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Volume 777, September 29 – September 30, 1944
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Volume 777, September 29 – September 30, 1944
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Henry Morgenthau, Jr. Papers
Diaries of Henry Morgenthau, Jr.
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DIARY
Book 777
September 29-30, 1944
Regraded Unclassified
- A -
Book Page
Allied Control Commission
See Post-War Planning: Germany
- C - -
Cartels
See Post-War Planning
China
Financial report from American Embassy - 9/29/44
777
158
Military operations - settlement of: War Department
memorandum reviewing situation to date. together with
draft of memorandum of agreement - (undated)
196
Combined Chiefs of Staff
See Post-War Planning: Germany
Correspondence
Mrs. Forbush's mail report - 9/29/44
114
a) Reaction to Treasury plan for Germany discussed
(See also Book 776, page 199)
Crider, John (New York Times)
See Post-War Planning: Germany (Treasury Plan)
- D - -
Davis, Elmer
See Post-War Planning: Germany (Treasury Plan)
- I -
Eliot, George Fielding
See Post-War Planning: Germany (Treasury Plan)
- , -
Financing, Government
Increase in weekly Treasury bill offering - Federal
Reserve System memorandum opposing any increase
transmitted to Treasury in advance of October 4
meeting - 9/29/44
61
Flynn, Alfred M. (Wall Street Journal)
See Post-War Planning: Germany (Treasury Plan)
Foley, Edward H., Jr. - Colonel
HMJr-McCloy conversation concerning release from Army in
Italian theatre for job with Hinckley - 9/29/44
30
a) Italian situation reviewed
Foreign Economic Administration
FDR's letter to Crowley outlining policy following end
of military resistance: See Post-War Planning
(Germany - Treasury Plan)
Regraded Unclassified
- G -
Book Page
Germany
See Post-War Planning
- H - -
Hightower, John M. (Washington Evening Star)
See Post-War Planning: Germany (Treasury Plan)
- I -
International Economic Council
See Post-War Planning: Germany
- K -
Krock, Arthur (New York Times)
See Post-War Planning: Germany (Treasury Plan)
- M -
Moulton, Harold G. (Brookings Institution)
See Post-War Planning: Germany
- N -
Newspaper Guild (Washington)
See Robertson, Nathan
- P -
Pajus, Jean (Board of Economic Warfare)
See Post-War Planning: Germany (Cartels)
Pearson, Drew (Washington Merry-Go-Round), Washington Post
See Post-War Planning: Germany (Treasury Plan)
Post-War Planning
Cartels: Pajus (Jean), Board of Economic Warfare,
memorandum transmitted to HMJr by Mrs. FDR - 9/29/44. 777 101
Germany
Treasury Plan
Krock (New York Times), Hightower (Washington Evening
Star), Pearson (Washington Post), Flynn (Wall
Street Journal), Crider (New York Times) articles
discussed by HMJr, Gaston, White, Luxford, DuBois,
and Goodhart - 9/29/44
1
a) Resume of Treasury participation by HMJr
2
Hopkins suggests to HMJr that he ask Anna Boettiger
to show FDR Krock articles before press conference -
9/29/44
20
a) HMJr's effort to follow this advice
21
b) Ticker comment on
1) FDR's press conference
23,24
2) FDR's letter to Crowley (Foreign Economic
Administration) outlining policy following
end of military resistance.
27
a) Copy of letter to Crowley
29
Regraded Unclassified
- P - (Continued)
Book Page
Post-War Planning (Continued)
Germany (Continued)
Treasury Plan (Continued)
Plan explained to Elmer Davis and others at Office
of War Information by White and Luxford -
Luxford memorandum - 9/29/44
777 175
Eliot, George Fielding: Article in New York Herald
Tribune and Gaston-Eliot conversation concerning -
9/30/44
177,180,
181,182
International Economic Council meeting: Moulton
(Brookings) address warning against crippling
economically - 9/29/44
65
State Department report on reparations, restitution,
and property rights in Germany: White memorandum
outlining present status - 9/29/44
69
(See also Book 774. page 123)
Allied Control Commission at end of war: FDR's
directive - "recruit experts in finance and exchange
from Treasury" - 9/29/44
90
Relations between Allied occupying forces and
inhabitants of Germany - - policy memorandum issued by
Combined Chiefs of Staff - - 9/29/44
91
Pringle, Henry
Cannot associate himself with Treasury permanently -
Gaston memorandum - - 9/29/44
43
(For discussion see Book 776, page 188)
- R -
Robertson, Nathan
Dinner given by Washington Newspaper Guild as Robertson
leaves for Harvard University
a) HMJr's notes for impromptu tribute - 9/29/44
40
- W -
War Department
See China: Military operations - - settlement of
Regraded Unclassified
1
September 29, 1944
9:15 a.m.
GERMAN ARMISTICE TERMS PUBLICITY
Present: Mr. Gaston
Dr. White
Mr. Luxford
Mr. Dubois
Mrs. Klotz
Mrs. McHugh
H.M.JR: Now, do you have the first Krock article?
MRS. McHUGH: Here it is.
H.M.JR: Where are the other things?
MRS. McHUGH: These are the Hightower and the Wall
Street Journal articles, and this is Drew Pearson. (Hands
clippings to the Secretary)
H.M.JR: Oh, good for you! Thank you. I'm very much
obliged. I'll very likely be calling for you shortly.
(Mrs. McHugh leaves office)
H.M.JR: This is my impression after reading this
article--and to make the record clear, at eight-fifteen I
called up General Watson and said I had to see the President
on a very urgent matter. I said, "Please give the President
my message, I want to see him."
The point was, I wanted to make it that way. I have
tried three times to speak to him on the telephone on this
over a week. I know he doesn't like to get letters, and I
am not particularly anxious to do it, but I want to draft
a letter to him on this, and if he says, "Why didn't you
tell this to me?", I'll say, "Well, I tried to see you and
couldn't."
Now, if you people want to make a couple of notes as
I go along, here is the record.
Regraded Unclassified
2
- 2 -
This is the time table. I am going to put aside the
stuff--this has nothing to do with the thing that Pearson
discovered--the President's message to Stimson on the
Directive. I don't think that is pertinent, but I want
to run over the thing as I see it.
On September 20 I saw Hull, and Hull had Doc Matthews,
I had Doc White, and Stimson had McCloy. Now, Krock's
first article appears on the 22nd, two days later, and it
is entitled, "Why Secretary Morgenthau Goes to Muebec."
(Professor Goodhart enters conference)
I am just giving my opinion. There is no question
that this article of Krock's, which was given to him by
either War or State, did give aid and comfort to the enemy
as shown by that statement of Goebbels' which I haven't
got, but we'll get it.
(To Mrs. Klotz) Will you tell her there is a statement
about me, comparing me with Clemenceau. She'll get it.
Now, the thing that has been bothering me is that up
to this article of Krock's today nobody has mentioned the
fact that this isn't a question to be debated; this is an
accomplished fact, do you see? But I think that Krock
has gotten worried--Goodhart doesn't agree with me--and I
came to this conclusion during the night, that the man who
gave this to Krock, aiding and comforting the enemy by
stiffening them, is really responsible; and Krock wrote it
after getting it from Mr. X.
I came to this conclusion during the night, that whoever
this man is, this man knew that the thing had been finished,
knew that Churchill and the President agreed to it, but
notwithstanding that he was so opposed to the plan that he
gets hold of Krock and gives him this thing two days after
I have been in Hull's office, in order to undercut; and in
doing that he strengthens the Germans' resistance. General
Marshall told me yesterday that the German resistance was
strengthened. They have all these loud-speakers on the
Regraded Unclassified
3
- 3 -
line telling them to resign, and along comes this thing
and stiffens the resistance against the American troops.
Now, during the debate they have tried to twist the
thing that I was responsible for the stiffening on the
part of the Germans. I have a right, at the President's
request, to furnish him with a memorandum which becomes
his property, and it doesn't aid and comfort the enemy up
to the time it is made public. It is the person who made
it public who was responsible.
I think that Krock, who is super-shrewd, for his own
sake and for the sake of the person who told him, has written
the article today making out that, one, through his
publicity he got Churchill to change--through the public-
ity showing it made Goebbels uncertain. The conceit of
the thing is unbelievable, but he is making a record for
himself.
Goodhart said he had lunch at the Times the other day,
and they are very proud of the fact that they got a full
set of the papers of Dumbarton Oaks and printed them. He
doesn't agree with me at all. He thinks they think this
is wonderful.
Here is the story of Rustin's which ran on Dumbarton
Oaks--a digest of the plans. They had the full thing before
it ever appeared, showing that this isn't just an isolated
case.
Now, the thing I had in my mind, I wanted to prepare
a memorandum for the President in advance of his press
conference today, and of course this thing in here, Harry,
which smells a little bit like Hopkins--you know Hopkins'
memorandum in which he wanted the President to say that
the Committee was wound up and it would go back to State--
that smells a little bit like Hopkins in here.
MR. LUXFORD: They are almost the same words.
DR. WHITE: I'll have to read it more carefully, because
I was positive when I got to reading that Krock article
that that was State--Hull or Matthews.
Regraded Unclassified
4
- 4 -
MR. GASTON: I wonder if they didn't get that memorandum
from Harry Hopkins?
DR. WHITE: Which one? You mean the single-page
release?
MR. LUXFORD: Yes.
MR. GASTON: Yes.
DR. WHITE: I didn't recognize the similarity, but I
read it only once. But I certainly recognize that there
was information there that was divulged--from the discussion
in Secretary Hull's office with Secretary Stimson present.
There is nobody, Mr. Secretary, other than the British, and
only Lord Cherwell, and even then he doesn't know it all,
who would know that outside of the people who were there and
yourself and myself.
H.M.JR: But you see, what they are beginning to tell
Krock is that the export feature of the thing which the
British will gain is so attractive to the British, the
thing that Cherwell said he hoped we would play down.
Do you remember the question Stimson asked me, what
came first, Roosevelt's promise to them of six billion
dollars in Lend-Lease or the agreement to go along on the
Ruhr and the Saar? I said, "Stimson, I know what you are
getting at, and for your comfort and peace of mind, the
English agreed first to the Ruhr. and the Saar, and subse-
quently the President agreed to the Lend-Lease."
This thing is all going to come out, and I want to get
this stuff to the President before he has his press conference.
I mean, now they are taking the angle that of course what
got the English was the attractiveness of getting the German
export trade.
DR. WHITE: I think one important thing for the
record, I would go ahead and do what you are contemplating
doing, because to me as I reconstruct the picture I came
out, as you did, that he got that from Stimson or Hull or
both, because several of the reporters went to each place,
Regraded Unclassified
5
- 5 -
and Krock being the chief man they must have had a talk
in which they all pitched in what they knew and he was able
to write the article. But it came from those sources.
This information he got later, 30 I am convinced he did it.
I further believe that if this is of comfort and aid
to the enemey, and it may be, I am very skeptical about
that; but if it is-did you read this morning's Post?
H.M.JR: No.
DR. WHITE: Childs says very definitely that you were
responsible for the stiffening of German resistance. If
it is of comfort and aid to the enemy, then the responsi-
bility lies exclusively with Krock. He should have fore-
seen that, in the first place; and it lies with Hull or
Stimson, or both, or their lieutenants, because that is
where the information came from. I think that goes without
question.
After all that has been said and done, Mr. Secretary,
I think that very little can be made of that now. I think
you have to take whatever rap is coming during the next
month on the Election. Publicly, I think that the President
will do whatever he thinks is of interest to him politically.
H.M.JR: Granted, but look--
DR. WHITE: After the Election it will be a different
story.
MR. LUXFORD: On one point there, I don't think you
can pick the time at which you are going to answer this
opposition. Look what they have done with public opinion
in just one week of blasting at this plan. Give them
another month and it will be as dead as a door-knob so
far as trying to get public acceptance.
H.M.JR: Lux, I haven't quite gone over the whole thing
yet. On the assumption that the President is going to
handle this thing, I am going on the assumption that grad-
ually the whole story is going to come out, that this is
a finished document, do you see, and all of the nuances
Regraded Unclassified
6
- 6 -
and everything else with it, inch by inch, are going to
come out.
Now, if all of it comes out, then the plan really
may be hurt. I don't think putting me up as a whipping boy
is going to hurt the plan. I have ninety letters, fifteen
unfavorable and only three out of the ninety raising the
Jewish issue. And those three are anonymous. That shows
how the mail is.
But you see, if I can get this memorandum to the
President--and they said he might send for me any minute
now--I think he should send for Hull and Stimson and my-
self and he can whip us all three and say, "Now, you three,
what has happened up there has got to stop." And I
want to get over to the President--I asked him should I
go and see Hull and Stimson on Tuesday the 20th and report
to him. He said yes. And I want to get over to him that
I went there and reported to these people, and from that
time on the leaks began.
But he could, by being very severe if he wants to,
pick on me in front of them--it is all right--and stop
this thing from leaking any further.
MR. LUXFORD: I doubt it.
DR. WHITE: Most of the damage of the leak has been
done, and now I can also see why the same fellows tried
to put the blame for the leaks in the Treasury. They had
us coming both ways.
MR. GASTON: They started at the very start and told
the story that the leaks were coming out of the Treasury.
MR. LUXFORD: The radio said the first day this
leaked--last Saturday--there was a radio announcement
about four in the afternoon stating that it was learned
from Treasury sources, and then giving the story which
obviously showed it hadn't come from the Treasury. But
that was right over the radio.
H.M.JR: Elmer Davis tells me yesterday that it's
all over Washington that this comes from the Treasury.
Regraded Unclassified
7
- 7 -
H.M.JR: That is another reason I want to make a
memorandum; maybe the President thinks it comes from the
Treasury.
DR. WHITE: You see, the record on this, as far as
you are concerned, is perfectly clear, that your recommend-
ations on the basis of policy were made in a very confidential
way, top secret way; that nothing came from here; that you
only told the others when you had the President's permission;
that the leak came from there.
I think, however, that the question of who bears the
responsibility and the culpability for proposing the plan
for allowing the leaks can best be attacked and postponed
until after the election when the whole story can be made
clear. In the meantime, what we have to do, it seems to
me, is to go ahead as we are doing, defending a position,
and you can make clear to the President whatever you want.
H.M.JR: But I'd like a little memorandum with a
time-table to hand the President with these articles
attached, see?
DR. WHITE: I think you have to supplement it unless
the President knows that Krock is close to Hull.
H.M.JR: In this memorandum I had thought to say,
"Mr. President, I am sure that you know who Krock's very
good friend is in the State Department and in the War
Department. If you don't, I'll be glad to furnish you
that information orally."
I am not going to put it in writing, because you don't
know who is going to see it.
DR. WHITE: But as I read that article this morning,
Mr. Secretary, I became convinced that during such time
as the thing can be made completely clear in an authori-
tative way you have got to take a lot of the licking.
H.M.JR: I agree with you, but if I can get this
memorandum and get it to the President between now and
his press time--I don't know that Hopkins has sold the
President on this idea.
Regraded Unclassified
8
- 8 -
Now, one of the things, again quoting Goodhart, the
very thing that Krock says I shouldn't take part--he says
the very strength of the English Cabinet is the feeling of
joint responsibility. Then why shouldn't it be a joint
responsibility on this thing? Why should I be put off in
a pocket completely by myself?
And, again, if you don't mind, he says how could
Herbert Hoover and Charles Evans Hughes sit next to
Daugherty on the oil scandal and keep their mouths shut.
Are we going back to those days where I am going to sit
in the Cabinet, and because Mr. Daugherty was a crook and
I am a Cabinet Member and it is none of my business, am I
going to sit in the Cabinet knowing that the American
people and soldiers are being sold down the river on the
entrance to Germany, and I am not going to express myself
when the President asks me to?
DR. WHITE: You are a hundred percent right. There
isn't the slightest doubt you will come out on top when
the whole story can be told and the proper defense can be
made.
H.M.JR: Harry, you are right, but let's give the
President something which may influence him between now
and four o'clock. There is the chance that if we can pre-
pare a one-page memorandum showing him how a job has been
done on him that he will get very angry and will not do
what Krock prophesies.
Krock's greatest usefulness to me is his power of
prophecy through his inside information. I simply want to
get this to the President as a stop, look, and listen.
Now, does the President want to do what Krock says he is
going to do, or does he want to do what he thinks is going
to be best for future generations?
DR. WHITE: In other words, is he going to be forced
by a maneuver to change a policy which he decided upon on
its merits--a maneuver by a press man?
MR. LUXFORD: That is another way of putting it. One
of the things that is clear to me from Krock's articles--
Regraded Unclassified
9
- 9 -
and I think he is right--is that they are very likely to
change this Government's policy by virtue of the publicity
they are giving this thing. I think we are at fault if we
don't answer that, not on the plan, but on the premises.
H.M.JR: But change it for the worse, through Krock's
publicity.
MR. LUXFORD: I mean, we must answer on the merits,
because that publicity is only going to hurt us. I don't
think we have a month's time.
MR. DUBOIS: We are in a very poor position. The
Treasury plan is being misrepresented in the papers, you
are being criticized, and yet you are in a position where
you can't speak up. It is ridiculous.
H.M.JR: You saw Crider's story after meeting with
me, didn't you?
DR. W ITE: No. He says that you feel it is the
property of the President.
MR. LUXFORD: Yes, I saw that story.
DR. WHITE: You see, the situation is that you are
the target for several reasons, some very broad, all of
them potent. You are the target because Stimson is angry
for reasons which we are all familiar with. Hull.is
extremely angry. And then you have the group who are
against any such peace, and they are all joining hands and
they are going to ride this horse very hard until such
time as the story can be made authoritatively clear.
MR. GASTON: I don't think it is being made author-
itative. What difference is that going to make?
MR. LUXFORD: Well, today the newspaper publicity is
a fight against a straw man. They are not attacking the
Morgenthau plan, they haven't even the Morgenthau plan
before them. They are fighting a straw man which they are
Regraded Unclassified
10
- 10 -
calling the Morgenthau plan, and by the time you are ready
to release the Morgenthau plan they will have defeated it
by calling it the Morgenthau plan.
DR. WHITE: That isn't wholly accurate, Lux. They
have the essentials of the plan. They go to a little
extreme. They are not attacking a straw man, but there is
nobody giving any adequate defense.
MR. GASTON: The thing they are attacking is the very
thing that was agreed to at Quebec.
MR. LUXFORD: I think it is a straw man in the sense
that they have missed the point of what the plan proposed.
DR. WHITE: I am not sure of that.
H.M.JR: I saw Crider day before yesterday. This is
what he says: "Inquiries in the Treasury as to whether
the situation might have been explained by the fact that
Mr. Morgenthau was called to Quebec to discuss economic or
financial matters other than those relating to the
treatment of Germany have been pushed aside."
He asked me that question and said, "That will be a
nice out for you, Mr. Morgenthau." I said, "I am not say-
ing yes or no." That was the one question.
"It is understood that the Secretary has taken the
position that he has played square with his fellow Cabinet
Members at every stage of the committee's work. Moreover,
the Treasury official
does not discuss them until
the President speaks or gives him clearance."
That is the truth.
DR. WHITE: I like your approach to the President on
the grounds that what is being done is a job on his policy
and not on you. It is not a question of your saying that
you have got to be protected by him, but rather that his
policy--
H.M.JR: In all the messages I have sent him, I have
never raised the question of what is being done to me; it
is always to him.
Regraded Unclassified
11
- 11 -
MR. GASTON: It may have been successfully done, too,
Harry.
MR. LUXFORD: That is what I suspect.
MR. GASTON: They may have succeeded in causing him
to switch, you see. Even an agreement at Quebec isn't
necessarily finally binding. They are working here and
abroad to upset it.
DR. WHITE: And they will have an easy time with
Churchill, because he will upset the thing very easily,
particularly when he says, "Your public is not in favor
of it."
MR. LUXFORD: I think Hopkins is definitely headed
in that direction.
MR. DUBOIS: Shouldn't we also give the President
some constructive suggestions as to what he might do,
particularly what he might say to the press?
DR. WHITE: That press release, it seems to me, would
have hit that on the head, if he would give out that state-
ment.
MR. GASTON: You mean what?
DR. WHITE: The revised one, with the press release.
That would do a great deal of good and would provide the
opportunity for further discussion, and would also provide
the opportunity for justifying the Treasury completely in
taking its action, because then we can tell the public in
a hundred different ways that that is the document that
emerged, because the Secretary interfered. And you ought
to see the document when he got it that was going into
effect! That would provide the opportunity without rais-
ing all those questions.
H.M.JR: I thought of that, too. Have we got
Document No. 1--the interim Directive?
DR. WHITE: No, but I have asked Taylor to be sure
and get it in England. We should never be that degree of
Regraded Unclassified
12
- 12 -
honest! I insisted on having that thing copied that night
and I was over-ruled. We should never be that honest again.
It was "Top Secret" and you are not supposed to copy any
"Top Secret" documents--and we don't for ninety-five
percent of them.
MR. GASTON: Some of those copies that I read in that
file were not "Top Secret."
DR. WHITE: Oh, well, we leave the "Top Secret" out
in the copies!
(Mrs. McHugh enters office temporarily)
H.M.JR: Mrs. McHugh, I would like to have the
suggestions for the President's press conference which
Dr. White took over to Mr. Hopkins.
DR. WHITE: Well, we'll get that copy. There is no
question of that, but Taylor will have to get it in
England, because I don't think we can get it here.
H.M.JR: I thought we had it.
DR. WHITE: You may have it, but the only copy that
they let us look at--
H.M.JR: I think I have it. There is a whole flock
of stuff--one day in here I think McCloy gave it to me. I
am fairly sure that I have it.
DR. WHITE: You don't have the Handbook, but you
didn't leave the Directive?
H.M.JR: I haven't the Handbook, but I have that so-
called Interim Directive.
MRS. KLOTZ: I think that is the thing I have.
(Mrs. Klotz leaves office temporarily)
DR. WHITE: But we don't need that because we have
the excerpts which are better, or as good. And we have
got more excerpts than we gave the President, because we
reduced the number that we had.
Regraded Unclassified
13
- 13 -
H.M.JR: Where is that Handbook?
DR. WHITE: The President has it. He wrote on it,
"I want this sent back to me personally." I don't know
whether he has it, because when we saw it with that note
on it, we borrowed it from the Army. The Army has
another copy. There will be copies in England, I am
positive about that.
H.M.JR: It is so much easier in England; you only go
to jail for two years in England!
DR. WHITE: That would be an excellent step, if we
could get that thing published.
H.M.JR: You mean the two? Yes, but we can't do that
today.
Well, now, how about you people putting down something
for me on a sheet of paper which would lead up to this
suggestion which we drew up for the President's press
conference--why the President should continue this
committee? I think it is a sign of weakness for him to
give it up.
MR. DUBOIS: If there is no chance he could issue the
other statement, could we try our hand at another state-
ment that possibly he could give out today?
H.M.JR: The sky is the limit: The point is that
on the theory he will or won't see me, I'll get this into
his hands before lunch.
DR. WHITE: You will give it to him orally?
H.M.JR: Both. But I want to give him the back history.
And we'll fix this thing up here, do you see? Here is
September 20. September 21 was written one day later.
DR. GOODHART: On the Dumbarton Oaks thing, I'd
rather not be personally quoted there, but I think it is
so obvious that it was Eden that it is funny.
Regraded Unclassified
14
- 14 -
MR. GASTON: Ed Locke, of Time, called me last night
and was very anxious to see you to give you an opportunity
to say something on your side of this matter. He has an
appointment to see Stimson at ten-thirty this morning.
H.M.JR: You can tell the s.o.b. for me that the
time to see me is before the horse is stolen out of the
barn!
MR. GASTON: Before the lead article is printed
stating a lot of things that aren't SO.
H.M.JR: Sure.
DR. WHITE: It isn't that they stated a lot of things
that aren't so--
MR. GASTON: That's right, Harry.
DR. WHITE: The major criticism that you can direct
against them--
MR. GASTON: It is an editorial attack.
DR. WHITE: It is almost equivalent--from General
Marshall's point of view it would be just the same as
discussing a plan whether Germany should be invaded from
the north or the south that they happened to get ahold of
from the Army before the decision is made. Here is a plan
for long-term treatment of Germany which in their opinion
would affect Germany's resistance.
MR. GASTON: One thing we have to remember is that
this thing was widely discussed around town before the
Secretary ever went to Quebec, before he ever had this
meeting with Hull and Stimson.
DR. GOODHART: I agree with you, the more accurate
this report, the worse it is.
(Mrs. Klotz returns to office with file of Quebec papers)
DR. WHITE: I am sure we don't have it, Mr. Secretary.
There were a number of those drafts which we drafted outselves.
Regraded Unclassified
15
- 15 -
MRS. KLOTZ: This book was given to us by the War
Department.
H.M.JR: The War Department draft immediately following
cessation.
MR. DUBOIS: That is a later draft. The one they
actually cabled to the field was some time ago.
DR. WHITE: I am positive it is not in this book.
H.M.JR: Anyway, you people have the same book as
this, haven't you?
MR. LUXFORD: Yes.
DR. WHITE: If we could work with those before you
we would give it right back--the sequence of stories.
H.M.JR: Yes, I just fixed it for you; but this is
my only set. (Hands file to Dr. White)
Before you go, Arthur, do you want to say something.
You have listened to this discussion very patiently.
DR. GOODHART: I agree, first of all, I think it is
worth recalling that there has been a leak before, and
that was very serious, over the Dumbarton Oaks conference,
and that international affairs are going to be difficult
to run if every time a plan is announced before you dis-
cuss it.
Then on the next, I agree entirely with Dr. White
that as long as you can't answer it completely it is much
wiser not to say anything at all until the election is
over--you won't be in a position to say anything, and I
don't think that--I am not saying anything about you are
going to lose, because people are going to think about
this, anyhow, and a snap judgment by the public isn't
going to affect them, because you can come out much more
strongly later on. What I would do would be--anyhow, so
far all they have been talking about is details. They
have been talking about whether they are going to close
a mine, or something like that. It seems to me that you
Regraded Unclassified
16
- 16 -
have won your fight to a great extent already, because you
have forced everybody to say that they are in favor of
a strong peace. And the real fight in the end is going
to be whether you have a strong peace or a weak peace,
and all these other things are more a matter of detail.
I think, therefore, the best thing is your statement
in the Times yesterday, which is admirable--this is up to
the President and you won't say anything.
DR. WHITE: I didn't mean to say that we shouldn't
say anything. I'd like to have you agree with me, but I
believe we should continue along the lines we are, of de-
fending the issue. But so far as the personal story of
the matter and indicating to the public where the leak
came and the responsibility and taking the view which is
not only defensible--but I think something else, Secretary
Morgenthau would be derelict in his duty if he sees
being developed a policy which he feels is bad or wrong
and does not speak out. I think there is no greater
nonsense than the assumption that this is not his business
as a Cabinet Member. But that can be handled after the
election and you will emerge from it better.
But I think we have to go ahead and try to defend the
issue without trying to defend Secretary Morgenthau's
role in that. Let's save that for later when the whole
story is written.
MR. LUXFORD: I'd put it this way, if you can sell
this issue to the public you will have Secretary Morgenthau
emerge with a higher position, no matter what you say.
That is, his status will emerge from having supported the
right position of a problem and the tactics will disappear.
But you can't, I believe, go by default for another
month on defending the issue. I think we have to continue
the policy we have on winning this issue on its merits.
MR. GASTON: You can't argue the issue without telling
what our position has been.
DR. WHITE: But that is different from saying that
Admiral Land has agreed.
Regraded Unclassified
17
- 17 -
MR. LUXFORD: We mean, don't inject the issue of
Morgenthau versus Stimson, and begin to pull that out.
Don't pull out that line, even. Fight the issue on its
merits. We are not discussing who leaked what or what was
the result of that leak. All we are talking about is on
the merits--is this a good proposal.
DR. WHITE: That's right. Let's fight the issues now
and the role that each individual played in that.
MR. GASTON: Are you going to tell what the proposal
is?
DR. WHITE: In the main, it is already out. And it
is going to be more out after--
MR. LUXFORD: It is out and defenseless.
H.M.JR: I tell you, gentlemen, just don't worry about
this. This isn't the first time that I have been the
whipping boy for the President, and I have taken it on
taxes again and again, as you people know. At the time it
seemed very important, but nothing is as important as this,
and I have told the President and Mr. Hull that I am going
to do this thing and this is more important to me as a
citizen than it is as Secretary of the Treasury.
So don't worry; I can take it. I have demonstrated
over eleven years I can take it. I have not yet had any
indication from the President that he has changed. I
don't agree with you people that he is going to change. I
don't think he is going to change one iota.
DR. WHITE: I think it is important, as you said, to
let him know that you did not promote or foster the leaks.
H.M.JR: So that out of pique he doesn't sort of slap
me on the wrist. And don't forget, if Mr. Hull is angry
about many things that he wasn't consulted about--that
Churchill-Roosevelt statement in regard to Italy--he read
about that in the paper.
DR. WHITE: He mustn't get the idea that you, because
of your victory, were boasting; and that is what they will
Regraded Unclassified
18
- 18 -
try to give him, and that is why he mustlmow that the
leaks did not come from here.
MRS. KLOTZ: He ought to know by this time that you
don't operate like that.
H.M.JR: Do you remember one time there was something
he personally got on the telephone and I had to check
every single telephone call in my office? I mean, it was
a question of himself and his son and myself. He checked
every call between the White House and the Treasury, himself--
took the time to do it. I happened to be right; his son
happened to have been telling an untruth.
Anyway, had you finished, Arthur?
DR. GOODHART: Yes.
H.M.JR: All we can do, I think, between now and this
afternoon is try to influence him in regard to his press
conference. That is all we can try to do. Then as to
strategy for the balance between now and the 7th of
November, I'd like to sit down and talk to you gentlemen
again. That is another story.
DR. WHITE: You didn't promise the fellow from OWI
I would see him this morning?
H.M.JR: Tomorrow will be just as good. The fellow's
name is Elmer Davis. He used to be on the radio!
Regraded Unclassified
13
- 18 -
try to give him, and that is why he mustlmow that the
leaks did not come from here.
MRS. KLOTZ: He ought to know by this time that you
don't operate like that.
H.M.JR: Do you remember one time there was something
he personally got on the telephone and I had to check
every single telephone call in my office? I mean, it was
a question of himself and his son and myself. He checked
every call between the White House and the Treasury, himself--
took the time to do it. I happened to be right; his son
happened to have been telling an untruth.
Anyway, had you finished, Arthur?
DR. GOODHART: Yes.
H.M.JR: All we can do, I think, between now and this
afternoon is try to influence him in regard to his press
conference. That is all we can try to do. Then as to
strategy for the balance between now and the 7th of
November, I'd like to sit down and talk to you gentlemen
again. That is another story.
DR. WHITE: You didn't promise the fellow from OWI
I would see him this morning?
H.M.JR: Tomorrow will be just as good. The fellow's
name is Elmer Davis. He used to be on the radio!
Regraded Unclassified
18
The New York Times.
SEP 22 1944
In The Nation
mitted, found them to his liking.
many of those who have never accepted
When, therefore, the plans at Quebec
the necessity of General Eisenhower's
depended on an understanding between
invasion policy in North Africa and
the United States and Great Britain
who fear that the national trant of-good-
Why Secretary Morgenthau
(which presumably Russia has ap-
nature may operate to make it too easy
Went to Quebec
proved) with reference to the treat-
for the conquered German people. Sec-
ment of German nationals after the
retary Morgenthau never was known as
war and during the occupation, the
a critic of the North African policy.
By ARTHUR KROCK
President sent for the Cabinet member
But he seems to think that the Ger-
WASHINGTON, Sept. 21-A number
who had pretty much taken over the
mans may not be taught their merited
of inquiries have come to this depart-
problem.
lesson unless he and others of like
ment, of which the following is typical:
This is the explanation, given by
mind watch for and stamp out anything
Both Foreign Minister Eden and
those who should know, of the pres-
which may stimulate a psychology of
Foreign Under-Secretary Cadogan
ence of the Secretary of the Treasury
leniency.
were summoned to Quebec for con-
with Mr. Eden and Sir Alexander Cad-
In an orderly administration the
ference, but the Secretary of the
ogan and the absence of the Secretary
State and War Departments would be
Treasury, and not the Secretary of
of State. The Quebec conference dealt
the central figures in this problem, par-
State, was the only Cabinet mem-
largely with military matters, war and
ticularly since neither Secretary Stim-
ber summoned from Washington.
post-war, but the line to be followed
son nor Secretary Hull can even faintly
Does this mean that Mr. Morgen-
by our civilian representatives in Ger-
be suspected of any inclination to be
thau has become the President's
many must be integrated with military
easy with the Germans. And in that
adviser on foreign affairs instead
measures for some years to come.
type of administration the Cabinet
of Mr. Hull?
In a way the discussion in Washing-
Migister for Foreign Affairs would
In a. general sense the answer is
ton over these measures is a very mild
have conferred at Quebec with hin op-
"no," but in a limited way it appears
descendant of that which arose over
posite number, Mr. Eden. But the
to be "yes." This is only with respect
our North African policy for a few
United States Government these days
to one sector of foreign policy: The
months after the invasion. General
in much too personal to be thus aye-
post-war treatment of Germany. Mr.
Eisenhower, finding that General Gi-
tematimed.
Morgenthau has become the central
raud could not maintain the order
civilian government official concerned
which the safety of his military opera-
with this matter, and he seems to have
tions required, accepted the aid of the
persuaded the President that the poli-
late Admiral Darlan. On the latter's
cies he proposes during the occupation
advice, General Eisenhower installed in
of Germany are more in line with Mr.
civil posts some Vichy Frenchmen who
Roosevelt's ideas than those of some
were anathema to the de Gaulle group
other advisers and that the Treasury
and to the most vocal anti-Fascist
Secretary can be relied on to press
groups in the United States.
them firmly in the event of disputes.
Defense of Policy
As in so many other difficult areas
A. blast of criticism, which is still
of policy, the President, on the private
testimony of associates, hesitated until
blowing in some degree, assailed that
just before Quebec to make & choice
policy, and fear was expressed that it
forecast "soft treatment" and even ex-
of guiding principles for occupied Ger-
many and then demanded a new set to
culpation of European fasciats after the
war was won. To this the official re-
be ready in forty-eight hours. This in
why, according to these witnesses, the
sponse was that the policy had saved
a great many American lives in North
Quebec conference assembled with our
Africa and preserved order at General
post-war German program so new that
Eisenhower's back-the only way, it
the British were obliged to reopen re-
was asserted, this could have been
view of the subject by their Foreign
achieved. The President and Mr. Hull
Office.
also denounced the suggestion that they
The President some weeks ago ap-
are, disposed to be lenient with fascists
pointed to formulate a blueprint a
during or after the war. And It was
Cabinet committee composed of Sec-
argued that a policy which was invoked
retaries Hull, Morgenthau and Stim-
during the perilous military stage of
son. In this Mr. Morgenthau, following
invasion had to be prompted by con-
his visit to the Normandy front, took
siderations which could be disregarded
the lead, partly because of the bur-
after victory and therefore was not part
dens of other matters on his Cabinet
of a permanent pattern.
colleagues, partly because he. did not
This last attitude was the guiding
like suggested programs he had seen
principle of the Army invasion menual
and an invasion manual prepared by
in France which is said to have archsed
the Army.
the Secretary of the Treasury. -Com-
The Summers to Quebec
posed in the absence of a firm political
Mr. Roosevelt, to whom Mr. Morgen-
line, and addressed to military prob-
thau's views were vigorously trans-
Tema only, it nevertheless stirred up
Regraded Unclassified
18-
B
The Epening Star
SEP 24 1944
Presidential Peace Cabinet
by an Allied or United Nations mill-
tary commission.
7. No outright reperations-since
Reported Split Over Germany
a German agricultural state-with
little or no commerce would not be
Stimson Held Strongly Against Morgenthau's
able to pay them-although distri-
bution of German machinery might
Plan to Strip Nation of Industry; Hull-Coot
be considered as reparations in some
respects.
Criticisms Cited.
By JOHN M. HIGHTOWER,
Poland's loss of eastern territory
Associated Press Staff Writer.
to the Soviet Union; (B) Russia
The principal criticisms which
wants German labor battalione
have been leveled against this plan
President Roosevelt's cabinet
to work on the Soviet Union recon-
by War and State Department plan-
committee on German peace
struction: (C) With her own huge
ners is that It will not work be-
policy has split wide open, It was
needs for manpower, Russia is not
cause Germany occupies a key posi-
learned last night, over a plan
Interested in prolonged military OC-
tion in European economy due to
sponsored by Secretary of the
eupation of Germany and would be
her Industrial capacity to produce
Treasury Morgenthau for de-
willing to have Britain, the United
needed goods and because of the
stroying Germany as a modern
States and other Allied countries do
markets she affords other Euro-
the job.
pean countries.
industrial state and converting
Secretary Hull is known to be
Until Secretary Morgenthau
It into an agricultural country of
determined that whatever plan is
dropped his proposals in the hop-
small farms.
decided on finally here must be
per and won presidential support
The Morgenthau plan, drawn up
agreeable to Russia. He feels that
for them it had been tentatively
after the Secretary recent return
It is essential to have British-
planned that that Germany would
from European battlefronts and
American-Soviet co-operation in Im-
be permitted to function as an In-
England, is reported to have had
mediate postwar Europe as & basis
dustrial state after surrender. but
the general approval of the Presi-
for long-range co-operation in a
under Allied military and economic
world security organization.
controls that would deny her any
dent since before his Quebec
Plan Outlined.
opportunity to become a great war-
Conference with Prime Minister
Secretary Morgenthau's plan as
making state.
Churchill. It has failed to win
understood by those who have fol-
To date the Morgenthau plan has
support, however, from Secretary
lowed its development from the
served chiefly as a basis for hot
of State Hull and is violently op-
first to provide:
arguments in the secret sessions of
posed by Secretary of War Stimson.
1. Removal from Germany to de-
War. State, Treasury and other
vastated countries of what ever In-
Government agency experts charged
Secretaries Hull, Stimson and
dustrial machinery those countries
with evolving practical controls for
Morgenthau form the Cabinet Com-
want: destruction of the rest of
the Reich of the future. It has been
mittee.
Germany's industry.
Instrumental also in bringing about
For the time being, the dispute
2. Permanent closing of whatever
modifications of the basic handbook
mines remain in the territory of
being prepared by the Government
over un Morgenthau plan has
the postwar German state.
for,the guidance of military admin-
snarled
pp Treasury, War and State
3. Cession of the Saar and West-
Istrators In postwar Germany,
Departale
work on detailed
ar-
German industrial areas to
Postwar Germany is defined by
rangements for postwar control
of
France as well as cession to Poland,
these experts as the German state
Germany that three-power plan-
of Eastern German areas which
which will come into existence
Russia might want handled that
ning by this country, Britsin and
sometime after the armistice, The
way.
Russia on long-range German pol-
first period of German occupation
4. Dissolution of large German
already is beginning with the ad-
icy also has virtually stalled. This
landholdings into small farms which
vance of Allied armies onto German
planning. carried on through the
would enable the 40 to 50 millior
soil. It was with this period in
European Advisory Commission, had
people remaining in Germany
mind that Gen. Dwight D. Elsen-
been proceeding along lines other
exist largely on an agricultura
hower as Allied supreme command-
than those advocated by Secretary
basis.
er on Friday announced the direc-
Morgenthau, so far as American
5. Refusal by other countries
tives for control of Germany by
extelid any assistance, ecolomic
Allied combat commanders.
leaders were concerned.
otherwise, to the people of erman;
Mr. Roosevelt presented the Mor
hat they would have
Eisenhower Would Direct.
so
42
make
genthau plan to Prime Minister
thef own way as best their could
It now is expected here that Gen.
Churchill at Quebec. Secretary Mor-
Eisenhower will serve as American
out of the wreckage of their was
genthau and British Foreign Secre-
en Aurope.
military chief in the Reich until
tary Anthony Eden were present
the second period of occupation sets
6. Prolonged control of Germany
while Secretaries Stimson and Hull
in after the war, but whether that
were not.
period will be one of three-way oc-
Secretary Morgenthau came away
cupation under a three-power com-
from the conference with the im-
mission as originally planned or
pression that Mr. Churchill found
whether It will follow the, Morgen-
his proposals acceptable, especially
thau plan more closely evidently
since Foreign Secretary Eden is re-
nowremains to be determined.
ported to have held somewhat sim-
M: Morgenthau always has been
Dar views.
regarded by his associates as an
What Premier Stalin plads with
advicate of ruthless handling of
respect to Germany apparently still
Gerinany after the war. His inter-
is no known here. Mr. Morgenthat
est in detailed planning. however,
based
his plan of three assumptions
is reported to stem from his trip
with respect to Russia: (A) Russis
to England and France a month and
wants East Prussia and most of
a half ago,
Silesia to go to Poland to offset
Regraded Unclassified
The Epening Star
18- C
I
SEP 24 1944
At that time he became convinced
that-total victory in Europe probably
would be achieved relatively soon
and the need for decisions on Ger-
man policy was urgent. Among top
British officials he found three
broad theories of what ought to be
done. One school, reportedly in-
cluding Foreign Secretary Eden,
favored ruthless handling: a second,
with an eye to Germany's future
place in possible European power
polities, favored an easy peace to
result in a reconstructed but con-
trolled German state: the third
sought some compromise between
these two extremes.
Had Regulations Changed.
In London also Secretary Mor-
genthau came on the draft of a
booklet designed to instruct Allied
Military Government officers in han-
dling German affairs once the Reich
is completely occupied. One para-
graph of this booklet prescribed a
daily food allowance for the Ger-
mans with a calory value higher
than that allowed for the friendly
peoples of liberated countries.
(Or returning to Washington. the
Treasury Secretary reported the
fact to Mr. Roosevelt who thereupon
wrote Secretary Stimson directing
that the handbook be written to
incorporate provisions for a tough
handling of Germany. He also cre-
ated the Cabinet Committee.
Those familiar with the work of
the committee say that thus far its
work has shown no ground for a
meeting of minds between Secre-
tarles Stimson and Morgenthau as
to the policy to be followed, beyon)
the fact that both agree, as, doi
M: Hull, that, by whatever meanil
Germany must be rendered unable
to make war in future.
Regraded Unclassifie
The Epening Star
18 D
SEP 25 1944
Showdown on Hard
The emergence of this plan and
Its reported White House backing
threw State and War Department
Peace for Germany
experts, who had been working out
measures on a different policy line,
into confusion,
May Come This Week
Their basic assumption appears to
have been that while Germany
would be reduced in territory by
By JOHN M. HIGHTOWER,
grants to Poland and France she
Associated Press Stall Writer,
would remain an industrial nation.
