Mr. Secretary, the boys tell me that the
State administrators want to take back copies of that
source-of-funds material. Does that bother you if that
gets out? They want to duplicate Lindow's lecture back
in their home territories to convince the people that the
money is there. The only thing that--
H.M.JR: It doesn't bother me, but it may bother Dan
Bell. You had better wait until Bell gets back tomorrow.
MR. HAAS: It has got that seven, you see.
H.M.JR: You had better talk with Dan Bell - better
clear that with him. I know he feels pretty strongly
about it.
Did you get my message about Federal expenditures?
MR. HAAS: Not yet.
H.M.JR: I sent it to you. Anyway, it is easy enough
to repeat it. I don't know who I told. Anyway, I want
to go back to September '39, begin with Federal expenditures
and break them down, Army, Navy, and non-military. I want
to get sort of a line - I told somebody - I wanted a lateral
line. I mean, I didn't want up and down charts. I wanted
figures - a line chart going east and west.
MR. HAAS: O.K.
Regraded Unclassified
8
- 7 -
H.M.JR: I mean, I want to see if the Navy has reached
its peak for expenditures, has the Army reached its peak
of expenditures, and then as we begin to get that we will
break it down. I want to see if these expenditures have
reached the peak or not.
MR. HAAS: In other words, you would like to have
at the top the total, then below that the biggest item,
like the wan and break that down.
H.M.JR: Bring me something in pencil. But I want
to begin to go into that, George.
MR. GASTON: Would you want them on a monthly or
quarterly basis 80 as to show you a curve on that basis?
It might show you a peak better.
H.M.JR: I mean a monthly basis. Isn't there such
a thing in the Treasury?
MR. HAAS: We have the figures. We haven't put them
on a chart.
-
H.M.JR: It would be interesting.
MR. GASTON: Yes, it would be very interesting.
H.M.JR: Has the Navy reached its peak and the Army -
then when we begin to get it we want to maybe break down
the Army appropriations, you see. In other words, I want
to begin to study a little bit the war spending, George.
That is the assignment.
MR. HAAS: We will have it.
MR. PAUL: That agreement that we had with Doughton
was consummated yesterday noon. You probably saw the
papers this morning.
H.M.JR: With holy water? (Laughter)
MR. PAUL: Anyway, we tried our best to keep the
heat off the Treasury for delaying it. While not perfectly
Regraded Unclassified
9
- 8 -
satisfied with the press story, at least it wasn't so
bad as it might have been.
H.M.JR: I don't know whether Gamble likes it.
I don't know how Smith feels, but I kind of liked the
heading in the Tribune, "Tax Bill Postponed to See How
Well the War Bond Drive Will Go - Whether We Need Com-
pulsory Savings or Not." Do you mind that?
MR. GAMBLE: It is very good.
H.M.JR: Just a little extra heat under your chair
there. (Laughter)
MR. GAMBIE: It is very good.
H.M.JR: Do you mind it?
MR. GAMBLE: Not in the least.
H.M.JR: I had nothing to do with it, but that is
the way it came down. I think it is kind of good. The
implication - incidentally, on that, when Mrs. Ogden
Reid came in here complaining about not being able to
increase her salary, I said, "Mrs. Reid, how do you stand
on the volunteer plan?"
She said, "I am for it very definitely."
I said, "I wish everybody on your paper was that way,
too."
She said, "Who?"
I don't want to go into it, but I had Nick Gregory
in mind.
She went back. She said, "I go all through the
paper. I will send you this editorial which I have written,"
which was a swell editorial on the volunteer plan.
MR. PAUL: There was an awfully good editorial in
the Post yesterday about replying to Senator George.
Regraded Unclassified
10
- 9 -
MR. GASTON: That is the one I mentioned to you
yesterday.
MR. PAUL: I called up Eugene Meyer about it. I
told him I wish he would get some more of that across.
H.M.JR: There is a swell editorial today, too, on
Leo Crowley firing this fellow. Anybody who hasn't read
that in today's Post - it is an awfully good article.
MR. GASTON: It starts out, "Martin Dies, the new
personnel manager of OEW"-- (Laughter)
MR. PAUL: I have another matter here. It is a
memorandum on the proposal to get a number of Jewish
people out of Rumania, made by the American-Jewish
Congress. A few days ago - towards the middle of last
week - we wrote Wise that we were agreeable - you wrote
him.
H.M.JR: We wrote. (Laughter)
MR. PAUL: I won't quarrel about the pronoun. (Laughter)
Anyway, a letter was written and signed by you to him to
that effect. He wrote the President also, and the
President sent over a letter for reply. On receipt of
that, the matter was tak en up with the State Department.
There is a great division of opinion over there. Dr.
Feis is very strong - is very much back of the Treasury.
H.M.JR: For doing it?
MR. PAUL: For doing it. There are certain elements
in the State Department, which you may well imagine, are
opposed to it.
H.M.JR: I can't imagine. (Laughter)
MR. PAUL: We are in a position now where we have
to do one of two things. We have to write that we are
for it. We told Dr. Feis we would have to reply that we
are for it, but State is opposed to it. He begged us not
Regraded Unclassified
11
- 10 -
to do it, but to help him get it through over in the
State Department. He suggested that you call up Hull,
who, he thought, was sympathetic to it. I have replies
here both ways, whichever way you want to do it.
H.M.JR: Simply write a little letter for me, "Dear
Cordell: I am contemplating sending the President the
following letter, but before doing so I would very much
like to know whether this meets with your approval."
MR. PAUL: All right.
H.M.JR: I would much rather--
MR. PAUL: Feis thinks that that W ould be enough to
get it through.
H.M.JR: Just do it; write a little letter like that.
MR. PAUL: Could I expand that just a little bit to
give him the point?
H.M.JR: Oh, yes. But you get it to me this morning
whenever you can get it, and I will sign it. I don't
want to do it over the phone. I would much rather make
a written record of it. I think it would be better,
much better for me personally to have a written record.
Don't you agree?
MR. PAUL: It is clear to me that it ought to be done.
H.M.JR: Don't you agree?
MR. PAUL: Yes, I think you ought to have a written
record. Whether also you might call him in addition--
H.M.JR: I don't think SO. I wish you would say
that I am doing this on the advice of my General Counsel,
Mr. Paul.
Kades?
CAPT. KADES: I haven't anything, Mr. Secretary. I
carried on a conference with Mr. Bergson.
Regraded Unclassified
12
- 11 -
H.M.JR: Was it interesting?
CAPT. KADES: As interesting as it was in here. I
told him he would get all the consideration he deserved.
H.M.JR: Nothing special?
CAPT. KADES: No.
H.M.JR: During the day I will see you.
CAPT. KADES: Nothing special, no.
H.M.JR: Gamble?
MR. GAMBLE: I have only one thing to report. It
may have already been called to your attention. They
appointed Generoso Pope as chairman of an Italian-
American committee. P.M. called you last night and asked
for a comment on a press release that they had from our
New York office with respect to this. They particularly
wanted comment on a statement in the press release that
he was a prominent liberal editor.
I advised them that we were in no position to
comment on it, that we had not seen the release; and that
as a matter of policy we did not pass on matters relating
to the appointment of committees by our State organiza-
tions; that they were autonomous groups; that the Treasury
officer they should contact in New York for comment was
Mr. Randolph Burgess, our State chairman, who is the one
man that We look to from here and hold responsible for
the activities of the War Finance Committee for the State
of New York.
MR. SULLIVAN: I had the Army fellows in this morning
with Joe O'Connell, and we were discussing the renegotia-
tion of the brokers.
H.M.JR: Brokers?
MR. SULLIVAN: Yes. I mentioned it to you yesterday
afternoon. They are coming back again at twelve.
Regraded Unclassified
13
- 12 -
H.M.JR: You are together on this?
MR. PAUL: We are having a meeting today.
MR. SULLIVAN: We have a meeting scheduled for
three this afternoon, Randolph, Chuck, Joe O'Connell
and myself.
H.M.JR: Wonderful.
MR. SULLIVAN: That is on the whole picture.
H.M.JR: Good. I haven't heard anything from
those regulations over in Vinson's office, but I expect
to call before eleven.
MR. GASTON: We tried to get the Department of
Justice to approve an Executive order under which
harvesting trucks and equipment from Canada could be
brought in legally without doing violence to the
Customs laws and regulations. They wouldn't approve
it, so we decided to do it illegally.
H.M.JR: Wonderful, Herbert. (Laughter) Congratula-
tions.
MR. GASTON: We have sent out instructions telling
the collectors to act corruptly in this matter and not
see the trucks.
H.M.JR: Want to put out a story about Mr. Biddle
on it?
MR. GASTON: No, I don't think 80. I think he is
right. That is the difficult part of putting out a story.
We are trying to stretch B statute that really wasn't
made for that purpose.
H.M.JR: Do you want to say that we are doing it
illegally? Who could sue us?
MR. GASTON: I don't think anybody is going to sue
us. It might make a little trouble.
Regraded Unclassified
14
- 13 -
MR. PAUL: All we have to do is let the trucks come
in, then not see them after they are in.
MR. GASTON: That is about what we are telling the
collectors to do.
MR. PAUL: Just a slight dereliction of duty.
MR. GASTON: It is a necessity.
H.M.JR: Good.
MR. GASTON: I cleared the Hassett matter with
John McCormack. I notified Walsh - couldn't reach him
on the phone. I notified the White House and the Democratic
National Committee.
H.M.JR: Who is the National Democratic Committee?
The Republicans can leave the room. (Laughter)
MR. GASTON: Ambrose O'Connell. He happens to be
out in Chicago.
H.M.JR: Wasn't he with Farley? Wasn't he his right-
hand man?
MR. GASTON: Yes.
MR. SULLIVAN Assistant Postmaster General.
H.M.JR: He is still there?
MR. GASTON: He is not there now; he is over on the
Committee. He is working with Walker.
H.M.JR: He used to be Farley's shadow.
MR. GASTON: That is right, but he isn't by any
means any more. He is Frank Walker's shadow.
H.M.JR: Does Frank Walker give it any time?
Regraded Unclassified
15
- 14 -
MR. GASTON: I don't know how much time he gives
to Ambrose O'Connell. I think he does give some time.
But I only heard from him once or twice.
H.M.JR: I am very much pleased because that was
a difficult thing, and I am sure the Commissioner must
be pleased.
MR. GASTON: I told you McCormack would want to tie
it up with the appointment of the Collector of Customs
up there. He raised that matter, and I told him I
couldn't see his man at all. We agreed that we would
let that ride until he came back.
H.M.JR: You and Ted are getting tough, aren't
you? (Laughter)
MR. GAMBLE: I don't know. We may have to take
the man eventually.
H.M.JR: "Tough Head Fires Twenty-three Collectors
of Internal Revenue" - back on Sullivan.
MR. SULLIVAN: Believe me, we wanted them fired,
and have for a long while.
H.M.JR: We can tell you which ones are good, too.
MR. SULLIVAN: So can I tell you some we have that
aren't any good.
H.M.JR: Fred?
MR. SMITH: Nothing.
H.M.JR: If that is all, I would like Smith, Gaston,
and Paul to stay a minute.
Regraded Unclassified
16
August 5, 1943
10:20 a.m.
HMJr:
Hello.
Ed
Stettinius: Good morning, Henry.
HMJr:
Hello, Ed.
8:
You are a very persuasive gentleman.
HMJr:
Why?
S:
They have - Sir Kingsley has tabled his statement.
HMJr:
Oh, really?
S:
Yesh.
HMJr:
Well, that's nice. Isn't it?
S:
Yeah.
HMJr:
I think that's very helpful for the war effort.
8:
Well, I think it worked out well all around the
lot.
HMJr:
He tabled the whole thing?
S:
That's the news we just got from the Embassy from
Press - from the Press Room of the Embassy that they
had tabled the proposed statement.
HMJr:
I see.
S:
Now, I imagine that you and I will be hearing from
Halifax sometime during the morning.
HMJr:
What a funny way to hear.
S:
Well, I had my scouts out, you see.
HMJr:
Oh, I see. I see.
S:
And they got - they got - my scouts got the information
through the British information - that is the British
OWI - whatever that 18.
HMJr:
Yeah. Well, you're happy over it?
Regraded Unclassified
- 2 -
17
S:
Yes. I think from every standpoint that what came
out in the discussion yesterday
HMJr:
Yeah.
S:
that it would have been a mistake to have done it.
HMJr:
That was a God-awful statement your people prepared
for you.
S:
Well, there's no question about that....
HMJr:
Yeah.
S:
and what I told you of the other assistance, however,
was the thing that muddied the waters.
HMJr:
You mean the British?
3:
Yeah.
HMJr:
Well, they were in on it.
S:
They were. Yeah.
HMJr:
They helped on it.
S:
Sure.
HMJr:
Right.
S:
That fellow that you called that was with us with
Helifax.
HMJr:
Waley.
S:
Yeah.
HMJr:
Yeah. Well, let me ask you this. I'm delighted. Now,
how do you feel about negotiating for these raw
materials with the British? I mean - would you like
us to do it or would you rather do it yourself?
S:
Well, I think that you have been 80 effective on the
business - - I think we ought to continue and do it -
I would be very much - very unhappy if you dropped
out of it. I think We ought to continue and let our
fellows tie in with what you do.
HMJr:
Good.
Regraded Unclassified
18
- 3 -
S:
Our fellows are working with OWI who make the
HMJr:
You don't mean
S:
....
that is, Leo Crowley's new outfit
HMJr:
You don't mean
8:
....
Economic Warfare
HMJr:
Yeah.
S:
who make the purchases.
HMJr:
Well, 8.8 soon 8.8 Harry gete back (Pause) Hello?
S:
Harry White?
HMJr:
White, yeah. I'll tell him to get in touch with
you and we'll move on the United Front.
S:
Good, and if Harry - when will Harry be back?
HMJr:
Monday.
S:
Why don't you - Denby will be my man - why don't we
just say that Harry White and Denby see each other
the first of the week and carry the ball and then
report to you and myself?
HMJr:
Wonderful.
S:
Okay, old fellow.
HMJr:
Thank you.
S:
Thank you, sir.
Regraded Unclassified
August 5, 1943
19
10:52 a.m.
HMJr:
Hello.
Operator:
Lord Halifax.
HMJr:
Thank you. Hello.
Lord
Halifax:
Hello.
HMJr:
Good morning.
H:
Good morning. I just had a telegram from Kingsley
HMJr:
Oh, really?
H:
which I will read over the phone to you.
HMJr:
If you please.
H:
"Please inform Mr. Morgenthau that in view of his
personal request the Chancellor has agreed to post-
pone publication in White Paper on speech. (2) The
Chancellor reserves further comment for the moment
and would be glad of a fuller explanation of Mr.
Morgenthau's attitude 8.8 soon 8.8 possible."
HMJr:
Yeah.
H:
Well, that's all right I think.
HMJr:
Well, I think that's fine for both countries.
H:
Well
HMJr:
And I wish you would tell him that 1 appreciate it
very much and I think it's good for both of us.
H:
Yes. Well, it's quick work and I think he has -
I think that he has met you quite quickly.
HMJr:
Yesh.
H:
I thought he probably would.
HMJr:
Well, I'm sure that he did it largely due to whatever
you told him.
H:
Well, I did my best for you.
Regraded Unclassified
20
- 2 -
HMJr:
Well, your best was good.
:
Well, anyhow, there it is.
HMJr:
Well, I'm
H:
Will you - what I was going to ask you - could you
put on paper
HMJr:
Yeah.
H:
and let me have as soon as you can - uh - what
you consider - argument of the injustice of your case
on the - on the raw material points?
HMJr:
Well - I - - I think we can do that - - I'll - we will
do that in conjunction with Stettinius' organization.
H:
Yes.
HMJr:
And I'll have our people and his get together.
H:
Will you?
HMJr:
I will.
H:
As soon 8.8 you can?
HMJr:
Yes.
H:
And if by chance I am not here, you'll communicate
either with Ronnie Campbell
HMJr:
Yes.
H:
....or Waley.
HMJr:
Right.
H:
Will you do that?
HMJr:
And please, I wish you would send the Chancellor
quite a warm telegram from me....
H:
I will.
HMJr:
telling him I appreciate what he has done.
H:
I certainly will.
Regraded Unclassified
21
- 3 -
HMJr:
And my thanks to you.
H:
Righto. Will you tell the others?
HMJr:
Uh
H:
If you think you ought to, I mean. I won't bother
with Stettinius if you will tell him.
HMJr:
I'll call Stettinius now.
H:
Righto.
HMJr:
Thank you.
H:
Good bye.
HMJr:
Good bye.
Regraded Unclassified
21
- 3 -
HMJr:
And my thanks to you.
H:
Righto. Will you tell the others?
HMJr:
Uh
H:
If you think you ought to, I mean. I won't bother
with Stettinius if you will tell him.
HMJr:
I'll call Stettinius now.
H:
Righto.
HMJr:
Thank you.
H:
Good bye.
HMJr:
Good bye.
Regraded Unclassified
22
Original, okayed by the Secretary,
sent to Mr. Livesey, State Dept., by
special messenger, noon, August 5, 1943.
23
To Winant from the Secretary of the Treasury
Please transmit the following message to the Chancellor of the
Exchequer:
"The Secretary of the Treasury expresses his deep appreciation
oi the decision of the Chancellor 01 the Exchequer to postpone his
statement on reciprocal aid. The Secretary of the Treasury believes
that the Chancellor's decision will contribute to the United ..ations
war effort. with more time for the preparation ano study of the
most appropriate .'orm in whener. to present in both countries the facts
on the value of reciprocal aiu, it will be possible to make clearer
the common advantages of tiús program. The Jhancellor of tne
exchequer may be assured that the Secretary 01 the Treasury will
continue to cooperate with nim in the furtner development of the
rogram of natual ain."
O.K.
Regraded Unclassified
24
August 5, 1943
11:56 a.m.
HMJr:
Hello.
Operator:
Mr. Stettinius.
Ed
Stettinius: Hello.
HMJr:
Stettinius.
S:
Yes, sir.
HMJr:
I've been officially notified by the Ambassador
of that - it's been postponed.
8:
You've been officially notified by the Ambassador?
HMJr:
Yeah.
S:
Well, you were very surprised when you heard it.
HMJr:
I was surprised and he asked me to call you.
8:
Thank you for calling, Mr. Morgenthau.
HMJr:
Now, Mr. Stettinius, he's asked me whether we
wouldn't give him 8 written memorandum why we don't
like the raw material thing. And I said I would get
in touch with you and your staff and ours would
formulate a memorandum why we don't like it.
8:
Good.
HMJr:
So, I think what we'll do - he said he would like to
have it soon. E. M. Bernstein 1s in charge here
while White's away and he - what was the name of the
man you had?
S:
Denby - Charles Denby.
HMJr:
Danby?
S:
D-e-n-b-y, Denby.
HMJr:
Denby. Well, he'll get in touch with Denby.
S:
Bernstein?
HMJr:
Yeah.
Regraded Unclassified
- 2 -
25
S:
Good.
HMJr:
E. M. Bernstein.
S:
E. M. Bernstein.
HMJr:
Yeah.
S:
Okay. They'll work out a memorandum, Henry.
HMJr:
That's right.
8:
And thank you. I'm delighted that the British
called you.
HMJr:
They did.
S:
Thank you, sir.
HMJr:
All right.
Regraded Unclassified
26L
August 5, 1943
11:58 a.m.
HMJr:
Hello.
Operator:
Mr. Acheson.
HMJr:
Dean.
Dean
Acheson:
Good morning, Henry.
HMJr:
Good morning, Dean. I don't know whether this is
news but Halifax just called me to say that they
had tabled that resolution.
A:
I had gathered from the Lend-Lease people that
they hadn't heard of anything 80 it must have been
done.
HMJr:
Well
A:
I think that's - it took us about three hours.
(Laughs)
HMJr:
Well
A:
1 think that's
HMJr:
I hope you think it was worth while.
A:
I think it was worth while.
HMJr:
I do.
A:
I think it's good. Have you at a copy of that
telegram I sent out?
HMJr:
Not yet. No.
A:
Well, I sent it over this morning. You'll have it
in a few minutes.
HMJr:
Good. Well, now, he asked us to draft A formal
objections - what our objections are on the raw
materials. See?
A:
Yes.
HMJr:
And I've asked - uh - I said we'd do it jointly
with Lend-Lease. Now when I get that I'd like to
sit down with you and Stettinius and go over it -
I mean before we give it to the British.
Regraded Unclassified
27
- 2 -
A:
Yes, I think that's wise.
HMJr:
If that's agreeable to you.
A:
Yes.
HMJr:
And one other thing - I'm going to draft a cable to
Winant thanking Kingsley Wood for this and I'll send
it over to you and I'll appreciate it if you will
forward it to Winant.
A:
I'll send it right out....
HMJr:
Thank you.
A:
....as soon as it comes along.
HMJr:
Thank you.
A:
All right, Henry.
HMJr:
All right. The next time I'll have Coca Cola for
you.
A:
Well, that Dr. Pepper was pretty good.
HMJr:
(Laughs) All right. Sorry, but we'll do better
next time.
A:
(Laughs) All right.
HMJr:
Good bye.
A:
Good bye.
Regraded Unclassified
28
August 5, 1943
4:00 p.m.
TAXES
Present: Mr. Paul
Mr. Blough
Mr. Gaston
Mr. Smith
Mrs. Klotz
H.M.JR: Let's have a report on this meeting,
please - proposed meeting.
MR. PAUL: We went over a list of names--
H.M.JR: Do you mind if I ask first whether Mr.
Gaston approves the idea? That is what I wanted -
Herbert's brains.
MR. GASTON: I don't know about it.
MR. SMITH: You said you were going to check with
him.
H.M.JR: I asked you fellows to prepare him before
he came in - to discuss it with him.
MR. SMITH: I understood you to say--
MR. GASTON: The only message I got was from Fitz
asking me if I knew about a meeting at four o'clock.
H.M.JR: I said to prepare Mr. Gaston and discuss
it with him before he came in.
MR. PAUL: I must confess I didn't understand it.
Regraded Unclassified
29
- 2 -
H.M.JR: Anyway, Herbert, inasmuch as they haven't,
and I have got to do all the spade work around here -
(Laughter) in conjunction with these good but lazy
people, we worked out the idea that - the idea was that
next week we would call a meeting of various people who
are interested in taxes. We would invite all the people
who are on Mr. Vinson's committee, but not as a committee.
We would invite people like Nelson - some of his people -
Patterson and Forrestal, and some others. I mean,
fifteen or twenty people, see? And then use them as
a guinea pig to try the various ideas we have to raise
money and combat inflation.
I want to explain to you that I was acting chairman
of Vinson's committee, and I told them I would like to
come before them and tell them what we had. They were
crazy about it. When I mentioned it to Vinson he said,
"No," - that it would just start a lot of controversy.
MR. PAUL: Didn't he say - make a point that it
would all be in the papers?
/
H.M.JR: Yes. I thought - at my press conference
this morning I said we were going to follow the usual
procedure of doing this thing and consulting with people
the way we had before. I don't know whether you read
my press conference.
MR. GASTON: I didn't read the transcript. I read
the ticker.
H.M.JR: This would be following the new procedure.
There won't be firm Treasury recommendations, but it
will be setting up different proposals for them to
consider. We were going to ask to have the meeting
here.
MR. GASTON: How soon?
H.M.JR: We are going to shoot for next Tuesday
afternoon.
Regraded Unclassified
30
- 3 -
MR. GASTON: I think the idea is good. The question
is now big a list - how much of a meeting you want to
have. I don't know whether you want War Department and
Nelson in it or not - whether it will help any.
H.M.JR: I will explain that. How do you like the
idea of a meeting?
MR. GASTON: I like the idea. The second question
that arises in my mind is whether you want to check it
with the President before you have a meeting.
H.M.JR: No, I wouldn't dream of checking it with the
President.
MR. PAUL: For a little background, the Secretary
first thought of having Vinson - asking Vinson to call
& meeting of his committee. Then he thought, I think
wisely, that that would be bad and play right in the
hands of all these reporters who say that he is in
charge of the tax bill. So we thought we would have it
a Treasury meeting.
MR. GASTON: That is better.
MR. PAUL: We have made a list which doesn't include
all of these people.
H.M.JR: But you are satisfied.
Now, before we go into the list, has anybody any
qualms about having the meeting? You people were going to
think it over and discuss it with Gaston. Has anybody
got any qualms?
MR. PAUL: I haven't got any qualms about having the
meeting. On the contrary, I think that we must prepare
our position by having a meeting. That is, we must make
it clear that we do consult this year as we did last with
the other agencies and persons interested. But I do think
that the meeting should make it very firm that nothing -
make it very clear that nothing said by us is & firm
Treasury proposal.
Regraded Unclassified
31
- 4 -
H.M.JR: Did you read my press conference?
MR. PAUL: Yes, I did. It was very good.
H.M.JR: Thank you, sir.
MR. BLOUGH: It hadn't come to my desk.
MR. GASTON: Did you have the transcript or the
ticker?
MR. PAUL: I had the transcript.
For instance, I don't think we ought to put all our
eggs in the basket of this one scheme we discussed this
morning.
H.M.JR: I am in accord with that.
MR. PAUL: With those qualifications, I think the
meeting would be very helpful.
H.M.JR: I am in complete accord.
Now, do you want to get down to the names?
MR. SMITH: What do you think about giving out
charts - having Lindow--
H.M.JR: I don't think we will have that, Fred. It
takes too long, and it is too much on a theoretical
assumption. It takes a couple of hours and then you
immediately get down with this crowd, "Well this is pure
theory; it is just set up to sell the volunteer plan.'
I mean, I think it is all right to do it with some-
body alone, talking the thing over and asking questions,
but if you have fifteen or twenty people - I thought of
that - I am afraid of it. I think if you get somebody
in alone, good. You can sit down quietly and take a
couple of hours, but not this crowd.
Regraded Unclassified
32
- 5 -
MR. GASTON: In this group that you call, the
majority of them are economic technicians and familiar
with all that general background.
H.M.JR: I wouldn't call them economic technicians.
Hear the list.
MR. PAUL: Judge Vinson, Ben Cohen, Harold Smith
or Wayne Coy, Jesse Jones, Marriner Eccles, Prentiss
Brown, Donald Nelson, Arthur Whiteside, James Forrestal,
Robert Patterson, Eric Johnston, william Green, Philip
Murray, James Patton, Lauchlin Currie, Claude Wickard -
we put his name in because it is hard to ask Jones and
not ask Wickard when they are both on the committee - and
W.L. Davis.
R.M.JR: And 1 won't fight for the Army and the Navy
if you want to leave them out.
MR. PAUL: I don't see any objection to having them.
Last year - at first I opposed it, as you remember, but
last year we had a good many conferences with them about
different aspects of the tax program.
MR. GASTON: Patton is on there because he is the
farm representative?
MR. PAUL: We left out O'Neal because if you have
O'Neal there you won't have any meeting.
MR. GASTON: There is the thing I was questioning,
leaving out the other farm organizations, because O'Neal
is on that Stabilization Committee, too, isn't he?
MR. PAUL: Yes. I don't know whether we should leave
out O'Neal but he is a terrible man. He breaks up a
meeting.
H.M.JR: Well, look, gentlemen, as far as the names
E0, I will leave it to the three of you. My thought was
to call it for about four o'clock in the afternoon.
Regraded Unclassified
33
- 6 -
MR. PAUL: Four is a good time because it doesn't
extend too late, then.
H.M.JR: I will leave it to you.
MR. GASTON: You will get good publicity.
MR. PAUL: You will get publicity, all right.
Marriner Eccles will be here.
H.M.JR: Herbert, this is what I was thinking about.
I listened to you fellows today and I said what we all
agreed I would say to the press. I would like you (Gaston)
to read my press conference.
MR. GASTON: Yes.
H.M.JR: I don't know what the stories will be, but
I am going to go ahead. I didn't ask the President. I
didn't ask him last year.
I have done an awful lot of thinking on this thing
entirely by myself and I am satisfied to go ahead on
this thing, and I am satisfied that the President will
not knock me down.
MR. GASTON: I think that same thing.
H.M.JR: Then if he does, it is a damned serious
matter. He won't - he never has.
MR. PAUL: I merely wanted to recall a point I made
this morning, that this meeting cannot be held without a
discussion of compulsory versus volunteer.
H.M.JR: That is all right. Your mind is open and
my mind is made up. (Laughter)
MR. PAUL: I am afraid somebody else had better do
the talking on that.
H.M.JR: We have got plenty. I know Blough is a
violent volunteer fellow. We will let him present it.
We have plenty of fellows to present the volunteer side.
Regraded Unclassified
34
- 7 -
MR. BLOUGH: Lindow can do it enthusiastically and
I can do it fairly. (Laughter)
MR. PAUL: Who is going to call these people?
H.M.JR: I would like you to, or have your office
do it if you will. Or give the names to Fitzgerald and
he will do it in my name. Maybe that will be better.
What do you think, Herbert?
MR. GASTON: I think that would be a good idea for
Fitzgerald to do it.
MR. PAUL: I will give him a little statement of the
purpose of the meeting.
H.M.JR: Let Fitz do it.
MR. BLOUGH: The dismissal compensation is not in 8
stage that you are thinking of that in this connection
at all?
H.M.JR: I don't think 30. I hope to have one meeting
a week until we get this thing straightened out.
MR. BLOUGH: I mention it because we, of course,
haven't gone over that memorandum.
H.M.JR: That is all right.
Regraded Unclassified
35
August 5, 1943
4:48 p.m.
Operator:
Here's Mr. Paul.
HMJr:
Randolph?
Randolph
Paul:
Yeah.
HMJr:
I thought that we certainly ought to have Baruch
and Hancock.
P:
Well, we've got Baruch's name down but since we
were in your office we've had a further discussion
which has partly been solved by practicalities.
HMJr:
Yes.
P:
Eric Johnson is leaving tonight for England.
HMJr:
Yeah.
P:
and we've decided that it wouldn't be a good
thing - and Patton is going this afternoon to
Denver
HMJr:
Yes.
P:
/
and we've decided we couldn't have just an
Administration and Labor meeting 80 we are limiting
the list to the various Administration people and
we've added to that list 2. little bit
HMJr:
Well
P:
and
HMJr:
will that include Baruch?
P:
Well, Baruch qualifies, I should think, because he's
an - sort of an assistant to Byrnes.
HMJr:
Well, he's an advisor to Byrnes.
P:
Yes, he's in the Administration.
HMJr:
Yeah.
P:
All right. I'll put his name down.
HMJr:
What about Hancock?
Regraded Unclassified
36
- 2 -
P:
Well, he's My-man-Friday for Baruch.
HMJr:
Yeah.
P:
He isn't cuite the same status but I don't know how
to have Baruch and say, "You can't have Hancock. If
HMJr:
Oh, I'd have Hancock. I don't want to hurt his
feelings.
P:
All right.
HMJr:
Yeah. Okay?
- - - -
Regraded Unclassified
37
August 5, 1943
Memorandum Dictated by the Secretary
Congressman Celler telephoned me. It seems that
he planned to have a baseball game on August 26th to
raise $60,000,000 in War Bonds. He wanted to get
a Navy team from Norfolk but Under Secretary Forrestal
turned him down. He asked me whether there was anything
I could do.
I asked him to send me & telegram about it, and he
said he would and that he also would have the president
of the Brooklyn Savings Bank sent a telegram.
When these telegrams come in, I want them routed
directly to Mr. Gamble, and then I want Mr. Gamble to
bring them in to me together with this memorandum. I
think that if they are going to have the game that
we ought to have it after September 9th 80 that the
proceeds will count in on our Third War Loan Drive.
$60,000,000 is still a lot of money.
Famished Per Jambl. 8/10.
Regraded Unclassified
38
August 5, 1943
Fred Smith
Secretary Morgenthau
Yesterday I asked Mr. Paul to get in touch with
the Comptroller General and see if he couldn't make
an exception in favor of the charwomen and grant
them this pay. Please follow up on this, and if we
could get it through it would be a good human interest
story.
The attached clipping from today's Wall Street
Journal says they don't understand the story about
the invasion currency. I don't see where there
is any mystery, and it seems to me that somebody
in Bell's or White's office could see the newspaper
men and explain it to them.
Regraded Unclassified
39
TREASURY DEPARTMENT
Att
INTER OFFICE COMMUNICATION
DATE August 5, 1943
TO Secretary Morgenthau
FROM Fred Smith is
It looks like the Charwomen's Union beat us to the punch
on this one. However, I will follow it up, and perhaps when
the job is complete we will be able to do a "Saga of the
Charwomen's Pay," which will make pleasant reading.
And speaking of pleasant reading, did you ever see the
Ed Hoyt story on your pennies? He tells me the Managing Editor
was very fascinated with the yarn, and it looks at this point
as though Readers Digest is going to reprint it.
Finished
Regraded Unclassified
THE WASHINGTON POST
40
August 5, 1943
Treasury Defers
Deductions in
1
Charwomen's Pay
An advantage was won by the 80
Federally employed charwomen
yesterday in their fight to prevent
the Treasury Department from tak-
ing further deductions from their
current wages for purpose of reim-
bursing the Government for over-
paying them 13 cents an hour for
about one year.
The Treasury Department an-
nounced it would withhold deduc-
tions to give the women opportunty
to appeal to Congress this fall for
an appropriation to cover the over-
payment. A total of approximately
$5000 is involved.
The fight was made by the United
Federal Workers, Local No. 11. One
deduction, amounting to approxi-
inately $5 per woman, was made
This week from pay checks. The
legular wage is 65 cents per hour
rnd deductions from this hourly
rate left the women in dire circum-
ances, they claimed. The rate that
was paid through error of some-un-
identified official was 78 cents.
Regraded Unclassified
41
Treasury Stuck With Pennies
Of Steel That Look Like Dimes
star
The Treasury's new steel penny
lutely everything." the Secretary
has been causing so much trouble
said. "Our experts point out that
because of its atmilarity to the
it is Impractical to change the color,
dime that The Star assigned a
to bore holes or to change the size."
reporter to get e story on it. The
"The experts tell me," he sald,
story was sent to Secretary Mor-
"that in time the coins will tarnish
genthau for clearance. The
and no one will ever mistake one
Treasury not only released It, but
for a dime."
also reurote it. Herewith is the
Asked If the tarnishing would
Treasury's own report of its
solve the problem and please every-
penny dilemma:
body, the Secretary shook his head
Secretary Morgenthau took time
and produced a letter from a gentle-
off from financing the war this
man in Ohio, who Inclosed one of
the new coins which had become
morning to explain to A Star re-
porter that the possibilities of doing
spotted. "This new Lincoln penny,"
something about the steel wartime
the correspondent wrote, "Is A. dis-
penny, which looks like a dime, have
grace to the Great Emancipator
been exhausted. He predicts, there-
and the U. S. A."
fore, that it will be with us for the
The Secretary explained that the
duration and regrets that he has no
production of this penny last year
better answer to the several hun-
saved 4.600 tons of copper, or enough
dred persons who have written the
for 1.250,000 field-gun shells.
Treasury asking Mr. Morgenthau
About 175,000,000 of the new coins
please to change the shape or the
have been delivered to the Federal
color or at the very least to bore a
Reserve Bank In San Francisco
hole in the center.
where they are being passell out
"We have tried leverything-abao+
freely. The vice president & the
street railway company there said
there did not seem to be much
trouble once the public got used to
the new coin.
The new penny. It was explained,
cannot be colored because acida
would injure the sinc costing-
necessary to keep It from rusting.
The penny was introduced at the
first of this year after the War Pro-
duction Board had suggested calling
in all existing pennies for remelting.
Steel, being less scarce than any
other metal, was the only one which
would relieve the situation. Steel
rusts easily. but the board allotted
enough sine to coat the coins.
The mint used the same design of
the familiar Lincoln penny for the
new coin and the same machinery
for its manufacture. This meant
that the new penny could not have
a hole in it or be octagonal.
The Mint buys blanks for the
coin-steel slugs just the alse of A
penny. Coins with holes in them
would mean new machinery and
purchase of metal In strips, which
would mean 32 per cent waste.
"The Mint officials." the Secretary
explained, "do not want to have to
manufacture any more punched
coins. They made 100.000,000 of
them in 1941 for the Netherlands
possessions in the Far East. Their
manufacturing equipment and
methods were so little adapted to
making the punched coins that toey
had a great deal of trouble produc-
Ing them."
As for letters of complaint, It was
pointed out that the public always
resists changes in coinage. "The
Mint." the Secretary said, "has
letters predicting that the Nation
would be ruined by the substitution
of Jefferson for the bison on the
nickel."
Regraded Unclassified
41
Treasury Stuck With Pennies
Of Look Like Dimes
Steel That Star
The Treasury's new steel penny
lutely everything." the Secretary
has been causing so much trouble
sald. "Our experts point out that
because of its similarity to the
It is impractical to change the color,
dime that The Star assigned e
to bore holes or to change the size."
reporter to get a story on it. The
"The experts tell me," he said,
story toos sent to Secretary Mor-
"that in time the coins will tarnish
genthau for clearance. The
and no one will ever mistake one
Treasury not only released It, but
for a dime."
also reurote it, Herewith La the
Asked if the tarnishing would
Treasury's own report of its
solve the problem and please every-
penny dilemma:
body. the Secretary shook his head
Secretary Morgenthau took time
and produced a letter from a gentle-
off from financing the war this
man in Ohio, who Inclosed one of
morning to explain to & Star re-
the new coins which had become
porter that the possibilities of doing
spotted. "This new Lincoln penny,"
something about the steel wartime
the correspondent wrote, "Is A. dis-
penny, which looks like a dime, have
grace to the Great Emancipator
been exhausted. He predicts, there-
and the U. S. A."
fore, that It will be with us for the
The Secretary explained that the
duration and regrets that he has no
production of this penny last year
better answer to the several hun-
saved 4.600 tons of copper, or enough
dred persons who have written the
for 1.250,000 field-gun shells.