A furious debate over how to
They proposed to control her In-
write a hard peace for Germany
dustry and prevent its being used
shook the State, War and Treasury
for future aggression by a system of
Departments today. The issue may
bottleneck controls.
be forced to a showdown this week.
Would Watch Strategic Matrials.
The argument, revolving essen-
According to the bottleneck theory,
tially around what to do with Ger-
the United Nations, or a commis-
man industry, stems from a split in
sion acting in their name, would re-
President Roosevelt's cabinet com-
tain firm grasp on such strategic
mittee on German peace policy.
war-making materials going into
Secretary of the Treasury Morgen-
Germany as oil, steel and nitrates.
thau is adamantly backing a plan
Some have assailed Mr. Morgen-
to give away or destroy Germany's
that's plan, in seve
hot sessions
industrial machinery, while Secre-
of representatives ol
the three de-
tary of War Stimson is understood
partments, as impraitical
in
that
it
to be firmly opposed.
would not permit Germany to exist
The third member of the com-
as a normal element of Europe's
mittee, Secretary of State Hull, is
economic system. They have claimed
reported extremely cool toward the
that the plan eventually would break
Morgenthau proposals, but the
down under economic pressures aris-
Treasury head apparently has con-
ing from the fact that 40 or 50 mil-
siderable support for his ideas from
lion people, remaining in Germany
President Roosevelt, who discussed
would have to produce something
them at Quebec with Prime Min-
to sell and would provide rich mar-
ister Churchill.
kets for outside exploitation.
Pressure for Speed.
Interest in Russia's Role.
There is pressure for speed in ar-
Mr. Morgenthau's own experts, on
riving at some decision on which a
the other hand, have contended
positive American approach to the
that the German people have bru-
problem of Germany's future can be
cally mistreated other pations of
based. This arises from the fact the
Europe and deserve no consideration
fate of Germany actually is an Al-
for themselves, that they should be
lied problem and whatever policy is
denied relief and rehabilitation and
finally applied will have to be worked
should be prevented from ever re-
out jointly with Great Britain and
building an industrial state.
Russia and in some consultation
Among many officials not directly
with other European countries. no-
concerned in the argument consid-
tably France.
erable interest has been aroused in
Mr. Morgenthau's plan was tossed
one aspect of Mr. Morgenthau's
into the hopper last month after he
planning-the assumption that Bo-
returned from Europe and his dis-
viet Russia is not directly inter-
cussions with British government
ested in long-range occupation of
officials in London.
Germany and may want to hand
There he is reported to have found
that job over to the United Na-
Foreign Secretary Anthony Eden on
tions group in which Russia would
the side of a ruthless handling of
take only stiall part.
Germany after the war. Mr. Mor-
The Russians are said 10 want
genthau. charging that the War and
from Germany territory to compen-
State Departments were planning a
sate Poland, for areas which Po-
"soft" peace, drew up a detailed pro-
land will have to give up to the
gram for control of Germany.
Soviet Union, and also [to want
Plan Confuses Experta
manpower in labor battalions which
Under this program, Germany
Moscow plans to use in the recon-
would be stripped of her industries
struction of devastated Russian ter-
and reduced from a modern indus-
ritories.
trial state to a country of small
farms. Areas such as Silesia on the
east and the Saar on the west would
be given to neighboring nations and
any mines which remairfed-in-nom-
inst Perman territory would Be
plugged up to prevent the Reich
from again becoming a great war-
making state.
Regraded Unclassified
18-E
The Washington Post
SEP 25 1944
Experts Told
Is First Testing Ground
The handbook is the first testing
ground of Morgenthar's recently
To Harden'
developed plan, reported to have
at least a measure of approval
from President Roosevelt, for in-
Nazi Peace
posing on Germany a ruthless
peace designed to end the exist-
By John M. Hightower
ence of the enemy nation as a
Accomated Press Staff Writer
odern industrial state and turn
it Into an agricultural country.
Treasury economic experts under
Morgenthau's plan has caused a
direct orders of Secretary Morgen-
split in President Roosevelt's Cabi-
thau were reported yesterday to
net committee on German peace
*be seeking basel changes, pointed
policy and the split has extended
toward a hard peace, in instruc-
into the groups of experts who are
seeking to work out future Ger-
tions to be given Allied military
man controls in detail. The Treas-
administrators on the han of
ury economic experts, who have
German civil affairs.
consulted heretofore only on tech-
That immediate development
nical aspects of economic policy,
have forged to the front, with the
served to a point up a deeper,
claimed support of the President,
more basic split among American
urging their chief's ideas on
policy makers, revealed by the
broader policy questions.
Associated Press last night, on just
Little Progress Made
how rocky a road to lay out for the
Se far, it is understood, the dise
aggressor nation.
cussions have resulted in little or
The military instructions are to
no progress. Tip War and State
be set forth in a handbook, which
Department experts, reflecting the
eventually will réquire British
attitudes of Seciptaries Stimson
agreements and about which the
and Hull, have ben reluctant to
Russians will be kept informed,
accept proposals based - Morgon-
in order to make uniform the con-
than's plan.
trol over all sections of the de-
The program of the War and
fested Reich.
State Departments calls for basic
rehabilitation for the people of
Primarily for AMG
Germany and assesses that eventu-
The handbook is designed pri-
ally some industry will develop.
marily for Allied Military Gov-
The question of her to control
ernment or other officers charged
Germany
industrial future and
with handling civil affairs either in
revent the
German people
the whole nation after a general
producing
new world war
in
surrender or in rear noncombat
fact a erities
Issue not only and
X
areas if it is conquered piecemeal.
the State, Treasury and War
In Italy and in other areas where
partment experts but also among
AMG or similar agencies have
the Allies.
functioned heretofore, the basic
purpose has been to keep the pop-
ulation quiet and safeguard the
movement of supplies and troops.
Morgenthau is reported to fear
that application of this policy in
Germany would mean reconstruc-
tion of a large part of the Reich's
destroyed industries and transpor-
tation facilities. Morgenthau has
argued that any such reconstrue-
tion, where it was not directly es-
sential to the armies, would be a
grave mistake. Instead, he has
demanded Allied administratore be
Instructed to take no measures
either to reconstruet any part of
Germany or to rehabilitate the
German people with food, cloth-
ingn. or similar relief supplies.
Regraded Unclassified
18
The Evening Star
SEP 25 1944
split has developed and is
would remain an Industrial nation.
Hull Voices Hope
still wide open.
They proposed to control her In-
Mr. Morgenthau is reported to
dustry and prevent its being used
have considerable support for his
for future aggressive by a system of
Of 9/5/44 Speedy Action on
Ideas from President Roosevelt, who
bottleneck controls,
discussed them at Quebec with
Would Watch Strategic Matrials.
Prime Minister Churchill.
According to the bottleneck theory,
Nazi Peace Terms
Pressure for Speed.
the United Nations, or a commis-
There is pressure for speed in ar-
sion acting in their name, would re-
washington
riving at some decision on which a
tain firm grasp on such strategic
By JOHN M. HIGHTOWER,
positive American approach to the
war-making materials -going into
Associated Press Staff Writer,
problem of Germany's future can be
Germany as oil, steel and nitrates.
Secretary of State Hull said today
based. This arises from the fact the
Some have assailed Mr. Morgen-
he hoped that high Allied omcials
fate of Germany actually is an Al-
thau's plan. in several hot sessions
including officials of the United
lied problem and whatever policy is
of representatives of the three de-
States Government, would be able
finally applied will have to be worked
partments, as impractical in that it
to come to agreement soon on peace
out jointly with Great Britain and
would not permit Germany to exist
terms for a defeated Germany,
Russia and in some consultation
as a normal element of Europe's
He made the comment in response
with other European countries. no-
economic system. They have claimed
to a request for a statement on an
tably France.
that the plan eventually would break
Associated Press report that Presi-
Mr. Morgenthau's plan was tossed
down under economic pressures aris-
dent Roosevelt's cabinet committee
into the hopper last month after he
ing from the fact that 40 or 50 mil-
on German peace policy was split
returned from Europe and his dis-
lion people remaining in Germany
over a proposal by Secretary of the
cussions with British government
would have to produce something
Treasury Morgenthau that Germany
officials in London.
to sell and would provide rich mar-
be converted into an agricultural
There he is reported to have found
kets for outside exploitation.
nation.
Foreign Secretary Anthony Eden on
Interest in Russia's Role.
Mr. Hull is understood to be cool
the side of a ruthless handling of
Mr. Morgenthau's own experts, on
to the Morgenthau plan and Secre-
Germany after the war. Mr. Mor-
the other hand. have contended
tary of War Stimson, the third
genthau, charging that the War and
that the German people have bru-
member of the committee, to be
State Departments were planning a
tally mistreated other nations of
strongly opposed to it.
"soft" peace. drew up a detailed pro-
Europe and deserve no consideration
The Morgenthau plan would strip
gram for control of Germany.
for themselves, that they should be
Germany of much industrial terri-
Plan Confuses Experts.
denied relief and rehabilitation and
tory and destroy or give away the
Under this program. Germany
should be prevented from ever re-
rest of its industries.
would be stripped of her Industries
building an industrial state.
Authorizes Quotation.
and reduced from a modern indus-
Among many officials not directly
Mr. Hull authorized the following
trial state to a country of small
concerned in the argument consid-
quotation:
farms. Areas such as Silesia on the
erable interest has been aroused in
"The whole question of dealing
east and the Saar on the west would
one aspect of Mr. Morgenthau's
with the postwar German situation
be given to neighboring nations and
planning-the assumption that So-
has been receiving attention by each
any mines which remained in nom-
viet Russia is not directly inter-
of the governments most interested,
inal German territory would be
ested in long-range occupation 'of
and that includes this Government
plugged up to prevent the Reich
Germany and may want to hand
and the State Deparment.
from again becoming a great war-
that job over to the United Na-
"It would serve no purpose to
making state.
tions group in which Russia would
say more at this time except that
The emergence of this plan and
take only/small part.
the higher officials of the govern-
its reported White House backing
The Russians are said to want
ments concerned will reach mutual
threw State and War Department
from
Germany territory to compen-
understandings, I hope, at an early
experts, who had been working out
sate
Poland for areas which Po-
stage. It is very necessary that
measures on a different policy/line,
land
will have to give up to the
we wait until we know the true
into confusion,
Sovid: Union. and also to want
conclusions they reach."
Their basic assumption appears to
manpower in labor battalions which
Mr. Hull made no other comment
have been that while Germany
Moscow plans to use in the recon-
but it was notable that he studiously
would be reduced in territory by
struction of devastated Russian ter-
avoided in his prepared statement
grants to Poland and France she
ritories.
any denial of the fact that he
Regraded Unclassified
The Epening Star
SEP 26 1944
World Security Plan
Land Enters Peace Debate.
If is against this background that
one aspect of the current controversy
Likely to Be Delayed
over German peace policy B being
studied here. The conviction of
American diplomatic officials is that
whatever policy is finally decided
For Year After War
upon it must be mutually acceptable
to the United States, Britain and
Russia If long-range Allied CO-
By JOHN M. HIGHTOWER,
operation for peace is to have more
Associated Press Staff Writer
than a theoretical chance.
American officials are reported
Chairman Emory 8. Land of the
to have revised sharply their es
Maritime Commission got into the
timates of how long It will tak
American debate on how to treat
to get a world security organiza
Germany by proposing yesterday
tion into operation. Their con
that prewar foreign trade of Japan
fidence in ultimate success re-
and Germany be distributed among
the United Nations.
mains, but they see it now as
slow, uphill job.
The - no impossibility in
pastoral nations of our
This is due to the amount of time
have proved they don't know how
required for representatives of the
to keep the peace," Admiral Land
United States, Britain and Russia to
told a House subcommittee.
get together on an organization
Denial of world commerce to the
blueprint in the talks at Dumbarton
enemy states would mean their end
Oaks,
as modern industrial nations. Ad-
Latest word is that at least one
miral Land made clear, and in
important question-what happens
advocating such a course he appar-
If one of the hig powers is accused
ently ranged himself alongside Bec-
of aggression-will have to go un-
retary Inf. the Treasury
answered for the time being.
in favoring the return of Germany
(One postwar agreement was
specifically to an agricultural state.
disclosed last night in a British-
Secretary of State Hull gave virtual
United States announcement that
official confirmation yesterday of an
they will continue after the war
Associated Press story of Saturday
the blacklisting of firms found to
night disclosing a cabinet split on
have been pro-Axis. This is de-
German peace policy. Mr. Hull HM
signed to prevent such firms in
asked at his nows for
neutral countries like Spain,
comment on published reports that
Sweden and Argentina from
Secretary of War Stimson and he
sharing in trade at the expense
opposed Secretary
of business interests which have
plan to break up German industry.
gone along with the United Na-
In reply he disclosed that it is a
tions.)
subject of wide open discussion not
Another Meeting Possible.
only among officials here but also
If many points should remain un-
among American, British and Rus-
solved after the imminent conclus-
sian leaders.
ion of the Russo-Anglo-American)
"The whole question of dealing
talks, a second. Dumbarton Oaks
with the postwar German situation
meeting might have to be held.
has been receiving attention by each
Even without such a contingency.
of the governments most inter-
however, the present session was
ested." Hull said, "and that in-
scheduled to last three weeks and
cludes this Government ann the
has now run into its sixth.
State Department.
Consequently officials no longer
"I would Verve no purpose
say
expect & world security system to
more at this time except the the
snowball into existence. They an-
higher officials of the governalents
ticipate a slow and tedious process
concerned will reach mutual under-
of consultation and agreement that
standings, I hope, at an early stage."
may mean an interim of more than
a year between the ending of the
war in Europe and the formation of
machinery to maintain peace.
There is increasing emphasis
among high authorities, therefore,
on theridea that the proving ground
of Allied co-operation in peacetime
will be postwar Europeand much of
this coloperation will liste to take
place tefore there is any certain
assurance, in the form of treaties
and agreements, that a world secur-
ity organization can be made to
function.
Regraded Unclassified
13-H
THE WALL STREET JOURNAL
SEP 23 1944
This is regarded as one of the more dras-
Post-V Germany
tie plans for, post-war Germany. It has run
into considerable opposition from
of proposals which are designed to achieve
Treasury Plan Calls for
the objective of making Germany incapable
of waging war by less severe means.
Under the Treasury plan, East Prussia
Dismemberment, Ban on
and the Polish corridor area would be turned
over to Poland. To France would go that
Most Heavy Industry
part of Germany which lies west of the
Rhine River. The remainder of Germany
would then be split into two major states-
a northern state and a southern state. There
Morgenthau-Sponsored Policy
would be other, but less important geographic
changes.
One of Several Proposals
States Would Be Separated
There would be no federation of states,
Now Under Consideration
Each part would be & distinct entity. Officials
who support the Treasury plan say this
would be necessary to prevent the parts from
growing back together. To make certain
It Meets Official Opposition
that trade did not promote a political tie,
provision might be made for a customs union
between Austria and the southern state. The
BY ALFRED F. FLYNN
theory is that resulting trade would tend to
Staff Correspondent of The Walt Street Journal
pull the southern state's economy farther
WASHINGTON A proposal that Ger-
away from that of the northern state.
many be dismembered and stripped of her
There is considerable opposition to the
industrial might has been prepared by the
partitioning proposal. It is based largely on
Treasury Department.
the argument that the various parts of Ger-
It is one of a number of exploratory
many are interdependent and their separation
plans developed within the Government to
would mean economic chaos, with the pros-
make certain that after this war Germany
pect the states would become & burden to
does not stand as a threat to world peace
the world.
While these proposals agree on this genera
On the Industrial side, the Treasury plan
objective, they show official thinking divided
would change Germany's whole economic
on how far the Allies will have to go to
system: the chief source of fivelihood would
achieve itc
be agriculture.
Here are the highlights of the Treasury
The German steel plants would be stripped
plan which was prepared under the direc-
to a fraction of their present or pre-war
tion of Secretary Morgenthau andels said to
capacity. The excess facilities would be
have reached the Cabinet level of discussions:
moved to Russia and France, as a. sort of war-
Germany would be split into northern
damage payment. The chemical industry
and southern states, with & portion of
also would be dismembered. The synthetic
her lands on the east and west going to
motor full industry would be removed com-
Poland and France.
pletely. The theory here is that it is essen-
She would lose the bulk of her heavy
tially a war industry) Germany would be
industry. Steel mills, chemical and syn-
permited to buy what fuels she needs for
thetic fuel plants would be transferred
normal uses from producing countries.
to nations she invaded. The Ruhr Valley
Power System Has Been Damaged
would be operated under an Allied com-
The electric power industry would be sub-
ject to very little direct action. The Treas-
sion.
Education would be supervised by the
ury's thought is that facilities would
Allied powers. The lower schools would
shrink when heavy industry was reduced, to
be closed until new text books could be
nt the lower requirements and would not re-
prepared. Universities, with the excep-
main a threat. Also, much of Germany's
tion of medical departments, would be
power system has been damaged by bombing.
Some of it would not be rebuilt.
closed indefinitely.
As the plan would work out, Germany
Plan Would Take Many Years
would be left with little more than a civilian
The Treasury plan is designer to bring
goods industry-textiles and food processing,
rout fundamental changes not only in
for example-to support her agricultural
vaical Germany, but in the German way
economy.
living and thinking. To effectuate it
Supporters of the Treasury plan agree
uld require two or more generations
- would not be adequate to support the
time and close political and economic super-
German population except on a starvation
vision from an Allied Government organi-
economy. They say it would encourage more
sation over this period.
than 30 million persons to move to other
Regraded Unclassified
I
THE WALL STREET JOURNAL
SEP 23 1944
portions of the world and that this, in itself,
would be a major contribution to future
peas
Competing proposals for post war treat-
ment of Germany would allow' her to
keep a much greater portion of her industry.
They would take out portions of the chemical
industry and do away with the synthetic
fuel industry. without which Germany could
not have waged the present war. Much of
the electric power generating equipment
would be located outside the country so it
could be cut off if Germany threatened war.
Schools Would Be Closed Temporarily
The Treasury plans for education are
based on the belief that the schools must be
cleared of the Nazi doctrine if Germany is
to be led away from its war-like ways,
Schools would be closed until new text books
which would omit the Nazi doctrine could be
prepared Universities would be closed in-
definitely. largely on the basis that the first
students ready for higher education have the
Nazi ideology well established in their minds.
This is also thought to be true of the pro-
fessors. Medical colleges might be permit-
ted to continue. so that there would be no
shortage of doctors.
The Treasury plan, while worked out in
constant consultation with the State De-
partment. does not represent this Govern-
ment's position. in official policy with re-
gard to post-war Germany has yet to be
determined.
Then. when the United States plas are
madel. they will have to be taken up with the
British and the Russians. These two coântries
will have some very specific ideas of their
own as to what should be done with Germany.
Regraded Unclassified
18-J
The Washington Post
SEP 21 1944
Washington Merry-Go-Round
By Drew Pearson
WAR DEPARTMENT and
sulted about the appointment of
and wrote in the margin such
State Department officials are
Robert Murphy as political ad-
comments as "What's wrong with
still quaking in their boots after
viser to General Eisenhower,
this?" or "This looks okay to
President Roosevelt blew up
read through six pages of the
me."
last month over their failure to
handbook. then threw it down
FDR's demand for a definite
achieve any clear plan for civil
indignantly.
policy on Germany was made on
administration in Germany,
"Feed the Germans!" he said.
Thursday afternoon, August 31.
With the armistice due any
"I'll give them three bowls of
The deadline was the next Satur-
time, joint British and American
soup a day, with nothing in them.
day, and resulted in a flurry of
army units spent most of the
Control inflation! Let them have
memos and a good deal of over-
summer writing and rewriting a
all the inflation they want. I
time work at the State Depart-
handbook to place before civil
should worry Control industry.
ment.
administrators to be assigned to
There's not going to be any in-
No final plan was reached, but
Germany. The fourth draft of
dustry in Germany to control."
enough was put together for the
this handbook arrived here from
London late in August for com-
Blistering Letter
President to put before the full
Cabinet for discussion the next
ment from the War, State, and
To Stimson
week. By the time he left for
Treasury Departments.
It
Quebec, he himself had some
turned out to be a completely
HE TURNED to Morgenthau
very clear ideas one this policy,
negative set of instructions, with
and demanded that. within two
even though it was not yet fully
no clear and workable recom-
days, Morgenthau, Secretary of
formulated.
mendations concerning labor
War Stimson and Secretary of
problems. food problems, indus-
State Hull prepare for him a de-
One beneficial result of the
trial problems.
tailed plan for the civil adminis-
President's anger was the dump-
And there was absolutely no
tration of Germany. Then he
ing into State Department waste-
instruction for the handling of
wrote Stimson a two-page letter.
baskets of half a dozen directives
Nazis in "key posts. Civil ad-
blistering the proposed hand-
being prepared to outline civil
ministrators studying the book
book,
administration in Japan after the
war. These were just as insipid
were given no reason to believe
So irked was he that he dis-
as the handbook for German ad-
that the British and American
pensed with the usual "Dear
Governments even desired to
ministration.
Henry" salutation, heading his
oust Nazis from important posts
letter instead "To the Secretary
Capital Chaff
in Germany.
of War." First sentence was,
THE ARMY QUARTERMAS-
The galley profs came in with
"This is a very bad job." There
TER is now considering banish-
instructions that recommended
followed long quotes from the
ment of its concentrated food
changes should be cabled back
handbook galley proofs, passages
tablets given Gl's as emergency
to London in about twenty-four
which FDR picked at random as
rations, particularly dextrose
hours.
especially weak or stupid.
tablets. Writes one GI: "We can
In disgust. Treasury Secretary
Copies of this letter went to
give the French almost anything
Henry Morgenthau and Harry
Hull and Morgenthau. Hull's
but they wont accept those dex-
White. director of the Teeasury's
copy was routed out through the
trose tablets. From foxhole to
monetary research division. took
various offices concerned in the
foxhole. disearded dextrose tab-
the proofs to the White House,
State Department, finally getting
lets fairly litter the earth." 'We
tossed them on the President's
back with penciled notations op-
have been hungry enough to
desk and asked him to look
posite the various quotations.
munch on the boxes but never
them over.
State Department officials wase
the tablets.
The President. already peeved
unable to understand, it seems,
because he had not been con-
what was wrong with the draft
United States District Judge
"Jefty" O'Connor of Los Angeles
has urged that we preserve the
official records of Nazi-Jap
atrocities, lest the next genera-
tion forget. The original docu-
ments from the war guilt trials
should be preserved in the Con-
gressional Library for future
students, urges Judge O'Connor.
Democratic Congressmen are
Regraded Unclassified
18 - K
The Washington Post
SEP 21 1944
fuming over the fact that, while
the Rotary. Kiwanis and other
socalled nonpolitical choice are
warning their speakers not to
talk politics, Miss Vivien ("Tax-
Me-Not") Kellems has been
speaking to various of these
clubs, spreading violent anti-
Roosevelt propaganda. Before
the Los Angeles Rotary clubs
recently. the vivacious Vivien
launched her sharpest barb at
Attorney-General Francis Biddle,
Apparently she didn't know that
that it was Biddle who over-
ruled his subordinates regarding
prosecution of Miss Kellums for
communicating with a Nazi agent
in Argentina.
Canine "Short Snorter"
GENERAL MARK CLARK
recently has his cocker spaniel
"Pal" sent to him in an airplane
across the Atlantic. As a result,
officers at Clark's headquarters
in Italy decided that "Pal"
should be a member of the Short
Snorters Club, to join which one
must cross the Atlantic by plante.
So they presented "Pal" with a
little leather bill case attached
to his collar and containing a
Snorter dollar bill. In oile
hour' time, "Pal" came back
with 14 signatures on his mem-
bership bill.
Regraded Unclassified
19
September 29, 1944
10:27 a.m.
HMJr:
Hello.
Operator:
Mr. Hopkins.
HMJr:
Hello.
Harry
Hopkins:
Hello, Henry.
HMJr:
Harry, I suppose that they told you -- the
War Department -- that they got a clearance
from Hull yesterday.
H:
Yeah.
HMJr:
Last night they
....
H:
Well, now, I'm
....
HMJr:
Hello?
H:
I'm trying to get a clearance from London.
HMJr:
I -- you haven't got that yet?
H:
No, and the President said that's the one
thing he must have.
HMJr:
I see.
H:
And I hope to get that by tonight or tomorrow
at the latest.
HMJr:
Yeah.
H:
But I can't get it this morning.
HMJr:
Yeah. Did you see the Krock article today?
H:
No.
HMJr:
You haven't seen it?
H:
No.
HMJr:
You'd better send for it.
Regraded Unclassified
- 2 -
20
H:
All right. In the Times?
HMJr:
Yeah.
H:
Yeah.
HMJr:
And ....
H:
About this business?
HMJr:
Yeah. I'm trying to get it to the President
so that he'll read it before he has his Press.
H:
Well, has he done it?
HMJr:
Well, I
....
H:
I'll tell you how to do it, if you
....
HMJr:
Yeah. How?
H:
Call Anna. Anna.
HMJr:
Yeah.
H:
And tell her to take it in and show it to him
right now. He's shaving.
HMJr:
Oh.
H:
That ought to be a good time for it. Let her
read it to him.
HMJr:
I see.
H:
Tell her to read it out loud to him.
HMJr:
Do you think so?
H:
Yeah. Well, sure, if you want him to get it
before his press conference, that's what you'd
better do.
HMJr:
All right.
H:
All right, Henry.
HMJr:
Thank you.
H:
Good bye, old boy.
Regraded Unclassified
20-A
The New York Times.
SEP 29 1945
left at home, and not until the details
tration circles that Mr. Morgenthau re-
In The Nation
of these ideas were published also did
calved encouragement at Quebec as
the domestic reaction begin that ap-
well - in Washington before he de-
parently affected the President's at-
parted for the conference. This cor-
titude.
A Good Example of the Value
respondent was informed today that the
Part of this upsurge was based on
British lent an interested ear to de-
of Publicity
the obvious use German propaganda
scriptions of the beneficial effects on
would make of a fixed Allied program
their hard-pressed economy If Germany
By ARTHUR KROCK
to transform Germany from an Indus-
were turned into an agricultural nation,
trial to an agricultural country. It was
WASHINGTON, Sept. 28-Familiar
The British lend-lease debit account
clear that Dr. Goebbels would ask why
signs point to the abandonment by the
with us is now about $6 or $7 billions,
Germans should not die to the last
President of Secretary Morgenthau's
which would be a large item on their
man to resist a conquest after which
Carthaginian post-war plan for Ger-
post-war ledger, growing larger and
(he would say) no German could hope
many, which was briefly in the ascend-
more difficult to liquidate the longer
to enjoy even the driest fruits of in-
ant here and got much encouragement
the duration of the war. If German in-
cessant labor.
at Quebec.
dustry were to be dismantied, alloca-
The usual "high administration
Spiking the Guns
tion of the machinery, stockpiles, etc.,
sources" are passing out word that Mr.
The German propaganda machine
to other countries might well include
Roosevelt does not favor the plan, after
took this line very promptly, but the
the United Kingdom, cutting down its
all, and that he never really was ready
publicity by which Mr. Morgenthau's
need for importing such costly gear
to adopt its basic philosophy. From
activity and the details of his plan were
until its industries have been restored
these same inspired sources come state-
revealed also carried the news that the
and converted to peacetime manufac-
ments that arrangements for post-war
administration was violently split. This
ture. The subtraction of Germany from
Germany are again being handled in
fact undoubtedly made its way into
world markets-by destroying its in-
an orderly manner: The State Depart-
Germany and rendered it more difficult
dustry and making it agricultural-
ment dominant in the political sector,
for Dr. Goebbels to persuade the people
would also increase the export markets
the War Department in the military.
the plan was fait accompli. Such is
of other nations, among which the
and the Treasury confining itself to its
the information from the underground.
United Kingdom would aurely acquire
proper concerns instead of trying to
Therefore it can be said that, if the
a goodly share.
take over the whole problem.
project was unwise and an impediment
These "advantages" of the Morgen-
Some very careful and well-informed
to the promptest possible conquest of
thau plan would help to improve the
reporters have ample evidence that this
Germany-as most comment holds-the
financial position and prospects of the
attitude is an about-face by the Presi-
publicity by which it was made gener-
United Kingdom, It could be urged by
dent, however, and if his position is as
ally known, and by which also the pow-
an advocate of that plan. At any rate,
now stated by spokesmen with good
erful opposition to It in Washington
some of the British at Quebec are said
credentials the change can largely be
was made known, not only brought
to have been impressed by such repre-
attributed to publicity.
about abandonment of the plan but
sentations, and consequently by the
Secretary Hull's objection to the
spiked the propaganda guns of Dr.
plan from which the benefits would
Goebbels.
flow.
plan, and his disapproval of the as-
sumption of management of the whole
The President is expected to issue a
Whatever the facts as to this, pub-
matter by Mr. Morgenthau and the
statement assuring the German people
licity and the return of common sense
Treasury, were well known to many
as well as opponents of the Morgenthau
which It evoked have apparently solved
plan among the Allies that it is not to
in the government. And Secretary
the Cabinet crisis, restored order in
Stimson had made plain to a number
be high policy, and announcing that the
the administration in handiing the
of influential persons his resentment
State and War Departments will retain
German problem, and produced recon-
and disapproval of, and positive alarm
their proper responsibilities. This ex-
sideration by the President of wiser
pectation was fortified by the procla-
measures. If he would now undertake
over, the turn the situation was taking
mation issued today by General Eisen-
with the encouragement of the Presi-
to remove the phrase "unconditional
hower in which he said that the forces
dent. But not until it was published
surrender" from the political atmos-
under his command have entered Ger-
that Mr. Morgenthau had become the
phere which envelops it and define-it
many "as conquerors but not as oppres-
administration authority, and had been
as the military matter It really is, an-
sors."
permitted to press ideas at Quebec
other of Dr. Goebbels' guns would be
while Messrs. Hull and Stimson were
Balt for Britain
spiked.
Yet there in a. belief in high adminis-
Regraded Unclassified
21
September 29, 1944
I went over about 10:30 and saw Anna Boettiger, and
I gave her all of my clippings on the German Plan, and asked
her to particularly show the President the one of Krock's
today. She had read the first one, so she said, "Oh, the
President knows all about this.' So I said, "Please take
it in and show it to him." I said, "I think he ought to get
Hull, Stimson and me together in the room and read the law
to all of us, and tell us to stop talking." I said, "The
first thing you know they are going to spread it that the
President has signed an agreement with Churchill on this
thing. It is bad politically and it is bad by the inference
on the Jewish angle." I said, "I will stay here outside
the President's door in case he should want to see me.
She came out in a couple of minutes, and put her hand
on my arm and sort of gently but forcibly started to move
me away, and she said that the President didn't want to see
me, and she kept moving me towards the elevator. She said,
"All I know is that the President said he definitely doesn't
want to see you." She said, "I am confident the President
has made up his mind as to what he is going to do, but he
didn't tell me what it is.
Then I dropped in to see Hopkins and told him I had taken
his advice, but the President said we were both wrong. Hopkins
for the first time read Krock's article, and he thought it
was very vicious. Nobody hates Roosevelt as much as Krock
does, and I pointed out to him that the next story would be
that Roosevelt bribed Churchill with $6 B. Lend-Lease to be
favorable to what we wanted to do in the Ruhr and Sahr,
and Hopkins said, "He practically says that in this article."
I told Hopkins that the President ought to get the three
of us together, and he agreed that he should.
Hopkins said that he had gotten hold of General McGrady,
and told him we wanted to hold off doing anything on Lend-Lease.
Then Hopkins said, "What do you think about Patterson's
going to Europe. He said that he had talked to the President
about it, and he seemed to like the idea. I told him I had
Regraded Unclassified
22
- 2 -
Patterson over for lunch one day last week, and was surprised
to find out he knew nothing about it, and I said that I had
asked him if he would be interested, and he said he would
consider it very seriously.
Hopkins said that he was convinced that if this matter
had been left to Hull and me, we would have had no trouble
but that Stimson, being opposed to it, had made trouble. He
didn't imply that Stimson had talked to the newspaper men at
all.
:
********
Regraded Unclassified
23
September 29, 1944
MEMORANDUM
TO:
Secretary Morgenthau
FROM:
Mr. Shaeffer CB
SUBJECT: President's Press Conference, Friday,
September 29, 1944 - 10:30 A.M.
ALLEGED CABINET BREACH -- President Roosevelt, at
his regular press conference, denied flatly that there
had been a breach in his three man cabinet caused by
your plan. The denial came about indirectly, after the
President had made public a letter to Leo Crowley con-
taining major policies to be effected in postwar
Germany.
"Is this supposed to heal the differences in your
three man cabinet committee, Mr. President," he was
asked. "There is no truth in reports of a split in
my little cabinet", Mr. Roosevelt replied. 'All stories
to the contrary are essentially untrue in all details",
he concluded.
Mr. Roosevelt added that the major policies set
forth in the attached letter had been approved "all
the way down the line" by State, War and Treasury.
GERMAN MARK -- President Roosevelt was asked to
comment on & recent report that the German mark would
be valued at 10¢. He replied he believed this was an
old story, that he did not know about it, but suggested
that the query be addressed to the Treasury Department.
Regraded Unclassified
24
PRESIDENT ROOSEVELT DESCRIBED AS ESSENTIALLY UNTRUE REPORTS THAT
THERE HAD BEEN A SPLIT WITHIN HIS CABINET ON PLANS FOR POSTWAR
TREATMENT OF GERMANY.
9/29--GE1139A
Degradad I
25
0
PRESIDENT ROOSEVELT DENOUNCED ARGENTINA FOR SUBMITTING TO "INCREAS"
ING NAZI INFLUENCE" AND SEEKING TO "UNDERMINE" THE SAFETY OF THE
AMERICAN REPUBLICS BY SPREADING THE WORD THAT THE ALLIES ARE DIVIDED
IN THEIR ATTITUDES TOWARD ARGENTINA.
9/29--GE1134A
ADD ROOSEVELT
26
THE PRESIDENT WAS ASKED WHETHER NIS POLICY DIRECTIVE SETTLED A
REPORTED SPLIT AMONG HIS THREE-MEMBER CABINET COMMITTEE ON POSTWAR
PEACE POLICY. HE ANSWERED BY SAYING THIS WAS IN THE CATEGORY OF
NEWSPAPER STORIES,
ASKED WHETHER THIS MEANT THERE WAS NO DISPUTE, HE SAID YES. HE
ADDED THAT EVERY STORY THAT HAD COME OUT BAOUT THIS SITUATION HAD BEEN
ESSENTIALLY UNTRUE IN THE BASIC FACTS.
ASKED WHETHER THE POLICY WAS EVOLVED AT QUEBEC, HE SAID NO. ASKED
IF THE POLICY HAD BEEN DETERMINED BY THE SPECIAL CABINET COMMITTEE, NE
SAID IT HAD BEEN APPROVED ALL DOWN THE LINE BY THE STATE, WAR AND
TREASURY DEPARTMENTS.
ON THE QUESTION OF POSTWAR GERMANY, THE PRESIDENT SAID THERE WAS A
GOOD DEAL OF NATURAL CONFUSION ABOUT THIS BECAUSE THIS COULD BE
APPROACHED FROM TWO POINTS: WILL THIS POSTWAR PERIOD BEGIN THE DAY
GERMANY FOLDS UP, OR SHALL IT BE CONSIDERED AS A LONG RANGE THING?
9/29--GE1149A
Regraded Unclassified
ADD ROOSEVELT
27
HE ALSO RELEASED DURING HIS NEWS CONFERENCE A SUMMARY OF A POLICY
TO BE FOLLOWED BY THE FEA *WHEN THE MILITARY RESISTANCE OF NAZI
GERMANY IS OVERCOME." IT SPECIFIED THAT ECONOMIC STUDIES SHOULD BE
ACCELERATED UNDER THE GUIDANCE OF THE STATE DEPARTMENT so THAT THIS
GOVERNMENT CAN PARTICIPATE WITH THE UNITED NATIONS "IN SEEING TO IT
THAT GERMANY DOES NOT BECOME A MENACE AGAIN TO SUCCEEDING GENERATIONS.
THESE STUDIES, ME SAID IN A LETTER TO FEA ADMINISTRATOR CROWLEY
SHOULD BE DIRECTED TOWARD CONTROL OF THE GERMAN "POWER AND CAPACITY TO
MAKE WAR IN THE FUTURE."
MR. ROOSEVELT TOLD CROWLEY IT WAS "IN THE NATIONAL INTEREST OF THE
U. So, AS WELL AS THE JOINT INTEREST OF THE U. s. AND OTHER PEACE-LOVING
NATIONS, THAT THE DESTRUCTION AND DEVASTATION OR WAR BE REPAIRED AND
THAT THE FOUNDATIONS FOR A SECURE PEACE BE LAID.
HIS POLICY DIRECTIVE TO CROWLEY COVERED EIGHT POINTS -- EXPORT
CONTROL, STRATEGIC AND CRITICAL RAW MATERIALS, PRECLUSIVE BUYING,
ECONOMIC WARFARE, LEND-LEASE, SURPLUS PROPERTY, CONTROL OF THE WAR-
MAKING POWER OF GERMANY, AND RECONSTRUCTION AND FUTURE FOREIGN TRADE.
9/29--GE1147A
Regraded Unclassified
ADD ROOSEVELT-ARGENTINA
28
THE PRESIDENT TSSUED A STRONGLY WORDED STATEMENT SAYING THAT THIS
GOVERNMENT FELT "INCREASING CONCERN" OVER DEVELOPMENTS IN ARGENTINA
DURING RECENT MONTHS,
IT IS "PARADOXICAL," HE SAID, THAT NAZI INFLUENCE IN ARGENTINA IS
INCREASING AT A TIME WHEN GERMANY IS MOVING NEARER TO ACTUAL DEFEAT IN
EUROPE. IT ALSO IS PARABOXICAL, HE SAID, THAT A "VAST MAJORITY" OF THE
PEOPLE OF ARGENTINA STILL ARE STEADFASTLY FAITHFUL TO THEIR IDEALS OF
DEMOCRACY.
HE ACCUSED THE ARGENTINE GOVERNMENT OF HAVING "REPUDIATED" SOLEMN
PLEDGES TO THE OTHER AMERICAN REPUBLICS, AND SAID THAT UNLESS WE NOW
DEVELOP RESPECT FOR SUCH PLEDGES, THERE CAN BE "LITTLE NOPE" FOR
INTERNATIONAL SECURITY.
9/29--GE1142A
Regraded Unclassified
29
IMMEDIATE RELEASE
SEPTEMBER 29, 1944
The President has addressed the following letter to
Honorable Leo T. Crowley, Administrator of the Foreign Economic
Administration:
"In accordance with our discussions, the following are
the major policies which should be put into effect by the Foreign
Economic Administration within the scope of its present functions
and responsibilities when the military resistance of Nazi Germany
18 overcome:
1. Export Control. With a view to encouraging pri-
vate trade without interfering with the successful prosecution
of the war against Japan, the FEA should relax controls over
exports to the fullest extent compatible with our continuing war
objectives, particularly that of defeating Japan 88 quickly and
effectively an possible.
International trade on as full and froe a basis 8.8
possible is necessary not only as a sound economic foundation
for the future peace, but it 18 also necessary in order that we
may have fuller production and employment at home. Private in-
dustry and private trade can, I am suro, produce a high level of
international trado, end the Government should assist to the
extent necessary to achieve this objective by returning interna-
tional commerce to private lanes 8.8 rapidly as possible.
2. Strategic and Critical Raw Materials. In view of
the curtailment which is to be made in our war production after
the German phase of the var, the Foreign Economic Administration
should consult with the appropriate supply agencies with a view
to making an appropriate cut in its foreign procurement program
for strategic end critical materials needed in the prosecution
of the war.
The adjustment to this reduced program should be made
in such a way as to prevent undue and unnecessary financial
losses to American taxpayers, to best preserve our foreign rola-
tions and to strengthen the foundation for & high level of
international trade in the futuro.
3. Preclusive Buying. The Foreign Economic Adminis-
tration has been buying abroad materials needed by the Axis to
produce munitions and other war materials in order to prevent our
enemies from getting thom. I undorstand that the peak of this
program is alroady passod as a result of the victories which have
been von by the United Nations. The Foreign Economic Administra-
tion should continue to take all necessary steps to prevent Japan
from getting strategic and critical materials for the Japaneso
war program, but it should limit its proclusive purchasing program
to achieving that ond, observing, of course, any existing commit-
ments.
4. Economic Warfaro. The Foreign Economic Administra-
tion's studies of the enemy's war potential and other phases of
economic warfare should be reduced and focused on the war against
Japan. This work should be carried on as it has in the past, in
close integration with our armed forces.
2. Lond-Lease. Lend-Lease supplies should continue to
be furnished in whatever amounts are necessary for the most effective
prosecution of the var. We have wagod var on a combined basia with
our Allies with a success which is boing amply domonstrated every
day on the battlefields of Europe and the Far East. Until the com-
ploto defeat of both Japan and Germany, the flow of Lend-Leaso aid
should be continued in the amounts necessary to enable the combined
strongth of all the United Nations to defeat our common enomios as
Regraded Unclassified
- 2 -
quickly as possible and with the least loss of life. The amount
and nature of the aid necessary after the defeat of Germany is
closely tied up with the strategic plans for the Pacific var, and
the programs for reconstruction and for reconversion of industry
to civilian needa which ve and our Allies work out on a basis of
mutual understanding. The Foreign Economic Administration should
aid in carrying out this policy to the fullest extent.
6. Surplus Property. AB you have done in the past,
you should continue to take every reasonable neasure to see to
it that no unnecessary surpluses develop out of procurement by
the Foreign Economic Administration for Lend-Lease, UNRRA or other
purposes. In connection with procurement or production for Lond-
Loase or relief and rehabilitation purposes, you should continue
to investigate and take up supplies of other Government agencies
which are or may be surplus.
7. Control of the War-Making Power of Germany. You
have been making studies from the economic standpoint of what should
be done after the surrender of Germany to control its power and
capacity to make var in the future. This work must be accelerated,
and under the guidance of the Department of State you should furnish
assistance in work and when requested to do BO in personnel by mak-
ing available specialiste to work with the military authorities,
the Foreign Service, and such other American agencies and officials
as participate with the United Nations in seeing to it that Germany
does not become a menace again to succeeding generations.
8. Reconstruction and Future Foroign Trade. It is in
the national interest of the United States, as well as the joint
interest of the United States and the other peace-loving nations,
that the destruction and devastation of war be ropaired and that
the foundations for a securo poace be laid. I understand that you
are also preparing to submit for my consideration major proposals
along those lines. In varying degrees every workman, every farmor
and every industry in the United States has a stake in the produc-
tion and flow of manufactured goods, agricultural products and other
supplios to all the other countries of the world. To produce the
largest amount of useful goods and services at homo, we should
export and import as much as possible.
Any marked improvement in the oconomic well-being of the
United States will not only improve the economic woll-boing of the
other peace-loving peoples of the world, but will also aid materially
in the building of a durable peace.
With this objective in mind, you should continue to take
such action as 10 necessary or dosirable in accordance with the
powers delogated to the Foreign Economic Administration and in con-
formity with the foreign policy of the United States as defined by
the Secretary of State."
Regraded Unclassified
30
September 29, 1944
12:52 p.m.
HMJr:
Yeah.
Operator:
Mr. McCloy is at lunch. I left a message that
you returned his call.
HMJr:
Oh. Is that what they said?
Operator:
That's right. He called about twelve-thirty.
HMJr:
Well, you remind me when I come up from lunch.
Operator:
All right.
2:08 p.m.
John
McCloy:
have been pressured by all the King's horses
and all the King's men to get Ed Foley released
from Italy for a job with Hinckley. You know
what he's doing in Italy.
HMJr:
No, I -- who, Hinckley?
M:
No, Foley.
HMJr:
(Laughs).
M;
Well, Hinckley is doing contract settlement work.
HMJr:
Yeah.
M:
And he wants Foley for his General Counsel, and
I told him that they couldn't have. him until I
at least checked in with the theatre to see what
the situation was there.
HMJr:
Yeah.
M:
The President has been pressing us awfully hard
in Italy. I think a little unwisely they have
sort of stressed some of the so-called hardships
of Italy
HMJr:
Yeah.
M:
....
and haven't stressed what we've done for Italy.
Regraded Unclassified
31
- 2 -
HMJr:
Yeah.
M:
Which is at the rate of something over a hundred
million dollars of the American taxpayers' money.
But that hasn't come out; you'd think we're
starving them to death.
HMJr:
Well, aren't you?
M:
No, we're not. We're feeding them two and a
half times better than they were being fed when
the Germans were there.
HMJr:
Yeah.
M:
The figures are really amazing but there's sort
of a story that they're having a hard time and
we'll give them a great deal of relief
HMJr:
Everybody that comes back says they're starving.
M:
Well, they're -- they're not starv -- they're not
starving in relation to what they -- they had
before we went in. They have greatly improved.
Now, the figures are rather extraordinary.
HMJr:
Well, they're half-starving.
M:
No, I'd say ninety-nine percent starving.
HMJr:
(Laughs)
M:
You know these -- some of these fellows go over
there -- they've never been in Naples before and
they never saw any poverty before, but here these --
see. these Italians. were fighting us 'a' little while
ago
HMJr:
Yeah.
M:
....
and had a -- about as disreputable a war
record as anybody and it's a great phenomenon
We turn around and spend that much money to --
to feed them, and liberate their country besides
and set up a new Democratic Government for them.
It seems to me that's the note we ought to take --
what we're doing for them rather than to talk
about how some of the people don't have the right
clothing in the streets. However, that's beside
the point. At any rate, we're getting a great
Regraded Unclassified
32
- 3 -
M:
Cont'd.
deal of pressure on that whole Italian scene,
and of course one of the elements of it is the
fiscal
HMJr:
Yeah.
M:
....
situation. Now, the theatre replied today
that, "Well, if you think it's very important --
this new job that he's got -- why, we can release
him provided you can give us somebody else."
HMJr:
Who -- who said this?
M:
This Is the theatre -- Devers or whoever is down
there now.
HMJr:
You ought to have television because I'm really
laughing at you.
M:
Why? Why, you
....
HMJr:
(Laughs) Well, anyway, go ahead.
M:
Okay.
HMJr:
Don't ....
M:
Don't I
....
HMJr:
Don't take me too seriously.
M:
All right.
HMJr:
All right.
M:
All right.
HMJr:
Relax a little bit. Relax.
M:
We'll start again. All right.
HMJr:
All right.
M:
Now, I'm going to -- can you give me another
man for Italy?
HMJr:
You mean can I give you another man in place of
Ed Foley?
Regraded Unclassified
- 4 -
33
M:
Yes. If I let Ed Foley go, somebody that knows
something about fiscal and monetary matters and
....
HMJr:
Well, we're
....
M:
to take his place.
HMJr:
Yeah, we're starving over here too.
M:
You are?
HMJr:
Yeah.
M:
Well, that's too bad.
HMJr:
Yeah.
M:
I feel sorry for you.
HMJr:
I mean for men.
M:
Yeah, I know you are. You've been very generous.
There's no question about that.
HMJr:
Yeah.
M:
But I -- do you know what -- what do you think
about it? Do you think I ought to let Foley go?
HMJr:
Listen
....
M:
I've got more damn pressure over that fellow than
anybody I ever had
HMJr:
Listen
M:
anything to do with.
HMJr:
....
I wrote -- Foley wrote me a letter which he
sent over to me about a month ago.
M:
Yes.
HMJr:
And -- in which I answered him about -- that --
that I had nothing to do with his staying in the
Army ....
M:
Yes.
Regraded Unclassified
34
- 5 -
HMJr:
....
or leaving the Army or what he had to do
in the Army.
M:
Yes.
HMJr:
It was purely a military matter governed by
military necessities.
M:
Yes.
HMJr:
And frankly, Jack, I'm not going to get in on
it.
M:
Uh huh.
HMJr:
And ....
M:
Well, I -- yeah, I -- he was. hell-bent to get
into the Army.
HMJr:
Well, that's -- and in this letter he more or
less implied that I sort of dragooned him into
the thing, and I
....
M:
Oh.
HMJr:
And I reminded him that for several reasons
at that time he Was very anxious to get in.
M:
Oh, yes.
HMJr:
Do you remember?
M:
Oh, I remember it very well.
HMJr;
Yes.
M:
Very well.
HMJr:
And I ....
M:
Now, the dragooning is all the other way.
HMJr:
It's a dragoonette.
M:
Yes, that's right. That's
....
HMJr:
Isn't that the female?
Regraded Unclassified
- 6 -
35
M:
That's right. That's right.
HMJr:
Isn't that the female of a dragoon?
M:
That's it. That's what I was -- I didn't dare
speak of that point but that's -- you've got it.
HMJr:
Yes.
M:
Yeah.
HMJr:
Well, I -- I'm afraid I'm going to not be helpful.
M:
Yeah.
HMJr:
I'm going to stay strictly on the sidelines.
M:
Yeah.
HMJr:
And watch the play.
M:
Yeah.
HMJr:
And it's wholly up to the Army. But as to giving
you a man
....
M:
Yes.
HMJr:
....
any men that we have at this time -- well,
we're short
M:
Yeah.
HMJr:
And it would go to the -- oh, I call it the
European Theatre -- I don't know whether you
call it General Eisenhower's Theatre.
M:
Yes.
HMJr:
But ....
M:
That's -- that's Western European. Yeah.
HMJr:
What?
M:
That's the European Theatre.
HMJr:
Well, we're extremely short and we have nobody
that we could give you in place of Foley.
Regraded Unclassified
- 7 -
36
M:
Uh huh. Okay.
HMJr:
But as to the other, seriously ....
M:
Yes.
HMJr:
....
you have to -- there's no pressure from
the Treasury, is there?
M:
Oh, no, not a bit. Not a bit.
HMJr:
Well ....
M:
Not a bit, but from every other place in town.
HMJr:
Well, the White House isn't interested.
M:
Yes, yes, they're giving me hell.
HMJr:
About Foley?
M:
For Foley, yes.
HMJr:
Who in the White House is interested in Foley?
M:
Well, Pa Watson called me up and -- and -- and
Grace Tully called me up and Jimmy Byrnes then
called me up. Jimmy was all right. When I told
him what the story was, he said, "Well, you
decide it as you think best, but
If
....
HMJr:
That's what I'm saying.
M:
Yeah.
HMJr:
But we have no substitutes now.
M:
Uh huh. Well, that's the -- if I had a substitute
I'd let him go, and maybe I can find one, but I --
I -- you see, for that sort of a job, I really have
to have somebody who -- who knows all your business.
HMJr:
Yeah.
M:
It doesn't do to just pick up a -- a banker and send
him over there. I've got to send somebody that
knows money.
HMJr:
Yeah.
Regraded Unclassified
37
- OR -
M:
And -- well, I'll solve it the best I can. The --
oh, but that -- really the most -- you haven't
any idea of how many different corners and angles
that's coming from.
HMJr:
Well ....
M:
Well ....
HMJr:
....I'll be ....
M:
.... did you see the -- have you seen -- have you
seen our movie yet?
HMJr:
Oh, I'm awfully glad you spoke of it. I saw it
last night and I think it's swell.
M:
Okay.
HMJr:
I think it's swell.
M:
Good. See -- mind you that was done eight months
ago, or six months ago. I mean the story on it
was done six months ago.
HMJr:
Who did that?
M:
Well, the -- what's-his-name -- Osborne ....
HMJr:
Oh.
M:
and the Morale Services people. What it is --
it's based on -- the thing is -- just between you
and me, it's based on a phamphlet which we wrote
over here eight months ago to hand to soldiers
who were going into Germany. All the sub-titles
are from that little booklet.
HMJr:
It's a swell job.
M:
Yeah.
HMJr:
I don't know whether you know Arthur Goodhart.
Do you know him?
M:
No. I don't know him.
HMJr:
Yes, you do. Of Oxford.
Regraded Unclassified
38
- 9 -
M:
Arthur Goodhart.
HMJr:
Professor Goodhart.
M:
No, I don't know him.
HMJr:
Yes, you do. He's the ....
M:
I don't move in those academic ....
HMJr:
Yes, you do. He's the editor of English Law
Journal.
M:
I still don't know him.
HMJr:
Well, anyway, he was with me last night.
M:
Yes.
HMJr:
He's a cousin of mine.
M:
Yes.
HMJr:
He thought it was wonderful.
M:
Yeah. I'm going to show you -- the thing 1s made
up -- made up from this pamphlet which I wrote.
HMJr:
Really?
M:
Yeah.
HMJr:
I'd like to see it.
M:
And I'd like to show you -- show that to you.
HMJr:
All right.
M:
It's still -- but that was -- -- that was canned
six months ago.
HMJr:
Right.
M:
And is now -- I guess it's been distributed
already in Germany. But it's -- it's just
the note of that picture.
HMJr:
Yes.
Regraded Unclassified
39
- 10 -
M:
The picture is simply the -- the picturization
of that pamphlet. I think it's pretty good.
HMJr:
Yeah.
M:
Now ....
HMJr:
Why don't you
....
M:
....
I also sent you over this morning a copy
of the orders which have been issued over there
on fraternization which I think you'll like.
HMJr:
Good.
M:
And you send it -- I told you to send it back
to me as it's the only copy I've got.
HMJr:
All right. I was just doing my mail now.
M:
Okay. Fine. All right.
HMJr:
Thank you.
M:
Bye.
Regraded Unclassified
40
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE
September 29, 1944
TO
Mrs. Klotz
FROM
Secretary Morgenthau
I am now going to make some notes which I thought up
during the night of what I want to say at the Newspaper
Guild Dinner Monday night.
1. Let it be said on behalf of Nathan Robertson
that he wrote some of the very best stories on the Tax
Bill that were ever written in Washington.
2. Let it be said that he slants his stories, but
he slants them straight, straight in the interests of the
common man.
3. Let it be said that his absence from Washington
undoubtedly will cost the taxpayer several billions of
dollars. And I wouldn't be surprised if a good newspaper
reporter made an investigation that he would find out that
the Washington Tax Bar was behind the move to get Nathan
Robertson out of town and into Harvard University. I
hope that Nathan Robertson will come back soon and help
us close the remaining loopholes in the tax bill which we
have been unable to close so far.
Mrs. Klotz, please have this written out so that I
can see it. My thought is that I want to have something
like this to read before I speak and then I'll speak
without notes.
Regraded Unclassified
41
A DIENER IR HONOR OF
1
NATHAN ROBERTSON
civon by
THE W.Shington MENSPAPER GUILD
Head Tuble:
Mr. and Mrs. Nathan Acbertson
Senator Joseph C O'Mahoney
Mrs. Thomas Robertson
Hon. Oscar Chipman
Miss Dorothy Rockwell
Hon. Archibald MicLeish
Hon. Henry Morgenthau
Hon. Hugo Black
Hon. Thurman Arnold
***
Table No.1
Table No. 5
Mr. Jonathan Daniels
Miss Holen Fuller
Mr. Rqndolph Paul
Mr. Chis. Aldridge
Mr. Blair Bolles and guest
Mr. and Mrs. Clifford Durr
Hon. and Mrs. John Rogge
Mr. and Mrs. David Loth
Mr. and Mrs. Joseph Short
Mr. Matthew Gordon
lir. and Mrs. Joseph Kovner
Mr. Emanuel Friedman
Table No. 2
Table No. 6
Mr. Lowell Lellett
Mr. Herbert Little
Mr. Lee Miller
dr. archie "obinson
hr. Duncan +1kman and guest
Mr. Joseph Gambatese
Mr. Charles Malcolmson
Ar. Bruce Catton
Mr. John O'Donnell
MAjor 1 H Raskin
Mr. Richard Strout
.r. Maury Maverick
Mr. and Mrs. Juck Reid
Mr. Lenry Liebernan
Cupt. Louis P Ade
Table Ko. 3
Table No. 7
Mr. and Mrs. Chus. Michie
.r. Tom Stokes
Mr. And Mrs. John O'Brien
Mr. Robert Nathan
Mr. and Mrs. Eugh Morrow
mrs. James a Wechsler
Mr. Paul hard
Mr. Carroll Kilpatrick
Mr. Bert Andrews
Mr. William McCleery
Air. Carl Levin
Miss Elizabeth Donahue
Mr. J L Myler
Table No. 4
Table No. 8
Dr. Chus. J. Gridley
Mr. Radford Mobley
Mr. John Herling
Mr. Harold Young
Mr. Richard Hivolehauser
kr. Bascon Timmons
Mr. Ernest Johnson
ar. Goo. Polk
it. Bulkley Griffin
Rep. .nd Mrs. Clinton P anderson
Miss Urcel Daniel
er. Milton Plumb
Mr. Arthur Riordan
Mr. and Mrs. Arnold Serwer
Regraded Unclassified
42
Table No. 9
Table No. 11
Mr. and mrs. Joseph Loftus
Mr. William Rodgers
Mr. and mrs. Allan Barth
.r. and hrs. David Karr
Mr. and Mrs. William Smith
P. G Warren Morgan
Mr. and Ars. Ben W Gilbert
Ar. Jusso Leventhal
Miss Glorai Lubar and guest
Table No. 10
Miss Elizabeth Oswald and 2 guests
Mr. D Harold Oliver and guest
Table No. 13
Mr. Douglas Connell
Mr. Jerry Kluttz
Mr. and Mrs. Edwin Lahey
Miss Una Franklin
kr. and Mrs. Loe Pressman
air. Harry E Resseguie and guest
Mr. and Ars. John Moutoux
Mr. Truman Falt
miss Mollie Lynch
Mr. Len De Caux
Table no. 12
Table No. 14
X. and 14,8. Paul Sifton
Mr. John Edelman and gues t
Mr. and ars. John Anderson
Lt. and TS. Barney Paylor
Mrs. Honry Klein
Mrs. Gordon Cole
Mrs. Frioda Lyman
Mr. Oliver Pilat
Miss Annabella Kaplan
Kr. Grogg Frankel
Tablo No. 15
Lieut. John Limbert
Liss Poggy Dudley
Mr. Joseph Van Denburg jr. and guest
.ir. George Copeland
Mr. Chalmers Roberts and guest
Mr. G orge Duly and 2 guosts
TO:
9-29434
The Secretary
Henry Pringle has just spent a half
hour with me and has left. He says
he has too much on his hands to take on
any regular job, even of an advisory
character. Besides his magazine work
he is undertaking a history of the
war for Knopf, which will run to
several volumes and require several
years of work. He has a grant from
Guggenheim Foundation.
He is still in process of moving
today and he hoped under the cir-
cumstances you would excuse/him.
He'll be glad to come in at any time
to talk about any specific matter
on which he might help us.
19
FROM: MR. GASTON
Mr. Frederik Smith, Assistant to Secretary Morgenthau
since May, 1943, has resigned to accept a position with the
Blue Network as Director of Advertising and Promotion, it was
announced today.
Secretary Morgenthau said Mr. Smith will return to the
Department for service during the Sixth War Loan, scheduled
to start in November, and will assist in a consultive capacity
"whenever I need him."
Before his appointment as Assistant to the Secretary, Mr.
Smith for several months gave technical assistance to the War
Finance Division. He came to the Treasury from the advertising
firm of Young & Rubicam, Incorporated, New York City, where he
was head of the agency's public relations division.
Mr. Smith will assume his position with the Blue Network
imme diately.
oOo
O.K.10m2
Regraded Unclassified
Jecond 9-29-44 Barth Deaft
War Finance Speech 45
Secy. Morgenthau
Atlantic City
You may not be aware of it but this meeting today is a king
of birthday celebration -- a very important birthday in my
calendar. Just about ten years ago the first United States
Savings Bonds -- they used to be called Baby Bonds in those
days -- were sold to the American public. And in just a few
months -- next March to be precise -- the youngest of these
Bonds will reach its maturity and be presented to the Treasury
of the United States for redemption.
A birthday is a family affair. And I am especially happy
to be able to celebrate this birthday with members of the
immediate family that made savings bonds the most popular and
most widely held form of investment ever conceived in the United
States. I think you can be very proud of your adopted child.
When the history of this war comes to be written I think, indeed,
that the savings bond program will have a highly honored place
in it and that the job which you have done 80 generously and
so effectively will be recorded as one of the major contributions
to our victory.
I should like to go back with you for a few minutes to
those early days, a decade ago, when War Bonds were Baby Bonds.
They were conceived then with a very definite purpose in view.
That purpose was, in a phrase, to democratize public finance
in the United States.
Regraded Unclassified
46
- 2 -
We in the Treasury wanted to give the average American &
direct personal stake in the maintenance of sound Federal
finances. We wanted to bring the Treasury, through the Federal
Reserve System, into direct entact with all the banks of the
country. The public debt, we felt, should go through something
of the same sort of mutualization that had enriched and expanded
the life insurance industry in this country. Every man and
woman who owned a Government Bond, we believed, would serve as
a bulwark against the constant threats to Uncle Sam's pocket-
book from pressure blocs and special interest groups. In short,
we wanted the ownership of America to be in the hands of the
American people.
We had made only a start in this direction, you will re-
member, when war broke out in Europe and threatened the security
of the United States. But the foundation had been laid for real
popular participation in an American preparedness program.
Savings bonds became known as Defense Bonds. And, as you all
know, they played an important part in making the Nation ready
for the great crisis which came upon us at the end of 1941. They
served not only as a vital factor in financing the rearmament of
our fighting forces but, what seems to me even more important,
they gave to the average citizen a sense of the war's meaning
of the urgent nature of the national danger.
Regraded Unclassified
47
- 3 -
When the crisis struck, the machinery was ready and in
operation for the people's financing of the war. It was at this
point that you took over. Defense Bonds became War Bonds. And
through your efforts they have been put into the hands of 80
million individual Americans. I congratulate you on the accom-
plishment. Think of it! Out of every 13 men, women, children
and babies in the United States, eight have purchased bonds of
thei r Government. Today there are approximately 23 billion
dollars of Series E Bonds -- the people's Bond -- outstanding,
all held by individual investors.
Now let us look at the role which these War Bonds have
played in the war finance program as a hole and in the maintenance
of essential economic stability in the United States both during
the war and in the difficult reconversion period which will come
with peace.
It has been the task of the Treasury Department to finance
the costliest war in history. Since Pearl Harbor, the war has
cost about 201 billion dollars. During this same period, non-
war expenditures have been kept down to 15 billion dollars,
making a total government outlay of 216 billion dollars.
Well, 81 billion dollars, or 37 percent, of this staggering
sum has come from revenue -- in other words, from taxes.
Unclassified
43
- 4 -
During the fiscal year just ended expenditures were just
over 95 billions and net receipts slightly exceeded 44 billions,
or 46 percent. In short, our coverage curve has been upward --
a favorable trend which may be surprising to some and certainly
should be encouraging to all. For the sake of comparison, it
may be pointed out that World War I was financed only 29 percent
from revenues.
In the year ended June 30, 1940, the last fiscal year before
the beginning of the defense program, Treasury receipts were
slightly less than 5 1/2 billion dollars. The 44 billion total
for the year just ended was more than eight times as great --
a larger increase than has occurred in the case of any other
major belligerent. No sign of a soft policy there.
Recognizing the need for greatly increased government
revenues, the American people have submitted to the highest taxes
in the nation's history with remarkable good grace and good
cheer.
But after these record collections there remained 51 billion
dollars in the last fiscal year, 135 billion in the last three
years, that had to be raised in some other manner.
This money had to be raised by borrowing. We not only
had to get the money, but we had to do it in a way that would
Regraded Unclassified
49
- 5 -
strengthen, rather than weaken, the national economy.
It would have been relatively easy to finance the rising
debt through the banks. But in order to avoid inflation, it
was essential that as large & proportion as possible of the
increased debt be borrowed outside of the banking system,
after allowing for the increase in money supply mecessary to
finance the wartime expansion of the economy.
Regraded Unclassified
50
- 6 -
We proposed to do this by offering a variety of securities
designed to meet each type of investment need. The Series E
Savings Bonds, non-neogitable and payable on demand 60 days after
issue date, were tailored to meet the need of the average Ameri-
can citizen able to set aside modest savings for investment pur-
poses. By their nature they are guaranteed against fluctuation
in market value. Their investment yield if held to maturity,
219 percent, is the highest obtainable on any United States Govern-
ment security.
The small investor thus has a fully liquid investment with
relatively high yield and 8 guaranty against loss as a result
of fluctuations in market value. There are certain incidental
advantages to both the investor and the Government from this
situation.
First, non-neptiable securities with guaranteed redemption
values are not subject to panicky liquidation which, experience
shows, develops among small holders of marketable securities in
the event of a decline in market value. In short they are more
likely to be retained as investments.
It is worth while to recall the experience following World
War I when Liberty Bonds plunged downward into the eighties
and frightened buyers, inexperienced as investors, unloaded.
They felt that their trust in their Government had been betrayed.
'er they awoke to find that their loss had been the gain of
Regraded Unclassified
- 7 -
51
the speculators and the wealthy who then owned their Bonds at
prices which brought them truly handsome yields on the safest
securities in the world.
Second, it should be noted that when non-negotiable
securities are redeemed they have no direct effect upon the
money market. The Treasury can refund them in an orderly manner
through the issuance of whatever type or types of securities
seem best fitted for the market at such time.
Third, War Bonds willconstitute an invaluable backlog of
purchasing power in the postwar decade. Only 9 part, and I
believe the smaller part, of this purchasing power will come from
cashing the bonds themselves. The most important part will come
from the greater spending of current incomes growing out of the
sense of security afforded to individuals by their war bond
holdings. Thus we shall be in a strong position to ward off the
sort of deflation which struck this Nation so disastrosly in
1920 and 1921.
Series F and G Bonds which have been sold for the most part
to individuals in the higher income brackets and Series C Notes
which have been sold to corporations are, like Series E Bonds,
demand obligations.
On the other hand practically all of the Securities dold
to the commercial banks have been of fixed maturities. It has
Regraded Unclassified
P. 8 -
52
been our policy to encourage banks to purchase issues of short
maturity. As & consequence about half the securities acquired
by the commercial banking system since the beginning of the war
have been bills and certificates maturing within one year, and
practically all of the securities acquired by the banks have
had a maturity of ten years or under.
The securities held by industrial corporations, mainly
certificates of Indebtedness and Series C Notes, constitute
a substantial part of their reserves for reconversion and poat-
war development. It is advantageous not only to the corporations
but to the whole economy that these reserves be liquid.
Finally, it should be noted that Government securities now
constitute a large proportion of the assets of the commercial
banks. The result is that the banking system of the country is
in a position of unparalleled liquidity. This affords added
assurance against a recurrence of deflation such as came in the
aftermath of World War I. Moreover, it places the banking system
in a strong position to meet the shifts in deposits that will
probably come with reconversion and the new business demand for
funds that may be anticipated with the development of a healthy,
expanding economy. In brief, the banks are in a position to
service a virile private enterprise system. The maturity structure
of the debt is equal ly advantageous from the point of view of the
Government. It has at one and the same time contributed to the
liquidity of the economy and permitted a large saving to the
Regraded Unclassified
- 9 -
53
overnment in borrowing costs.
The average cost of money to the Treasury since Pearl Harbor
has been one and three-quarters percent. This contrasts with an
average of four and a quarter percent paid for money during World
War I. On the basis of the 150 billion dollar increase in the
debt to the present time, the resulting saving to the Government
amounts to almost 4 billion dollars annually.
The saving in interest has been a real social gain, since
it has been achieved by sparing the holders of a large proportion
of the debt the risks incident to fluctuations in interest rates.
I believe these risks are exaggerated; but whatever they may be,
the Government is in & better position to bear them than the bond-
holders, whether individual or corporate. There is no reason
why gambling on the long-term rate of interest should be &
necessary part of lending money to the Government. The day is
past when the United States Government need ask its citizens to
insure it against changes in the rate of interest.
Moreover, and this is a point which is deserving, Sf par-
ticular emphasis, the interest on all the securities sold during
this war has been fully taxable, while the issues marketed during
World War I were largely tax exempt. This has resulted in &
further savings, probably well in xcess of a half billion dollars
a year, to the Federal Treasury. At the same time it has left
Regraded Unclassified
54
-10 -
the Federal debt in a position where it does not offer unfair
competition to private capital, or, maybe I should say, to
private enterprise seeking to attract private capital.
Our fiscal policy -- paying through taxes for as large a
proportion of the war costs as possible and borrowing from
sources other than the zommercial banks 8 maximum share of the
remainder -- has been one of two buttresses supporting the
structure of economic stabilization. The other, of course,
has consisted of direct controls, including rationing, price
ceilings, allocations and 80 forth.
As a result of this policy of stabilization, a saving of 70
billion dollars has been effected in Government expenditures
through June of this year.
Regraded Unclassified
55
- 11 -
But the greatest and most important saving has been that
among the people themselves. It has come about through an
intelligent deferment of satisfactions. In the course of this
war there has been comparatively little of the reckless kind
of silk shirt buying that took place as & result of inflated
pay envelopes during World War I. There has been very little
recourse to baack markets. Instead, people have used their
incomes, in considerable measure, to pay off their debts.
Since the beginning of 1942, for example, farm mortgages have
been reduced
percent. It is fair to say, I think, that the
War Bond program, by its encouragement of thrift, has contributed
significantly to this sensible restraint in the expenditure of
surplus income.
Of course, there have been other benefits of economic
stabilization, too. The success of this policy has aided in
preventing the piling up of excessive profits by fortunate
business concerns, has helped to reduce industrial disputes
to a minimum -- and here I refer you to the factual record
rather than the headlines -- has prevented the impoverishment of
recipients of fixed incomes including soldiers' dependents; and
probably most important of all, it has averted what otherwise
would have been almost a certainty, the likelihood of & post-war
Regraded
Unclassified
56
- 12 -
deflation which would have been devastating in its consequences.
So much for the record of war finance to date. It is a
record of which I am proud -- good in its accomplishments,
perhaps even better in the fine cooperation which made these
accomplishments possible. If this same tireless, unselfish
cooperation is applied to the problems of the post-war world,
we need have no fear of the future.
The aspect of the War Bond program which gives me the
greatest pride is the fact that, throughout, it has been con-
ducted on a genuinely voluntary, democratic basis. From the
beginning, we were resolved to avoid certain high-pressure sales
tactics which, unavoidably, attended the finnd-raising of World
War I. It was determined that there should be no compulsion, no
hysteria, no slacker lists and no invidious comparisons between
those who bought Bonds and those who did not. There was to be
room in this program for the individual with special burdens
and responsibilities who could contribute only in very small
amounts -- and even for the individual with special burdens and
responsibilities who could contribute only in very small amounts --
and even for the individual who could not share at all. I think
you know, and the whole Nation knows, how scrupulously this policy
has been observed.
Regraded Unclassified
57
- 13 -
There was & good reason for it. In the early days of 1941,
when I first asked Congress for authorization to borrow from the
general public through a Defense Savings Bond campaign, I said
this: "There exists in the country today an overwhelming desire
on the part of nearly every man, woman and child to make some
direct and tangible contribution to the national defense. We
ought to give them & sense of personal participation beyond that
which comes from doing their daily job faithfully and well. Every
day, letters come to me from people who ask, 'What can I do to
help?' Our plan to offer securities attractive to all classes of
investors is an attempt to answer this question. I can think of
no other single way in which so many people can become partners of
their Government in facing this emergency. It is the purpose of
the Treasury to raise money for national defense by methods which
strengthen the national morale."
The desire of the people "to help," the sense of participation
in the national cause, could never have been realized except
through a voluntary program. You will recall, of course, the
clamor that arose for forced or compulsory savings. There were
many who declared that only in this way could the stupendous
sums needed for victory be raised. There were times, indeed,
when those of us who had faith in voluntary methods seemed lonely
voices crying in the wilderness. But there was one voice that
P failed to support us -- the voice of the President of the
Regraded Unclassified
58
- 14 -
United States. He believed always that the people would respond
to any call that was made upon them. He knew that the enlist-
ment of their support could be best attained through a voluntary
program adapted to the democratic pattern of American life.
But a voluntary program could succeed, of course, only
through the efforts of volunteer workers. We in the Treasury
could fulfill only the functions of a general staff. The real
battle had to be fought and won in the field -- fought and won
by sustained, unstinting, tireless service. You have given
that service. You have given it with a resourcefulness and
enthusiasm and good cheer that have overridden every difficulty.
You have given it at real sacrifice of time and comfort and
self-interest. I think that the job that you have done is be-
yond my priase. I know that the richest reward you can receive
for it is the knowledge that it has been done supremely well,
that it has played an indispensable part in our forward march
to victory. Still, I should like, on behalf of the Treasury
Department to say one simple word to you -- Thanks. I shall
venture nothing more than this. But know that this one word
is echoed, and will be reechoed, by every one of your fellow-
Americans.
When you enlisted in this program, you enlisted for the
duration. The term of your service has not yet reached its end.
The truth is that the toughest part of your job still lies ahead.
Regraded Unclassified
59
- 15 -
Let us look at the future realistically. The war news of
late has been extremely good. The enemy in Europe is on the run.
How soon he will collapse, none of us can tell. But even when
that great day comes, there will still be a hard and costly
victory to be won in Asia. Our military and naval authorities made
the grim assertion just recently that it will take us at least
a year and a half, possibly two years, to defeat Japan after
Germany is beaten. And we shall be able to do it in that time
only if we put every bit of our strength into the effort. The
enemy has short, interior lines of communication, while we must
move men and materials across the vast distances of the Pacific
before we can bring our power to bear. The costs of this kind
of warfare will certainly be very high, higher even than they were
in Europe.
You cannot rest on your laurels. The Sixth War Loan
campaign lies immediately ahead. Its challenge must be confronted
just as resolutely as in the past. And I tell you frankly that
even on the most optimistic assumption there will have to be a
Seventh Loan. Your job is to make the people of America under-
stand that there can be no let-down on the Home Front now, that
the time has not yet come to relax or celebrate. One thing a
champion learns in his climb to the top is to bear down as victory
nears. This is the time to bear down with all your strength. I
know that America can count upon you to see your job through to
its end.
Regraded Unclassified
60
September 20, 1944
Dear mr. Ransom:
Your letter of September 29th
to Secretary Morgenthau came after
he had left the office for a few
days. lie will return on Monday and
I shall see that your letter is brought
to his attention promptly.
Yours sim erely,
(Signed) H.S. Klotz
n. S. Klotz
Private Secretary
Hon. Ronald Ransom,
Acting Chairman, Board of Governors,
Federal Reserve System,
Washington, D. C.
Regraded Unclassified
BOARD OF GOVERNORS
OF THE
1 THE of
FEDERAL RESERVE SYSTEM
WASHINGTON
OFFICE OF THE VICE CHAIRMAN
aggo
September 29, 1944
Honorable Henry Morgenthau, Jr.,
Secretary of the Treasury,
Washington 25, D. C.
My dear Mr. Secretary:
Mr. Bell has asked me to meet with you on October 4 at 11:00 a.m.
for the purpose of discussing a proposal to increase the weekly Treasury
bill offering. Both Mr. Eccles and Mr. Sproul will be away at that time and
the Executive Committee of the Federal Open Market Committee had designated
me as Acting Chairman for the period of their absence and requested that I,
together with technical advisers of the Committee, be available for consulta-
tion with you at any time.
Treasury proposals to increase the bill offering have been dis-
cussed at a number of meetings of the Executive Committee, which has taken
the position that there should be no further increase in the weekly offering.
This position was reviewed quite thoroughly at the meeting of the Federal
Open Market Committee on September 21, the attendance at which included the
Presidents of all the Reserve Banks. The discussion disclosed unanimous
agreement and the position of the Executive Committee was approved. The
reasons are stated in a memorandum of September 13, which was furnished to
Mr. Bell, but I assume that because of the heavy demands upon you there has
not been an opportunity for you to look at it. I am therefore attaching a
copy and would greatly appreciate it if you would read it before our meeting
on October 4, as it represents the position which I shall present, together
with the alternatives that might be considered in the event that you feel
that it is necessary to raise additional funds before the next drive.
I am sending a copy of this letter with its enclosure to Mr. Bell.
Very truly yours,
Rohald Ransom,
Acting Chairman.
Enclosure
CC: Honorable D. W. Bell,
Under Secretary of the Treasury.
Regraded Unclassified
62
COPY
September 13, 1944
Honorable Daniel W. Bell,
Under Secretary of the Treasury,
Treasury Department,
Washington, D. C.
Dear Dan:
The Executive Committee of the Federal Open
Market Committee has considered further the question
of increasing the weekly offering of Treasury bills and
presents its recommendations in the enclosed memorandum.
Representatives of the Executive Committee would be glad
to meet with you and discuss the matter further if you
wish. If you disagree with the memorandum and want to
issue additional bills, we would like to have an oppor-
tunity to discuss the matter further before you make a
definite decision.
Sincerely yours,
M. S. Eccles, Chairman,
Federal Open Market Committee.
Enclosure
Regraded Unclassified
63
STRICTLY CONFIDENTIAL
September 13, 1944
MEMORANDUM FROM THE EXECUTIVE COMMITTEE OF THE
FEDERAL OPEN MARKET COMMITTEE TO THE SECRETARY OF THE TREASURY
The Executive Committee of the Federal Open Market Committee
has considered further the question of increasing the weekly offering
of Treasury bills, which was the subject of the memorandum of July 31.
The Committee recommends that the Treasury make no increase in the weekly
offering before the end of the Sixth War Loan, unless the timing of the
Sixth War Loan makes necessary the building up of the Treasury balance
prior to the date of payment for securities offered in the drive. In
making this recommendation, the Committee has taken into account the fol-
lowing considerations:
1. Under present conditions, any increased amount of outstand-
ing bills would need to be purchased by the Federal Reserve. In the
opinion of the Committee, there should be no increaso to raise funds when
the markot for notes and bonds is strong, but increases should be postponed
until bills are needed to supply reserves and to maintain the pattern of
rates. Otherwise, part of the reserves created by Federal Reserve pur-
chases of bills would go to banks that already had sufficient reserves,
with the result that these banks would be enabled to hold the large amount
of socurities that they purchased during the Fifth War Loan and would be
encouraged to expand credit further by purchasing additional amounts. The
existing difficulty in maintaining the pattern of rates would thoreby be
increased, and the continued strength in the note and bond market might
encourage banks to purchase an even larger amount of securitics during the
Sixth War Loan than they purchased during the Fifth War Loan.
2. Banks hold sufficient securities to meet their needs for
reserves without strain on the pattern of rates. Between September 6 and
November 15, the Federal Reserve will need to supply 2.4 billion dollars
of reserves, comprising 1.1 billion to meet increased reserve requirements,
Libillion to mect an increase in money in circulation, and about 200-mil-
lion to meet a gold outflow. Weekly reporting member banks on September 6
still held 629 million dollars more of bills than they held on June 7, just
before the beginning of the Fifth War Loan. Between June 7 and the peak
in their holdings, reporting member banks increased their holdings of
cortificates by 2.3 billion dollars, their holdings of notes by about 400
million, and their holdings of bonds by 1.3 billion, & total of 4.0 billion.
Since the poak, they have reduced their holdings of certificates by 134
million dollars, their holdings of notes by 97 million, and their holdings
of bonds by 12 million, fl total of 243 million. They still hold, therefore,
3.8 billion dollars more of certificates, notes, and bonds than they held
before the beginning of the Fifth War Loan. It is apparent, thorefore,
that bonks can readily meet their reserve needs by selling only part of
these acquisitions. It is the opinion of the Committee that they should
be required to do so rather than supplied with reserves by an increase in
Regraded Unclassified
64
STRICTLY CONFIDENTIAL
- 2 -
September 13, 1944
the bill offering, which as pointed out above would increase the reserves
of banks that did not need them. Such a policy would reduce the demand
for notes and bonds and permit them to recede in price from the advanced
levels reached following the Fifth War Loan. This development is desir-
able if excessive speculation is to be discouraged during the Sixth Mar
Loan. Since bank earnings are now at very high levels, there is no need
from this point of view of maintaining their present holdings.
3. In maintaining the pattern of rates, Federal Reserve holdings
of notes and bonds have declined by about 300 million dollars since early
in July. Unless notes and bonds are restored to the Foderal Reservo to
replace the notes and bonds that have recently been sold, the Federal
Reserve will find it increasingly difficult, if not impossible, to main-
tain the present pattern of rates.
Regraded Unclassified
65
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
At
DATE Sept. 29, 1944
TO
Secretary Morgenthau
FROM Mr. White
Subject: Meeting of the International Economic Council on
Germany.
1. The International Economic Council, which is an
association of business men interested in foreign trade and
associated international economic problems, recently held a
meeting on post-war economic policy with respect to Germany.
2. Represented at the meeting were officials of the
Departments of State, Commerce, War, Navy, Foreign Economic
Administration, as well as important representatives of
foreign governments, including Great Britain, Australia,
Brazil and China. Among those present for the Navy Depart-
ment was Captain James D. Mooney, former President of General
Motors Overseas Operations (who was decorated by the German
Government during the 1930's). Both Eric Johnston, President
of the Chamber of Commerce of the United States and Edward R.
Stettinius, Jr., Under Secretary of State, sent messages
which were read to the meeting.
3. Moulton in addressing the meeting emphasized the
necessity of "allowing the enemy nations to build up prosperous
economies without placing them in & position where they can
again embark on schemes of world conquest".
4. We have been unable to learn of any Treasury official
who attended this meeting notwithstanding the statement that
officials of the Treasury attended the meeting.
Regraded Unclassified
From:
65
INTERNATIONAL ECONOMIC COUNCIL
Bond Building
Washington, D. C.
September 22nd, 1944
BROOKINGS PRESIDENT WARNS AGAINST
CRIPPLING AXIS NATIONS ECONOMICALLY
IEC Creates Capital "Sounding Board" for Members
of Business, Government and Overseas Governments
The United Nations can best serve their own long-
range interests by stripping Germany and Japan of conquered
lands without throttling them economically, Dr. Harold G.
Moulton, economist, author and President of The Brookings
Institution said in an address in Washington, D.C. this week.
Dr. Noulton, co-author of a recent book on the
subject of controlling the Axis powers, told the International
Economic Council at a luncheon at the Washington Hotel that
destruction of the economic life of Germany and Japan would
mean unemployment, political upheaval and the strengthening
of a spirit of revenge in these countries.
The speaker declared it will not be feasible to
occupy the defeated nations with military forces for indefi-
nite periods, and suggested instead a system for detecting
and putting down efforts to rearm and controlling industries.
Other speakers at the luncheon were Hugh Wilson,
former Assistant Secretary of State and Ambassador to Germany,
Representative Louis C. Rabaut (Michigan), Chairman of the
House subcommittee on appropriations for the Departments of
State, Commerce, and Justice, and Joseph A. Jones, Director
of the Council, who presided.
The meeting was limited to 100 officials of the
United States Government Departments of State, Commerce,
Treasury, and the Foreign Economic Administration, and diplo-
matic representatives of the United Nations and members of
international business organizations. It was the first in a
series of Fall and winter programs, the objectives of which,
as described by Mr. Jones, are to:
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67
"1. Promote public appreciation of the need for
continuing economic cooperation between nations
68 the basis for future pence; and public
acceptance of the importance of increasing
reciprocal trade between the United States
and the rest of the world.
2. Provide 6 "sounding board" over which the
representatives of industry, government and
other governments may speck to one another
and exchange views on the best means of
achieving increased two-way trade.
3. Encourage a friendly understanding and re-
lationship between members of industry, govern-
ment and other governments - a Know-Your-Neighbor
spirit between members of the three groups."
Ambassadors, Ministers, and First Secretaries of many of
the United Nations sttended. Delegations were sent by the Embassios
and Legations of Australia, Brazil, Costa Rica, China, Great Britain,
Ireland, New Zealand, Nicaragua and Panama. State, Commerce,
Treasury, Foreign Economic Administration, War and Navy were among
the United States Departments represented. Coptain James D. Mooney,
former President of General Motors Overseas Operations, WGS among
those from the Navy Department.
After reading messages from Eric Johnston, President of the
Chamber of Commerce of the United States, end Edward R. Stettinius,
Jr., Under Secretary of State, Congressman Rabaut remarked: "The
last time Secretary Hull appeared before our Committee in Congress,
one of my colleagues asked him to name his biggest problem. With-
out hesitating, the Secretary replied that the problem which most
concerned him and the members of his Department was that of having
at all times an informed public opinion on matters of international
policy.
"The efforts of the International Economic Council during
the past year or more in helping to create an informed public
opinion, particularly on matters of international trade, are
indeed valuable in helping to meet that problem of which Mr. Hull
spoke. This further achievement of bringing together business
and government groups to sit down in a friendly atmosphere to
discuss matters of mutual interest 18 also worthy of commendation."
Mr. Robaut further declared that none of the nations-- 27 of them -
with which the United States has trade agreements is at war against
the United States, and complimented members of the Council for
their efforts in support of the trade agreements program.
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Page Three --
In introducing the Congressman, the Director of the Council
referred to him as the man who "next to Cordell Hull 1s the greatest
friend foreign traders have in this country today. He has untir-
ingly fought for a strengthening of the American Foreign Service
and has consistently supported reciprocal trade agreements legis-
lation and other measures designed to increase international
trade."