Treasury asking Mr. Morgenthau
About 175,000,000 of the new coins
please to change the shape or the
have been delivered to the Federal
color or at the very least to bore A
Reserve Bank in Ban Francisco
hole in the center.
where they are being passed out
"We have tried deverything-abso-
freely. The vice president « the
street railway company there said
there did not seem to be much
trouble once the public got used to
the new coin.
The new penny, It was explained.
cannot be colored because acids
would injure the sine coating-
necessary to keep It from rusting.
The penny was introduced at the
first of this year after the War Pro-
duction Board had suggested calling
in all existing pennies for remelting.
Steel, being less scarce than any
other metal, was the only one which
would relieve the situation. Steel
rusts easily, but the board allotted
enough sinc to cost the coins.
The mint used the same design of
the familiar Lincoln penny for the
new coin and the same machinery
for its manufacture. This meant
that the new penny could not have
a hole in It or be octagonal.
The Mint buys blanks for the
coin-steel slugs just the size of e
penny. Coins with holes In them
would mean new machinery and
purchase of metal In strips, which
would mean 32 per cent waste.
"The Mint officials," the Secretary
explained, "do not want to have to
manufacture any more punched
coins. They made 100,000,000 of
them in 1941 for the Netherlande
possessions In the Far East. Their
manufacturing equipment and
methods were so little adapted to
making the punched coins that they
had a great deal of trouble produc-
ing them."
As for letters of complaint, it was
pointed out that the public always
results changes in coinage. "The
Mint." the Secretary said, "has
letters predicting that the Nation
would be ruined by the substitution
of Jefferson for the bison on the
nickel."
Regraded Unclassified
42
Mrs. Klotz phoned Mr. Smith about this.
Regraded Unclassified
43
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE August 5, 1943.
TO
Mr. Fred Smith
FROM
Mr. Gaston
Evans Clark of the Twentieth Century Fund called me this after-
noon. He now has a new proposition and a new date. He would like to
have the Secretary take part in the program on Saturday, October 16,
the theme of which is to be post-war financial policies to assure full
employment. This is right along the line of work that Harry White
and his men have been doing in the post-war monetary field and would
give an opportunity for discussion of the international stabilization
plan. There would be one or two other speakers. Among those sug-
gested by Clark are Randolph Burgess, Sloane Colt and Hemingway,
President of the A.B.A., but the Secretary could have & voice in the
selection of his companions. There would be introductory talks and
about half the time would be reserved for discussion, with principal
attention to be paid to questions which are stimulated by announcing
the program the week previous. Clark asks me to call him today or
tomorrow at Bryant 9-8188.
w.s.
Regraded Unclassified
44L
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE August 5, 1943
TO
Secretary Morgenthau
FROM
E. M. Bernstein
Subject: "The World Bank Proposals", Fortune, August 1943
The article is one of the most helpful on the proposals
of the United States and British Treasuries. The article is
principally devoted to the need for international monetary
cooperation. In this it appears to draw heavily upon the
memorandum accompanying the United States Treasury proposal
which was sent to the finance ministers of the United Nations
and made public on April 7, 1943.
The principal points are:
1. Post-war monetary problems can be solved only
through EL world bank. In the view of the author, the
ideal system is a gold standard with international co-
operation through a world bank to assure effectiveness
in meeting severe crises.
2. Currency stabilization 1s an appropriate starting
point for cooperation among the United Nations in solving
their economic and financial problems. In this way a
healthful atmosphere can be provided for the solution of
other international and domestic economic problems.
3. A successful program of stabilization would in-
volve no real cost to the United States. Instead there
would be important gains through the maintenance of &
higher level of economic activity. Even if the world
bank is not completely successful in maintaining balanced
international accounts and stable currencies a great ad-
vance would have been made in these directions.
4. Participation in such a world bank would not
involve a loss of sovereignty. "In all association and
intercourse among men and nations, certain fundamental
rules have to be worked out and adhered to. To call this
8 surrender of sovereignty does not make very good sense."
This article should bring us a considerable degree of
support in intelligent business circles.
Regraded Unclassified
45
TREASURY DEPARTMENT
OFFICE OF THE SECRETARY
August 5, 1943
CONFIDENTIAL
Received this date from the Federal Reserve
Bank of New York, for the confidential informa-
tion of the Secretary of the Treasury, compila-
tion for the week ended July 28, 1943, showing
dollar disbursements out of the British Empire
and French accounts at the Federal Reserve Bank
of New York and the means by which these ex-
penditures were financed.
EMB
Regraded Unclassified
46
FEDERAL RESERVE BANK
OF NEW YORK
August 4, 1943.
CONFIDENTIAL
Dear Mr. Secretary: Attention: Mr. H. D. White
I am enclosing our compilation for the week
ended July 28, 1943, showing dollar disbursements out
of the British Empire and French accounts at this bank
and the means by which these expenditures were financed.
Faithfully yours,
/s/ Robert G. Rouse
Robert G. Rouse,
Vice President.
The Honorable Henry Morgenthau, Jr.,
Secretary of the Treasury,
Washington, D. C.
Enclosure
COPY
Regraded Unclassified
ANALYSIS OF CANADIAN AND AU TRALIAN ACCOUNTS
(In Millions of Dollars)
Week Ended July 28, 1943
Strictly
Confidential
BANK
OF
CANADA (and Canadian Government)
DEBITS
COMMONWEALTH BANK OF AUSTRALIA (and Australian Government)
CREDITS
DEBITS
CREDITS
Transfers
Transfers from Official
Transfers
to
Proceeds
British A/C
Net Incr.
to
Proceeds
Net Incr.
Official
of
(+) or
Official
of
(-) or
PERIOD
Total
British
Others
Total
Gold
For Own
For French
Other
Decr.(-)
Total
British
Other
Total
Gold
Other
Dec. (-)
Debite
A/C
Debita
Credite
Sales
A/C
A/C
Credits in $ Punds(d)
Debits
A/C
Debits
Credits
Sales
Credits in$ Funds(d)
First year of war (a)
323.0
16.6
306.4
504.7
412.7
20.9
38.7
32.4
+ 181,7
31,2
War period through
3.9
27.3
36.1
30,0
6,1
- 4.9
December, 1940
477.2
16.6
460.6
707.4
534.8
20.9
110.7
41.0
. 230.2
57.9
14.5
43.4
62.4
50.1
12.3
+ 4.5
Second year of war(b)
460.4
-
460.4
462.0
246.2
3.4
123.9
88.5
+ 1.6
72.2
16,7
55.5
61,2
62.9
16,3
+ 9.0
Third year of war (c)
525.8
0,3
525.5
566.3
198,6
7.7
-
360.0
+ 40.5
107.2
57.4
49.8
112,2
17.2
95.0
- 5.0
1942
Sept. 3- Sept. 30
46.3
-
46.3
53.6
13.2
-
-
40.4
+ 7.3
28.0
20.5
7.5
18.1
-
18.1
- 9.9
Oct, 1 - Oct, 28
44.9
-
44.9
51.5
16.6
-
-
34.9
+ 6.6
14.3
12.0
2.3
14.6
-
14.6
- 0.3
Oct, 29 - Dec: 2
56.5
-
56.5
80.8
14.4
-
-
66.4
+ 24.3
10.2
5.5
4.7
9.4
-
9.4
- 0.8
Dec. 3- Dec. 30
48.2
-
48.2
43.9
2,9
-
-
41.0
- 4.3
14.1
8.0
6.1
11.7
-
11,7
- 2.4
1943
Dec. 31 - Feb. 3
52.5
-
52.5
217.1
-
125,0
-
92.1
+ 164.6
16.2
8.0
8.2
17.3
-
17.3
- 1.1
Feb. 4- Mar, 3
35.1
-
35.1
101.2
37.7
-
-
63.5
+ 66.1
15.9
15.0
0.9
16.0
-
16.0
. 0.1
Mar, 4- Mar. 31
36.2
36.2
51.6
-
-
-
-
51.6
+ 15.4
7.1
5.0
2.1
6.7
-
6.7
- 0.4
Dr.
1- Apr. 28
29.0
-
29.0
39.6
-
I
-
39.5
+ 10.0
16.4
15ah
2.3
29.3
-
-:-1
- 60%
Apr. 29- June 2
79.9
-
79.9
95.8
-
-
-
95.8
+ 15.9
21,8
19.0
2.5
2001
-
20.1
-
Jun
3- June
30
53.8
-
53.8
77.2
-
-
-
77.2
+ 22.4
20.0
20.0
-
2103
-
-62
- 7.3
Jull
1- July 28
102,1
-
102.1
61.8
-
-
-
61.8
- 42.3
17.2
30.6
2002
-
have
- D.I
WEEK ENDED,
July 7
15.7
-
15.7
18.6
-
-
-
10.6
+ 2.º
8.3
7.0
1.3
11.0
-
:J.O
+ 3.3
14
68.5
68.5
8.9
-
-
-
.
8.9
- 59.6
2.8
0.0
-
0.5
-
-
-
1.3
21
11.4
-
25.0
25.0
211
-
11.4
NO
-
-
-
+ 23.6
3.0
3.0
0.1
5
28
6.5(4)
-
6.5
9.3(0)
-
-
-
9.3(F)
+
2.8
0,1
0.1
63
-
-
and
...2
Articles Weakly Expenditures
of
6.2 million,
(a) For monthly breakdown see tabulations prior to April 23, 1941.
8.9 million.
(b) For monthly breakdown see tabulations prior to October 8, 1941.
10,1 million.
(c) For monthly breakdown see tabulations prior to October 14, 1942.
9.2 million,
d)
Reflects
changes
holdli
able on demand or maturing in one year.
Does
v..s. securities.
Ltd.
Regraded Unclassified
ANALYSIS OF BRITISH AND FRENCH ACCOUNTS
(In Millions of Dollars)
Week Ended July 28, 1943.
Strictly
Confidential
BANK OF ENGLAND (BRITISH GOVERNMENT)
DEBITS
BANK OF FRANCE
Gov't
Transfers to
CREDITS
PERIOD
Expendi-
Proceeds of
Transfers
Net Incr (+)
Net Incr. (+)
Official
Sales of
from offi-
Total
Other
or Decr.(-)
Total
Total
tures
Canadian
Other
cial Aus-
or Decr. (-)
Total
Securities
Debits
(Official)
tralian
Credits
in $ Funds
Debits
Credits
in $ Funds
(a)
Account
Debits
Credits
Gold
First year of war (8)
1,793.2
605.6
2
Account
(c)
(d)
(e),
(e)
(d)
20,9
1,166.7
1,828.2
War period through
1,356.1
52.0
3.9
416.2
+ 35.0
866.3(f)
1,095.3(f)
+299.0
December, 1940
2,782.3
1,425.6
20.9
1,335.8
2,793.1
2,109.5
108.0
14.5
561.1
+ 10.8
878.3
Second year of war (h)
1,098.4
+220.1
2,203.0
1,792.2
3.4
407.4
2,189.8
1,193.7
274.0
16.7
Third year of war (1)
705.4
- 13.2
38.9
1,235.6
904.8
8.8
7.7
- 30.1
223,1
1,361.5
21,8
1942
5.5
57.4
1,276.8
+125.9
18.5
4.4
- 14.1
Sept. 3- 3 - Sept, 30
56.1
37.1
I
19.0
81,6
-
0.5
20.5
60.6
+ 25.5
10,1
0.4
Oct, 1- Oct, 28
46.7
- 9.7
27.4
-
19.3
57.5
-
-
12.0
45.5
+ 10.8
-
0.3
+ 0.3
Oct, 29 - Dec. 2
96.6
35.5
-
61.1
83.7
-
-
5.5
78.2
- 12,9
0,2
0,3
+ 0.1
Dec. 3 Dec. 30
30.4
13.3
-
17.1
51.9
-
-
10/4
8.0
43.9
+ 21.5
-
-
-
Dec. 31- - Feh. 3
168.6
20.9
125.0
22.7
58.9
-
-
8.0
50.9
-109.7
-
-
-
Fab. 4- Mar. 3
87.2
17.8
37.7
31.7
120.8
-
-
15,0
105.8
+ 33.6
-
-
-
Mar. 4- Mar. 31
35.3
12,9
-
22.4
64.4
-
-
5.0
59.4
+ 29,1
-
-
-
Apr. 1 - Apr. 28
37.0
16.3
-
20.7
87.4
-
-
15.1
72.3
+ 50.4
-
-
-
Apr. 29 - June 2
90.4
74.3
-
16.1
103.4
-
-
19.0
64.4
+ 13.0
-
-
-
June 3- June 30
31.6
11.6
-
20.0
130.7
-
-
20.0
110.7
+ 99.1
-
-
.
July 1 July 28
33.0
18.2
-
14.8
100.5
1
-
16.0
34.5
+ 67.5
-
-
-
-
WEEK ENDED:
July 7
5.1
2,9
-
2.2
18.2
-
-
7.0
11.1
+13.1
-
-
-
14
9.2
5.3
-
3.9
30.3
-
-
6.0
24.3
+21.1
-
-
-
21
9.4
4.9
-
4.5
23.6
1
-
3.0
20.6
+14.2
-
-
-
28
9.3
5.1
-
4.2
28.4(j)
-
-
-
25.4(3)
+19.1
-
-
-
Average Weekly Expenditures Since Outbreak of War
See attached sheet for footnotes.
France (through June 19, 1940) $19.6 million
through June 19, 1940) $27.6 million
1941)
$54.9
million
ON
million
Regraded Unclassifie
(a) Includes payments for account of British Ministry of Supply Mission, British Supply Board, Ministry of Supply Timber
Control, and Ministry of Shipping.
(b) Estimated figures based on transfers from the New York Agency of the Bank of Montreal, which apparently represent the
proceeds of official British salas of American securities, including those effected through direct negotiation. In addition
to the official selling, substantial liquidation of securities for private British account occurred, particularly during the
early months of the war, although the receipt of the proceeds at this Bank cannot be identified with any accuracy. According
to data supplied by the British Treasury and released by Secretary Morgenthau, total official and private British liquidation
of our securities through December, 1940 amounted to $334 million.
(c) Includes about $85 million received during October, 1939 from the accounts of British authorized banks with New York banks,
presumably reflecting the requisitioning of private dollar balances. Other large transfers from such accounts since October,
1939 receipts. apparently represent current acquisitions of proceeds of exports from the sterling area and other accruing dollar
(d) Reflects net change in all dollar holdings payable on demand or saturing in one year.
(e) For breakdown by types of debits and credits see tabulations prior to March 10, 1943.
(f) Adjusted to eliminate the effect of $20 million paid out on June 26, 1940 and returned the following day.
(g) For monthly breakdown see tabulations prior to April 23, 1941.
(h) For monthly breakdown see tabulations prior to October 8, 1941.
(1) For monthly breakdown see tabulations prior to October 14, 1942.
(j) Includes: $15.0 million to be held for the credit of the U. S. Army
9.5 million apparently representing current and accumulated dollar proceeds of sterling area services and merchandise exports
2.0 million transferred from Reserve Bank of New Zealand account at this bank.
Regraded Unclassified
50
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE August 5, 1943
TO
Secretary Morgenthau
FROM Mr. White
subject: Status of Stabilization and Gold Agreements on June 30.
1. Stabilization Agreements in Operation
Amount
Country
Dated
Expires
Commitment
Outstanding
Collateral
Trazil 1/
7/15/37
7/15/47
$100,000,000
None
None
gold
ina 27
7/14/37
6/30/43
50,000,000
None
None
gold
hina
4/1/41
6/30/43
50,000,000
None
None required
cuador 3/
3/1/42
6/30/43
5,000,000
None
None required
celand 4,
5/1/42
6/30/43
2,000,000
None
None required
2. Stabilization Agreements Concluded but
not yet Effective
exico
11/1/41
6/30/45 $ 40,000,000
None
None required
3.
Gold Sale Agreement
Payment due
country
Dated
Expires
Commitment
Outstanding
within:
Suba 5/
7/6/42
6/30/43
$ 5,000,000
5,000,000
120 days from
each sale
4.
British Coin Purchase Agreement
Country
Dated
Expires
Commitment
Purchases
Liberia
9/26/42
6/30/44
$ 2,000,000
$ 454,800
This agreement, as amended, also provides for sale to Brazil of
up to $200,000,000 in gold, of which $96,297,868 has been sold.
No official agreement has been reached renewing the Chinese
Stabilization Agreements.
Extended to June 30, 1944.
Extended to June 30, 1944.
xtended to June 30, 1945.
Regraded Unclassified
51-
Treasury Department
Division of Monetary Research
Date August 5, 1943 19
To:
Secretary Morgenthau
From:
E. M. Bernstein
This is the memorandum on the
Herald Tribune paragraph "Occupation Costs"
regarding which you spoke to Mr. Bell.
MR. WHITE
Branch 2058 - Room 214
52
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE August 4,1943
TO
Secretary Morgenthau
FROM
Mr. E. M. Bernstein
Subject: United States Government Expenditures in French Africa
The view stated in the attached newspaper article that
the expenditures in French Africa of the Allied Governments
attendant on the occupation of that area have been excessive
is not borne out by information in our possession.
The expenditures of the United States Armed Forces in
French Africa are not excessive when compared with the number
of troops in the area. Total disbursements amounted to approxi-
mately $116 million from November 1942 through May 1943. Of
this amount, only an estimated $21 million was spent in French
Africa for the purchases of supplies and services. The balance
of $95 million was for the pay of troops of which it is esti-
mated at least $50 million was remitted to the United States
or spent in the Army Post Exchanges.
Expenditures in French Africa by the Civilian Depart-
ments of the United States Government have not been substan-
tial. Only one payment of $1-1/2 million has been made for
essential raw materials purchased in French Africa for export
to the United States.
Rapidly rising prices have not been an important factor
in the expenses of the American Armed Forces in the area. In
accordance with an agreement with the French to maintain Novem-
ber 8 prices, the legal price level has remained substantially
the same since the Allied landings. Despite continued pressure
by the French for an upward revision of the prices under this
agreement, the American representatives have successfully re-
sisted major increases. A June 1943 report from the Lend-
Lease Administration in West Africa states: "There has been
no price increase in consumer goods, the final retail prices
on all imports having been held at the November 1942 levels.
Prices and wages on May 29, 1943 were frozen at June 15, 1942
levels by order of General Giraud, Prices on the black market,
which is 8. flourishing institution in "rench Africa, have con-
tinued to evidence an increase but this market 1s not patro-
nized by the American Armed Forces.
Regraded Unclassified
53
Division of Monetary
- 2 -
Research
A check to rising prices and inflation 1a provided by
the commodities shipped from the United States to French
Africa for civilian consumption. These commodities lessen
the serious shortage of goods which largely resulted from
draining the area by the enemy of all available consumer
stocks. The French African authorities are paying for
these goods with dollar funds received from U.S. military
expenditures. $25 million on account has been received
by the Office of Lend-Lease Administration to date. Ar-
rangements are now being made by the French to make a fur-
ther payment in the neighborhood of $32 million which will
cover the cost of commodities shipped through June 30, 1943.
In addition the United States Government has furnished
without payment military supplies and equipment to the French
Armed Forces amounting to $100 million through June 30, 1943.
These are provided under military lend lease.
The budgetary position of the French African Government
is excellent. The recent borrowing program of the French
African Treasury has been so successful that the Minister
of Finance recently indicated that loans from the Allied
Governments were unnecessary.
The change in the rate of exchange on February 2, 1943
from 75 francs to 50 francs to the dollar reduced the pur-
chasing power of our military personnel and increased French
holdings of dollar balances by increasing the cost of francs
to us.
It is still too early to speak of Sicily as no reports
on economic and financial conditions have yet been received
from the area.
Regraded Unclassified
54
WALL STREET COMMENT
Occupation Costs
As increasingly larger areas are occupied by troops
of the United Nations, the question of occupation costs
becomes an important economic consideration. British
observers have said openly that our African expenses, for
example, are understood to have amounted to"a formidable
figure". They raise the question whether all of it was
inevitable. In fact, a proposal has been made to have
the London Select Committee on National Expenditure in-
vestigate the matter with a. view of determining if some
of the expenses could have been saved, 1f exchange rates
had been adopted which would not have started the spiral
of rising prices in occupied lands. There are, of course,
many inter-related problems in this picture, such as the
large purchasing power of many bids for goods regardless
of exchange rates. However, the question is likely to be
raised with great frequency as the war progresses.
(Source: New York Herald Tribune, July 31, 1943)
Regraded Unclassified
55
UNITED STATES DEPARTMENT OF AGRICULTURE
Bureau of Agricultural Economics
THE LAND MARKET
FARMER AND LANDLORD OPINION CONCERNING
A POSSIBLE BOOM AND ITS CONTROL
RESTRICTED
For 4. inistrative Use Only
Study 69
Program Surveys Division
Report No. 48
August 5, 1943
Regraded Unclassified
56
IMTRODUCTION
Farm land prices are meking rapid gains. Many studies indicate
a significant riso in farm land values during recent months. To
obtain attitudes relative to the farm real eatate situation in
the Corn Belt and to the need for controls of the land market,
309 farm operators and 117 non-operating owners were interviewed
between May 19 and June 19, 1943. The area surveyed includes
Edgar, Dewitt and DoKalo Counties, Illinois; Lucas, Case, Poweshick,
Johnson, Kossuth and O'Brien Counties, Iowa; end Seward and Pierce
Counties, Nebraska. This sample is a cross section of farmers end
landlords in those parts of Illinois, Iowa, and Nebraska which
lie in the Central Corn Balt Area.
The study sought information on the following questions:
1. What do farm operatore and local landlords living in the
ares think is happening or has recently been happening in
the land market in their communities?
2. What factore are affecting these people's attitudes
towards the purchase of land?
3. What are their attitudes toward Government action to curb
excessive increases in land prices and volume of sales?
4. What are their attitudes toward specific types of control
measures?
Another report covering this subject, based on interviews with
Government officials, business men and professional men of the
counties surveyed, vill be issued later.
Regraded Unclassified
57
SUMMARY AND CONCLUSIONS
Although certain facts about land market developments are well-
known -- euch as the number of farm sales by periods and areas,
the volumo of farm mortgage dobt, and farm land prices -- little
systematic information has been available about farmers' under-
standing of such matters. Do farmers and persons in rural areas
fear a land boom or vant one? Would they like to check it them-
selves or are they developing & "boom psychology" which will
magnify it? Do they went the Government to take action or keep
hands off? Do they 680 any threat in current developments, or
bright opportunity, or show little understanding at all? How do
opinions differ among various groups such as farm owner-operators,
tenant-operators, and landlords? Exploration in these general
areas of attitudes to guide policy development was the objective
of the present study.
The findings of the survey and their implications may be summarized
an follows:
1. Two cidelights on the thinking of fermers end landlords about
the problem of land inflation are interesting to observe:
B. Hearly all of then are awere of developments in the land
market and of trende in land prices. Although there are
FOMO differences about how much land prices have ricon and
ACCO disagreement about how much land market activity 18
accelerating, practically Ell of them are watching what
in going on, either out of general interest or with more
deliberate purpose. Whether the attention of rural people
to the progress of land values will máles for public support
of control of land prices or for widespread participation in
an inflationary spree is yet to be seen.
b. Similarly, farmers and landlords almost unanimously hold
1deas AS to who is doing the buying of farm land. They
have their differences of opinion, but significant in
itself 10 the fact that they are conscious that several
types of buyers with different objectives may be in the
market.
2. Differences in attitudes toward non-operators in the land
market Are only the surface marks of & split in viewpoint that
runs very deep batween operators and non-operator owners.
Regraded Unclassified
58
11
111
Farm operators are skoptical of speculatore in land and of
These percons understand what has happened and what 10
absentee cusers. They tend to view last prices from
happening in terms of a "rising market -- end not a die-
the standpoint of prospective or notual operators; that
proportionately swollen market.
is, primarily in serve of yhether it is reasonable to
expost the land to pay out on the basis of products and
To many of the persone interviewed the storectype of &
marketings. They 0047 to be more influenced by sesury of
land boom is fearsone. Therefore, they readily acree that
the last collapse, more conscious of the threat of A his
If 8 boom should develop, "something should be done". At
nortgage dobt, and tore Inclined to want B. land hoom ploood
present, however, only & very few senso any threat and the
under control.
great majority view conditions in the land market with
equalially or with pleasure and not with apprehension.
On the other Land, unc-eparating ovnero naturally hold no
It seess that farmers will DOS danger in disproportionste
antagosion toward persons in their rolation to the Land
risss in land values, but it also soume that they do not
earlies, but they constimes rail against "speculators" 10
feel that in the case at present. The first problem in
contract to thomolves as "invertors". The investor point
any proposed program of control 1e therefore the develop-
of view predocinates in their thinking. They polculato
ment of 6. recognition that a loon exists.
the reasonnbleness of form land prices more coldly in
toras of prospactive returns and alternative investment
5. within this genaral pattern there are monntagful group differ-
opportunities -- and at present, at loast, com out with
encoe. Gome people obvioualy may be benefitted by & boon.
more optimatic natura.
Depending on the degree of incline of the trend. a land boom
at its various stages any help one or several of the groups
3. The evidence 11 class that ! iremendously important group is
directly affected by land market developments. In collecting
ready to lond its help Le trading up the price of land. One-
views toward the necessity of controls in general and toward
[ifth of the landlords in the prevent study - representing e
various specific centrols, vo have had opportunity to see the
group customarily found In the higher brackets of income and
sulf- and cocial-interesta of landlords, owner-operators, and
savings - feel that land prices are relatively lens corpared
tacants as they themselves express them.
with product prices, that Innd prices can & higher and still
allow the land to pay out. There any even be evidence of as
In general, landlords, who are the nost speculation-minded
growing belief that lead prices have reached e "permonently
of any of the several groups, are most opposed to controls,
higher plateau -- on 1dea that notivated invectors in the
wherene tensats, who ceem to have the viewpoint of pros-
securities markete late in the 'tventies, In the farm land
pootive buyors nnd long-time opurators, are sost in favor
market it is expressed as as expectation that land prices
of controle. Owner-operators on most issues stand between
will not fall after the var.
these two /troupo. It is toteworthy that nost farmers who
nake eventaneous suggestions on checking a land boos favor
Dullish feelings are 002 confined to the landlord group, how-
price controls on land, a device which right protect them
ever. Farmors are less inclined to think that fare land 1s
an buyers; landlords on the other hand, consistent in
undervalued in comparison to product prices, but practically
their general reluctance to sccept controls, most often
as high & proportion of then B.B. landlords -- about one-third -
magest credit restrictions, a method which night be less
think farm prices will continue at present levels or even
restrictive to than, assuming that they are loss probably
increase.
"shoe-otring" buyero in the market.
k. Although many farmers and landlords are evare of rising lond
After respondents were given the opportunity to make spon-
values and increased trading in the land sarket, it cannot be
tangous suggestions about workable controle, interviewers
assumed that they therefore recognize the beginnings of A land
gathered reactions to three hypothetical programs of action
toom. Loce than one in tea feel ve are having a boom nov, and
which the Government might follow:
only one-fifth oven expect A land boom during or after the was.
a. Credit restrictions for land purchases
b. A high resale gains tax
c. Limiting the sale of farms to farm operators.
Regraded Unclassified
59
1v
Three (Toupe -- landlords, tenants, and owner operatore
show high approval of restricting credit, although the
I. ATTITUDES TOWARD ACTIVITY
motivations of each in expressing approval may be quite
IN THE LAND MARKET
different. For example, tenants any favor such 6. plan
because thry are chary of high noragages and landlords may
Approve the idea because 1: offers do real chetroction to
Farmers and Landlords
their actions.
See Land Prices Rising
Boughly 60 percent of the tenants, 50 percent of the ovner-
Nearly nine out of every ten respondents think farm land values
operators, and to percent of the landlords approve a high
Are appreciably higher than & year ago. One in five believes land
re-sale gains tax Scan seem to applove for the noral at
values have climbed at least 25 percent, and & few even speak of
aconomic reason that "speculators" would be kept out: the
a 50 percent advance.
disapproval of many VAS related to cuneral (adividualistic
notions. The enjority of the landlords applier to be quite
When asked how prices paid for land in their vicinity since last
atrone la opposing such a proposal.
summer compare with prices a year or 60 8go, fature and landlords*
replied as follows:
The dest disparity amoug the attitudes of the three
groups appeared In the discussion of the third alternative.
& relatively emall proportion of landlords (2) percent)
Farvers**
Landlords**
approved the plan of limiting the sale of farm land to
Tarm operators, but the majority vigoronaly opposed the
Land is generally higher
12%
9%
idea: they denounced it as discriminatory, unconstitutional,
Much higher (26 percent and over)
23
19
and un-Anarican. The strangth of their opposition may be
Somewhat higher (11 to 25 percent)
36
53
en indirect neasure of the extent to which this group 0412
Little higher (ten percent and under)
15
12
A rich opportunity for profit in the land market and la
Prices have not changed
of
4
ready to take part. Tenante, on the other hand, are moat
No land 1s moving
4
in favor of the plan (54 percent;. In thair discussions
Do not know
4.
2
they reveal e. poverful foeling that speculators and
Opinion not ascertainable
2
1
speculative activity in the land market are a threat to
their OVD chances of acquiring & place et & reasonable price.
Over Half of the Respondents
6. If It 1a felt by Government officials that a load boom be
Recognize Increased Activity
developing, our evidence given 114120 support for may
in the Land Market
placency or feeling of security that the memory or any the DOB- last
to dleaster be will provent another. The tank of prevention sease
Fifty-five percent of the farmers believe there has been an increase
much more complex than that, In the total cituation
in the volume of sales this year over & few years Ago.
to spiral their in land prices. Other groups we apprecensive, according a
nome very influential groups are Ivedy to take edvantage of
to relation to the market; that 10, worther they intend
Throughout this report the cample 18 broken into two groups -
in la the market. While those Varlous croupe are simply restrained to
trade operate & form, to buy and hold fare land, or
farmers and landlords. The group called "farmers" includes all
bona fide operators, both tenants and owners. "Landlords" are
the different degrees by their experience or with
non-operating owners living within the county.
attracted by profit prospects in the present market. are If it
disaster that occurred after the last vor, they also
Comparative percentage figures for farmors and landlords are
becomes Government policy to check & load inflation the
given throughout the report. Except where otherwise indicated
grounde to make of Its haraful social consequences, it vill on be helpful
the percentage differences between the two groups are not large
to 2 careful assessment of the steps Maico are
enough to be considered statistically significant.
sources of opposition.
mobilize potential sources of support and worken potential necessary
)
Regraded Unclassified
60
2
3
Sixty-nine percent of the landlords believe this to be true.
"The farms should belong to the farmers. The benker should
etay in his bank. We have one that has cone into the cattle
Acked what change has occurred in the number of farms selling this
trialness since cattle prices are good. He has displaced ten-
year as compared to a few years ago, respondents replied:
ente co he could get in. Do you think they would let farmers
put in a bank? Hall no!"
Farmers
Several of each group of respondents qualify their approval of
Landlords
farmers buying laud. Acquiring title to farn real estate is com-
Much more land is moving
mendable, they say, if farmers have sufficient cash not to involve
20%
Somewhat more land in moving
39%
therselves heavily in debt.
35
There 1e no change in volume of anles
30
18
Less land in moving
8
10
Some land Is moving - no trend stated
5
Hov Do Respondents Emplain
9
No land le moving in this community
12
This Increased Activity?
6
Do not know what is happening In the
2
2
land nerket
Farmers, in the optaion of their follows, are acquiring title to
farm real astate to operate the farms, whereae landlords think
farmore are buying principally for investment. Significanatly,
Farrers Are Considered the
landlords mention A dosire to fare the land a.e only a secondary
Principal Buyers of Land
reason why farmers enter the land market.
Faruers and landlorde [on] that fermer-buyers predominate in the
5:th groups of respondents feel that the two major reasons wky
present land market, but many in both (Toune way that non-formers
farmers are buying now are:
ATe also buying:
1. They have surplus cash on hand;
2. Land prices are lov relative to returns (=00 Table 5).
80% of the formare, and
83% of the landlords etate that fareers are Using Lead:
PA lot of follows are 11ke no. I would like to buy a farm if
I could got it right. 1 have e good landlord, but It is not
Also, 50% of the fazmera, and
like farning for yourself. Another reason for farmers buying
70% of the landlords Mention non-farmars as buyers.
le that they feel land will & vp. They have money now and
00 they want to buy."
(Several respondente sention both farmers and non-
farmers 612 buyers of lond.)
Both farmore and landlords think investore are in the land market
Six percent of ench group failod : anover, primarity Secure they
purely because they consider land a good investment.
thought no land was moving in their vicinity.
"Especially those from town are buying for B.L. investment. It
(see Both farmers and landlords heartily approve of farmers buying land
serve they have c. lot of idle many and since they cannot spand
Table 7).
it for new care and casoline, they invest it in land."
"Fermere have bought the few farms I have heard about. It's &
While both farmers and landlords aecribe part of the increased
good thing for a man to buy a home. : don't like to 000 the
activity in the land market to the efforts of speculators, farmers
to boy & bome."
speculators get in because it make it hard on the nan who wants
1000 to fear this element in the parket more than do the landlords.
"Tho big end of the land cold 10 being bought by bankers. A
Parmers Bowever, only the landlords ebov much approval of non-farmer buying.
young tanker from town Le buying right along. It 16 specula-
non-farmere make poor landlords, know little about farming, say and
generally disapprove of non-farmer buying. They that
tion! They do not intend to farm! They do not know how!
are not good for the community.
Regraded Unclassified
61
Other Avidence Given Some
Factual Substantiation for
Both landlorde and Tarners in these arote recognize lick of decumé
Avareness of Land Market Activity
DE only a elnor mar'o in the market, Both beliare that mary of
the other land taxe la the primary Person for any 2ack of depand.
During the study Government officials and business and professional
In areas where crop yields were below overage Tor several years Ln
zen of the counties surveyed vere intervioved. These persons say
the nineteen thirties, fargure think that Inck of funds in the
that there is now much surplus cash in rural counties and that
marida of other farmere 10 one of the principal INSURE why there
investment returns on land at present prices are extremely high.
1a Stile demand. Landlords show sore then formers of
the effucts of machinory con Inbor chartage as & strket deterrent
The following material is a surgary of thair remarkst
(ene Table 6).
A. Denand deposite are grently Increased in the country banks.
Such deposits are as much as three times the normal amount in
a few Instances. Farmers are paying off their dabie rapidly.
bankere deplore their failure even to mintain a normal dollar
level of production loans outstanding. Many banks pay no
interest whatover and yet demand deposits continue to (Tov.
Non-formere In particular appear to be entering the land markot
to put their idle funds to work. Farmere also, faced with
the unusual situation of having large amounts of inle cash,
try to keep their money at work.
turn to the only investment market they know such about as they
D. Land is yielding a higher return than any other investment.
Tields are 58 high na 20 and 25 percent. People, seeing such
returns earned by investors, quibble little over prico. This
provides e tempting situation for speculative money. Investors
areas. from cities far outside are entering the land market in sone
Scaroity of Forms for Sole Ourby
Market Activity in Sone Areas
In areas where little land la moving, toth fargers and landlords
for recognize that the primary cause is en Inadequate supply of farms
supply of land for sale 16 due at lenst in part to the fact that
sale and not look of demand. They explain that the inadeguate
high Income from forming 1a causing owners to hold the land.
corporate holdings of land are elmost all disposed of, and that
A. In addition, landlords say that investment opportunities
other than land are less attractive and hence potential
sollers are withholding their land from the market.
b. Farmers state that they feel an important reason for the
owner-oparators. dearth of land for sale 1s that most land 1a now held by
Regraded Unclassified
62
6
II. ATTITUDES TOWARD TRENDS IN LAND PRICES
Over Half of the Farmers and Landlords Believe
Current Land Prices are Reasonable
In their views on land prices there are significant differences
between the attitudes of investment-oriented landlords and form
operators. Although 52 percent of the farwers and 64 percent of
the landlords say farm real notate prices are reasonable, a signif-
icantly higher propertion of farmers think land values are too high:
25 percent of the farmers as against only 9 percent of the land-
lords. High rental returns are one factor making the latter more
conscious of the earning capacity of the land at current levels of
form prices.
Twenty-two percent of the landlordo, but only five percent of the
formors, regard present land prices as too low. Since almost one-
fourth of the landlords hold this opinion, demand for land my be
vory considerably increased by this group and thus operate as a
value-stimulating force of such proportions as to initiate an
inflationary spree in the land market. One landlord says:
"Land is still fairly reasonable. They are getting their
monoy's worth because land is up less than consodity
prices. My, land is gotting up only to about where it
was in 1913, and the return from land 10 much greater
than from high-grade bonds."