Dr. Moulton pointed out that the victors of the World War
had to rebuild Europe's economic system when conditions got so bad
they had an adverse effect on their own international trade. He
said Japan's conquered territories wore military rather than
economic assets, and that when she loses these she still can
develop a thriving, peaceful economy which will be & benefit in-
stead of a liability to world trade.
He stressed the importance of allowing the enemy nations
to build up prosperous economies without placing them in &
position where they can again embark on schemes of world conquest.
******
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89
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE Sept.29, 1944
TO
Secretary Morgenthau
FROM
Mr. White
Subject:
State Department Report on Reparations, Restitution
and Property Rights in Germany.
This report, which you went through on the plane
to England, was dated July 31. On August 4, there
was another meeting of the Interdepartmental Committee
and as & result of that, this report went through a
slight revision and was issued again as of August 7.
A copy of the August 7 report is being sent to us by
the State Department.
In early August, this revision was submitted
through the Joint Chiefs of Staff to the War and Navy
Departments for their concurrence. Such concurrence
has never been given because, in the meantime, the
Cabinet Committee was formed and virtually all matters
referring to Germany have been in abeyance. The State
Department has been utilizing the time in getting up
information and statistics in regard to reparations
and a Mr. Rosenman is rewriting the larger informal
report upon which the document under reference was
based.
The document has never been transmitted to
Ambassador Winant formally, although, of course, a
copy of it has been sent to him informally for his
information. The report has not been submitted to
EAC for circulation.
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3
SECRET
70
ECEFP D-31/44
July 31, 1944
SECRET
SUMMARY: REPORT ON REPARATION, RESTITUTION, AND
propared
PROPERTY RIGHTS
GERMANY
ache
I. Interest of the United States in German Reparation.
The problem of German reparation is immediately
and
related to the broader question of a general peace
settlement, through which the United Nations hope to
attain certain political, economic, and security ob-
jectives. While not in itself a major means of achiev-
ing these objectives, a reparation program can, de-
pending upon its nature, greatly help or hinder their
attainment. This Government has approached the problem of
German reparation with a view to reaching a solution
which would facilitate the attainment of these objec-
tives. The "direct" interest of the United States in
German reparation, i.e. in the amount of reparation
which this country may receive, is small. The claims
of other nations which have suffered severely from
German aggression are direct and substantial. The
main concern of this Government with respect to German
reparation is that the program aid in the attain-
ment of (or interfere as little as possible with) its
ultimate political and security objectives.
Broadly stated, the general economic and political
objectives of this Government are as follows:
1. The preservation of peace by a system of col-
lective security and disarmament of the aggressors.
2. The early return to a multilateral system
of international trade. and finance through the removal
of excessive barriers to the movement of goods and
funds.
3. The rapid reconstruction and rehabilitation of
war-torn areas.
4. With respect to Germany: 1/
a) The
1/ Based on General Objectives of United States Economic
Policy with Respect to Germany. (ECEFP D-22/44)
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71
-2-
a) The control of Germen economic war potential.
This, however, is not assumed to imply E.
large-scele and permanent impairment of all
German industry.
b) Redress of the balance of the European economy.
c) The eventual integration of Germany into the
world economy.
a) The establishment of democratic institutions,
including 2. free trade union movement.
II. Need for Special Arrangements for the Immediate
Post-Surrender Period.
It is unlikely that agreed decisions regarding all of
the basic policy questions cen be reached during the immedi-
ate post-surrender period. It is essential, however, that
a program of restitution and reparation transfers be initisted
promptly, both in order to hasten European reconstruction
end to avert an undue imposition of European recuirements
upon the American economy while the war against Japan is
still in progress.
In order to bridge this gap, immediate discussions
looking toward agreement among the claimant states or,
in any event, emong the United States, United Kingdom,
and Union of Soviet Socialist Republics should be in-
sugurated. Preliming ry agreement must promptly be
reached on
1. certain minimum basic principles;
2. an interim reparation organization and
the relation of this organization to
the machinery of Allied economic control
of Germany;
3. the development in advance of the military
collapse of Germany of an ad hoc program
for reparation deliveries which will meet
the immediate needs of claimant countries.
Such an advance program is essential to
the orderly reconversion of industry and
labor to post-war production.
The purpose of such an interim arrengement would be to
initiate and develop a large program of restitution and
reperation transfers even before the terms of D. final agree-
ment had been settled.
A temporary
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72
-3-
A temporary arrangement of the kind contemplated
would remain in effect until a more comprehensive program,
based on a final agreement, could be inaugurated.
III. Resume of Recommendations on the Final Reparation
Agreement
The essential elements of the program recommended in
the Reparation Report may be summarized as follows:
1. Time Period.
The reparation period should begin as soon as the
United Nations have the power to impose economic con-
trols on Germany. It should be limited to a minimum of
about five years from its inception but perhaps may have
to be extended to ten. Both political and economic con-
siderations emphasize the need for a short reparation
period.
The urgent needs of the devastated areas for re-
lief and rehabilitation and the desirability of restor-
ing normally functioning economies in these areas as
rapidly as possible demand quick and decisive action.
Moreover, unless the United Nations stand ready to exploit
fully the opportunity for cooperative action during the
early period after the surrender of Germany, it may prove
difficult to accomplish the aims of the program.
The one-way movement of goods and services which
takes place under reparation is artificial and necessarily
different from normal trade. The longer it continues
the longer 18 deferred the full resumption of regular
multilateral trade and the desired integration of Germany
into the world economy.
From the political point of view, it must be
remembered that the humiliation and cost of reparation
will almost inevitably be associated in the mind of the
German public with the regime in power at the time. For
this reason, long-continued reparation would prejudice
the establishment of democratic government in Germany and,
indirectly, the maintenance of peace.
The collection of substantial reparation from
Germany will probably be impossible without fairly
extensive
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73
extensive controls over the German economy. Since
this Government has taken the position that enduring
controls of this nature are undesirable 1/ the length
of the reparation period will need to be correspond-
ingly limited.
It is realized, however, that the countries which
have been devastated by Germany will probably demand
2. much longer reparation period. While the long-range
objectives of this Government make E. five-year period
preferable to a longer one, it is conceded that an
extension of the period may be necessary. In no event
should reparation deliveries continue beyond ten years.
In case a period in excess of five years is adopted,
deliveries should taper off toward the end of the extended
period.
2. Amount of Reparation
In view of the numerous uncertainties surround-
1ng the post-war situation of Germany, no useful purpose
would be served in attempting to estimate at this time
the amount of reparation Germany will be able to pay.
These uncertainties rolate especially to the amount of
damage to physical plant in Germany, the degree of dis-
organization or disruption of the country's working
force, the nature and extent of economic disarmement,
and territorial adjustment.
This much may be stated with confidence, however:
ε.) Barring dismemberment or extremes of
devastation, Germany will b.e capable of
paying, in absolute terms, a very sub-
stantial amount of reparation. This has
been mede menifest by the propertion of
national income devoted by Germany (as
well E.E by other countries) to war
purposes.
b) Large 08 it may be in absolute terms, the
amount recoverable from Germany will, in
all
1/ See ECEFP D-22/44, cited, p. 2.
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74
-5-
all probability, be but a small fraction
of the total admissible claims, and a
much smaller fraction still of the total
direct and indirect damage caused by
Germany to the claimant countries. It
would be highly misleading and dangerous
to let the notion gain currency that
Germany can be forced to make good all
or even a large part of the damage she
has wrought.
c)
Reparation deliveries by Germany will be
limited both in character and amount by
the goods and services the claimant
countries are willing and able to take.
Certain general principles regarding the amount of
reperation are recommended as follows:
(1) As between the amount, on the one hand,
end the time limit on the period of reparation on the
other, the time limit should be the governing factor.
This means that instead of beginning with the assessment
of a definite amount of reparation and adjusting the time
period accordingly, the maximum time limit should be
defined from the outset and the greatest possible amount
of reparation should be collected during that period.
Provision should be made for extending the
time period in the event the Allied authorities believe
the reparation program is being sabotaged. Conversely,
in the event the reparation period is determined to be
more than five years, it may be desirable to hold out
to the Germans the possibility of reducing the duration
of the period by fulfilling their obligations energetically.
The decision as to the duration of reparation should
be made known to Germany at an appropriate time in the
light of political developments.
(2) During the period of reparation the
German people should be permitted to retain such part
of their production 28 may be required to maintain a
minimum prescribed standard of living. It is
clear
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75
-5a-
clear that the execution of such a program will require
effective controls over the economic life of the country,
perhaps similar to the wartime controls now in force.
During the control period Germany's production will
consist of that required:
a) to maintain the prescribed minimum standard
of living.
b) to furnish such exports 88 may be necessary
to pay for essential German imports.
o) to furnish reparation.
The composition of German output and the reperation schedule
should be so fixed as to utilize all German production
above that required for (a) and (b) above.
All foreign exchange proceeds of exports should be
utilized by the Allied control authorities to pay for
necessary German imports and, 1f there is any surplus,
to provide cash reparation. Imports should be restricted
to the amounts necessary to effectuate the above types of
German production.
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76
-6-
3. Form of Reparation Payments.
The bearing of form of payment on the long-range
political and security objectives of this Government
is regarded as an important consideration. The most
important question that arises in this connection is
whether payment should be made predominately in kind
or in cash. It is agreed that a policy of requiring
payments in kind with allowance for cash payments only
in exceptional cases should be adopted.
A. Reparation in Kind.
Payments in kind can be made from the following
sources:
a) Stocks of goods 1/;
b) Existing capital equipment 1/;
c) Current production of goods and services;
a) Direct labor services.
Stocks of raw materials and food above certain minima
for German use will, no doubt, be taken immediately from
Germany and transferred to the most needy surrounding
countries. In regard to other classes of goodsto be
included in payments in kind, deliveries should consist
of the widest possible range of goods needed by the
claimant countries. Reparation in kind should include
machinery, electrical equipment, and any other types of
manufactured goods that Germany is fitted to produce and
the claimant countries are willing to accept, as well as
coal, fertilizers, chemicals, et cetera. Only in this
way can Germany make its maximum contribution to the
European recovery.
One major question, however, remains to be answered:
To what extent should reparation come out of existing
stocks of goods and capital equipment and to what extent
out of current production?
This question involves consideration of the follow-
ing factors:
(1) To
1/
Other than those subject to restitution which would
not be credited against reparation.
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77
-7-
(1) To what extent should deliveries be
made out of existing stocks of goods and capital
equipment for the purpose of satisfying immediate post-
surrender needs in the claimant countries?
Deliveries of this nature will necessarily
be most important in the early years of the reparation
period. The policy of making early deliveries to the
claimant countries from existing goods and equipment
is desirable because such a policy would make the
maximum contribution to reconstruction in Europe at the
time when the need 16 most urgent. This will also
help to redress the economic balance in Europe by shift-
ing machinory and equipment from Germany to the surround-
ing countries. The transfer of equipment, particularly
of equipment for capital goods industries, should be subject
to the condition that the ability of such equipment to
contribute to the net reconstruction of Europe is not
thereby seriously impaired.
This policy of taking reparation deliveries in
the form of existing goods and equipment might be objected
to on the ground that it will have the effect of reducing
German productive capacity and will result in E. reduction
of reparation deliveries below the maximum obtainable
over the total reparation period. It is believed that
the long-range security objectives and the contribution
to immediate reconstruction in the claimant countries
outweigh this objection. It is recognized, however,
that the great bulk of reparation deliveries over the
entire period must come from current production since the
reparation which could be derived from the transfer of
capital equipment would, in any case, be relatively small
compared to that available from current production.
(2) To what extent should German industry be
rebuilt and operated for the purpose of maximizing current
production for reparation deliveries?
It should be the policy of this Government to
maximize reparation deliveries in so far as this is pos-
sible without exténsive rebuilding of German plant and
equipment. This kind of
capital
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78
-8-
capital formation should be kept to 2. minimum in Germany
and should be permitted to the maximum extent in the
claimant countries. In general, Germany should be permitted
only 80 much capital expenditure 2.8 may be necessary to main-
tain reparation schedules end the preseribed standard of
living. It would be undesirable to leave Germany at the
end of the reparation period with plant and equipment much
newer and more modern than that of her European neighbors.
Qualifications to this principle would arise
in instances such as the following:
a) In case of extreme devastation of German
industry it would be necessary to allow
some rebuilding before substantial
reparation could be delivered.
b) A limited quantity of capital equipment of a
"bottleneck" nature will have to be
provided so 8.8 to permit German production
to get under way.
It is clear that decisions in regard to capital
formation in Germany will depend not only on the extent
of destruction but also on the types of plant and
equipment destroyed in both Germany and the surrounding
countries.
B. Reparation in Cash
Cash payments depend on the commercial policy
and the readiness to import of Germany's potential
customors. A program of heavy reliance on cash payments
is accordingly vulnerable to the same difficulties that
plagued the reperation program of the twenties. It will
be possible to make use of cash reparation to the extent
that E. commercial cash market exists for German exports
and to the extent that the control authorities decide
in exceptional cases to permit such exports to exceed
those required to pay for necessary imports. The gold
and net foreign exchange assets available to Germany
after the restitution program has been completed will
be limited.
In a
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79
-9-
In a five-year reparation period there will
be relatively little need for cash payment. Cash payment,
however, can serve a useful purpose in taking care of
exceptional cases and in lending flexibility to the
reparation program provided the total volume is kept
down to a relatively small figure.
If the period is extended to ten years, it
may be desirable to increase the proportion of cash pay-
ment in the latter half of the period. With reconstruction
substantially complete, the claimant countries will be
less needful of German goods. As German resources are
released from satisfying the wants of surrounding countries,
they can be turned increasingly to the production of export
goods for other markets on a commercial basis, thus creating
foreign exchange for reparation purposes and beginning the
process of reintegrating Germany into the world economy.
Reparation whether paid in kind or in foreign
exchange should be strictly related to the export surplus
of goods and services actually obtained from Germany, Any
significant accumulation of external indebtedness by Germany
during the period of reparation transfers is contrary to the
objectives of this Government. This precludes both commer-
cialization of reparation through the floatation of new
German securities abroad and any other substantial extensions
of credit to Germany,
Commercialization or other borrowing would in
effect mean the financing of German reparation payments
primarily by the United States and Great Britain, The con-
tinuance over a long period of years of payments by Germany
may well become an internal political issue and thus create
repercussions which would interfere with the long-range
political and security objectives of this Government.
Moreover, at present Germany's credit worthiness is
virtually nil. An estimation of Germany's
future
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80
-10-
future credit worthiness cannot well be made until such
time as the essential changes in hor political and
economic structure have begun.
4. Apportionment of Reparation.
It is recommonded that the principal basis for the
apportionment of reparation among claimant states should
be the amount of damago to and loss of non-military
proporty caused by or incident to hostilities.
This basis of admissable claims does not nocessarily
favor property owners over other classes of claimants
such, for example, as those suffering personal injury'
sinco reparation payments will be mado to governments,
not to individuals. Governments may dispose of tho pro-
coeds of reparation and make such componsation to thoir
injured nationals as they S00 fit.
A procise audit of proporty loss will bo impossiblo.
The total of admissable claims will have to bo roached
on the basis of reasonable estimatos as determined by
the appropriate Alliod authorities.
It is recognized that the rolativo impact of
proporty lossos on different countries may not bo accur-
ately reflected by even the most caroful computations.
The hardships imposod depond on tho circumstances
surrounding the loss and on tho wealth of the country
concerned.
As a supplomentary basis for tho apportionmont of
reparation it is recommonded that occupation costs loviod
by Gormany also bo allowed as an admissable claim but
at a lowor woighting than proporty lossos. Occupation
costs for this purposo should include cloaring balancos
built up in Gormany during the poriod of occupation.
Somo occupied countries have suffered rolativoly littlo
physical damago but have undergono many other typos of
injury at tho hands of tho Nazis. It is folt that it
will bo difficult to dony tho claims of such countries
for somo compensation.
In recommonding the forogoing two bases for repara-
tion claims, it is intondod that all other claims should
bo oxcluded.
5. Rostitution
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81
-11-
5. Restitution and Replacement
Tho principal rocommondations with respect to
this subject may bo summarized briofly as follows:
a) In principlo thoro should be an unlimited
obligation on Gormany to restoro idontifiable looted
proporty, ovon though in practice official offorts to
locate such proporty will have to be confined to a
limitod number of categorios.
309 Restitution should be restricted to idonti-
fiable proporty in oxistonce prior to Gorman occupation.
Looted proporty should bo rostorod to the existing govorn-
monts of the torritorios where the property had its situs
and not to the former owners individually.
c) Looted proporty should bo returned in the
condition in which it is found. Tho roturn of such
proporty should not count as = crodit against Gormany's
reparation obligation nor should it be doducted from the
roparation claim of the recipiont.
d) All proporty transforred to Gormany during
tho poriod of rman occupation (except for curbont output)
should bo prosumed to have boon transforred under duross
and accordingly troated as lootod proporty.
0) Tho right to rostitution is not absolute.
The Alliod authorities should have the discrotionary right
to provent or postpono rostitution of vital oquipment
(such as, 0.6., rolling stock) whenover such oquipment is
doomod essential to assist tho rovival of C. seriously
disorganized country.
f) It has boon suggested that, in addition to
rostitution and reparation, countries having suffored
proporty losses bo ontitled to "roplacement", moaning the
roceipt of an equivalent pioco of proporty for proporty
lost or destroyed. It is bolioved that the "roplacomont"
catogory would bo C. source of confusion and that it would
sorvo no purpose that could not bo sorved oqually woll by
reparation in kind. It is, thereforo, rocommonded that
no claims for roplacoment be allowed excopt in the CASOS of
(1) gold and (2) works of art and other oultural treasures,
thoso excoptions boing justified by the poculiar importance
attached to thoso catogorios of goods.
g) Replacoment
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82
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g) Replacement of gold means that stocks of
monetary gold found by the Allied authorities in Germany
should be prorated in proportion to gold losses among
the Allied countries whose gold stocks were looted. In
no case, however, should there be transferred to any
country gold in excess of its losses.
6. Labor Services (Tentative)
No final conclusion has been reached on this subject
and it is receiving further study. In principle it is
agreed that under appropriate conditions and to a limited
extent labor services can be a proper and useful form of
reparation. The chief problems relate to the method of
selection of the laborers, their treatment and length of
service, and the valuation of their services.
One suggestion receiving consideration is that there
be two classes of laborers, one to consist of extreme
Nazis such as members of the Gestapo, S.S., etc., and the
other to be recruited, on a voluntary basis if possible,
from the general German public. It is contemplated that
the former class would receive semi-punitive treatment
while the latter would be protected by more or less normal
labor standards.
7. Reparation Commission
It is believed that questions of policy such as those
discussed in this summary are outside the proper scope of
a Reparation Commission. The Commission should be an ad-
ministrative body whose function, broadly speaking, would
be the supervision and management of the program of repara-
tion and restitution. Within the broad limits of policy
laid down by the Allied governments, it would be granted
wide discretionary powers to determine the amounts of
reparation to be paid periodically, to schedule deliveries
in kind, to make adjustments in the schedules of payments,
to determine whether Germany is complying with the pro-
visions of the reparation settlement, etc.
The Reparation Commission should act in cooperation with
the supreme Allied control authorities in Germany, which
authorities should have the power to review and veto any
of the Commission's acts.
The Commission should consist of representatives of all
claimant states, but equal plural votes should be provided
for the United States, the United Kingdom and the Union of
Soviet Socialist Republics.
IV. Resume
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83
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IV. Resumé of Recommendations with Respect to Subjects
Closely Related to Reporation
1. Treatment of Property
a) Germany Property Abroad
Each member of the United Nations should reserve
the right to retain and dispose of all German property and
rights within its territories, and to use the proceeds to
pay off reparation claims, and possibly pre-wor debts owed
by Germany or its nationals to the country in question or to
its nationals. The value of property 80 retained or disposed
of, regardless of the claims which it goes to satisfy, should
be counted as payment against the reparation claim of the
holding country. Germany can be left to compensate its
nationals for property 80 retained.
The problem of obtaining control over German
property in neutral countries is a much more difficult one,
since from a strictly juridical point of view there is no
way of compelling the neutrals to transfer ownership. The
matter thus becomes one for treatment on the political level.
b) Allied Property in Germany
The German Government should be required to return
to the owners Allied property in Germany or an equivalent
in value where such property was sequestered by German
authorities or seized in any other menner. Where the property
consists of liquid funds, such return should not carry with
it the right to transfer the funds out of the country except
in accordance with the exchange regulations established by
the Allied authorities.
Countries should have the right to present
reparation claims for damage to or destruction of property
in Germany belonging to them or their nationals.
2. Pre-War Debts and Claims
American citizens have outstanding substantial amounts
of pre-war claims against both the German Government and
German nationals. These claims consist of short-term, long-
term, and commercial obligations. While the problem has
not
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84
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not been thoroughly investigated, it is believed both
politically impossible and economically undesirable
to leave American creditors of Germany entirely to their
own devices in protecting their interests. The matter
should receive further study.
It is recommended, however, in view of the urgent
need of reparation for reconstruction purposes, that
pre-war debts and claims receive a priority below that
of reparation.
3. Compensation for Injuries to Persecuted German
Minority Groups
It is considered appropriate for several reasons that
the German Government be required in some way to compensate
the minority groups persecuted by it. The moral basis for
such compensation is self-evident. Moreover, it is now
recognized that minority baiting and persecution is a potent
weapon in the hands of totalitarian demagogues both for
gaining political power at home and for spreading anti-
democratic doctrines abroad. Finally, it is felt that
since Germany was responsible for a situation in which many
thousands of former German nationals needed to be rehabili-
tated or resettled, she should contribute to the solution
of that problem and not be permitted to leave the entire
burden to the outside world.
The restitution of property located in Germany is,
on a number of grounds, regarded as an unsatisfactory
answer to the problem:
a) Most of the individuals involved are either
dead or outside the country and many would
not find it worthwhile to return in order to
regain their property;
b) Large-scale transfers of funds abroad in full
satisfaction of these claims would be out of
the question;
c) The full return of property to members of these
groups at a time when the general German public
was passing through a period of great difficulty
would tend to create strong social tension in
Germany.
a) Lack of proof by claimants, and the varying
circumstances under which property was lost
or sold, would make the administrative problem
of restitution extremely difficult.
A twofold
Regraded Unclassified
85
-15-
A twofold contribution by Germany is, accordingly,
recommended:
(1) Resettlement Aid, 1.e. payments in cash
or in kind, to an international agency, to aid in the
settlement of individuals belonging to persecuted minority
groups. Such payments would be akin to reparation, but their
amounts would be related to the needs of the resettlement
schemes rather than to the property losses of the indi-
viduals concerned.
(2) Indemnity for Property Losses. In addition
to the foregoing payments, Germany should also be obliged
in lieu of restitution, to provide an indemnity, up to
some moderate maximum per person, to individuals who have
suffered property losses since the inception of the Nazi
regime through discriminatory measures. Transfers of such
indemnities abroad should be subject to the availability
of foreign exchange but should receive a priority equal to
that of other reparation payments.
The foregoing recommendations apply to German nationals,
or former nationals, situated outside Germany 1/ who have
been subjected to discriminatory laws by reason of their
racial, religious or political status.
While the racial and religious categories are sus-
ceptible of fairly precise definition and do not involve
unmanageable numbers, a moment's reflection will show that
the political category offers formidable difficulties in
both respects. In spite of this fact, it is considered
both impolitic and unjustifiable to deny compensation to
those Germans who have suffered loss because of their
political opposition to Nazism while granting it to persons
discriminated against on other grounds. The problem of
defining the political category so as to keep within
reasonable bounds the number included is now receiving
further attention.
and to stateless persons resident in Germany on or before
September 1, 1939.
FMA:HRSpiegel:eph
Regraded Unclassified
Treasury Department
85
Division of Monetary Research
Date Sept. 29, 19449
To:
Secretary Morgenthau
I have bracketed the chief phrase
that was left out of the Proclamation
as drafted by Eisenhower and underlined
the phrases in Eisenhower's final
Proclamation which were not in his
original draft.
H.D.W.
MR. WHITE
Branch 2058 - Room 214-1/2
TREASURY DEPARTMENT
07
INTER OFFICE COMMUNICATION
DATE Sept. 29, 1944
TO
Secretary Morgenthau
FROM
Mr. White
This is the first paragraph in the proclamation that
General Eisenhower was to have issued and to which we ob-
jected:
"The Allied Forces serving under my command have
now entered Germany. We come as conquerors; but not
as oppressors. In the areas of Germany occupied by
the forces under my command, (as as in other countries
liberated from the horrors of Nazi tyranny, we shall
overthrow the Nazi rule, dissolve the Nazi Party and
abolish the cruel, oppressive and discriminatory laws
and institutions which the party has created. Party
leaders, the Gestapo and others suspected of crimes
and atrocities will be tried and, if guilty, punished."
This is the paragraph that we wished to substitute:
"The Allied Forces serving under my command have
now entered Germany. We come as victors to insure
that Germany shall never again plunge the world into
war. The German people must never again become the
carriers of death, horror and wanton destruction.
As conquerors, our aim is not oppression but the
obliteration of every vestige of Nazism and militar-
ism from Germany. The cruel and barbaric laws and
institutions of Nazism will be abolished. Party
leaders, the Gestapo and those guilty of crimes and
atrocities will be punished."
This is what finally appeared, according to the
New York Times this morning:
"1. The Allied forces serving under my command
have now entered Germany. We come as conquerors,
but not as oppressors. In the area of Germany occu-
pied by the forces under my command we shall obliterate
Nazism and German militarism. We shall overthrow the
Regraded Unclassified
88
- 2 -
Nazi rule, dissolve the Nazi party and abolish the
cruel, oppressive and discriminatory laws and insti-
tutions which the party has created. We shall eradi-
cate that German militarism which has 80 often dis-
rupted the peace of the world. (ilitary and party
leaders, the Gestapo and others suspected of crimes
and atrocities will be tried and, if guilty, punished
as they deserve."
Regraded Unclassified
.
.
89
October 4, 1944 -
Photostats to D. W. Bell
Charles Bell
Harry White
30
September 29, 1944.
MEMORANDUM FOR THE SECRETARY OF WARs
It is desirable that civilian experts
be recruited for the American section of the
Allied Control Commission for Germany. For
such recruiting, I suggest that the Army call
upon the State Department for civilians for
political work; upon the Foreign Economic
Administration for civilians for economic work;
and upon the Treasury for experts in finance
and exchange.
"F.D.R."
(FDR)
LC:em
Copies to:
Secretary of State
Secretary of the Treasury
Foreign Economic Administrator
Regraded Unclassified
SECRET
STATE STATES ST
THE ASSISTANT SECRETARY OF war
WASHINGTON
STATE
29 September 1944
Honorable Henry Morgenthau, Jr.
Secretary of the Treasury
Washington, D. C.
Dear Mr. Secretary:
I think you would be interested in the
enclosed statement on Policy on Relations Between
Allied Occupying Forces and Inhabitants of
Germany prepared in Supreme Headquarters, Allied
Expeditionary Forces.
After you have read it, will you be
good enough to return it to ne as it is my file
copy.
Sincerely,
JOHN Injuly ⑆ McCLOY
Inc.
SECRET C.C.S. Memo 239, 22 September 1944
SECRET
Regraded Unclassified
Read 22
SECRET
SECRET
COPY NO.
74
C.C.S. Memo 239
22 September 1944
COMBINED CHIEFS OF STAFF
MEMORANDUM FOR INFORMATION NO. 239
POLICY ON RELATIONS BETWEEN ALLIED OCCUPYING FORCES
AND INHABITANTS OF GERMANY
Note by the Secretaries
The attached directive, which has been issued by the
Supreme Commander, ..llied Expeditionary Force to the Allied
forces under his command, is circulated for information.
A. J. McFARLAND,
A. T. CORNWALL-JONES,
Combined Secretariat.
Regraded Unclassified
SECRET
SECRET
SUPREME HEADQUARTERS
ALLIED EXPEDITIONARY FORCES
APPENDIX 'A'
TO LETTER, 12 SEPTEMBER 1944
POLICY ON RELATIONS BETWEEN ALLIED OCCUPYING
FORCES AND INHABITANTS OF GERMANY
1. GERMAN ATTITUDE AND PROPAGANDA
a. The German mental attitude during the previous occupation
of Germany ranged from hatred, through friendliness, to
fawning subservience. In the coming occupation, all
attitudes of mind may be encountered, differing with persons
and localities, and changing from time to time. However, be-
cause of this war's greater air-bombing damage and possibly
ground combat within Germany, and because of the intense
Nazi indoctrination, German hatred may be far deeper and
more universal than in 1918. Also, the whole country will
be occupied, as compared to only a small fraction in 1918.
b. The German conception of themselves as n "Master
Race" has been too deeply implanted to be eradicated out-
right; many Germans will accept defeat as only a temporary
phase of C. continuing struggle, and strong efforts will no
doubt be directed towards regaining a commanding position
in Europe. Plans for underground continuation of the
struggle are believed to exist.
C. Aside from initial resistance by any German military
forces not immediately under control, the occupying forces
must be prepared for civil disorders, including sniping and
assaults on individuals, sabotage, provoked riots, perhaps
even organized raids. Hidden arms will undoubtedly be
available.
d. Later there is likely to be deliberate, studied and
continuous effort by the Germans to influence the sympathies
* Not received
by Secretariat
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SECRET
and thoughts of the occupying forces, with a view to
minimizing the consequences of defeat and preparing the
way for a resurgence of German power. Propaganda in widely
differing forms may be expected. It will probably
endeavor to weaken the Allied solidarity; to undermine the
Allied determination to exercise supervision and enforce
the surrender terms; to induce a reduction in the occupying
forces; and to lower Allied morale and military effective-
ness.
e. While open propaganda through press and radio will
probably be ineffective because of Allied supervision, it
1s expected that word-of-mouth propagande, under the
direction of underground agencies, will be attempted
uncensingly by the population wherever it contacts Allied
personnel. Its methode will include attempts at frater-
nization by civilions (especially by children, women, and
old men); attempts at "soldier-to-soldier" fraternization;
and social, official, and religious contacts. The
propaganda may include appeals to generosity and spirit of
fair play; appeals to pity for victims of devastation;
appeals to racial and cultural similarities between Germans
and Anglo-Saxons; organization of sympathy for an allegedly
misled and oppressed people and its starving children; sowing
of discord between British and American forces and between
them and the Russians; and attempts to prove that Nazism
was an alien idea implanted against the general vill in the
cultured and unaggressive minda of Germans. The propaganda
will be universal, insidious, and dangerous, and vill require
extensive means to avoid and combat it.
2. GENERAL CONDUCT
a. Allied personnel vill so conduct themselves in their
relations with the inhabitants of Germany as to command
respect for themselves and for the countries which they
represent.
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85
SECRET
SECRET
b. The Germans, &8 a nation, hold the armed forces and
all things military in deep respect. A high standard of
conduct and discipline must therefore be maintained by
Allied personnel.
C. Acts of violence committed when not in the lawful
course of military duty are forbidden, as are acts of
pillage and oppression. If such transgressions occur,
offenders will be severely punished.
3. DRINKING
Strict measures to control the consumption of liquor by
Allied personnel will be exercised by commanders. Cases of
drunkenness will be firmly dealt with.
4. NON-FATERNIZATION
Definition: "Non-Fraternization" 13 the avoidance of
mingling with Germans upon terms of friendliness, familiarity
or intimacy, whether individually or in groups, in official
or unofficial dealings. However, non-fraternization does not
demand rough, undignified or aggressive conduct, nor the
insolent overbe.rance which has characterized Nazi leadership.
5. GENERAL POLICY OF NON-FRATERNIZATION
a. There will be no fraternization between Allied
personnel and the German officials or population.
b. This policy of non-fraternization 18 necessary in
order to emphasize the relationship between the occupation
forces and themselves and to circumvent their efforts to
defeat the objects of our occupation. They must learn this
time that their support and tolerance of militaristic
leaders, their acceptance and furtherance of racial hatreds
and persecutions, and their aggressions in Europe have
brought them to complete defeat, and have caused the other
people of the world to look upon them with distrust.
- 3 -
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Regraded Unclassified
55
SECRET
SECRET
6. ATTITUDE TOWARD GERMANS IN OFFICIAL CONTACTS
&. Allied personnel dealing with Germans on official
business will be just, but firm. They will adopt an
attitude of stern courtesy. They will make it clear by
words and attitude that immediate compliance with orders and
instructions will be required and enforced. In official, as
in personal matters, there must be no fraternization. The
definition laid down in para. 4 above, applies to both.
b. Contacts on official matters with Germans, both
military and civilian, vill be restricted to the minimum
necessary to insure adequate supervision of execution of the
surrender terms and other official business. There will be
no entertaining, "official" or otherwise.
C. Germans holding or appointed to official positions,
such as police, administrative or military positions, vill
be made to understand that they hold office by consent of
Allied authorities, and only 80 long as they conform to
Allied instructions and requirements.
7. ADMINISTRATIVE MEASURES IMPLEMENTING NON-FRATERNIZATION"
The policy of non-fraternization will be implemented
by the adoption of the following measures:
a. Segregation in Quarters
The billeting of officers or men in the homes of the
population is forbidden. Separate quarters for troops will
be obtained by the use of permanent barracks, schools, and
other public buildings, by requisition of hotels, private
buildings and houses, or by the use of hutted or tented
camps. Permanent quarters vill be 80 located as to minimize
contact with the German population.
b. Marriage
Marriage with Germans or personnel of other enemy
countries is prohibited.
C. Religious Services
Whenever possible, church services conducted by Allied
chaplains will be provided. When this is not possible,
- 4 -
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97
SECRET
SECRET
attendance at German churches will be permitted; in such
cases, separate seating will be provided for the troops.
d. Restrictions on Contacts
The following must be prohibited: Visiting German homes,
drinking with Germans; shaking hands with them; playing
games or sports with them; giving or accepting gifts;
attending German dances or other social events; accompanying
Germans on the street, in theaters, taverns, hotels, or
elsewhere (except on official business); discussions and
arguments with Germans, especially on politics or the
future of Germany.
e. Execution and Enforcement
Commanders will take energetic action to implement and
execute the policies and instructions contained in this
section. Uniform enforcement of non-fraternization is
especially important throughout the zones of the Allied
armies.
8. ORIENTATION OF TROOPS
Prior to their arrival in Germany, Commanders will take
all practicable measures to inform their troops as to:
a. The mission of the occupying forces, their attitude
towards the German people, and the standard of conduct
required of them.
b. The characteristics of the German people, theirproboble
attitude towards the forces of occupation, and the types of
propaganda which they are liable to employ. Emphasis should
be laid upon the necessity for non-fraternization and the
means by which this policy is to be effected.
9. TRAINING AND RECREATION
a. Policy. The policy of segregation from the civilian
population 18 & difficult one to maintain, entailing as it
does considerable sacrifice upon the part of our troops of
- 5 -
ECRET
Regraded Unclassified
98
SECRET
SECRET
many of the amenities to which they are accustomed. Every
endeavor must be made by commanders to provide a full and
varied program of training, education, and recreation with
which to occupy the time of the troops, interspersed by as
frequent periods of leave as are permitted by operational
conditions.
b. Military Training
Military training must continue as vigorously as
practicable and consistent with maintenance of morale. The
highest state of discipline and smartness must be attained.
C. Education
General educational work should be undertaken, to cover
subjects of general culture and military or civilian utility
(arts, sciences, handicrafts, etc).
d. Recreation
(1) Recreation under control of Allied forces will be
strongly encouraged. All facilities practicable will be
provided.
(2) Forms and means of such recreation may well
include:
Military competitions and shows.
Athletic sports, including tournaments.
Entertainments:
Motion pictures and theater, the latter
including both professional and military anateur
talent.
Restaurants, cafes, cafeterias, canteens and beer
gardens.
Service clubs, with facilities for reading, writing;
games, radio, refreshments, dancing, entertainments,
etc.
- 6 -
SECRET
Regraded Unclassified
39
SECRET
SECRET
Development of other forms of entertainment,
including as many bands as can be made available.
(3) Fucilities
Commanders are authorized to take over suitable
local entertainment facilities wholly or partly and to
prescribe, in accordance with the circumstances of each
case:
(a) Allied attendance at separate hours.
(b) Exclusive Allied use.
(4) Recreation Centers
Recreation centers ("leave centers"), well organized,
staffed and equipped, should be established; preferably
outside of Germany, where the men will have greater
freedom from restraints imposed by non-fraternization.
Planning therefor should be initiated shortly after the
surrender in order that the centers may be ready early.
e. Leaves
Initially, the situntion will not permit a liberal
leave policy. Leaves for over 48 hours' duration vill
normally be for destinations outside of Germany. Neither
then nor later vill leaves be granted if they entail staying
at private houses, hotels, or other establishments controlled
by Germans. However, with arrangements for recreation centers
and improvement of the military situation, it is expected
that the leave policy will be liberalized an soon as
practicable. Leaves, however, will still be primarily for
destinations outside of Germany, to leave centers or to home
countries.
f. Womens Services
It is desirable that, as early as the situation permits,
the Womens Services, whether belonging to the forces, 32 a
voluntary character (Red Cross, Y.W.C.A., etc) should be
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100
SECRET
SECRET
included in the occupying forces, and in relatively large
numbers.
10. APPLICATION TO ALL ALLIED PERSONNEL
The provisions of this memorandum will apply to all
personnel of the Allied Expeditionary Forces, including Army,
Navy, Air Forces, and all civilians under military control.
- 8 -
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Regraded Unclassified
101
SEP 29 1944
w dear Kleanor:
Thank you very much for your letter of September 22
transmitting the memorandum on Gorman cartels prepared
by Mr. Pajus. I found his recommendations of special
interest at this time in relation to the general problem
of Curnery in the post-war period, and I have turned over
the material to my staff for study and incorporation in
their programs. They will no doubt contact Mr. Fajus
soon.
Affectionately,
(Signed) Henry
Secretary of the Treasury.
Mrs. Franklin D. Receivelt,
The White House.
In Secretary's handwriting:
P.S.: Have you seen "Time" magazine? Believe it or not I have your ear.
What do you know about that?
HG:g 9/29/46
Regraded Unclassified
white
102
VAL-KILL COTTAGES
HYDE PARK, DUTCHESS COUNTY
NEW YORK
September 22, 1944
Dear Henry:
I thought these notes might be of
interest to you. Mr. Pajus 18 a Frenchman
who has worked for sometime for the economic
division of O.EP. He is a student of cartels
apparently, from way back and has been much
excited because he does not think enough
attentuon is being paid to them. Whether
this is true or not, I do not know.
He and his secretary, Miss Till,
seem to have a great deal of information.
If from this memo you get anything useful,
I know he would be overjoyed to talk to
anyone who showed the slightest interest.
Affectionately,
Thaves Rooseault
The Secretary of the Treasury
Washington, D.C.
BOARD OF ECONOMIC WARFARE
EP-260
MEMORANDUM
TO:
Mr. Frank Coe
DATE: 9/14/44
Assistant Administrator
FROM:
Jean Pajus
Economic Organization, O.E.P.
SUBJECT: A Policy Toward German Cartels
Prior to the outbreak of war, international cartels in which the
major nations participated, controlled a number of vitally important
commodities, iron and steel goods, electrical products, airplane parts,
business machines, wires and cables, copper, chemicals and drugs, and a
host of other commodities. This control was exercised through agreement
between members regulating the markets by fixing prices, dividing terri-
tories, and restricting production.
Patents and Trademarks were often used as devices to eliminate
competition from outsiders. Patents belonging to members of a cartel
or their subsidiaries were protected and combined. Trademarks con-
tributed their share in the strengthening of cartel agreements. This
is particularly true as regards pharmaceuticals in Latin America.
Unlike the Western European and American cartels, in the last
quarter of a century the German cartels have centered their activities upon
the revival of military strength of Germany. Likewise, they have contribu-
ted greatly to the weakening of the economies in countries which were likely
to oppose the German national policy; thus, for instance, Germany was
instrumental in increasing its own production of steel at the expense of
France's steel production. In the case of ball bearings, the production
of France was set at 25% of that of Germany. Similarly the German cartels
prevented full use of tungsten alloy steels in the United States.
With the advent of the Nazi regime the economic power of the German
cartels became a tremendous political weapon. All German-controlled
enterprises made extensive use of their power to influence their customers
in commercial as well as political policies. The result was that the
German Government, through the German cartels, acquired large assets and
made ample use of them in its political propaganda against the democratic
nations. This has been particularly noticeable in Latin America.
German Cartels Acting Through Neutrals
The war has caused the suspension of some international agreements to
which German firms were a party. In many cases, however, the cartels con-
tinue to operate as effectively as before. Neutral countries, such as
BEW 199
Regraded Unclassified
2-- Mr. Coe
Switzerland, Sweden, and Argentina, have been the points of contact for
those firms which view the war as a mere interlude and scheme of continuous
international control of their commodities. For instance, I. G. Farben's
share in Electroclor -- an Argentina company formerly owned jointly by
British, American, and Belgian interests -- has been preserved intact for
the duration and I.G. Farben was expressly promised the return of its
former participation at the conclusion of hostilities.
Activities of German Cartels in German-Occupied Europe
Since the conquest of Europe the German cartels have sought, under
the guise of every known legal device, to gain greater and permanent con-
trol over the non-German European industry. The effective control of
Europe's industry has been centralized in the hands of a few German
companies. Typical illustrations are:
1. The acquisition of heavy and light industry by the Goering
combine in Central Europe and the Balkans.
2. The acquisition of Europe's oil industry by the Kontinentale
Oel Co.
3. The acquisition of the chemical industry in France.
The method by which the French chemical industry was acquired by I.G.
Farben is particularly revealing. An agreement entered into between the
latter and Etablissements Kuhlmann, allowed the latter the production of
low grade chemicals and dyes only. The entire industry was centralized
in three firms, which included Kuhlmann, and were combined under the name
of Francolor. I.G. Farben acquired 51% shares of Francolor in return for
2% of its own stock.
The Technique of Camouflage of German Cartels
The German cartels have been successful in devising means of protect-
ing their interests by establishing companies in neutral territories. Here,
again, I.G. Farben has been singularly adept in the use of the technique of
camouflage. For instance, a small and insignificant bank was acquired in
neutral Switzerland to which I.G. Farben transferred nominal title to a
number of I. G. Farben firms located abroad. Another holding company, I.G.
Chemie, Basle, was established, whose ownership was placed with several
Swies dummy companies. By virtue of this so-called neutral ownership of
I.G. Chemie, the latter is in a position to claim ownership and control of
the tremendous I.G. interests in the United States. Smilar techniques
were used by I.G. Farben for the protection of its interests in Canada,
Britain, and other countries.
It is also known that German capital, as well as patents, licenses,
processes, etc., were transferred from Germany to neutral countries.