Three Times as Pary Landlords
as Formers Think Land Values are Low
Compared with Farm Product Prices
Enjoying high returns from land at current prices of farm products,
35 parcent of the landlords state land prices are low, but only
12 parcent of the farmers consider land values low in relation to
farm product prices,
"Why, land has been too cheap. It has sold for $20 to
325 an acre. It should be more. I know 4 farm with
fair improvements and it sold for $25, then it cold for
$40 which still was cheap. It should bei about $60 an
acre in comparison with farm prices."
Eight percent of the farmers and two percent of the landlords view
present land prices as excessive in terms of what they are being
paid for their farm produce.
Regraded Unclassified
63
7
8
Sixty-one parcent of the fermers and 49 percent of the landlords
agree that the present relationship of prices is about right.
Farmers
Landlords
In addition to this group, 10 percent of the farmero and 12 per-
Land 10 high enough now
50%
38%
cent of the landlords regard form roal estate prices AB reasonable,
form product prices as excossive. Only a very few farmers (two par-
Land has gone too high if
cent) fael the prices they are receiving for their products are 100,
one plans to pay for it
though they feel land prices are all right.
from its earnings
7
-
Twice as Know Landlords 43 Permons
Little Difference Appears Between
Think Land Prices can no Higher
Parcers' and Landlords' Expectations
and Dtill Pay Out
of Post-ilar Trends in Land Prices
The differences shown on the previous page between the attitudes
Consistent with their bullish attitudes toward present farm prices,
of landlords and famous can be expressed in a slightly different
thore is some indication that fever landlords than farmers expect
way, 20 percont of the landlords say land can & account higher
land prices to fall after the war (26 percent and 56 parcent,
and 10 percent my it our go much lugher and still pay out.
respectively).*
"I have confidence that Mile land will pay for itrolf at
Declining poot-war demand, unexployment, high Goverment debt with
200 an acre end I think other people vill fool the cuas
counting taxes, lessened buying power, European return to self-
way. You can out the price of these hage and catile in
sufficiency, too high prices now, and overproduction of farm pro-
half and still pay for the load. I think our money 10
ducts are all quite prevalent reasons why this group thinks prices
going to como at a changer rate of interest, around two
of land will fall after the war (me Table 14).
to three percent, and at $200 per acre that is 38.00 an
acre for interest, Farmero can pay that eacy enough with
"Land prices will fall just like everything else is
of hoge, 74 cattle, and 50g corn."
going to fall. They are proaching now that things will
not be like they were before, but I don't believe that.
Only 10 percent of the farmore think land can go combitat higher
Tie went into this war with a heavy debt and no one can
and five percent that it can go much higher and pay out,
tell how high it will be whom the war 18 finally WOD.
There will be this big debt to pay and on top of that these
"I think land prices could go bigher. My farm paid 28
war plants will close down and many of those people and
20 percent last your."
the soldiers will have to come back to the farms or starve.
There will not be those big jobs and big wages then, and
51x percent in each group feel land can go higher but mention no
the farmer is going to feal it. The other countries will
degree, while 14 percent of both the furners and landlords say it
need food, but I don't see how the U. 5. can help them
dependo on the price of form products, the amount of down payment,
much because we will are so much it will take years to
and the quality of the land.
pay it, and how can we loan noney to those nations to buy
our stuff?"
But a Large Proportion of the Respondants
Think Land Prices Should Not Co lither
A large relatively group among both farmers and landlords
present little threat to the maintenance of a stable land market.
Their andwer to the question of how much higher land prices could
Although this difference is not statistically significant, its
to and still allow the land to pay out:
direction is consistent with the general interpretation of the
material.
Regraded Unclassified
10
64
9
Declining post-var demand for farm products due to post-war unemploy-
ment and increasing ability of Durope to feed itself loom as the
Another stisemble (troup in more optimistic, nome expecting present
major reasons for this expected trend. Other important determinants
ewollen land values to be maintained, and G. smaller musber even
of beliefs in a declining post-war price level of farm products are
antivipating acreas further rise.
overproduction, certainty of very high taxes because of great Govern-
ment debt, and the certainty of a drop in all present inflated
24 percent of the furners and
prices (see Table 19).
80 percent of the landlerds expect stable land prices.
"Inside of four years we are going to see corn back to
B percent. of the famero and
60 cente and hoge down to seven cents. That will be a
11 percent of the lawilords expect EL further rise.
good price if we don't drop below that, We are going to
go on more of a world market than we have had. Right
One of the major records given for believing Land values will
now we have a war market and when they ask for parity,
remain on a stendy to strong basic in Exat they will stay on the
they are asking for something as unreasonable as the
same level noth form product prices. Mary prodict strong port-vay
labor demands. I don't cee aty we should demand any-
demand for form products from Europe and c/atinued Web employment.
thing in warting that TO can't get in peacetime."
Others feel that Covernment inflation controls will no effoctive
in holding prices on an even sont. A few cention Clease inflamoor
Stability of prices of farm products is expected by 26 percent of
on the Tand market must ac returning soldiers who will want 100/1,
the farmers and 51 percent of the landlords, and about an equal
and sprealators who will inter the land market and cause D. rise in
land values,
number anticipate the same situation for land prices.
Only three percent of the farmers and five percent of the landlords
"Loat anything could happen. If the Geverment don't
look for higher product prices.
stop It, the boom will continue till after the close of
the var, at least till Europe gale a belly MI, and that
may take several yours, I would atpect it to last five
Tas, if we add those who feel prices will remain at present levols
years. And unless people get interested in other invest-
after the war to those who expect some further rise, roughly a
third of the respondents expect a rather high price level in the
ments De can have constantly riging land prices even if
the Government bolde fun product prices there they are."
form products parket. They base their attitude principally on
such considerations as the effectiveness of governmental efforts
Twenty-seven percent of the fareers and 25 percent of the landlords
in holding prices on a fairly high level, heavy post-war employ-
feel land prices will be dependent on various factors. They 1981-
tient, and on the fact that prices will not CP dom because they
tion commodity prices, effectivences of Covernment coutrols, desand
have not [tone up.
from Europo for food, post-mar emiloyment, and a possible land boom
during the war period, as the principal determining factors.
"I think that we will have good product prices for several
years. They say that we will have to furnish other coun-
"To a large assect that will depend on how nuch vid-
tries with a lot of stuff. Prices are not getting us high
nal engloyment there S.= when the boys cose home, It will
as they did before. These price coilings are keeping then
depend on how many of the returning boye will want to
down to a certain extent. Prices may not drop ruch after
start farming for thearelves. If many Days want to start
the war."
farming competitive mattag will force land prices
Ferer expressed doubt as to what the trend will be. Thus, 18 per-
cent of the farmers and 15 percent of the landlords say the price
Purpore and Landlords Clossly A TVE
of farm products will depend on prices of other commodities.
on the Expected Pont-lar Price Stustion
Those farmers and landlords who feel some uncertainty about the
for Farm Products
future situation in the farm comodities market believe prices
will depond largely on the effectiveness of Government controls or
However, more respondents look for form product prices to fall Users
en the possibility of feeding Europe.
expect land prices to drop. Forty-nine payment of the farmers and
44 fall. percent of the landlords think the priors of their products will
"I do not believe prices will fall like they did before
and they may even go up. They will not fall, I do not
Regraded Unclassified
65
11
12
believe, because WE have a Government program now in MAA,
III. EXPECTATIONS OF A LAND ROOM
and we did not have that before; there is nore Government
backing for the farmers this time. They may go up some
for a year or so because when the way 1s over, I figure
Soco Increased Activity in the land Market
shipping will paso up and we will be able to ship more
in Empected During the Tar Period
stuff across the waters."
27 percent of the operatore and
24 percent of the landlords expect an increase in the number
Three out of Five Respondents
of farms which will be selling during the war period.
Say Post-Uar Land Prices
will Glosely Follow the
The principal reasons for this expected trend are:
L'ovement of Farm Product Prices
Ecare buyers want land because of high prices for fare products.
Sixty-one percent of the farmers and 63 percent of the landlords
believe that land prices and farm product prices will be closely
Surplus cash makes buyers more willing to pay higher acking
related after the WILL They feel that the two groups of prices
prices.
are always closely tied together, or that they will be in line,
or that land prices will lag bohind fare commodity prices.
Profits in land speculation will cause a greater deand.
"As long as land good along like it is now, keeping in
"I know several fellows who are talking of buying land,
line with farm products, it will be in line after the war
I believe there will be a little more moving. You know
and will fall or go up with farm product prices. There
people are furmy - when things are cheep they don't
1a no speculation at All this time, and it is only when
want them, and when it geta high priced everybody vants
you have land speculation that land prices get out of
1t-"
line with farm stuff, I don't look for that for farmore
are wiser this time and the whole situation 10 different."
so percent of the farmers and
45 persent of the landLords look for no change in the number
Right percent of the formors and 11 percent of the landlords think
of farms selling.
land prices will be relatively higher than form product prices.
Some believe the high investment returns now will cause land prices
They give two major reasonsi
to rise. Others think land prices will go up and stay up while
product prices may go down.
Experiences in the other land boon make people centions
about buying and celling.
"I figure land prices will reach above farm prices,
You know there is just too bdg a return on land com-
There will be little or no Iand for onlo,
pared with interest rates en other investments to
stop an upward movement of land values."
The latter assumption is based on a feoling that farmers and land-
lords will be unwilling to sell because land now yields an excellent
Ten percent of the formero and seven percent of the landlords feel
return on investment and the high income tax takes a major portion
tho relationship between land and product prices will depend on the
of the profits from the sale of land. llost respondents believe no
extent of Government controls of both, on the duration of the war,
increase in males can be expected, since all or nearly all corpora-
or the extent to which speculation may enter the land market.
tion land has born sold.
"People woo't sall, for then they will have to pay a big
income tax, They are mking a good thing farming their
land and won't want to each in or: it. Then people are
thinking the var will soon be over and they won't buy
land at these prices when they feel that way."
Regraded Unclassified
66
13
14
Four percent of the farmers and seven purcent of the landlords
In the opinion of both farmers and landlords, the increase in activ-
look for on actual decrease in the mimber of farmo which will be
ity of non-farmers and speculators will be the result of such buyers
sold during the war period. They feel that corporation land,
having more money for investment and expecting to get good returns
which has been disposed of 1a recent months, constituted the bulk
on their money in the land market. There 1s, noreover, the feeling
of land activity in the past.
that these buyers will get in and get out early and that farmers
will be less quick to participate in the trading.
"Not as many (farms will be cold). Personally I wouldn't
want to sell land. It 18 a good investment. The politi-
"Lore and more non-farmore are buying for investment and
cians in Washington can print money, build tenecentin, etc.,
speculation. The farmers are generally slow to take
but they can't nake land. I don't expect as nuch land to
advantage of things that increase land prices. That is
be cold, but I expect the price to go up."
the they come in at the tall end of the boom 25 years
ago and got stuck with land."
Twelve percent of the farmers and 19 percent of the Lendlords feel
any increase in activity in the land market will depend on such
things as how long comodity prices hold up, willingness of farmers
to soll, and conditions of this year's crop.
"That will depend upon the way prices stay W. If the
prices of our commodities stay up and the old countring
still have a buying power, I would say yes (thore will
be increased sales).*
Six percent of the farsere and five percent of the landlords do not
know whether thore will be any increased activity in the land market,
"I don't know. There are no insurance farms left and
owners are generally reluctant to cell. On the other
hand, formers are making money, end If this laste nore
will want to buy. I don't know what will happen."
Sope Respondents Expect a Change
in Linds of Dayora
Thirty-two percent of the faruers and 23 percent of the landlords
expect a change in the kinds of people who will be buying land.
The kinds of buyers who will increase in numbers are shown for the
two groups of respondents:
Farmero Landlords
Expect an increase in non-
farmer investore
22%
16,
Expect an increase in speculators
4
5
Expect an increase in former
buyers
6
2
Regraded Unclassified
67
is
16
Only Organ Flith of 216 Dispondents
Lane loon
Lore tenants believe there will be a land boom than do either farm
Complex one ant that two Hulf the pursons intervised amiso
owner-operators or landlords. Tenants also feel more strongly that
increasion nativity in ne Ind names (Dabin 4), and that a major-
present prices of farm land constitute a "land boom". This may be
Day any Cat land ham riper at 1641. 10 percents within the
accounted for by the higher proportion of tenants who are interested
Last /MR (Mble 8), only "land boxe." Those
in buying land and who are conscious of high land prices. The inter-
understand Mins has lapponed and not 1: imppen or in three
eat of the three groups relative to purchase of land is shown below.
at "rising niskes celber shaw in the of a Socauno
preilge their 0, upon the
Intentions
Tenants
Owners
Landlords
at "bona," Di count activity
mignificant.
Could buy
260
12%
21%
would not buy
49
75
63
This lara of to Line apxas la De following suble, resed
Undecided
20
8
9
:
will
I
Land
additity
Plar
Not nsked
5
5
7
100%
100,2
100,
Name
N=137
E=172
II=117
but
()
ráld
6
Deja sur- Code No 471
C
Half the Respondents Believe
1.05
the Recults of the Other Land Boom
6
o
are Unking People Coutious
Hall blue 431 empeator
About Daving Land How
Nople mecher the 1047 CTIN
If
S
- mill provide il
y
Throughout their discussions, respondents in varying proportions
egenotes are sustom
20
spontaneously mentioned nemory of the land boon and collapse after
Hangle we and 10
1.
the last war as a deterrent to speculation at present. When asked
Temple Two problems repremien
es
57
1
n
specifically, respondents in a still greater number ascribed
ved
...loz
VO
No. MD to in Chromi
0
importance to this factor.
NO will other place
No
1
Importance of Land Boom 25 Years Ago
Farmers
Landlor's
Nob THEY dependo
It makes everyone cautious about buying
or
Lund
50C
49%
Older people resomber, but younger
0
people have to loarn by experience
16
13
=
'eople wouth more
1
1
:
C
I
People will soon forget that experience
in another boom
5
2
They expect to "find it where they lost 1t"
2
o
Compt know
3
Tax
o
It has some effect
16
20
=
TRI
It bas no effect
7
7
100%
TSK
2-170
2
2
F-317
Do not know
4
7
Not ascertainable
1000
100%
N-309
11=117
Regraded Unclassified
68
17
18
"I think it has a decided effect. I think land would
IV. RESPONDENTS' OPTHIOUS ABOUT
be 25 an acre higher now if they didn't remember,
LAND L'ARKET CONTROLS
Those in a position to buy remember what happened to
their dads. It didn't quite take Dad's place, but it
A series of quostions was asked about the necessity of controls
came pretty close. In our township there were just four
over the land market, the acceptability of such controls, and the
forms that weren't closed out, That cade things look
Idnds of controls nost desired. Significantly, it appears that
pretty tough when all your neighbors had to go. 1 can
the acceptability of controls depends fundanentally upon a recog-
remember when the kide started going out of school
nition of the actotence of a land boon. While, as indicated earlier,
because their dads had lost their places. It Loolind
only one-fifth of the respendents recognise the present situation
like the world was coing to come to an end."
in the land market as a "boon", it is probable that if the estab-
lichment of controls in accompanied by strong evidence of an impend-
ing "boom", such controls will be accepted by a majority.
Over Half the Reguondente
Believe Sounthing Should be Done
If a Land Boom Threatens
All respondents were asked what should be done if a land boom threat-
ms, regardless of whether they had indicated that they did or did
not expect one. In those cases where a. respondent had previously
said be did not think there would be a land boon, the question will
presented on the basis that if, 05 some people think, a land boom
does develop, what chould be done about it? The responses to this
question are shown below:
Tenants Owners Landlords
Smothing
Government should regulato the
land market
53%)
245)
16%)
Covernment should control com-
)
)
)
10
153,5
7
LBC
modity prices
5
595
Government should control land
)
and comodity prices
4
1
1
Scrething should be done
16 )
16 )
25 )
Nothing
B )
9 )
14 )
Nothing should be done
7 18
5 16
14
53
Nothing can be done
No controls are necessary - - things
)
will take care of theaselves
5
2 )
5
Nothing is necessary, for we won't
2
ID
B
have a land boom
17
16
9
Do not know
5
6
2
Not ascertainable
100%
100,2
100%
12=137
11=172
1:-117
Regraded Unclassified
69
19
20
Lore tenants express need for action than do either owner-sperators
Farmers and Landlords
or Landlords, Owners are next most concerned, and landlords are
take Different Suggestions
least concerned about a need for action 10 a land boom threatens.
Tenants are more explicit in what they think should oe dene, looking
for Controlling Land Prices
to Government regulation of land and comodity markets as the major
if the Necessity Should Arise
anower. Again, the tenants' greater interest that canething be done
about a. possible land boom 1a related to his greater interest in the
Interviewers raised with respondents the hypothetical question of
land market no a buyer (see page 16),
what should be done to control land prices if they should go higher.
The following table shown the frequency of the various spontaneous
One of the major reasons for the high percentage of landlords, EG cour
suggestions made by persons in the two groups.
pared with over-oporators, who feel nothing should be done may be
that a higher proportion of landlords are interested in selling land.
The following table brings out the difference between lundlords' and
Farmers
Landlords
owner-operstors' interest in selling their farms.
Price ceilings on land
25%
95
Comodity price control
8
8
Intentions
Operators
(andlords
Limitation of credit and tightening
credit regulation
7
14
Votile noll
12%
DAS
Righer tax on speculative profits
5
1
Vould not sell
77
64
Permitting only farmers to buy
1
1
Undecided
E
-
Control of land and commodity prices
1
o
Dot acided
6
3
Limiting number of acres a person can own
1
o
100
100
Differential land tax
1
2
Higher income tax
1
2
0-172
>017
Compulsory bond sales
1
1
Government educational program en dangers
Some respendente, most of where are feel that nothing
of inflation and high indebtedness
o
2
should be done because the rights of the individual in D. market
should be procerved.
Opposed to Government regulation
5
12
"I doa't know that anything should (to done what Ind
Do not know
28
24
contiols). If a san wants to tay high-priced land, It's
his hard luck."
Not asked of come respondente who stated
there who no possibility of & land boom
20
25
Among others who feel nothing should be due are the people who an
100%
100%
flatly opposed to Government regulation, OF tains there 1n too mucl
regulation.
1=309
N=117
got too muy controls now. If Evey Just did is dur-
ing Lhe Mr, it would be all right, at they always find
The important difference is that farmers tend to favor price ceil-
DOBO excuse to continue the thing. Don exergency never
ings on land, while more landlords prefer credit regulations. A
significant number in both groups favor comodity price control,
on the assumption that it would be a sufficient means of regulating
In many instances ruch objections seen to be mationalisations by
the land market. The finding suggests that farmers, interested in
people who think they starri to gain if the trend to not controlled
land as a place on which to live and work, and landlords, interested
in land as an investment or speculative opportunity, reflect in
their preferences a logical consistency with their self-interest,
economic status, and general point of view. A young Iowa farmer
age:
Regraded Unclassified
70
21
22
"I think they should set land at a certain price just
as they have everything else. Just as they have for
hogs. A fellow knows where he is at, that way. If
what are the Reactions to
they are going to let land keep a-going up they should
Specifically Suggested
turn everything else loose. Because if land good up
Governmental Controls?
rent will go higher too, and then we will have to have
more for our stuff to pay it."
In addition to providing respondents with an opportunity to offer
spontaneous suggestions, interviewers tested their reactions to
A middle-aged landlord who favoro all restrictions but the one
three suggested controls. The questions were as follows:
which would prevent him from buying land says:
1. What do you think of limiting credit on land to 50 or
"One reason I think we won't have another boom is that
60 percent of the appraised value before the war, say
people can't borrow as mich on farms as they did the
in 1940, as a means of controlling the land market?
other time. I know nobody would be willing to take a
second mortgage today. They have soon the others wiped
2. What do you think of the idoa that the Government take
out. It is still too fresh in their menory. I think
most of the profit on land bought and sold again during
that 12 they keep the credit dom that will prevent a
the war period?
land boom."
3. What do you think about limiting the sale of farms to
those who intend to farm the land themselves)
lience, in interpreting findings, it must be understood that the atti-
tudes expressed were given in response to direct probing, not spon-
tanecusly.
Significantly, only 5 percent of the farmore and
9 percent of the landlords disapprove of
all three suggested controls.
On the other hand, 17 percent of the farmers and
8 percent of the landlords approve of all
three suggested controls.
The balance of 78 percent of the farmors and
83 peroent of the landlords give approval or
qualified approval of one or two of the three
suggested controls.
Regraded Unclassified
71
25
24
Tenants, Owners, and Landlords
Survice Uniformly High Approval
had to endure while attempting to hold title to land with a high
nortgage debt. To many respondents rigid credit control constitutes
of Idmiting Credit on Para Land
the one method of preventing a recurrence of such a serious post-war
situation.
Limiting credit to 50 or 60 percent of the pre-war value of land
meets with the unqualified approval of
"That's good, all right. Can't let then get in too deep.
62 percent of the tenants,
llobody should pay or buy a farm unless he can pay 50 per-
58 percent of the owners, and
cent down and have enough money to pay for the machinery.
65 percent of the landlords.
Don't buy anything, however cheap, if you have to go
deoply into debt."
Those who approve give the following rensons in support of their
opinions:
"I think that would be all right. That's the way it is
now mostly. I don't know if that 1a true now of all
individuals, but it is for most banko. I don't think
our loan companies and our Federal land bank would make
Tenante
STATE
Landlordo
any great change in their loans under that."
14. will leasen danger of fore-
closure or of inability to
However, approximately ope out of five tenants, owners, and landlorde
pay for land
20%)
disapprove of limiting credit for farm mortgage loans.
15;)
22C)
It's all right, but 10 being
done new anyway
22 percent of the tenants,
4
cest
B
10
63%
It would eliminate shoe-string
)
22 percent of the owners, and
)
)
buying
18 percent of the landlords disapprove of such control.
6
6 )
7
It will keep prices down
4
5
2
No specific reason given
Reasons for disapproval can be grouped under the following general
20 )
26 )
22
ideas:
Thoma Mio qualify their approval give the following reasonsi
Tenants Owners Landlords
It would not affect the cash buyer,
Tenants
Owners
Landlords
but merely keep out the tenant
Provision should be made for
buyer
12%)
11
5%)
tenante to buy
5%)
It makes it possible for only rich
o
)
It would not prevant a land bood,
3:5)
20)
)
people to buy
5
22;
5
22%
3 18%
y
although it would probably help
)
Pa opposed to Government regula-
4 10%
Approve, but cash down-payment
1 12%
3 17%
tion
4 )
2
2
)
should be even greater
)
Do specific reason given
1
4
B
o
5
No specific reason given
o )
1
5
)
12
)
The table indicates that the principal objection of tenants and
luch of the general acceptance of this suggested control way be
owners to the limitation of credit springs from the feeling that
related to the disastrous results of the other land boon. Hearly
such & device might discriminate against actual farm operators.
all respondents were mare of the difficulties many farners then
"In 1940 land was terribly cheap, a lot cheaper than now,
and unless a nan had a lot of cash noney he could not buy
a farm if you limited purchases to that kind of a credit.
I don't think they should do that. A young fellow on a farm,
a good worker haan't got a chance if he does not have the
cash value and could not even start. The non with money
would buy und the young farmer who ought to CNED it in shut
off from that."
Regraded Unclassified
72
25
26
Lore Tenants Approve
A Mich Capital Uains Tax
Conversely,
Than Lither Owners or Landlorde
21 percent of the tenante,
00 percent of the tenants,
27 percent of the owners, and
50 percent of the owners, and
45 percent of the landlords look on euch a high special tax
41 percent of the landlordo approve of the Government taking
with disfuvor.
nout of the profit on land bought and re-sold since
Pearl Harbor.
The reasons for such disapproval fall under the following headings:
more the autrove give DD their reasons that each a neusure
Tenants
Owners
Landlords
Tonanto
Owners
Landlordo
I'm opposed because the regular
income tax is taking care of it
2)
7%)
9%)
Would reduce or stop speculation
28,5)
22,C)
19;1)
It's an individual's privilege to
)
In provided for in higher income
1600
)50%
take a risk and make a profit
2
412
B)
B )
tax brackets
2
a
)
I'm opposed to Government regulation
5
9
21%
1
27,
B
45%
Reason not specified
so
25
)
13
De have too mary taxes now
2
3
5
It's Un-Amorican and unconstitutional
2
0
3
Land speculation is no more objection-
In addition,
able than other speculation
1
1
25
Reason not specified
7 )
7 )
11
)
6 parcent of the tenants,
10 percent of the owners, and
7 percent of the landloris indicate approval with qualifications.
The following are typical comments:
Respondenta who approve typically express their sttitudes in words
No,because I expect to make a profit out of my land - a
like the following:
selfish roason, I admit. Also, we're not up to the point
in our theory of taxation on the subject of unearoed incre-
"That would be EL (god thing. Invoice eliminate the specu-
ment - of taking that kind of profit. Al.co, why take
lator from the market. De doem't contribute anything.
profit from land transactions if you don't from other
No doesn't do anything to corn the conty, Joma say it
investments? Why discriminate against land!"
takes a smart n/n to do that, but It isn't anything he
controls - If land prices & up, he nakes money."
"I don't think you could do that. You couldn't pick out
one certain type of land sale 11ke that and charge a con-
"That would be a good thing. The speculative buyer doesn't
fiscatory tax against that. It wouldn't be constitutional."
do the community any good, They nake their money hure and
do nothing to nake it and then & to Collfornia or come
Landlords appear quito strong in their opposition to this suggested
place olse like that and spend all their timely there rather
control. Their more intense interest in the land market as both
than here, and when they die they leave it to DOLLO library
buyers and sellers possibly accounts for some of this reaction. The
keep the speculator away from Nie land buying,"
or Red Cross or the like away from here, That would surely
tenants' interest in the market only as buyers has much to do with
their relatively high approval of such a tax. They DOC their oppor-
tunity for acquiring ownership of land decreased by the extent to
which speculation enters the market.
Regraded Unclassified
73
27
28
Hearly One-Tenth of the Fermare
Believe the Government Should
Great Difference of Opinion Exists
Take all of the Profito from
Among Tenants, Owners, and Landlords on Limiting
Speculative Lond Transactions
the Sale of Farms to Farm Operators
To the question, how with A percentage do you think the Government
Limiting sales of farms to actual operators meets with less gen-
should trête on profite made from resale of land bought since Poarl
oral approval than do either of the other two suggested controls.
Harbor, the responses case primarily from those the approved a
Although a majority of tenants approve of this method, they are
mails goins time. Reds opinions on how High smoh & the should be
nore inclined to favor the other two methods.
are chown no follows)
54 percent of the tenants,
42 persont of the owners, and
Tax should tabs
Parmers
Lindlords
21 percent of the Landlords approve restricting land purchases
to actual farm oporators for the war period,
All of the profite
9.
2,
75 percent and ever
in
Their reasons for approval can be grouped under the following
7
50-74 percent
28
general headings.
is
20-19 percent
5
6
Below 20 percant (edditional to
Tensuto
Owners
landlords
present, tax)
5
2
lio additional resupt over the
Farmero should own the land
23%)
17%)
(%)
present income tex.
It will help people buy house
4 )
3 )
o )
0
"
It would stop spoculation
4
N
)
3 )
To not know
0
Non-formers will OWN most of
12
Sept
et
21%
7
the land if smothing like
)
)
)
(liot. assertainable, minly become
that 1sn't done
0
)
2
o
respondent mine opposed to (dan)
Renson not specified
23
-
18
9
33
56
1000
200%
In addition, they give qualified
2=309
approval as follows:
11=117
All right If It can be done
4%)
et)
&)
A fer respondents expressed themelves reber strongly on operatore
All right if retired farmer
)
)
)
being in the market to mode money ithent dolne anything to carn their
can hold his land
1
)
18%
3
)
16%
1
)
11%
profits. These respondents consequently opressed approval of a con-
Heason not spocified
7 )
5
)
6 )
fiscatory tax on such profits. They believed that such an element in
the lard market should not be allowed to continue.
Touants, especially, feel that as non-farmers enter the land market
their chances of owning land diminish. The goal for many tenants
'That's a good Idea. I know of a fellow who bought a farm
18 ultim.te ownership of their farms. Any additional influx of
and & few weeke Inter FRO offered a 2200 profit on it.
non-farmors into the land market causes graver concern among ton-
Things like that shouldn't be allowed, They should take
note then emong present land owners. Consequently, 6. control plan
All of the profit. A man shouldn't be allowed to keep any
which would afford tonants greater opportunity for land ownership
profit like that, for he didn't do anything to make it,
received their relatively high approval.
Too many people are getting rich over war."
"I think that would be all right. In one way I think it
in all right for town people to buy farms to uove out on
but not to speculate or them. We have a follow right
here in our town who bought three farms for nothing but
speculation. I don't think that's right. Let him get
along with his own business (oare). Farmers got along
when their business was hard hit. I don't think it is
right for these people to jump in hore and buy land 80
ve can't, and the only reason is to make 015 or 420 an acre.
Regraded Unclassified
74
25
50
"Tlat is a good 1dve. There are too many tenants.
That's what is hurting this part of the country.
"It don't Look right to limit these things and still it
The landlords don't keep the farus up like they
don't look right for somo speculator to step in and buy
would 1f they lived on theu themsolves."
A farm away from a farnor that wate to operato it. If
the farmer can make 6. good payment, I think he should
Major disapproval of restricting purchase of land to notual opera-
have the preference."
tors centers about the effect of such a control on the Individual's
"rights", Soveral feel that such a. nothod of controlling any one
Responses Show Little Thought About
#pecific market in foreign to our way of government.
The Operation of This Control
Disapproval falle into a for general categories
Some of the respondente voiced ideas 0.8 to how a system of permit-
Tenanto
Outors
ting only actual operators to buy land during the energency would
Landlords
be set up. Since this is the most unusual of the three suggested
% mut not destruy are indi-
controls, the and which farmers are least likely to volunteer
viscal's right to buy land
13%)
185)
spontaneously, it is not surprising that for have concrete sugges-
There would not be mough
17%)
tiers to nake. Their ideas are 0.5 follows:
)
)
buyers for all the land,
)
thus causing low land prices
Farmers
2
Landlords
6
4
Tenants need investment capital
-
to carry the land
31%
Have the Government regulate the land
⑆
à
sep
7
62,-
market during the war omergency
0%)
25)
I as opposed to Goverment
limit acroago & nan can own
6 )
6
)
regulation as unservable,
Require buyar to operate the farm
4
1
undemooratio, unconstitutional 5
Pass a difforential land tax (state)
3
1
6
It would provent retired farmore
12
)
28%
14%
/
)
from purchasing films for
-
Adopt a tenant purchase plan
2
1
th If sone
1
Government night buy all the land
)
)
2
Reason not specified
1.
for sale and resell it to farm operators 1
1
B
6
21
Bushington determines that ("It's too
)
Landlords are expecially votiforous about not being permitted an
deup for no")
3
2
opportunity to buy land during the war period, They come out
such 2020 strongl. In opposition to this suggested means of
Does not know
23
control then to either *f the other two methods,
Not accertainable (mostly those
72%
)
86%
Coments of landlords en this proposal are onlightening.
The disapproved of this specific
)
control)
49
73
)
"Soue of We bust citicens a have here UWI land that they
100%
100%
rent out, and there we lots of people who could not farm
if schoole 0100 did not own and keep up the land."
B=309
N=117
"I would object to that, perhaps from a purely selfish
standpoint. I an not trying to buy coro land, but as long
A Farmer's commont illustrates the general unfand lierity with this
as into got our constitution and our Bill of Rights,
cort of proposal.
nobody should be harred from free onterprise, I don't
want this poace to promote olther Cosoism or ocumuniss.
"I don't know. The Government would have to pass laws and
Thenover you take free anterprise out, and the right to
regulate it like they have other things. They have done well
ambition to get ahoad isn't A good American,
get about, you lower norale. I think anybody who basn't
there and could do so in this too,"
Regraded Unclassified
75
APPENDIX
Contents
Map showing location of counties covered in this survey
Interview schedule
Table 1. Tenure Status of Respondents
Table 2. Intentions re Purchase of Land
Table 3. Intentions re Selling of Land
Table 4. Activity in the-Land Market as Compared with &
Pew Years Ago
Table 5. Reasons Given by Operators and by Non-operators
for Various Types of People Buying Land
Table 5A. Who La Buying land?
Table 6. Reasons Given for Land Not Noving Much
Table 7. Attitude of Operators and Non-operators Toward
Purchasing of Land by Fermers and Non-furners
Table 8. Comparison of Land Price Since last Surmer With
a Year or to Before
Table 9. Attitude Toward Present Land Price
Table 10. Opinion on Relationship Between Present Farm Land
and Farm Commodity Prices
Table 11. Expectation of Possible Increase in Number of Farms
Selling During the War Period
Table 12, Expected Change in Kinds of People Who Will be
Buying Land
Table 13. Expected Trend in Post-war Land Prices
Table 14. Reasons for Attitude on Post-war Land Prices
Table 15. Expected Trend in Post-war Farm Product Prices
Table 16, Reasons for Attitude on Post-mr Farm Product Prices
Table 17. Post-war Relationship Between Land Prices and
Farm Product Prices
Table 18. Reasons for Attitude on Post-war Relationship
Between Land and Farm Product Prices
Table 19. Extent to Which Land Prices can Advance and Still
Pay Out
Table 20. Expectancy of a Land Boom
Table 21. Effect of Other Land Boom on Present Land Buying
Table 22. Proposed Action if a Land Boon Threatens
Table 23. Controls Suggested
Table 24. Attitude Toward Limitation of Credit on Parn Land
Table 25, Attitude Toward Government Taking Most of the
Profit on Land Bought and Sold Since Pearl Harbor
Table 26. What Percent Should the Government Take
Table 27. Attitude Toward Limiting the Sale of Farma to Farm
Operators
Table 25. Ideas on Operation of the Permit System of Land
Purchase
Table 29. Attitude Toward All Three Controls
Regraded Unclassified
76
Map showing Location of Counties
Covered in This Survey
O'Brilen
Co.
Co,
Piarba Co.
IONA
De Kalb
Johnson
Co.
Co.
NEBRASKA
Case Co.
Co
Ludas Co.
ILLINOIS
Soward Do.
De ****
Co.
Edger
Co.
Regraded Unclassified
R
77
Interview Schedule
1 Has much land changed haude in your county (or neighborhood)
since last summer?
2. What change ie thore in the number of Turne selling this last
year as compared to a for years ago?
3. (If appropriate) What are the reasons people are buying land
around hore?
4. (If appropriate) Loud HAS been moving in name Brons. Why do
you think it lan't moving much here?
5. Is it mostly formors or non-formers who are buying land? (If
n-farmers) What kinds of non-farmers?
6. What do you think about such people buying land?
7. Around here, how do prices paid for lend sinos last summer com-
para with what they were a year or so before?
8, What do you think about the prices being paid for land now?
9. How do you think these land prices compare with the prices far-
more are getting for their products?
10. Ae it looks to you now, do you think thore will be an increase
in the number of farms which will be sold during the war period?
11. That makes you think so?
12. Do you look for any change in the kinds of people Vão will be
buying land? What kinds of people?
13 (If changes are mentioned in 12) thy will these people buy
land?
14. What do you think about much people buying land?
15. What do you think will happen to the price of land during the
first five years after the war?
16. Why do you feel that way?
17. What do you think will Lappen to the price of farm products
during the first five years after the war?
Regraded Unclassified
78
Table 1.
Tenure Status of Respondents
19 Bow po you think farm land prioos will compare with prices
Operatore
Non-operating Owners
of farm after the end of the mr?
Status
56%
200%
DI
priors will work out that way?
Omero
Tenants
44
0
100%
100%
DO
and prions and still allow the land
11=509
N=117
4d
have e land boom during or shortly after
1.
the respondent has indicated that land
PF
clara shoply, then aski) libst do you think
Table 2.
Intentions re Purchase of Land
should be dene about it?
(But if 1.0 has not indicated this state of offairs then state
the question as follows.) Some people have been worried
Intentions
Owners Tenants Non operating Ownere
about & coming lard boom. If land prices should to higher
12%
26%
21%
(or still higher), what do you think should be done about it?
Tould buy
Would not buy
75
49
65
8
20
9
23 Must controls do you believe could work best?
Undecided
Not scked
5
5
7
24. What do you think about limiting credit on land to 50 or 80
100%
100%
100%
percent of the appraised value, before the war, my in 1940,
As a. of controlling the land market?
11=172
11-1.57
N=117
25. Nhat do you think of the idea that the Government take most
of the profit on land bought since Pearl Enrbor and sold
again during the war period?
26. (If the suggestion in question 28 is approved) How high a
percentage do you think the Government should tabut
Table 5. Intentions TO Selling of Land
27. Hust do you Unink about limiting the sale of farms to those
who intend to farm the land themselves?
Operators
Non-operating Owners
Intentions
24%
28. (If ANY approval) Bow do you think this should be done?
Would cell
12%
64
Reald not sell
77
04
Undecided
5
29. Re had a land loos 25 years ago. What effoot is 1hat having
on people when it oosies to buying land now?
9
Not asked
6
100%
100%
N=172=
(1=117
137 renters onitted since they do not own land.
Regraded Unclassified
None
Less
change 8 Same
Much more
Question 21 What change is there in the number of farms soll-
- Question 1; Has ruch land changed hands in your county (or
Some no trend indicated
0.170 emog
Activity
Not secortainable
Done not 10:00
¿agu state mas If % paradmon 3u GUNI Dut
noighborhood) since lost cummon?
N-309
%00%
1
1
P
e
10
BI
55
20%
Operators
Compared with e For Years Ago*
Table 4. Activity in the land Market 59
N=117
%OOT
o
o
C
2T
5
8
05
39%
Owners
Table 5. Beasons Given by Operators and by Non-Operators for Verious Types of People Buying Land
-
Why Farm
Why Investors
Why Speculators
Why People (ganeral)
Reasons
Operators Buy
Buy
Buy
Duy
According to:
According to,
According to:
According to:
Opera-
Non-opera-
Opera- Non-
Opura- Non-
Operators Hon-
tora
tore
tors
operatora
tore
operators
operators
Farm to Operate
you a home, or to fare
28)
25)
-
-
-
2)
-
For additional farm land
4)
3)
-
-
-
-
-)
-
Tenant buying - cheaper to
)
43
48
2
own than torent
7)
11)
-
-
-
-
-
-
Desire for ownership of land
4)
9)
-
-
-
-
-)
-
As a Source of Investment
For investment, general
13)
18)
12)
27)
-)
-)
5)
25)
Increased income enables
)
-
-
)
)
)
)
people to buy
10)28
21)58
2)16
)30
-)6
f
-)2
1)10
3)31
High returns, land cheap
5)
19)
2)
3)
)
-
4)
3)
Sar-time profits
-)
-)
-
-)
-)
5)
2)
-)
-
Other Reasons
For family number in service
or to avoid draft
3)
6)
-)
-)
-
-
#
-)
Meduce income tax or hedge
)
)
)
)
)
against inflation
-)6
-)?
1)1
4)4
-
.
-
11
Kind of buyer specified but
)
)
in
)
)
)
no CORBON given
2)
2)
-)
-)
-
-
-
-)
Does not know
-
-
-
-
-
-
S
-
Little or no land moving
-
-
-
-
-
-
89
18
Question 3: "Whet are the reasons people are buying land around here?"
Percentage totals over 100 because more than one russon mss allowed each respondent.
79
Regraded Unclassified
80
Table
Reasons Given for Land Hot Loving suche
Recas 18
Operators
Non-operating Owners
Inade quate sung Z
01 land camed by operators
31%
172
R land for ale
16
30
R gh form in cere (individuals
will not ell)
14
17
A king price LOO high
10
7
2 in stro 18 hands now
7
5
Table Eas Who is Buying Land?*
Not the type of land people
Kinds of Buyere
Operators
Non-Operating Owners
want
7
3
High income tax discourages
sales
6
7
Farmers
80%
89%
All corpora ion land sold
S
10
Non-farmers
46
68
Price not h gh enough - no
Speculators
4
2
one want to soll
3
o
None buying
6
0
Prospective sellere feel no
attracti "e place for
reimvest iont of funds
3
17
Not ascertainable
6
5
Inviequate de and
N=309
N=117
People card lous because of
the last boom
6
10
Lack of fundo - farmers do
Question 51 Is it mostly furmers or non-farmers who are
not have the money
10
4
buying land?
Difficult to obtain machinery
2
13
Percentage totela over 100 because more than one reply
and help
Little or no deasnd because
was allowed each respondent.
of other factors
B
0
Doos not know
5
0
Not ascertainable
2
o
N-143**
:-30**
Question 4 Land Las best moving in coma proas
My do you think 1% im't soving much her
Percentage totals over 100 because more than one ply was
allowed each respondent.
H 166 famore and 87 non-operating owners were not ked this
question because they believed land was noving in Their
community.
Regraded Unclassified
81
Tab
8.
Comparison of Land Price Since Last ALDOOR
Table 7, Attitude of Operatora and Non-oparators Toward
with a Year or DO Defore*
Purchasing of Land by Farmors and Non-farmoro
Attitude of Oper-
ators Toward Pur-
Attitude of Nos.
Non-operating
chase of Land By
operators Toward
Concerison
Operators
Owners
Purchase of Lane à
Farmers Non-Farmore
Farmers Non-Farm
Generally higher
12%
9%
puch higher (26% or $25 and over)
23
19
Approval
Sope higher (11 to 25% or $11 to (25)
36
53
land should 10 and by form *6
12)
Little higher (10% or C10 and under)
15
-)
12
6)
1)
&
4
Any are -
4
v)
*)
(i)
lister conditions for
)
No land moving
4
o
)
tenant
-)
1)
-)
4
Con-farmerc ave right to by
Does not know
2
-)
47
3)
16
46
Individual better
6) 5)
Not accortainable
2
)
1
than corporation landlords
100%
-
100%
3
ther reasons
1)
5)
11)
No resson typolfied
25)
2)
26)
34)
N=309
Qualified App rel
if don't by too mich on
19
Question 7: Around here, how do prices paid for land since last
contrage
15
2)
summer compare with what they were a your or so
17)
If they have the cash
1)
before?
à
6)
If they ret. It
4)
1)
-
19
3) 12
21
If kept for Divertment not
3) 10
-
apaculation
)
-
8)
-)
5)
Table 9. Attitude Toward Present Tand Price*
Disapprovel
Land in too high to buy
]
-)
Purmers shirld USD the land
1)
-)
Non-operating
7)
-
Non-faimento inko poor land-
1)
Attitude
Operators
Owners
lords
)
)
7)
-)
Non-farter venership not gc xl
3)
Too high
23%
9%
for community
8
54
About right
52
56
2
liot interes nl, know little
2
3)
12
Too low
5
22
about far ing
)
$)
Price all right, but foar future drop
Non-Parture aid up the prive
-
)
of complity prices
5
8
of land
Non-farmere only speculator
2)
-
1)
Depends on location, quality, etc.
4
2
Other receipt
5)
-
5
loos not know
5
1
No roason spoiled
0)
-
Not acceptainable
8
2
16)
-)
8)
100%
100%
Indifferent
Does not -
2
-
Not secerts mble
1
N=309
117
16
32
17
Il
6:
Is
INV
16
100%
7004
mostly
106-farmer
who
nes
buying
19247
b Question a: What do you think about the prices being paid for
Question 8, - GO you name about such people buying iand?
land now?
0
Regraded Unclassified
82
12
Expectation of Possible Increaso in Age if Farms
Selling During the flar Period
Non-operating
TXT tation
Operators
Umero
Increase expected
Loro buyers wanting land
7%)
3%)
Tidgh price of farm products creating
)
5
dentind
4
6 )
Table
10
frofits in land speculation will
)
Opinion on Relationship Detween Present Form Land
cause greater desand
4
27%
o
)
24%
and Form Comodity Pricess
surplus cash causing buyers to be nore
)
willine to pay higher prices
3
)
9
City investors wanting land
2
1
Land in too cheap
1
1 )
Opinion
Operators
Non-operating Owners
Increase expected, no resson given
6
4 )
Land 1s about right
GL%
Land is low
19%
12
No change
35
People cautious because of other boom
7
6
land 15 high
8
2
All or nearly all land sold
6
a
famera won't sell
4
)
5
)
Land is about right, but from
People will keep the land because it
)
commodity pricess are high
20
12
is & good investment
6
)
7
Land about right, but farm
People will hold land because it is
)
3
50
1
45
comodity : ricen are low
home.
2
o
People have bought all they want
5
)
2
Does 20, cabie
Dupluo cash being used for bonds
2
1
a
1
Suyary won't pay higher acking prices
2
=
Not associainable
5
1
incone tax will keep furmers from
)
100%
1
5
100%
relling
No reason given
16 )
LO
11-502
N=117
Decreuge expected
All or nearly all corporation Land
sold and formers will not cell
4
7
Question 9: Line do you think these land prices compare with the
putees farmers are getting for their products?
increase depends on
Brie 200g commodity prices hold up
4 y
y )
Condition of this year's crop
2
o
2
Advancing price or willingmess of
)
2
12
3
)
19
famero to nell
1
2
l'onsibility of making money
Schent to which fare boys are drafted
3
0
2
5
Reason not specified
6
5
Does not know
1
1
Not ascertainable or not adked
100%
100%
1-309
1-117
Autorian 10: DO it looks to you GOW do you think the -ill sold ue en
increase in the medium of farms which rd DE
during the var period?
o
mostion 11: West maked you think so?
Regraded Unclassified
83
Table 13. Expected Trend in Post-war Land Prices*
Expected Trend
Operators
Non-operating Owners
in
Trople
acying Land
Little change up or down
24%
30%
Falling land prices
Dostature
Non
Dovintard trend after the war
13
3
65
Go down like after the last war
6
7
Stay at present level for a
)
timo, then drop
6
)
6
)
Jo down right after the close
)
36%
)
26%
of the war
3
If)
3
Go down loss than after the
)
last war
3
)
5
do up for a short period,
)
)
then drop
3
2
)
Very sharp drop right after
)
the war
2
0
.
&
TOR
Ricing land prices
16008
Upward trend
6 )
8 )
Go up and stay up
1
3
0%
11%
Very sharp rise right after
the war
1
o
)
Depende on various conditions
27
25
Does not know
5
7
Not ascertainable
0
1
100%
100%
N=309
H=117
a Question 16, What do you think will happen to the prico of land
during the first five years after the war?
Regraded Unclassified
Table 15, Reasons for Attitude on Post-war Land Prices
84
Operators
Non-operstors
Steady or Strong 20200 Situation
Strong deced and in Europo for food
will held complity prices up
17
1%
Will stay on the - use level with form products
7
3
Won't 8° down hasn't gone up DO much
Б
6
Price will be governed by Government action
Toble 15. Expected Trond in Post-war Parm Product Prices
or price control
4
10
Boya Lack from The buying land will tomperarily
force land prince higher
2
&
Non-operating
Operators
Owners
Prices strady Evenuse there has been no
apeculation
2
2
Little change up or down
26%
Strung, post-war downd for land and hoavy employment
1
31%
e
Increased demand Cor land
1
3
Polling prices
Lond prices will stay up regardless of other prices
1.
4
Cownward trend after the war
16 )
13 )
Government inflation control will break down and
Gn dom like after the last war
e
6
)
prioes will CC up
to
-
Stay at present level for a time,
Speculation will untor the land markot causing
then drop
11
18
& boom followed by a crash
1
1
Go down ght after the close
That's what happened before
3
1
of the war
6
)
49%
2
44%
(i) town less than after the last
Declining Price Signation
er
5
2
)
Declining post-ing dernad, hare and in Europe
8
5
Go up for a short period, then
Post-mr depression
11
8
drop
3
)
2
Government control will prevent
8
4
Very alarp drop right ofter
Prices are too high or out of line
1
-
the var
2
1
)
Over-production of farm producto will cause
& drop
1
-
Rising prices
Dovernment controls will treak down, prioss
Upmrd trend
2
1
1
No up and stay up
-
3%
3
6%
drop
1
2
That in what hagponed before
10
10
Depends on various conditions
18
15
Not sure - Dependa On
Commodity prices
14
5
Does not know
4
4
Effectiveness of Government controls
8
12
Not Assortainable
o
1
Whether % have a land boon
6
1
100%
100%
Whether TO feed Europe
3
G
Post-war employment
1
-
N-309
M-117
Whether the cane developments occur as last time
1
1
Uncertainties on crops and post-war conditions
2
2
Chostion 17: What do you think will happon to the price of farn
Not ascertaissble; no roason given
10
11
products during the first five years after the war?
N.309
N-117
Question 16: Why do you foel that way? (See Question 15, pre-
oeding page.)
Percentage totals more than 100% because more than one reply was
allowed anch respondent.
Regraded Unclassified
85
Table 16. Hansons for Attitude on Post-war Parm Product Prices
Table 17. Post-mar Relationship Between Land Prices
Operators
Non-Operators
and Farm Product Prices
Steady or Strong Price Situation
Non-operating
Strong post-war demand for farm products here
Operatore
Owners
and in Europe
31
Government prioe control will be effective in
27
Closely Related
holding prices steady
7
6
Both are tied togother
20%
31%
Won't go down because not inflated
1
1
will be in line with farm product
Government inflation control will break down
prices
17
61%
19
63%
and prices will 30 up
1
1
Relationship will be aore even that
)
now
4
)
4
Declining Price Situation
Price movement of land up or dewn
Dealining post-mr denand, here and in Europe
16
will lag behind movement of farm
Post-war depression
12
10
product prices
14
19
Over-production of farm products
9
3
Frices are too high or out of line
2
2
Land Prices Relatively High
Government inflation control will break down
2
Land prices will go up or stay up
and prices will drop
1
Government controls preventing prioes from
1
and product prices 6° down
4
3
Land will be high in comparison
going a.o. high other war, hence prices
with returns
3
%
6
11%
won't drop so much
2
2
Land will EP up faster than farm
product prices
1
2
Not Sure - Dependo On
Effectiveness of Government controls
Whether NO feed Europe
10
sopends On
8
Government controls of both
4
o
Uncertainty of post-war conditions
e
7
2
How long the war lasts
1
10%
o
X
Other factors
2
That's the way prices acted after the other war
2
Other factors
5
7
2
9
8
They will regulate themselves
1
0
Not ascertainable or no reason given
Be like after the other war
1
2
14
12
Determined by government action
1
2
That is too far away to say
1
o
B=309**
N-117
Does not know
12
e
Not ascertainable
5
7
100%
00%
during first five years after the war?
Question the 17: What do you think will happen to the price of farm products
11-309
[-117
each Percentage respondent. will total more than 100 as more than one reply was allowed
. Question 18: How do you think farm land prices will compare
with prices of farm products after the and of
the was?
Regraded Unclassified
86
This 18. Reasons for Attitude on Post-mar Relation-
ship Bottree: Land and Farm Product Prices
.
Table 19. Extent to Which Land Prices osc Advance and Still
Non-operating
Pay Out
Operatore
Owners
They always may together
Non-oporating
23%
14%
Operators
Owners
Land prior come later than the
changes in product prices
10
14
Too high now
7%
That's the any it did before
3%
a
11
None, for it's high enough tow
49
Post-aar dess will critae product
38
Some higher
10
20
prices to o'ay up to land prices
6
3
Much higher
4
10
Land prime Date with change in
Righer, degree not specified
6
fare produce prices
6
6
5
Govertment reglation and control
5
7
Supply and of commedities
Depende on
3
3
They will be are eve: for they
Price of form products
9
10
are cut of Inna now
2
Amount of down payment
2
3
4
European return to self-sufficiency
Quality of land
2
1
will obuto compdity prices to drop
to level of and prices
Does not know
7
6
2
1
There in no #padulation in land
Not ascertairable
4
3
this time
100%
2
100%
to
309
N-117
Supply and decound of land
a
Speculation IT land
a
2
Rich investment returns will cause
1
Question 20, How much higher con land prices go and still allow
land to be \datively higher
the land to pay out?
1
a
Doos not now
10
Fe reader given
5
10
Not aste saimble
1
4
17
100%
100%
N-309
E-117
Question 16. that mairee you holders prices will work out that way?
Regraded Unclassified
87
Table 20, Expertency of g Land Boom
Table 21 Effect of Other Land Boom on Present Land
Buying
Tenants Ovners Landlords
Non-operating
Land Boon Expected
Operators
Having une now
9%)
6%)
Possibly a mild one
5%)
9
El )
To receive mentioned
7
27%
6 )
10%
Making everyons ceutious about
&
)
B
19%
Hope no but fear we will
buying land
50%
2 )
19%
2 )
2 )
Older people, remember, younger
Land Beny Not Expensed
people have to loarn by 155-
poriance
13
People remember the lest one
15
35
27 )
30
Some offect
18
Government will prevent it
20
4
9 )
Lending agencios are coutinus
8
People will soon forget that ex-
2 )
3 )
People Mawilling to sell
2 )
perience in another boom
3
2
3
I
Fear or post-war depression
52%
3
Expect to find it shere they
2
)
1
61%
shortage of equipment and lator
o
)
67%
lost it
DI
o
)
1 )
Income TAX and other places
o
No effect
7
7
)
for money
)
1 )
No reason nentioned
3 )
3
)
Does not know
2
2
14 )
16 )
24 )
Not amcortunable
4
7
Not Sure - Dopands on
100%
1%
Effectiveness of government
regilation
9 )
N=300
-117
Amount of speculation
7 )
5 )
People gotting anough noney
1 )
14%
3
)
1
1
15%
o )
Non-syerkfied roasons
)
)
D
)
0%
3 )
- Question 19+ No had 6 Land boom 25 years ago, H at effect
4 )
4 )
16 that having on people when it to buy-
Dona not know
5
Not ascertainable
25
B
And land now?
2
=
o
100%
100%
100%
N-137
B-172
N-117
Question 21: Do you think wo will have a land boom during or
shortly after the war?
Regraded Unclassified
88
Table 13. Controls Suggested
Non-operating
Operators
Owners
Table 8% Proposed Action if a Land Boom Threatens
-
Price coilings in land
23%
9%
Tonante
Owners
Community price control
B
8
Landlorde
Limit credit and tighten oredit
regulations
7
14
Something
Higher tax or. speculative profite
3
1
Government replation of the
Permit only farmers to buy
1
1
land marker.
53%)
24%)
16%)
Control land and commodity priors
1
0
Something mid be dono
16 )
18
25 )
Unit number of acrea a person
Covernment entrol of community
2
50%
)
53%
04.0 own
1
o
48%
prices
5
10
)
7
)
Differential land tax
1
1
Government control of land and
)
2
1
2
Higher income tax
comedity
4 )
1 )
1 )
Compulsory bond sales
1
1
Government educational program on
Nothing
Nothing shou is be done
dangera of inflation and high in-
8 )
9 )
14 )
debtadness
o
2
Nothing can e done
7
)
6
)
24
No controls 150 necessary--thinga
Opposed to government regulation
a
12
18%
)
16%
2 5
will take cere or themselves
3
a )
5 )
Does not know
28
26
Nothing is necessary for we won't
Not asked of some respondents
have a Land betti
who stated there was no possi-
2
9
e
hility of 0 land boom
20
25
100%
100%
Dose no", know
17
16
e
Not ascirtainable
5
6
2
N-309
N=117
100%
100%
100%
N-137
N=172
N-117
Question 23:
That controls do you believe would work best?
Question II: (Do you think we will have a land boon during or
shortly after the mar?)
Question 22, What do you think should be done about it?
Regraded Unclassified
89
Table as Vitude Toward Limitation of Credit on Parm Land y
Tab
Tenante
Owners
25, Attitude Toward Government Taking More of the Profit
Landlords
ea Land Bought and Sold Since Pearl Larbor
Approval
Lessen danger of foroclosure
Tonants
Canera
Landlordo
or inability to pay for land
306)
10%)
22%)
It's all righ. ut to being
)
)
)
Approval
done new anyway
/
8
10
)
would reduew or stop speculation
20%)
12%)
19%)
Would climinate shoestring
62%
58,
63%
Higher income tax bracksts will
60%
buying
2
50%
0 )
6 )
7
take oure of it
5
9
41/
mill keep pri dewn
4 )
3 )
2
Reason not specified
30 )
13')
13
No specific givan
38
26
)
22 )
Qualified Approval
Qualified Appro al
No reason specified
6
1.0
7
if provision I made for
tenants to. my
: )
$ )
)
Disapproval
would not out a land loom
)
2
Opposed because the regular income
although probibly help
G
1
tax 1s taking care of it
2
12
)
7
9 )
Approval but bash down payment
10%
)
Individual's privilege to take the
)
)
should be NO outer
C ?
3
rick and take a profit if any
2
5
8
o
tão specific Person given
1 )
5
12 )
Opposed to government regulation
5
1
8
Too many taxes now
2
21%
3
2%
3
45
Disapproval
Un-Amorican or unconsti cutional
2
o
DO
)
Hould not affer cash buyar,
Land spoculation no more ob-
)
merely keep out tenant buyer
10
10
5 )
jectionable than other specu-
)
)
Makes it possible for only rich
-
)
lation
1
1
3 )
people to by
/
5
)
2 )
Roason not specified
7
7
11 )
Opposed to Government regulation
5 )
4
)
22%
2
)
22
Should permit 6. higher loan
2
e
1
Indiffer nt to the idea
3
1
o
No specific reason given
o
1 )
4
8
Does not know
7
7
4.
Does not know
4
Not asked or not ascercainable
5
Not accertainable
2
B
3
2
=
o
100%
100%
100%
5
100%
100%
TOO%
N=137
172
N-117
N=137
K-172
H=117
-
Question 25: What do you think of the idea that he Government
Question 24, Altat do you think about limiting crodit on land to
take most of the profit on land beu ht since Pearl
50 or 60 percent of the appraised value sefore the
Harbor and sold again during the period?
market? mar, say in 1940, ILA a means of controlling the land
Regraded Unclassified
90
Table 2% Attitude Toward Limiting the Sels of
Farms to Farm Operators
Tonants
Owners
Landlords
Approval
Farmers should own the land
23%)
17%)
9%)
It will help people buy homes
4
3
o
7
What Porcent Thould the Covemp nt Take
Would stop speculation
4
2
3
Non-farmers will own most of
54%
42%
121%
the land if something like
)
)
)
No -operating
that isn't done
o
)
2
o
Operators
where
Reason not specified
23
)
16 )
9 )
All of
Qualified Approval
ex
2%
If it can be dons
4
Tax 71% and over
8 )
4
10
7
Retired farmer is entitled
)
Tax of
15
13
to his land
1
12%
3
16%
1
11%
TAX of 4%
a
e
Reason not specified
7
5
Tax belo 20%
)
6
3
2
No wids nonal tax over the
proso income tax
Disapproval
7
7
Cannot destroy individual rights
n DO not know
for anyone has the right to
15
7
13
Nit
buy land
)
12
17
)
2
o
N asked minly because
Would not be enough buyers for all
)
)
pondent via opposed
the land, thus causing low land
)
)
prices
2
6
the Idea
)
4
36
58
Tenants need investment capital
100%
31%
36%
62%
00%
to carry the lend
2
$
7
)
Opposed to Government regulation
4
)
2
3
)
5-30D
-117
Impracticable, unworknble
1
)
2
)
7
Prevent retired farmers from
)
)
Viosti
26:
purchasing farms for their sons
1
Row high # percontage do you think the
2 )
1
Undemocratio
D
2
2
Government should taket
Reason not specified
8
)
6 /
21 )
Indifferent to the idea
o
2
o
Does not know
1
2
2
Not ascertainable
2
2
4
100%
100%
100%
N=137
N-172
H=117
Question 27: What do you think about limiting the sale of farms
to those who intend to farm the land themselves?
Regraded Unclassified
91
able 29, Ideas or Operation of the Parmit System
of Land Purchase
Non-operating
Operators
owners
Table 29. Attitude Toward All Three Controls
Government me margency regis-
Mon of the land suchet
$ s
2 12
Unit actwage a uso DAL own
6
e
Attitudo
Farmers
Landlords
Sequire buyer to operate the for
4
2
Differentialland tex (atate)
3
1
Zeinnt purchase plan
2
1
Government buy all Ind for salon
Approval of all throo
17%
8%
Disapprovel of all three
5
9
and readl 15 to farm operatore
1
1
mahing's determines that (*Ic E
too d(1) for ce,")
Approval or qualified approval of
3
2
one or two of the three
suggestions
78
83
Dove not know
23
13
100
100%
No assertainable
2
1
No: anked of those who dia-
N=309
N#117
proved or lost of those
Min care qualified ap-
proval to question 27
17
72
1002
100%
N-117
(Question
27, liber do you think about limiting the sale
of farms to those who intend to farm the
land themselves?)
Question 28,
How do you think this should be done?
Regraded Unclassified
DUPONT 1530
POST OFFICE Box 6677
1601 V STREET N.W.
92
WASHINGTON, D.C.
August 5th, 1943
The Honorable Henry Morgenthau, Jr.
Secretary of the Treasury Department
Washington, D. C.
Dear Mr. Secretary:
We have just received a telegram from His
Excellency Dr. H. H. Kung asking us to convey to Your
Excellency his personal appreciation for your prompt
action in granting our request for the purchase of
gold.
With highest respect and kind regards.
Yours sincerely,
PULICE
Ruo Ping-Wen
Hsi Te-Mou
LM
Regraded Unclassified
93
DLA
Chungking
This telegram must bE
paraphrased before being
Dated August 5, 1943
communicated to anyone
other than a Governmentol
Rec'd 9:35 name 6th
ogency. (BR)
Secretary of State
Washington.
1390, August 5, 5 p.m.
TO SECRETARY OF THE TREASURY FROM ..DLER
TF-149.
Department's 998, July 31, 6 p.m. Dr. Kung
this morning give me his assurance that no
provote individual or institution shares in income
of the board.
(2) Sole of United States doller backed
savings certificates cansed on August 3. Since
July 1 about United States dollar 40,000,000 of
certificates have been sold. It would appear that
the heavy (#) in this prriod were made in anticipation
of cossation of sale.
WSB
ATCHESON
( ) apparent omossion
Regraded Unclassified
94
CORRECTED COPY
FMH
Chungking
This telegram must bE
paraphrased before being
Dated August 5, 1943
communicated to anyone
other than B Governmental
Reo'd 9:35 a.m., 6th
agency. (BR)
Secretary of State,
Washington.
1390, August 5, 5 p.m.
TO SECRETARY OF THE TREASURY FROM ADIER TF-149. -
Department's 998, July 31, 6 p.m., Dr. Kung
this morning gave me his assurance that no
private individual or institution shares in
income of the board.
(2) Sale of United States dollar backed
savings certificates ceased on August 3, Since
July 1 about United States dollars 40,000,000 of
certificates have been sold. It would appear
that the heavy purchases in this period were
made in anticipation of cessation of sale.
ATCHESON
HPD
Above correction from Embassy, Chungking
Regraded Unclassified
95
PARAPHRASE OF TELEGRAM RECEIVED
FROM: American Embessy, London, England
DATE: August 5, 1943, 9 p.m.
NO.: 5114
FROM CASADAY FOR SECRETARY OF THE TREASURY, STRICTLY
CONFIDENTIAL.
Keynes' reaction to Dr. White's letter of July 24
has been favorable. Keynes indicated that incessent die-
cussions among British officiale have been going on since
the currency talks in Washington closed. He said that
R formal message had gone to Lord Palifax within the
last few days suggesting that A series of bilateral dis-
cussions be begun between with and American officials
not later than September 15, apperently not limited to
discussing the nost-war currency proposals but including
plso exchange rates, reciprocal aid and the implementing
of Article VII. He thought that un to yesterday no reoly
from the British Embessy in Washington had been received.
Taking note of Dr. White's statemen's concerning
the minimum requirements for any currency pronosal to
have 8 chance of obtaining legislative sanction, Keynes
said that for similar reasons the British would probably
also have to adhere to certain minima (mentioning the
question of gold contribution and the matter of exchange
control) but he WP8 sure that the respective lists of
minimum requirements on the American and Aritish sides
would not prove mutually incompatible. He plans to be
present himself for the the series of discussions now proposed
by the British, but he said that he believed that in a
weekend of conversations Dr. White and he could reach agree-
ment on most basic pointe of the currency pronosals. Not
having hed an opportunity up to the time I talked to him
to read the revised version of the American proposal, he
has not yet expressed any reaction to it.
WINANT
Regraded Unclassified
96
STRICTLY CONFIDENTIAL
FROM:
Chungking
Date Sent: August 5, 1943
(by pouch)
Rec'd: Auc. 20, 5 p.m.
Secretary of State,
DIVISION OF
Washington.
AUG 2 3 1943
A-28, August 4, 9 8.01, 1943. COMMERCIAL APPAIRS
Department
Mmbassy's 1270, July 23, C D.H., paragraph onc.
1. À new and curious development alone those lines,
of which we have beon informed by Admiral Yan:, is that
recently several of Yang's agents and several of those of
General Tai Li in the Shanghai-Manking area were tracked
down und seized by the Japanese but, instead of executing:
these agents, the Japanese loctured them on political
philosophy from the puppet point of view ana sont them
back to Free China to persuade their colleagues and
superiors hore that Japancse intentions toward Chinese
were bonevolent and that there was no use in continuing
the state of hostilities between Chungling and Japanese-
Hanking troops. Whether this incident is mercly sympto-
Atic of Japanese opportunism in attempting to further
Japan's "soft policy" toward China or whether it has more
Tar-reaching implications is an interesting matter for
spoculation.
Another instance of interest is the CASO of ./U K'ui-
hsien, member of the CEC and former head of the Chinese
scoret
Regraded Unclassified
97
-
secret polico in Shan Jui who was seized by the Japanese
in Larch 1942 and who arrived In Chungking Lay 7, 1943
(scction ..,1, (L), Limbassy's lay political roview--des-
patch no. 1255, June 12) with, accordin : to some rumors,
Jupanese pence proposals. A number of sources state
that /u was flown from Shanchai to Long Kong in a Jupa-
nose military or naval plane; it is generally accepted
that he made his way from Ton: Kong to Aveilin in unoc-
cupied China; he flaw from Avoilin to Chungking by CRAC
Lane and was Lot at the airficle by a number of Govern-
nont officials. Subsequently he was feted to some extent
but the welter of rumors about him reportedly soon caused
him to go into retironent. He is 110% reported by several
fairly reliable sources to have returned to Shunchai or
Hanking.
2. .1th reference to paragraph three of our 1270 and
to Adlor's regort for Treasury contained in our 1354,
August 2, the Consul at Aveilin states that his informant
in regard to the counterfeit notes was E l.r. 3. C. Chen,
Avoilin manager of the Lank of China. While the latter
does not have a (000 reputation, thore would scon to be
little point to his inventing such a story and telling it
to the American Consul. Mr. ndler suggests that his own
informant, Concrul manager of the Central Bank, night, by
stating that the countorreit or nutilated notes in question
TO those of the nenk of Communications, be seekin, to
protect
Regraded Unclassified
98
- 2 -
protect the OM) loyees of his bank ona of the Bank of China
at ..ong Kong at the time of its capture who had responsibility
for the Chun_ Hue Book Company's plates.
3. NO concur in ,r. Adlor's opinions as expressed in
the third paragraph of his Message contained in our
1354, All ust 2, referred to above.
WICHINSON
G..jr/hff
I
99
SEORETARYOFTREASURY
NOT TO BE RE BRANSMITED
1945 AUG
COPY NO. 13
BRITISH MOST SECRET
TREASURY DEPARTMENT
U.S. SECRET
OPTEL No. 257
Information received up to 7 a.m., 5th August, 1943.
1. NAVAL
HOME WATERS. 5th. One of H.M. trawlers was sunk by E-boat off
HARWICH.
MEDITERRANEAN. 2nd. U.S. Cruiser bombarded roads and gun posi
tions near AGATA (North coast of SICILY).
ANTI-SUBMARINE OPERATIONS. U.S. aircraft engaged U-boats on 28th,
30th and 3rd in West Atlantic. On 3rd U.S. Destroyer took prisoners from
Italian submarine off PANTELLARIA. 4th. Surface craft took prisoners from
U-boat, which had been engaged by Sunderland south of ICELAND.
2. MILITARY
SICILY. 8th Army. Our troops have advanced 6 miles beyond
REGALBUTO and patrols are overlooking SIMETO River from high ground to east of
MUGLIA (2) miles east of CATENANUOVA).
7th Army. On North Coast road U.S. troops have reached point 2
miles N.W. of SAN FRATELLO.
RUSSIA. Russians are fighting in OREL.
3. AIR OPERATIONS
WESTERN FRONT. 4th. 33 escorted Marauders (B. 26) bombed LE
TRAIT shipyards near ROUEN with good results. Escorted fighter bonbers attacked
airfields at POIX and ABBEVILLE. Beaufighters (1 missing) possibly hit a
4,000 ton ship and a 4,500 ton tanker in convoy off NORWAY.
4th/5th. 3 Mosquitoes attacked DUISBURG, 2 attacked COLOGHIF.
Naval Albacores sunk 3 R-boats.
SICILY. 3rd. 155 medium and light bombers attacked enemy P-
tions in ADRANO area.
4. HOME SECURITY
4th/5th. Slight damage to property and 2 fatal service casuel
in DOVER area from shells fired from French Coast.
Regraded Unclassified
100
August 6, 1943
9:30 a.m.
GROUP
Present: Mr. Bell
Mr. Gaston
Mr. Paul
Mr. Sullivan
Mr. Bernstein
Mr. Thompson
Mr. Smith
Mr. Blough
Mr. Gamble
Mr. Haas
Mrs. Klotz
Capt. Kades
H.M.JR: The main thing is, McCloy was here yester-
day with three men whose names started with "H". There
was nothing special except they are still looking for
people - the same people you (Bell) talked to me about.
I talked with White as of last night and told him
that Luxford and Taylor - he said they were going to
some meeting. They still haven't anybody to head it
up in Italy.
MR. BERNSTEIN: That is for Area Director, Mr.
Secretary. He called me this morning about it.
H.M.JR: What meeting is there this morning?
MR. BERNSTEIN: There is going to be a meeting,
apparently, about eleven o'clock or a little after, and
Mr. white wanted to have these men put to you the ques-
tion of whom we would back for Area Director. It may
be that Mr. McCollester has turned down the position.
I don't know.
H.M.JR: Who has got the facts?
Regraded Unclassified
101
- 2 -
MR. BERNSTEIN: Mr. Taylor will know.
H.M.JR: Where is Taylor?
MR. BERNSTEIN: He will be coming in at this morn-
ing meeting when you are ready to see him.
H.M.JR: Those that are interested can stay. White
said Taylor and Luxford. Do they both go to the meeting?
MR. BERNSTEIN: That is right.
H.M.JR: Paul?
MR. PAUL: To this eleven o'clock meeting?
H.M.JR: Are you with us?
MR. PAUL: I am with you but I can't be at the
eleven o'clock meeting.
H.M.JR: I mean with me now, because you seem-(Laughter)
MR. PAUL: I haven't gotten this all clear.
H.M.JR: Will you stay?
MR. PAUL: Yes.
MR. THOMPSON: I have a report on that pay roll
stuff. It is just about as I reported yesterday.
Mr. Cann cleared it for ads and posters, but not for that
little pay roll slip.
H.M.JR: Then what happened?
MR. THOMPSON: Then after that - for that purpose
War Finance people got up this little slip but did not
submit that for clearance.
H.M.JR: How can this not happen again?
(Memorandum to Mr. Elmer Irey from Mr. Lane, Special
Agent, dated August 5, handed to the Secretary.)
Regraded Unclassified
102
- 3 -
MR. THOMPSON: Under the orders we have gotten out,
anything going to the public must clear through Chick and
Fred Smith.
H.M.JR: Do you know about this, Ted?
MR. GAMBLE: Yes.
H.M.JR: Evidently this is on your shop. But it
can't happen again?
MR. THOMPSON: It couldn't happen again under this
order. It must be cleared with the public relations
people.
H.M.JR: All right?
MR. GAMBLE: Yes, sir. I don't think our people are
guilty of anything but paying attention to their business
so far as this job is concerned.
MR. THOMPSON: They had cleared the accuracy.
H.M.JR: You have gone into it and they all know
about it and it won't happen again - until next time.
(Laughter)
MR. THOMPSON: I hope it will never happen again.
H.M.JR: That is that. Just the fact you investi-
gated, that will be good for a while.
What else?
MR. THOMPSON: That is all.
MR. BELL: Mr. McKee of the Federal neserve Board
called last night and said that the Board had considered
reduction of the rate on savings accounts, two and a half
downward, and decided that it would be much better if they
let it go over until after the drive. I haven't talked to
him. He just gave me that message.
Regraded Unclassified
103
- 4 -
H.M.JR: It is all right with me.
MR. BELL: This is the vote on Library of Congress
acceptance of a gift. (Letter dated July 27, 1943,
regarding gift to Library of Congress (Dayton C. Miller
estate) initialed by the Secretary.)
H.M.JR: Have some fun?
MR. BELL: Yes, 8 little bit. It was very hot.
H.M.JR: It was here, too.
On this invasion currency, they are all fussing
around. We will just sit tight. I told Jack McCloy
we would stick it through together. He has gotten
letters from some Senators and Congressmen.
MR. BELL: I sent him some letters.
H.M.JR: And also I am very glad I had them because
I pointed out to them our troubles with the English -
big balances - that I didn't want them to help out the
English balances through some of the things they might
do. They were very much interested - - these Army officers -
in the whole picture. They said they are going to watch
it very closely.
MR. BELL: Did you see the Colonel that was just
back?
H.M.J.R: They are bringing & General somebody over
Tuesday to talk to War Bonds, who is just back.
Just to give you an example of how unprepared they
are, they were looking to England to give them two hundred
and fifty thousand tons of coal a month and they really
need a million tons, and they now find England says they
haven't got any coal. I told you what Ickes said, "Over
my dead body. Instead of having the coal there ready
to go in, to show how efficient the Democracies are, by
the time they get the coal there all the plants will have
stopped running.
Regraded Unclassified
104
- 5 -
MR. GASTON: Russia will probably be the first country
to get coal in there. They have recently started turning
out coal from some of their recovered mines, I am told.
H.M.JR: But they need help.
MR. BELL: I imagine they do.
H.M.JR: I liked this General Hilldring.
MR. BELL: Yes, he is rather straightforward.
H.MJR: You will be amused at this. McCloy said to
me, "Now, we would like to have Burgess." I said, "Gawd
damn you, no." I thought Hilldring - the way he laughed
the room just shook. (Laughter)
I said, "Do you understand that kind of language?"