Regraded Unclassified
3--Mr. Coe
With the war approaching its end, both German and Allied cartel
representatives are ready with their post-war plans. In Germany 90% of the
domestic cartels were abolished because they impeded the German effort, but
international German cartels were left intact. In Great Britain Sir
Edgar Jones -- through the Nar Trade Alliance -- has perfected a plan, as
early as 1941, for the successful control of the post-war world business,
through a series of international cartels. These cartels were to embrace
the steel production, iron ore, manganese, tungsten, chrome, zinc, nickle,
vanadium, molybedum, etc. Sir Edgar's plans have found an able champion
in the person of Lord McGowan, president of Imperial Chemical Industries.
Lord McGowan's ideas, as they were propounded during the debate in the
House of Lords July 5-6, 1944, were characterized by the U. S. Embassy
in London as follows:
"This amounts to a restatement of the considerations and objectives
which led to the Dusseldorf Conference of Industrialists, the con-
ference between the Reichsgruppe Industrie and the Federation of
British Industries held on March 15-16, 1939. It is also a state-
ment that international arrangements similar to those sought at
that conference will be necessary after the war, and that the
British Government will have to give even more extensive support
and assistance than it did if such an objective is to be achieved."
The President's letter to Mr. Hull, September 8, 1944, provides an
effective answer to the British and German attempts to reconstruct the
international If cartels after the war. In it the President states that
The defeat of the Nasi armies will have to be followed by the
eradication of those weapons of economic warfare". Proceeding on the
assumption that the President's policy on cartels is to be predicated
upon the following objectives:
1. Security for all Nations.
2. The strengthening of the economies of Germany's neighbors.
3. Protection of the interests of consumers, the following policy
toward German cartels is indicated:
Recommendation I.
1. A Cartel Commission should be established within the Inter-
national Commission to control the German cartels; the
membership of this Commission should comprise representatives
of the smaller allied nations and the personnel should be
recruited from the ranks of businesses and professions not
connected with any cartels whatsoever.
a. In the future all agreements should be submitted to this
Commission for analysis and approval.
4--Mr. Coe
Recommendation II.
Immediately after the occupation of Germany, all available files of
German companies which have entered into international agreements should
be seized and impounded wherever found and their contents submitted for
analysis in order to determine the true nature of the cartel agreements.
1. All the assets of these companies at home and abroad should be
assessed, analyzed, and reported.
2. In case files have been taken out of Germany to neutral or
other countries, secure directives from the officers to their
representatives or agents abroad requiring the return of all
records belonging to the companies in Germany.
3. The German patents, licenses, and processes which have been
transferred to neutral or other countries should be returned
to Germany.
4. As a guarantee of complete compliance with these directives
the shares of the officers in their companies or any other
properties belonging to them should be held in escrow. In
case of failure to comply with the Allied directives the
properties of officers responsible will be forfeited. In
addition, German firms which refuse to comply with the Allied
directives should be blacklisted and their international trade-
marks confiscated.
Recommendation III.
All private agreements pertaining to limitation of production, sales
quotas, allocation of territories, licensing agreements pertaining to
patents or other cartel devices should be made public and declared null and
void.
Recommendation IV.
Public utilities, such as water, gas, or electricity, should be
supervised by the Allied Security Commission.
Recommendation V.
Steel, coal, potash, non-ferrous metals, the chemical industries,
the electrical machinery industry, and power, should be controlled by
the International Security Commission, which will determine the quantity
of the products in each category.
Regraded Unclassified
5-Mr. Coe
8.
The reorganization of companies placed under the control
of the International Security Commission should be accom-
plished on the basis of semi-public companies, except
insofar as some of them are already nationalized.
b.
All the interests of former Nazi sympathizers or those
who have rendered active help to the Nazis should be
confiscated and placed at the disposal of the International
Security Commission.
C.
All multiple-vote shares and all bearer shares should be
abandoned; and all shares should be registered.
d.
All holding companies should be abolished.
e.
Labor and consumers should be represented in each industry
and should have a voice in the price control.
Recommendation VI.
All foreign subsidiaries of German cartels located in Allied countries
should be liquidated and their benefits placed to the account of reparations;
the patents, licenses and processes held by the German subsidiaries in
Allied Nations should be licensed to the Allied Nations.
Recommendation VII.
The guiding principle of the Cartel Commission should be to make
available to the world at large the fruits of research of German cartels,
and especially to encourage the individual development of Germany's
smaller neighbors.
a.
The German industries should be decentralized and some
parts transferred to Germany's neighbors on account of
reparations This should be accomplished after an ex-
haustive analysis of Germany's post-war needs; the policy
to be worked out jointly with the Reparations Commission.
b.
Encouragement should be given to the development of industries
in Europe which have been held back by agreements with the
German cartels.
C.
Patents belonging to German cartels should be licensed to
the Allied Nations; technical know-how should be placed at
the disposal of Allied Nations.
d.
The duration of future patents should be shortened.
Regraded Unclassified
6-- Mr. Coe
Recommendation VIII.
The free industries of Germany not under the direct control of the
International Security Commission should be regulated by the State in
the interest of international security, under the guidance of the
International Security Commission.
Recommendation IX.
The interests of consumers should be enhanced by an extensive cam-
paign of education and by the encouragement of the establishment of
a. Cooperatives
b. Consumers' Leagues
Recommendation X.
The International Security Commission will take an active interest
in the public control of prices.
Recommendation XI.
The International Security Commission will supervise all public as
well as self-financed investments.
Recommendation XII.
In order to implement the President's directive on German cartels,
overtures should be made to all Allied and neutral Governments with &
view to securing general consent to call for & registration of all
companies suspected of harboring German interests.
Regraded Unclassified
Mr. Frank Coe
9/1/46
Jean Pajus
yn
A Policy Towards Germany's Ball Bearing Industry
In war and in peace ball bearings constitute a primary necessity
in the functioning of planes, tanks, trucks, guns, instruments, ship-
ping, railway transportation, machine tools, the steel industry, the
mining industry, and agricultural machinery. Both modern warfare and
modern economy demand a continuous and adequate supply of ball bearings,
since they cannot be stored for any appreciable length of time.
Germany's ball bearing industry can be controlled strategioally
and economically with the least effort and with a maximum effect. This
single control will allow a very effective supervision of Germany's
post-war military potential.
Germany's ball bearing industry, known the world over as V.K.F.,
was, prior to the war, a component part of the Swedish SKP ball bearing
trust and constituted 50% of the total production of SKF. The Swedish
trust comprised 80% of the European ball bearing industry.
Post-war Europe should not be left at the nerey of the German-
Swedish combine, which in the past has largely favored Germany's interest,
to the disadvantage of other nations. The breaking up of the German-
Swedish control of ball bearings should prove of great help in the
rehabilitation of post-war Europe and should also militate in favor of
lower prices to the consumers.
Recommendation I,
It is recommended that following the military occupation of Germany,
all documents belonging to either VKF or SKF be seized and their contents
analyzed in order to determine the respective interests of Germany and
Sweden in the SKF ball bearing trust.
Recommendation II.
All shares of VKP to be called in and placed at the disposal of the
Security Commission in order to re-enforce the Allied control of Germany's
industrial war potential and also as an effective guarantee against any
attempt on the part of the German interests to again form the European
ball bearing cartel.
Regraded Unclassified
- Mr. Coo
Resommendation III.
The emers of ver shares to be compensated by the German Government
according to the principle of equal terms for all claimants.
Recommendation
IV.
The shares of the French ball bearing industry, now being held by
the German interests, to be transferred to the French Government on
account of reparations, with the provise that the connections between
C.A.M. and SKP Bueden be severed completely. The French Government will
agree that the ball bearing industry in France will not enter into any
cartel agreement with any foreign company.
Recommendation V.
The ball bearing industry, located at Purstein, Csechoslovakia, to be
transferred to the Csechoslovakian Government, with the same provises as
those applying to the French industry.
Recommendation VI.
The ball bearing plant located at Steyr, forming a part of the Goering
combine, to be transferred to the Cgechoslovak Government on account of
reparations.
Recommendation VII.
The Security Commission will administer the German ball bearing
industry, not primarily for profits, but according to the principles of
international security. Final disposition of the property to be decided
by mutual agreement of all nations concerned with post-war security
a) Former SKP representatives will be expressly excluded from
any connection with the administration or supervision of
the German ball bearing industry.
Recommendation VIII.
Statistics of production and of sales, according to types and groups
of consumers, should be published monthly.
Regraded Unclassified
3-- Mr. Coe
Recommendation II.
All agreements entered into between the German ball bearing
industry and foreign producers to be made public and voided.
Recommendation X.
Patents belonging to VKP to be licensed to all nations; technical
know-how to be placed at the disposal of the Allied Nations.
Recommendation XI.
Production of ball bearings and ball bearing machinery to be
centered at Schweinfurt.
Recommendation XII.
The Security Commission will determine Germany's peace-time
requirements of ball bearings.
Recommendation XIII.
The German ball bearing industry shall not in the future enter
into any agreements restrictive in character with any foreign ball
bearing or machine tools producers.
Recommendation XIV.
The connections of the former Swedish SKP officials of the VEP
company and the German ball bearing industry are to be completely
severed.
JPimo
9/1/44
112
MEMORANDUM FOR THE SECRETARY.
September 29, 1944.
A sharp falling off in letters in connection
with the German situation took place this morning.
Up to noon, only 7 communications in all had been
received -- 5 favorable, 2 unfavorable.
In addition, 1 favorable editorial and 1 un-
favorable editorial arrived without letter or any-
thing but the indication that this represented the
senders' point of view.
Yesterday afternoon, after the report went down,
9 more favorable, 3 more unfavorable, and 1 indefinite
response to the statement were received.
Unfavorable communications in both these groups
are attached.
gettobush
Regraded Unclassifie
113
m
MEMORANDUM FOR THE SECRETARY
September 29, 1944.
My count to date is as follows:
Favorable
89
Unfavorable
20
Impossible to determine whether
they are pro or con
3
Copies of clippings, etc., with
no letter
4
Regraded Unclassified
114
M
MEMORANDUM FOR THE SECRETARY.
September 29, 1944.
Mail Report
The so-called Morgenthau plan for converting
Germany into an agricultural nation lifted the mail
out of its summer doldrums with a sudden sharp spurt.
With more than 80 comments already received, the total
will pass the hundred mark, and while some of these
communications are brief statements, many are long,
carefully written letters showing a great deal of
thought on the subject. The ratio of favorable to
unfavorable has been consistently 6 to 1. An interest-
ing side-light is that a great number of those in
favor of the plan state that they are German by birth
or direct descent. Many letters go even farther than
the Secretary in urging drastic measures to be taken
against the German nation.
Though not of great importance numerically, there
was quite a flare-up about the debt forgiveness cele-
bration suggested by Professor Frank G. Dickinson. No
letters were in favor of it, and there were a number of
strong objections, particularly from elderly persons
afraid that they would be deprived of the funds invested
in bonds toward their future support.
Other bond mail ran much as usual. Complaints on
delays continued to be few, though bonds submitted for
redemption rose from 35 last week to 53 this week. Only
3 or 4 replies to the redemption slip were received.
The light tax mail included 16 requests for refunds.
There was a definite increase in the number of inquiries
about the availability of surplus property, most of the
letters being transmitted by Members of Congress.
Regraded Unclassified
115
Favorable Comments on Statement Concerning
Postwar Plans for Germany
Robert Heckert, Westinghouse Radio Stations, Inc.,
Philadelphia, Pennsylvania. I had occasion this
past week to mention you in my news commentary broad-
cast in connection with a discussion of the Quebec
conference. Certain aspects of your program for
Germany struck my attention forcibly. For years
I have studied the German problem, both while at
home, and in Germany itself. I have known the
Germany of the Weimar Republic, and the Germany under
Hitler. About a year ago I put down on paper what
I thought would be a wise program for Germany, and
I sent a copy of it to the President, and to the
State Department. The important points in my
program from the standpoint of your interest are
points 6 to 10 inclusive. A dismemberment of
Germany that leaves the Prussian structure intact
will be useless. You have got to dismantle Prussia
itself, and the Prussian bureaucratic structure, but
the way to do that is to federalize Germany, and change
the capital from Berlin to some other town outside of
original Prussia. You will have to rely heavily on
what is left of the old trade union blood to rebuild
German democracy. They have the strongest democratic
tradition in Germany. Build up a cooperating team
of the trade union element with the farm cooperative
element -- a union of farm and work bench. That,
I think, is the best hope for the future in Europe.
James Bruce, New York City. I am just 100% in
accord with what you have had to say regarding the
treatment of Germany. After the last war, and I was
at the front continuously for almost a year, having
started in the Second Division, there wasn't anyone
from a private to a General that didn't think that
Germany should be garrisoned and kept from making war
again. They were dealt with much too easily, and on
top of that, as you know, the bankers of this country,
England, Switzerland and Sweden loaned Germany prac-
tically the entire working capital that the Nation had
Regraded Unclassified
116
- 2 -
and which they used in one form or another to rebuild
their armaments. We certainly must not let this
happen again, and the only way to prevent it is a
plan which means a complete dismemberment of Germany
industrially and splitting them into smaller states,
each one of which would only consist of a farming
community. We should, of course, make every effort
to maintain a very strong France, and do what we can
to help England to help themselves, particularly towards
strengthening their position in the Far East. # # #
I hope that you will maintain your position and will
not let anyone dissuade you from it as it is most
sensible.
A. E. Browning, Barbizon-Plaza Hotel, New York City.
May I join my congratulations to those of many others
on your having found the only solution of dealing with
the Germans after the war. Turn them into agricul-
turists only, and make them live on the products of
their land. No imports, no exports, no matter how
poor the results. And may I add -- let the United
Nations decree that if anyone of any Nation approaches
them to do this type of business, "he shall be im-
prisoned for 10 years". Surely there are enough other
nations for us and our Allies to do business with, to
allow us to ostracize Germany and Japan for many years.
***
R. B. Mateer, Philadelphia, Pennsylvania. For the
first time since you assumed office many of us are
in accord with you on the way Germany should be
handled. Hope you can and will sell your ideas to
those who believe they are heading up the United
Nations. Partition Germany and strip Germany of in-
dustry and deny her all arms and all armed forces.
Stand pat!
Regraded Unclassified
117
- 3 -
Mrs. T. Schleh, Chicago, Illinois. I want to send
you a few words of encouragement - stick to your
plans about Germany. They are absolutely right!
I am an American of Czech extraction. I was born
at Prague at a time when it had been a province of
Austria, by a decree of Ferd, Hapsburg in 1624.
Since then, Austria's official language was the
German. We had to learn it in the schools and
mastered it as our own mother tongue. The knowledge
enabled us to study easier the German lust for other
people's land and properties. ### You are absolutely
right; the interest of the United States, this hemis-
phere, mankind, call for destruction of German industry;
but do not forget to take the business too from their
claws, chiefly their department stores -- they always
had been the hot-beds of poisonous propaganda. ***
In the meantime, sail on! Do not forget that humanity
with all its fears and all the hopes of future years
is hanging upon America's Democracy.
A. E. Pfahler, Chestnut Hill, Philadelphia. I heartily
approve your suggested plan for dealing with Germany
after the war. Since it is, in some of its aspects,
a similar one to that proposed by the Nazis for deal-
ing with the conquered nations of Europe, whom they
sought to reduce to the estate of subject races, it
quite likely is a program which will have the same
effect upon the German race. That is certainly to be
desired. The fear that if Germany's productive plant
is ceded to the French, Poles and Czechs, etc., the
world will be the poorer is to my mind a fallacious
one. Those nations are equally alert mentally and
will soon make good any loss which might temporarily
occur.
Edmund Kabman, The Atlantic Refining Company, Phila-
delphia, Pennsylvania. Your postwar plan for Germany's
des-industrialization is highly commendable. Let
Regraded Unclassified
- 4 -
118
those who have any fears about loss of trade on that
account, whether they be nations or individuals,
Europeans or transoceanic, remember the constant
menace and dangers that inevitably go with German
trade.
John Howes Burton, New York City. I have been very
deeply impressed by the article which appeared on the
front page of The New York Times. I lived in Germany
as a boy. I learned German before I spoke English.
As a matter of fact, I learned to think in German,
and there is no question in my mind, with my knowledge
of the average German, that you are 100% correct in
the argument that you have presented, that Germany
should be converted into small agricultural holdings.
# I am perfectly positive that 90% of all women
in the Rhine district of Germany all worked in the
fields all the time. At that time in Germany, the
peasants on the Rhine were spoken of as "cannon fodder".
A nation has to be kept occupied somehow and do some-
thing; otherwise they will get into mischief. If your
plan is carried out, and you convert the present
Germany into small agricultural holdings, in my opinion
you are making the greatest hit to assure peace for the
future that has ever happened. I am 80 anxious to have
you accomplish this result, that frankly, I would be
very glad to come to Washington and present my argu-
ments before any committee. * I am sure that if
your plan, Sir, succeeds, you will be doing the best
thing that you have ever done to assure future peace.
You cannot fight a war with farm products. The theory
opposed to your suggestion would probably bring out
the question that Germany must pay reparations, and
that if they were not a farming community, they would
have more opportunity to make money to pay reparations.
In my opinion, Mr. Morgenthau, reparations are not
going to pay for the dead. * * # You cannot fight a
war if you have no war industries, and if Germany
has nothing but agricultural industries, you are not
going to have another war. #
Regraded Unclassified
119
- 5 -
P. Randolph Harris, Attorney and Counsellor at Law,
New York City. According to the New York Times, you
transmitted to representatives of the British Government
at the recent Quebec conference the views of the
Administration with regard to the treatment to be
accorded to Germany after her unconditional surrender.
I venture to express the hope that the views so trans-
mitted by you were sufficiently realistic to remove
the threats to the peace of the world which for nearly
100 years have originated in Germany. # I suggest
that the simplest way to deal with the impending problem
is to destroy the capacity of Germany to make war.
That capacity is based upon her manufacturing facil-
ities. If those facilities be destroyed, and their
resurrection be prevented, Germany cannot again plunge
the world into war. I hope therefore that the conquest
of Germany will be accompanied and followed by the
destruction of every manufacturing plant which contri-
buted towards her total war effort. It may be
said that the adoption of such a program would reduce
the German people to an agricultural economy. This
is probably true, but I do not shed any tears at the
thought of the German people being reduced to living
on farms. # # # The dreamers suggest that the Allied
nations should "re-educate" Germany. This assumes
that the leopard, with some outside assistance, can
change his spots. It disregards the obvious fact
that the only language which the German understands
is that of the club.
Blanche G. Williams, Miami, Florida. Our entire family
and many friends were amazed and overjoyed to hear
that someone has finally come out in favor of convert-
ing conquered Germany into an agrarian state. Dismantle-
ment and removal of all heavy industry in 1918 would
have prevented this war. It would seem not only logical
but also mandatory to do it now, after Germany has upset
the world's peace and equilibrium for the second time
in a fourth century. # # # No "ism" could, .with agri-
culture as the basis of itseconomy, threaten the
Regraded Unclassified
- 6 -
120
security of any other state, regardless of the
number or ardour of its adherents. Keep plugging
your idea - we think it is swell.
George L. Glaser, Springfield, Massachusetts. With
extreme gratitude I did read this morning your sug-
gested treatment of Germany after Victory. Do the
other gentlemen, who oppose your plan, wish to reward
the Germans for their unspeakable crimes? Anything
more than permitting them to remain on the surface
of this earth seems like treason on the American soldier.
Germany does not need any industry, but I am for pro-
viding a plan for their surplus population to emigrate
by lend-lease controlled and supervised routes to all
nations on this earth. Germany can't support more
than about 36 millions in a decent way, or they become
a steady threat to civilization. I most sincerely
wish for the success of your fine plan.
Lawrence Langner, New York City. I wonder if you have
been giving some thought as to how German industry
can be prevented from dominating after the war by
means of inventions, and preparing for another war.
I have prepared a plan by which I believe this could
be prevented from happening in the future, and by
which Allied Nations would control all German inven-
tions. I am enclosing copy of this plan herewith.
Daniel B. Cope, Chicago, Illinois. # # # I have four
sons serving in the service, and I am like you -- keep
our flag, or some flag, flying on Germany and we know
whose flag will fly over Japan. Each country should
be stripped of everything they have in+the way of
building war materials. Please do not get offended
at the two bits cut out from the Sunday Chicago Times.
May God be with both of us until the conflict ends.
Regraded Unclassified
121
- 7 -
Vladimir G. Simkhovitch, Robbinston, Maine. The
radio was just reporting your plan for Germany. You
are absolutely right. It is the only way to win the
peace, and whoever does not follow your idea has not,
I fear, an adequate grasp of the situation. Industrial
Germany will seriously complicate and endanger the
situation. # # I know Germany well, and I doubt
whether we, as conquerors, can re-educate Germany.
It is not within our power, but it is within our power
to change Germany - so let us do it.
Herman Greenberg, Brooklyn, New York. Yours is the
most reasonable solution to dealing with a chronic
individual, criminal nation. What's done with 8. con-
firmed criminal whose shrewd villainies through the
years accumulated and interlocked business dealings?
Surely not to help him maintain them for further
destruction. Such an individual (even a nation) is
fittingly stripped of his loot and placed on a farm
under strict watch. Germany is such a nation
and must be restored to earth lest she buries more
millions of good humans below it.
Baruchius Lipschutz, New York City. I just read in
the newspapers about your interesting plans about
Germany. I include hereby an article I wrote on
August 15 to the newspaper P.M., five weeks before
anything was known about your plans. # # # Nothing
until now has been said about the danger of the
German population superiority after this war. ***
When your plans should get through, we will get a
wholesale German immigration to other countries.
I believe this to be harmless and opportune. With
a weak and unindustrious motherland behind, they will
be harmless. I know very well the German mind,
and if the Germans outside of Germany do not get any
more in view of articles "Made in Germany", they will
get estranged from their country, and the spirit of
Regraded Unclassified
122
- 8 -
"Germany ueber alles" will be a dead duck. The Germans
nearly won this war by being bold; it is only by being
bold that we will win the peace. ***
C. F. Farnham, Lorain, Ohio. The best war news that
I have read in a long time is clipping "A" which I en-
close. I hope it is not a dream from which I will
awaken and find it false. (Clipping concerns the
Secretary's postwar plans for Germany.)
Evan W. Morris, Alliance, Ohio. It was with the ut-
most admiration I read of your proposal for an agri-
cultural Germany. # I write only to say I feel
there are many like myself who hope and pray that an
intelligent and realistic approach, such as yours,
may ultimately prevail. Among the many fine features
of your plan, the fact that no agricultural people
have ever waged an aggressive war, should alone prove
to your associates how right you are.
Re-directing German drive and energy could be a good
thing for the whole world. Permitting it to again
"get up a full head of steam within the narrow boiler,
i.e. Germany, will only bring again the catastrophe
the world cannot and must not afford. My interest is,
as yours, solely American. As far as I am able to
read, you have freed yourself of prejudice to a re-
markable degree, which I much admire. As the hopes
of many of our people rest with your clear and intelli-
gent attack on the selection of method of dealing
with Germany, may God grant you the strength and will
to be fully successful.
Mrs. Willie Conyers Cook, Hotel Georgian Terrace,
Atlanta, Georgia. Having just read your article as
to what disposition to make of Germany, I can't resist
a note of applause! Since November 1943 I've written
a number of letters -- Byrd, November 13, 1943;
Roosevelt, December 19, 1943; Churchill, August 14,
1944 -- urging them to break up Germany. I was a
Regraded Unclassified
123
- 9 -
year in Germany, France, Italy, etc., hearing with
disapproval, giving up the "occupied territory" to
Germany. They will reorganize on a shoestring, 80
WHY send our boys to saturate their soil with their
blood for naught. # # # Others advocate making money -
again endangering our boys' souls - a crime in itself.
Your solution should be urged by all lovers of
humanity. Please do not give in to a grasping clique.
***
E. C. Cunningham, Research Engineer, West Bend, Wis.
I just want to say that I think your idea of handling
Germany after the war is the only sensible one; if
anything, it should be much more drastic. The surest
way to have peace in the future, as far as Germany is
concerned, is to have no Germany after the war. Grind
Germany into the ground - the whole damned works.
# # # Those who whine that we can't afford to lose
Germany's contributionsto science and culture haven't
sense enough to know that for every dollar's worth of
good developed by Germany, they have cost hundreds of
dollars' worth of destruction alone. Germany is no
bargain in any sense. Those who complain that we
can't afford to lose Germany's markets are thinking
only of the immediate dollar, the same as they did
previous to these two last wars. They are already
willing to sell out the next generation for 5¢ on
the dollar. This is probably our last chance to take
care of Germany the way she should be taken care of,
because in another 25 years we won't have the raw
materials to fight with, nor the sense to store them
up. I hope that you push your scheme for all you can.
***
Andrew Zelinsky, McKeesport, Pennsylvania. Your plan
for Germany's peace terms is good from among all the
rest, but mine, I demand the complete destruction of
the German people. ***
124
- 10 -
Mrs. Russell Chadwell, Kokomo, Indiana. After radio
comment concerning your proposal of dealing with
Germany and the people, I am in accord with you 100%.
In justice to all those who have died at the hands
of these Frankensteinish robots of world destruc-
tivism, Germany should be forever dissolved as a
nation and a race. Let the country of Germany be di-
vided among the survivors of her victims. # # # If
there is any justice left in this world, they must
pay in their own coin for the monstrous mass murders
and desolation of humanity. Our men have given their
lives in defense of our country, and to all the leaders
of society rests the responsibility of making that
supreme sacrifice justified.
Pfc. D. J. Doblin, Fort Jackson, South Carolina. If
occupying troops move out of Germany before we're sure
of that country's intentions, it might be well to
burn coal seams; existing shafts, plus new ventilation,
would keep up the fires. Troops would stay until fires
were well along. Before destruction, mining might be
intensified. Before leaving oil pools in dangerous
hands, we might do similarly.
B. C. Rodes, Washington, D. C. Please accept my
sincere congratulations for your courageous plan to
bring Germany to an accounting for the cruelties and
crimes that they have committed against the peoples
of Europe, and to prevent them from undertaking a new
war within the foreseeable future. I pray that God
give you strength to carry out your plan and prevent
another world cataclysm. Many of our people here, and un-
fortunately many in high Government posts, do not seem
to realize what Germany has done to the peoples of
Europe in the past 10 years or so, not to mention what
the Germans have done in Europe in the past 1,000 years.
They are not aware, or if they are aware, they do not
care apparently that the Germans were set out delib-
erately not only to conquer other people and other
people's lands, but to destroy, burn, kill, murder and
Regraded Unclassified
125
- 11 -
hang the other peoples of Europe in a premeditated,
deliberate, and preconceived plan. # # * A great
many of our people seem to ignore, or if they know,
to forget that it was not the Nazis alone that
perpetrated all these crimes, but the whole German
race -- all the German people in concerted action.
Who did all the fighting, killing, destroying, murder-
ing, burning, torturing, and hanging? Were they not
Germans? Did they not celebrate for weeks the destruc-
tion of Poland, France, and the other unfortunate
peoples of Europe, and boasted to the world that it
was "German arms" that did it? # # # Why delude our-
selves about the truth? Has it not been the German
philosophy of life for nearly 100 years to conquer by
brutal force in a destiny of world supremacy and world
conquest? Was it not this philosophy that created Nazism
with all its sadism, brutality, barbarism by which they
planned to destroy other peoples and to conquer the
World? Do we want the people of Europe to be completely
destroyed in the next war, which the Germans will surely
attempt, if we permit them? Do we want our children
and their children to die fighting the German monster
again? Please, I beg you, and I would like to beg
every American if my voice could carry far enough, not
to delude ourselves about the Germans. Let us face
realities. Let us do the realistic thing to secure
our protection. Let us destroy the German state. Let
us measure out real, true, and commensurate punishment
to the Germans for the cruelties and crimes according
to the law of God and man. Let us make it impossible
for the German beast to start another war. Only your
plans, as reported recently, could accomplish that. # #
Mrs. Right, Peru, Indiana. Your proposition to make
Germany a small farm land is good, but much better to
wipe out the whole Nazi nest. To be sure, we will have
peace, and all sacrifices are not in vain when Germany
is divided like once Poland was, between the neighbor
lands. Only so can completely disappear the brutal
Nazis. # Our President's speech was terrific. He
alone is the right man for America's V in any respect.
Long live our smart President Roosevelt!
Regraded Unclassified
126
- 12 -
J. J. Dessert, Atlanta, Georgia. Your plan for the
handling of Germany after the war is splendid. It
is the first concrete example that the leaders of
this nation are thinking of peace instead of dollars.
Your plan would eliminate reparations in dollars, but
would repair Europe in machinery and materials. No
one need tell you that an agricultural nation cannot
have purchasing power. # ## Keep up the good work.
I hope you win. We are fortunate to have a nation
wherein we can write so freely to our leaders.
D. F. Savery, Kansas City, Kansas. Please be harsh.
The-Nazis and Japs asked for and intended to do the
same thing to everyone. Give each family 40 acres,
but let them find their own mules. Allow no toys
like machines or factories so they can think things
over while the apples grow for our Veterans to sell
when the war is over.
A Citizen - Kalamazoo, Michigan. Please keep up your
fight to give Germany all that is coming to her.
I certainly do favor your ideas for depriving the Nazis
of all steel mills and all factories which might again
make any kind of war on us. Down with the Nazis and
down with every German factory, one and all the Devil's
workshop. They must be put out of business!
C. H. Wagner, San Antonio, Texas. See in paper where
you have competition on what to do about Germany. Well
my father came from Germany 90-odd years ago when
Germany was a Germany. # # In my mind there are as
many Hitlers in Germany as they have population. I have
a son who has been in the Pacific Ocean since May 14,
1941. He, my other 3 boys, and myself are for America
and all our Allies 100% strong. 100% against Germany
and Japan cut-throats, and both should be wiped off of
the map and done away with for now and forever. Had
the Allies listened to Marshall Foch 25 years ago, we
would not have this bloodshed now, and if we do not
Regraded Unclassified
127
- 13 -
do away with them for good, we will have the same
stunt again in 20 years. # # # I am only a Texan and
not a pussyfoot but a Texas Longhorn with the spirit
of our old pioneers. A free country, free speech,
and any person or country that is always making trouble,
do away with them. Our country sends habitual criminals
to the penitentiary - then why not hang habitual
murderers? Use this letter if you see fit and then
send it on to Hitler as I would like for him to know
how a decent person of German extraction feels towards
him and all his people. With kindest wishes and to
your satisfactory success to put the end to the old
trouble maker forever.
Mrs. Adolf Horomanski, Paterson, New Jersey. ***
I heartily approve of your plan, and I am dismayed
to find that the other leaders do not agree with you.
By not showing a united front to the enemy, they are
playing right into Germany's hands. My husband and
I left Poland 39 years ago to come to America to work
and raise our family in peace. You know how the Polish
nation has suffered for centuries from German aggression.
Here we suffer again -- my six sons are all in the Army
and our home is broken up. Why? Because German indus-
trial might and the Prussian military group that trains
the army was not destroyed after the last war. I can-
not understand why so many American leaders lean over
backward in their effort to be fair to the Germans.
They deserve the same leniency they showed to the
conquered nations of Europe. We can imagine the peace
terms they would give to us if they won the war.
I hope you will be firm in your stand, and that the
others will come to agreement with you.
Edward Grossman, Brookline, Massachusetts. Your plan
for the treatment of Germany was of very great interest.
Naturally the writer approves of it, since he advocated
almost similar treatment for Germany in his submission
in a contest. The writer's submission did not win 8.
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prize. There are one or two other points that may be
of interest to you. If you care to have the contest
entry sent you for reference, it will be done. # #
R. T. Lipscombe, Sr., Richmond, Virginia. I have read
with interest your farm plan for Germany. Herewith
is a farm plan that I am sure could be applied
economically in any country, especially our own, and
save the taxpayers fabulous sums of money.
E. S. Fisher, Indianapolis, Indiana. I am for your
plan "tooth and toe-nail" -- your plan for the treat-
ment of Germany and the Germans when she and they have been
defeated on their own "holy" ground. This is from a
retired business man, born and raised a Democrat in
Mr. Hull's own state, and of the same age as Mr. Hull,
but from one who became an independent in 1896, and
voted for McKinley, then voted for Wilson, and was
rather pleased when Mr. Roosevelt was elected in 1932.
# I am in favor of many of Mr. Roosevelt's objectives
but opposed to many of his devious plans of obtaining
or bringing them about. I have said all this to show
that a man of such opinions can and does agree with
your plan, which I believe has the approval of Mr.
Roosevelt. # * Put Germany on the basis on which she
planned to put France and Russia. If there ever is
another war of conquest, civilization will be wiped out.
Let us take no more chances with the Germans and the
Prussian Junkers.
Warren A. Seavey, Harvard Law School, Cambridge, Mass.
May I congratulate you upon your reported views as to
the treatment of Germany and its reduction to a primarily
agricultural community. With this I agree, and thousands
of those who have studied the problem also agree. There
is but one serious argument to the contrary which is
that Germany does not have sufficient arable land to
support a purely agricultural economy. May I suggest
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that your position would be made stronger if a
demonstration of this possibility can be made. In
common with a group of considerable numbers in this
vicinity, I would be glad to forward your point of
view, but we would welcome advice as to a dispassion-
ate source of information upon the purely economic
side.
John Wilcox, Philadelphia, Pennsylvania. I want to
let you know that I am back of you 100% in your plan
for de-militarization and de-industrialization of Germany
and hope you stand pat on those convictions as a means
of making Germany impotent forever. The same applies
for the Japanese. Isn't it possible that you could
bring more of the people of this country into accord
with this line of thinking through a series of broad-
casts? #
T. W. Phillips, Jr., T. W. Phillips Gas & Oil Company,
Butler, Pennsylvania. Your suggestion that Germany
be turned into a 100% agricultural nation meets with
my thorough approval. Anything less probably would
subject the next generation to another war, more
terrible, if possible, than the present one. Sensible
and peace-loving Germans would absolutely approve of
such a postwar condition without reservation; if not,
they are neither sensible nor peace-loving, and do not
have the best interest of themselves and their neigh-
bors at heart. It was very much of a disappointment
to me to learn from yesterday's paper that my former
colleague, Secretary Hull, and also Secretary Stimson
are very much opposed to this solution. Even if di-
vesting Germany of its manufacturing industries would
upset the world economy seriously (which I doubt), it
would be a mere bagatelle compared with the political,
economic, industrial and moral upheaval that would
accompany another world war or even the serious threat
of another world war. I hope the paper was correct in
indicating that the President of the United States and
the Prime Minister of Great Britain are in favor of
de-industrializing Germany. ###
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Peter H. McCarthy, Dubuque, Iowa. Note your terms of
dealing with Germany. I must say that I agree with
you just 100% plus, and I can make a few more suggestions
for
good
measure.
*** Germany is said to be the size
of Texas, and Texas has 245 counties. Cut Germany up
into 245 counties - the smaller the better. Plank 5
is o.k. Don't give Germany any assistance whatsoever
in building up their own country. They made their bed
now let them lie in it. Destroy Germany industrially
forever. Make them rebuild countries which they laid
waste. Stand your ground as you have the only lasting
solution.
N. C. Starkey, Norfolk, Virginia. I was greatly moved
by the announced split in Washington about what should
be Germany's fate commercially. I believe the man in
the rank that's doing the fighting is the proper person
to determine this fact, with the mothers who reared the
sons who died in battle, because the last Victory 25
years ago became a farce in view of the fact that the
peace was made on terms created by those who never had
on a uniform or fired a shot. I say let GI Joe make
the terms -- he's carrying the load.
Mrs. Elgin Moncure Styll, Richmond, Virginia. "Out of
the mouth of babes and sucklings comes wisdom". I am
now 75, but my mind is very active, and I try to keep
up with "things". The enclosed came out in our paper.
I approve everything you have suggested, but you have
not gone far enough. The German nation should be
destroyed as a nation. The German language should be
forbidden. When you destroy a people's language, you
then destroy the nation. This is the only hope for a
lasting peace. Please see that this is done. You can
"down" American money grabbers who want the "trade".
F. L. Boynton, Leesville, Louisiana. After reading in
the paper your plan to put the brakes on Germany,
I felt compelled to write you this letter. I heartily
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agree with you. I am in favor of anything that will turn
the trick, and I can guarantee the majority of the people
feel the same way. What most are afraid of is that all
this will be done in vain; that some silly, idealistic
scheme to teach them Democracy, or Republicanism, or
something else will be tried. Personally I am not an
extremist -- I just face the facts, and rather than
have this happen every 25 years, I would favor lining
up the whole bunch lock, stock, and barrel and shooting
them. # # I am glad to hear that our President is
siding with you on this matter. I have already lost my
only brother on the Reuben James, and my only son is in
the South Pacific in the Seabees. # * *Give the President
my regards and assure him I will be 100% bshind him
election day.
Maurice C. Hill, Treasurer, Willard Hawes & Company,
Importers & Commission Merchants, New York City. I have
read something of the plan which you have submitted for
the control of Germany after the war. If after the last
war such steps were taken, it is not likely that we
would have been experiencing this present holocaust.
Although the last war and this war have both turned out
very tragically for me, I have no feeling of revenge
against the Germans, but I unequivocally agree with
your plan and hope you will not let anything deter you
from urging it to the utmost.
Lieutenant Paul Boxell, Arlington, Virginia. *** If
this clipping correctly represents your views (Evening
Star, September 25), I am confident there are millions
throughout this nation who, like myself, agree whole-
heartedly with you. We are for you, we urge you to
stick to your guns; for only in victory for your plan
do we see victory worth the blood we are pouring into
this war. If we permit ourselves to be duped into letting
the German people arm again, we shall have only ourselves
to blame when our children become sacrificial lambs to
our own stupidity.
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May Cline, Phillipsburg, New Jersey. I am one-
half German. # I know the race! It is a fierce
blood! No price is too high for a desired objective.
Germans have a bunch of fine traits, so far as
stability is concerned. And they have a strong sense
of rhythm. But they want to demand, and they like to
bribe and are full of a smooth deceit. They are a
hammer and tongs race. The English are far more just.
English people have principles. The Germans are
emotional, and "want" and "want". # # The Germans,
proud of their power, want world expansion. They love
their home and don't leave it, but add to it. It is
a fertile and lovely homeland. (A German is domestic
and a good gardener.) So, the German doesn't go out
adventurously and shed blood, but subtly adds his
neighbor's estates, and goods, and enslaves his
neighbor. # Don't be too mild with men who intend
and have laid plans (in blue print) to make -our bald
Eagle scream. # Do notweaken! The German is a fear-
ful enemy. Don't underestimate! The German mentally
is A-1. ***
Major Frank Pease, Coral Gables, Florida. Back in 1934
it was my great pleasure to receive your kind letter
concerning my anti-Nazi document sent you, and as first
published by the Dickstein Committee, and later re-
printed by me as a study for wide international circu-
lation. The enclosed manuscript, "Germania Deserta",
is, so to say, a follow-up. # It was written a few
days after Pearl Harbor; laid aside for a couple of
years, and just now dug out and brought up-to-date.
In it are confirmations or substantiations of what
I understand is your own position regarding a practical
and permanent peace settlement -- settlement of the
"German Problem" as such. This is to say, Germany's
de-industrialization. # It is quite obvious that
anything like a permanent settlement, not overlooking
our proper retribution for Germany's crimes, is some-
thing which has got to be "fought" for. And this is
why I venture to send you this document. # * * Again
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with all thanks for your every attention and courtesy,
and with best wishes for your success towards Germany's
de-industrialization.
A War Plant Worker - Peoria, Illinois. After reading
of your "German Peace Policy" plans in today's paper
I think it is very good. "Grandma" Hull should wake
up and get behind you. This also goes for Mr. Stimson.
We cannot lay it on too strong when it comes "Peace Time".
Japs and Germans alike. They should not be allowed any-
thing like a soft peace. They do not deserve a place
in the family of Nations.
L. Lester Rona, New York City. (Telegram) Your reported
stand on Germany's complete de-industrialization appears
only practical solution. Whether right or wrong we can-
not take chances. Our dead cry out for the safety of
next generations. Respectfully suggest you do not
deviate from your position.
Herbert van Kaan, New York City. I do hope it will
interest you to read the enclosed clipping from the
Central European Observer giving some very good argu-
ments in support of the plan proposed by you to strip
Germany of her industry, especially the part that sug-
gests to the Allies to capture Germany's several billion
dollars worth of export trade as their part of the rep-
arations Germany could and would never pay., In addition
I think we should never again permit Germany to have
any merchant fleet whatsoever. I would even propose
to bar any German to leave his country. Their presence
within the borders of countries formerly ravaged by
her would most likely result only in disturbances, since
it is hardly likely that any of her former neighbors
would calmly see German salesmen trying to drum up bus-
iness for Germany again, and likewise German tourists
would not only be similarly unwelcome but even suspicious
in view of her tourist invasion of many countries. #
If the Allies would like to save some of Germany's
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heavy industries for the purpose of reparations in
kind, such industries should be located exclusively
in the Ruhr and Saar territories taken out of Germany's
economic system and placed under Allied control perma-
nently as 8. workshop on reparation account, since it
may be possible that Russia, which can, due to her
economic system, absorb any quantities of reparations
and will need hundreds of billions worth of goods to re-
store her devastated regions, may insist to receive such
reparations besides German machinery and labor batallions.
#
H. B. Charmbury, Assistant Professor, Department of
Fuel Technology, The Pennsylvania State College, State
College, Pennsylvania. I have read with great interest
a newspaper account of your plan, as a member of the
President's Cabinet Committee, on a German peace policy.
It was quite surprising to learn that in such a
plan there was no provision made for the Allied coun-
tries to control the very root of the German industry
even though your plan does call for the destruction of
its present industry. Therefore, I would like to sug-
gest for your consideration the following, not necessar-
ily as I have stated it, but at least in principal:
That an allied scientific committee be appointed to keep
in direct contact with and govern all long-range scien-
tific research and development work within the remain-
ing German state. Such a proposal would enable the
Allies to detect in its first phase any long-range plan
that Germany may institute to cause the recurrence of
another war, especially since it is a known and accepted
fact that Germany had to rely on its scientific achieve-
ments since World War I in order to even consider
becoming engaged in another world conflict.
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- 21 -
E. Maude Buchere, Glens Falls, New York. Our family
which consists of four adults, have read from time
to time your publicly expressed views in regard to
our affairs with Germany after the war. We think you
have been consistent, reasonable and just in your
statements, and feel you present the most rational
and sensible attitude to assume in dealing with such
a race of people as the German people have allowed
themselves to become. The German people have
shown themselves to be neither willing or capable of
living harmoniously in a world family of people - and
until they can show such a desire and ability, we
must keep the tools of destruction entirely out of
their hands. We trust you will continue to take the
stand you have presented and that you will make every
effort to put it into effect. It is unfortunate that
the laymen do not have more opportunity to make their
opinions public, but all can support those who do
voice a sound and consistent stand to take. Thanking
you for this opportunity to express our appreciation.