McCloy said, "O.K." (Laughter) Hilldring loved that.
MR. BELL: How about the other recommendation?
-
H.M.JR: They went all through them. The man Wolf
from the National City Bank, I know, because he did a
swell job for us in War Bonds with the churches. I
told them that he was all right.
MR. BELL: For what?
H.M. JR: They didn't say, but they want him for
something.
MR. BELL: Not the top that we have been talking
about?
H.M.JR: No, they just had him in mind for something.
I told them at a lower level that - the man who used to do
our foreign exchange - Cochran - at a lower level that he
was 8. technician, and at a very much lower level he did know
the technique.
MR. BELL: I believe he is still in South America.
Regraded Unclassified
105
- 6 -
H.M.JR: I told them that. Then we talked about
Jeff Coolidge. I told them he had heart trouble. I
wrote Jeff, incidentally. Did you know he had heart
trouble?
MR. BELL: Yes.
H.M.JR: Did you write him?
MR. BELL: No, but I should. I will.
MR. BLOUGH: Just as a piece of gossip, the Wall
Street Journal suggests that the presence of Mr. McConnell
in the Treasury indicates you are trying to get back
Alien Property.
H.M.JR: I didn't see it.
MR. PAUL: The other end of that is that the Alien
Property Custodian is trying to get a big area away from
us. We are having meetings this week end.
H.M.JR: What are they trying to get away from us?
MR. PAUL: I don't remember exactly. It is a sub-
stantial area.
H.M.JR: Judge Rosenman told me when they were setting
up this order under which Crowley operates, the Bureau of
the Budget was going to set up a separate department with
all of this stuff in it including all of Foreign Funds,
and they were outvoted.
MR. PAUL: We may have to have a fight on this.
H.M.JR: And that they were thinking now, Rosenman
said, of where they could put Alien Property Custodian -
in what Department they could put it.
MR. PAUL: That may not be Crowley.
H.M.JR: So I told him they could put it anywhere,
that the Treasury could handle it very easily.
MR. PAUL: That is true because we do have the
organization.
Regraded Unclassified
106
- 7 -
H.M.JR: Rosenman went all through that fight with
us. I think he will keep us posted - I hope. I may
have some ime this morning to go to school with you
(Blough). If I could get time shortly after ten o'clock,
it may save you a trip. I am going to try to do it.
MR. PAUL: I have a date with Stam. Do you want
me to cancel that?
H.M.JR: No, it is not necessary if he (Blough) is
just here. He has what you have, hasn't he?
MR. PAUL: Yes. I can take Louis Shere up on the
date with Stam.
H.M.JR: All right, if you could leave Blough behind.
MR. BERNSTEIN: I have nothing, Mr. Secretary.
H.M.JR: Paul?
MR. PAUL: I have nothing.
H.M.JR: George?
MR. HAAS: There are some rough charts we have pre-
pared on the war expenditures.
H.M.JR: Where are they? Stand up and let the crowd
see them.
MR. HAAS: They are not very well adapted for that
sort of presentation; they are too small. I will explain
it.
H.M.JR: I want Bell to get in on this.
MR. HAAS: It starts September 1939. Here is the
total, and here is the breakdown of the total War Depart-
ment, Navy, and miscellaneous (indicating). These three
add up to that (indicating).
Regraded Unclassified
107
- 8 -
Now, this miscellaneous I have further broken down
by giving this breakdown. It can be broken still further.
H.M.JR: For those who are interested, the Navy
Department passed its peak a couple of months ago. The
War Department seems to be leveling off, and miscellaneous
war activities are down. Don't you think that is good?
MR. BELL: Yes.
H.M.JR: George, I wish you would find out, because
last night - I mean, the people at the house who really
know - there is a lot of cancellation of contracts going
on, both Army and Navy, and I wish you would contact
Army and Navy or Nelson and find out - let's get some
dollar value on the cancellations.
MR. SULLIVAN: You might distinguish between out-
right cancellations and substitutions for new models,
because you can get fooled on that pretty badly.
H.M.JR: Let's get that.
MR. HAAS: Yes, sir.
H.M.JR: I want to follow that once a week if I
could.
MR. HAAS: I will make up a good chart.
MR. BELL: Some of those figures also include
receipts as a result of renegotiation.
H.M.JR: I don't think you have this.
MR. BELL: I have it on paper, not on a chart. It
shows on the daily statement every month.
H.M.JR: I can get it better through 8. chart. All
right, George?
Regraded Unclassified
108
- 9 -
MR. HAAS: Yes, sir.
H.M.JR: Did Lindow tell you what happened outside
with Baruch and the others?
MR. HAAS: Yes. He had a very good meeting. I
think you ought to see him.
H.M.JR: All right, I will. I will see him right
after Taylor and Luxford.
CAPT. KADES: I have nothing.
H.M.JR: Don't you think if there is going to be
some talk about McConnell - why don't we get out a little
statement?
MR. SMITH: I was going to ask you when it was my
turn. Isn't there something we can say about why he is
here?
H.M.JR: Say he is here as business advisor.
MR. PAUL: That doesn't refute this - you have to
be more specific than that.
MR. BELL: Can't you say that he is here to study
post-war problems in which the Treasury is concerned?
H.M.JR: Why not? If it is post-war, why not go
further - conversion--
MR. BELL: You raise the question - you can say
that part of it which the Treasury is concerned with.
MR. SULLIVAN: I think you are safe in keeping it
general.
H.M.JR: Have a little talk with him, will you?
MR. SMITH: All right.
Regraded Unclassified
109
- 10 -
H.M.JR: I think you ought to get out something.
MR. GAMBLE: I have checked with Fred Smith on the
appointment - and a number of newspaper people - of Max
Cook. I also checked these editorials. While I agree
with you about the editorials, the story I get on Cook
is that he is well liked by newspaper people because he
does not subscribe to Roy Howard's ideas and has been
moved out of the editorial command that he had because
he does not subscribe to them. But he is a very valuable
man and has remained with Scripps-Howard and is well
liked.
H.M.JR: What do you two boys think?
MR. SMITH: I think he should stay, because Roy
Howard doesn't like him any better than Roy Howard likes
you. (Laughter)
H.M.JR: Those are strong words. (Laughter)
MR. SMITH: You never took any yachts away from
Howard, either. (Laughter)
H.M.JR: All right.
MR. GAMBLE: I had him come on today with the idea
that he was either going to stay or not going to stay
because I invited him.
H.M.JR: All right, I am big enough to have him in.
MR. GAMBLE: If you would like to see him, I will
walk him in today.
H.M.JR: All right.
MR. GAMBLE: Hoyt asked me last night if you would
like to see some expurgated shots of newsreels the Army
took of the invasion of Sicily. He wants you to see them.
He wants Byrnes, Vinson, and Jones to see them. The idea
Regraded Unclassified
110
- 11 -
is that maybe a group of you can help him with the Army
and Navy. He said the shots they showed of the Sicilian
invasion - if they were allowed to see them here - he
said it is ridiculous, and that if the people could see
what happened in the invasion of Sicily they would feel
differently about the war. The ships that were blown up
and the attacks - all of them were shown in the Army,
and the Army wouldn't allow any of them to be included,
and the films are released in this country.
He says that he thinks if we don't start letting the
people of this country see it we will have to close up on
the home front.
H.M.JR: I could see them at two o'clock.
MR. GAMBLE: He wants to show them this coming week.
He wants to get all of you together if it is agreeable to
you.
H.M.JR: We are having this fairly important group
at four o'clock Tuesday on taxes. Maybe with that group
here - you could find out who that group is from Paul -
he might like it, too.
MR. PAUL: Fitzgerald has the list.
H.M.JR: He might like to take advantage of that group
being here to show it to them. Find out who that group is.
He might like to take that advantage to show them the film.
MR. GAMBLE: He has the feeling that nothing is more
important so far as our war bond program is concerned -
to let the people know what is going on.
H.M.JR: There is this group of fifteen or twenty
fairly important people in the Government.
MR. GAMBLE: I will see if he can arrange it.
H.M.JR: Well, look at the group.
Regraded Unclassified
111
- 12 -
MR. GAMBLE: I will. That is all I have.
MR. PAUL: If you do that, I think We ought to
perhaps advance the time a little bit and tell the
people - tell Fitz so that he gets the two purposes.
H.M.JR: I can't advance it, because I have this
general coming in at three o'clock to talk to War Bonds.
MR. PAUL: That is all right then, but at least We
ought to tell the people there are going to be two things.
MR. GAMBLE: This won't take long.
H.M.JR: I would do this at the end. Listen, if we
talk two hours on taxes and say, "At six o'clock we are
going to show you a picture," it will cut out a lot of
arguing.
MR. PAUL: That is right; it will keep a lot of
people there that have to go. (Laughter)
CAPT. KADES: Mr. Secretary, in line with that
general let-down I understand Forrestal is terribly con-
cerned about the decline in production. The reason I
am making this point is not only in connection with that
movie, but also it seems to me we have to go kind of easy
on the post-war aspects of McConnell's job in the pub-
licity.
H.M.JR: The President is afraid of that, too. I
don't see why you can't simply say that I had him come in
as a business advisor.
MR. PAUL: Could you say that he was not dealing
with any Alien Property - any Foreign Funds problems?
H.M.JR: No.
MR. GAMBLE: Why couldn't you say in the same state-
ment that you don't think the war is going to be over
tomorrow, that the Treasury wants to be prepared, and make
Regraded Unclassified
112
- 13 -
a statement about the war at the same time? It seems
to me it would fit very well with what you are going to
do with the post-war.
H.M.JR: Well, you handle it, Fred. That won't
break down your mental capacity to handle that situation.
(Laughter)
MR. SMITH: I will take a thyroid pill and go after
it. (Laughter)
Are you going to be able to clear that memorandum
to editors?
H.M.JR: Yes, I have it here. You will have to
put the heat on me. I tell you what you do - because
I don't like it - after General Deane leaves if you will
come in I will do it right then. Tell them to let you
know.
MR. SULLIVAN: I got that information over the tele-
phone last night. I will be able to tell you about it
any time you want it.
H.M.JR: Would you mind telling them that you come
after Smith?
MR. SULLIVAN: All right.
H.M.JR: You might even have a letter drafted for me.
MR. SULLIVAN: Very well.
H.M.JR: Did you get through?
MR. SULLIVAN: Yes, very quickly.
H.M.JR: Herbert?
MR. GASTON: Recently the War Production Board asked
all the agencies of the Government for a report on any
telephones that could be spared, also teletypewriters.
Regraded Unclassified
113
- 14 -
It is rather interesting - of a total of two thousand
eight hundred and twenty-one telephone instruments, of
which War Production Board provides one thousand seven
hundred and twenty--
H.M.JR: That they can give up?
MR. GASTON: Seventeen hundred and twenty surplus
telephones that they can give up in War Production Board.
The Treasury Department is next, with two hundred and
twenty-two.
MR. PAUL: Does that include the Bureau?
MR. GASTON: Yes, it includes everything in the
Bureau - two hundred and twenty-two.
MR. SULLIVAN: Is that just departmental?
MR. GASTON: It is here in Washington, a total of
two thousand eight hundred and twenty-one instruments.
There is one teletypewriter.
H.M.JR: We give up one?
MR. GASTON: No, one was given up by the Office of
Scientific Research and Development.
Regraded Unclassified
August 6, 1943
114
10:22 a.m.
HMJr:
Norman.
Norman
Thompson:
Yes, sir.
HMJr:
The thing that I asked you to do - to fix up how
publicity will come out of the Bureau
T:
Yes.
HMJr:
and all that. Is that all in hand?
T:
I had an order all prepared and was about to issue
it. I had it initialed by Sullivan, Helvering,
Gaston and Paul, but this morning Helvering asked
if I'd hold it up - that he had a suggested change
he wanted to make in it.
HMJr:
All right. Will I see it before it goes out?
T:
Yes, sir.
HMJr:
I'd like to see it.
T:
Yes, sir, I'll have it all ready
HMJr:
All right, well
T:
as soon as I get that clear.
HMJr:
You'll have to get it to me before lunch. Can you?
T:
I'll - I'll get right after it.
HMJr:
Put the pressure on it.
T:
Yes, sir.
HMJr:
Thank you.
T:
All right.
Regraded Unclassified
115
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE Aug. 6, 1943
TO Secretary Morgenthau
FROM Randolph Paul
Attached is a transcript of conversation with
Congressman Doughton yesterday.
AM
"
116
r. Paul returned Mr. Doughton's call - August 5, 1943 - 5:00 P.M.
Paul: You called me this afternoon.
Doughton: Yeh. I wanted to know if you had a copy of the
statement I issued after the conference the other
afternoon. I had one and a fellow came in my office
and I gave it away.
Paul: I'll be glad to send you another.
Dou hton: Put it in the mail.
Paul: How are you feeling?
Dou ton: It is hard to get these things strai thtened out. I
think that the President, uh, the Secretary, thou ht
maybe my call on Judge Vinson the other evening mi :ht
have some significance so far as the Judge's connection
with tax matters. Nothing could be further from my
feelings. Any part you, or the Pres -- the Secretary,
wants to play would be helpful, but I don't think
I think
I think he is trying to be helpful.
Paul: I have every confidence that is true.
Dou thton: Before I went down there, I told Fred I would see
him that evening. It had nothing to do with the tax
discussion.
Paul: I am sure the Secretary has no doubt about that.
You hton: I wish you would assure the Secretary of that.
I will be back about the first.
Regraded Unclassified
117
August 6, 1943
Tax issues to be decided in preparation for
revenue legislation of 1943
A. Revenue programi the volume of additional tax
revenue.
B. Sources of additional revenue.
1. Individual income taxi rates and exemptions.
2. Corporation taxes.
3. Estate and gift taxes.
4. Excise taxes.
5. Other sources which may be considered:
a. Sales tax
b. Tax on increases in income
C. War anti-inflation tax.
D. Compulsory lending.
E. Other issues.
1. Tax simplification.
a. Elimination of Vietory tax.
b. Simplification of withholding.
c. Dual rate schedule (normal tax and surtax).
d. Earned income credit.
2. Privileges and loopholes.
a. Tax exempt securities
b. Percentage depletion
e. Community property
3. Tax hardships
a. Debt relief
b. Relief for persons with fixed incomes.
RB:dsd
8/6/43
Regraded Unclassified
118
TREASURY DEPARTMENT
MA
INTER OFFICE COMMUNICATION
DATE
TO
Secretary Morgenthau
August 6, 1943
FROM Randolph Paul
On August 4 you referred to me an editorial from The
New York Times, entitled "British Taxes and Ours" and asked
how you should answer it.
I doubt if there is enough to criticize in the editorial
to justify an answer. It appears to be only mildly hostile.
It points out the dangers of the limited type of tax com-
parison which were used in the charts and adds some factual
material which appears to be substantially correct.
It would be helpful in avoiding editorial criticism of
statistical releases if proposed tax press releases were
discussed with persons familar with pitfalls in the use of
tax figures at an early enough stage to assist the release
writers.
kr
Regraded Unclassified
119
MEMORANDUM
August 6, 1943.
TO:
The Secretary
Ths
FROM:
Mr. Sullivan
I am attaching hereto a Treasury release approved by Mr.
Smith and myself and released by Mr. Smith and myself through
Mr. Shaeffer late yesterday afternoon.
Regraded Unclassified
120
TREASURY DEPARTMENT
Washington
Press Service
FOR IMMEDIATE RELEASE
No. 37-98
Thursday, August 5. 1943
According to Guy T. Helvering, Commissioner of Internal Revenue,
all persons should now determine whether they are current in their
payments for Federal income taxes for 1943. He points out that about
15 million people in the nation are not current.
Mr. Helvering stated that if you are single and your income is less
than $2700. or married and your income is less than $3500. and the boss
is withholding part of that pay for income taxes, probably you are all-
square with your tax on 1943 income. Otherwise, you may owe some money
on September 15.
If you are not among the two-thirds of the nation's taxpayers who
are all-square on their 1943 income taxes, Commissioner Helvering
announced tonight that September 15 is the deadline for doing something
about it -- namely, filing a declaration known as Form 1040-ES and en-
closing a check for half the amount due. This takes the place of your
third quarterly installment of taxes that you formerly paid the collector.
All income taxpayers will be sent copies of Form 1040-ES between
August 15 and August 20 which must be filed on or before September 15 by
those persons who have not become fully current on 1943 taxes through
the payroll deduction feature of the Current Tax Payment Act of 1943.
Revenue officials estimate that approximately 15 million of the indi-
viduals who filed returns on March 15 will be required to fill out the
declaration and make a tax payment on that date.
Form 1040-ES, known as the Declaration of Estimated Income and
Victory Tax for individuals for the Calendar Year 1943, requires answers
to only six questions. It will be accompanied by instruction sheets and
tables for estimating tax on incomes up to $10,000. so as to make the
computation as easy as possible for the taxpayer. Payment of half the
balance of the estimated tax still due on 1943 income must be made with
the filing of the declaration.
Most taxpayers who filed returns on March 15 will not be required
to file the declaration because their current year's tax requirements
will have been fully met through the deductions at source on wages and
salaries.
In general, a declaration is not required of wage earners subject
to withholding who do not receive more than $2700 a year if single,
or more than $3500 a year if married.
Regraded Unclassified
121
- 2 -
However, inasmuch as the personal income of certain persons, such
as physicians, lawyers, ministers of the gospel, agricultural labor,
domestic servants, those in the armed forces and others, 18 exempt
from withholding, and as other income such as interest, dividends,
rents and business profits is not subject to deductions for taxes at
source, - All persons receiving such income, generally speaking, will
be required to file a declaration on or before September 15.
Penalties are provided for failure to file a Declaration of
Estimated Tax or to pay an installment within the time prescribed,
or for a substantial under-estimate of the Estimated Tax, or for
willfully making a false return.
In order to place all taxpayers on an equal footing from the stand-
point of being current in their income and Victory Tax payments, the
Current Tax Payment Act of 1943 provided this method of filing a decla-
ration of estimated tax for the year. The taxpayer pays his estimated
tax either in a lump sum or in installments just as he has in the past,
but with this difference--he will be paying, during this year, his tax
on this year's income.
A taxpayer required to file a declaration must file it on or before
September 15, 1943, with the collector in whose district he expects to
file his income tax return for 1943, and must pay at the same timo at
least one half of the unpaid balance of the estimated tax for 1943,
unless he is a farmer. If at least 80 percent of the taxpayers' esti-
mated gross income 18 derived from farming, he must file this declaration
on or before December 15, 1943, and must at the same time pay the entire
unpaid balance of the estimated tax.
A taxpayer becoming liable after the first filing date because of
a change in income or marital status must file a declaration on or before
December 15, 1943. If necessary an amended declaration may be filed before
December 15, 1943. A joint declaration may be filed by husband and wife
even though they expect to file separate tax returns for 1943.
The Declaration Form 1040-ES. together with instructions and tables
furnished for the convenience of taxpayers in estimating their income
and Victory Tax, will be available to them in the office of their local
collector on or about August 9. Should a taxpayer prefer to make a more
precise computation of his estimated tax, he may, upon request to hie
local collector, receive an alternative work sheet with more detailed
instructions, which has been prepared for the convenience of taxpayers
in the higher income brackets.
-000-
Regraded Unclassified
122
MEMORANDUM
August 6, 1943.
TO:
The Secretary
JLS
FROM: Mr. Sullivan
August 4th you asked me to follow up the Regulations
on Salary Stabilization pending in Fred Vinson's shop to
determine whether we should write Judge Vinson again asking
him to expedite these Regulations.
I find that these Regulations have been informally
cleared everywhere except in Mr. Paul's shop, and that he
has dictated a memorandum for me on the only point not yet
decided. Under the circumstances, I believe we should not
write to Judge Vinson.
Regraded Unclassified
123
August 6, 1943
Dear Grace:
I realize that the President will
only be in Washington 8. few days.
I would very much like to see him
during that period. I would appreciate
your asking him for an appointment for me.
Yours sincerely,
(Signed) H. Mergenthau, Jr
Miss Grace Tully,
Secretary to the President,
The White House.
Regraded Unclassified
124
WAR SAVINGS STAFF
ROUTING SLIP
Mr. Adams
Mr. Houghteling
Mr. Anderson
Mrs. Jones
Mr. Augustus
Mr.
Mr. Broughton
Mr.
Mr. Buckley
Mr.
Mr. Callahan
Mr.
Mr. Coyne
Mr. McCorkle
Mr. Delehanty
Mr. Odegard
Mrs. Demonet
Mr.
Mr. Duffus
Mr. Partain
Shead Olney Mahan Long Lane Kilby
Miss Elliott
Mrs. Russell
Mr. Engelsman
Mr.
Mrs. Evans
Mr. Schram
Miss Finucane
Mr. Sloan
Miss Fitzgerald
Miss Spriggs
Mr. Gamble
Mrs. Thomas
Mr. Graves
Mrs. Turner
Mr. Hirzel
Mr. Williamnon
mrs m 0 Hugh
mr. Gample saje
the war all settled
with the nb
that he and MR
and uch dert per had
as = complete understand
Regraded Unclassified
WESTERN
125
1201
SYMBOLS
CLASS OF SERVICE
DL-Day Lenser
This is a full-rate
Telegram or Cable-
gram, unless its de-
Jointle
UNION
(32)
NL=Night Lenes
LC=Deferred Cable
ferred character is in-
dicated by a suitable
NLT=Cable Night Lenes
symbol above of pre-
ceding the address
A.
N. WILLIAMS
NEWCOMB CARLTON
J. c. WILLEVER
Ship Radiogram
PRESIDENT
CHAIRMAN OF THE BOARD
FIRST VICE-PRESIDENT
The cling time shown is the date line on telegrame and day letters is STANDARD TIME at point of origin. Time of receipt is STANDARD TIME at point of destinatic
WV325 66=UD NEWYORK NY 6 739PP I
043 AUG 6 PM 9 35
HON HENRY MORGENTHAU JR=
2434 BELMONT RD WASHDC=
SITUATION AT PRINCETON MAKES IT DESIRABLE I RETURN THERE
(STOP FINDING I CAN DO LITTLE FOR TREASURY I REQUEST YOU
RELEASE ME AS SOON AS POSSIBLE STOP IF AT ANY TIME YOU NEED
ME FOR SPECIAL ASSIGNMENTS BE ASSURED I SHALL ALWAYS BE AT
YOUR DISPOSAL STOP SHALL RETURN WASHINGTON NEXT WEEK AND Y
YOULD APPRECIATE INTERVIEW STOP UNTIL MONDAY AFTERNOON
PRINCETON CLUB NEWYORK STOP CORDIAL REGARDS=
R D WELCH.
THE COMPANY WILL APPRECIATE SUGGESTIONS FROM ITS PATRONS CONCERNING ITS SERVICE
Regraded Unclassified
126
AUG 6 1943
Dear Bill Murray:
I asked Ted Gamble to talk with you earlier
in the week regarding your resignation.
He has told as of his talk with you and I
an glad to know that you will still be available
to us on call.
All of us here are aware of the splendid
service that you have given the Treasury in its
Mar Bond activities. Certainly you can be proud
of the contribution that you have made. The many
sacrifices that you have made are matched only by
the excellence of your work for us.
With all good wishes, I an
Sincerely,
(Signed) H. Morgenthau, Jr.
Mr. William Murray
1270 6th Avenue
New York City, New York
File copies to Mr. Gamble.
Copy in Diary.
Regraded Unclassified
127
COPY
JULY 31, 1943
BEVERLY HILLS CALIF JULY 30
THE BONORABIE HENRY MORGENTHAU JR
SEVIETARY 043B TREASURY
VR. morgen thau : I FIND THAT THROUGH ENLISTMENT through DRAFT AND
THROUGH DEATH THE MAN POWER OF MY BUSINESS IS so DEPLETED THAT I MUST
HEREAFTER DEVO IE MORE TIME TO IT. THE LIVELIHOOD OF 50 MANY DEPENDS
UPON ME THE PROGRAMS FOR THEASURY STAR PARADE ARE COMPLETED THROUGH
SEPTEMBER 30, THE END OF THE NEXT DRIVE EXCEPT FOR THEIR SELLING MESSAGE
OF WILH THERE IS THE USTAL DELAY THE T S P PROJUCTION ORGANIZATION
FUNDITION SMOOTHLY AND CAN CONTINUE UNDER THE ARE SUPERVISION OF ROY
0 PRODUCE WA "E' IS REALLY THE LOST SUCCESSFUL OF GOVERNMENT RADIO
SMOWS. I'M BE BACK IN NEW YORK MONDAY AND WOULD APPRECIA TE HAVING
NI you All ACCEPTANCE TO TAKE EFFECT IMMEDIATELY OF THIS yy RESIGNATION.
MY 71 REGARDS TO YOU AND YOUR MANY ASSOLIATES
WILLIAM B. MURRAY
Regraded Unclassified
128
AUG 6 1943
Dear Mr. Horn:
Upon his return from a trip through the North-
west, Mr. Caston advised no that the Twin Cities
Ordnance Plant has been doing an outstanding job
on the Payroll Savings Plan for the purchase of
War Bonds. 1 understand that your employees are
subscribing 100 percent, and at a rate of about
13 percent of the average wouldly payroll.
MAY I congratulate you on this good record,
which testifies eloquently to the loyalty and
patriotism of everyone at the Twin Cities Ordnance
Plant. I confidently expect a continuing and
even finer accomplishment from your organization.
Sincerely,
(Signed) H. Morgenthau, Jr.
Mr. Charles L. Horn, President
Federal Cartridge Corporation
Twin Cities Ordnance Plant
!inneapolis, Minnesota
Photo of incoming and copy
of reply in Diary.
File to Mr. Thompson.
typed 7/31/43
Jh08:jml
Regraded Unclassified
HIPOWER
FEDERAL CARTRIDGE CORPORATION
TWIN CITIES ORDNANCE PLANT
MINNEAPOLIS, U.S.A.
Charles Hern, President
June 16, 1943
kied fun 19
The Honorable Herbert Gaston
(PERSONAL)
Assistant Secretary of the Treasury
Washington, D. C.
Dear Herbert:
lie had quite a party, when you consider the fact that two
shifts were not able to attend because of the hour of the
celebration. We would have enjoyed having you present.
I wonder if it is in good taste for me to nsk you to do this:
get the Secretary to write a letter to Mr. Charles L. Horn, President
of the Federal Cartridge Corporation, to this effect:
Mr. Gaston, upon his return from the Northwest, advises
me that he has learned from Mr. Purdy that the Twin Cities
Ordnance Plant has been doing an outstanding job with payroll
deductions -- that your employees, running into many thousands,
have subscribed 100 per cent and for amounts aggregating
approximately $150,000 a week, with 8. percentage of 13 per cent
and an average weekly deduction of $6.10 per person. Let me
congratulate you, as Mr. Gaston already has Mr. Purdy, on this
fine accomplishment, which bespeaks loudly the wisdom and
loyalty of your employed force.
Also, may I congratulate you upon the Army-Navy "E" Award,
which was presented to your large institution the day before
Mr. Gaston arrived.
What I will do with this, Herb, is to print it in the Twin Cities
Ordnance News, which reaches all of our employees, numbering close to
30,000.
It was nice to see you for a moment, and to observe your functioning
as effectively as ever. You gave an impressive talk, and I think you
Regraded Unclassified
30
The Honorable Herbert Gaston
-2-
June 16, 1943
will find you will get results in the September campaih in this
region.
Yours very truly,
were
E. A. Purdy
EAP:tm
Assistant to the President
Encl.
P.S. If you want to and A paragraph
to the seey's letter asking for still
greater affort-fine.
Regraded Unclassified
131
August 6, 1943
Dear Barney:
I wish to acknowledge your very thought "ul letter
concerning the report you received from South Carolina.
I appreciate your calling this matter to my attention.
The Presidents of the Federal Reserve Banks an
fiscal agents of the Treasury directed the field activities
of the Second War Loan held last April. We have since,
as you know, organized on a state basis merging the
district committees which we had set up under the Federal
Reserve Banks and the state committees, known as the War
Savings Committees, into a now War Finance Committee.
Attendant to this merger were numerous details which we
needed to clean up in a hurry so that we could clear the
atmosphere for the new committees.
The telegram you menti ned is either in connection
with the latter or could have been in connection with an
assignment that I gave them as my fiscal agent to prepare
order forms for the Third War Loan. In either event,
because of the pressure put on from here, they may have
felt it proper to use a telegram in face of the recent
considerable delay in the use of the mail. Re constantly
reaind all of our people to use the mails instead of
making a phone call or sending a telegram unless it is
absolutely vital. I know our record is very good in this
respect, but I an checking on this particular case.
with all good wishes, I am
Cordially yours,
(signed) Henry
Photo of Incoming and copy of
recly in Diary
Mr. Bernard M. Baruch
File returned to Mr. Gemble.
Carlton Hotel
Washington, D. C.
TG
Regraded Unclassified
BERNARD M. BARUCH
597 MADISON AVENUE
ns
NEW YORK , 22, New York.
August 1, 1943.
My dear Mr. Secretary:
Having a very high regard for your
administrative qualities, I am bringing a
very small matter to your attention because
I am sure you will want to check it.
I received a letter from a
man in South Carolina in which he said -
"econo I called attention to the fact
that some weeks ago I received in the
morning a two page telegram sent by the
Federal Reserve Bank of Richmond, under
instructions of the Treasury, regarding
the Third War Loan, which is not to
start until September 9th, and later in
the day all the information contained in
this telegram reached me by letter. The
use of the telegraph wires ot only costs
the Government money, but this message
cluttered the wires when 30 needed for
vital messages.
"
This is not a very important matter
but is something which might be looked into
because of the jammed condition of the wires.
Sincerely yours,
B.M.B.
Jan coming in This meh
Hon. Henry Morgenthau,
Secretary of the Treasury,
Washington, D. C.
Regraded Unclassified
133
MEMORANDUM FOR THE SECRETARY.
August 6, 1943.
Mail Report
A few of the unfavorable comments, particularly
those on taxation, reflected the soaring temperatures
of the past week. For the most part, however, the
mail contained largely factual inquiries rather than
emotional comments. One letter, which stood out from
all others, pointed out the advantages of increasing
the withholding tax to 40%! Numerous questions
about applications of the new tax followed the lines
of past inquiries. There continued to be many re-
cuests for tables or charts showing required deductions.
Several letters, and 8 number of clippings, condemned
the practice whereby employers, usually small ones,
absorb the withholding tax for their employees, thus
in effect granting an illegal salary increase. A num-
ber of correspondents asked that the form for the
Declaration of Estimation be made as simple AS possible
SO that the heavy paper work now demanded by the Govern-
ment would be lightened rather than made more burden-
some.
The bulk of the mail concerned routine Bond matters.
More than 100 letters inquired as to procedures for
correct handling of Bonds, many dealing with the re-
cently called series. The approach of the date set
for the Third War Loan Campaign brought out many ideas
for increased sales of Bonds, as well as more slogans,
patriotic poems, etc. On the other hand, the number
of "E" Bonds submitted for redemption rose sharply
this week. Complaints from personnel of the War
Department remained at last week's low level.
Demands for Government economy or for control of
inflation increased, but writers blamed the Treasury
Regraded Unclassified
134
- 2 -
Memorandum for the Secretary.
August 6, 1943.
less than the entire Administration. There were a
few complaints against OPA, a number of clippings
and comments on the Bovingdon incident, and a few
very nasty anonymous communications.
Gabrielle E Forbush
Regraded Unclassified
135
General Comments
An anonymous correspondent (New York) forwards a cir-
cular letter sent out by The Granite Foundation for
Elementary Political and Economic Education, Lancaster,
N. H. You and I belong to the class of people that it
is the fixed purpose of the New Dealers to make help-
less and impotent, to impoverish and "liquidate" -- to
use their word; for we are the only obstacle that stands
between them and the final and complete establishment of
their autocratic, bureaucratic, all-enslaving and all-
devouring New Deal Total State. Week after week, month
after month, year in and year out, I keep up the fight
and give all I have to save our enterprises from being
taken over permanently by the New Dealers, and to save
our private property, our personal income, and our in-
dividual rights and freedom of action from being finally
and completely stripped from us. + * More
than
one
thousand of the professional and business leaders of this
country 126 to date) have joined me in support of a
definite, specific, practical procedure to defeat the New
Dealers in this coming presidential election and thereby
save our enterprises, our property and income, our rights
and freedom from destruction at their hands. * # # We
have not saved ourselves just by winning a few more
seats in Congress last fall. We have merely scotched
the New Deal Snake, not killed it. * # % This coming
election, this final battle to break the strangle-hold
of New Deal boa-constrictor government, will be a diffi-
cult, desperate and uncertain struggle. In 1944 our
Porfirio Diaz, the best vote-getter of our time, will
again be seeking to perpetuate himself in office and in
power; and all the millions he has put on the public pay-
roll and all the other millions he has subsidized -
whose jobs and pay checks were not at stake in the last
election but will be in this coming one - will fight
desperately to keep their feet and snouts in the public
trough, and will march all their cousins and their uncles
and their aunts with them to the polls; while all the
inner-circle of New Dealers - the socialist, communist,
totalitarian fellow-travelers, friends and intimates of
Regraded Unclassified
136
- 2 -
Franklin Roosevelt and our Madame President - will be
fighting for their political lives and jobs and to
retain their power over us and to fasten their hateful
"New Order" upon us, finally, completely and for keeps.
(Appeal for funds follows. Etc., etc.)
W. F. Kennedy, St. Clairsville, Ohio. It seems to me
you go out of your way at times to put your best foot
forward. The chart you made public, according to
Associated Press on August 2, illustrates what I am
driving at. The comparison that Chart No. 3 revealed
would leave the impression with the unthinking that the
cost of the non-war activities was being greatly re-
duced, while, as 8. matter of fact, they remain at the
all time high and apparently shrink in comparison only
because of the tremendous increase in war spending.
In 8 word you pat the Administration on the back by
saying that in 1942 - 17% went for non-war; in 1943
this was only 6%; and in 1944 it will be only 5%. You
didn't state, and you might have done so, that the non-
war cost didn't vary more than 5 or 10% during those
three years, hovering in the neighborhood of five bil-
lion dollars annually. 4h # + It is high time that our
money spenders, and you one of them, set yourselves
resolutely to the task promised every American by
candidate Roosevelt in 1932, that he would relentlessly
move to reduce the cost of government. * # # Therefore,
such remarks and such charts as you have your people
spend their time in producing may serve your purpose,
but of course it is not yet out of order in the land
of the free to do a little bit of our own thinking,
and you can't criticize people for bringing to the
notice of our money spenders some of the inconsistencies
of the program.
Dr. John Alexander, Ann Arbor, Mich. The application
form for renewal of the Federal Narcotic Tax of one
dollar (which was payable by July 1, 1943) bore a
rubber stamp note that payment must be made by certified
Regraded Unclassified
137
- 3 -
check, postal money order or cash (registered mail).
I should appreciate your letting me know whether, in
the future, you will arrange to permit payment by
personal check. You permit payment of income tax by
personal check. It seems to me absurd that in these
exceedingly busy times any physician, or other person,
should be forced to take the time and use the gasoline
to go to the Post Office or bank when, in a few moments
he could write & personal check. This is an example
of the many little personal bedevilments the citizens
of this country are being subjected to by their own
bureaucratic Government, and that are arousing increas-
ing resentment.
A. Green, President, Peoples Bank of New Castle, New
Castle, Pa. We enjoy the clientele of a large Italian
population in our city and county. As a result of the
wonderful success of the Allied Armies in Italy, and
the turn of events there, those that still have near
relatives located in Italy are getting anxious to send
them a few dollars to help defray their living expenses.
We thought that it might be advisable when Italy will
surrender, and the Allies will be in charge of the
country, to make some arrangements by which these
people could be of some financial help to their rela-
tives located in Italy.
#
#
F. E. Turin, Executive Officer, American Legion Mar Bond
Campaign, Richmond, Va. We are forwarding to you with
this letter, cashier's check No. 177195, drawn by The
Seaboard Citizens National Bank, Norfolk, Va., in the
amount of $215.00, and dated July 30, 1943. Original
letter from the Reverend Sidney Quong, Chairman of the
Chinese Committee organized to cooperate with us on
our War Savings and other projects is also enclosed.
4> # When they gave us the $215.00 we offered to buy
Stamps and Bonds for them, but they said that they did
not want Stamps and Bonds, but did want the United
States to have the money for the mystery ship that
Regraded Unclassified
138
- 4 -
would be launched for the bombing of Tokyo. (The
following is the letter from Reverend Sidney W. Quong,
Chairman, The Chinese Committee.) I am glad to be
able to tell you that our Chinese residents of Norfolk
have responded in a liberal way and have raised
$215.00 towards the "Shangri-la" campaign, desiring
to make & contribution rather than buy Stamps. We all
appreciate the opportunity given us to have a part in
this campaign. We wish we could have made a larger
contribution, but we will buy more War Bonds in large
denominations for our final VICTORY.
B. H. England, Secretary-Treasurer, Washington, Virginia
& Maryland Coach Company, Inc., Arlington, Virginia.
We have been experiencing difficulty que to the fact
that our patrons inadvertently insert new pennies in
our fare boxes. During traffic hours these pennies
occasionally pass through our fare box unnoticed by
our drivers. Since they are responsible for the fares
in the box, each penny, which will run up, represents
a loss of nine cents to our drivers. * # % Do be good
enough to advise me whether it is the intention of the
Treasury Department to make any change in the new one-
cent piece.
Regraded Unclassified
139
- 5 -
Favorable Comments on Bonds
Harry Citron, Malcolm Brock Co., (Department Store),
Bakersfield, Calif. Enclosed you will find another
check for $18.75 for a War Bond, my further contribu-
tion to the war effort. At this time please accept
my humble gratitude for your citation which I received
in April. Needless to say that I never dreamed, when
I reached the shores of this great Continent, as an
immigrant, with exactly two-cents in my pocket, that
I would ever be recognized by this Government as a
contributor to the welfare of our beloved Country.
F. E. Stockwell, Sharon Hill, Pa. An Associated Press
statement in the Philadelphia papers indicates that the
new Bonds will be half-size. I wish to commend you, or
whoever is responsible for this change. The writer
has been buying Bonds monthly for 6 years. The old
size Bonds, or I may say, the present size Bonds re-
quire folding. The result is that I have had to in-
crease the size of my Safety Deposit Box twice in
order to accommodate this accumulation of Bonds. To
the writer, there is no more sense in having 8. Bond
in the present size than there would be to print a
$50 or 8. $100 bill the size of the present Bond. I hope
that the size you indicate you are going to furnish will
lie flat in a Safety Deposit Box, without any folding.
Senator Joseph C. O'Mahoney, (Wyoming). As you know,
the Interior Department appropriation bill for the
fiscal year 1944 carries & provision authorizing the
Secretary of the Interior to purchase from tribal funds
one $500 War Bond for each member of the Shoshone Tribe.
The enclosed is a copy of a letter I have received
from R. N. Harris, President of the Shoshone Business
Council. * 4b 4t "At the request of the Members of the
Shoshone Business Council, and leaders throughout the
Tribe, I am writing you to offer an expression of
gratitude for the service you did for the Tribe in
getting through the Bond purchase. I am sure you
Regraded Unclassified
140
6 -
realized from information that has come to us, and
from reading the record of the hearings, how much the
Shoshone people wanted this purchase to go through.
It is not in the h earts of any of our Indians to use
all of the money the Tribe has for themselves, but to
extend that benefit just as far as we can to the
future for our children. This Bond purchase, as you
know, gave a benefit to 8. large number of newborn
Shoshone children who otherwise could easily lose any
such benefits if the present generation were disposed
to use all of the Tribal funds for themselves alone.
If
Helen G. Fraser, R.N., Detroit, Mich. I received your
letter regarding my War Bonds yesterday. Also, in the
same mail I received all Nar Bonds from the War Ordnance
District, Detroit. I am sorry to have given you this
trouble, and sincerely appreciate your investigation
into this matter anyway.
Steacy E. Webster, Provident Mutual Life Insurance Co.
of Philadelphia, Pittsburgh, Pa. I would be indeed
ungrateful if I did not acknowledge with sincere thanks
the citation you presented to me individually, and to
all members of the Pennsylvania State Association of
Life Underwriters. " * 4:- We have tried hard to do an
outstanding job as far as the Payroll Savings phase of
this work is concerned. Many of the boys have served
in other capacities during different drives. # # $
Our only complaint is that we have not been able to do
as much as we would have liked to do. This is not only
because we want to do our bit, but because we are in &
position to recognize more fully than others the im-
portance of blocking inflationary trends, and we realize
the value of large Bond purchases by the individual
after the war is over. In this connection I would like
to compliment you on your reply to Colonel Franklin
D'Olier, in which you discourage the thought of com-
pulsory savings. # * * After all, to do such things
voluntarily is the very thing we are fighting this war
for. To do otherwise would seem to be very inconsistent.
Regraded Unclassified
141
- 7 -
Unfavorable Comments on Bonds
Goffredo Pantaleoni, N.Y.C. The Progresso Italo-
Americano, August the 3rd, yesterday, has an astonish-
ing announcement displayed in the first page:
Generoso Pope has been appointed by your Department
"Chairman of the Italian American War Finance Committee".
A certain Mr. Nevil Ford seems to have written the
official communication. * 4) Astonishing, Mr. Morgen-
thau, because an official recognition bestowed to a
man who has made his best contribution to make a war
possible between Italy and the United States, and for
over six years publicized and glorified Mussolini and
his gangsters among Italo Americans in this country,
cannot politely be called in a different way. Many
Assistant District Attorneys in New York are after the
people associated with the Progresso Italo Americano
and are still inquiring about Generoso Pope, and I am
one who is called very frequently by them. As it is
a shock to me, it is El shock for many to see how badly
informed your Department is in appointing people like
Generoso Pope to a position of merit in which, regard-
less whether a man can supply money, there should be 8.
man that has an honorable reputation, and Generoso Pope
has not. " *
John Johnston, San Antonio, Texas. * # # I was astonished
last Friday evening to find the Treasury Department,
my Treasury Department, paying tribute before and after
the program, to the one responsible for the musician's
strike. We must buy Bonds, Sir, and I'm furnishing a
couple of mighty fine boys as soldiers. I'd go without
food or luxuries that they and all other soldiers could
have anything they need, but do we have to submit to
insult upon injury by hearing one applauded as "with
the cooperation of Mr. James C. what-have-you?" My
friend, I'm only expressing the opinion of millions of
much better citizens than myself. I'm 8. newspaper man,
and I believe I know, and you more than likely do also,
the big echo isn't 50 far away.
Regraded Unclassified
142
- 8 -
Victor Gmyth, Washington, D. C. When I listened to
the middle part of the President's speech I could not
help feeling alarmed. We would natural ly like to
think of our boys receiving such rewards, in various
forms, if the Government owned the money, with which
to issue them, but as it is, the public's money is
what he proposes to use, and this causes one's feelings
to be mixed. What do you think about the future pur-
chasing value of our dollars invested in Bonds if
the Government is to be Santa Claus to such an extent?
What will our Bonds be worth in purchasing value when
we sell them? That is 8 very serious consideration.
I would like greatly to hear a detailed statement in
the President's next speech of the plans you have for
raising the money to cover -- say 45% of our present
expenditure! Until I know the plans devised for rais-
ing the money, I must reserve my decision as to the
wisdom of promising anything at present, mustering out
payments, veterans' bonuses, etc. As a prerequisite,
I need to feel the integral value of our Bonds is being
safeguarded by a courageous fiscal policy.
Anonymous - Postmarked, Utica, N.Y. Please do not ask
us to buy Defense Bonds while 20% of our small salaries
is being deducted to be wasted and thrown away at the
Rome Air Depot. Let the idlers at the Depot who are
being paid the most exorbitant salaries pay the taxes.
The Rome Depot is a notorious scandal all over Central
New York. when the force there is cut in half, and the
salaries of the remaining half are cut in half, we
will be glad to buy Bonds.
Walter J. Reese, Chicago, Ill. I am returning envelope
received from you today and ask that you discontinue
sending these to me, as I can no longer exist and carry
this plan (Bond purchasing) through. # # # Of my total
income this year I paid 40% income taxes, 4% into a
pension fund, 1% Social Security, 7% in payroll deduc-
tion plan for War Bonds, 16% for insurance, 4% for
Regraded Unclassified
143
- 9 -
church and charity, leaving me 28% on which to live.
With the freezing of salaries and the continued increase
in taxes, we white-collared workers will either have
to drop insurance, which we have been paying for years,
or buy fewer war Bonds, instead of more War Bonds.
I see no use in buying additional War Bonds and then
have to sell them a few months later in order to pay
income tax, or other obligations. Therefore, I am
discontinuing this one, hoping that I can carry all of
my other obligations along.
Regraded Unclassified
144
- 10 -
Unfavorable Comments on Taxation
Copy of letter addressed to Senator George by Mrs.
Bernice L. Wing, Pittsfield, Mass. " # I earn
$16.00 a week. # + # The Government itself once set
the minimum weekly wage for mere existence at $16.00
of week, or 40¢ an hour; then when it taxes, it sets
the minimum at $12.00 & week, for 8. single person
without dependents, and all over that to be taxed
at 20%. Room and board for a single person in this
section is at least $12.00 a week, and mostly $15.00
B. week, at present food prices. Anyone earning
$16.00 E. week, without dependents, must pay 80¢ a
week tax. That 80¢ is the equivalent of 1½ meals
et week. Over and above $12.00 there is no surplus
for the $16.00 a week person left for texation. All
of the $16.00 is necessary for minimum existence.
* + + There should be someone on the tax-forming com-
mittees who knows, from actual experience, what it
means to live on $16.00 a week, with prices spiraling,
and with an income tax tacked on to him besides. Just
try it for awhile, before talking about "How happy 8.
person should be to contribute to the war, and how
honored he should feel". The $16.00 people would feel
more honored if they were understood and if they could
buy food, clothes and necessities before being called
upon for taxes, while they see those all about them,
in higher brackets, still able to have 8. sizable in-
come AFTER paying their taxes. Play fair with us and
we will play fair with you. #
#
Thomas Jefferson Miley, Secretary, Commerce and Industry
Association of New York, Inc., N.Y.C. + # + This
Association has received a number of inquiries from its
members who fear that unless great care is taken in
the preparation of the forms to be used in furnishing
8. declaration of estimated tax by individuals, that
such form might be complicated and burdensome for the
taxpayer to comply with. We therefore earnestly request
that all of the information required to be furnished
under Section 58 be reduced to the simplest form that
Regraded Unclassified
145
- 11 -
it is possible to devise, and that the information
required to be furnished be reduced to a minimum,
especially in view of the great amount of forms and
paper work which businessmen and individuals are
required to prepare and execute under the various
regulations of Federal and other Governmental Agencies.
Anything that can be done to simplify the forms which
taxpayers have to execute and any reduction in the
burden imposed upon the taxpayers will unquestionably
be appreciated.
R. R. Barlow, Illinois Press Association, Urbana, Ill.
I regret to express my conviction that the method of
deducting income taxes under the new pay-as-you-go
plan is screwy as a bat! * # I earn something like
$416.00 8 month, twelve months in the year. It happens
that during two months I earn $833.00 & month. My de-
ductions amount to $47.60 per month, except for the
two months when I earn $833.00 a month, when my de-
ductions are about $147.00 for each of the two months.
During those two months I am taxed at a rate which would
apply to a salary much more than I earn -- something
like $10,000.00. That is unfair.
#
#
It happens
that on the basis of my 1943 earnings, after computation
of the losses, interest on indebtedness, etc., my income
tax will approximate $300.00. I have already paid
about $135.00 on my 1942 tax. My employer is deducting
$147.00 in July, $147.00 in August, and $47.60 for
September, October, November, and December. Add up
these amounts and they approximate $620.00. In other
words, I am not only paying my 1943 income tax, but
also my 1944 income tax. What the hell kind of a
system is that?
Miss Adelaide Emerson, Minneapolis, Minn. (Letter
addressed to the President and referred to us by the
White House.) I have given your withholding tax plan
a good try-out, and have spent the past three days in
bed because I tried my best to live on what was left
of my pay check. By the time War Bonds and all other
Regraded Unclassified
146
- 12 -
deductions were taken off my pay check of $18.00 per
week, I have not had enough to live on. With the
price of everything practically out of my reach,
I don't even have an existence. I have been so
thrifty that my health is impaired. I just don't
have enough proper food to eat, and I positively can-
not wait until sometime next year, after the income
taxes are all figured out, to see if I might have B.
couple of dollars left. I can't live on credit in
the meantime. 4) * Can't you and Mr. Morgenthau
please, please alter your plan so that we in this low
bracket of income can really live and not end up by
having the state or some other agency take care of us
after we have collapsed? It is situations like this
that breed discontent and end up in revolution. The
State Employment Department has stated they cannot do
anything for me because I am classified as essential.
If I am so essential why don't I get paid for it? You
and Mr. Morgenthau try going without your usual quota
of food for & time and see how strong you don't feel.
(Telegram sent to the President by George J. Seedman,
National President, American Business Congress, N.Y.C.
and referred by the White House to the Treasury.)
We respectfully urge that in your talk you emphasize
that employees demanding or allowing employers to pay
20% withholding tax, without deducting from salary, are
defeating attempts to avoid inflation, as well as
breaking the law by accepting salary increases.
Thousands of small businessmen are suffering in si-
lence as they must either pay this tax for their em-
ployees quietly and illegally or lose their irreplac-
able workers who refuse to have it deducted from
salary. In doing this they automatically give illegal
salary increases end defraud Government of full tax
since they pay on employee's base salary, which is
lower than base salary including tax. Unless Govern-
ment gives wide publicity to this recently developed
Regraded Unclassified
147
- 13 -
condition, so that every worker fully understands
complete object and meaning of the deduction, small
business will be further endangered since it cannot
survive a general 20% increase in salary, which, be-
cause it is paid surreptitiously, cannot even be
deducted as a business expense. Big business is not
affected as its employees are frozen. The only
alternative will be to freeze every worker in every
job and refuse certification for job change if re-
quested because of lawful (or unlawful) tax deduction.
This is 8. most serious problem and we cannot too
strongly urge your full cooperation in giving it wide
publicity.
George Lofftus, Hamilton, Mont. Having been made
Deputy Collector of Internal Revenue by the Victory
Tax, and now the withholding tax, please advise what
salary I may expect. I believe Uncle Sam usually pays
for such services as he requires. I am B. good American
citizen and very patriotic and will be glad to take my
pay in War Bonds.
Camille Dekan, N.Y.C. Will you please tell me why my
tax, earning $120 a month, is as much as a person
earning $150 per month - $8.80? I pay $8.80 on the
15th and $8.80 on the 30th of each month. Twenty
percent of my salary should be $7.80 twice each month.
Two dollars to me means an awful lot -- this could
bring back my milk which I had to cut off, and which
I need very badly. It is quite difficult trying to
live on $100 per month in these high times, when every-
thing is double in price.
(Neal W. Barnard, Dunsmuir, Calif., sends copy of
letter he has addressed to the President.) + # # I am
fully aware that the grievance I have is much too slight
for you to bother with, but to me it is somewhat of g
problem. Here it is -- I was E few days late in pay-
ing my installment on my 1942 income tax return and
Regraded Unclassified
148
- 14 -
for that I have been penalized 10%, plus interest.
I wouldn't mind so much, had it not been that the
only reason I was late in my first payment was due to
the death of my mother in January of this year. That
took all the money I had saved for my income tax,
and I was unable to pay it until April 19th of this
year. Now I am told that I must pay all my tax at
once, the amount being $275.00. It is impossible for
me to raise that much money at one time, unless I cash
my War Bonds, and that's one thing I will not do.
I don't know what the penalty will be if I don't make
the entire payment, but it is absolutely impossible
for me to get that much cash at present. I am employed
as a locomotive fireman by the Southern Pacific Rail-
road Company here in Dunsmuir, and I think that my job
is just as important as the work of 8 defense worker.
* I am too old for the Army, will be 46 my next
birthday, but I buy a $50 Bond every month through
payroll deduction, and all my spare dollars go for War
Stamps. I don't really consider that I'm under any
handicap in buying Bonds and Stamps because I fully
realize that I'll be repaid many times over, end buy-
ing Bonds and Stamps is the only way I can really help
in beating Hitler and the others. # # # I suppose if
I don't pay this whole amount of my income tax, I'll
be further taxed or even put in jail -- I certainly
do not want to go to jail and I'd like to continue my
occupation as locomotive fireman and help the war
effort as much as possible.
#
Regraded Unclassified
149
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
4-
DATE AUG 6-1943
TO
Secretary Morgenthau
M
FROM Randolph E. Paul
Re: Charwomen pay in Bureau of Engraving and Printing
I met today with the Comptroller General and made a
personal appeal to him on this matter. He would not change
or suspend his written ruling given to this Department at its
request. While we are continuing to study the law we have, so
Inr, l'ound no legal basis for a contrary opinion.
However, the Comptroller General advised that he will not
press the matter at this time; also that he would look with
fayor on an application to cancel the charges against the certi-
lying officers to the extent that past overpayments may not be
collectible by means of deduction from current pay due to the
fact that the charwomen may no longer be employed in this
Department, which applies to about a third of the total number.
In the meantime the rate of pay for these women has been
годноед to 85 cents per hour, the amount specified in the
Somptroller General's ruling (which is the rate paid charwomen
by the other agencies) and with the exception of the first pay-
roll after this incident arose, no deductions from their pay have
been or will be made. It is possible that & method may be
Revised by which, through overtime, enough credit may be obtained
by the charwomen to cover their indebtedness under the Comptroller
General's ruling. Mr. W. N. Thompson has suggested that this
method should be used only if le ¡slation is unsuccessfully sub-
mitted to Congress, and this question remains open. Nothing can
be submitted to Congress until late in September, and in the
monatime, Mr. Bell and I are giving further thought to the matter.
ART
Regraded Unclassified
150 c
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE 8/6/43
TO
Secretary Morgenthau
FROM P. McConnell
M
For the immediate purpose of securing for the
Treasury the best advice available from financial and
industrial leaders on post armistice problems, and for
consideration of other Treasury problems, it is suggested
that a group of twelve business men and industrialists
be selected to form a financial and industrial advisory
committee for the purpose of meeting from time to time
with the Secretary and his staff on special problems in-
volving the relationship of private enterprise to the
administration of Treasury policies.
Attached is a list of the type of men believed to
possess the ability, experience and character to accom-
plish the desired purpose.
Regraded Unclassified
151
Number
1
Iron & Steel
Norman Russell - Pres. U.S. Pipe Corp., Phila.
Chas. Hook - Pres. Amer. Rolling Mills, Pgh.
2
Food Process-
James Adams - Pres. Standard Brands, N. Y.
ing
James Bell - Pres. General Mills, Minneapolis
George Moffett - Pres. Corn Products, N. Y.
1
Utilities
Joe Gill - Pres. Elec. Power & Light, N.Y.
Curtis Calder - Pres. Amer. & For. Power, N.Y.
2
Manufacturing
C. L. McCuen - V.P. General Motors, Detroit
Chas. B. Wiman - Deere & Co., Moline
John Pratt - Formerly G.M.-duPont, Wilmington
1
Chemical
Edgar Queeny - Monsanto Chem. Co., St. Louis
Maj. Walker - Pres. Commercial Solvents, N.Y.
1
Commercial
Gordon Rentschler - Chm. National City, N.Y.
Banking
Sloan Colt - Chm., Bankers, N. Y.
Wm. Potter - Chm., Guarantee, N. Y.
1
Mining & Oil
E. L. deGoyler - Independent - Texas
1
Construction
Carlton Proctor
N. Y.
1
Investment
Clarence Dillon
N.Y.
Banker
Harold Stanley
N.Y.
Regraded Unclassified
152
1
25
49747
AUG 6 1943
My dear Mr. Livingston:
I have your letter of July 30, 1943,
referring to the report entitled "Var Progress"
which you have been sending no each meath.
I have found the report very useful, and
should appreciate 10 very such if you would
continue to send as a copy of 18.
Yours very truly,
(Signed) H. Morgenthau, Jr.
Secretary of the Treasury
Mr. s. A. Livingston
Editor, Ver Progress
Var Production Beard
336 Standard 011 Building
Vashington, D. C.
Photo of incoming and copy of
reply in Diary.
File to Mr. Thompson.
207:nd 8/4/43
Regraded Unclassified
WAR PRODUCTION BOARD
WASHINGTON, D.C.
IN REPLY REFER TO
336 Standard 011 Building
July 30. 1943
49747
The Honorable Henry Morgenthau, Jr.
Secretary of Treasury
280 Treasury Building
Washington, D. C.
Dear Mr. Morgenthau:
This is a periodic checkup to limit the distribution
of War Progress to persons who actually find it useful.
An you know, War Progress is a confidential report designed
to provide a continuing and coordinated picture of the var
effort. We want to guard against inflation in the cir-
culation.
Do you feel, at this time, that you wish to continue
to receive War Progress? If you do not, we shall stop
sending it to you and thus relieve you of the responsi-
bility of keeping it in safe custody.
A prompt reply by letter would be helpful.
Sincerely,
J.A.hinafth
J. A. Livingston
Editor, War Progress
P. S. For our editorial information we would like to know
(1) 1f you personally read War Progress. (2) how
many other persone see or read your copy.
Regraded Unclassified
154
25
AUG 6 1943
Dear Mr. Acheson:
This will acknowledge receipt of your letter of
August 2, 1943, enclosing copies of the three documents
left with Secretary Hull by Sir Honald Campbell concerning
the extension of the reciprocal aid program to cover cer-
tain imports from British Empire countries.
Very truly yours,
(Signed) H. Morgenthau, Jr.
Secretary of the Treasury.
Mr. Dean Acheson,
Assistant Secretary of State,
Room 215 1/2,
Department of State,
Washington, D. Ca
Photo of Incoming
and copy of reply in Diary
File returned to Mr. White.
TMK:rl 8/5/43
Regraded Unclassified
DEPARTMENT OF STATE
WASHINGTON
August 2. 1943
My dear Mr. Secretary:
I enclose copies of three documents left with
Secretary Hull by Sir Ronald Campbell this after-
noon, an aide-memoire concerning reciprocal aid, an
"Additional Point for Oral Presentation" and a
second aide-memoire concerning export policy.
Sincerely yours,
team Gilson
Assistant Secretary
Enclosures:
Two Aide-Memoires,
"Additional Point for
Oral Presentation... .
The Honorable
Henry Morgenthau, Jr.,
Secretary of the Treasury.
Regraded Unclassified
AIDE MEMOIRE
On June 3rd Sir Frederick Phillips received from Mr. White & letter
ting that one of the questions before the Interdepartmental Committee
ling with matters of financial assistance to the Allies was the
visability of bringing within the scope of the Reciprocal Aid Programme
irchases of certain goods being made by the United States in British Empire
cuntries. On June 26th Mr. Stettinius sent to Sir Frederick Phillips
approximate estimates of the value of purchases by United States government
agencies from the British Empire (excluding Canada) of which a copy is
attached for convenience of reference.
2.
On June 29th Mr. Acheson left with Mr. Opie for His Majesty's
Imbassador a memorandum expressing the hope of the United States Government
that His Majenty's Government would find it possible to assemble and, to the
extent compatible with military security, to make public figures with respect
to the cost of goods and services delivered as Reciprocal Lend Lease. The
object of these figures would be to indicate the impressive scope of the
Reciprocal Aid extended to the United States by the United Kingdom.
3.
His Majesty's Government have given careful consideration to these
Issues. In their view the principle of the unstinted pooling of resources,
namely that in a common war all shall give all they can to the common task,
which has been adopted by the Governments of the United States and the United
Hngdom, clearly goes far beyond the sharing of production and raw materials.
Land Lease and Reciprocal Aid form one element in a larger whole and are one
Illustration of 6. significant doctrine. It is with the desiro to cooperate
ith the United States Government in the furtherance of this conception of
Dooled resources and in the confident belief that that Government will do
werything possible to the same end, that H1s Majesty's Government-have
considered the requests put forward in Washington for the publication of
Reciprocal Aid figures and for the supply of raw materials as Reciprocal
Aid.
4.
As regards the publication of Reciprocal Aid figures, His Majesty's
Government have devoted much thought to devising a way in which the object
that the United States Government has in mind could be achieved without
incurring the dangers which His Lajesty's Government have hitherto felt in
the publication of figures. Their feeling has been that there in a risk of
Regraded Unclassified
misunderstanding in valuing in terms of money the goods and
- provided in the pooling of resources. They have felt that the
tion of monetary values involves bringing back the dollar and
ang signs into these transactions and furthermore that it would be
alt to establish comparative values without controversy. Horeover, they
throughout been impressed with the fact that keeping of detailed accounts
involve for them a diversion of man-power from other war duties which
feel they cannot afford.
His Majesty's Government understand that the United States War Department
aued instructions in June to all theatre Commanders to report all monetary
Ques of Reciprocal Aid received, these instructions to go into force officially
July lst. For His Majesty's Government to keep values of all items on the
dnes contemplated by these instructions would require several thousands of
clerks and accountants whom they are unable to spare for the purpose. Further,
the Reciprocal Aid furnished by His Wajesty's Government does not consist of
large block shipments centrally procured and centrally financed but of a wide
field of items given in the daily intercourse of the war effort by complete
accentralisation of administrative responsibility. Whatever the American
forces ask for His Liajesty's Government give if they have it and often to the
Deprivation of the civil population, but they do not enter all these gifts
in an exact ledger account.
i
Nevertheless, for the reasons explained in paragraph 3 above, His
Majesty's Government are prepared to meet the suggestion that they should
anflounce monetary figures for Reciprocal Aid. They accordingly propose during
the week commencing August 1st to present to Parliament a White Paper describing
the general principles of Lend Lease and Reciprocal Aid, illustrating the range
of help given and containing global valuations for each of the main groups of
such services and assistance as can be valued. This paper will set out what
His Wajesty's Government give to the United States and also what they give
to the other United Nations. The contribution is on a very substantial scale
especially in the case of Russia. As soon as the White Paper has been presented
to Parlinment its text will be communicated to the United States Government.
7.
It will of course be understood that the thite Paper can only deal with
the contribution of His injesty's Government in the United Kingdom, and His
- 2 -
Regraded Unclassified
Government assume that the United States Government is asking
Governments in the sterling area and the Government of India for
sterial. In the meantime His Majesty's Government are informing
werments of the action they themselves are taking.
return for this action on their part His Majesty's Government
it the War Department will find it possible to withdraw the
ition mentioned above. They hope that the United States Government
aderstand that for the reasons given in paragraph 5 above, they
ot give itemised valuations of reciprocal aid in the way the War
rtment's instructions would imply.
His Wajesty's Government have in the light of the principle of the
coling of resources given the most careful and sympathetic consideration
to the more important request made by the United States Government for the
supply by His Majesty's Government, as Reciprocal Aid, of raw materials to
total value of about two hundred million dollars a year. On the
Assumption that the list and valuation accompanying the letter from
25. Stettinius referred to above represents roughly the effect of what is
proposed and that no major item will be added, His Majesty's Government have
laken the decisions recorded in the following three paragraphs.
10.
His Majesty's Government will supply as Reciprocal Aid and at the
expense of the United Kingdom Government the raw materials called for from
the United Kingdom, Southern Rhodesia and the Colonies which are purchased
by the United States Government. It is understood that the United States
Administration agree that this shall not apply to purchases made through
private trade channels. It is proposed that this arrangement shall apply
to contracts for the supply of such materials which are made on or after
lot October, 1943
11.
Australia, New Zealand, South /frica and India either have separate
reciprocal aid agreements with the United States or are negotiating them.
His Majesty's Government therefore suggest that the United States Government
may wish to approach directly the Governments of each of these countries.
For their part its Lajesty's Government will inform the latter of their
decision and of their encral policy.
- 3
Regraded Unclassified
In dition His Majesty's Government will defray it their own
nse the cost of British shipping services for these terials from
parts of the Commonwealth.
BRITISH EMBASSY,
WASHINGTON, D.C.
AUGUST 2nd, 1943.
Regraded Unclassified
OFFICE OF LEND-LEASE ADMINISTRATION
FIVE-FIFTEEN 22d STREET N.W.
WASHINGTON, D.C.
June 26, 1943.
Sir Frederick Phillips
Assistant Secretary to
His Majesty's Treasury,
British Supply Council
Willard Hotel
Washington, D.C.
My dear Sir Frederick,
It gives me pleasure to send to you herewith a summary
of the present estimates of purchases by U.S. Government agencies
in areas within the British Empire (excluding Canada) for the fiscal
year beginning July 1, 1943. This 1s being sent to you as promised
in our conversation at the State Department yesterday.
These estimates are not entirely complete but are
sufficiently accurate to give you a good approximation of the
anticipated volume of these transactions. As soon as complete
estimates are available, I shall be glad to send them to you.
With best wishes,
Sincerely yours,
(Signed) E.R. Stettinius, Jr.
E.R. Stettinius, Jr.
Enclosure.
Regraded Unclassified
Summary of Estimated Public Purchase Program
Fiscal Year July 1, 1943 - June 30, 1944
BRITISH EMPIRE COUNTRIES
(Other than Canada)
Country
Value in $1,000'
Australia
23,700
Bahamas
140
British East Africa
17,000
British Oceana
3,500
British West Africa
14,600
Ceylon
26,300
Cyprus
200
India
87,1
Jamaica
New Zealand
1,8
Nigeria
3,200
Rhodesia
3,100
Union of South Africa
9,300
1,500
United Kingdom
191,720
TOTAL
(Source: Analysis & Reports Division - Contract Report
Section - B.E.W.)
Regraded Unclassified
- 2 -
for Commodities included under Public Purchase Program
Fiscal Year - 1943-1944
Total Value in
Commodity
Value of Major
$1,000's
Items in $1,000's
$ 23,700
Lead
$ 3,500
Livermeal
600
Quarts crystals
2,400
Tallow
1,100
Tantalite
120
Zinc
15,900
with East Africa
17,000
Goatskins
800
Mahogany
2,200
Pyrethrum
2,100
Sisal
11,900
writish Oceana
3,500
Copra
3,500
witish West Africa
14,600
Chrome
3,100
Coooa
11,500
Oxylon
26,300
Coconut oil
3,300
Copra
2,700
Tea
20,000
Datis
87,300
Burlap
22,000
Cashew mut shell oil
600
Ferro manganese
100
Goatskins
600
Jute, unmanufactured
100
Manganese ore &
Concentrate
200
Mica, all types
,000
Shellac (unf.)
9,000
Tea
20,000
doa
80
Goatskins
80
Zealand
1,800
Livermeal
700
Tallow
1,100
odesia
3,100
Asbestos
3,050
Tantalum
50
don of South Africa
9,300
Asbestos
900
Chrome
3,800
Corundum
600
Goatskins
900
Manganese
2,200
Vanadium
600
ited Kingdom
Coal tar acids
1,500
1,500
Regraded Unclassified
(00
1LM 8/2/43)
Additional Point for r=] AND -1%
SF
Connexion with Recigroor] etc of
All 1st
The arrangements Generibed in the
mean a serious additional Turden :- the Financial -001-
tion of the sterling ree -Ire- 2 to the years
of war and in porticular to that of the United
His Majesty's Embarry will -nortly :- in : oriting is
hand to the State Department T their inter-
mation one also that of the Transury and Liline - of Lent-
Lease Administration - poer setting ont 1-2 feats 2" the
United Kingdom's vest nn° reving external -ad
+ ts quite inadecupte of 1020 -nd dollars -inst
hese lickilities, - = which -1- Everhant
elieve 1- cot tagli of the administra-
ion.
Regraded Unclassified
Y:A-A:LM 8/2/43)
AIDE-MEMOIRE
His Majesty's Ambassador left with the Secretary of
State on July 10th an aide-memoire tracing developments
ince September 1941 which in their view have rendered the
White Paper of September 1941 out of date, and stating that
they desired to discuss with the United States Government
the proposal that a fresh statement of United Kingdom export
policy be issued which would maintain the essential principle
governing the use of Lend Lease supplies and at the same
time take account of the developments mentioned.
2. E1s Majesty's Government feel that their offer to the
United States Government of raw materials as Reciprocal
Aid represents a further and vital development which should
be taken into account in determining eny new statement of
policy. They therefore are of opinion that such new state-
ment of policy should be reciprocal. If the United States
Government agree, the form adopted might be an exchange of
notes. His Majesty's Embassy will be happy to discuss these
suggestions further.
3. His Majesty's Government wish to emphasise again the
importance which they attach to the principle that no
advantage in world markets shall acorue to either country
at the expense of the other by reason of sacrifices made
in the interest of the effective prosecution of the war.
They suggest that this principle should be reaffirmed in
the notes which the two Governments may agree to exchange.
BRITISH EMBASSY,
WASHINGTON, D. C.,
AUGUST 2, 1943
Regraded Unclassified
165
25
AUG 6 1943
Dear Sir David:
Please express my appreciation to the Chancellor
of the ixchequer for sending no a copy of the Adde
Vencire left by Sir Lonald Campbell with cearetary
Rull on August 2, 1943.
Sincerely yours,
(Signed) M. Mergenthan, Jr.
Secretary of the ?reasury.
Sir David valey,
United Kingdon Treasury
Representative,
British Supply Council,
Willard Notel,
Mashington, D.C.
Photo of incoming and enclosures
and copy of reply in Diary.
File returned to Dr. White.
TMK:rl 8/5/43
Regraded Unclassified
Willard Hotel,
Washington, D.C.,
August 2, 1943.
My dear Mr. Morgenthau,
The Chancellor of the Exchequer has asked me
to send you on his behalf a copy of the Aide Memoire which
Sir Ronald Campbell on behalf of Lord Halifax gave to the
Secretary of State this afternoon, on the subject of Recip-
rocal Aid figures and of the supply of certain raw materials
as reciprocal aid.
The grant of raw materials as reciprocal aid
involves a serious additional burden to the financial position
of the sterling area already strained by four years of war,
and in particular to that of the United Kingdom. I shall
shortly be in a position to hand to the United States Treasury
for their confidential information & note setting out the facts
of our vast and growing external liabilities and our quite
inadequate reserves of gold and dollars against these lia-
bilities. I will bring this paper to the Treasury as soon
as I receive it, and I shall be very glad to give them any
explanations which they may require.
The Chancellor asks me to send you his kind
regards.
I am,
Sincerely yours,
S Waley
(S.P. Waley)
Honourable Henry Morgenthau Jr.,
Secretary of the Treasury,
Washington, D.C.
Regraded Unclassified
167
25
AUG 6 1943
Dear Sir Bonalds
Thank you for your letter of July 30, 1943,
transmitting the reply of the Chanceller of the
Exchaquer to my inquiry of July 27, 1943, concern-
ing the status of OUR request that certain raw materials
be supplied as reciprocal side
Sincerely yours,
(Signed) H. Mergenthau, Jr.
Secretary of the Treasury.
Sir Ronald I. Campbell,
3100 Massachusetts Avenue, Now,
Fashington, D.C.
Photo of incoming and copy of
reply in Diary.
File returned to Dr. White.
TME:rl 8/5/43
Regraded Unclassified
1/43
BRITISH EMBASSY,
WASHINGTON,
July 30th, 1943
Dear Mr. Secretary,
The Chancellor of the exchequer
has asked me to convey the following reply to the
message which you sent through the on July 27th:-
I an sorry to hear that you have been dis-
appointed at the length of time which it
has taken us to reach a decision on the
proposal that we should furnish raw
materials under Reciprocal Aid to the
United States. We first learnt of this
when Dr. White wrote to Sir Frederick
Phillips at the beginning of June to say
that this suggestion was being considered
among others by the Inter Departmental
Committee which deals with the matter of
financial assistance to the Allies.
Since then, however, it has been put to
us 85 a formal proposal by the State
Department together with other proposals
relating to Lend Lease and Reciprocal Aid.
These questions are to a large extent
inter-linked and have given us a good deal
of thought. Not only do they raise
large questions of policy, they have also
needed a very thorough technical examination.
Some delay, therefore, has been necessary
but
/
Honorable Henry Morgenthau, Jr.,
Secretary of the Treasury,
Washington, D.C.
Regraded Unclassified
-2-
but I can assure you that I have given
the matter my close personal attention
throughout. All these questions are
now before the Cabinet and I think I
can assure you that Lord Halifax will
have received instructions from the
Cabinet at the beginning of next week
on all outstanding questions which
were raised with him by the State
Department. These instructions will
particularly cover the points you have
raised and in a way which I hope you
will find satisfactory.
I am, Mr. Secretary,
Yours very sincerely,
R.d. Campbell
Regraded Unclassified
170
AUG 6 1943
My dear Mr. Berle:
This is in reply to your letter of August 4, 1943,
(NE 884.51/66) relative to the request of the Government
of Sthiopia for financial assistance, and enclosing two
memoranda submitted by lis. eressa, Vice Minister of
Finance of Ethiopia.
At the request of the State Department the Treasury
has previously discussed with F. Beressa the problem of
currency stabilization. In view of the desire of the
State Department to accommodato the Ethiopian Government
as far as may be practicable, the Treasury will give
sympathetic consideration to the requests of the
Sthiopian Government for financial assistance in the
stabilization of its currency and the development of
its economy.
I an asking Mr. White to arrange for a meeting at
the Treasury on these financial questions.
Sincerely yours,
(Signed) H. Morgenthau, J1
Secretary of the Treasury
Honorable A. A. Berle, Jr.,
Photo of incoming and enclosures
and copy of reply in Diary.
Assistant Secretary of State,
File returned to Dr. White.
EMB/jm
8/6/43
Regraded Unclassified
THE
OF STATE
B. c. 25
DEPARTMENT OF STATE
WASHINGTON
n reply refer to
April 1943
E 884. 51/66
My dear Mr. Secretary:
I enclose herewith copies of two recent communica-
tions from Mr. Yilma Deressa, Vice Minister of Finance
of Ethiopia, who 18 at present in Washington, relative to
the desire of Ethiopia to obtain a loan from the United
States.