Dr. I. R. LeSage, Huntington, West Virginia. I wish
to add my hearty commendation of your plan for the
treatment of postwar Germany. Anyone who should
desire to subtract one jot or tittle from your proposi-
tion ought to be subjected to some of the brutality
our fighting men and the subjugated peoples have had
to endure. Do not retract an iota from your position.
Joseph W. Carroll, Carroll, McCall, Plough & Carroll,
Attorneys and Counsellors at Law, New Orleans, Louisiana.
I have read in this morning's paper a reference to a
proposed "handbook", issued, or to be issued, by economic
experts under direct orders of the Secretary of the
Treasury, regarding the handling of "German civic affairs"
addressed to Allied military administrators. The inti-
mation, if not the text, points to a "hard peace" --
with which I have no quarrel now -- if ever. May I have
a copy of the handbook when issued?
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- 22 -
Edward B. Benjamin, Greensboro, North Carolina. I am
sure many millions of other Americans feel as I do
that your so-called "Treasury Proposal" for handling
Germany is highly sound and desirable. I hope you
will stick to your guns and put your plan over. All
good wishes.
Mrs. Burgess E. Drane, Washington, D. C. I favor a
plan of splitting up Germany into separate portions;
a 10, 15, or 20 year occupation of Germany to see they
don't start to get ready for another war. I don't want
our children to have to fight another war in about 20
years. Germany won the last peace, we must not let
her win this. Richard Harkness' explanation of your
plan for treatment of Germany sounded good. Keep to it.
Emanuel Tyone, Boston, Massachusetts. The writer, who
was Secretary in the Wilson pre-nomination and election
of 1912, and a friend of your dear father, is anxious
to advise on important pre-election facts. Mr. Dewey
was 15 or 16 years at time of that tragedy when President
Wilson was defeated by the Republican party on the
League of Nations, and only by a scant 6 votes in the
Senate which rejected, and Senators Lodge, Borah and
Hiram Johnson assailed its principles which was to do
America's part in the League. # # # Germany was beaten
and hands in chains, or hand-cuffed, as it were, and
again I say the Republican party cannot be trusted.
Honestly, the United States is the fault of this war
because Germany could not start any wars if unable to
manufacture warfare implements. I am sure a great many
men, like the writer who is 70 years old, know what
I am writing, and as a patriot am sure my words can
be broadcast with great help for a human cause. President
Roosevelt will live long in history for his honesty and
charity for the masses.
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- 23 -
Many Treaties Blackfeet, Los Angeles, California.
Friend: Your plan for cutting Germany up into small
farming communities is the solution for preventing
future wars by Germany. I think Germany should be
dealt with most severly, once and for all. The world
would not suffer if Germany got a big dose of what the
Romans gave "Carthage". I do not see why we should be
so solicitous about the future welfare of an arrogant
and bestial Germany. To leave intact a Germany of 80
millions is to invite another war - policing or no
policing. The war plants of Germany should be leveled
to the ground. Yours for stern terms.
Zdena Trinka, Lidgerwood, North Dakota. The enclosed
copies of letters I have mailed to Mr. Hull and
Secretary of War, Mr. Stimson, are self-explanatory.
They are the last persons one would have thought would
oppose your plan for Germany after the war. #
To you, Mr. Morgenthau, goes the deep admiration of
myself and the man and woman in the street who are to-
day discussing your plan of an agricultural Germany,
a Germany deprived of its industries, and no repara-
tions. A plan, whether it succeeds or not, will win
you a place in American history for its thorough
Americanism in trying to prevent another war which the
enemy brags it is even now planning by going under-
ground in various European countries to prey on peace-
ful nations from its dugouts in the interim until Germany
can fight again. ***
Edward Davis, Retired Col. U.S.A., Evanston, Illinois.
You are a Cornell man and so am I. According to the
press you advocate arrangements regarding Germany's
future status which seem to be quite in accord with
my own conclusions, the latter being the result of my
long practical experience with the Germans in Germany
as Military Intelligence representative operating both
into Germany from the outside and later from the inside.
*** As to the efficiency of my above operations you
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may, if you wish, ask General March, late Chief of
Staff under whom I worked directly. Your representa-
tions, as mentioned in the press are absolutely
correct. I have studied German conditions continuously
since World War I. We can obtain a durable peace now
if we are intelligent enough to do so. If I can do
anything to back up your plans let me know.
Dr. Walter H. Colburn, New York City. Your seven-point
settlement of Germany expresses my sentiments to a dot.
I hope you stick to it. For over a year I have said
this was the only way to get rid of the plunderers and
murderers!
John C. Allen, Kearny, New Jersey. As a plain American
citizen I want to congratulate you regarding your very
wise plan for the postwar treatment of Germany. I was
for years in Latin America where there are many Germans
of the intelligent and official class and the best and
most effective method to cut their world-wide ambitions
is to put them on small farms without the right to
leave Germany as their presence in any part of the
Globe would be an added menace to world peace. Every-
body seems to be earnestly in favor of your idea except
Dewey Republicans.
Wolfram Hill, St. Paul, Minnesota. As.o.ne who was
born and educated in Germany, I wish to commend you on
the effective plan which you propose for the treatment
of the Nazi Reich, after, I hope, large sections of
it have been permanently detached. I am in a position
to realize that your plan is not only just, but if
peace for at least a hundred years is desired, it ought
to be carried out to the letter. At its worst, our
plan is merely an application of Nazi justice which
these gangsters have imposed upon innocent people.
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- 25 -
Anonymous - Washington, D. C. I hope you stick to your
guns and win out on the German question - "Treatment
After the War - as yours is the ONLY plan whereby we
can keep Germany from starting another World War of
complete annihilation of civilization, in another genera-
tion! This soft peace that Hull, etc., want is much
too human and soft; as the Germans do not profit by
kindness and softness, theyonly sneer at our backs and
build war materials. I cannot understand why our top
men in power do not remember that our kindness and
generosity and faith in the Germans only helped them
prepare for this war, and it will help them again, as
kindness, helpfulness and pity will give them courage--
that is, it will only help them to kill us later.
Thomas M. Boulware, Allendale, South Carolina. I should
like to do anything I can in the way of giving you some
slight assistance in your effort to prevent another war
by changing Germany from an industrial into an agri-
cultural nation. I should like to see every German,
Japanese and half-breed sterilized, but as those who
do not think would not agree to this, I think your plan
is the best that could be put across and is an absolute
necessity. If you could hold off a decision for a
short while, until the returning corpses and living
human wrecks make the people realize what is happening
in the world, then the Cabinet and the Congress will
learn from the people that the next war must be prevented.
I am not a politician, but I am a prominent man, having
been President of the State Bar Association, etc., and
could exercise some influence in this state in forming
public opinion. Awaiting any opportunity for service.
Charles Saunders, Sr., Philadelphia, Pennsylvania.
We, the people, have but a faint idea of your plans for
converting Germany into an agricultural country, but
you can rest assured that if this is to be principally,
though not wholly the German economy after the war, that
such a plan will have the hearty approval of the people.
Everyone with whom I talk voices the opinion that she
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must forever be rendered impotent to again make war.
I personally feel that just as sure as we allow her
to resume any heavy industry, just that sure are we
of again helping toward another war. # # #
Harry A. Ives, Brooklyn, New York. I read with great
interest an outline of your plan to administer Germany
after the war; it is the only one that I have heard of
that shows statesmanship, moderation, and vision. It
should be a matter of the deepest concern to every
American that proper measures are taken to prevent
future wars, and I commend you most heartily for your
foresight and plain common sense.
Ernest Briars, Rochester, New York. I am with you
fully in your desire for a tough peace, even if an
enrolled Republican. What kind of people are they
in the State Department? Evidently, Facists to a
large extent. They have continually babied Franco,
the butcher; have seemingly never read of the torture
chambers of the Gestapo, etc. Else they delight in
human misery. Stimson, too, must be a doddering idiot
to think we should let these German devils off lightly.
Franklin S. Clark, Attorney at Law, Fayetteville, North
Carolina. You are right, except that your plan for
Germany is too easy. The German people need a beating
and a punishment from which they can never recover.
# # # The public is back of you. Stick to it!
Mrs. Mary Ficker, Bronx, New York City. I am taking
the liberty of writing to you to tell you I and many
mothers in my city are very much in favor of your plan
for Germany after we win the war. I wish you all the
luck in the world, and that it does not get the same
setback that President Wilson's League of Nations got,
for Germany must be punished and now is the time to
do it.
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Julius Herz, New York City. May I congratulate you
on your plan for the future treatment of Germany?
This is indeed the best way to prevent World War III;
to prevent other nations from seeking an alliance with
Germany; to eliminate German (and Japanese) competition
in the world market; to give more employment to our
workers, thereby preventing a further trend to the Left;
to preserve our Democratic way of life. Perhaps I am
allowed to make the following supplementary suggestions --
etc., etc. * * *
S. Arthur Knapp, Reserve Officers' Association, Lake
Charles, Louisiana. I just want to tell you how very
much all of our thinking people appreciate your plan
of handling Germany after the war, as outlined in the
New Orleans Times Picayune of September 24, 1944. If
the politicians had let General Pershing alone he would
have settled this whole matter in World War I, and un-
less we settle on a basis that Germany will thoroughly
understand this time, we will just be inviting them to
whip us next time. I am not sure that there should be
any Germany, but if there is, there should never be a
factory of any kind. They should have no sea coast,
no shipping -- each one should have a hoe and shovel
and as they are nothing but a bunch of potato eaters
anyway, they should "root hog or die".
Mrs. Vera A. Dunn, Tulsa, Oklahoma. The attached
editorial (From The Tulsa Tribune - highly praising
the Morgenthau Plan) expresses the overwhelming opinion
of the American people, and any Government of the people,
by the people, and for the people should give it pro-
found consideration. Militarily, Germany must never
be allowed to rise again.
Allston D. Calhoun, Jr., Greenwood, S.C. I have been
following in the papers your stand for a hard peace
with Germany and I am taking the liberty to write you
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that Germany as a nation should be destroyed insofar
as her ability ever to wage war again is concerned.
Whatever means are used in making this a certainty are
immaterial as compared with the necessity of making
Germany forever impotent. Two years ago I became
tired of hearing people say that the Nazis were
responsible for this war. To refute this I sat down
and wrote the enclosed pamphlet to show that the
Germans have been at the same old game for many
centuries, and that the term "Nazism" is nothing more
than a new name for the same old brutal German aggres-
sion. # As a newspaper promoter who has travelled
throughout the nation and who knows the sentiment of
the people, I can tell you that nothing is going to
cement the fruition of the fourth term with more cer-
tainty than the knowledge by the people that this
Administration will carry the winning of the war
through with a dissolution of the German nation as
such. This sentiment is as strong with loyal Americans
of German descent as it is with those of English,
French and the like. Assuring you of the full appreci-
ation of every peace-loving American for your efforts.
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Unfavorable Comments on Statement Concerning
Postwar Plans for Germany
Joseph Kaskel, Madison, New Hampshire. The New York
Times of today reports that, in antagonism to the
Secretary of State and the Secretary of the War
Department, you favor the plan to destroy Germany's
industry, to close her mines, and to reduce the German
nation to a purely agricultural standard of life.
May I respectfully submit that this plan is unfeas-
ible, inconsistent with the principles for which our
sons are fighting on the battlefront, and destructive
to the hope of humanity for a lasting peace. I most
earnestly beseech you to reconsider your opinion.
* On July 1 you stated in Bretton Woods: "We
know now that the thread of economic life in every
nation is inseparably woven into a fabric of world
economy. Let any thread become frayed and the entire
fabric is weakened. No nation, however great and
strong, can remain immune.' If "prosperity is indi-
visible", the destruction of Germany's prosperity would
be of disastrous consequences to the prosperity of all
the world. Germany, more than any other country, ex-
cept for Britain, is connected to nearly all the
countries of the world by the tie of trade.
Germany has been one of the three greatest importers
of the world, following our country by a margin of
not more than 10% on the average. On the European
continent she took part in foreign trade to the extent
of 20%. She was the greatest buyer of the surpluses
in food and raw materials from Southeastern Europe,
and took a substantial part of the agricultural sur-
pluses of South America. Both areas would be at a
loss to find substitute markets. Also, Germany's
contribution to the development of technology and
production should not lightly be forsaken with a view
to our task to raise the low standards of living con-
ditions to which two-thirds of mankind are still
subjected. # The plan is also inconsistent with
#4 of the Atlantic Charter which promised access, on
equal terms, to trade and to the raw materials of the
world which are needed for economic prosperity to all,
victor or vanquished. (A long, detailed and in-
teresting analysis follows.)
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W. L. Woods, New Orleans, Louisiana. Have just read
your suggestions regarding the treatment of Germany
after the war, and I believe that instead of your lay-
ing the seed for another war, you are laying goose
eggs. Don't you realize that your method would create
more Hitlers, and besides, it might be that behind
your idea is the hope that England will get the most of
Germany. I am a little older than you (72) and can
well remember that England and Germany, controlled for
hundreds of years by Royalty relatives, have never been
able to get along together and have always been at each
others throat. No, I don't want the seeds nor eggs laid
for another sending of our boys to fight Europe's wars
which Roosevelt promised would never happen. Your idea
is crazy. #
A Friend - Colerain, North Carolina. It is necessary
to prevent postwar Germany from manufacturing war
material, but it is not necessary to destroy her indus-
try to accomplish that fact. It can be accomplished
just as effectively with less drastic means.
Anonymous - Chicago, Illinois. So you want Germany com-
pletely destroyed after this war. Try it". How could
the poor German people prevent this war? No more than
the poor Americans could prevent Roosevelt getting us
into this war. It is a close question, who is the
lowest - Roosevelt or Hitler. Etc. etc.
Herbert Harvey, Suffern, New York. Following is wire
sent to President Roosevelt dealing with the subject
opened in the newspapers of plan for dealing with
Germany: Plan for decentralization of Germany would
actually work if it included village estate technique
and productive homestead techniques worked out in de-
tail here but little known among professional economists.
Morgenthau plan as published can't work. Opportunity
exists within general framework of Morgenthau scheme
145
- 31 -
for specific plan pointing to broad social therapy,
not mere revenge. No doubt the press informa-
tion was incomplete, but I ventured to act on the basis
of it. #
Paul V. Beck, Tulsa, Oklahoma. The newspapers are now
carrying the disagreement on the peace plans in which
Secretary Morgenthau takes the extreme position that
Germany should be converted into a rural area and her
mines closed and kept closed by military power.
Such a peace as you suggest, Mr. Morgenthau, will starve
millions of German people, as well as many of the other
people of Europe who get some of their coal from German
mines. # It sounds fine now to demand the "hard"
peace, but such a peace will only lead to a worse war.
Russia will be demanding more than England will want to
give and will welcome the help of Germany. If we attempt
to make the Continent of Europe another India, we shall
fail as Europe is not like India. German people are not
going to be willing slaves. Wars will continue as long
as any nation dictates an unjust treaty. Hate will give
way to pity and finally to another war.
Katherine D. Lovell, Bremerton, Washington. *
I think Nazism should be abolished as our Armies enter,
of course, as is being done. I also favor prosecution
of war criminals. Some other plans I hear voiced I be-
lieve would be most unwise for the future peace of the
world. One of these is the partition of Germany. I in-
clude in that phrase either breaking Germany up into
small states again or giving part of her territory to
neighboring states. Breaking Germany up into small
states would not only be economically unsound but would
plant a seed of unrest. The various parts would attempt
to come together again until they at last would succeed,
probably at the cost of another war. To take away from
Germany any part that is historically and intrinsically
German would be most unwise. I believe the main
constructive point to be considered, and it is a large
order, is to help the Germans establish a healthy economic
life. # * For the future of the world, it is vital that
Regraded Unclassified
146
- 32 -
Germany as well as every other country have economic
health and stability. # # The proposal that Germany's
industry be moved to neighboring states and that
Germany be forced into being an agricultural state
amazes me. It seems scandalously opportunistic, mask-
ing as a sane preventive to future wars. The economic
dislocation in Germany would be terrific; the vocational
re-training program, on a vast scale; the bitterness
and resentment of the Germans, so deep that it would
probably thwart our plans for peace; and the loss of
skilled workers in Europe which will need all the
skilled workers it can get for years, would be great.
The opportunity for industrial victors such as Great
Britain and the United States to sell agricultural
Germany their products and the gain to covetous nations
from German machinery would undoubtedly be looked upon
in the future as masked self-aggrandizement and would
serve the victors as poorly as such a policy usually
does. I hope whatever we do, we don't do that! * * *
It is no argument for us to use that the Nazis were in-
human or unwise. We should not try to justify any of
our plans on the basis that it is merely better than
that of the Nazis. We want to plan for years to come,
to eliminate as many causes of future wars as possible.
I hope you will do all in your power to promote a sane
program for Germany.
Stanley U. Robinson, Jr., Attorney at Law, Columbus,
Ohio. Your plans for postwar Germany were briefly
reported in our Columbus papers recently, and as a
citizen and a father who is interested in the future
of his country and of his children, I would like to
take the liberty of presenting my views to you. I be-
lieve you start making your plans on the theory that
Germany has done a terrible wrong. With this I will
agree. Whether or not others have been equally guilty
is a debatable question, but that fact does not, in
my mind, make Germany's wrong any less real. I feel
that you might well have a bitter hatred in your heart
for Germany because of the way she has treated your
Regraded Unclassified
147
- 33 -
race. I will not attempt to defend such conduct, nor
have I any patience with anyone who does defend it.
# * But if peace terms are made unendurable, I fear
that Germany's will to continue resisting now will be
strengthened and that future war with Germany will be
almost a certainty. This, I certainly feel should be
avoided. I believe that if German industry is
destroyed and German mines are closed, the world will
lose by the loss of production of economic goods.
Frankly, I think such a procedure is pure waste -- like
plowing under the little pigs. If Germany can work
most efficiently as an industrial nation, the world
will benefit, if Germany is allowed to continue its
industries under "proper supervision". # I see no
particular harm from breaking up the large landholdings
into small farms if efficiency is not lost. But, by
the way, what machinery can Germany use to operate
its farms if all its existing machinery is sent to
devastated countries and Germany is not allowed to
produce more machinery? # * # Now I come to the part
of your plan that made my hair stand on end. "Refusal
by other countries to extend any assistance, economic
or otherwise, to the people of Germany". Please!
Are you going to let a nation starve before your eyes
because it has been guilty of brutality? What could
be more brutal than that? Certainly, we should not
tolerate any nation re-arming Germany for another war,
but to refuse bread to the populace that fell under the
spell of an evil man and an evil situation is to per-
petrate an atrocity. that makes the German atrocities
pale into insignificance. *
#
Arthur H. James, Jr., Bristol, Tennessee. In ancient
times it was customary, when some member of a family
or tribe committed a crime, to punish the whole family
or tribe. But all growth toward the ideals of justice
abandon this stupid "wholesale" method of condemmation
by simply prosecuting the individual guilty of infrac-
tion. * * # How then does it become American practice
to stand under present circumstances in a different
type of judgment against other nations? For example,
Regraded Unclassified
148
- 34 -
on what grounds do you reserve the right (according to
A.P. reports) to dictate, in the name of American and/or
Allied justice to remove from Germany industrial machin-
ery to other devastated countries such as they want,
and destroy the rest; to close permanently the mines
left in the German postwar state; and to dissolve large
German landholdings into small farms, and so dictate
the way the remainder of the people there shall live?
Winston Churchill, who, according to the report,
"seems agreeable" with such a proposal, was one of the
loudest voices, following the last war crying for the
Allies to feed the Germans and care for them, and it
is quite conceivable that had we listened to such in-
structions this whole mess could have been avoided.
Can we not learn something from our past? May the God
of truth see fit to grant you, dear Sir, a vision of
the way of peace that is quite separate from the in-
dulgences you suffer in the heinous playing of power
politics, and may you have the courage of such con-
victions in these dark hours of modern civilization.
Cora E. Lesher, Woman's Christian Temperance Union of
Lebanon County, Palmyra, Pennsylvania. Did not the too
restrictive Peace Treaty after the last World War aid
to bring upon the world the Second World War? Are all
men not born with certain inalienable rights? Does
not the Creator bestow one, two, or more talents upon
His created beings? Why are some ordained to be doctors,
some musicians, some skilled in finance; some in law,
some in inventions? Who are we that we should deny the
exercise and use of talents to the Germans? The Germans
have violated God's Laws, resulting in terrific losses
and suffering, but even this action by the Germans does
not justify our doing wrong in preventing them in exer-
cise of God's gifts. # Punish the leaders, yes,
but help the deluded German back to a normal life where
his talents, under proper supervision, may be used for
constructive use for the benefits of all society. #
Regraded Unclassified
149
- 35 -
General Comments
Pvt. K. P. Horst, 606th Tank Destroyer Battalion,
Camp Gruber, Oklahoma. I would like to find out
why a G.I. cannot buy vihicle from the Ordnance when
they are going to sell them out to a dealer. I really
do not think it is fair at all because they make a
good profit on them and here wer are fighting our
country and can't even buy one. The reason I am
writing about this is I would like to buy a motorcycle
and they say we can't buy them. The only way to get
one is through a dealer and they say the ceiling price
will be $2.75, but they can do repairs on them and
still get more than that from other people. I really
think that a G.I. should have first choice of buying
them if hehas the cash, of course, if they should
have to by them on time I don't approve of it.
The other day we took some jeeps to Chaffee and there
I talked to the man in charge and he said it was all
up to the treasury department so that is why I am send-
ing this letter to you and am hopeing it will get to the
right party. ***
J. M. Juran, Arlington, Virginia. Having just gone
through the procedure of getting a duplicate salary
check issued to replace a lost check, I make the con-
structive suggestion that the Treasury Department
overhaul its regulations on this point as a means of
eliminating one source of needless.employee. irritation.
On June 23, 1944, I mailed to my bank a salary check
($258.74), plus a small travel expense check -- both
checks having been rendered non-negotiable through
restrictive endorsement. # * To get a duplicate check
issued I had to execute a form requiring seven signatures,
as follows: Myself, warranting various things to be
true; Two Sureties; Three witnesses to the above three
signatures; and One Notary to certify that the Sureties
were good. I had no difficulty finding sureties, but
had a great deal of difficulty finding a Notary who
would execute the certificate that the Sureties
were good. This I accomplished finally by finding a
Regraded Unclassified
150
- 36 -
Notary who, in effect, chose the officials whom she
would be willing to certify as good Sureties. I then
secured the signatures of these officials as Sureties.
Actually, the Government was overwhelmingly protected
against loss. (a) The checks were no longer negotiable
and could not be the basis of a claim against the United
States; (b) The Government has over $1,000 of my money
in the Retirement Fund. # The Government also has
over $1,000 of my money in accumulated Annual Leave.
From the time of discovering the loss until the
issuance of duplicate check consumed about 11 weeks.
As it happened, I was inconvenienced but not burdened
by this incident. However, it is clear to me, and this
is the reason for this letter, that most Government
people in this situation do not come off with mere in-
convenience. Ordinary Government clerks have not the
stature to secure the necessary Sureties and Notary to
execute the Treasury Form. They are forced instead to
purchase a commercial indemnity bond at a cost of about
$10. The frequency with which this actually happens
would make poor reading in the public press. * In
addition, the resultant time interval may necessitate
borrowing from friends or from loan sharks. I suggest
that a solution lies in the use of the principle of
"calculated risk". It should be permissible for some
official much less occupied with policy problems than
yourself to exercise judgment according to the facts
or circumstances of each case. Obviously, neither a
Government administrator nor 8. Government clerk will
risk his tenure, his reputation, and a criminal prosecu-
tion for a half month's salary. And if by a combination
of probabilities the Government takes a loss occasionally
it can readily pay such a loss from what it saves in
existing paper work on the overwhelming majority of
cases. # #
Senator J. H. Bankhead sends the following letter he
has received from P. 0. Davis, Director, Extension
Service, Alabama Polytechnic Institute, Auburn, Alabama:
"Recently County Agent N. M. Woodham of Geneva, Alabama
Regraded Unclassifie
151
- 37 -
wrote: 'I have talked with farmers concerning pur-
chasing Army Salvage Trucks for use on their farms.
Permits are issued by the County AAA Committee. The
one receiving the permit is required to carry it to
an automobile dealer who accompanies the farmer to
the sale. The farmer picks out the truck before the
sale. The dealer purchases it for him. * # Emmett T.
Hughes purchased a truck last week, giving a check to
the Government for the truck. At the same time they
figured out the dealer's commission, and the dealer
was paid $101.00. # # The farmers of Geneva County
resent paying some dealer $100.00 or more for a couple
hours' work. The farmers believe that they could place
a bid on a truck with the Government as easily as they
could place a bid with the dealer.
The
problem
at present is due to the decision of the Treasury
Department to dispose of these trucks through dealers,
and not let farmers buy them direct. Mr. Jones of
the AAA tells me that after a farmer locates a truck
at Camp Rucker, for example, he must go to a dealer,
who, in turn, must call the Atlantic Procurement Office
to ascertain if the truck is still available. This
involves, of course, cost of telephone. Through this
process the purchase is finally made as reported by
Mr. Woodham. The rules are written so that a dealer
who does even the smallest amount of repair work to the
truck can charge up to 15% commission for his service.
I believe that trucks are about the only Army
equipment D.OW being disposed of I am writing you
about it in hopes that you'll ask reconsideration of
this policy decision because much other property is to
be disposed of later. My belief is that this policy
will lose the Government money by restricting the
procedure in disposing of the property. I'm told that
when listing is made, if no dealer calls for it, they
then start dickering with somebody for sale at a price
below that listed. # If
Regraded Unclassified
152
- 38 -
Ethel Dell, "Earlham", Barnwood Avenue, Gloucester,
England. In Friday 25th issue of the New Chronicle",
W. A. J. Cummings quotes from a speech of yours the
following words: "But for the spirit they have shown,
Britain today would not be marching forward with the
Allied Nations". But for Pearl Harbour you and your
Nation would not have thought it necessary to join us,
and but for Britain, Nazism would have engulfed the
world. Your remark, and similar ones from others, are
not calculated to cement the friendship between Britains
and Americans.
Regraded Unclassified
153
- 39 -
Unfavorable Comments on Bonds
Senator Edwin C. Johnson (Colorado), writes as follows:
"Please note the attached letter which I have received
from Fred W. Stover, President of the Poudre Valley
National Bank, Fort Collins, Colorado, with respect
to the dilemma of a wife of a man overseas who direly
needs money, yet cannot make use of $4,100 in Series E
Savings Bonds standing in her husband's name, although
she holds his Power of Attorney. The situation as out-
lined imposes great hardship on the dependents of a
man in our Armed Forces at the battlefront, and a more
workable plan should be devised to meet such emergencies.
***
The following is taken from the letter addressed to
Senator Johnson by Mr. Stover:
***
A
young
woman
now living in this city, the wife of a man in overseas
military service, has $4,100 of Series E Savings Bonds
standing in her husband's name. She has recently
given birth to a child, who is an incubator baby, and
the expense of caring for this child far exceeds her
Government allotment or her ability to provide for the
care of the infant. She has a Power of Attorney from
her husband, executed on the form provided by the
Government, which gives her the right to do everything
imaginable which her husband could do if personally
present, but the Federal Reserve Bank refuses to
recognize this Power of Attorney to allow her to cash
Series E Bonds. A special form describing the partic-
ular bond in detail has to be executed by her husband
to get these bonds cashed, and so far as we are advised,
when the check is issued, it will also be issued in the
name of the husband. This would necessitate sending form
to the husband overseas, getting it back, and sending it
to the Federal Reserve Bank each time. When the check
is issued, she probably could endorse it by using her
Power of Attorney, although I wouldn't want to depend
too much on that. The Federal Reserve Bank branch at
Denver advises us that this is according to the order
Regraded Unclassified
154
- 40 -
of the Treasury Department and is based on the
possibility that some of the loan sharks are advancing
money on these bonds, holding the same as collateral
and taking a Power of Attorney from the owner. We
believe that it was generally understood by all
soldiers going overseas that this Power of Attorney
would meet the exigencies that might happen while they
are gone, including cashing in their bonds, and if
this is not the case, then these men in the armed
services have been deceived. # 11
R. W. Voris, Deputy Manager, War Finance Committee,
Scranton, Pennsylvania. Would you be kind enough to
have one of your assistants advise us to whom we can
write to get some information for the soldier boys
and discharged soldiers who drop in here and inform
us that they are due various amounts of Treasury Bonds
paid for by deduction from their pay, and for which they
have written various places and can't get an answer,
or any satisfaction whatsoever. In fact, this office
has written to some of the centers designated on re-
ports and each time have shown certain amount of
Treasury issues (usually E Bonds) due both soldiers
at present in the Army and those who have been dis-
charged for physical reasons, and we have never re-
ceived a reply. Some of these letters have been
written nearly six months ago. * # Sure would appreci-
ate such information, as in many instances there seems
to be considerable disappointment and disgust with
their inability to get any information whatsoever.
Regraded Unclassified
155
- 41 -
J. Arthur Krauss, The Lane Company, Inc., Altavista,
Virginia. Since 1939 I have been purchasing the "E"
Bonds for my children, wife, and self in the amount-
of $32,850.00. Since I have been forced to purchase
a home, it will be necessary for me to raise approxi-
mately $6,000 cash within the next ten days, and un-
less I can arrange to borrow the money otherwise,
I will be forced to sell enough of these bonds to raise
the required amount. I purchased these bonds with the
idea of holding them until they matured and intend to
buy them in as large amounts as possible as long as they
are available. In view of this, I dislike very much
to be forced to sell any that we now own. While I under-
stand that these bonds cannot be used for collateral,
isn't there some special manner that I could use enough
of them as collateral to borrow the $6,000? The need
for this money is only temporary, but if I cash any of
the bonds in, they cannot be replaced on the basis they
were purchased -- that is, the time they were purchased.
I have put a good part of my net earnings into these
bonds as I consider them a wonderful investment,
especially to build up a cash income during the years
to come. # #
A. F. Taner, St. Paul, Minnesota. I have been buying
bonds with every spare dollar I could earn. I was told
more than once that some day the bonds would not be any
good. I could never see it that way and I still keep
on buying them. But here is a newspaper clipping
(re Dickinson plan) that bothers me. I am, 62 years of
age, and I will not be able to work much longer, and if
anything happens to these bonds, well, it will just
knock me out as they represent all my savings, so
I could have some money when I can't work any more. Is
it possible that anything could happen to these bonds?
I thank you.
Regraded Unclassified
156
- 42 -
John Reilly, Belleville, New Jersey. I resigned my
position with the Federal Telephone and Radio Corpora-
tion, 1226 Broad Street, Newark, New Jersey, July 29,
1944. I paid in full for several $25 Bonds and have
not received them. I have written them and got no
answer. Soon I will be leaving for Hawaii. I will
not buy any more bonds and the Sixth Bond Drive is
coming along. Why can't I get my bonds?
Regraded Unclassified
157
- 43 -
Favorable Comments on Taxation
Edwin Kempton, Counsellor at Law, Summit, New Jersey.
Yesterday I received check 4897346 of the Treasury for
$54.16, dated September 11, 1944, with a printed memo-
randum of the Collector that it represented "a refund
of income tax paid during 1943 which is in excess of
the amount due", as shown on my return, as re-estimated.
I doubt if I am entitled to all of the amount for the
following reasons. # In helping my wife with her
March 15, 1944, return I made an error against her of
$33.13. This represents a payment in cash by her
accompanying her declaration of estimated income dated
September 9, 1943, which I failed to include in her
return. *** I wrote respecting this to the Collector
at Newark on April 11, 1944, asking if this could be
deducted from the later installments of the 1944 tax,
and received an answer from him that it could not,
and that the adjustment would "be refunded in due
course of business". No refund has been received
therefor. Will you kindly inform me whether the mix-
up in the two cases will be settled to your satisfaction
by my sending to you my check for $19.60 and turning
over the $33.13 to my wife?
Regraded Unclassified
158
DEPARTMENT
INCOMING
DIVISION OF
OF
COMMUNICATIONS
STATE
TELEGRAM
AND RECORDS
FMH-680
Chungking
This telegram must bE
Dated September 29, 1944
CONFIDENTIAL
For security reasons the
paraphrased before being
text of this message must
communicated to anyone
other than 8 Government
Rec'd 3:07 p.m.
be closely guarded
agency. (SECRET 0)
w STATE
DIVISION OF
Secretary of State,
SEP 301941
Washington.
AND ASCORDS
1527, September 29, 4 p.m.
FOR SECRETARY OF THE TREASURY FROM FRIED
One. Central government receipts and Expenditures
during 1944 now EXPECTED to total about CN dollars
130-135 billion as compartá with Nadlier budget Estimates
of about 70-75 billion and actual total of 60 in 1943.
In January-June 1944 actual receipts 67 billion of which
50 billion loans and 14 billion taxes. Chief categories
of Expenditures were military (47 billion) and recon-
struction (8 billion).
Two. Reported that budget being tentatively drawn
up for 1945 totals CN dollars 130 billion.
Three. Rcchenof Bank of China has been made
director of new department of international supplies
under military council. Nominally directly responsible
to GMO, EXPECTS actually will report to Ministry of War.
Given rank of Lieutenent General for purpose. Depart-
ment will consist of six divisions: Lend LEASE; Canadian
mutual
Regraded Unclassified
159
-2- #1527, September 29, 4 p.m. from Shungking
mutual aid; purchases with British sterling loans;
purchases in United States without standing credit and
cash; diversion of supplies; miscellaneous. Appoint-
ment said to bE requested by GMO; will continue work on
China defense supplies. Still not clear what relation
with Central Trust here and Universal Trading NY will
bE.
Four. K P Chen hopes to leave early in October for
trade conference. Says appointment to delegation made
by GMO.
GAUSS
WFS
Regraded Unclassified
160
CABLE TO WINANT, LONDON, FOR MANN FROM WAR REFUGEE BOARD
Reference Department's No. 6904 of August 28, 1944, trans-
mitting message from Paul Baerwald of JDC to Sir Herbert Emerson.
JDC advises no reply has been received to date. Will you please
discuss with Sir Herbert indicating that WRB strongly supports
JDC request.
THIS IS WRB CABLE TO LONDON NO. 6
10:30 a.m.
September 29, 1944
FH:had 9/28/44
Regraded Unclassified
161
CABLE TO LONDON FOR WINANT AND MANN.
Please refer to Your No. 7473 of September 11, and to Department's
No. 7485 of September 14.
The following cable dated September 22 (Bern - No. 6276) has been
received from McClelland:
If
Here quote full text of No. 6276 from Bern.
#
The following reply has been sent to McC'elland as No.
of
:
Here quote full text of cable to McClelland.
#
In view of McClelland's cable, we do not (repeat not) intend to
take any further action in connection with the vague intimation of
the German Foreign Office that the emigration of some 2,000 Hungarian
Jews holding Palestine certificates might be more favorably considered
if their destination were to be American or British territory.
As you will note, however, we have indicated to McClelland that
he should continue to do everything possible to effect the emigration
of those Jews from Hungary into "non-Arab" territory for whom arrange-
ments have already been made. Since these arrangements presumably have
been communicated to the Germans some time ago, it is not known whether
any success can be achieved. However, we will continue to make every
effort to that end:
For your convenience and for the information of appropriate officials
of the British Government and of the Intergovernmental Committee, following
is a summary of arrangements already made by this government for the en-
igration of Jews from Hungary to the United States and other territory:
(1) On August 21 the Legation in Bern was authorized to issue visas
under liberal conditions to approximately 4,000 children arriving in
Switzerland from Hungary. This authorization was issued in such manner
as to insure the validity of the visas until transportation to the United
States is available. The Legation was instructed at the same time to
advise the Swise authorities of the authorization to issue visas, and to
make all appropriate efforts to arrange for the release from Hungary of
children eligible for such visas.
Regraded Unclassified
162
-2-
(2) On August 1 the Legation in Bern was authorized to issue, under
certain conditions, new American immigration visas to any person in enemy-
controlled areas who held an American visa or for whom a visa was authorized
after July 1, 1941. The Legation was instructed to
(a) advise the Swiss authorities of this authorization;
(b) request the Swiss Government to advise enemy governments
of Switzerland's willingness to permit the entry, with or
without transit visas, of all persons to whom immigration
visas were issued on or subsequent to July 1, 1941; and
(c) advise the Swise authorities that such persons entering
Switzerland would be adquately maintained until eligi-
bility for new visas was determined, and that all persons
found ineligible would promptly be evacuated from
Switzerland.
The same authorization and instructions were sent to Sweden, Turkey, Spain
and Portugal.
(3) On August 24 the Legation in Bern was directed to request Swies
authorities to advise enemy governments, particularly Germany and Hungary,
that American Consular Officers in aeutral countries had been authorized
to issue immigration visas to
(a) the alien husband, wife, parent and unmarried minor
children of an American citizen; and
(b) wife and unmarried minor children of an alien, resident
in the United States
who has been in an area controlled by Germany or any of her allies, provided
any such person(s) presents himself to an American Consular Officer and is
found not to be disqualified for a visa. At the same time, the Legation in
Bern was requested to secure the agreement of Switzerland to advise enemy
governments of its willingness to permit the entry into Switzerland of
persons falling within the categories indicated above, and to assure the
Swiss officials that persons 80 admitted will be adequately maintained
pending determination of eligibility for such visas, and those found un-
qualified will be evacuated promptly. Similar instructions were sent
on the same date to Sweden, Turkey, Spain and Portugal.
(4) Assurances have been obtained from the governments of Ireland and
various Latin American Republics that they will receive at least 2,000
children. In addition, Mexico has assured this government of its willingness
to give emergency shelter to an unspecified number of refugees from enemy
territory for the duration of the war. Among the neutrals, the governments
of Spain and Sweden have agreed to admit children, numerous adults, and
persons to whom American Visas were issued or authorized after July 1, 1941.
Spain alone has authorized 2,000 visas.
163
- 3 -
In view of the foregoing, it is apparent that adequate assurances
have already been afforded the Germans to test the sincerity of the in-
timation that refugees might be permitted to leave Hungary if they go
to the United States and not to Palestine. Accordingly, it seems more
practicable to continue our efforts to effect evacuation under these
existing authorizations than to pursue further the somewhat nebulous
statement of the German Foreign Office referred to in your No. 7473.
It will be appreciated if you will express our views on this matter
to the appropriate officials of the British Government and the Inter-
governmental Committee.
THIS IS WRB CABLE NO. 7.
2:30 p.m.
September 29, 1944
JBFriedman:dg 9/27/44
Regraded Unclassified
164
KD-693
London
Distribution of true
reading only by special
Dated
September 29, 1944
arrangement. (SECRET w)
Rec'd 3:45 p.m.
Secretary of State,
Washington.
8133, September 29, 5 p.m.
FOR PEHLE WAR REFUGEE BOARD FROM MANN.
In conversations with members of Polish Government
and groups interested in rescue work they report that
they have reliable information form the Polish under-
ground to the effect that the Germans are increasing
their extermination activities in all Polish concen-
tration camps.
They urge that the WRB again explore with the Army
the possibility of bombing the extermination chambers
and German barracks at largest Polish concentration camps
which, they state, are sufficiently detached from the
concentration camps to permit precision bombing. I
assume the Army authorities have maps of such camps.
However, the above mentioned persons have promised to
furnish me with recent maps which I shall transmit to
Washington by airmail. I have pointed out that this
has been before the Board before and found impractical.
However, at their insistence I am reporteng their views.
They also urge again that another warning to those
guilty of these atrocities be made. They have reite-
rated that they are able to furnish the names of per-
sons guilty of atrocities and that the OWI might care
to use such rames in its broadcasts. In this connection
see my letter of September 19.
WINANT
JT
Regraded Unclassified
165
ORIGINAL TEXT OF TELEGRAM SENT
FROM:
Secretary of State, Washington
TO:
American Legation, Tangier
DATED:
September 29, 1944
NUMBER: 144
CONFIDENTIAL
Information contained in your A-199 of September 12
is thoroughly appreciated. For your information, the
following has been cabled to Amlegation Bern:
QUOTE Amembassy Madrid advised that Spanish
visas have been granted to 500 Jewish children and
70 accompanying adults in Hungary, but that their
departure is being held up by refusal of German
authorities to grant transit visas. It j.s reported
that pending departure these persons have been placed
under Intercross supervision. Please verify this
report and, unless confirmed, request Intercross to
undertake such supervision of these beneficiaries of
Spanish visas, to prevent their deportation or persecu-
tion.
You may also inform Intercross that another
fifteen hundred Spanish visas have been authorized
for Jews in Hungary. To ensure their safety, Inter-
cross representation in Hungary is requested, likewise
to assume supervision of the beneficiaries of these
additional visas as soon as feasible. UNQUOTE
HULL
Regraded Unclassified
166
FME-774
Stockhelm
Distribution of true
reading only by special
Dated September 29, 1944
arrangement. (SECRET w)
Rec'd 6:20 p.m.
Secretary of State,
Washington.
3955, September 29, 5 p.m.
Every effort will be made to enter into any practicable arrangements
that will mitigate circumstances described in WRB 86 (Department's 1883,
September 20, 6 p.m.). Following may assist Board in obtaining insight
into problem as we have encountered it here. This is our 87 for WRB.
Tremendous difficulties and hazards of taking any helpful action
in Lithumnia perhaps is best suggested by fact that in course of Olsen's
rescue operations which ha (*) Lithuanians here, 4 beats and almost 250
lives were lost. These operations have recently become so dangerous and
appropriate communication with other side so erratic that it was decided
to stop operations this week. No a single Jew has been rescued. Lithuanian
refugees arriving here say Jews are too terrified to move from present
hideouts, either because they fear German trap, are afraid of almost cer-
tainty of being spotted by Gestapo and shot or are sery much afraid of
undertaking the dangerous escape. A Lithuanian Catholic Priest, one of
the refugees brought here through these rescue operations, states quite a
large number of Jews were able to get into Lithuanian territory
occupied by the Russians and are said to be treated extremely well.
Many others in some cases entire families, are being hidden by Lithuanian
farmers. He states many Jews have been given false birth certificates
by Catholic Priests According to him, there were only about 500 Jews in
Krotingen on July 1 of this year and he does not believe there are any more
than that now unless there has been heavy demand for conscript labor in
that area.
Operations in Estonia and Latvia were also stopped this week and
the NHEX beats ordered to be delivered to Olsen here.