This is one of several requests which have been
addressed to the Department by Mr. Deressa on behalf
of his Government, the others relating to lend-lease
aid, American advisers, American missions on agriculture,
mining and engineering, et cetera. In short, the Govern-
ment of Ethiopia 1s now looking to the United States for
material and financial assistance and for advice in its
efforts to rehabilitate the country and to contribute to
the war effort. Its needs have been brought to the atten-
tion of the Department in various communications from
Mr. Deressa and in letters to the President from the
Emperor. For political and other reasons the Department
1s anxious to accommodate the Ethiopian Government as
far as may be practicable and, in principle, 1s disposed
to give its support to the request of the Ethiopian Gov-
ernment for financial assistance, both as regards aid in
the stabilization of its currency and the furnishing of
funds for other purposes which would contribute to the
restoration and development of the nation's economy.
As
The Honorable
Henry Morgenthau, Jr.,
Revi
Secretary of the Treasury.
Regraded Unclassified
-2-
As a first step in the consideration of this matter
it is suggested that a conference might be called for the
purpose of discussing with Mr. Deressa such details as
may be necessary precedent to a further exploration of
the subject. The Department, upon receipt of an expres-
sion of your concurrence, will be glad to arrange such a
conference at the convenience of the Treasury Department.
Sincerely yours,
For the Secretary of State:
Enclosures:
1. From Mr. Deressa,
July 12, 1943.
2. From Mr. Deressa,
July 20, 1943.
Regraded Unclassified
(COPIED:NE:DF)
Washington, D.C.
July 12, 1943
The Honorable Cordell Hull
Secretary of State
Washington, D.C.
Dear Mr. Secretary:
In pursuance of my memorandum of the 25th of June,
I have the honor to bring to the notice of the Secretary
of State the desire of my Government to secure a loan.
I have been instructed to request a loan which my Govern-
ment intends to use for the rehabilitation of the country.
The revenue of the country which is raised by taxation is
hardly sufficient to meet the current expenditures of the
Government and cannot be made to cover capital expenditures
which are essential to put the country back on its feet.
Among the outstanding items for which the loan 1a requested
are:- Rehabilitation of agriculture, repair and maintenance
of roads, bridges and other means of communication, to
finance existing industries and to secure the service of
American experts to operate these industries, to develop
mines and in general to improve the economic condition
of the country.
The importance and need for agricultural development
in Ethiopia cannot be too stressed from the point of view
of noreasing production which will go a long way to aid
the Allied cause in the campaign of producing for the war
effort.
There is in Ethiopia today a large floating peasant
population which has been made homeless by the Italo-
Ethiopian war and also by the subsequent campaign. There
18 also a vast area of fertile land which for lack of
capital and labor now is idle and unproductive. My Gov-
ernment, after a careful study, has drawn up a plan by
which to settle the floating population on this land.
As most of these unfortunate men are quite poor and have
no means of starting farms, the entire expense of re-
entirely by the Government. The expense, when calculated,
settling them must, at least for the first year, be mat
proved to be beyond the means of the meagre budget of the
country.
Secondly
Regraded Unclassified
-2-
Secondly, the farmers in Ethiopia today are neither
producing in sufficient quantity nor are they working for
the right kind of production. Transportation conditions,
uncertainty of finding a. market, and lack of manufactured
commodities to be exchanged for their products has played
a large part during the last two years in curtailing produc-
tion and therefore decreasing the potentiality of the peas-
ant population. People in the far out provinces have been
forced to produce for the subsistence of their families
alone. It 18, therefore, evident that production can only
be increased by the latter group if a guarantee 18 given
to the farmers by the Government to purchase the crops at
a reasonable price. They must also be induced to raise
certain types of agricultural products for export. The
scheme requires a substantial sum to be held by the Gov-
ernment to effect the re-purchase.
There 1e certainly considerable room for the improve-
ment of agricultural technique and farming methods in
Ethiopia, and my Government has every intention to intro-
duce scientific methods in 60 far as its financial condi-
tion permits. But even with the existing methods of
production, it will be possible to increase production
ten fold if credit can be provided. In addition, crops
such 88 cotton, tobacco, oilseeds, fruit and similar prod-
ucts could be encouraged on a vast scale if only my Govern-
ment could offer the necessary financial inducement to the
farmere.
In Ethiopia, as elsewhere, the suocess of the economic
system of the country 18 conditioned by facility of trans-
portation. Communication in Ethiopia, 8.8 it stands today,
1s deplorable. To repair roads and bridges, overhaul the
system of transportation and communication, finance 18
required, and the amount available from the national
budget has proved hopelessly inadequate.
The currency situation in Ethiopia 1e not less pre-
occupying. Lack of subsidiary money ano fluctuation of
the exchange rate between the Maria Theresa dollar and
the British East African pound has created currency
problems.
Mining and industry likewise lack credit. A rehabil-
itated Ethiopia will undoubtedly be in a position to meet
its
Regraded Unclassified
-3-
its obligations within a reasonable period. Any loan
granted will be of a self-licuidating nature as the whole
sum received will be used for capital expenditure.
I enclose a statement of the amount of the loan and
credit requested by my Government and also the manner in
which we hope it may be supplied.
I hope, Sir, that you will be good enough to examine
favorably the request of my Government.
I avail myself of this opportunity to renew to you
the assurance of my high esteem.
Y. DERESSA
(Yilma Deressa)
Washington, D.C.
June 1943
Regraded Unclassified
IED:NE:DF)
Carver Hall
Second and Ela, N.W.
Washington, D.C.
July 20, 1943
Mr. Charles Lewis
Department of State
Washington, D.C.
Dear Sir:
Enclosed is a corrected copy of the credit to be
made to my Government.
Kindly disregard the other as a typegraphical error
was made.
Very truly yours,
Y. DERESSA
Yilma Deressa
Chairman Ethiopian Delegation
to the United Nations Conference
on Food and Agriculture
yd:ms
enc.
Regraded Unclassifie
DIT TO BE MADE AVAILABLE IN THE UNITED STATES
CASH BALANCE AND TO PURCHASE CONSUMERS GOODS
$40,000,000
SILVER LOAN UNDER LEND LEASE
$10,000,000
TOTAL
$50,000,000
THE CREDIT MAY BE SUPPLIED OVER A PERIOD, THE TERMS
AND CONDITIONS OF WHICH TO BE SPECIFIED.
Regraded Unclassified
Credit to be made available in the United States in
eash balance and to purchase consumers goods
$10,000,000
Silver Loan under Lend Lease
$10,000,000
TOTAL:-
$20,000,000
The credit may be supplied over a period, the terms
and conditions of which to be specified.
Regraded Unclassified
179
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATEAUGUST 6, 1943
TO
Secretary Morgenthau
FROM Messrs. Paul and Bernstein
Mt
Re: Area Director for Italy
At this morning's meeting of the Policy Committee on
Liberated Áreas, attended by Taylor and Luxford, Dean Acheson
stated that State had decided that they would like to have
Alexander B. Royce designated as Area Director for Italy and
asked for the views of the Policy Committee on the point.
Treasury stated that it was reluctant to see Royce
appointed for Italy since it did not think he had the stature
for such an important position, inasmuch as Italy was the
first major area in which the civilian agencies were going to
assume responsibility. Although Treasury had recommended
Governor Syzmozak as an area director, we had objected to his
Appointment as area director for Italy because we did not think
he was a big enough man, and certainly Royce was not even as
big a man as Governor Syzmczak. We also pointed out that we
had previously approved Herman Wells, President of Indiana
University, as area director for Italy but that State had
decided instead to make him an Executive Assistant to Acheson.
we understood that Calvin Baldwin was interested and probably
available and we felt that certainly he should be considered
in preference to Royce. It was suggested that the Policy
Committee consider both Robert Moses and William Myers as area
directors for Italy.
Governor Lehman stated that while he did not have any
objection to Royce's character or ability, he did have doubts
ns to whether he was a big enough man. He stated that he
would definitely prefer Calvin Baldwin or some other man of a
larger stature. He stated that he would oppose the appointment
of Robert Moses on the grounds that although he was an extremely
able man, he felt that he would be a "bull in a china shop" in
Italy and that the man would have to be kept under close rein
by someone who could knock him around when necessary.
Regraded Unclassified
180
- 2 -
Lend-Lease stated that they had no objection to Royce but
that at the same time they felt very highly of Baldwin.
Before the meeting Morris Rosenthal, who represents O.E.W.,
talked to the Treasury representatives and advised them that
just as he had left his office this morning, he had received a
call from Leo Crowley; that Hull had phoned Crowley personally,
and Rosenthal was instructed to oppose no man named by State
Department; and that State was obviously desirous of pushing.
At the meeting, Rosenthal stated that he had been instructed by
his agency not to object to Royce but he added that personally
he felt that Calvin Baldwin was a much better man.
Acheson was very upset and argued vehemently for Royce,
placing great emphasis on the experience he had acquired in
North Africa and the fact that General Eisenhower had found
him acceptable. General Hilldring, when asked, stated that
Eisenhower had been pleased with Royce, but made it clear that
he did not want to intervene in the choice of any area direc-
tor made by civilian agencies.
Acheson then inquired as to whether we objected to Royce
as area director for any area. All the agencies made it clear
that they did not mind considering Royce for some other less
important area.
Acheson then summarized the views of the meeting with the
statement that although Treasury preferred Baldwin everyone
agreed upon Mr. Royce's qualifications and experience for the
position of area director and that he would have to take the
matter up personally with Mr. Hull. Treasury modified Acheson's
statement by saying that it did not want to be represented as
having approved Royce for Italy. Acheson then stated he would
have to raise the matter with Secretary Hull.
Acheson next proposed Calvin Baldwin for sub-director for
Western Germany. He said that the Policy Committee had already
approved of Calvin Baldwin and that the question now was what
area should he be designated for. Treasury suggested that in
view of the opinion stated at the committee meeting it might be
Regraded Unclassified
181
- 3 -
more desirable to raise the question of Calvin Baldwin for Italy
than to consider him for Western Germany. At this point,
Acheson stated very forcefully that Calvin Baldwin would not be
considered for Italy because he did not speak French and stated
categorically that the man for Italy should be able to speak
either Italian or French and that Royce spoke French; that State
was only proposing at this meeting Royce for Italy and was not
proposing any other name for that country. Everyone present
at the meeting, except State, thereupon, on the direct request
of the Treasury representatives as to Mr. Baldwin's suitability,
stated that they would favor Mr. Baldwin for any area.
From the strong line that Acheson was taking at this
morning's meeting and in view of Hull's call on Mr. Crowley,
there is a strong possibility that Secretary Hull will call
on you to get approval for Royce. In addition to the objec-
tions to Royce which we mentioned this morning inyour office,
Morris Rosenthal in leaving the meeting stated to us privately
that Royce had told him in his office that he wished that there
were nine McReynolds on the Supreme Court in preference to the
present personnel, and that further before Royce was assigned
to his post in London, he had contributed nothing of any
importance to the O.E. W. despite excellent opportunities.
Bile
Regraded Unclassified
182
PARAPHRASE OF TELEGRAM RECEIVED
FROM: American Embassy, Chungking, China.
DATE: August 6, 1943, 9 a.m.
NO.: 1392
FROM ADLER FOR SECRETARY OF THE TREASURY. TF 150.
STRICTLY CONFIDENTIAL
Dr. Kung's reply, which I have just received, to my
letter of August 2 formally submitting my resignation,
neither accepts or rejects it, Dr. Kung writes that he
has telegramed Chinese representatives in Washington to
ascertain what bearing your instructions to me have on
the possible negotiation of an altered stabilization
agreement and proposed international monetary arrange-
ments. His letter concluded with & statement that after
receiving & reply to his inquiry he will communicate
further with me,
ATCHESON
Regraded Unclassified
183
NOT TO BE RE-TRANSMITTED
13
COPY NO.
BRITISH MOST SECRET
U.S. SECRET
OPTEL No. 258
Information received up to 7 A.M., 6th August, 1943.
1. NAVAL
On 3rd/4th, coastal forces engaged enemy trawlers off
the Dutch Const. 2 of our motor gunboats were damaged.
2. AIR OPERATIONS
WESTERN FRONT. 5th. A Spitfire sank u 1,500 ton trnker
by camon fire off rrouvilLE.5th/6th. 4 Mosquitoes attacked DUISBURG
and one attacked DUSSELDORF. ICELAND-based Lightnings shot down a
Focke Wulf 260 miles off north of the Island.
OFFICE
SECRETARY OF TREASURY
1943 AUG 7 AM 11 25
TREASURY DEPARTMENT
Regraded Unclassified
184
August 7, 1943
MEMORANDUM FOR THE SECRETARY
On Friday, members of the three research divisions
and Fred Smith had a long conference regarding the anti-
inflation (spending) tax plan which he has proposed.
Great interest was evidenced in the use of the
spendings tax technique as a method of attacking the
inflation problem. There were, however, very serious
misgivinge with respect to two points:
1. Whether the people of the United States are in
a mood at this stage of the war to accept either the
restrictions on spending imposed by such a tax or the
necessary paper work involved in its payment.
2. Whether the type of exemption proposed by
Fred Smith 18 equitable and whether it would be acceptable
to Labor and other low income groups. The exemption calls
for the same proportional reduction in the expenditures
of high income and low income groups. This effect 18
somewhat offset by a sharply progressive rate scale
which would have the effect of bearing more heavily on
high income groups.
Fred Smith agreed that in times of scarcity, the
consumption of high income groups should be reduced by
a larger proportion than the consumption of low income
groups. However, his view was that the adoption of the
anti-inflation tax 18 the really important matter and
that his exemption proposal 18 necessary to secure such
adoption. He expressed the opinion that he can secure
the support of labor for the proposal 8.8 a compromise
measure to defeat the sales tax and that he can also
secure the support of conservatives.
We are of the opinion that, despite the progressive
rate schedule, the exemption provision, which 18 the
heart of Fred Smith's plan, would not be acceptable to
Labor or to other liberal political groups. This 18 a
political question, but we venture the suggestion, in
which Fred Smith concurs, that you have some test of
sentiment made before you commit yourself, even tenta-
tively, to this plan, assuming you personally feel that
you can support the exemption as being sufficiently fair
and equitable.
Rsp
RB
Regraded Unclassified
185
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE August 7, 1943
TO
Secretary Morgenthau
FROM
E. M. Bernstein
Mr. Acheson tried to get you this morning to say
that the O.E.W. wishes a copy of the Aide Memoire sub-
mitted by the British Government. Because mention is
made of a proposed White Paper, Mr. Acheson thought it
would be well to restrict knowledge of this to avoid
any word getting out to unauthorized sources.
He proposed that instead of the whole Aide Memoire,
only those paragraphs dealing with raw materials be
iven to the O.E.W. They are concerned with Government
purchases of these raw materials and are qualified to
determine the actual monetary value of what would be
received.
I told Mr. Acheson that in your absence I should
like to clear the matter with Mr. Bell. Mr. Bell
agreed it would be well to limit the information
turned over to O.E.W. to that portion of the Aide
Memoire concerned exclusively with raw materials.
I so informed Mr. Acheson.
(77)
Regraded Unclassified
U.S. SECRET
181
BRITISH MOST SECRET
NOT TO BE RETRANS MITTED
COPY NO.
OPTEL 259.
For J.S.M. Washington. Information received up
to 10.0 a.m. 7th August, 1943.
1. NAVAL
On 24th one of H.M. submarines sank a schooner west
of Stromboli and on 25th shelled a tug towing a schooner
off the western toe of Italy. Both vessels were beached
and abandoned. An Italian sabotage party of 2 officers
and 18 men landed from a U-boat on the 3rd south of Benghazi.
They were all captured before reaching Berca Airfield,
their objective.
2. AIR OPERATIONS.
ESTERN FRONT. 6th. Fighters damaged 4 locomotives
in Northern France. 2 Mustangs missing.
6th/7th. Aircraft despatched: Seamining 34 (2 missing)
Cologne 3, Duisburg 4, Leaflets 14, Intruders 2, Anti-
shipping 4.
SICILY AND SOUTHERN ITALY. 4th. In addition to
operations reported yesterday, 225 aircraft flew offensive
sweeps.
4th/5th. Wellingtons dropped 78 tons at Battipaglia
40 miles south-east of Naples hitting a transformer and
the railway centre. Other Wellingtons dropped 97 tons on
Messina.
5th. Fortresses dropped 185 tons on Messina. Enemy
positions at Adrano and Biancavilla were attacked by 60
medium and light bombers.
SARDINIA. Escorted litchells made a low level attack
on Guspini switching station 35 miles North Vest of
Cagliari scoring 3 hits.
TREASURY DEPARTMENT
1943 AUG 9 AM 9 51
SECRETARY OF TREA SURY
OFFICE
Regraded Unclassified
187
NOT TO BE RE-TRANSMITTED
COPY NO. 13
BRITISH MOST SECRET
0.5. SECRET
OPTEL No. 262
Following is supplementary resume of operational events covering the
period 31st July to 7th August, 1943.
1. NAVAL
A small reconnaissance raid was carried out on French coast on 4th/
5th. 8 all ranks landed Northeast of LE HAVRE and having gained useful informe-
tion were re-embarked by a motor torpedo boat. During three engagements off the
Dutch coast B.M. Coastal Forces have seriously damaged one Sperrbrecher and at
least 3 trawlers.
MEDITERPANEAN. H.M. Cruisora, Destroyers and a Nonitor have bom-
barded LOCRI, COTRONE, TAORMINA and two places in the Gulf of SUFIMIA. H.M.
Constal forces severely damaged an E-boat and bouberded railway targets at GIARDINI.
U.S. Cruisers and Destroyers have carried out several bonbardmonte in support of
the 7th Army and sunk nn E-boat and B. lighter south of LIPARI. H.M. Submarinos
have sunk two minesweepers, one A/S yacht, one minelayer, one travler and 1
schooner.
SUBMARINE WARFARE. Summary of anti-submarine attack for month of
July reported up to noon lat August:
Number of Attacks by:
Shore-based aircraft
118
Carrier-borne aircraft
8
Warships
46
Sunk and probably sunk by:
Aircraft
27
Warships
11
Possibly sunk by:
TREASURY DEPARTMENT
1943 AUG 12 PM I
SECRETARY OF TREASURY
OFFICE
Aircraft
6
Warships
5
Probably danaged by:
Aircraft
10
Warships
3
Possibly damaged by:
Aircraft
4
In August up to noon 4th, 12 attacks were made by aircraft and 5 by
marships. 4 submarinos were sunk or probably sunk. Estimated that recent AMERICA sinkings
of U-boets will cause U-boats operating in CARIBBEAN and off SOUTH from
to cut supply short their cruises by at least a fortnight. Shipping casualties and 31st
July to 6th August inclusive - 8 ships were reported torpedood. One British one or
Swedish and 3 British (one a belated report) sunk and one U.S. torpedoed,
Brazilian were sunk in the South Atlantic; in the Indian Ocean one Dutch, but
renched In addition, one British and one U.S. and a Norwagian tanker accordin were
damaged Italian claim). A British ship was sunit by circraft at PALERMO. A mine
at port. GIBRALTAR by under-water explosions (caused by human torpedoes O.S. tanke
to mined off CAP BON but is proceeding end & Bolgion trawler was sunk by of
W&S southeast of BERRY HEAD. A British ship reported torpedoed 15th July east
CANARIES has reached port.
TRADE. There have been signs of increased nctivity among Far Eastom
blockade lot 5 ocean runners convoys arrived destination without loss. Imports, convoy into UNITED
in BISCAY ports during the past fortnight. During week ending
KINGDOM week ending 31st July - 754,000 tons including 339,000 oil.
2. MILITARY
SICILY. Casualties 10th July to 4th August. 8th Army (including
Canadians) - killed, wounded and missing 9,353. 7th Army, same poriod - 7,700.
Prisoners to 4th August - 8th Army - 28,000; 7th Army - 91,600.
3. AIR OPERATIONS
weather, Another but further damage caused. On same night 402 tons on other objectives in
heavy attack on HAMBURG, not n.D. successful 48 previous ones owing to bad
WESTERN FRONT. Night. Out of 909 sortios, 33 aircraft missing.
Northwest GERMANY.
Regraded Unclassified
- 2 -
Day. Operations mostly against airfields in FRANCE and on shipping.
LE TRAIT shipyards bombed. In shipping attacks 3,000 ton ship sunk and 3 escort
vessels damaged off TEXEL. 2 armed trawlers probably destroyed off LORIENT. 1,000
ton ship set on fire and 7 E-boats damaged off LE TOUQUET. 4,000 ton ship and 4,500
ton tanker probably hit off NORWAY and 1,500 ton tanker sunk off TROUVILLE. In all
these operations we lost 10 aircraft.
ENEMY. 10 enemy aircraft crossed East Const. One was destroyed.
ITALY. Heavy attacks on airfield, railway centre and U-boat base at
NAPLES and twice on CATANZARO and PAOLO railway centres. In attack on cirfield 15
eiles south of HOME 34 enemy aircraft destroyed and damaged on ground.
SICILY. Up to 4th operations mostly against enemy positions and communi-
cations, particularly in ADRANO, RANDAZZO and MILAZZO areas. From night 4th/5th
onwards attacks concentrated on MESSINA. 30 enemy aircraft attacked PALERMO harbour.
SARDINIA. Warhawks gained noteworthy success against German and Italian
fighter aircraft on 30th. Successful low lovel attack on GUSPINI switching station.
GREECE. 5,000 ton ship, 1 gun boat and 6 motor boats demaged off Weat
Coast. In all these Mediterranean operations Allies lost 13 aircraft.
RUSSIA. Russian Air Force continued support of their land forces Orel
area. Heavy Russian night raids on railway junction OREL and BRYANSK and on German
mirfields OREL area, Still no indication of German air reinforcements from other
fronts or GERMANY, although strength of German Air Force in RUSSIA estimated reduced
from 2,000 at beginning of July to about 1,850 at beginning of August.
4. EXTRACTS FROM PHOTOGRAPHIC AND INTELLIGENCE REPORTS OF ALLIED AIR ATTACKS
HAMBURG. Still not possible to give comprehonsive estimate of damage
caused, but particularly severe in East and Southeast of districts, docks end near
main station at ALTONA. Industrial damage widespread, shipyards and oil plants
have suffered badly.
REMSCHEID. Damage very severe especially in central area near main
station. Factories of following nature involved - circraft forgings, chemical
mochinery, tube works, steel works.
CASSEL. Main building of Spinnfeser Textile Factory (priority one) ro-
ceived two direct hits and was set on fire. Two large buildings of Fieseler Air-
craft Components Factory severely damaged. Other dranges to muchine tool, paper
and cotton weaving factories. Very heavy damage to large assembly shop of Fiesolor
Aircraft Assembly Works.
AACHEN. Final interpretation of photographe discloses heavy damage to
toxtile industry. The town contains numerous owall toxtile and engineering firms,
ospecially in centre. 80 are damaged out of about 140. Damage is also severe to
roilway property, permanent way, warehouses and rolling stock.
KIEL. 25th July. Damage in Noval dockyard and nt Deutsche Werke. In
former two covered flonting docks badly burned and sheds and stores destroyed. In
latter, direct hits oñ workshops and engineering shops. 29th July. Furthor damage
to Naval dockyard, especially to large engine workshop, iron and steel foundries as
another floating dock.
WARNEMUNDE. Photographs 29th July show at least 100 craters on the air-
field. Buildings in Heinkel Factory severely damaged or destroyed include 4
Assembly shops, offices, stores and a boiler house.
5. HOME SECURITY
2 fatal service casualties at DOVER from shell fire.
Regraded Unclassified
189
NOT TO BE RE-TRANSMITTED
COPY NO. 13
BRITISH MOST SECRET
U.S. SECRET
OPTEL No. 260
Information received up to 10 A.M., 8th August, 1943.
1. NAVAL
One of H.M. Destroyers was seriously damaged by fire
while helping a burning ship in ALGIERS Harbour on the 4th. One of
H.M. Submarines sank an inward-bound three-funnelled transport off
BRINDISI on 3rd.
2. AIR OPERATIONS
WESTERN FRONT. 7th/8th. Aircraft despatched: TURIN
and GENOA 124 (3 outstanding); MILAN 73, Intruders 11, COLOGNE 4,
DUSSELDORF 1, Anti-shipping 4. Over North ITALY weather good and
bombing well concentrated at all three places.
Regraded Unclassified
190
August 9, 1943
Harry White
Secretary Morgenthau
I wish you would make the first order oB
business today getting together with Lend-Lease on a memorandum
that I can send to the Chancellor of the Exchequer on why we
don't like their proposal on raw materials under Lend-Lease
in Reverse.
Finished
Regraded Unclassified
File
191
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE August 9, 1943
TO
Secretary Morgenthau
FROM Mr. Thompson
With respect to volunteers to help in the Offices of the
Collectors of Internal Revenue, Harold Graves assures me that full
arrangements have been made in each Collector's office to get the
material out as fast as it is received. Daily reports are to be made
by each Collector, and if any bottleneck develops anywhere, immediate
steps will be taken to correct it. He assures me that they have the
situation completely in hand and there is no danger of a failure.
With respect to the War Bond literature, fortunately the program
is rolling ahead of schedule and there are no difficulties there.
Our own men have been out in the field checking local printing plants
and everything is going at top speed ahead of schedule.
Am
Regraded Unclassified
192
UNITED STATES DEPARTMENT OF ACRICULTURE
Bureau of Agricultural Economics
AN APPRAISAL OF THE SECOND WAR LOAN DRIVE
Identification and Motivation
CONFIDENTIAL
For Administrative Use Only
Study 68
Program Surveys Division
Report No. 49
August 9, 1943
Regraded Unclassified
193
CONFIDENTIAL
INTRODUCTION a
This in a final report on cortain aspects of a total appraisal of
the Second War Loan, It supersedes two preliminary reports:
An Appraisal of the Second War Loan Drive -
Identification and Motivation, June 14, 1943
An Appraisal of the Second War Loan Drive -
Identification and Motivation (A Comparison
of Farm and Non-Farm Populations), June 23, 1943
Minor changes in these reports have been made, but without affect-
ing their principal conclusions.
This report is restricted to a discussion of (1) "Identificatior,"
or popular awareness of the drive and its purpose; and (2) "Motiv-
ation," or the reasons for buying bonds. It should be read in
conjunction with:
An Appraisal of the Second War Loan -
Participation and Implementation, July 8, 1943
A short sumary of the most important conclusions of the survey
18 also available.
The sample comprises & total of 474 interviews with farmers and
873 interviews with non-farmers. Those interviews were taken in
the period between May 14 and June 4, 1943.
Sample points for the survey included the following cities: New
York, New York; Chicago, Illinois; Detroit, Michigan; and Los
Angeles, California. In addition the following counties were
sampled: Lackawanna, Pennsylvania; Clarke, Georgia; Grant,
Louisiana; Natchitochos, Louisiana; Rockland, New York; Santa
Crus, Celifornia; Sarilac, Michigan; Ogenow, Michigan: Jackson,
Missouri; Leon, Florida; Monroe, West Virginia; Hamilton, Illinoia;
Hennopin, Minnesota; Pennington, Vermont; Howard, Nebraska;
Custor, Nebraska; Douglas, Kensas; Columbia, Orogon: Gilos,
Virginia; Cumborland, Maine; Bluo Earth, Minnesote; and Worth,
Iown,
*This study was conducted for the Treasury Department.
Regraded Unclassified
194
CONFIDENTIAL
FINDINGS
1. Before the April campaign the great majority of the people
living in towns and cities owned at least one bond and con-
sidered themselves "band buyers." To be widely effective,
therefore, the campaign had to persuade these people to buy
more bonds than usual.
In sharp contrast, only half of the farmers of the country
had at least one bond bofore the campaign. For this group,
therefore, the April campaign might have served as the stimu-
lus for buying their first bond.
2. During the April campaign, about & fifth of the population
bought bonds for the first time or increased their usual
bond purchases. Two percent of the farmers and one porcent
of the non-farmers bought their first bond. In addition,
16 percent of the farmors and 19 percent of the non-farmers
increased their bond purchases.
3. Most people were aware of the April drive. About one-third
of the farmers, however, and one-sixth of the non-farmers did
not realize that Chere was a special drive to sell bonds in
April. Farmers who did know about it tended to view it 0.8 a
local drive more often than did city dwollers; fewer of them
wore able to identify it as the "Second War Loan;" and they
spoko of the local quota more frequently than did the people
living in towns and cities.
d. The offectivences of the April compaign ms, reduced by the
incorrect notions of its purpose held by many of the people
who ware aware of the drive. This discovery 18 probably the
most significant result of the study.
a. To many the drive secued moroly au intensification of
usual sales tuotico. Apparently the compaign failed
to show then a clear reason for buying extra during
the drive, nor did they understand what they personally
wore supposed to do during April. The most commonly
held view of the purpose of the drive was that it was
intended to remind people of their obligation to buy
bonds.
b. Twenty percent of the non-farmoro and seven percent of
the farmers escaped the pressure of the drive by
Regraded Unclassified
195
- 2 -
- 3 -
viewing it as aimed at those not yet doing thoir
6. Even when given an opportunity to complain about annoyances
share. Vost people who participite in a payroll
in bond promotion, most people found nothing to criticiso,
deduction plan or who regularly invest at least
The few who did make criticism mentiobed the following an-
10 percent of their inconce in bond purchases be-
noyances:
lieve that they are doing their share, and that
the drive was, therefore, not insanded for them.
Extreme pressure on buying bonde
That the quotas were so realily reached without
Excessive repetition on the radio
extra purchases reinforced this balief for many
Interrupting movies to soll bonds
people.
Interrupting radio programs to sell bonda
Using movie stars to soll bonds
0. Still others thought the drive TL2 aloud at gob-
Using sound trucks and street rullies
ting "extra" or "sparo" many from people, and it
Using soldiers to sell bonds
was easy for them to believe that they had no "apare"
Presenting atrocity stories to sell bonds
money. Creat numbers of there people, eising the
rising cost of living, rising taxes and "unuaual"
7. Some people citod certain recent events in their lives which
expacies, said that they "pould at afford" to buy
mado them more enger to buy bonis. The people who mentioned
extra tonde in April.
the following events bought extra bondo moro frequently than
people who did not mention then in connection with bond buy-
d. Farmers tended to escape the pressure of the drive
ing:
in much the cero way as city poople, An additional
avenue of escape was open to 1 wall group of form
The execution of American fliers by the Japanese
are, particularly in areas where there WELF no pay-
Recent drafting of & member of the funily
conal solicitation, who viewel to drive 00 admid
Receipt of a letter from = Service mas urgine
at city people. On the other hell, because of die
bond purchases
gres: amount of personal volicitation smong farm-
The sinking of & hospital ship
urs, fewer farmers than city dowllars escaped tisa
A war camualty among the numbers of the family
prescure of the drive by holding that it WELS mount
for the "other fellow."
N
Some people said that the Tunisian victory, which occurred In-
mediately after the campaign, mde them want to buy bonds.
5. Then asked that type of promotion they 111cod best, people non-
tioned the radio more often than any other type. The other
A elightly smaller percentage of farmers than non-farmore -
proferred types in order of frequency emong the population
tion recent events no incentives for buying bonds.
were:
8. In general, the conclusions concerning motivation reached in
Special promotion (rallies, displays, bund
the report, "The Sale of Visa Bonds in Urban Areas," still up-
boothe, etc.)
ply to en effective bond promotion technique. Between March
Postors
end May, however, there appear to have been three significant
Slogann
changes in the reasons people give for buying bonds:
Fereonal solicitation
Movies
(1) More people say that bond buying will help a mamber
Quotas
of the family in the service.
Each of those types, except personal Br lisitation, was rentioned
(2) More people now son bond buying as a way of winning
less frequently by formers than by off dwellers. That fewer
the war sooner.
farmers nection the radio in probably due in part to the diffi-
oulty of obtaining radio batterios in ress where electricity
(3) More people are aware that the Government is trying
10 not available.
to control inflation through bond sales. There has
Regraded Unclassified
196
4
been no increase, however, in the number of people
RECOMMENTATIONS FOR THE THIRD WAR LOAD
who give inflation control as the major reason
they are buying bonds.
To be most successful, the Third The Loan mat do two things,
Parmons end non-farmore differ in this responsa with regard to
rensons for tuying bonds:
(1) Sell bonds to a large number of people.
(1) Farmers pention personal cooporte reasons for buying
(2) Sell a. large amount of bonds to each individual
beliefe loan often than non-Parmers. For those farm-
in proportion to his income,
provide de nention then, Mode appeal scons to be
equally effective.
To reach the first objective, it in important,
(1) Permise loss frequently martion inflation control no
a. To write the publicity DO that it is perfectly clear
a reven for buying bonde.
to every individual that he is expected to buy more
bonds than during the drive.
9. Only one type of motivation some to have been particularly N-
fectivo in inducing people to increase their purchases during
b. To coorcinate the publicity with a thorough solicit-
the compaign the investment appeal of bonds. it exch incous
ation campaign.
level the invostment-mindod" people, those who spoke of bonds
14 " good and cafe investment, made extra bond purchases dur-
In this way it should be possible to multiply many times the num-
leg the computer more then did other groups.
bar of people who participate in the Third War Ioan.
Dridence Cream the present survey nd previous ones indicates
The problem of reaching the second objective remains. How can
that the following sam to be the met effective appeals for
people be convined that they must buy even after it hurts? That
regular bond buying anong both urban and rvral people,
Government bonda are = good place to invest spare money has proved
en effective argument, but will not alono sell enough bonds.
revent inflation
Since people must be noked to make cacrifices in buying bondo, they
DATE for specific post-war une
must be given reasons for sacrificing that will be meaningful to
Help : tember of the family In the service
them Individually. The following suggestions are rade in this
Save for & post-mr depression
comeotions
Invest noney safely in bonds
a. Buying Bonda to help a nember of the family in the serv-
10. Personal solicitation in following up publicity was a very 10-
100 produce to become an incroasingly effective appeal.
portant factor in solling bonds, Although fewer fermors wro
Zinco the desiro to got the boys home quickly is beacue+
reached by the publicity than non-Parmora, they bought extra
ing ever cironger the purchase of bonds can, for more
bonds in approximately the Bano proportion. The explanation
and more people, be más to moon a personal participe-
for this apparent contradiction 1a that a larger percentage of
tion in the war. A good alogan night box "Back your
farmers were personally asked to Day bonds, and more of thom
boy with bonds!"
give this or their reason for buying attra bondo during April.
Whether it is wine from the point of view of national
morale to stimulate the debiro to see the boys home
should be carefully considered before using it au an
appeal in colling bondo.
b. Current symba can be used to make e competion for
puople between the progress of the war and their bond
buying. In this way purchase of bonds becomes for the
Regraded Unclassified
197
APPENDIX
individual a realistic action which las meaning in the
Contents
world in which he lives. The Treasury releases follow-
ing the announcement of the execution of the American
fliors by the Japanese are a good example of the way ex-
Interview Schedule
tra purchases wore tied in with current events.
Table 1. Magnitude of Bond Purchases Prior to April Campaign
This type of approach need not, however, be confined to
Table 2. Changes in Bond Buying During April
the exploiention of atrocities. The military victory
in Tunicia immediately following the last drive could
Table 3. Changes in Dond Buying During April BE Related to
have been used to cell many apra bon's simply by don-
Usual Method of Purchase (Non-farm Population)
nooting the event with bond buying 111 people's minds:
Table 4. Changes in Bond Buying During April as Related to
"Our boys have non a victory in Tuni-la. Show your ap-
Usual Method of Purchase (Farm Population)
preciation by buying bonde."
Table 5. Awareness of Campaign
Table 6. Awareness of Compaign as Related to Weekly Family
C. Since more and more people are beginning to 400 the con-
Income
nection botwoon bond buying and infletior control, 1t
Table 7. Spontmeous Wention of Quotas
aight be desirable to reconsider the Curthor use of this
Table 8. Do You Think it is a Good Idea to Have Special
appoal in bond promotion. To be offoctive this appail
Campaigns to Sell Bonds?
should be jub in highly personal terms which bring hose
Table 9. Reasons Poople Give for Not Buying Extra Bonds in
to the "avorage as:" the meaning of inflation.
April
Table 10. Typo of Pronotion Found Most Appealing and Percentage
lict only niot the Third liar Loan Drive furnish with individ-
of Those Mentioning Each Type Who Bought Extra
unl mitivation for bond buying, but it must also give then 11. def-
Bonds
inito idea of the mount they are expected 10 by. The drive -
Table 11. What Sort of Things About the Way They Have Been
be so ocnducted that an individual whose financial position 021-
Trying to Sell Bonds Annoy You!
rante & purchase of $300 worth of bonde will not fool that he has
Table 12. Reasons for Buying Given by Those the Bought Extra
done his share when he huys one $25 bood. it 1a quita important
During April
to det individually adjusted goals which 05, be made to apply con-
Table 13. Spontsneous Mention of Recent Events which Stims-
cretely to every person.
late Bond Buying
Table 14. What do you Think is the llost Important Reason to
Buy Bonds?
Table 15. Reasons People Give for Buying Bonds
Table 16. Increases in Prequency of Certain Reasons for Buying
Bonds Since March (Non-farm Population)
Table 17. Plans for Using Bond Money Given by Bond Owners
Most Effective Reasons for Buying Bonds
Regraded Unclassified
198
INTERVIEW SCHEDULE
1. Have you heard more about bonds than usual in the last month or not
2. What sort of things were they?
5. What sort of things about the way they have been trying to sell bonds
have you liked?
4. What sort of things have annoyed you?
(If not fully discussed)
5. Have there been special drives around here?
6. What did they do?
7. Pere they trying to cell bondo to anybody in particular?
8. llow do you think the drive wont over?