JOHNSON
MJF
(*) apparent omission repeat requested
Regraded Unclassified
167
MB-774
CORRECTED COPY
Distribution of true
Stockholm
reading only by special
arrangement. (SECRET W)
Dated September 29, 1944
Rec'd 6:20 p.m.
Secretary of State,
Washington.
3955, September 29, 5 p.m. (SECTION ONE OF TWO)
Every effort will be made to enter into any
practicable arrangements that will mitigate circumstances
described in WRB 86 (Department's 1883, September 20,
6 p.m.). Following may assist Board in obtaining insight
into problems as we have encountered it here. This is
our 87 for WRB.
Tremendous difficulties and hazards of taking any
helpful action in Lithania perhaps is best suggested
by fact that in course of Olsen's rescue operation which
have brought less than 150 Lithuanians here, 4 boats
and almost 250 lives were lost. These operations have
recently become 80 dangerous and appropriated
communication with other side 80 erratic that it was
decided to stop operations this week. Not a single Jew
has been rescued. Lithuanian refugees arriving here
say Jews are too terrified to move from present
hideouts, either because they fear German trap,
are afraid of almost certainty of being spotted by
Gestapo and shot or are very much afraid of undertaking
the dangerous escape. A Lithuanian Catholic Priest, one
of the refugees brought here through these rescue
operations, states quite a large number of Jews
were able to get into Lithuanian territory occupied by
the Russians and are said to be treated extremely well.
Many others in some cases entire families, are being
hidden by Lithuanian farmers. He states many Jews have
been given false birth certificates by Catholic Priests.
According to him, were only about 500 Jews in Krotingen
on July 1 of this year and he does not believe there are
any more than that now unless there has been heavy
demand for conscript labor in that areas
Operations in Estonia and Latvia were also stopped
this week and the boats ordered to be delivered to
Olsen here.
JOHNSON
This was originally stencilled as a complete
message instead of Section One.
MJF
Regraded Unclassified
168
FMH-773
Stockholm
Distribution of true
reading only by special
Dated September 29, 1944
arrangement. (SECRET #)
Rec'd 6:25 p.m.
Secretary of State,
Washington.
3955, September 29, 5 p.m. (SECTION TWO)
was due in part to the military situation in that
area as well as to the difficulties of controlling the
types of people who were to be brought out. There are
literally hundreds of thousands of people on the Baltic
coastal areas, of all political followings, making every
panic stricken effort to escape. The last boat sent to
Estonia was almost capsized by scores of people swimming
around in the sea trying to climb aboard. Somewhat over
three hundred were rescued from Latvia and approximately
250 from Estonia. Here again, however, it was not
possible to bring out a single Jew. A full report of
all these rescue operations will be forwarded in the
near future.
All available channels will, as they have in the
past, be used to forestall further massacres in east
Prussia and Poland, although we are extremely pessimistic
that much can be accomplished since the contacts we have
had in the past are not able to exert any influence
upon the severe military control presently being maintained
by the Germans over such matters. Threats of reprisals
are meaningless to this group and it may be assumed that
should any proposals ultimately be forthcoming through
Kleist or ohher intermediaries for the Germans, such
proposals will undoubtedly involve totally unacceptable
military implications. We are pushing these negotiations
as strongly as possible nevertheless, simply to stall
for time.
END OF MESSAGE.
JOHNSON
JMS
169
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
American Legation, Stockhelm
To:
Secretary of State, Washington
DATED:
September 29, 1944
NUMBER:
3959
SECRET
According to the agent of British Secret Service handling
matters in connection with Norway, he has been informed by Dr. Malm,
new director of Norwegian Legation's "Sambandakenteret" that the
Government of Sweden will not allow Quisling refugees to come into
Sweden from Norway after October 1. In addition, Dr. Malm stated that
the Swedes are going to install two new refugee reception camps near
the frontier of Sweden and Norway.
In an effort to decide whether they shall be rejected
and handed over to the Swedish police or accepted as loyal Norwegians,
the cases of all refugees who have been found by preliminary investigation
to be of questionable character will be reviewed by a committee made up
of Dr. Malm and two other members of the Norwegian Legation.
Our informant was advised by Dr. Malm that he calculated
that in order to evade compulsery labor conscription in Norway, 3,000
young men had gone into hiding. Around 1,200 had entered Sweden of this
total. A certain number found it possible to obtain work on farms, among
those remaining in Norway. It is known, however, that a sizable part
of these refugees were ranging the Buskerod territory. They have set
up an organization which operates independently, raiding towns to
secure food and even stealing 200,000 kroner in cash from a bank recently.
JOHNSON
DCR:GPW 9/30/44
Regraded Unclassified
170
This telegram must be
September 29, 1944
paraphrased before being
communicated to anyone
8 p.m.
other than a Government
agency. (RESTRICTED)
AMLEGATION
BERN.
3361
Favorable action on request set forth your 6306,
September 23, has been recommended to London, with
request that London communicate direct with Bern in
regard thereto.
HULL
(EDK)
Approved by:
wrb - Miss Hodel
FEA - Mr. Kiaer
SWP:EDK:VIC 9/27/44
EH
Regraded Unclassified
171
PARAPHRASE OF TELEGRAME RECEIVED
FROM:
American Legation, Bern
TO:
Secretary of State, Washington
DATE:
September 29, 1944
NUMBER:
6471
CONFIDENTIAL
Reference is made herein to Legation's airmail 9250 of
September 15 and its September 19 cable No. 6195.
We are in receipt of a note dated September 27 from the
Swiss which states that Swiss Legation Berlin reports that
on September 13 Sethe of the German Foreign Office deblared
deportation of Vittel internees, which occurred in spite of
his May 11 assurances, were due doubtless/to action on own
initiative by subordinate officials. A representative of German
security office was sent by Sethe to Bergen-Belsen where it
was ascertained that Jews in question had never reached camp
there. Another representative of German security office
was instructed by Sethe to undertake inquiry at German Paris
Embassy concerning deportees' fate. Owing to recent develop-
ments in France however this representative was unable to
conduct effective investigation. Only fact he was able to
establish was that all Jews deported from Vittel had been
transferred either to Compiegne or Drancy and on basis of
Gestapo information is convinced that departure of these Jews from
France never took place. Accordingly Sethe assumes that
Allies liberated persons concerned simultaneously with
other detainees at Compiegne and Drancy.
Inquiry is made by the Swiss as to whether Allied authorities
in France have any trace of Jews in question and whether
information concerning fate of Vittel deportees could possibly
be obtained through such authorities.
Likewise, any information which Department may be able
to obtain regarding identity of persons liberated from camps
in France, including individuals claiming Latin American
nationality, would be gratefully received by War Refugee Board
representative and this Legation.
HARRISON
DCR:EBH 9/30/44
Regraded Unclassified
172
LFG-606
Bern
This telegram must be
paraphrased before being
Dated
September 29, 1944
communicated to anyone
other than a Government
Rec'd 10:58 a.m.
Agency. (SECRET 0)
Secretary of State,
Washington.
6471, September 29, 10 a.m.
FOR WRB FROM MCCLELLAND
Department's 3180, September 14 and 3207 September 16.
We are proceeding in consultation with certain private
individuals and organizations here in Switzerland with
the assembling of as complete lists as possible of persons
to whom Latin*American documents have been issued
particularly those thought not to be in physical possession
of such papers. Special effort is being made to compile
list of such persons now in camp of Bergen Belsen in hope
that this will enable Switzerland as protecting power
to obtain access to this camp and exercise more satisfactory
protection of these internees than has been possible to
date.
In lists already received accurate information
regarding present whereabouts many document holders is
lacking last known address often being several years
old (an internment camp in France for instance). Only
indication given is frequently that individuals in question
were deported from Drancy Frankfort Cracow et cetera,
at some previous date.
In the interest of translating such lists into
more effective protection it is strongly recommended
that an exchange of even 100 document holders be
arranged as soon as possible in order that German
interest in these people as exchangeable may be kept
alive.
HARRISON
WFS
Regraded Unclassified
173
FMH-891
Ankara
Distribution of true
reading only by special
Dated September 29, 1944
arrangement. (SECRET W)
Rec'd 3:53 a.m., 306h
Secretary of State,
Washington.
1853, September 29, midnight
FOR THE WRB FROM THE AMBASSADOR AND HIRSCHMANN.
ANKARA 162.
The following information has reached us from reliable sources
in Sevia:
One. Klarman, representative of the emergency committee and
Pomeranz representative of several Palestinian organizations who proceeded
so Sofia ostensibly as newspaper correspandents have conferred there with
high Bulgarian officials with a view to stimulating immediate emigration
from Bulgaria to Palestine claiming the same to be part of the Board's
rescue program. These efforts to stimulate emigration from
Bulgaria to Palestine, notwithstanding the discontinuance of anti-
Jewish measures, appear to have as their principal objective immigration
for Palestine.
Two. The same representatives are also reported to have requested
high Bulgarian officials to release all Jewish young men of military age
from the obligation to join the Bulgarian armed forces 80 that they may.
proceed instead to Palestine. This latter request has been refused by
the Bulgarian authorities.
These moves by irresponsible Palestinian representative
are presumably at variance with the poltcy of the War Refugee Board
to aid in bringing about the reinstatement of the Bulgarian Jews who
now enjoy full rights and commensurate obligations as Bulgarian citizens.
STEINHARDT
JMS
WMB
Regraded Unclassified
174
NOT TO BE RE-TRANSMITTED
COPY NO. "
SECRET
OPTEL No. 312
Information received up to 10 a.m., 29th September, 1944.
1. NAVAL
Estimated 75 days required before BREST can be used
for limited unloading cargo and troops.
2. MILITARY
WESTERN EUROPE. Second Army have made slight gains on
the flanks of their salient. German resistance strong in most
places, especially the north, and several enemy air attacks made
on bridges at NIJMEGEN. Good progress made towards HERTOGENBOSCH.
Canadians attacking CALAIS have also met stiff opposition but in
hard fighting have captured the Citadel and made considerable haul
of prisoners.
ITALY. Bad weather prevails with consequent slowing up
of operations. Forward troops of 8th Army are along the FIUMCINO
River and in one place north of SAVIGNANO have forced a crossing.
Fierce German counter-attacks forced us to yield slightly in
SAVIGNANO area. 5th Army have advanced about 3,000 yards north of
CASTEL DE RIO on the IMOLA Road and have captured MONTE CANDA,
MONTE OGGIOLI and MONTE BASTIONE, three important features astride
FLORENCE-BOLOGNA road.
3. AIR OPERATIONS
EASTERN FRONT. 27th/28th. KAISERSLAUTERN. 945 tons
dropped, nearly all incendiary. Marking reported accurate and
attack well concentrated. Reconnaissance one hour later reported
mass of fires. Fighter opposition negligible.
28th. In poor visibility 266 Bomber Command aircraft
bombed defensive positions CALAIS and CAPE GRIS NEZ - 1120 tons.
972 escorted U.S. heavy bombers bombed MAGDEBURG - 698 tons, KASSEL
armoured vehicle works - 432, MERSEBURG synthetic oil plant - 690,
Results reported moderate. 49 bombers, 16 fighters missing. 36
German aircraft destroyed. 67 medium bombers attacked road and
railway rossings EMMERICH. 360 aircraft carried supplies to HOLLAND
and evacuated wounded. Mosquitoes sank a small warship off
Southern NORWAY.
28th/29th. Aircraft despatched: BRUNSWICK and two
railway centres Germany - 53 Mosquitoes. Bomber support, etc. - 75.
One aircraft missing.
MEDITERRANEAN. 26th/27th. 84 heavy bombers bombed a
railway viaduct 40 miles N.N.W. SARAJEVO. Beaufighters destroyed
three JU 52 and one Dornier north of CRETE.
27th. 261 light bombers and fighters operated in close
support of the army in Italy.
4. HOME SECURITY
Between 5 a.m. and 6 a.m. 29th 8 flying bombs plotted.
175
SECRET
MEMORANDUM FOR THE SECRETARY
SEP 30 1944
FOR YOUR INFORMATION
Pursuant to your arrangements, Messrs. White and Luxford
talked to Elmer Davis yesterday afternoon regarding the
"Morgenthau Plan" for Germany. Also present at the discussion
were Edward Klauber, Associate Director of OWI, Edward W. Barrett,
Director of Overseas Branch, and Wallace Carroll, Deputy Director
of Overseas Branch in Charge of Western Europe.
Davis opened the discussion by inviting us to state the case
for the "Morgenthau Plan". He made it clear that everything said
would be entirely "off the record."
Mr. White outlined briefly how Treasury had become interested
in problems of post-War Germany as a result of its responsibilities
in the field of reparations, your discovery of the contents of the
Army handbook and your discussions in London. He then reviewed the
plan in detail and the reasons for its adoption.
Davis and his associates were visibly impressed by this
explanation of the plan. He stated that he was sorry he had not
fully understood it before, because he would have had a different
attitude on the manner in which the President had handled the
matter at his press conference. He and his associates felt that
German propaganda would make the most out of the alleged harshness
of the plan as publicly reported. They said, that it would be
exploited on the German home front and that ultimately its effect
might be felt on the battle front. None of them believed that it
could have had its effect on the fighting front yet since, in their
opinion, propaganda did not work with that speed. Rather, it took
a much longer period of time to manifest its effects.
Davis said that he thought that it would be highly desirable
if the truth about the "Morgenthau Plan" was made known to the
public and to Germany. He said he was strongly tempted to write
a note to the President that afternoon and urge this course. White
queried whether this would have a reassuring effect on the German
populace since Goebbets would play up the harsh features and emphasize
Regraded Unclassified
176
SECRET
- 2 -
that the Allies intended to make Germany into a nation of farmers.
Davis said that in his opinion this would not lack appeal for the
ordinary German. He quoted from Mein Kamp to show that Hitler
had promised to take the German worker out of the factory and
give him his own small tract of land. He felt that we could use
this effectively. Moreover, he felt that the backbone of the
German propaganda line was that we proposed to starve 30,000,000
Germans, and if this could be repudiated as a policy and the plan
explained we would have the basis for strong counter-propaganda.
We spent almost two hours with the group. It was my definite
impression when we left that Davis was in agreement with our plan
and that probably his assistants also shared this view. There can
be no doubt but what the conference was extremely valuable.
COR
Regraded Unclassified
177
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE Sept. 30, 1944
TO
Secretary Morgenthau
FROM Mr. Gaston
I talked to George Fielding Eliot this morning about
the attached article. He seemed greatly pleased and asked
me to thank you for your interest in the article and your
thoughtfulness in having me call him. I told him that in
view of all that had been printed on the subject I felt
free to tell him that he had appraised correctly the real
significance of your proposals. He asked me whether I
thought that the discussion of the "Morgenthau Plan" would
have any real influence on prolonging German resistance.
I told him I didn't see how it could have much effect. He
said that was his opinion notwithstanding what Marquis Childs
and others were writing. If we come across any bits of
evidence to support this view, he would like to have them.
wr
Regraded Unclassified
NEW
YORK
Herald
Tribune
178
1944
Perhaps this sounds a little on
German Industry's Destruction
the fantastic side just now. But
remember the brave words; that
were spoken when Germany went
Way to Clinch Peace
down in blood and fire last time
after four years of struggle and
remember what happened after-
Robot Bomb Cited as Proof Nation Can't Be Trusted
ward. Can It be a cause for won-
der If there are those who are un-
With Modern Tools; Supervision Is Termed
willing to run such a risk again?
Can we be sure-with the evidence
Inadequate, Since It Might Become Lax
of the robot bomb actually before
us, with the terrible photographs
By Major George Fielding Eliot
of the senseless, savage devasta-
Copyright, 1944, New York Tribune Inc.
tion and slaughter in London ap-
If the policy of the United Nations toward the future of Germany
pearing daily in our illustrated
now swings in the drastic direction of the complete destruction of
press-can we be sure that any
German heavy industry and the reduction of Germany to an agrilul-
world in which Germans possess
tural economy, the Germans have
the tools to make such weapons
only themselves to thank for it.
4a Inevitable that thinking
can be a secure and happy world?
It may well be doubted whether,
men, concerned with & peaceful
Would Remove Basis of Power
up to the launching of the robot-
future for that vast majority of
bomb offensive against the people
the human race which passionately
There is a great and essential
of England, such a program would
desires a peaceful future, should
difference between taking the
have received very wide popular
reason that the only vay to be
tools away or saying to the Ger-
support either in Great Britain or
safe from the German mentality
mans, keep the tools but use them
the United States. The general
is to deprive that mentality of the
only under guard for purposes
sentiment, to judge from the press
means for translating its evil pre-
which we approve. The latter
and from the utterances of leaders
dilections into action.
method depends on the continued
of public thought, ran generally
Mere supervision of German In-
vigilance, throughout the coming
toward giving the Germans a
dustry may not be sufficient. No
years, of the guard we keep over
chance to get back on their feet,
matter how complete a system of
Germany, subject as that will be
supported by the belief that a
control and inspection might be
to all sorts of political and psycho-
prosperous German industrial
worked out it would be subject to
logical stress. The former method
economy/was an essential part of
the wear and tear of time. Men's
is definitive, and we can do it now
the general economy of Europe.
minds turn very readily away from
while our purpose is still firm.
the thoughts and passions of war
Mig) Build Worse Weapons
Once the Germans are deprived of
to the happy pursuits of peace.
their industrial plant they can-
But the Germans have been at
The Germans, for their part, know
not rebuild it unless we deliberately
great pains to demonstrate to the
very well how to put on what Gen-
world that they cannot be trusted
present them with the means to
eral Stuelpnagel brazenly calls "a
with the tools of modern industry;
do so. And without their plant,
campaign of pity." Whatever the
that they are capable of producing
their research laboratories, their
new system might be, it would
obscene, Inhuman devices and
system of technical education, they
presently be subjected to a series
launching them into the midst of
cannot make war. The foundation
of strains-little strains at first,
great cities for no better purpose
an Inch here and half an inch
of their power will have been swept
than the mad-dog destruction of
there gained by some particular
away.
the lives of human beings. If
German interest and surrounded
If the minds of peoples normally
they can do such a thing when
with plausible argument. As the
of liberal and generous character,
they are already defeated, when
years passed the system might
whose Tirst impulse toward a failen
they have no hope of winning but
slowly relax-supported. no doubt
fe is to extend the hand of fellow-
are concerned only with killing as
by "humanitarian" idiots in this
ship and reconciliation, now Turn
many British men, women and
country and even after a while in
td such a course as this against
children as they can contrive to
Britain as the memories of the
deleated Germany it will be be-
reach while they still possess the
blitz and the buzz-bomb faded into
cause the Germans themselves
means of murder, then what will
the shadows of an evil past. Those
have convinced us all that there
they do, what can they be expected
who tried to argue against each
is no other way to deal with them,
to do if they are given a chance
encroachment might, after of bit,
no other way by which we can live
to recover and to work out new
comey to be called "alarmists."
in the same world with them and
and more terrible devices which
And then, in the fullness of
lime, enjoy the pursuit of happiness and
cin suddenly be launched upon
Ger/han science, backed by
Ber-the fruits of human progress.
their neighbors-or indeed upon
mar industry, might hurl the Bolts
any nation in the world, for there
of & new war suddenly upon an
is probably no limitation of range
unready world.
which science cannot now over-
come.
Regraded Unclassified
House
179
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
Date
September 27, 1944
TO
Mrs. Klotz.
FROM Secretary Morgenthau.
Please get copies of George Fielding Eliot's
column the last couple of days. I understand he is
talking favorably about our plans for Germany. attached
Finished
Regraded Unclassified
NEW
YORK
180
Herald
Tribune
SEP 27 1944
Arnhem Battle Called No Proof
hoven and Nijmegen. But their
of the main German defensive po-
attacks do not appear to have
sition in the west-the line of the
Nazis Can Hold Until Winter
been co-ordinated with the at-
Rhine-than at ang point
tacks on the east, perhaps luckily
and which will certainly be the
for us, and the Germans west of
springboard for further Allied
the road are now threatened by
advances.
Desperate Resistance There Termed Only Part of
the increasing pressure of the Ca-
nadian 1st Army from the south,
Meanwhile, It is a good idea-
'Big Picture,' Which Shows Foe's Defenses
which is across the Antwerp-Turn-
to use an Army phrase-to keep on
hout Canal in at least one place.
looking at "the big picture." The
Strained All Along His Western Front
A Canadian advance to Tilburg
enemy is at full strain all along his
and S'Hertogenbosch would al-
western defense zone. He is put-
By Major George Fielding Eliot
most certainly put the German
ting in everything he has, every
troops in this area in a desperate
man he can scrape up. General
Copyright. 1944. New York Tribune Inc.
position.
Eisenhower still disposes of reserve
The official "blackout" on news of the progress of the fighting
striking / power in considerable
In Holland should under no circumstances be interpreted as an
But north of Niimegen the tac-
force. His problems are those of
attempt to cover up an Allied disaster.
tical situation, as last seen before
Its purpose seeml to be to
transport, supply-and therefore
cover a period of what might be
the blackout on news descended,
of time. A tactical reverse at any
called "replanning"-an adjust-
The Germans have atticked the
is less favorable. Desperate Ger-
one point may cost us time, but it
ment of Allied moves to take care
narrow supply corridor fijm Eind-
man resistance has slowed down
cannot cost us victory. The Ger
of a changing tactical situation.
hoven to Nijmegen several times,
the Allied attempts to get help
That this tactical situation is not
through to the air-borne forces
mans are trying desperat
to
both from the east and from the
drag of the war into the winter
so favorable as might have been
west. The main attack from the
which are encircled north of the
months: they have not yet suc-
hoped for is already clear enough,
east was made Saturday by troops
Neder Rhine at a point about
ceeded even in that. and there is
but there is no reason to suppose
which had been ferried across
three miles west of Arnhem. These
little reason to suppose, from the
that General Eisenhower lacks the
the Rhine and concentrated in
forces do not, apparently, control
situation as it now exists, that they
resources to deal with it adequately.
the forest called the Reichswald,
the northern end of the highway
are going to be allowed to do so,
The maximum success which
about eight miles southeast of
bridge in Arnhem itself (a detach-
could have been expected when
Nijmegen. This attack was beaten
ment there seems to have been
the Allied air-borne army was
off, and it appears to have been
eliminated by German attacks)
dropped in the Eindhoven-Nij-
the German main effort, for since
nor eyen the railway bridge west
megen, Arnhem area was to seize
then Allied forces have been gain-
of the town, though the situation
the clossings of all the Dutch
ing ground steadily east of the
of that bridge is uncertain. Ger-
water lines-the Maas, the Waal
road and are reported to have
man troops from the Russian
and the Neder Rhine-and thus
crossed the German frontier at
front are reported to be fighting
prepare and hold open a gateway
two places and to be penetrating
in this area. There is every evi-
by which the British 2d Army
into the Reichswald. This looks
dence that the German high com-
could pour across these water
very much like the pursuit of a
mand has given orders that the
lines into the flat plains of north-
beaten enemy force.
crossing of the Neder Rhine at
ern Germany, outflanking the de-
The principal source of danger
Arnhem be held at all costs.
fenders of the Siegfried line.
to the supply corridor now appears
Relief Possibilities Limited
This objective has, so far, been
to be coming from the west, as
achieved only in part.
German troops in the Dutch
The relief of these trapped air-
coastal areas endeavor to escape.
borne troops against this sort of
British Established at Eindhoven
These apparently include at least
opposition requires that a broad
The British 2d Army is firmly
parts of the German forces that
and secure corridor of advance be
established in the Eindhoven area,
escaped from France northward
opened up to and across the Waal.
where it is widening its positions
along the coastal corridor which
This is being done; we seem al-
to the northeast, east and west.
the Germans held open for a time
ready firmly set on the Maas and
Two crossings of the Maas, at
before the British thrust to Ostend
are improving. our situation be-
Grave and Mook, are in our hands,
closed it. Our old acquaintances
tween the Maas and the Waal.
and the Maas has been reached
of Normandy, the 9th and 10th
Meanwhile, there are only two
on a front of some twenty miles.
Panzer Divisions (both SS units)
ways of helping the air-borne
American air-borne troops are
have been identified. also the 59th
troops in the Arnhem area-by
participating in these operations,
and 245th Infantry Divisions, for-
air-borne aid and by infiltration.
and the Americans hold Nijmegen,
merl stationed on the Dutch
Both are being tried, but the com-
where they have the highway
coase, and the 107th Panzer and
bined possibilities of both methods
bridge over the Waal, the most
719th Infantry Divisions, formerly
are limited, and may be insuffi-
formidable of the three water
part of the German 15th Army.
cient. If so, the men who are
barriers, intact.
These troops and perhaps others
fighting at Arnhem will at least,
appear to be persistently nammer-
by their sacrifice, have contributed
ing at the British bolt position
materially to a very considerable
along the highway between Eind-
Allied success which has brought
our forces closer to a break through
Regraded Unclassified
NEW
YORK
181
Herald
Tribune
26 1944
Raids on Philippines Indicate
Invasion May Follow
It is altogether possible that
more extensive operations may be
Foe Can't Prevent an Invasion
much closer at hand then
has been supposed. Given the
crushing blow delivered to Japa-
Greatly Increased Range of U. S. Carrier Planes
nese air power in Luzon, there
does not seem to be any reason
and Timidity of Japanese Fleet May Add Up to
why we should not land, provid-
Ing there are sufficient troops in
Early Acceleration of the Pacific War
the western Pacific for the pur-
pose. The Japanese may have
By Major George Fielding Eliot
been trying to reinforce their
troops on Luzon-in fact their
Copyright. 1944. New York Tribune Inc.
troops seem to be their one stout
The heavy attacks of Admiral Halsey's 3d Fleet against the Japa-
reliance just now-and there is no
nese air forces and shipping in the Philippines-attacks which the
way to tell whether the ships
Japanese say still are continuing-appear to have scored a most
which were sunk or damaged had
notable success.
Not only have 357 Japanese air-
Will History Repeat?
already landed reinforcements
craft been destroyed and forty-
Is the same thing going to hap-
and stores or not. Most of them,
eight damaged, but forty ships and
pen now, not only to the Japanise
apparently, were transports or
six small craft have been sunk and
garrisons in the Palaus, Halmahera
cargo ships: not many were war-
and Celebes, but to those in the
ships. Therefore it would be rash
thirty-five ships, eleven small
craft and two floating drydocks
Philippines?
to try to estimate the actual pres-
It is much too early to say defi-
ent strength of the Japanese
damaged and extensive injury has
nitely that this is going to be the
Army in the Philippines.
been inflicted on Japanese military
Certainly a landing in Luzon or
and naval installations on the
case. But it is perfectly clear that
anywhere else in the Philippines
ground; all at a cost of eleven
we have full and unquestioned abil-
will be a major operation, calling
American aircraft and fifteen lives.
ity to strike from the sea wherever
for larger American ground forces
The effect of this success has
we wish to do so, even at the larg-
than have hitherto been employed
been to break the Japanese air
est of island outposts of Japan.
in any one place in the whole Pa-
power in the northern Philipp/hes
There was a school of thought
cific area. So far, the presence of
and to compel the Japanere to
which held that it was all very well
eight Army divisions and five ma-
withdraw their naval forces from
to deal with little islands by car-
rine divisions in that area is
Philippine anchorages-presum-
rier-based attack, when we could
known from their mention in of-
ably because they now lack the air
produce such a swift and over-
ficial communiques; some of these
force with which to protect their
whelming concentration against a
are with General MacArthur in
warships from our attacks.
estricted area that nothing could
the southwest Pacific, and the re-
Thus the Japanese are prevent-
vithstand it: but that It would be
mainder probably do not make up
ed from using the Philippine archi-
uite another matter to attack a
a force sufficient to deal with the
pelago as a station on their air and
reat semi-continental area like
full Japanese garrison in the
sea highways to the southward;
uzon, where the Japanese have
Philippines as last reported by
they cannot send reinforcements
as plenty of time to prepare Mis-
Chinese sources. But it must be
by air to their beleaguered garri-
fields and to concentrate air
remembered that that garrison is
sons in the Palaus and in the Hal-
mahera group, nor to Celebes,
power in considerable force.
But
not all on line island, that Ad-
Halsey's men have proven
that
miral Nimitz ports that Japanese
which is also under heavy air at-
tack from General MacArthur's
this, too, is now well within the
inter-island movements have been
forces.
range of our abilities.
interrupted b3) Halsey's activities
The only way. the Japanese can-
In fact, the Japanese do not seem
-that, in short, we can because
restore this situation-which if
to be safe anywhere within the
of our. air and naval superiority
continued must prove disastrous to
greatly increased range of our car-
continue the process of choosing
rier-borne planes. We achieved
and isolating r'stideêsive battle-
them-is to get strong reinforce-
ments to the Philippines by sea;
what appears to be complete sur-
fields in the Philippines as else-
prise in the strikes in the Manila
where. It is a process which has
which means that they must run
area, and even returned to the
brought us many victories, and
the risk of fighting Halsey's fleet
before they can get there. Once
scene after the first successful
may well bring us more.
more the main battle force of the
strike for another punishing blow.
imperial Japanese Navy is chal-
It is clear that our fleet is ranging
lenged. It was challenged when we
unchecked in the waters of the
went into the Marianas; it sent out
Philippine Sea. and that it is not
a part of its strength, suffered a
only ready to deal with any Japa-
sharp setback, lost its carrier-
nese naval interference but is do-
based aircraft and at least some of
ing everything it can to induce the
its carriers, and ran away before
Japanese to try to interfere with it.
it could be brought $ serious bat-
tle, leaving the garrisons on Guam
and Salpan to their fate.
Regraded Unclassified
NEW
YORK
Herald
Tribune
182
1944
be & tremendous disaster, of un-
Speedy, Direct Aid to Chinese
foreseeable consequences. Should
who Japanese be able to armash all
Is Called Vital to Allied Cause
organized resistance in China o
reduce it to negligible quantity
they might well be able so to en-
Japanese Conquest of the Asiatic Mainland, With
trench themselves on the Asiatic
Continent, with their curving
Collapse of Resistance by Chungking, Might
Island barrier in front of their
Assure Long and Costly Pacific Conflict
continental position, that Wt
should have to fight a far longer
By Major George Fielding Eliot
and bloodier was to dig them out.
Copyright. 1944. New York Tribune Inc.
Hence, in considering the future
Monday's heavy and successful attack by Admiral Halsey's carrier-
course of the war against Japan,
based planes against Japanese airfields and shipping in the Manila
in examing the long-range strat-
area may well be of exceptional significance. The recovery of the
egy which is designed to bring
Philippines is a major American
down the brutal structure of em-
mined to consolidate their
whole
objective in the Pacific war, not
bire which the Japanese have
only for military but also for psy-
position in South China and to
erected at the expense of their
chological and sentimental reasons.
link it by rail with the north and
heighbors, the need for bringing
We have promised the Filipino
with the ports of the Sea of Japan,
quick help to the Chinese must
people that we would come back
to which they can still move sup-
have considerable priority.
and rescue them from the Japa-
plies and reinforcements even if
It is quite possible that the
nese, and we are going to do that.
they lose command of the Yellow
trategy which might, if this fac-
and East China Seas.
But, as Under Secretary of the
or could be disregarded, seem
Navy Bard has pointed out, the
It is of the first importance that
best calculated to bring us to de-
main Japanese power is not to be
some check be given to the prog-
cisive gripa with the Japanese may
found in the Philippines. The loss
ress of this Japanese consolida-
hot be that which is best designed
of those islands would be a heavy
tion, and it is of even greater im-
to bring the Chinese the help they
blow to Japan because it would cut
portance that some strong and
need in the shortest possible time.
the Japanese off from all their
effective aid be given to the Chi-
For example, a direct assault on
conquests to the southward, de
nese people so that they may have
the Japanese main islands, even if
priving them of valuable raw ma-
visual and unmistakable evidence
it were successful in the end,
terial sources and isolating their
that the long-promised help is
might still be too late to save
far-flung garrisons. But it would
actually at hand. It cannot matter
China from falling under com-
not be a fatal blow.
very much to a Chinese who has
plete Japanese domination. It is
The time factor enters into all
endured eight years of grueling
not inconceivable that we might
our calculations of the Pacific-war
warfare and who still sees the
find ourselves in full possession of
pattern, and for the moment prob-
Japanese in possession of so much
the Japanese main islands and
ably the Chinese time factor is of
of his country, to hear that we
still have to fight the Japanese
more urgent importance than any
have taken Guam and Saipan, or
Army on the Asiatic Continent. Of
other. The military situation in
that we have landed in the Palaus,
course, there is an imponderable
China can only be described as de-
or even that we are beginning the
in these, as in most military cal-
plorable. The Japanese are ad-
reconquest of the Philippines. What
culations. Nobody knows what
vancing rapidly on the important
he wants to hear-and to see-is
the reaction of the Japanese peo-
road and rail town of Kwellin:
something actually happening to
ple-including the soldiers-might
they are also pushing northward
the Japanese right in his own
be to a real invasion of the "sacred
from coastal points west of Canton
Chinese homeland. What he wants
soll" of Nippon. It might bring
to make secure their grip on the
Is the sight of Allied troops and
planes and tanks attacking the
about a general moral collapse or
whole coastal-area of Kwangtung
a complete chaos in which all or-
Province between Canton and the
Japanese and driving them back:
ganization and all national cohe-
island of Hainan. Farther north
or at least some clear evidence
sion would disappear. But It
they have captured the port of
that this is going to happen soon.
might not; and it is very plain
Wenchow. The only Chinese hold-
Nor is this just a very natural
that the necessities of our Chinese
ings on the coast are in Fukien
but entirely Chinese aspiration.
allies must rank high among the
Province, directly opposite the
It is vitally necessary to the whole
motivating considerations upon
stronghold or Formosa, and there-
Allied cause that the Chinese
which the immediate future strat-
fore difficult of access unless For-
should be kept going, somehow,
Egy of our war in the Pacific is to
mosa be first reduced.
until real help can reach them.
be based.
The Japanese seem to be deter-
The collapse or Oninese resistance
now, or its dissolving into mere
sporadic guerrilla warfare, would
Regraded Unclassified
183
C
0
P
Y
10/2/44
THE WHITE HOUSE
WASHINGTON
September 30, 1944
My dear Cordell,
In my letter of September 9, I gave instructions con-
cerning the administration of the lend-lease program after
the collapse of Germany.
It was not intended that these instructions should
apply to the lend-lease negotiations current with the Govern-
ment of U. S. S. R.
Sincerely yours,
"F. D. R."
The Honorable
Cordell Hull,
The Secretary of State.
Copies to:
Vice Admiral E. 8. Land
Hon. Leo T. Crowley
Admiral Ernest J. King
The Secretary of the Treasury
General George C. Marshall
Regraded Unclassified
184
185
SEP 29 1944
My dear Mr. President:
The instructions on lend-lease administration in your
letter of September 9 as interpreted by the Departments have
left same doubt whether these instructions ware intended to
apply to the negotiations current between the U.S.S.R. and
this Government on a lend-lease program.
I have reviewed this problem with Secretary Hull and
Secretary Stimson. We are agreed on the interpretation that
your letter did not require the interruption of negotiations
with the Russians, and we join in recomending to you the
desirability of this interpretation.
With the concurrence of Secretary Hull and Secretary
Stimson I suggest, for your consideration, that the interested
government departments be advised definitely as to the effect
of your instructions upon these ourrent negotiations, as
suggested in the attached draft of a letter.
Faithfully yours,
(Signed) M. Morgenthsu. J7.
Secretary of the Treasury,
The President,
The White House.
SG:HGske 9-29-44
Regraded Unclassified
186
THE WHITE HOUSE
WASHINGTON
September 9, 1944
The Honorable
The Secretary of the Treasury
Washington, D.C.
My dear Mr. Secretary:
There has been E. good denl of discussion within the
several Government Departments relative to our Lend Lease
policy after the collapse of Germany.
It is my wish that no Department of the Government
take unilateral action in regard to any matters that con-
cern Lease Lend, because the implications of any such
action are bound to affect other Departments of the
Government and, indeed, our whole national policy. I am
particularly enxious that any instructions which may have
been issued, or are about to be issued regarding Lease
Lend material or supplies to our allies after the collapse
of Germany, be immediately cancelled and withdrawn.
I intend to give instructions to all Departments
relative to the Lease Lend policy of this government at
an early date.
Will you be sure, therefore, that your several bureaus
and divisions are advised of my position at once?
I am sending identical letters to the Chief of Staff,
the Chief of Naval Operations, the Secretary of State, the
Administrator of the Foreign Economic Administration and
the Administrator of the War Shipping Administration.
Sincerely yours,
Fimily
187
PUBLIC OPINION NEWS SERVICE
For Release Saturday, Sept. 30, 1944
Public Expects Jap Conflict
To End Latter Part of 1945,
Nation-wide Survey Reveals
Public Now Slightly
JAP
WAR'S
END
?
Less Optimistic Than
In Earlier Survey
By GEORGE GALLUP
Director, American Institute of Public Opinion
successes of our forces at Saipan
and Guam, and before the bomb-
PRINCETON, N.J., Sept. 29.-Although the average
ings in the Philippines.
guess of the American publie is that the war in
In its periodical soundings of
Europe will be over before the end of this year, no
public attitudes toward the length
of the war in Japan, the Institute
such marked optimism prevails about the war in the
had field reporters ask a scientifi-
Pacific.
cally selected cross-section of vot-
The average of
tie as they were in July. At that
ers this question:
guesses on the
time, a survey revealed 33 per
"How much longer do
length of the war
cent of those with opinions expect-
against Japan
ing the war against the Japs to
you think the war with Ja-
last into 1946 or later. Today, 36
pan will last?"
would put the
end of hostilities
per cent name sometime during
The replies of those making a
in the Pacific
1946 or later for the Pacific war's
guess add up as follows:
end.
Think War Will End
the latter half of
Even so, the public is more
In 1944
1945.
optimistic now than it was last
4%
In 1945
60
Moreover, the most recent In-
March, when over half of the peo-
In 1946
28
stitute survey on the question finds
ple questioned said they thought
In 1947 or later
8
some people not quite so optimis-
the Pacific conflict would go into
1946 or later. This was before the
In the present survey, one in
twenty offered no opinion.
26 8 Nd 62
188
THE WHITE HOUSE
WASHINGTON
September 30, 1944
My dear Mr. Secretary:
I have your letter of September 25 and
I appreciate your sending me for my records
the British Treasury memorandum on Lend-Lease
Supplies for Britain in Stage II, which
Lord Cherwell handed you at Quebec.
Very sincerely yours,
F.R.
The Honorable
Henry Morgenthau, Jr.,
Secretary of the Treasury.
189
September 25, 1944
My dear Mr. President:
While at Quebec, Lord Cherwell handed me
the enclosed memorandum from the British
Treasury. I only noted the other day that it
was addressed to you, so I am sending it to
you for your records.
Sincerely yours,
(Signed) H. Morgenthau, JR.
The President,
The White House.
Regraded Unclassified
180
TOP SECRET.
Lend-Lease Supplies for Britain in Stage II
Note for President of U.S.A.
1. The President, in transmitting to Congress the Sixteenth
Quarterly Report on Lend-Lease Operations, has recommended that
"until the unconditional surrender of both Japan and Germany,
(the United States, should continue the Lend-Lease programe
on whatever scale is necessary to make the combined striking
power of all the United Nations against our enemies as over-
whelming and as effective as we can make it". There are several
problems concerned with the application of this policy which
require decision at the forthcoming Conference.
2. The object of Lend-Lease assistance hitherto has been to
satisfy our justifiable requirements in excess of those which
we can furnish ourselves in conditions of full mobilisation of
manpower for war purposes. In other words, Lend-Lease has been
treated hitherto as residual. If it is accepted that during
State II the continuence 'OT' bend-Desse assistance should.be
compatible with some appropriate degree of war demobilisation
in the United Kingdom below the 1944 level, the above criterion
of Lend-Lease availability will no longer be applicable. The
appropriate criterion henceforward must necessarily be one of
what absolute amount of assistance 18 appropriate to the
changed conditions. The President will be asked to recognise
this new situation by agreeing to the preparation of a firm
agreement specifying the amount and character of the assistance
on which we can rely.
3. Until strategical lons are completed, Britain's requirements
for munitions in Stage JJ cannot be stated with precision. Our
production plans are for the moment besed on the estimate that
/the
- 1 -
Regraded Unclassifie
191
the strategy will require the provision for the Forces under
British supply responsibilities of something over 60 per cent
of the present volume of munitions over the rirst year, HS a
whole, falling to something over 50 per cent by the end of the
year.
4. The munitions supplies of the British Em_ire have been drawn
during the German war from a number of sources. A little under
60 per cent has come from Britain; about 27 per cent has come
from the U.S.A.; about 10 per cent has come from Canada; the
remainder has been drawn from other countries in the British
Empire. If the total of British munitions requirements had to
be provided from British Lapire sources, there could be little
11° any reduction from the present output of munitions in the
United Kingdom, even 11 production could be switched to other
types of munitions in time to make them effective.
5. At the end of five years or war, some relaxation in the
pressure on British civilian standards of life is necessary.
It is necessary also to begin to rebuild the dame, ed cities,
to devote more work to the overdue repairs to industry and
public utilities, and to make first steps towards restoring our
export trade; without exports Britain can neither meet her
immediate obligations nor assure her purchases of necessary
imports. These needs cannot be further deferred.
6. In working out the assistance to be afforded, a simple -
principle, which in practice would probably yield the minimum
required - and might at the same time be regarded us rough
justice - would be that the proportion of our total munitions
supplies furnished on Lend-Lease should be the same in Stage IT
as 't has been in 1944. TF, for example, our munition needs from
all sources are reduced by, say, one third, the amount of
munitions furnished on Lend-Lease should also be reduced in the
same proportion or one third.
/7.
- 2 -
Regraded Unclassified
192
7. The President will be usked for H firm commitment that we
shall be given munitions on Dend-Lease terms on some such scale;
this would either fix the total volume of munitions assistance
in Stage II or would endorse the principle outlined above. It
would then be possible for 0:11 respective officers to work out
the detailed programme of supply correspondingly.
8. The amount of non-munitions assistance covering food,
shipping, oil, raw materials, etc., which we shall continue to
require would not depend to any great extent on the degree of our
domestic reconversion, since only a small part of such
assistance has been concerned with goods which we are in a
position to produce. Some reduction is, however, possible in
so far as such supplies have been for the purposes, not of
civilian consumption, but of armed forces. For this reason the
aggregate requirements of the United Kingdom are put at about
33 billions during the first year of Stage II compared with
$3.9 billions in the programme for the current year.
9. To sum up, Britain's needs can only be met by a
continuance of Lend-Lease through Stage II. The result of our
examination is"to show that we'shall need:-
(a) Lend-Lease for munitions on a scale to be defined at
the Conference.