9. Do you think it is & good idea to have special campaigns to sell
bonds? Why?
10. (If this in not rentioned before) Did anybody 00138 to you and ask you
to buy bondo?
10a. Toll ne about it.
10b. What did he say?
10o. Did he represent any special organisation?
10d. How did you fuel about this visit?
No are interested in knowing how people got started buying bonds.
11. Do you have bonda talcon out of your pay where you work?
12. Do any other members of your femily?
If yes to 11 or 12:
13. Have you had the amount changed since the first of April?
Regraded Unclassified
199
14. What changes have you made?
Table 1. Magnitude of Bond Purchases Prior to April Campaign
15. How did it happen that you changed?
Magnitude in Percent
16. Have you bought any more bonde than usual since the first of April?
of Inoome
Non-farm
Farm
If yes to 16:
Does not buy
20%
44%
Buye irregularly
24
40
17. How did you happen to buy them at that time?
Regularly 1-0%
5
.
Regularly 6-9%
3
.
18. Mhere did you buy them?
Regularly 10%
26
4
Regularly 11% or more
10
1
19. Did you buy them through como organisation?
Not ascertainable
12
11
20. How did you buy those extra bonds? Dut of money you had seved
100%
100%
or out of your current income?
N=873
N-474
(If not certain whether respondent owns bonds)
Lose than 1 percent
We are interested in talking to people about the used that they plan
to make of the money from their bonds.
21. Do you happen to own any bonds?
22. Have you made any special plans for using the money from the bonds?
23. Why do you think the government is anxious No get people to buy
bonds?
Table 2. Changes in Bond Buying During April
24. Why do you think pome people feol they don't want to buy bonds?
Changes
Non-farm
Farm
25. Is there anything about liar Bonds that people want to know?
Made increase in purchases
Bought first bond
1%)
35)
Started payroll deduction
1 )
0 )
Increased payroll deduction
3 201
o 18%
Bought at least one extre bond
15 )
12
o )
4
Signed plodgo to buy
Made no increase in purchases
77
74
Not ascortainable
$
8
100%
100%
11-673
N=474
Regraded Unclassified
200
Table 5. Awareness of Campaign
Table 3, Changes in Bond Buying During April as Related
Degree of Awareness
to Usual Method of Purchase (Non-farm Population)
Non-Parm
Farm
Usual Method of Purchase
Did not realize there was a
Phyroll
Own Regular
special compaign
Purchases During
16%
33%
April
Deduction
System
Irregular
Knew only of local drive
12
20
Knew of national drive, but not
26%
46%
24%
by name
Bought extra bonds
4
8
[A] not buy oxtra bonds
73
54
71
Knew of Second Tar Loan, but only
as an increase in publicity
25
13
Net adcortainable
1
1
5
Enem of Second Ver Loan as more than
100%
100%
100%
an increase in publicity
42
26
11-370
N=75
K-240
Not ascertainable
1
100%
100%
-
Includes only that part of non-fans population who buy bonds.
N-873
N-474
. Less than 1 percent
Table 4. Changes in Bond Buying During April an Related
Table 6. Awareness of Compaign All Related to Neekly Panily Income
to Usual Hethod of Purchase (Farm Population)
Usual Method of Purchase
Degroe of
Bookly Income
Purchases During
Payroll
Own Regular
Awareness
80-25
$26-45
846-65
966 and over
April
Deduction
System
Irregular
Did not realize there were a
Bought extra bonde
22%
43%
39%
special campaign
10%
16%
10%
at
Did not buy extra bonds
78
67
Know only of local drive
18
14
10
10
55
Know of national drive, but
Not ascertairable
o
not by name
3
3
7
7
0
e
100%
100%
100%
Know of Second War Loan,
but only es en increase
11=27
in publicity
23
28
23
26
N-14
N-213
Knew of Second war Loan as
more than increase in
Includes only that part of farm population who buy bonds.
publicity
37
37
48
47
Not ascertainable
3
2
2
2
100%
100%
100%
100%
N=148
N=229
N-234
N=214
Includes only that part of non-farm population whose wookly income
was ascortairable.
Regraded Unclassified
201
Table 7. Spentaneous Mention of Quotas
Table 9. Reasons People Give for Not Duying
Extra Bonda in April .
Quotas Mentioned
Non-farm
Farm
Non-farm
Farm
Mentions national quota
11%
X
Mentions local cuota
15
23
Never heard of the drive
15%
31%
Mentions a quote, but not clearly
Say they could not afford to buy
36
43
identified
11
5
Say they were doing hoir share
Mentions both national and local quotas
5
4
already
13
5
Does not montion quota
58
61
Say both they could tot afford it
100%
100%
and they were doing their share
already
7
2
N=873
U=474
Givo no reason
8
19
100%
100%
N=681
N-376
Tuble 0, Do You Think it is 6. Good Ider to Seve Spocial
Includes only that part of population who did not buy extra
Canguigna to Soll Bonda?
bonds in April.
Attitude toward Special Compaigns
Non-farm
Farm
Yes
Becruse some people need to be reminded
45%)
2017)
Because rollice, contesta, quotas, etc.,
)
Table 10. Type of Promotion Found Most Appealing and Percentage of
soll bonds
6
5
those Mentioning Each Type The Bought Extra Bonds
Because people buy when personally asked
5
77%
6
62%
Percentage of Those
Because they tall people how the money is used
1
2
No roason given
16 )
28
Type of Promotion
Percentage Mentioning
Mentioning Each Appeal
Found Nost Appealing
Each Appoal
The Bought Extra Bonda
on-farm
Para
Non-farm
Farm
Conditional approved
All right for people who aren't buying
A
25%
25%
their share
4
-
2
)
Redio publicity
14%
2
)
Rellios, booths,
All right if the Government needs the none)
1
displays, eto.
8
4
24
19
All right if they don't come too often
2 2%
2
%
6
1
13
o
Posters
All right if prossure 10 put on people with
)
Personal solicitation
4
7
43
42
exera armay
2 )
-
4
1
23
17
Slogans
2
.
22
o
No
Movies
57
Newapaper publicity
2
1
50
Because people will buy anyway
4 )
7
)
1
3
29
100
Because it is & nuisance to poople on payroll
8%
10%
Quotas
deduction who buy anyway
Mentions nothing role-
1
o
59
79
18
16
Because furmers have irregular income
vant to compaign
o
2
100%
100%
Don't know
4
7
1-873
1/=474
No: ascortainable
5
10
YOUR
100
Less than 1 percent.
11-075
N-4/4
Loss than 1 percent
Regraded Unclassified
202
Table 11. that Sort of Things About the Wey They
Table 13. Spontaneous Mention of Recent Svente
Have Boen Trying to Sell Bonds Annoy You?
which Stimulato Bond Buying .
Type of Annoyence
Non-farm
Parn
Events
Non-farm
Form
Bothing mentioned
85%
94%
Turisian victory
5%
$
Execution of fliers
4
1
Foreing people to buy
3
2
Excessive regitition on radio
3
2
Recent drafting of nember of family
1
1
Arking people who are doing their
Receipt of letter from service san
o
urging bond buying
1
no
share alrongy
1
Sinking of hospital ship
1
"
They didn't put enough pressure on
A war casualty mong menbers of family
:
as
people with anney
1
1
Interrupting novies to cell bonds
1
o
Interrupting radio programs to sell. bondo
1
-
Nothing mentioned
88
95
1
o
100%
100%
They didn't visit overybody
Door-to-door canvessing
1
.
2-873
N-174
Having covie stars cell bonda
-
-
Une of stronity stories
*
o
Ecund trucks and street rallios
-
o
*loro of the people mentioning these events bought ertra
Using soldi to sell bonds
bonds than did people o. comparable income who did not
100%
100%
mention them.
N-673
N-474
**Less than 1 percent
Less ther 1 percent
Table 14. That to you Think is the Most Importent
to Buy Bonds?
Reason
Non-farn
Fara
Table 13. Heasons for Buying Given by Those
The Bought Extra During April
Help the country, pay fo: the war
70%
69%
Roason
Non-farm
Farm
B
12
Help the boye
Bords are e. good investment
5
3
4
4
Broause they had the campaign (could
Bonda are e good way to save
It 10 one's patriotic duty to buy
3
2
not attribute reason more specifically)
24/5
13%
Prevent inflation
3
1
Secause I vas personally asked to buy
19
52
A1d friends or relatives in Service
2
1
Because they noked ne at work
10
2
Preserve the American may of life
1
2
Bocause I had extra noney at that time
14
8
1
1
To help fill the quota
Miscellaneous
11
13
3
6
Don't law
Aa a result of is rally, exhibit, etc.
a
2
100%
100%
I would have bought anyway
12
S
Because of execution of fliers
.
o
11-873
N-474
Don't low why
2
7
100%
100%
1/-195
N=91
Lets their 1 percent
Regraded Unclassified
203
Table 16. Increases in Prequency of Certain Reasons for
Buying Bonds since March
(Non-Parm Population)
Table 15. Reasons People dive for Buying Londo
Reasons
March
May
Reanons
Non-farm
Person
To help a member of family in the Service
4%
12%
To get the war over socier
o
9
Patriotio
To help prevent inflation
4
17
Colling Code money to win TAP
50%
17%
It atriotio duty
11
5
a momest of femily in the antio
12
11
Program OF Austrican Way of 11/0
u
2
Pro /1.de matoriel
10
12
Cet the over
9
7
Pursonal
Table 17. Plans for Using Bond Money Given by
Bond Omers
for after the wer
10
6
You 6st 11gh rato of interest
25
17
It LA investment
21
22
Plans
Non-farm
Farm
You not city unvo but help country the
18
8
If buy bondo, I milding 0.79
18
11
Help the children (education, etc.)
16%
11%
If Lend good titor the =,
Buy a home or farm
13
6
mthl cill be
10
11
Keop as an emergency fund
5
8
Sall against a post-war depression
4
3
Funds for old ago
6
5
San for (Z)O specific post-wer a
3
I
Recerve in a post-war depression
2
3
Buy household furnishing, car, etc.
3
4
Refind
1
,
Travel
Hols provit inflation
to
Pay dobts and taxes
*
2
17
2
Hel. koss crixea Corm
Farm machinery
o
4
3
Miscellaneous plans
2
-
Zees people from spending soury
51
58
billing
Bas no plans
4
5
100%
100%
Proven. yout-war depranated
1
00
11=703**
N=242**
11.474
Less than 1 persent
There policitages total to poru there 100% benause may YOH
2020 more then one rouder for buying bonds,
Number of people owning bonds about whose plans in-
formation could be obtained
Leis the 1. percent
Regraded Unclassified
Most Effective Reasons for Buying Bonds
Reasons Given by Both Farm and Non-farm Population
Prevent inflation
Save for specific post-war use
Help a member of family in the Service
Save for a post-war depression
Bonds are a safe investment
If bonds are not good, nothing will be good
Reasons Given by Non-farm Population
Preserve the American Way of Life
Bonde are a good investment
Reasons Given by Farm Population **
You not only save but help the country too
It's a good way to save
It's a patriotic duty
You get a high rate of interest.
Non-farm Population - This list contains both reasons
which proved effective before the campaign and reacons
which were effective during the drive. More of the
people who give these reasons buy bonds than do people
of comparable income who do not give them.
Farm Population - This list contains only the reasons
which proved effective during the April campaign. Hold-
ing solicitation constant, more people who gave these
reasons bought bonds than people who did not give them.
Regraded Unclassified
204
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
CONFIDENTIAL
DATE August 9, 1943
TO
Secretary Morgenthau
amer
by: Mr. Descit, Mr. Murphy end Miss Michener
subject: The Business Situation,
Week ending August 7, 1943.
Summary
income: Income payments in June attained D. record
annual rate of $142.1 billions. This compares 11th on
annual rate of $140.2 billions in the previous month and
only 113.9 billions in June 1942. Income payments during
the first h/df of 1943 were 27 percent higher then those of
D your earlier, the rice being Que almont entirely to In-
creases in Federal Govermment payrolls, menufacturing
onlories and vages, and net income of form operators.
Protory wages: Average weekly earnings of factory workers,
ifter allovance for rising living coste, 2020 20.9 percent
from January 1941 to March 1943. This rise emeeded that
of any other major youp of vorkers, and contrasts with E,
corresponding decline of 2.9 percent in the adjusted weekly
econings of non-manufacturiag employees, exclusive of farm
workers.
Stock market: Stock prices showed further declines last week,
but the net loss for the period WEB less than 1 percent.
Trading activity dropped sharply, with trading volume 42 ner-
cent below the previous week. So-called "Desce" stocks
continued to display somewhat (reater resistance to the
decline than "war" stocks, and by Friday the former stood
in the strongest relative position since September 1939.
Commodity prices: The BLS index of 25 basic commodities rose
0.3 percent last week, and now stance at the peak level
reached just before the issuance of the Precident's hold-
the-line order of early April. The all-commodity index
has shown a downward tendency for the past seven weeks, and
in the week ended July 31 the index vos at the lowest point
in the past five months.
702m real estate: The rise in farm real estate valued 18
causing increasing concern among Government officials. The
index of estimated value per 202'e of form real estate rose
3 percent in the four months ended July 1. Speculative
notivity 1e evident in some sections of the country, and the
volume of voluntary sales has been rising.
Regraded Unclassified
205
- 2 -
National income payments at new peak
The long upswing in national income payments continued
during June and attained & record annual rate of 142.1 bil-
lions. This compares with 140.2 billions in May and only
113.9 billions in June 1942. (See Chart 1.) In addition
to the usual May to June increase in interest and dividend
payments, payrolls of factories engaged in war Vork continued
to expand and contributed to the greater-than-seasonal rise
in total payments. Reference to Chart 1 will disclose that
all major components showed gains over 1942 levels, although
the rise in "other income payments" WDB relatively slight,
with c), decline in relief payments largely offsetting an in-
crease in allotments to soldiers' dependents. On the other hand,
Meyments to individuals from Government sources were 61 percent
higher, in reflection of the great expansion in military and
civilien personnel during the past year.
Income payments in the first holf of 1943 totalled
67.1 billions, or 27 percent more than in the corresponding
period To year ago. All but a small portion of the rise in
1943 has been due to increases in Federal Government payrolls,
menufacturing wages and salories end the net income of farm
operators. Federal Government payrolls in the first helf of
1943 were 148 percent higher than 25 year earlier, while net
income of farm operators, and unufecturing wages and salaries,
showed corresponding gains of 45 and 42 percent, respectively.
It should be pointed out, however, that the rate of increase
over last year's levels in Government and manufacturing pay-
volle has shown B. declining trend in 1943 00 the wer progrom
has approached stendily closer to ultimate goals.
Factory workers' earnings rise faster then living costs
Despite the great expension in payments for salaries and
wages during the war period, lenders of organized labor recently
have been extremely critical of the price and wage control
programs. Following uo earlier demands that prices be rolled
beek to September 15, 1942 levels, the presidents of the AFL
and the CIO last month said they would demand that Price
Administrator Brown be removed from office 1f the rollback
in prices is not carried out.
In an apparent refutation of organized labor's claim
that workers have been hard hit by wage stabilization measures
in the face of rising living costs, OPA last week released
figures covering the course of "real" wages to non-farm
Regraded Unclassified
206
- 3 -
workers during the period Jenuary 1941 to March 1943. In
order to allow for the rise in the cost of living, actual
hourly and weekly earnings were deflated by the BLS cost-
of-living index. On this basis, changes in "real" wages of
workers by major groups during the period mentioned were as
follows:
Percent change
Jan. 1941 to March 1943
Group
Hourly
Weekly
earnings
earnings
Factory workers
+12.3
/26.9
Mining workers
/1.6
/27.2
Construction workers
- 4.0
$ 6.6
Transportation and
public utility vorkers
- 6.5
- 0.6
Trade workers
- 1.7
- 3.6
Financial workers
- 5.4
- 5.1
Government workers
-21.2
-10.3
It will be noted that factory workers end miners, whose
lenders have been most vociferous in denouncing the alleged
inecuities of the price and wage control programs, have
actually received E. substantial increase in "real" wages
since the beginning of 1941. Moreover, their earnings
position has been considerably more favorable than those of
other groups of workers, particularly in comparison with
Government workers, whose "real" earnings have dropped sub-
stontially.
In contrast to the gain of 28.9 percent in the "real"
traged of factory vorkers during the period January 1941-
March 1943, "real" wages of non-manufacturing employees,
exclusive of farm vorkers, dropped 2.9 percent. Moreover,
Suring the longer period from August 1939 to March 1943 the
OPA study revealed that the weekly wages of fectory workers,
najusted for living costs, rose 41.4 percent, in comparison
with a rise of only 13.9 percent for all non-form workers.
Stock market activity declines
After declining further at the beginning of last week,
stock prices subsequently rallied elightly and then declined
again in the latter part of the period. Trading activity,
however, dropped off sharply from the previous week, and on
Regraded Unclassified
207
- L -
Thursday fell to the lowest level since last January. At the
close on Saturday railroad stock prices averaged about 1 per-
cent lower than 2. week earlier, while utilities and industrial
stocks showed smaller declines. (See Chart 2.)
While so-called "peace" stocks continued to webken along
11th "Wer" stocks, their decline (as in the previous week) was
of smaller proportions, 80 that by Friday our ratio of var and
neede stocks showed the latter to be in the strongest relative
position since September 1939. Industrial stock prices in
London last week continued to make stronger showing than
industrial stocks in New York, although prices levelled off
riter reaching B new high for the year on Wednesday.
Commodity prices hicher
Commodity prices noved up somethat last treek in relatively
nuiet markets. Advencing 0.3 percent, the BLS index of 25 bosic
commodities reached the peak level just preceding the issuance
of the President's hold-the-line order of early April. (See
Chart 3.) Steer prices were noticeably higher, and hos prices
rose 2.3 percent 28 marketings fell off in line with the normal
Auguct-September decline. Mill buying pushed up viseat prices;
Also the 000 is reported to be buying considerable quantities
0" wheat for feed purposes. Rosin prices continued their
sharp advance and have now risen almost 16 percent in the past
seven weeks.
An announcement of E. reduction in Army procurement
schedules of woolens and worstède for the balance of the year
caused some decline in vool top prices.' The apparent drop
in print cloth prices shown on Chart 3 18 due to D. change in
the item quoted rather then on actual decline in the price of
the commodity.
All-commodity index continues downward movement
The BLS all-commodity index has shown & downward tendency
for the past seven weeks. In the week ended July 31 the index
declined slightly to 102.8 percent of the 1926 Everage, which
is 37.1 percent above the pre-war level of August 1939. The
index 18 now 1.2 percent below the peak reached at the end of
May, and is at the lowest point in the past five months. The
rollback of meat and butter prices, and P. sessonal decline in
fresh vegetable prices, have largely accounted for the downward
movement.
The recent relative stability of the all-commodity index
contrasts with the rather sharp rise which began in the corre-
sponding months of World War I. (See Chart 1, upper section.)
Regraded Unclassified
208
- 5 -
Moreover, the some divergence has been shown recently in the
trené of the wholesale food index 88 compared with that of
he last war. (See Chart 4, lower section.) The disparity
between the rise in the all-commodity index in the two war
periods, however, has been much greater than in the case of
the wholes le food index. From August 1939 to July 1943 the
all-commodity index rose only two-fifths as much as during
the corresponding period of World War I, whereas the wholesale
food index rose tvo-thirds as much. Success in controlling
the mices of industrial commodities during the present ver
is largely responsible for the relatively smaller rise in the
all-comsodity index.
Increase in livestock slaughter forecast
Several factors now point to a marked increase in supplies
of livestock for slaughter during the last half of 1943 and in
19kh, according to the Bureau of Agricultural Economics, which
vill probably tend to lower prices during the fall months, as
well as to increase meat supplies for civilian consumption.
The present record levels of livestock numbers and production
vie beginning to outrun total feed resources. Allowing for a
further increase in livestock during 1943, the supply of feed
per animal unit this year may be 10 to 15 percent below the
1937-41 average. Rather then risk A very drastic shortage of
feed next spring, livestock growers are expected to begin ex-
panding marketings in the near future.
The drying uo of pastures 4n sections of the Southwest 18
likely to cause premature marketing of grass-fed cattle. Because
of the deteriorating conditions of pastures, the Department of
Agriculture urged last week that western stockmen market their
range cattle early. Rain is needed for pastures and ranges in
practically all sections except in part of the eastern third
of the country. Moreover, in Oklahoma and Texas livestock are
reported to be losing weight due to the serious ary condition
of the ranges.
Farm real estate values rising
Increasing concern has been manifest by Government officials
over the rise in farm real estate values. The index of estimated
value per acre of farm real estate rose 3 percent in the four
months ended July 1, according to preliminary figures of the
Department of Agriculture. While the increase 18 less then
half that which occurred from November to March, the land
market 18 normally less active from March to July than during
the preceding four months. The average rate of increase during
the past year has been about 1 percent 0 month, the highest of
record aside from the boom year 1919-20.
Regraded Unclassified
209
- 6 -
Concurrent with the rise in value, the volume of
voluntary sales of farm property has increased considerably.
In the 12 months ended March 15, 1943 such sales were the
largest since 1919-20. Voluntary transfers per 1,000 farms
incressed to 44.4 for the year ended March 15, 1943 as
compared with 41.7 for 1942 and only 30.2 for 1940.
Although investors have constituted an important
element of all buyers, farmers continued to buy more than
three-fifths of the number of farms solá during the year
ended March 1943. While the total outst ndin form mortgage
debt is estimated to have decreased E, percent during 1942, it
was indicated that in recent months heavier mortgages have been
oloced against many farms BE the result of sales, despite an
increase in cash payments.
Farm values in two ware compared
The trend of form real estate values during the present
V:I has been similar to that of World War I, but the extent of
the rise has not been 85 creat. (See Chart 5.) Whereas from
March 2079 to March 1943 the index of estimated volue ver acre
or form real estate increased 1,8 hercent, the index rose 25 oer-
cent from March 1914 to March 1918. During the fourth year of
World Wor II, however, (year ended July 1, 1943) the index
sãvenced at E faster rate than during the fourth year of the
avevious yer.
Several factors have tended townrd raising form land values.
Farm prices have risen 22 percent in the year ended July 15, and
the volume of liquid purchasing power in the hande of potential
buyers of farm real estate continues to grow. Speculative buy-
ing for early resale 1s reported to be increasing, particularly
in several Western and North Central States. While speculative
buying 18 not widespread, in areas where such activity 1s in-
creasing values are rising at accelerated rates. On the other
hand, the fears of shortages of farm labor and form machinery,
which have been deterrents to purchases of ferms, sppear to be
lessening. "In many respects current developments in the land
market, the Department of Agriculture stated last week, "offer
a striking parallel to those of the World War I period, which
culminated in the 1919 land boom and subsequent collapse.'
The Farm Credit Administration, 18 reported to be studying
ways to forestall the development of a speculative form land
boom. Some preventative measures that have been suggested are:
(1) special taxes on land profits, (2) credit controls, and (3)
the requirement that permits be obtained before sales can be
wade.
Regraded Unclassified
NATIONAL INCOME PAYMENTS AND COMPONENTS
1939
1940
1941
1942
1943
DOLLARS
DOLLARS
Billions
Billions
Annual Rate, by months
140
140
130
130
120
120
110
110
100
100
90
90
80
80
70
70
A
5
o
N
D
J
F
M
A
M
J
J
A
5
o
D
J
F
M
A
J
J
A
5
o
N
o
J
F
M
3
J
J
A
5
N
D
J
F
J
a
A
5
o
D
1939
1940
1941
1942
1943
Dollar Totals for Selected Components. June 1942 and June 1943
DOLLARS
DOLLARS
Billions
Billions
3.5
3.5
June 1942
June 1943
3.0
3.0
2.5
210
2.5
2.0
2.0
1.5
1.5
1.0
1.0
is
.5
o
o
DISTRIBUTIVE
COMMODITY PRO-
WITHDRAWALS FROM
DIVIDENDS AND
GOVERNMENT
OTHER INCOME
AND SERVICE
DUCTION INDUSTRIES
NONCORPORATE
INTEREST.
INCLUDING
PAYMENTS.
INDUSTRIES,
(CHICFLY MFG),
ENTERPRISES.
MILITARY
(INCLUDES FARMS)
SALARIES AND WAGES
Source: Department of Commerce
Office of the Secretary of the Treasury
Grow of - and
C-485-1
Regraded
Unclassified
211
STOCK PRICES, DOW-JONES AVERAGES
Feskly Pange
Daily
1942
seri,
1943
WAY
MPT.
-
-
-
BILLING
30 Industrial Blocks
Chart 2
180
134
Há
130
30 Industrial Stasks
las
IN
130
145
-
-
120
-
/
116
155
118
noo
n
1%
F.N.
.
A
a
X
5
T.R.
45
20 Mailroads
20 Reilroads
F
-
#
-
a
30
.
-
a
W
W
or
is
es
:
a
is Utilities
a
1
as
19 Villities
"
e
R
e
=
is
18
-
-
seciet
-
-
Volume of Trading
Nime of Traffice
or
#
-
9
a
M
:
"
29
11
18
16
25
IN
*
:
26
n
.
18
-
a
15
"
a
-
12
19
<
APRIL
-
-
EXPIRATION
MPI.
(14)
MOVEMENT OF BASIC COMMODITY PRICES
1942
1943
1944
PERCENT
PERCENT
AUGUST 1939.100
220
220
210
210
200
200
9 Uncontrolled Commodities*
190
190
180
180
28 Commodities
170
170
19 Controlled Commodities
160
160
OCT.
DEC.
FEB
APR.
JUNE
AUG
OCT
DEC
FEB
1942
1943
1944
PERCENTAGE CHANGE DEC 6, 1941 TO JULY 30. AND AUGUST 6. 1943
PERCENT
PERCENT
19 Controlled
9 Uncontrolled
Flaxseed 6462
Commodities
Commodities
+60
+60
+50
.50
Barley46.) %
Com446%
Wegs 432 2
+40
+40
Resin422X
212
+30
Lard 288%
+30
Shelloc 232
Wheat 2452
Lood 111%
Steers 243 :
+20
Cottonseed Oil 7/2
+20
Butter 158%
Sugar 6.9%
Cotton 184 z
Wool Tops 54%
Print Cloth 49%
Zinc 32
+10
0% Change
.10
Mides, Salb,
in, Rubber,
Coffee, Copper.
o
St Scrap,dom,
o
St Screp.exp
Cocoo 8%
Tellow 4/1
Burlap 431
I
10
10
Dec. 6
July 30
August 6
Dec. 6
July 30
August 6
1941
1943
1943
1941
1943
1943
. 20 Controlled 8 Uncontrolled previous 10 June 26, 1942
Office of the Secretary of the Insury
of Research - Inno
P-244-A
Regraded Unclassified
PRICES, 1939 TO DATE COMPARED WITH 1914 TO 1918
July 914.100 World Wor Period; Aug. 1939-100 Present Period
PERCENT
PERCENT
All Commodities
200
200
1918
180
180
1917
160
160
West Ended
1943
/
July 34
140
140
1916
1942
120
First Month
120
of Wor
1915
1940
1941
1939
100
100
1914
80
80
J
2
M
J
5
N
,
M
M
J
5
N
J
M
M
J
5
N
J
M
M
J
S
N
J
M
2
J
5
N
PERCENT
PERCENT
Foods
200
200
1918
180
180
1917
213
for
1943
July 31
160
160
1942
140
140
1941
First Month
120
of War
120
1916
1939
1940
1915
100
100
1914
60
80
J
M
2
J
5
N
J
M
M
J
5
N
J
M
E
J
5
N
J
M
E
J
5
N
J
E
3
J
5
N
1939
1940
1941
1942
1943
Based on B.L.S. data
P-222-A
Regraded Unclassified
FARM REAL ESTATE VALUES IN TWO WORLD WARS
World War I. 1914=100; World War II. 1939=100
PERCENT
PERCENT
165
165
1920
160
160
155
155
1921
150
150
1919
145
145
140
140
1922
135
135
1918
130
130
World War I
125
125
120
120
1917
1943
115
115
World War II
110
110
1916
1942
105
1915
105
1941
1914
100
1940
100
1939
95
J
M
M
J
S
N
J
M
M
J
S
N
J
M
M
J
S
N
J
M
M
J
S
N
J
M
M
J
S
95
N
J
M
J
s
N
J
M
M
J
S
N
J
M
M
J
5
N
J
M
M
J
S
Office of the Secretary of the Treasury
Chart 5 214
Division el and Statistics
C-515 -
Regraded Unclassified
215
TREASURY DEPARTMENT
PROCUREMENT DIVISION
OFFICE OF THE DIRECTOR
WASHINGTON
SECRE
August 9, 1943
MEMORANDUM TO THE SECRETARY:
Supplementing report to you of August 2, 1943,
the purchases against the African Program from
August 2, 1943, to August 8, 1943, totaled $2, 818, 649.60
or a total of purchases for the program thus far of
$54,389,404.02.
Attached is report giving status of shipping
against these purchases.
When A./J. Walsh
Acting Director of Procurement
FORVICTORY
BUY
UNITED
STATES
BONDS
AND
STAMPS
Regraded Unclassified
216
SHIPPING REPORT AS OF AUGUST 7, 1943
SECRE
Tonnage
Tonnage
Tonnage
Tonnage
Commodity
Shipped to Date
Under Load
On Hand at Port
En Route
From U. S. A.
At Port
Waiting Vessels
To Port
Agric. Mach. & Implements
1352.54
106.08
487.95
269.85
Automotive Equipment & Parts
714.57
129.78
72.69
Batteries
84.03
8.
34.99
7.25
Bearings
1.88
2.70
.25
Brass & Bronze
288.4
2.5
137.6
Brushes & Brooms
.2
.75
Building Hardware & Material
178.29
38.31
142.
49.86
Chemicals
15008.5
1978.71
4743.06
4671.48
Clothing, Notions & Textiles
15398.10
198.15
2034.24
4848.55
Copper in Various Forms
208.32
44.
108.44
58.43
Electrical Eqpt. & Supplies
66.52
4.
5.29
20.02
Explosives
14.15
Ferro-Alloys
44.
24.5
Food & Food Products
6032.25
Furniture & Office Equipment
.6
.01
Glass
99.6
60.
78.
95.3*
Graphite Products
22.68
109.86
**
Hand & Cutting Tools
643.09
52.9
541.39
443.70
Industrial Machinery
44.30
63.44
49.92
13.01
Iron
145.00
410.
172.
349.
Jute Bags
751.19
33.55
555.
Lead & Lead Alloys
54.97
6.5
97.
Médical Supplies
52.12
5.
23.
Non-Ferrous Metals, Other
386.
24.
44.
Paper & Paper Products
3258.31
2123.82
522.9
3486.83
Rope & Twine
247.75
34.75
14.
12.
Rubber
644.06
32.78
319.73
372.
Regraded Unclassified
-2-
217
SECRE
Tonnage
Tonnage
Tonnage
Tonnage
Shipped to Date
Under Load
On Hand at Port
En Route
Commodity
From U. S. A.
At Port
Waiting Vessels
To Port
Shoes & Boots
315.68
5.34
199.77
813.5
Steel Alloy & Carbon
6221.12
310.55
5013.18
3595.04
Steel, Pipe & Tubing
216.
44.41
56.5
Tin Plate
845.
Zinc
28.
Totals
53,338.62
5,568.23
15,638.22
19,235.26
*Shipping instructions for 38 tons canceled.
## Shipping instructions for 13.05 tons canceled.
Regraded Unclassified
218
211
BRITISH air COMMISSION
1785 MASSACHUSETTS AVENUE
WASHINGTON, D. C.
TELEPHONE HOBART 9000
PLEASE QUOTE
REFERENCE NO
With the compliments of British Air Commission
who enclose Weekly Statement No. 114 covering
Aircraft Flight Delivery as at August 3, 1943.
The Honourable Henry Morgenthau, Jr.
Secretary of the Treasury
WASHINGTON, D. C.
August 9, 1943.
Regraded Unclassified
219
U.S.
2
SECRET
LOCATIONS OF OCEANIC FLIGHT
NO.
115
(Covering Novements through August 3, 1943)
BRITISH
MOST SECRET
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
(15)
BITE
LIB.
É
VEST.
FL. BOAT
VEHT.
HDD.
BOST.
BALT.
R178, 1
8240
B25
B26A,0
TREEP.
(RAC)
(BAC)
(BAC)
(BAG)
(BAC-I/L)
(I/L)
(1/1)
(L/L)
(L/L)
(M)
(A.B)
(L)
(1/L)
TOTAL
UNITED KINGDOM
20
%
432
140
302
15
373
177
1
64
193
140
4
37
1,994
EAST
5
95
48
31
179
SOUTH AFRICA
127
127
UNIT AFRICA
4
4
AUSTRALIA
27
27
SINGAPORE
9
9
INDIA
2
3
OTU'S IN GAMADA
5
45
63
6
165
ROAF
279
28
1
16
MASSAN
45
27
51
FERRY SERVICE
78
7
6
13
Asere,Taberadi,or Prestem
2
14
91
506
2
a route Overseas
138
753
5
16
1
21
1
1 i É
40
9
93
1
1
1
7
1
1
Nassan or Berunds (en reste)
22
2
1
22
6
Special daty .
31
4
1
15
4
20
1
Nentreal
45
2
1
12
19
GRASHED AFTER EXPORT
4
4
9
5
1
,
$
18
20
10
38
15
21
3
2
8
A reute export
1
136
At installation center
4
1
5
"
1
h reste instal's emter
1
61
At modification easter
1
1
28
44
60
h reste medification conter
10
142
6
6
Special daty in U. s.
2
2
3
1
Under regair
8
1
At starting point (Les Besch,ets)
1
6
CRASHED III U. 8.
1
7
1
2
5
1
26
2
19
2
2
RIVERTED TO U. 8.
7
$
50
20
281
351
TOTAL
20
165
520
663
143
98
838
200
in
"
337
2/2
a
III
1.582
# In Canada, Bermade, or lum,
PLANNING AND AIRFRAME SUPPLY
BRITISH AIR COMMISSION
c.
Regraded Unclassified
220
BRITISH AIR COMMISSION
1785 MASSACHUSETTS AVENUE
WASHINGTON, D. C.
TELEPHONE HOBART 9000
LASE QUOTE
FERENCE NO
With the compliments of British Air Commission
who enclose Statement No. 97 -- Aircraft Despatched
-- for week ended August 3, 1943.
the Honourable Henry Morgenthau, Jr.
Secretary of the Treasury
WASHINGTON, D. C.
August 9, 1943.
Doaraded
221
MOST SECRET
STATEMENT NO. 97
Aircraft Despatched from the United States
Heek Ended August 3rd, 1943
ASSEMBLY
BY
BY
TYPE
DESTINATION
FLIGHT DELIVERED
POINT
SEA
AIR
FOR USE IN CANADA
CONSOLIDATED
Liberator III
U.K.
U.K.
1
Liberator III
India
India
4
Liberator GR V
India
India
5
Liberator GR V
W. Africa
W. Africa
2
Liberator GR V
Bahamas
Nassau
2
Catalina IV
U.K.
U.K.
1
Curtiss
Kittyhawk
S. Africa
Capetown
4
Kittyhawk
Australia
Sydney
20
Seamew
U.K.
U.K.
2
DOUGLAS
Dakota III
India
India
1
Dakota III
M.E.
M.E.
8
FAIRCHILD
Cornell II
S. Africa
Capetown
7
GRUMMAN
Hellcat
U.K.
U.K.
2
GLENN MARTIN
Baltimore IV
M.E.
M.E.
1
Baltimore V
M.E.
M.E.
9
NORTH AMERICAN
Harvard
U.K.
U.K.
2
VULTEE
Vengeance
India
Bombay
7
Vengeance
India
Karachi
7
Vengeance
U.K.
U.K.
2
STINSON
Reliant
Trinidad
Trinidad
2
VEGA
Ventura GR V
M.E.
M.E.
4
Canada
5
Ventura GR V
Canada
TOTALS
53
40
5
British Air Commission
Movements Division
August 7th, 1943
Regraded Unclassified
NOT TO BE RE-TRANSMITTED
222
COPY NO. 13
BRITISH MOST SECRET
U.S. SECRET
OPTEL No. 261
Information received up to 10 A.M., 9th August, 1943.
1. AIR OPERATIONS
WESTERN FRONT. 7th/8th.
MILAN. 191 tons dropped, including 45 4,000 lb. H.E.
Bombing fairly well concentrated, attack effective, many fires,
moderate heavy and light anti-aircraft.
TURIN. 191 tons, including 27 4,000 lb. H.E. and 82
tons incendiaries. Very concentrated attack, fires quickly gained
hold, smoke to 10,000 feet, very weak ground defences.
GENOA. 166 tons, including 25 4,000 lb. H.E. Docks
and harbour clearly identified, attack concentrated, large fires,
several explosions reported. 2 Bombers missing from MILAN, a third
crashed in NORTH AFRICA.
8th. 40 unescorted Bostons made a successful low level
attack on U-boat stores at RENNES. A large concentration of bombs was
seen in and around the main section of the depot. 2 Bostons missing.
Torpedo Hampdens attacked B. convoy off Southwest NORWAY, probably
hitting a 2,000 ton ship and escort vessel.
TREASURY DEPARTMENT
1943 AUG 10 PM 4 25
"SECRETARY OFFICE OF TREASUR
Regraded Unclassified