(b) Lend-Lease for Foodstuffs, raw materials, oil,
shipping, etc., sufficient to meet the reasonable
needs in these respects of the United Kingdom for
supplies from U.S. sources.
10. In order to give effect to those decisions it 1s suggested
that the President and the Prime ..inister should appoint a
Committee with power to appoint technical sub-Committees which
would of course report to the main Committee. One sub-Committee
would, as 8 matter of urgency, consider the proposals of the
/British
- 3 -
Regraded Unclassified
187
British Government's representatives for the unitions asked for
under Lend-Lease, with the aim of reaching agreement as to:-
(a) the amount involved by the application of the
principle of proportionate a'd (unless this hes been
determined at the Conference itself).
(b. the most appropriate sub-division of that amount
between the various broad classes of equipment for
each of the Services.
(c) the arrangement for settling the details of the
munitions programme ES quickly as ossible within
that broad pettern.
11. The instructions to the main Committee should, of course,
cover the whole ground of Lend-Lesse Munitions and Non-Hunitions,
Reverse Lend-Lease and Export Policies and might be somewhat as
follows:-
(a) So far as munitions are concerned, it would be the duty
of the Committee to approve a report of the Sub-
Committee mentioned above embodying a programme capable
of fulfilling the agreed conditions in the manner most
convenient and effidient Tyoid the point of view of the
Governments.
(b) So far as non-munitions are concerned, the Committee,
through such Sub-Committeesas wight be found convenient,
would examine the British position with a view to
determining the appropriate scale of assistance and
should in this connection consider the advisability of
possible modification in the fields to be covered by
Lend-Lease and Reverse Lend-Lease respectively with a
view to simplification and concentration.
(c) So far as exports are concerned, it should be an
instruction to the Comuittee to propose the principles
which should govern henceforth the relationship between
- 4 -
/Lend-Lease
Regraded Unclassified
191
Lend-Lease and Reverse - mi-Lease assistance and the
export policies of the two countries, with a view to
minimising the measures of restriction and regula tion;
and in arranging in detail the character of the aid to
be furnished under the above L nd-Lease programme
they should bear in mind the object of facilitating
and simplifying the application or the principles,
which they are proposing, in A asnner likely to
interfere with the res ective export programmes of
the two Governments to the least possible extent.
(a) Thus, generally the Committee and its Sub-Committees
would be charged with the task of drawing up and
agreeing programmes which would implement the
decisions reached by the Conference. It would not
be competent for them to reopen these decisions.
12. Since It 18 unlikely that the Committee could complete its
deliberations, except on munitions, before, say, Lovember, it
18 essential that & Directive should be given meanwhile which
would prevent any steps being taken during the intervening
Weeks likely to be prejudicial to the carryin_ out, should they
be approved, of any propossls which are brought before the
Committee.
4th September, 1944,
- 5 -
Unclassifier
4
195
TO:
195
MISS CHAUNCEY g/m0/yy
Mr. Bell says he wants this
put in the Secretary's Chinese
file.
ew
Office of the Under Secretary
SECRET
186
WAR DEPARTMENT
HEADQUARTERS, ARMY SERVICE FORCES
WASHINGTON $5. D. c.
Honorable D. W. Bell
The Under-Secretary of the Treasury
Treasury Department
Washington, D. C.
Dear Mr. Bell:
Reference to the discussions held with Dr. Kung at Bretton Woods
regarding the settlement of obligations to the Chinese Government for our
operations in China up to June 30, 1944 and to negotiations now being
carried on with Dr. Kung by your department on the same subject, there is
transmitted herewith certain additional information which may be of assist-
ance to you in this matter.
Under date of August 11, 1942 there was consumated an agreement
between General Stilwell and the Chinese Government whereby the United
States agreed to pay what was termed the non-operational construction and
maintenance costs incident to our use of airfields in China and the Chinese
Government agreed to pay the operational construction costs on such fields.
Copies of the letters making this agreement are attached hereto and define
in detail the items included under the two general headings stated. No
fundamental changes appear to have been made in the agreement reached at
that time until the beginning of the current year when the new arrangement
whereby the Chinese advance funds for our needs as required was entered
into.
The records of the War Department indicate that expenditures by the
United States in China for the period August 1, 1942 to January 31, 1944
covered by the above mentioned agreement total USA146, 778, 000-divided,
$140,578,000 for construction, supplies, etc., and 06,200, 000 for pay of
our personnel. These amounts were expended either in United States currency
or Chinese currency purchased at the official rate of 20 to 1, and were in
liquidation of all obligations of the United States up to January 31, 1944.
Expenditures made by the Chinese on the Chengtu Airfield prior to
March 1st would have been a proper charge against their account under the
agreement of August 1942 referred to above. However, in view of our agree-
ment of January 1944 to finance the entire cost of the Chengtu Airfield,
these expenditures prior to March 1st are properly payable by the United
States and should be included with the expenditures for Chengtu since
PVICTORY
BUY
UNITED
STATES
WAR
CONTO
AND
STAMPS
SECRET
Regraded Unclassified
SECRET
197
March 1st in your resent discussions with Dr. Kung. General Stilwell
reports that Chinese sources claim they had expended on Chengtu prior to
March 1st but the Chinese have presented no papers to him
to support such a figure. Chengtu expenditures since March 1st have all
been included in funds advanced by the Chinese at our request under the
existing agreement. General Stilwell advises the United States Engineers
estimate that the total cost of Chengtu Airfield to June 30, 1944 as
CN$4,464,000,000.
It will be noted from the attached statement that the Chinese have
advanced up to June 30th 01013,896,000,000, which includes all funds expended
for Chengtu to June 30, 1944. General Stilwell advises that while the total
reported is the correct amount advanced, it includes taxes and other items
not properly chargeable to the United States and that our net liability to
June 30th is only CM$10,925,000,000. This figure does not include the item
of food and lodging for our men. (The Chinese insist upon providing this
latter item without reimbursement, but it is to be expected that the amount
will be included as a claim under reverse lond-lease.) General Stilweil's
message does not breakdown in amounts the deductions for taxes and other
items nor does ne specify the Kind of taxes referred to. It is possible
that there may be some liability on our part for some of these taxes. General
Stilwell is being contacted further on this matter. However, he does raise
in a separate radio (copy herewith) the question of whether the United States
should pay taxes included in the price of commodities which we purchase in
China in connection with our war effort.
You will recall that in the discussions with Dr. Kung at Bretton Woods
an offer was made for the United States to pay $125,000,000 to liquidate
all obligations of the United States up to June 30th, except amounts expended
for rationing and quartering of our personnel in China. After this offer
was made, Dr. Kung raised the question of payment for the Chengtu Project.
He was advised that that was included in the contemplated settiement but he
could also include it in the reverse Lend-lease and made available by China
if he so desired. If the Chengtu Project (CNS4,464,000,000) were excluded.
from the settlement and deducted from the net indebtedness of CN010,925,000,000
as reported by General Stilwell, our total indebtedness in Chinese dollars to
be settled under the agreement would be only CN$6,461,000,000 for which we
would pay $125,000,000. lience, we feel that it should be made clear in the
discussions with Dr. Kung that we are willing to pay $125,000,000 only because
it represents a complete settlement including the fulfiliment of our commit-
ment with respect to the Chengtu Project, and that we are agreeable to the
latter cost also being listed as reciprocal lend-lease only because of the
very substantial excess of lend-lease values over reciprocal lend-lease values.
This should be further emphasized if we increase the total amount to be paid
by the United States to $150,000,000 so that the record will indicate clearly
that the United States does not intend to pay any further sums for the Chengtu
Project although it will give further consideration to the facts of settle-
ment whenever lend-lease and reverse lend-lease expenditures are adjusted.
- 2 -
SECRET
Regraded Unclassified
SECRET
198
For your information there is attached a memorandum from General
Stilwell to the Generalissimo dated January 8, 1944 in which the United States
agrees to bear the cost of labor and material for Chengtu airdrome construc-
tion at a rate of exchange to be arrived at under negotiations now in
progress. There is also inclosed a letter dated March 10, 1944 from General
Stilwell to General Chang Chen in which it is stated that consistent with
the new policy, the United States will pay for all new construction required
by it in China.
There is attached hereto a memorandum of agreement which the War
Department is of the opinion includes the fundamentals that should go into
any agreement for the settlement of this account. However, it is not
intended that you are to be limited to the provisions of this memorandum of
agreement in making your settlement with the Chinese Government, for, as
stated in' letter of the Secretary of War of June 28, 1944 to the Secretary
of the Treasury, the authority to complete this settlement rests with the
Treasury Department.
There is attached hereto a copy of a radio from General Stilwell and
the War Department's reply thereto on the subject of taxes required of
the Army in China. In viewof the fact that we are using currency furnished
by the Chinese Government at this time to pay such taxes, there appears no
reason for making an issue of this matter in Chungking until after the
present negotiations being carried on by you are completed. It is requested,
however, that this question of payment of taxes by the United States Army in
China be included in your discussions with Dr. Kung.
Sincerely yours,
BREHON SOMERVELL,
Lieutenant General,
Commanding.
6 Incls.
1-Cy of agreement Aug 42.
2-Statement of U.S. expenditures in China.
3-Cy of suggested memorandum of agreement.
4-Copies of radios on subject of taxes.
5-Cy ltr of General Stilwell to Generalissimo
dtd Jan. 8, 1944.
6-Cy ltr of General Stilwell to General Chang
Chen dtd March 10, 1944.
- 3 -
SECRET
Regraded Unclassified
SECRET
199
Chungking, China
July 12, 1942
MEMO RANDUM TO: His Excellency, The Generalissimo.
SUBJECT
: Construction required for American Army Forces.
1. The United States Army Forces in China will in future require
certain construction work to augment existing facilities at various places.
In accordance with the policy of the Commanding General, American Army
Forces in China, Burma and India, of bearing all reasonable expense for the
maintenance of American Combat Forces in China, the following principles
are proposed and approval requested:
a. The United States will pay the entire cost of all necessary
new construction of living quarters, hospitals, recreational buildings,
mess halls, and related structures, and pertinent utilities.
b. The Government of China will pay the entire cost of construc-
tion to fulfill requirements of an operational nature. This class of pro-
jects will include clearing, grading, draining, and surfacing of airdromes
and taxistrips, and the construction of dispersal pen shelters, ordnance
storage, alert quarters, operations shelters, dugouts, roads, and related
earth work, structures and utilities required at the airdromes for effi-
cient air force operations.
C. For the actual accomplishment of such construction projects
as the Commanding General, American Army Forces in China, Burma and India,
may request, it is recommended that Mr. Tseng Yang Fu be designated as
the directing head with full control over an appropriate agency to handle
the work.
JOSEPH W. STILWELL
Lieutenant General, U. S. Army,
Commanding.
SECRET
Regraded Unclassified
SECRET
200
"COPY"
REPORT OF CONFERENCE
SUBJECT: Operations of American Aviation in China.
1. At a conference hold on June 24th with Madam Chiang Kai Shek,
General Stilwell, General Gruber, General Bissell, General Chow and
Major General Huang present, the Madam announced the following decisions
relative to each of the lettered paragraphs of attached memorandum No. 24,
subject as above dated June 23, 1942.
a. Approved.
b. Approved but timely warning must be given when units are moved
to new Hostels.
C. Approved.
d. Approved. There will be no quibble by China about credit
against Chinese Lend-Lease.
e. Approved. Requests for motor vehicles required, beyond those
now in possession of AVG, should be made through General Huang.
f. Approved.
2. Copies of the basic memorandum No. 24 are furnished herewith for
distribution as follows:
2 copies to Madam Chiang Kai Shek, and one copy each to General
Chow, General How, and Ceneral Huanc. There is also a copy attached
marked for General Bissell. It is requested that this copy be
returned to General Bissell with indication that the above rep-
resented the Madame's understanding of the decisions taken.
CLAYTON BISSELL
Brigadier General, U.S.A.
Aviation Officer
There were approved by
the Madam without change.
/s/ CB
SECRET
Regraded Unclassified
SECRET
201
"COPY"
FOREIGN AFFAIRS BUREAU OF THE NATIONAL MILITARY COUNCIL
FAB/NMC No. 92
Chungking, Aug 11, 1942.
Lt. Gon. Joseph W. Stilwell,
CG., AAFCBI, Chungking.
My dear General Stilwoll:
In reply to your memorandum of July 12th to the Generalissimo sub-
mitting three proposals regarding "Constructions required for American Army
Forces", I am authorized to make the following statements:
1. The Chinese Government concurs with your proposal that the United
States pay the entire cost of all necessary new construction of living
quarters, hospitals, recreation buildings, etc, as emumerated in pars. a.
of your memorandum under reply.
2. My Government also concurs with your proposal that the entire cost
of construction to fulfill requirements of an operation nature, as specified
in para b. of your memorandum, be paid by the Government of China. However,
as this class of projects is too numerous and in view of present difficulties
both in finance and in supply of materials, it is necessary that construction
of this nature should be limited to only such materials that can be made
available in China's war zones insofar as the requirements of an operational
nature can adequately be met. Whenever additional construction in connection
with air operations is needed, recommendation should be nade by you to the
Generalissimo for approval. After sanction is obtained, it will then be
turned over to the Commission on Aeronautical Affairs for necessary action
to be taken.
3. With regard to your recommendation c, it is the decision of my
Government that the Commission on Aeronautical Affairs should be responsible
for all construction projects required for air operation. The designating
of a particular individual as the directing head with full control over an
appropriate agency to handle the construction projects, as proposed, does
not seem to be necessary.
Yours sincerely
SHANG CHEN
Director, Foreign Affairs Bureau.
SECRET
Regraded Unclassified
202
COPY
HEADQUARTERS
U. S. ARMY FORCES
CHINA BURMA AND INDIA
# 111
Chungking, China
January 8, 1944
MEMORANDUM :
TO
: His Excellency, The Generalissimo
In accordance with your desire expressed in conference
31 December, a radio was sent to General Marshall, Chief of Staff,
U. S. Army, repeating your questions reference starting construction
on Chengtu airfields, and responsibility for payment.
Answers from General Marshall this date are to the
effect that:
Work should be started on very long range bomber
fields and proceed as rapidly as possible, regardless
of estimate that three of these fields may not be
completed until 1 May.
The United States will bear the cost of labor and ma-
terials for Chengtu airdrome construction at a rate
of exchange to be arrived at under negotiations now
in progress.
In view of the above it is requested that such instru-
ctions be issued that the matter of payment shall not in any way delay
construction.
For Lieutenant General STILWELL:
T. G. HEARN
Major General, G.S.C.,
Chief of Staff.
SECRET
Inclassifie
203
SECRET
Chungking, China
Mar 10 1944
General Shang Chen, Director
Foreign Affairs Bureau,
National Military Council,
Chungking.
Dear General Shang:
Consistent with the new policy that the United States will
pay for all new construction required by it in China, there has-
been issued this date a directive to our several Construction
agencies. Six (6) copies thereof are enclosed for your information.
It will be noted that the new procedure become effective as of
1 March 1944 but does not include those projects that are under contract
and for which Chinese funds have been allotted. Please also note that
it contemplates the distribution and expenditure of funds through
Chinese channels, followed by reimbursement by this Headquarters. Of
the Chinese agencies involved, the principal ones are the Ministry of
Communications and the Commission on Aeronautical Affairs.
Five(5) billion dollars Chinese National Currency have been
made available by the Minister of Finance for the purposes indicated
for the month of March, with similar amounts to become available for
April and May. In order that the new procedure may function smoothly
and to economize on time, this Headquarters plans to advise directly
the Minister of Communications or the Director, Commission on Aeronautical
Affairs, as the case may be, of the order of priority of approved projects,
requesting that he immediately allot the necessary funds to accomplish the
work. He, in turn, will be requested to advise this Headquarters of the
date and amount that such allotments are made.
Your cooperation in disseminating this information to the inter-
ested parties will be appreciated.
For Lieutenant General STILWELL:
T. G. HEARN
Major General, G.S.C.
Chief of Staff
0 Enclosures-
As Above.
SECRET
Regraded Unclassified
204
SECRET
28 September 1944
From CG US Army Forces China Burma and India Forward Echelon
Chungking China
Lengthy correspondence between this headquarters and Chinese
Government during 1943 and early 1944 resulted in a decision of
Chinese Government to exempt United States Government from pay-
ment of taxes. The question of whether or not the United States
Government should pay taxes included in the price of commodities
which we purchase in China in connection with our war effort
is frequently raised. Exemptions were revoked as of July 1,
1944. No have furnished the War Department estimates of taxes
paid or estimates of our no rate currency expenditures less
taxes to include June 30, 1944. llowever no decision
has been reached as to what policy we are to pursue in this
matter in the future and until nowe have assumed that this
question will be disposed of in joint departmental agreements
reached at the conclusion of current negotiations with Doctor
H H Kung on the settlement of United States financial accounts
with China. Your instructions in the matter will be appreciated.
Are we correct in this last assumption or is it desired that this
Headquartors resume its correspondence directly with the Chinese
Government in an effort to reach an agreement of this tax
problem.
SECRET
Regraded Unclassified
SECRET
205
1+ October 1944
Commanding General, US Army Forces, China, Burma and India,
Forward Echeion, Chungking, China
To llearn from Carter our SPFB.
Tax situation will be included in discussions here and therefore
it is not desired to make issue of it by you at this time. Re
your CFBX 23395 dated September 28. In order that taxes paid
may be deducted from total indebtedness to Chinese under existing
procedure whereby they advanced funds, a record of taxes paid should
be maintained.
é
SECRET
Regraded
SECRET
206
MEMORANDUM OF AGREEMENT
Whereas, military activities by the United States during the present
hostilities in China have necessitated the incurring of obligations and the
expenditure of funds by the United States for military operations, including
the construction of various air fields, roads and other military installa-
tions for the use of the United States Armed Forces in that country, and,
Whereas, the Commanding General of the United States Armed Forces in
the India-China-Burma Theater has determined that such operations, and the
incurring of obligations and the expenditure of funds in connection there-
with, were required by reason of military necessity, and were required and
appropriate to facilitate tho prosecution of the war and to accomplish the
mission confided in him, and,
Whereas, it was impracticable to liquidate many of the obligations
incurred in connection with such operations in United States currency,
and the performance by the Chinese Government or its agents of certain
services on behalf of the United States necessitating the use of Chinese
currency, and
Whereas, the Chinese Government in liquidation of the aforesaid obliga-
tions of the United States made expenditures out of its funds by advances to
U.S. Army Finance Officersin China and by payment of obligations created by
representatives of the Chinese Government at the request of the War Depart-
ment and in addition to the above the Chinese Government advises that it
performed various services and obligated and expended its funds for projects
entered into jointly by the U.S. War Department and the Chinese Government
in their joint war effort against Japan all of which advances, obligations,
SECRET
SECRET
207
expenditures and work performed by the Chinese Covernment are intended and a re
deemed to be included within settlement, except 8.8 noted hereinafter for all of
which sums advanced, obligated or expended and for work performed by the Chinese
Government or its agents for which the U.S. Government may have a legal or moral
obligation the U.S. is desirous of making a one sum settlement, except as stated
herein, in the amount of $125,000,000 less 25,000,000 previously paid to the
Chinese Government or credited to its account in March, 1944, and,
Whereas, it is the desire of the Chinese Government that any and all
amounts representing expenditures made by the Chinese War Area Service Corps
for food, quarters and other similar expenses of the United States Army in
China up to and including the 30th day of June, 1944, in the estimated amount
of two billion Chinese National Dollars, and that the approximate sum of CO.N.
4,500,000,000 Chinese National Dollars expended by the Chinese Government for
the Chongtu airfield construction incident to the joint operations of the United
0
States and the Chinese Government be not included in this settlement, (any and
all expenditures and advances made on account of said two specifically named
exceptions are reserved for consideration in the settlement of lend-lease or
reverse lend-lease transactions which hereafter may be agreed upon) which, with
the aforesaid two exceptions, include all claims of the Chinese Government against
the United States War Department for expenditures made or obligations incurred
for the use 2n benefit of the United States up to and including June 30, 1944,
and,
Whereas, under date of March 3, 1944, the United States Government de-
posited in the Chase National Bank, New York, to the credit of the Central
Bank of China, for the account of the Chinese Government $25,000,000, the
receipt of which said amount is hereby acknowledged by the Chinese Government
as part payment of the $125,000,000, stated above as due the Chinese Government,
-2-
SECRET
Regraded Unclassified
SECRET
208
Now Therefore, under the authority of the First War Powers Act, 1941
(55 Stat. 838), and Executive Order No. 9001 issued pursuant thereto, and
under the provisions of the Contract Settlement Act of 1944 approved July 1,
1944, and in consideration of expenditures made or obligations created for
and on behalf of the United States, and the advances hereinbefore referred to,
it is agreed that the United States shall, as soon as practicable after the
date of the signing of this instrument, pay to the Chinese Government the
sum of $100,000,000, US dollars, in full settlement of any claims which the
Chinese Government may have against the United States War Department on 80-
count of the obligations of the United States Army in China up to and in-
cluding June 30, 1944, except the items specifically mentioned herein as being
excluded from this settlement.
It is further agreed that, if necessary and called upon to do 80 by
the United States, the Chinese Government will continue to liquidate obliga-
tions of the United States on account of military operations in China during
the present conflict and/or to advance its currencies to the United States in
order that the United States may meet its obligations on account of said
operations subject to an adjustment and settlement at the end of each quarter
of the year, and that as'soon as practicable after said adjustment and settle-
ment, the United States shall likewise reimburse the Chinese Government in an
amount as may be found due and mutually agreed upon on account of said additional
expenditures and advances.
Signed this
day of
1944.
SECRET
IN
CHINA
Remarks
Chinese account against the United States - CN$ (In millions)
Month
Operational
Non-operational
Note 1. The U. S. agreed to finance the Chengtu Project, all enlarged.
constructional cost
The Chinese claim to have expended CN$860,000 prior to
construction, including
finance through
March 1st. Subsequent to March 1st all expenses of the
operations and maintenance
Chinese agencies,
enlarged Chengtu Project were paid for under the agreement
finance through Army
and are shown in this statement. (See radio CFHX 21031
Finance oers,
August 11 from Chungking and CRA 1903, April 23).
January
Note 1.
Note 1.
February
Note 1.
1,000
Note 2. The total shown is the gross amounts advanced by the Chinese
March
1,743
1,000
since Feb. 1, 1944 to June 30, 1944 and is not necessarily the
April
2,993
300
amounts actually used for the benefit of the U.S. Under the
May
2,380
1,000
agreement with the Chinese they were to furnish reports of actual
June
2,020
600
obligations incurred by their agencies against amounts advanced
Total advanced
to them at our request. This they have failed to do and there-
under agreement
CN$9,136*
CN$3,900*
fore our only source of information on such expenditures is from
our Engineers on the spot. See statement of credits due the
Chengtu prior
U.S. on this account.
to March 1.
860
Note 1.
CN$9,996
CN$3,900
Note 3. As an offset against the above gross of CN$13,896,000,000 the
Total column 1.
9,996
following U.S. credits should be considered:
cost of
Grand gross total of debt recognized by U.S.
CN$13,896
Note
2.
1. Taxes paid prior to Mar 1, 1944 at 20 to 1
In letter to Secretary of War dated April 19, Dr. Kung claims to have
Japes
3.) 2. Taxes on funds advanced through U.S. Fin. Off. 663,000,000 80,000,000
Paid out of the Treasury the following amounts in addition to those re-
Overhead and roads etc. not chargeable to
-
U. S., advanced through Chinese agenci 08
ported above: In answer to this General Stilwell states that all of these
2,308,000,000
4. Est. cost Chengtu to June 30
charges are properly payable by the Chinese in accordance with our agree-
4,464,000,000
5. Credit for U. S. construction after war
ment of August 11, 1942.
6. Since, lst practically all motor, alcohol
Airfields
8.018
and gas used in Chinese trucks supplying
Barracks for composite wing
0.355
U.S. forces purchased by U.S. yet we pay
WASC for food and quarters
1.483
regular rates for trans. by trucks.
Transport U.S. Air Force supplies
0.404
Imp rovements in roads at our request
0,615
Note: The credits for taxes paid are estimates only.
Total
10.875
ESTIMATED EXPENDITURES FOR JULY, AUGUST AND SEPTEMBER, 1944.
Month
Chinese Agencies
Finance Officers
July
445,000,000
1,500,000,000
August
1,699,500,000
1,500,000,000
209
September
1.162.500,000
1,600,000,000
Total
3,307,000,000
4,600,000,000
SECRET
Regraded Unclassified
210
DEPARTMENT
INCOMING
DIVISION OF
OF
COMMUNICATIONS
STATE
TELEGRAM
AND RECORDS
DEPARTMENT
or
STATE
BAS-958
Chungking via Navy
This telegram must be
18
paraphrased before being
Dated September 30, 1944
communicated to anyone
other than a Government
Rec'd 10:12 a.m.
Agency. (RESTRICTED)
(LIMSON)
Secretary of State,
Washington.
1629, September 30, 8 a.m.
FOR SECRETARY OF THE TREASURY FROM FRIEDMAN.
(1)- - On September 21, 1944, army here issued folloing
regulations: "The practice of sale and/or purchase of
Chinese clearing board as well as Chinese saving
certificates university and other privately owned
Chinese agency drafts by United States Army personnel
is prohibited effective this date".
(2)- Army indicated desire similar regulations
be issued for United States civilian governmental per-
sonnel here. Ambassador and chief representatives of
civilian agencies here consulted and agree on desirability
of such regulations being issued in Washington. At
present only Embassy has prohibited its personnel from
engaging in such transactions; other agencies operating
on voluntary individual basis.
(3)- There is problem of governmental personnel
leaving
Regraded Unclassified
211
-2- #1629, September 30, 8 a.m. from Chungking via Navy
leaving China particularly those who have been here since
1942 as central bank will not provide any exchange except
in special cases decided on individual basis.
(4)- Suggest discussing (?) with Navy in Washington
their following similar policy.
GAUSS
WSB
Regraded Unclassified
212
CABLE TO AMERICAN LEGATION, TANGIER, FROM WAR REFUGEE BOARD.
Please deliver the following message to Renee Reichman, 23 Rue Moliere,
Tangier, from Vaad Hahatzala Emergency Committee:
QUOTE READY MAKE PAYMENT TO JACOB S. COHEN WHO WILL INSTRUCT
BROTHER PAY YOU $5,000. REQUEST BROTHER TANGIER TO CABLE BROTHER
NEW YORK ACCEPT SUM. PLEASE ADVISE DEVELOPMENTS MATTER OF 500
CHILDREN. SEND ALL COMMUNICATIONS AND REQUEST DIRECTLY TO US
VIA WAR REFUGEE BOARD AND NOT TO PRIVATE INDIVIDUALS UNQUOTE
RDrury 9/30/44
Regraded Unclassified
213
CABLE TO NORWEB, LISBON, FROM WAR REFUGEE BOARD
Please deliver the following message to Elisabeth Dexter, 111 rua
Marquex de Fronteira, Lisbon, from the Unitarian Service Committee:
QUOTE 225 FOLLOWING CABLE SENT DIRECTLY TO FIELD IT WAS NECESSARY
DUE TO A NEW TREASURY DEPARTMENT RULING COUNTERMANDING OUR LICENSE
FOR FRANCE WE HOPE THE CHANNELS WILL BE CLEARED SOON:
SINGLE QUOTE THE APPARENT MISUNDERSTANDING CONCERNING USE OF OUR
FUNDS ABROAD SHOULD BE CLARIFIED STOP ALL AVAILABLE FUNDS FOR
FRANCE ARE EXCLUSIVELY EARMARKED FOR REFUGEES OR DISPLACED PERSONS
THEY CANNOT BE USED IN FRANCE FOR FRENCH CIVILIANS HOWEVER NEEDY
UNLESS THESE CIVILIANS ARE ACTUALLY REFUGEES STOP SAME RUEE BEYOND
OUR CONTROL APPLIES EVERYWERE ELSE STOP THIS IS REASON WHY THE
APPEALING PROGRAM OUTLINED IN YOUR SEPTEMBER 15 CABLE EXCEPT FOR
REPATRIATEON OF FOREIGN REFUGEES IS OUTSIDE THE SCOPE OF OUR
BRESENTERUTHORIZED RESPONSIBILITY STOP UNFORTUNATELY NEW TREASURY
DEPARTMENT RULING PREVENTS ANY EXPENDITURE FOR FRANCE EVEN FOR
REFUGEES AND EVEN WITH FUNDS ALREADY IN YOUR HANDS UNTIL NEGOTIA*
TIONS WITH FRENCH GOVERNMENT CLARIFIED STOP THIS DUE TO CHANGE
FROM OCCUPIED TO LIBERATED STATUS OF FRANCE STOP THIS RESCINDS
OUR CABLED AUTHORIZATION TO SPEND IN FRANCE 20,000 AT YOUR DISCRE*
TION STOP THE ADDITIONAL 13,000 MENTIONED AS AVAILABLE FOR FRANCE
IS TEMPORARILY BLOCKED STOP OUR APPROVED BUDGET FROM OCTOBER 1ST
IS 5,000 MONTHLY FOR ALL REFUGEE WORK IN FRANCE STOP APPLYING FOR
TREASURY LICENSE HOPE REMIT SOON STOP IF YOU CAN REPORT IMMEDIATELY
URGENT EMERGENCY REFUGEE NEEDS IN FRANCE WE WILL APPLY FOR ADDITIONAL
SPECIAL GRANT FROM WAR FUND CONTINGENCY FUND STOP ALSO TRYING TO
FIND OUTSIDE SOURCES OF ASSISTANCE FOR YOUR RECOMMENDED NONREFUGEE
PROGRAM STOP DEEPLY REGRET THIS CONFUSION STOP COMMITTEE SENDS
GRATEFUL APPRECIATION YOUR EFFORTS UNQUOTE
THIS IS WRB CABLE TO LISBON NO. 100
3:30 p.m.
September 30, 1944
FH:hd 9/30/44
Regraded Unclassified
214
TO JOHNSON FOR OLSEN
Reference your 3926 of September 27. You are
authorized to pay immediately total claim of 99158 kronor
68 ore for BARDALAND to the Swedish Orient Line. Regret
misunderstanding.
THIS IS WRB CABLE TO STOCKHOLM NO. 93
10:15 a.m.
September 30, 1944
DWhite:dm 9/29/44
Regraded
215
ORIGINAL TEXT OF TELEGRAM SENT
FROM:
Secretary of State, Washington
Regraded Unclassified
TO:
American Legation, Bern
DATE:
September 30, 1944
NUMBER:
3378
SECRET
The following is for Harrison and McClelland.
Please refer to your No. 6276 of September 22.
We concur in your conclusion that it probably would not be
useful to pursue further the vague suggestion by the German
Foreign Office that a request for the emigration from Hungary of
Jews holding Palestine certificates might be more favorably
considered if such Jews sere going to American or British territory.
With regard to your suggestion that perhaps efforts could be
made to facilitate the emigration of children and others who do
not have Palestine certificates, your attention is called to the
fact that the Legation in Bern already has broad authority to
grant visas for entry into the United States.
Particular reference is made to Department's No. 2877 of
August 21, which made available approximately 4,000 American visas
for children in Hungary; Department's No. 2605 of July 28, which
made special provisions in favor of persons to whom American
immigration visas were issued or authorised after July 1, 1941;
and Department's No. 2918 of August 24, making special provisions
in favor of close relatives of American citizens and alien
residents in the United States. Please refer also to Department's
No. 3120 of September 9 which summarizes the arrangemente made
by this government for the emigration of refugees from Hungary
to the United States and other countries.
You were requested to bring the foregoing arrangements to the
attention of the Swiss Government and the International Red Cross,
and through them, to the attention of the German and Hungarian
authorities in an effort to effect the evacuation from Hungary
of as many as possible of the refugees for whom arrangements
have thus been made. We assume that you have done everything
possible to edecute these instructions, and if anything further can
be done in this regard, we are sure that you will proceed to do
80 under the already existing authorizations. You will note that
the authorizations above referred to are applicable to
substantially more than the 2,000 refugees referred to in
your No. 6276 of September 22.
THIS IS WRB CABLE NO. 189.
HULL
216
CABLE TO MINISTER HARRISON, bern, FOR MC CLELLAND, FROM WAR REFUGEE BOARD.
Please deliver the following message to Reverend A. Freudenberg,
World Council of Churches, 41 Avenue de Champel, Geneva, from Leland Rex
Robinson, American Committee for Christian Refugees:
"Remitting $3,000 regret temporary shortage hoping send $13,000
October Stop First documents Geneva study group postwar problems
just received being circulated Stop Our staff includes professions®
workers loaned UNRRA Balkans probably available within year Stop
We have available immediately mature Protestant Italian woman who
helped refugees Milan before coming America 1940 Stop Could you
use loaned worker your program aiding refugees from Italy"
THIS ISWRB CABLE TO BERN NO. 190
2:00 p.m.
September 30, 1944
RDrury 9/29/44
Regraded Unclassified
217
CABLE TO MINISTER HARRISON AND MCCLELLAND, BERN, SWITZERLAND
With reference to your 6292 of September 22, you may request Swies
Foreign Office to inform Hungarian authorities that, if they so desire,
this government will be glad to treat as a Hungarian national any person
in the United States who claims Hungarian nationality even if the claim
of such person to Hungarian nationality is not well established, and thus
permit him to benefit from protection of State representing Hungarian
interests.
This government assumes that other American republics will also
accede to such a request, in case Hungarian authorities are really
desirous of making it.
Please convey to Hungarian officials through such informal channels
as may be available to you that this Government view 8 the Hungarian
inquiry as specious in view of the circumstances and considere it to have
been made in an endeavor to gain time. Such officials should be advised
that this Government will hold them personally accountable for any harm
that may befall any person claiming the nationality of an American
republic as the result of the Hungarian government's failure to accord
him the rights and privileges due to & national of an American republic.
In this connection, you should also convey to appropriate Hungarian
quarters the sense of Department's 2490 of July 21 paragraph three.
THIS IS WRB CABLE TO BERN NO. 191
3:30 p.m.
September 30, 1944
BAkzin:ar 9/29/44
Regraded Unclassifie
218
CABLE TO MINISTER HARRISON, SWITZERLAND, FROM WAR REFUGEE BOARD
Please deliver the following message to Noel Field, 12 Rue du Vieux
College, Geneva, from the Uniterian Service Committee:
QUOTE THE APPARENT MISUNDERSTANDING CONCERNING USE OF OUR FUNDS
ABROAD SHOULD BE CLARIFIED STOP ALL AVAILABLE FUNDS FOR FRANCE
ARE EXCLUSIVELY EARMARKED FOR REFUGEES OR DISPLACED PERSONS THEY
CANNOT BE USED IN FRANCE FOR FRENCH CIVILIANS HOWEVER NEEDY UNLESS
THESE CIVILIANS ARE ACTUALLY REFUGEES STOP SAME RULE BEYOND OUR
CONTROL APPLIES EVERYWHERE ELSE STOP THIS IS REASON WHY THE
APPEALING PROGRAM OUTLINED IN YOUR SEPTEMBER 15 CABLE EXCEPT FOR
REPATRIATION OF FOREIGN REFUGEES IS OUTSIDE THE SCOPE OF OUR
PRESENT AUTHORIZED RESPONSIBILITY STOP UNFORTUNATELY NEW TREASURY
DEPARTMENT RULING PREVENTS ANY EXPENDITURE FOR FRANCE EVEN FOR
REFUGEES AND EVEN WITH FUNDS ALREADY IN YOUR HANDS UNTIL NEGOTIA-
TIONS WITH FRENCH GOVERNMENT CLARIFIED STOP THIS DUE TO CHANGE
FROM OCCUPIED TO LIBERATED STATUS OF FRANCE STOP THIS RESCINDS
OUR CABLED AUTHORIZATION TO SPEND IN FRANCE 20,000 AT YOUR DIS...
CRETION STOP THE ADDITIONAL 13,000 MENTIONED AS AVAILABLE FOR
FRANCE IS TEMPORARILY BLOCKED STOP OUR APPROVED BUDGET FROM
OCTOBER 1ST IS 5,000 MONTHLY FOR ALL REFUGEE WORK IN FRANCE STOP
APPLYING FOR TREASURY LICENSE HOPE REMIT SOON STOP IF YOU CAN
REPORT IMMEDIATELY URGENT EMERGENCY REFUGEE NEEDS IN FRANCE WE
WILL APPLY FOR ADDITIONAL SPECIAL GRANT FROM WAR FUND CONTINGENCY
FUND STOP ALSO TRYING TO FIND OUTSIDE SOURCES OF ASSISTANCE FOR
YOUR RECOMMENDED NONREFUGEE PROGRAM STOP DEEPLY REGRET THIS
CONFUSION STOP COMMITTEE SENDS GRATEFUL APPRECIATION YOUR
EFFORTS UNQUOTE
THIS IS WRB CABLE TO BERN NO. 192
3:30 p.m.
September 30, 1944
FH:hd 9/30/44
Regraded Unclassified
219
BAS-5
Bern
This telegram must be
paraphrased before being
Dated September 30, 1944
communicated to anyone
other than a Government
Rec'd 1:48 p.m.
Agency. (SECRET 0)
Secretary of State,
Washington.
6512, September 30, 11 a.m.
FOR WRB FROM MCCLELLAND.
Department's 3314 September 26 and 3268 September 22.
On September 27 I received through Swiss National
Bank gross sum of 128,644.95 Swiss francs on order of
Queen Wilhelmina fund which I assume is $30,000 although
your 3314 spoke only of additional sum of $25,000.
This remittance however makes up $90,000 originally announced
in Department's 2438 July 17 and 2631 July 31.
With reference paragraph Legation's 5925, September 8,
I must call your attention to fact that none of
Wilhelmina funds now here have been spent yet as Krier
and Clement withheld any transmission to Netherlands in
August awaiting further clarification of contradictory
instructions received through Dulles from Oldenbruck in
London and through Luxembourg Consulate at Bern according
to which this money was to be paid over to Duch Minister
in Bern who was apparently to have made equivalent
available in Holland to J. A. Burger of Dutch Labor
Party.
It is highly doubtful that this money can now be
sent into Holland before country is liberated.
In case Belgian War Relief and Friends of Luxembourg
funds both countries are now liberated which restricts
expenditure this money to "enemy territory". that is
Germany.
Practical possibilities bringing relief to
Belgians, Dutch and Luxemburgers in Germany are very
limited. Most obvious use would be financing sending
food parcels to political prisoners these three countries
in German concentration camps within ICRC--WRB program.
Amounts however which could be utilized this program
are relatively small. Consequently do not feel it
necessary forward additional Belgian funds mentioned
your 3314.
KRIER and
Regraded Unclassified
220
-2- #6512, September 30, 11 a.m. from Bern
Krier and Clement are investigating other possibilities.
I will report any further useful outlets in keeping
terms original licenses which may develop.
-
HARRISON
WSB
Regraded Unclassified
221
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
American Legation, Bern
TO:
Secretary of State, Washington
DATE:
September 30, 1944
NUMBER:
6542
CONFIDENTIAL
Reference is made in the following to the Department's
September 21 telegram No. 3255.
The Legation wishes to report in connection with second
paragraph of message referred to above that, in accordance
with instructions of the Department, it communicated to Inter-
cross by letter the substance of numbered paragraphs one and
two of the Department's August 19 cable No. 2863, numbered
paragraph three thereof to Swiss Foreign Office for communi-
cation to the authorities of Hungary. The reply which Inter-
cross made to Legation's letter is summarized in Legation's
September 3 cable No. 5796. According to Swiss note dated
September 26 the Swiss Budapest Legation communicated to the
Hungarian Government the substance of numbered paragraph 3
of Department's telegram No. 2863, on the 6th of September.
On the same date Hungarian Government was also advised by
said Legation of substance of paragraph two under numbered
section one of August 23 cable No. 2900 from the Department.
The Wilner Case mentioned in last paragraph of Department's
cable under reference, which was also the subject of Department's
September 2 cable No. 3038, is being taken up with Swiss authori-
ties again by Legation. If cases involving individuals who
claim U. S. nationality were made the subject of separate
instructions from the Department it would be most helpful
to us.
HARRISON
Regraded Unclassified
222
"
SECRET
COPY NO
NOT TO BE RE-TRANSMITTED
OPTEL No. 318
Information received up to 10 A.M. 30th September 1944,
1. NAVAL
On 26th Corriando nd small infantry force with supporting
arns successfully landed N.W. Corner PELOPONNESE. The convay escorted
by a British Destroyer and swept in by British Yacht Minesweepers.
On same day a British Submorine sank self propelled lighter
escorting convoy in GULF OF SALONIKA. Coastal forces of GENOA sank
one 2,000 ton ship and damaged another. in large enemy submarine has
been sunk in MALACCA Strait by a British Submarine; 11 prisoners
taken. On 29th & U.S. Liberator sank a U-boat in the South
ATL.NTIC.
2. MILITARY
Western Europe Slight goins N.E. of NIJMEGEN and towards
HERTOGENBOSCH. Germans active on Western
face of Corrider and have counter-attacked unsuccessfully, Our
bridgehoad over ANTWERP TURNHOUT CANAL enlarged in face of strong
opposition. First Canadian Army continued its attack on CALAIS
against stubborn resistance and by noon 29th had captured all the
long renge guns on CAPE GRIS NEZ,
Italy Heavy rain hampering operations Eighth Army Front,
Rivers MARECCHL. and USO swollen and several
crossings out of action. Germans launched several counter-attacks
causing in sono cases loss of ground which has everywhere been
regained. Further progress Fifth Army Front where more prominent
hill features astride BOLOGN. Road have been taken,
Russia 29th. Russians have made further progress towards
RIGA and en advance on 100 mile front in
CARPATHIANS S.W. of ST.NISL.VOV.
3. AIR OPERATIONS
Western Front 72 Halifaxes carried petrol to BELGIUM
and 406 other aircreft carried supplies to
and evacuated wounded from FRANCE and BELGIUM. 67 other escorted
Medium Bombers attacked GELDERN N.W. of DUISBURG dropping
98 tons. 764 fighters over N.W. GERAL.NY and HOLLAND destroyed
or damaged two locomotives, 20 ruilway trucks, 33 motor vehicles
and 6 ferries. German casualties 33:3:13, Ours 7 fighters missing.
29th/30th. ..ircraft despatched: KARLSRUHE 40 Mosquitoes
Sea-mining 15, Bomber support 62.
Mediterranean 28th. Operations restricted by bad weather.
Balkan Air Force fighters destroyed 3
aircraft on the ground at SALONIKA as well as six locomotives and
several motor vehicles.
Germän Activity
18 Flying Bombs plotted,
Regraded Unclassified